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Note 5 - Loans and Leases | 3 Months Ended
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Mar. 31, 2024
Notes to Financial Statements |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 5. Loans and leases The classifications of loans and leases at March 31, 2024 and December 31, 2023 are summarized as follows:
(dollars in thousands) |  | March 31, 2024 |  |  | December 31, 2023 |
Commercial and industrial: |  |  |  |  |  |  |  |
Commercial |  | $ | 152,953 |  |  | $ | 152,640 |
Municipal |  |  | 113,058 |  |  |  | 94,724 |
Commercial real estate: |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 305,962 |  |  |  | 311,565 |
Owner occupied |  |  | 299,394 |  |  |  | 304,399 |
Construction |  |  | 48,473 |  |  |  | 39,823 |
Consumer: |  |  |  |  |  |  |  |
Home equity installment |  |  | 55,626 |  |  |  | 56,640 |
Home equity line of credit |  |  | 52,564 |  |  |  | 52,348 |
Auto loans - Recourse |  |  | 10,980 |  |  |  | 10,756 |
Auto loans - Non-recourse |  |  | 102,622 |  |  |  | 112,595 |
Direct finance leases |  |  | 32,544 |  |  |  | 33,601 |
Other |  |  | 16,045 |  |  |  | 16,500 |
Residential: |  |  |  |  |  |  |  |
Real estate |  |  | 475,712 |  |  |  | 465,010 |
Construction |  |  | 33,174 |  |  |  | 36,536 |
Total |  |  | 1,699,107 |  |  |  | 1,687,137 |
Less: |  |  |  |  |  |  |  |
Allowance for credit losses on loans |  |  | (18,886 | ) |  |  | (18,806 | )
Unearned lease revenue |  |  | (2,079 | ) |  |  | (2,039 | )
Loans and leases, net |  | $ | 1,678,142 |  |  | $ | 1,666,292 |
Total unamortized net costs and premiums included in loan totals were as follows:
(dollars in thousands) |  | March 31, 2024 |  |  | December 31, 2023 |
Net unamortized fair value mark discount on acquired loans |  | $ | (6,015 | ) |  | $ | (6,468 | )
Net unamortized deferred loan origination costs |  |  | 4,966 |  |  |  | 4,930 |
Total |  | $ | (1,049 | ) |  | $ | (1,538 | )
The Company excludes accrued interest receivable from the amortized cost basis of loans disclosed throughout this footnote. As of March 31, 2024 and December 31, 2023, accrued interest receivable for loans totaled $6.4 million and $5.7 million, respectively, and is included in the accrued interest receivable line in the consolidated balance sheets and is excluded from the estimate of credit losses. Direct finance leases include the lease receivable and the guaranteed lease residual. Unearned lease revenue represents the difference between the lessor’s investment in the property and the gross investment in the lease. Unearned revenue is accrued over the life of the lease using the effective interest method. The Company services real estate loans for investors in the secondary mortgage market which are not included in the accompanying consolidated balance sheets. The approximate unpaid principal balance of mortgages serviced for others amounted to $479.3 million as of March 31, 2024 and $477.7 million as of December 31, 2023. Mortgage servicing rights amounted to $1.4 million and $1.5 million as of March 31, 2024 and December 31, 2023, respectively, and is included in other assets in the consolidated balance sheets. Non-accrual loans Non-accrual loans and loans past due over 89 days still accruing, segregated by class, at March 31, 2024 and December 31, 2023, were as follows:
(dollars in thousands) |  | Non-accrual With No Allowance for Credit Loss |  |  | Non-accrual With an Allowance for Credit Loss |  |  | Total Non-accrual |  |  | Loans Past Due Over 89 Days Still Accruing |
At March 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | - |  |  | $ | 55 |  |  | $ | 55 |  |  | $ | - |
Municipal |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 525 |  |  |  | - |  |  |  | 525 |  |  |  | - |
Owner occupied |  |  | 1,578 |  |  |  | 457 |  |  |  | 2,035 |  |  |  | - |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity installment |  |  | 79 |  |  |  | - |  |  |  | 79 |  |  |  | - |
Home equity line of credit |  |  | 299 |  |  |  | 67 |  |  |  | 366 |  |  |  | - |
Auto loans - Recourse |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Auto loans - Non-recourse |  |  | 27 |  |  |  | 8 |  |  |  | 35 |  |  |  | - |
Direct finance leases |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 12 |
Other |  |  | - |  |  |  | 24 |  |  |  | 24 |  |  |  | - |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 438 |  |  |  | - |  |  |  | 438 |  |  |  | - |
Total |  | $ | 2,946 |  |  | $ | 611 |  |  | $ | 3,557 |  |  | $ | 12 |
(dollars in thousands) |  | Non-accrual With No Allowance for Credit Loss |  |  | Non-accrual With an Allowance for Credit Loss |  |  | Total Non-accrual |  |  | Loans Past Due Over 89 Days Still Accruing |
At December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 39 |  |  | $ | 16 |  |  | $ | 55 |  |  | $ | - |
Municipal |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 252 |  |  |  | - |  |  |  | 252 |  |  |  | - |
Owner occupied |  |  | 2,040 |  |  |  | 210 |  |  |  | 2,250 |  |  |  | - |
Construction |  |  | - |  |  |  |  |  |  |  | - |  |  |  |  |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity installment |  |  | 70 |  |  |  | - |  |  |  | 70 |  |  |  | - |
Home equity line of credit |  |  | 297 |  |  |  | 67 |  |  |  | 364 |  |  |  | - |
Auto loans - Recourse |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Auto loans - Non-recourse |  |  | 32 |  |  |  | 7 |  |  |  | 39 |  |  |  | - |
Direct finance leases |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 14 |
Other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 278 |  |  |  | - |  |  |  | 278 |  |  |  | - |
Total |  | $ | 3,008 |  |  | $ | 300 |  |  | $ | 3,308 |  |  | $ | 14 |
The decision to place loans on non-accrual status is made on an individual basis after considering factors pertaining to each specific loan. C&I and CRE loans are placed on non-accrual status when management has determined that payment of all contractual principal and interest is in doubt or the loan is past due 90 days or more as to principal and interest, unless well-secured and in the process of collection. Consumer loans secured by real estate and residential mortgage loans are placed on non-accrual status at 90 days past due as to principal and interest and unsecured consumer loans are charged-off when the loan is 90 days or more past due as to principal and interest. The Company considers all non-accrual loans to be impaired loans. Loan modifications to borrowers experiencing financial difficulty Occasionally, the Company modifies loans to borrowers in financial distress by providing interest rates below the market rate, temporary interest-only payment periods, term extensions at interest rates lower than the current market rate for new debt with similar risk and/or converting revolving credit lines to term loans. The Company typically does not forgive principal when modifying loans. In some cases, the Company provides multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as lowering the interest rate, may be granted. For the loans included in the "combination" columns below, multiple types of modifications have been made on the same loan within the current reporting period. The following tables present the amortized cost basis of loans at March 31, 2024 and March 31, 2023 that were both experiencing financial difficulty and modified during the three months ended March 31, 2024 and 2023, by class and type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below:
