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Loans and Allowance for Credit Losses on Loans (Tables)

3 Months Ended

Mar. 31, 2023

Receivables [Abstract]

Schedule of Composition of Loan Portfolio

The following table presents the composition of the loan portfolio as of March 31, 2023 and December 31, 2022:

($ in thousands)						March 31, 2023						December 31, 2022
Commercial real estate						$	833,615					$	842,208
SBA—real estate						225,719						221,340
SBA—non-real estate						13,275						13,377
C&I						117,841						116,951
Home mortgage						500,635						482,949
Consumer						1,400						1,467
Gross loans receivable						1,692,485						1,678,292
Allowance for credit losses						(20,814)						(19,241)
Loans receivable, net (1)						$	1,671,671					$	1,659,051

(1)Includes net deferred loan fees or costs, unamortized premiums and unaccreted discounts of $70 thousand and $160 thousand as of March 31, 2023 and December 31, 2022, respectively.

The following table represents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2023, for which repayment is expected to be obtained through the sale of the underlying collateral.

($ in thousands)						Hotel / Motel						Gas Station						Single-Family Residential						Total
As of March 31, 2023
SBA—real estate						$	424					$	381					$	—					$	805
Home mortgage						—						—						1,133						1,133
Total						$	424					$	381					$	1,133					$	1,938

Schedule of Activity in Allowance for Loan Losses by Portfolio Segment

The following table summarizes the activity in the allowance for credit losses on loans by portfolio segment for the three months ended March 31, 2023 and 2022:

($ in thousands)						Commercial Real Estate						SBA— Real Estate						SBA —Non- Real Estate						C&I						Home Mortgage						Consumer						Total
Three Months Ended March 31, 2023
Beginning balance						$	6,951					$	1,607					$	207					$	1,643					$	8,826					$	7					$	19,241
Impact of CECL adoption						875						(238)						(142)						(320)						1,753						(4)						1,924
(Reversal of) provision for credit losses						(951)						(140)						(7)						(53)						893						—						(258)
Charge-offs						(91)						(11)						(14)						—						—						—						(116)
Recoveries						—						—						23						—						—						—						23
Ending balance						$	6,784					$	1,218					$	67					$	1,270					$	11,472					$	3					$	20,814
Three Months Ended March 31, 2022
Beginning balance						$	8,150					$	2,022					$	199					$	2,848					$	2,891					$	13					$	16,123
(Reversal of) provision for credit losses (1)						(1,670)						(258)						(47)						644						1,877						—						546
Charge-offs						—						(14)						—						—						—						—						(14)
Recoveries						—						—						17						—						—						—						17
Ending balance						$	6,480					$	1,750					$	169					$	3,492					$	4,768					$	13					$	16,672

(1)Excludes reversal of uncollectible accrued interest receivable of $205 thousand for the three months ended March 31, 2022.

The following table presents a composition of (reversal of) provision for credit losses for the period presented:

($ in thousands)						Three Months Ended March 31, 2023
Reversal of credit losses on loans						$	(258)
Reversal of credit losses on off-balance sheet commitments						(80)
Total reversal of credit losses						$	(338)

The following table presents the allowance for credit losses on loans and recorded investment (not including accrued interest receivable) by portfolio segment and impairment methodology as of March 31, 2023 and December 31, 2022:

($ in thousands)						Individually Evaluated for Impairment						Collectively Evaluated for Impairment						Total
As of March 31, 2023
Allowance for credit losses:
Commercial real estate						$	—					$	6,784					$	6,784
SBA—real estate						34						1,184						1,218
SBA—non-real estate						—						67						67
C&I						259						1,011						1,270
Home mortgage						—						11,472						11,472
Consumer						—						3						3
Total						$	293					$	20,521					$	20,814
Loans (1):
Commercial real estate						$	—					$	833,615					$	833,615
SBA—real estate						806						224,913						225,719
SBA—non-real estate						—						13,275						13,275
C&I						270						117,571						117,841
Home mortgage						1,133						499,502						500,635
Consumer						—						1,400						1,400
Total						$	2,209					$	1,690,276					$	1,692,485
As of December 31, 2022
Allowance for credit losses:
Commercial real estate						$	—					$	6,951					$	6,951
SBA—real estate						—						1,607						1,607
SBA—non-real estate						—						207						207
C&I						279						1,364						1,643
Home mortgage						—						8,826						8,826
Consumer						—						7						7
Total						$	279					$	18,962					$	19,241
Loans (1):
Commercial real estate						$	—					$	842,208					$	842,208
SBA—real estate						423						220,917						221,340
SBA—non-real estate						—						13,377						13,377
C&I						279						116,672						116,951
Home mortgage						—						482,949						482,949
Consumer						—						1,467						1,467
Total						$	702					$	1,677,590					$	1,678,292

(1)Excludes accrued interest receivables of $6.4 million both as of March 31, 2023 and December 31, 2022.

