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Loans and Allowance for Loan Losses | 9 Months Ended
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Sep. 30, 2022
Receivables [Abstract] |
Loans and Allowance for Loan Losses | NOTE 5. Loans and Allowance for Loan Losses The composition of loans at September 30, 2022 and December 31, 2021 was as follows:
|  | September 30, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
|  | (in thousands) |
Mortgage loans on real estate: |  |  |  |  |  |
Construction and land development |  | $ | 69,255 |  |  | $ | 71,191 |
Secured by farmland |  |  | 16,220 |  |  |  | 13,710 |
Secured by 1-4 family residential properties |  |  | 280,880 |  |  |  | 263,723 |
Multifamily |  |  | 38,877 |  |  |  | 29,093 |
Commercial |  |  | 491,364 |  |  |  | 377,051 |
Commercial and industrial loans |  |  | 179,848 |  |  |  | 143,378 |
Consumer installment loans |  |  | 107,877 |  |  |  | 67,281 |
All other loans |  |  | 11,167 |  |  |  | 16,798 |
Total loans |  | $ | 1,195,488 |  |  | $ | 982,225 |
Net deferred loan costs and premiums |  |  | 6,353 |  |  |  | 3,495 |
Allowance for loan losses |  |  | (10,742 | ) |  |  | (8,787 | )
|  | $ | 1,191,099 |  |  | $ | 976,933 |
At September 30, 2022, the Company was servicing $178.0 million of marine loans for other financial institutions which are not included in the table above. Also excluded from the table above are net servicing assets of $466 thousand at September 30, 2022, which are recorded in other assets in the Consolidated Balance Sheets. When loans are sold with servicing retained, servicing assets are recorded which represent the Company's right to service loans that were sold. Servicing assets are initially recorded by the Company at fair value and are subsequently amortized in proportion to, and over the period of, estimated net servicing income. Changes in the allowance for loan losses for the nine months ended September 30, 2022 and 2021 and the year ended December 31, 2021 were as follows:
|  | Nine Months Ended |  |  | Year Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | December 31, |  |  | September 30, |
|  | 2022 |  |  | 2021 |  |  | 2021 |
|  |  |  |  | (in thousands) |  |  |  |
Balance, beginning |  | $ | 8,787 |  |  | $ | 7,096 |  |  | $ | 7,096 |
Provision for loan losses |  |  | 900 |  |  |  | 1,483 |  |  |  | 1,183 |
Recoveries added to the allowance |  |  | 1,224 |  |  |  | 318 |  |  |  | 238 |
Loan losses charged to the allowance |  |  | (169 | ) |  |  | (110 | ) |  |  | (69 | )
Balance, ending |  | $ | 10,742 |  |  | $ | 8,787 |  |  | $ | 8,448 |
Nonaccrual and past due loans by class at September 30, 2022 and December 31, 2021 were as follows:
|  | September 30, 2022 |
|  | (in thousands) |
|  | 30 - 59 Days Past Due |  |  | 60 - 89 Days Past Due |  |  | 90 or More Days Past Due |  |  | Total Past Due |  |  | Current |  |  | Total Loans |  |  | 90 or More Days Past Due Still Accruing |  |  | Nonaccrual Loans |
Commercial - Non Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Industrial |  | $ | 301 |  |  | $ | 32 |  |  | $ | 73 |  |  | $ | 406 |  |  | $ | 179,442 |  |  | $ | 179,848 |  |  | $ | — |  |  | $ | 73 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 219,493 |  |  |  | 219,493 |  |  |  | — |  |  |  | 22 |
Non-owner occupied |  |  | — |  |  |  | 271 |  |  |  | — |  |  |  | 271 |  |  |  | 271,600 |  |  |  | 271,871 |  |  |  | — |  |  |  | 1,353 |
Construction and Farmland: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | — |  |  |  | 208 |  |  |  | — |  |  |  | 208 |  |  |  | 9,818 |  |  |  | 10,026 |  |  |  | — |  |  |  | — |