|  | Loans modified during the three months ended: |
(dollars in thousands) |  | March 31, 2024 |
|  | Principal Forgiveness |  |  | Payment Delay |  |  | Term Extension |  |  | Interest Rate Reduction |  |  | Combination Term Extension and Principal Forgiveness |  |  | Combination Term Extension Interest Rate Reduction |  |  | Total Class of Financing Receivable |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  | $ | - |  |  | $ | - |  |  | $ | 849 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  |  | 0.28 | %
Owner occupied |  |  | - |  |  |  | - |  |  |  | 6,533 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2.18 | %
Total |  | $ | - |  |  | $ | - |  |  | $ | 7,382 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  |  |  |
|  | Loans modified during the three months ended: |
(dollars in thousands) |  | March 31, 2023 |
|  | Principal Forgiveness |  |  | Payment Delay |  |  | Term Extension |  |  | Interest Rate Reduction |  |  | Combination Term Extension and Principal Forgiveness |  |  | Combination Term Extension Interest Rate Reduction |  |  | Total Class of Financing Receivable |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  | $ | - |  |  | $ | - |  |  | $ | 65 |  |  | $ | 3,261 |  |  | $ | - |  |  | $ | - |  |  |  | 1.07 | %
Total |  | $ | - |  |  | $ | - |  |  | $ | 65 |  |  | $ | 3,261 |  |  | $ | - |  |  | $ | - |  |  |  |  |
The Company has not committed to lend additional amounts to the borrowers included in the previous tables. Loans modified to borrowers experiencing financial difficulty are closely monitored to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that have been modified in the previous 12 months:
(dollars in thousands) |  | March 31, 2024 |
|  | Current |  |  | 30 - 59 Days Past Due |  |  | 60 - 89 Days Past Due |  |  | Greater Than 89 Days Past Due |  |  | Total Past Due |
Commercial and industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 15 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 849 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Owner occupied |  |  | 8,191 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 9,055 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
(dollars in thousands) |  | March 31, 2023 |
|  | Current |  |  | 30 - 59 Days Past Due |  |  | 60 - 89 Days Past Due |  |  | Greater Than 89 Days Past Due |  |  | Total Past Due |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  | $ | 3,326 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Total |  | $ | 3,326 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three months ended March 31, 2024 and 2023:
(dollars in thousands) |  | March 31, 2024 |
|  | Principal Forgiveness |  |  | Weighted-Average Interest Rate Reduction |  |  | Weighted-Average Term Extension (Months) |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  | $ | - |  |  |  | - | % |  |  | 3.0 |
Owner occupied |  |  | - |  |  |  | - |  |  |  | 5.0 |
(dollars in thousands) |  | March 31, 2023 |
|  | Principal Forgiveness |  |  | Weighted-Average Interest Rate Reduction |  |  | Weighted-Average Term Extension (Months) |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  | $ | - |  |  |  | 6.13 | % |  |  | 6.0 |
There were no financing receivables that had a payment default during the three months ended March 31, 2024 and 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty. Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. The allowance for credit losses (ACL) may be increased, adjustments may be made in the allocation of the ACL or partial charge-offs may be taken to further write-down the carrying value of the loan. Past due loans Loans are considered past due when the contractual principal and/or interest is not received by the due date. For loans reported 30-59 days past due, certain categories of loans are reported past due as and when the loan is in arrears for two payments or billing cycles. An aging analysis of past due loans, segregated by class of loans, as of the period indicated is as follows (dollars in thousands):
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Recorded |
|  |  |  |  |  |  |  |  |  | Past due |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | investment past |
|  | 30 - 59 Days |  |  | 60 - 89 Days |  |  | 90 days |  |  | Total |  |  |  |  |  |  | Total |  |  |  | due ≥ 90 days |
March 31, 2024 |  | past due |  |  | past due |  |  | or more (1) |  |  | past due |  |  | Current |  |  | loans (3) |  |  |  | and accruing |
Commercial and industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 145 |  |  |  | - |  |  |  | 55 |  |  | $ | 200 |  |  | $ | 152,753 |  |  | $ | 152,953 |  |  |  | $ | - |
Municipal |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 113,058 |  |  |  | 113,058 |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | - |  |  |  | 285 |  |  |  | 525 |  |  |  | 810 |  |  |  | 305,152 |  |  |  | 305,962 |  |  |  |  | - |
Owner occupied |  |  | 72 |  |  |  | 70 |  |  |  | 2,035 |  |  |  | 2,177 |  |  |  | 297,217 |  |  |  | 299,394 |  |  |  |  | - |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 48,473 |  |  |  | 48,473 |  |  |  |  | - |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity installment |  |  | 164 |  |  |  | - |  |  |  | 79 |  |  |  | 243 |  |  |  | 55,383 |  |  |  | 55,626 |  |  |  |  | - |
Home equity line of credit |  |  | 89 |  |  |  | - |  |  |  | 366 |  |  |  | 455 |  |  |  | 52,109 |  |  |  | 52,564 |  |  |  |  | - |
Auto loans - Recourse |  |  | 46 |  |  |  | - |  |  |  | - |  |  |  | 46 |  |  |  | 10,934 |  |  |  | 10,980 |  |  |  |  | - |
Auto loans - Non-recourse |  |  | 519 |  |  |  | 13 |  |  |  | 35 |  |  |  | 567 |  |  |  | 102,055 |  |  |  | 102,622 |  |  |  |  | - |
Direct finance leases |  |  | 211 |  |  |  | - |  |  |  | 12 |  |  |  | 223 |  |  |  | 30,242 |  |  |  | 30,465 |  | (2) |  |  | 12 |
Other |  |  | 118 |  |  |  | 9 |  |  |  | 24 |  |  |  | 151 |  |  |  | 15,894 |  |  |  | 16,045 |  |  |  |  | - |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | - |  |  |  | 430 |  |  |  | 438 |  |  |  | 868 |  |  |  | 474,844 |  |  |  | 475,712 |  |  |  |  | - |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 33,174 |  |  |  | 33,174 |  |  |  |  | - |
Total |  | $ | 1,364 |  |  | $ | 807 |  |  | $ | 3,569 |  |  | $ | 5,740 |  |  | $ | 1,691,288 |  |  | $ | 1,697,028 |  |  |  | $ | 12 |
(1) Includes non-accrual loans. (2) Net of unearned lease revenue of $2.1 million. (3) Includes net deferred loan costs of $5.0 million.