The following table presents the recorded investment in impaired loans and the specific allowance for loan losses as of December 31, 2022.

						December 31, 2022 (1)
($ in thousands)						Unpaid Principal Balance						Recorded Investment With No Allowance						Recorded Investment With Allowance						Related Allowance
SBA—real estate						$	423					$	423					$	—					$	—
C&I						279						—						279						279
Total						$	702					$	423					$	279					$	279

(1) The difference between the unpaid principal balance (net of partial charge-offs) and the recorded investment in the loans was not considered to be material

The following table presents the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans by portfolio segment for the years ended December 31, 2022. The difference between interest income recognized and cash basis interest recognized was immaterial.

						Three Months Ended March 31, 2022
($ in thousands)						Average Recorded Investment						Interest Income Recognized
SBA—real estate						$	818					$	—
C&I						309						—
Home mortgage						—						—
Total						$	1,127					$	—

Schedule of Recorded Investment in Nonaccrual Loans and Loans Past Due 90 or More Days and Still Accruing Interest by Portfolio Segment

The following table presents the recorded investment in nonaccrual loans and loans past due 90 or more days and still accruing interest, by portfolio as of March 31, 2023 and December 31, 2022:

($ in thousands)						Nonaccrual Loans with a Related Allowance for Credit Losses						Nonaccrual Loans without a Related Allowance for Credit Losses						Total Nonaccrual Loans						90 or More Days Past Due & Still Accruing						Total
As of March 31, 2023
SBA—real estate						$	1,500					$	424					$	1,924					$	—					$	1,924
SBA—non-real estate						653						—						653						246						899
C&I						270						—						270						—						270
Home mortgage						132						1,133						1,265						—						1,265
Total						$	2,555					$	1,557					$	4,112					$	246					$	4,358
As of December 31, 2022
SBA—real estate																		$	423					$	—					$	423
SBA—non-real estate																		657						442						1,099
C&I																		279						—						279
Home mortgage																		1,280						—						1,280
Total																		$	2,639					$	442					$	3,081

Schedule of Aging Analysis of Recorded Investment in Past Due Loans

The following table represents the aging analysis of the recorded investment in past due loans as of March 31, 2023 and December 31, 2022:

($ in thousands)						30-59 Days Past Due						60-89 Days Past Due						> 90 Days Past Due						Total Past Due						Loans Not Past Due						Total (1)
As of March 31, 2023
Commercial real estate						$	—					$	—					$	—					$	—					$	833,615					$	833,615
SBA—real estate						430						—						1,500						1,930						221,859						225,719
SBA—non-real estate						95						—						691						786						11,703						13,275
C&I						—						—						—						—						117,841						117,841
Home mortgage						5,227						—						342						5,569						489,497						500,635
Consumer						—						—						—						—						1,400						1,400
Total						$	5,752					$	—					$	2,533					$	8,285					$	1,675,915					$	1,692,485
As of December 31, 2022
Commercial real estate						$	—					$	—					$	—					$	—					$	842,208					$	842,208
SBA—real estate						199						175						—						374						220,592						221,340
SBA—non-real estate						117						49						381						547						12,283						13,377
C&I						—						—						441						441						116,069						116,951
Home mortgage						1,707						1,522						342						3,571						475,807						482,949
Consumer						—						—						—						—						1,467						1,467
Total						$	2,023					$	1,746					$	1,164					$	4,933					$	1,668,426					$	1,678,292

(1)Excludes accrued interest receivables of $6.4 million both as of March 31, 2023 and December 31, 2022.