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Recorded |
|  |  |  |  |  |  |  |  |  | Past due |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | investment past |
|  | 30 - 59 Days |  |  | 60 - 89 Days |  |  | 90 days |  |  | Total |  |  |  |  |  |  | Total |  |  |  | due ≥ 90 days |
December 31, 2023 |  | past due |  |  | past due |  |  | or more (1) |  |  | past due |  |  | Current |  |  | loans (3) |  |  |  | and accruing |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 77 |  |  | $ | 16 |  |  | $ | 55 |  |  | $ | 148 |  |  | $ | 152,492 |  |  | $ | 152,640 |  |  |  | $ | - |
Municipal |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 94,724 |  |  |  | 94,724 |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 85 |  |  |  | 65 |  |  |  | 252 |  |  |  | 402 |  |  |  | 311,163 |  |  |  | 311,565 |  |  |  |  | - |
Owner occupied |  |  | 1,875 |  |  |  | 104 |  |  |  | 2,250 |  |  |  | 4,229 |  |  |  | 300,170 |  |  |  | 304,399 |  |  |  |  | - |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 39,823 |  |  |  | 39,823 |  |  |  |  | - |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity installment |  |  | 105 |  |  |  | 150 |  |  |  | 70 |  |  |  | 325 |  |  |  | 56,315 |  |  |  | 56,640 |  |  |  |  | - |
Home equity line of credit |  |  | 60 |  |  |  | 92 |  |  |  | 364 |  |  |  | 516 |  |  |  | 51,832 |  |  |  | 52,348 |  |  |  |  | - |
Auto loans - Recourse |  |  | 86 |  |  |  | 1 |  |  |  | - |  |  |  | 87 |  |  |  | 10,669 |  |  |  | 10,756 |  |  |  |  | - |
Auto loans - Non-recourse |  |  | 417 |  |  |  | 48 |  |  |  | 39 |  |  |  | 504 |  |  |  | 112,091 |  |  |  | 112,595 |  |  |  |  | - |
Direct finance leases |  |  | 548 |  |  |  | - |  |  |  | 14 |  |  |  | 562 |  |  |  | 31,000 |  |  |  | 31,562 |  | (2) |  |  | 14 |
Other |  |  | 30 |  |  |  | 4 |  |  |  | - |  |  |  | 34 |  |  |  | 16,466 |  |  |  | 16,500 |  |  |  |  | - |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 42 |  |  |  | 682 |  |  |  | 278 |  |  |  | 1,002 |  |  |  | 464,008 |  |  |  | 465,010 |  |  |  |  | - |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 36,536 |  |  |  | 36,536 |  |  |  |  | - |
Total |  | $ | 3,325 |  |  | $ | 1,162 |  |  | $ | 3,322 |  |  | $ | 7,809 |  |  | $ | 1,677,289 |  |  | $ | 1,685,098 |  |  |  | $ | 14 |
(1) Includes non-accrual loans. (2) Net of unearned lease revenue of $2.0 million. (3) Includes net deferred loan costs of $4.9 million. Credit Quality Indicators Management is responsible for conducting the Company’s credit risk evaluation process, which includes credit risk grading of individual commercial and industrial and commercial real estate loans. Commercial and industrial and commercial real estate loans are assigned credit risk grades based on the Company’s assessment of conditions that affect the borrower’s ability to meet its contractual obligations under the loan agreement. That process includes reviewing borrowers’ current financial information, historical payment experience, credit documentation, public information, and other information specific to each individual borrower. Upon review, the commercial loan credit risk grade is revised or reaffirmed. The credit risk grades may be changed at any time management feels an upgrade or downgrade may be warranted. The Company utilizes an external independent loan review firm that reviews and validates the credit risk program on at least an annual basis. Results of these reviews are presented to management and the Board of Directors. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures. Commercial and industrial and commercial real estate The Company utilizes a loan grading system and assigns a credit risk grade to its loans in the C&I and CRE portfolios. The grading system provides a means to measure portfolio quality and aids in the monitoring of the credit quality of the overall loan portfolio. The credit risk grades are arrived at using a risk rating matrix to assign a grade to each of the loans in the C&I and CRE portfolios. These loans are assigned credit risk grades based on the Company’s assessment of conditions that affect the borrower’s ability to meet its contractual obligations under the loan agreement. That process includes reviewing borrowers’ current financial information, historical payment experience, credit documentation, public information and other information specific to each individual borrower. Upon review, the commercial loan credit risk grade is revised or reaffirmed. The credit risk grades may be changed at any time management feels an upgrade or downgrade may be warranted. The following is a description of each risk rating category the Company uses to classify each of its C&I and CRE loans: Pass Loans in this category have an acceptable level of risk and are graded in a range of one to five. Secured loans generally have good collateral coverage. Current financial statements reflect acceptable balance sheet ratios, sales and earnings trends. Management is competent, and a reasonable succession plan is evident. Payment experience on the loans has been good with minor or no delinquency experience. Loans with a grade of one are of the highest quality in the range. Those graded five are of marginally acceptable quality. Special Mention Loans in this category are graded a six and may be protected but are potentially weak. They constitute a credit risk to the Company but have not yet reached the point of adverse classification. Some of the following conditions may exist: little or no collateral coverage; lack of current financial information; delinquency problems; highly leveraged; available financial information reflects poor balance sheet ratios and profit and loss statements reflect uncertain trends; and document exceptions. Cash flow may not be sufficient to support total debt service requirements. Substandard Loans in this category are graded a seven and have a well-defined weakness which may jeopardize the ultimate collectability of the debt. The collateral pledged may be lacking in quality or quantity. Financial statements may indicate insufficient cash flow to service the debt; and/or do not reflect a sound net worth. The payment history indicates chronic delinquency problems. Management is weak. There is a distinct possibility that the Company may sustain a loss. All loans on non-accrual are rated substandard. Other loans that are included in the substandard category can be accruing, as well as loans that are current or past due. Loans 90 days or more past due, unless otherwise fully supported, are classified substandard. Also, borrowers that are bankrupt or have loans categorized as modifications experiencing financial difficulty can be graded substandard. Doubtful Loans in this category are graded an eight and have a better than 50% possibility of the Company sustaining a loss, but the loss cannot be determined because of specific reasonable factors which may strengthen credit in the near-term. Many of the weaknesses present in a substandard loan exist. Liquidation of collateral, if any, is likely. Any loan graded lower than an eight is considered to be uncollectible and charged-off. Consumer and residential The consumer and residential loan segments are regarded as homogeneous loan pools and as such are not risk rated. For these portfolios, the Company utilizes payment activity and history in assessing performance. Non-performing loans are comprised of non-accrual loans and loans past due 90 days or more and accruing. All loans not classified as non-performing are considered performing. The following table presents loans including $5.0 million and $4.9 million of deferred costs, segregated by class and vintage, categorized into the appropriate credit quality indicator category as of March 31, 2024 and December 31, 2023, respectively: Commercial credit exposure Credit risk profile by creditworthiness category As of March 31, 2024 (dollars in thousands)
March 31, 2024 |  | 2024 |  |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | Prior |  |  | Revolving Loans Amortized Cost Basis |  |  | Revolving Loans Converted to Term |  |  | Total |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 5,443 |  |  | $ | 29,235 |  |  |  | 18,316 |  |  |  | 15,459 |  |  |  | 4,978 |  |  |  | 18,956 |  |  |  | 52,436 |  |  | $ | - |  |  | $ | 144,823 |
Special Mention |  |  | - |  |  |  | - |  |  |  | 139 |  |  |  | 193 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 332 |
Substandard |  |  | - |  |  |  | - |  |  |  | 259 |  |  |  | 6,338 |  |  |  | 17 |  |  |  | 353 |  |  |  | 831 |  |  |  | - |  |  |  | 7,798 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total commercial and industrial |  | $ | 5,443 |  |  | $ | 29,235 |  |  | $ | 18,714 |  |  | $ | 21,990 |  |  | $ | 4,995 |  |  | $ | 19,309 |  |  | $ | 53,267 |  |  | $ | - |  |  | $ | 152,953 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 30 |  |  | $ | - |  |  | $ | 84 |  |  | $ | - |  |  | $ | - |  |  | $ | 114 |
Commercial and industrial - municipal |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 16,861 |  |  | $ | 26,778 |  |  | $ | 15,758 |  |  | $ | 21,783 |  |  | $ | 12,996 |  |  | $ | 18,882 |  |  | $ | - |  |  | $ | - |  |  | $ | 113,058 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total commercial and industrial - municipal |  | $ | 16,861 |  |  | $ | 26,778 |  |  | $ | 15,758 |  |  | $ | 21,783 |  |  | $ | 12,996 |  |  | $ | 18,882 |  |  | $ | - |  |  | $ | - |  |  | $ | 113,058 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Commercial real estate - non-owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 3,814 |  |  | $ | 33,675 |  |  |  | 38,013 |  |  |  | 70,006 |  |  |  | 41,912 |  |  |  | 102,540 |  |  | $ | 7,269 |  |  | $ | - |  |  | $ | 297,229 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 688 |  |  |  | 125 |  |  |  | 7,920 |  |  |  | - |  |  |  | - |  |  |  | 8,733 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total commercial real estate - non-owner occupied |  | $ | 3,814 |  |  | $ | 33,675 |  |  | $ | 38,013 |  |  | $ | 70,694 |  |  | $ | 42,037 |  |  | $ | 110,460 |  |  | $ | 7,269 |  |  | $ | - |  |  | $ | 305,962 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Commercial real estate - owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 1,922 |  |  |  | 29,866 |  |  |  | 58,559 |  |  |  | 45,279 |  |  |  | 28,676 |  |  |  | 104,280 |  |  |  | 10,805 |  |  | $ | - |  |  | $ | 279,387 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 486 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 486 |
Substandard |  |  |  |  |  |  | - |  |  |  | 6,740 |  |  |  | 512 |  |  |  | 527 |  |  |  | 11,156 |  |  |  | 586 |  |  |  | - |  |  |  | 19,521 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total commercial real estate - owner occupied |  | $ | 1,922 |  |  | $ | 29,866 |  |  | $ | 65,299 |  |  | $ | 46,277 |  |  | $ | 29,203 |  |  | $ | 115,436 |  |  | $ | 11,391 |  |  | $ | - |  |  | $ | 299,394 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 5 |  |  | $ | - |  |  | $ | - |  |  | $ | 5 |