Schedule of Credit Risk Ratings by Portfolio Segment

The following table presents the loan portfolio's amortized cost by loan type, risk rating and year of origination as of as of March 31, 2023:

						March 31, 2023
						Term Loans by Origination Year																																				Revolving Loans						Total (1)
($ in thousands)						2023						2022						2021						2020						2019						Prior
Commercial real estate
Pass						$	17,774					$	216,444					$	150,672					$	101,254					$	147,925					$	187,802					$	11,184					$	833,055
Special mention						—						—						—						—						—						560						—						560
Substandard						—						—						—						—						—						—						—						—
Doubtful						—						—						—						—						—						—						—						—
Subtotal						$	17,774					$	216,444					$	150,672					$	101,254					$	147,925					$	188,362					$	11,184					$	833,615
Current period charge-offs						$	—					$	—					$	—					$	—					$	91					$	—					$	—					$	91
SBA— real estate
Pass						$	2,686					$	49,259					$	32,031					$	29,056					$	32,328					$	75,815					$	—					$	221,175
Special mention						—						—						—						—						936						1,121						—						2,057
Substandard						—						—						1,500						—						—						987						—						2,487
Doubtful						—						—						—						—						—						—						—						—
Subtotal						$	2,686					$	49,259					$	33,531					$	29,056					$	33,264					$	77,923					$	—					$	225,719

Current period charge-offs						$	—					$	—					$	11					$	—					$	—					$	—					$	—					$	11
SBA—non-real estate
Pass						$	1,235					$	2,958					$	539					$	2,146					$	1,070					$	4,586					$	—					$	12,534
Special mention						—						—						—						—						—						—						—						—
Substandard						—						—						—						—						—						396						—						396
Doubtful						—						—						—						—						—						345						—						345
Subtotal						$	1,235					$	2,958					$	539					$	2,146					$	1,070					$	5,327					$	—					$	13,275
Current period charge-offs						$	—					$	—					$	—					$	—					$	—					$	14					$	—					$	14
C&I
Pass						$	4,054					$	24,304					$	26,764					$	6,533					$	5,564					$	2,841					$	47,511					$	117,571
Special mention						—						—						—						—						—						—						—						—
Substandard						—						—						—						—						—						270						—						270
Doubtful						—						—						—						—						—						—						—						—
Subtotal						$	4,054					$	24,304					$	26,764					$	6,533					$	5,564					$	3,111					$	47,511					$	117,841
Current period charge-offs						$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—
Home mortgage
Pass						$	26,513					$	325,326					$	82,729					$	20,196					$	9,858					$	34,748					$	—					$	499,370
Special mention						—						—						—						—						—						—						—						—
Substandard						—						—						342						791						—						132						—						1,265
Doubtful						—						—						—						—						—						—						—						—
Subtotal						$	26,513					$	325,326					$	83,071					$	20,987					$	9,858					$	34,880					$	—					$	500,635
Current period charge-offs						$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—
Consumer
Pass						$	53					$	—					$	—					$	—					$	149					$	200					$	998					$	1,400
Special mention						—						—						—						—						—						—						—						—
Substandard						—						—						—						—						—						—						—						—
Doubtful						—						—						—						—						—						—						—						—
Subtotal						$	53					$	—					$	—					$	—					$	149					$	200					$	998					$	1,400
Current period charge-offs						$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—
Total loans
Pass						$	52,315					$	618,291					$	292,735					$	159,185					$	196,894					$	305,992					$	59,693					$	1,685,105
Special mention						—						—						—						—						936						1,681						—						2,617
Substandard						—						—						1,842						791						—						1,785						—						4,418
Doubtful						—						—						—						—						—						345						—						345
Subtotal						$	52,315					$	618,291					$	294,577					$	159,976					$	197,830					$	309,803					$	59,693					$	1,692,485
Current period charge-offs						$	—		—			$	—					$	11					$	—					$	91					$	14					$	—					$	116

(1)Excludes accrued interest receivables of $6.4 million as of March 31, 2023.

The following table presents the loan portfolio's amortized cost by loan type and risk rating of as of December 31, 2022:

($ in thousands)						Pass						Special Mention						Substandard						Doubtful						Total (1)
As of December 31, 2022
Commercial real estate						$	841,645					$	563					$	—					$	—					$	842,208
SBA—real estate						220,348						—						992						—						221,340
SBA—non-real estate						12,621						—						480						276						13,377
C&I						116,672						—						279						—						116,951
Home mortgage						481,669						—						1,280						—						482,949
Consumer						1,467						—						—						—						1,467
Total						$	1,674,422					$	563					$	3,031					$	276					$	1,678,292

(1)Excludes accrued interest receivables of $6.4 million as of December 31, 2022

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Tabular disclosure of allowance for credit loss on financing receivable.

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Tabular disclosure of financing receivables by credit quality indicator. The credit quality indicator is a statistic about the credit quality of financing receivables. Examples include, but not limited to, consumer credit risk scores, credit-rating-agency ratings, an entity's internal credit risk grades, loan-to-value ratios, collateral, collection experience and other internal metrics.

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-Publisher FASB
-Name Accounting Standards Codification
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