Commercial real estate - construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 4,846 |  |  | $ | 21,758 |  |  | $ | 17,216 |  |  | $ | - |  |  | $ | - |  |  | $ | 3,689 |  |  | $ | 964 |  |  | $ | - |  |  | $ | 48,473 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total commercial real estate - construction |  | $ | 4,846 |  |  | $ | 21,758 |  |  | $ | 17,216 |  |  | $ | - |  |  | $ | - |  |  | $ | 3,689 |  |  | $ | 964 |  |  | $ | - |  |  | $ | 48,473 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Consumer & Mortgage lending credit exposure Credit risk profile based on payment activity As of March 31, 2024 (dollars in thousands)
March 31, 2024 |  | 2024 |  |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | Prior |  |  | Revolving Loans Amortized Cost Basis |  |  | Revolving Loans Converted to Term |  |  | Total |
Home equity installment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 1,416 |  |  | $ | 8,372 |  |  | $ | 17,214 |  |  | $ | 9,081 |  |  | $ | 7,501 |  |  | $ | 11,963 |  |  | $ | - |  |  | $ | - |  |  | $ | 55,547 |
Non-performing |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 79 |  |  |  | - |  |  |  | - |  |  |  | 79 |
Total home equity installment |  | $ | 1,416 |  |  | $ | 8,372 |  |  | $ | 17,214 |  |  | $ | 9,081 |  |  | $ | 7,501 |  |  | $ | 12,042 |  |  | $ | - |  |  | $ | - |  |  | $ | 55,626 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Home equity line of credit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 41,497 |  |  | $ | 10,701 |  |  | $ | 52,198 |
Non-performing |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 366 |  |  |  | - |  |  |  | 366 |
Total home equity line of credit |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 41,863 |  |  | $ | 10,701 |  |  | $ | 52,564 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Auto loans - recourse |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 1,236 |  |  | $ | 3,029 |  |  | $ | 1,779 |  |  | $ | 2,540 |  |  | $ | 1,678 |  |  | $ | 718 |  |  | $ | - |  |  | $ | - |  |  | $ | 10,980 |
Non-performing |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total auto loans - recourse |  | $ | 1,236 |  |  | $ | 3,029 |  |  | $ | 1,779 |  |  | $ | 2,540 |  |  | $ | 1,678 |  |  | $ | 718 |  |  | $ | - |  |  | $ | - |  |  | $ | 10,980 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Auto loans - non-recourse |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 1,375 |  |  | $ | 36,683 |  |  | $ | 38,441 |  |  | $ | 15,457 |  |  | $ | 6,823 |  |  | $ | 3,808 |  |  | $ | - |  |  | $ | - |  |  | $ | 102,587 |
Non-performing |  |  | - |  |  |  | - |  |  |  | 12 |  |  |  | 4 |  |  |  | - |  |  |  | 19 |  |  |  | - |  |  |  | - |  |  |  | 35 |
Total auto loans - non-recourse |  | $ | 1,375 |  |  | $ | 36,683 |  |  | $ | 38,453 |  |  | $ | 15,461 |  |  | $ | 6,823 |  |  | $ | 3,827 |  |  | $ | - |  |  | $ | - |  |  | $ | 102,622 |
Current period gross write-offs |  | $ | - |  |  | $ | 15 |  |  | $ | 29 |  |  | $ | 6 |  |  | $ | 3 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 53 |
Direct finance leases (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 2,852 |  |  | $ | 10,252 |  |  | $ | 9,776 |  |  | $ | 6,568 |  |  | $ | 935 |  |  | $ | 70 |  |  | $ | - |  |  | $ | - |  |  | $ | 30,453 |
Non-performing |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 12 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 12 |
Total direct finance leases |  | $ | 2,852 |  |  | $ | 10,252 |  |  | $ | 9,776 |  |  | $ | 6,580 |  |  | $ | 935 |  |  | $ | 70 |  |  | $ | - |  |  | $ | - |  |  | $ | 30,465 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Consumer - other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 1,422 |  |  | $ | 7,244 |  |  | $ | 2,767 |  |  | $ | 1,770 |  |  | $ | 592 |  |  | $ | 898 |  |  | $ | 1,328 |  |  | $ | - |  |  | $ | 16,021 |
Non-performing |  |  | - |  |  |  | - |  |  |  | 24 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 24 |
Total consumer - other |  | $ | 1,422 |  |  | $ | 7,244 |  |  | $ | 2,791 |  |  | $ | 1,770 |  |  | $ | 592 |  |  | $ | 898 |  |  | $ | 1,328 |  |  | $ | - |  |  | $ | 16,045 |
Current period gross write-offs |  | $ | 1 |  |  | $ | 15 |  |  | $ | 10 |  |  | $ | 10 |  |  | $ | 2 |  |  | $ | 16 |  |  | $ | - |  |  | $ | - |  |  | $ | 54 |
Residential real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 9,706 |  |  | $ | 52,897 |  |  | $ | 84,935 |  |  | $ | 139,372 |  |  | $ | 51,022 |  |  | $ | 137,342 |  |  | $ | - |  |  | $ | - |  |  | $ | 475,274 |
Non-performing |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 438 |  |  |  | - |  |  |  | - |  |  |  | 438 |
Total residential real estate |  | $ | 9,706 |  |  | $ | 52,897 |  |  | $ | 84,935 |  |  | $ | 139,372 |  |  | $ | 51,022 |  |  | $ | 137,780 |  |  | $ | - |  |  | $ | - |  |  | $ | 475,712 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Residential - construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 2,212 |  |  | $ | 12,642 |  |  | $ | 8,601 |  |  | $ | 6,420 |  |  | $ | 2,665 |  |  | $ | 634 |  |  | $ | - |  |  | $ | - |  |  | $ | 33,174 |
Non-performing |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total residential - construction |  | $ | 2,212 |  |  | $ | 12,642 |  |  | $ | 8,601 |  |  | $ | 6,420 |  |  | $ | 2,665 |  |  | $ | 634 |  |  | $ | - |  |  | $ | - |  |  | $ | 33,174 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
(1) Net of unearned lease revenue of $2.1 million. Commercial credit exposure Credit risk profile by creditworthiness category As of December 31, 2023 (dollars in thousands)
December 31, 2023 |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Revolving Loans Amortized Cost Basis |  |  | Revolving Loans Converted to Term |  |  | Total |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 30,328 |  |  | $ | 19,115 |  |  |  | 22,820 |  |  |  | 4,848 |  |  |  | 6,922 |  |  |  | 12,156 |  |  |  | 53,758 |  |  | $ | - |  |  | $ | 149,947 |
Special Mention |  |  | - |  |  |  | 597 |  |  |  | 288 |  |  |  | - |  |  |  | - |  |  |  | 55 |  |  |  | 30 |  |  |  | - |  |  |  | 970 |
Substandard |  |  | - |  |  |  | - |  |  |  | 16 |  |  |  | 20 |  |  |  | 53 |  |  |  | 324 |  |  |  | 1,310 |  |  |  | - |  |  |  | 1,723 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total commercial and industrial |  | $ | 30,328 |  |  | $ | 19,712 |  |  | $ | 23,124 |  |  | $ | 4,868 |  |  | $ | 6,975 |  |  | $ | 12,535 |  |  | $ | 55,098 |  |  | $ | - |  |  | $ | 152,640 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | 300 |  |  | $ | 20 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 320 |
Commercial and industrial - municipal |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 27,016 |  |  | $ | 13,933 |  |  | $ | 21,241 |  |  | $ | 13,137 |  |  | $ | 1,445 |  |  | $ | 17,952 |  |  | $ | - |  |  | $ | - |  |  | $ | 94,724 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total commercial and industrial - municipal |  | $ | 27,016 |  |  | $ | 13,933 |  |  | $ | 21,241 |  |  | $ | 13,137 |  |  | $ | 1,445 |  |  | $ | 17,952 |  |  | $ | - |  |  | $ | - |  |  | $ | 94,724 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Commercial real estate - non-owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 34,103 |  |  | $ | 37,508 |  |  |  | 71,209 |  |  |  | 42,692 |  |  |  | 17,390 |  |  |  | 89,860 |  |  | $ | 6,779 |  |  | $ | - |  |  | $ | 299,541 |
Special Mention |  |  | - |  |  |  | - |  |  |  | 1,044 |  |  |  | 304 |  |  |  | - |  |  |  | 1,375 |  |  |  | - |  |  |  | - |  |  |  | 2,723 |
Substandard |  |  | - |  |  |  | 65 |  |  |  | 1,063 |  |  |  | 129 |  |  |  | 566 |  |  |  | 7,478 |  |  |  | - |  |  |  | - |  |  |  | 9,301 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total commercial real estate - non-owner occupied |  | $ | 34,103 |  |  | $ | 37,573 |  |  | $ | 73,316 |  |  | $ | 43,125 |  |  | $ | 17,956 |  |  | $ | 98,713 |  |  | $ | 6,779 |  |  | $ | - |  |  | $ | 311,565 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 32 |  |  | $ | - |  |  | $ | - |  |  | $ | 32 |
Commercial real estate - owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 29,429 |  |  |  | 59,132 |  |  |  | 47,240 |  |  |  | 29,377 |  |  |  | 24,636 |  |  |  | 84,423 |  |  |  | 9,731 |  |  | $ | - |  |  | $ | 283,968 |
Special Mention |  |  | - |  |  |  | 199 |  |  |  | 554 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 125 |  |  |  | - |  |  |  | 878 |
Substandard |  |  |  |  |  |  | 7,029 |  |  |  | 379 |  |  |  | 560 |  |  |  | - |  |  |  | 10,991 |  |  |  | 594 |  |  |  | - |  |  |  | 19,553 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total commercial real estate - owner occupied |  | $ | 29,429 |  |  | $ | 66,360 |  |  | $ | 48,173 |  |  | $ | 29,937 |  |  | $ | 24,636 |  |  | $ | 95,414 |  |  | $ | 10,450 |  |  | $ | - |  |  | $ | 304,399 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 59 |  |  | $ | - |  |  | $ | - |  |  | $ | 59 |
Commercial real estate - construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 15,075 |  |  | $ | 17,358 |  |  | $ | 852 |  |  | $ | - |  |  | $ | - |  |  | $ | 3,739 |  |  | $ | 2,799 |  |  | $ | - |  |  | $ | 39,823 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total commercial real estate - construction |  | $ | 15,075 |  |  | $ | 17,358 |  |  | $ | 852 |  |  | $ | - |  |  | $ | - |  |  | $ | 3,739 |  |  | $ | 2,799 |  |  | $ | - |  |  | $ | 39,823 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Consumer & Mortgage lending credit exposure Credit risk profile based on payment activity As of December 31, 2023 (dollars in thousands)
December 31, 2023 |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Revolving Loans Amortized Cost Basis |  |  | Revolving Loans Converted to Term |  |  | Total |
Home equity installment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 8,581 |  |  | $ | 17,890 |  |  | $ | 9,487 |  |  | $ | 7,988 |  |  | $ | 3,832 |  |  | $ | 8,792 |  |  | $ | - |  |  | $ | - |  |  | $ | 56,570 |
Non-performing |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 70 |  |  |  | - |  |  |  | - |  |  |  | 70 |
Total home equity installment |  | $ | 8,581 |  |  | $ | 17,890 |  |  | $ | 9,487 |  |  | $ | 7,988 |  |  | $ | 3,832 |  |  | $ | 8,862 |  |  | $ | - |  |  | $ | - |  |  | $ | 56,640 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 26 |  |  | $ | - |  |  | $ | - |  |  | $ | 26 |
Home equity line of credit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 40,939 |  |  | $ | 11,045 |  |  | $ | 51,984 |
Non-performing |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 364 |  |  |  | - |  |  |  | 364 |
Total home equity line of credit |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 41,303 |  |  | $ | 11,045 |  |  | $ | 52,348 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Auto loans - recourse |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 3,120 |  |  | $ | 1,957 |  |  | $ | 2,834 |  |  | $ | 1,926 |  |  | $ | 765 |  |  | $ | 154 |  |  | $ | - |  |  | $ | - |  |  | $ | 10,756 |
Non-performing |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total auto loans - recourse |  | $ | 3,120 |  |  | $ | 1,957 |  |  | $ | 2,834 |  |  | $ | 1,926 |  |  | $ | 765 |  |  | $ | 154 |  |  | $ | - |  |  | $ | - |  |  | $ | 10,756 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Auto loans - non-recourse |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 39,673 |  |  | $ | 42,059 |  |  | $ | 17,314 |  |  | $ | 8,162 |  |  | $ | 3,999 |  |  | $ | 1,349 |  |  | $ | - |  |  | $ | - |  |  | $ | 112,556 |
Non-performing |  |  | - |  |  |  | - |  |  |  | 3 |  |  |  | 17 |  |  |  | - |  |  |  | 19 |  |  |  | - |  |  |  | - |  |  |  | 39 |
Total auto loans - non-recourse |  | $ | 39,673 |  |  | $ | 42,059 |  |  | $ | 17,317 |  |  | $ | 8,179 |  |  | $ | 3,999 |  |  | $ | 1,368 |  |  | $ | - |  |  | $ | - |  |  | $ | 112,595 |
Current period gross write-offs |  | $ | 3 |  |  | $ | 7 |  |  | $ | 105 |  |  | $ | 36 |  |  | $ | 15 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 166 |
Direct finance leases (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 11,569 |  |  | $ | 10,728 |  |  | $ | 7,508 |  |  | $ | 1,660 |  |  | $ | 83 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 31,548 |
Non-performing |  |  | - |  |  |  | - |  |  |  | 14 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 14 |
Total direct finance leases |  | $ | 11,569 |  |  | $ | 10,728 |  |  | $ | 7,522 |  |  | $ | 1,660 |  |  | $ | 83 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 31,562 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Consumer - other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 8,127 |  |  | $ | 3,266 |  |  | $ | 1,963 |  |  | $ | 705 |  |  | $ | 368 |  |  | $ | 762 |  |  | $ | 1,309 |  |  | $ | - |  |  | $ | 16,500 |
Non-performing |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total consumer - other |  | $ | 8,127 |  |  | $ | 3,266 |  |  | $ | 1,963 |  |  | $ | 705 |  |  | $ | 368 |  |  | $ | 762 |  |  | $ | 1,309 |  |  | $ | - |  |  | $ | 16,500 |
Current period gross write-offs |  | $ | 125 |  |  | $ | 77 |  |  | $ | 16 |  |  | $ | 7 |  |  | $ | 17 |  |  | $ | 29 |  |  | $ | - |  |  | $ | - |  |  | $ | 271 |
Residential real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 53,604 |  |  | $ | 80,516 |  |  | $ | 137,620 |  |  | $ | 51,710 |  |  | $ | 29,859 |  |  | $ | 111,423 |  |  | $ | - |  |  | $ | - |  |  | $ | 464,732 |
Non-performing |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 278 |  |  |  | - |  |  |  | - |  |  |  | 278 |
Total residential real estate |  | $ | 53,604 |  |  | $ | 80,516 |  |  | $ | 137,620 |  |  | $ | 51,710 |  |  | $ | 29,859 |  |  | $ | 111,701 |  |  | $ | - |  |  | $ | - |  |  | $ | 465,010 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Residential - construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 10,733 |  |  | $ | 13,084 |  |  | $ | 9,267 |  |  | $ | 2,675 |  |  | $ | 343 |  |  | $ | 434 |  |  | $ | - |  |  | $ | - |  |  | $ | 36,536 |
Non-performing |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total residential - construction |  | $ | 10,733 |  |  | $ | 13,084 |  |  | $ | 9,267 |  |  | $ | 2,675 |  |  | $ | 343 |  |  | $ | 434 |  |  | $ | - |  |  | $ | - |  |  | $ | 36,536 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
(2) Net of unearned lease revenue of $2.0 million. Collateral dependent loans Loans that do not share risk characteristics are evaluated on an individual basis. For loans that are individually evaluated and foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and repayment of the financial asset is expected to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. The following table presents the individually evaluated, collateral dependent loans as of March 31, 2024 and December 31, 2023:
(dollars in thousands) |  | Real Estate |  |  | Other |  |  | Total Collateral-Dependent Loans |
At March 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial: |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | - |  |  | $ | 55 |  |  | $ | 55 |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 525 |  |  |  | - |  |  |  | 525 |
Owner occupied |  |  | 2,035 |  |  |  | - |  |  |  | 2,035 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |
Home equity installment |  |  | 79 |  |  |  | - |  |  |  | 79 |
Home equity line of credit |  |  | 366 |  |  |  | - |  |  |  | 366 |
Auto loans - Non-recourse |  |  | - |  |  |  | 35 |  |  |  | 35 |
Other |  |  | 24 |  |  |  | - |  |  |  | 24 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 438 |  |  |  | - |  |  |  | 438 |
Total |  | $ | 3,467 |  |  | $ | 90 |  |  | $ | 3,557 |
(dollars in thousands) |  | Real Estate |  |  | Other |  |  | Total Collateral-Dependent Loans |
At December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial: |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | - |  |  | $ | 55 |  |  | $ | 55 |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 252 |  |  |  | - |  |  |  | 252 |
Owner occupied |  |  | 2,250 |  |  |  | - |  |  |  | 2,250 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |
Home equity installment |  |  | 70 |  |  |  | - |  |  |  | 70 |
Home equity line of credit |  |  | 364 |  |  |  | - |  |  |  | 364 |
Auto loans - Non-recourse |  |  | - |  |  |  | 39 |  |  |  | 39 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 278 |  |  |  | - |  |  |  | 278 |
Total |  | $ | 3,214 |  |  | $ | 94 |  |  | $ | 3,308 |
Allowance for credit losses Management continually evaluates the credit quality of the Company’s loan portfolio and performs a formal review of the adequacy of the allowance for credit losses (ACL) on a quarterly basis. The allowance reflects management’s best estimate of the amount of credit losses in the loan portfolio. Information related to the change in the allowance for credit losses on loans and the Company’s recorded investment in loans by portfolio segment as of the period indicated is as follows:
As of and for the three months ended March 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Commercial & |  |  | Commercial |  |  |  |  |  |  | Residential |  |  |  |  |  |  |  |  |
(dollars in thousands) |  | industrial |  |  | real estate |  |  | Consumer |  |  | real estate |  |  | Unallocated |  |  | Total |
Allowance for Credit Losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 1,850 |  |  | $ | 8,835 |  |  | $ | 2,391 |  |  | $ | 5,694 |  |  | $ | 36 |  |  | $ | 18,806 |
Charge-offs |  |  | (114 | ) |  |  | (5 | ) |  |  | (107 | ) |  |  | - |  |  |  | - |  |  |  | (226 | )
Recoveries |  |  | 2 |  |  |  | 155 |  |  |  | 22 |  |  |  | 2 |  |  |  | - |  |  |  | 181 |
Provision (benefit) for credit losses |  |  | 166 |  |  |  | (161 | ) |  |  | (43 | ) |  |  | 150 |  |  |  | 13 |  |  |  | 125 |
Ending balance |  | $ | 1,904 |  |  | $ | 8,824 |  |  | $ | 2,263 |  |  | $ | 5,846 |  |  | $ | 49 |  |  | $ | 18,886 |
As of and for the three months ended March 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Commercial & |  |  | Commercial |  |  |  |  |  |  | Residential |  |  |  |  |  |  |  |  |
(dollars in thousands) |  | industrial |  |  | real estate |  |  | Consumer |  |  | real estate |  |  | Unallocated |  |  | Total |
Allowance for Credit Losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 2,924 |  |  | $ | 7,162 |  |  | $ | 2,827 |  |  | $ | 4,169 |  |  | $ | 67 |  |  | $ | 17,149 |
Impact of adopting ASC 326 |  |  | 278 |  |  |  | 756 |  |  |  | (547 | ) |  |  | 198 |  |  |  | (67 | ) |  |  | 618 |
Initial allowance on loans purchased with credit deterioration |  |  | - |  |  |  | 126 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 126 |
Charge-offs |  |  | (170 | ) |  |  | (32 | ) |  |  | (101 | ) |  |  | - |  |  |  | - |  |  |  | (303 | )
Recoveries |  |  | 20 |  |  |  | 39 |  |  |  | 72 |  |  |  | 9 |  |  |  | - |  |  |  | 140 |
Provision (benefit) for loan losses |  |  | (502 | ) |  |  | 106 |  |  |  | 197 |  |  |  | 307 |  |  |  | 72 |  |  |  | 180 |
Ending balance |  | $ | 2,550 |  |  | $ | 8,157 |  |  | $ | 2,448 |  |  | $ | 4,683 |  |  | $ | 72 |  |  | $ | 17,910 |
Unfunded commitments In accordance with ASC Topic 326, the Company estimates expected credit losses for off-balance-sheet credit exposures over the contractual period during which the Company is exposed to credit risk. The estimate of expected credit losses takes into consideration the likelihood that funding will occur (i.e., funding rate) as well as the amount expected to be collected over the estimated remaining contractual term of the off-balance-sheet credit exposures (i.e., loss rate). The Company does not record an estimate of expected credit losses for off-balance-sheet exposures that are unconditionally cancellable. On a quarterly basis, Management evaluates expected credit losses for off-balance-sheet credit exposures. The Company's allowance for credit losses on unfunded commitments is recognized as a liability on the consolidated balance sheets, with adjustments to the reserve recognized in the provision for credit losses on unfunded commitments on the consolidated statements of income. The Company's activity in the allowance for credit losses on unfunded commitments for the period was as follows:
(dollars in thousands) |  | For the Three Months Ended March 31, 2024 |  |  | For the Three Months Ended March 31, 2023 |
Beginning balance |  | $ | 944 |  |  | $ | 49 |
Impact of adopting ASC 326 |  |  | - |  |  |  | 1,060 |
Provision (benefit) for credit losses |  |  | (50 | ) |  |  | 225 |
Ending balance |  | $ | 894 |  |  | $ | 1,334 |
Direct finance leases The Company originates direct finance leases through three automobile dealerships. The amortized cost of the Company’s lease receivables, net of unearned income, was $5.8 million and $6.1 million as of March 31, 2024 and December 31, 2023, respectively. The residual value of the direct finance leases is fully guaranteed by the dealerships. Residual values amounted to $24.2 million and $25.1 million at March 31, 2024 and December 31, 2023, respectively, and are included in the amortized cost of direct finance leases. As of March 31, 2024, there was also $478 thousand in deferred lease expense included in the carrying value of direct finance leases that is not included in the table below. The undiscounted cash flows to be received on an annual basis for the direct finance leases are as follows:
(dollars in thousands) |  | Amount |
2024 |  | $ | 10,128 |
2025 |  |  | 13,162 |
2026 |  |  | 6,410 |
2027 |  |  | 2,271 |
2028 |  |  | 95 |
2029 and thereafter |  |  | - |
Total future minimum lease payments receivable |  |  | 32,066 |
Less: Unearned income |  |  | (2,079 | )
Undiscounted cash flows to be received |  | $ | 29,987 |

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- Definition The entire disclosure for claims held for amounts due to 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 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 835 -SubTopic 30 -Name Accounting Standards Codification -Section 45 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482925/835-30-45-2 + Details
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