Commercial |  |  | — |  |  |  | — |  |  |  | 103 |  |  |  | 103 |  |  |  | 75,346 |  |  |  | 75,449 |  |  |  | — |  |  |  | 655 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Installment |  |  | 262 |  |  |  | — |  |  |  | — |  |  |  | 262 |  |  |  | 107,615 |  |  |  | 107,877 |  |  |  | — |  |  |  | 1 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity Lines |  |  | 137 |  |  |  | — |  |  |  | — |  |  |  | 137 |  |  |  | 40,835 |  |  |  | 40,972 |  |  |  | — |  |  |  | 19 |
Single family |  |  | — |  |  |  | 172 |  |  |  | 156 |  |  |  | 328 |  |  |  | 239,580 |  |  |  | 239,908 |  |  |  | — |  |  |  | 304 |
Multifamily |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 38,877 |  |  |  | 38,877 |  |  |  | — |  |  |  | — |
All Other Loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11,167 |  |  |  | 11,167 |  |  |  | — |  |  |  | — |
Total |  | $ | 700 |  |  | $ | 683 |  |  | $ | 332 |  |  | $ | 1,715 |  |  | $ | 1,193,773 |  |  | $ | 1,195,488 |  |  | $ | — |  |  | $ | 2,427 |
|  | December 31, 2021 |
|  | (in thousands) |
|  | 30 - 59 Days Past Due |  |  | 60 - 89 Days Past Due |  |  | 90 or More Days Past Due |  |  | Total Past Due |  |  | Current |  |  | Total Loans |  |  | 90 or More Past Due Still Accruing |  |  | Nonaccrual Loans |
Commercial - Non Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Industrial |  | $ | 8 |  |  | $ | 7 |  |  | $ | — |  |  | $ | 15 |  |  | $ | 143,363 |  |  | $ | 143,378 |  |  | $ | — |  |  | $ | — |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 188,839 |  |  |  | 188,839 |  |  |  | — |  |  |  | 124 |
Non-owner occupied |  |  | 146 |  |  |  | — |  |  |  | 130 |  |  |  | 276 |  |  |  | 187,936 |  |  |  | 188,212 |  |  |  | — |  |  |  | 1,547 |
Construction and Farmland: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10,077 |  |  |  | 10,077 |  |  |  | — |  |  |  | — |
Commercial |  |  | — |  |  |  | 126 |  |  |  | 108 |  |  |  | 234 |  |  |  | 74,590 |  |  |  | 74,824 |  |  |  | — |  |  |  | 234 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Installment |  |  | 6 |  |  |  | — |  |  |  | — |  |  |  | 6 |  |  |  | 67,275 |  |  |  | 67,281 |  |  |  | — |  |  |  | 3 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity Lines |  |  | 13 |  |  |  | — |  |  |  | — |  |  |  | 13 |  |  |  | 35,849 |  |  |  | 35,862 |  |  |  | — |  |  |  | 29 |
Single family |  |  | 409 |  |  |  | 238 |  |  |  | 434 |  |  |  | 1,081 |  |  |  | 226,780 |  |  |  | 227,861 |  |  |  | 43 |  |  |  | 786 |
Multifamily |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 29,093 |  |  |  | 29,093 |  |  |  | — |  |  |  | — |
All Other Loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 16,798 |  |  |  | 16,798 |  |  |  | — |  |  |  | — |
Total |  | $ | 582 |  |  | $ | 371 |  |  | $ | 672 |  |  | $ | 1,625 |  |  | $ | 980,600 |  |  | $ | 982,225 |  |  | $ | 43 |  |  | $ | 2,723 |
Allowance for loan losses by segment at September 30, 2022 and December 31, 2021 were as follows:
|  | As of and For the Nine Months Ended |
|  | September 30, 2022 |
|  | (in thousands) |
|  | Construction and Farmland |  |  | Residential Real Estate |  |  | Commercial Real Estate |  |  | Commercial |  |  | Consumer |  |  | All Other Loans |  |  | Unallocated |  |  | Total |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 2,794 |  |  | $ | 1,750 |  |  | $ | 1,650 |  |  | $ | 1,656 |  |  | $ | 646 |  |  | $ | 291 |  |  | $ | — |  |  | $ | 8,787 |
Charge-Offs |  |  | — |  |  |  | (2 | ) |  |  | — |  |  |  | — |  |  |  | (67 | ) |  |  | (100 | ) |  |  | — |  |  |  | (169 | )
Recoveries |  |  | 5 |  |  |  | 883 |  |  |  | 197 |  |  |  | 107 |  |  |  | 21 |  |  |  | 11 |  |  |  | — |  |  |  | 1,224 |
Provision |  |  | (84 | ) |  |  | (862 | ) |  |  | 352 |  |  |  | 702 |  |  |  | 397 |  |  |  | 185 |  |  |  | 210 |  |  |  | 900 |
Ending balance |  | $ | 2,715 |  |  | $ | 1,769 |  |  | $ | 2,199 |  |  | $ | 2,465 |  |  | $ | 997 |  |  | $ | 387 |  |  | $ | 210 |  |  | $ | 10,742 |
Ending balance: Individually evaluated for impairment |  | $ | — |  |  | $ | 32 |  |  | $ | — |  |  | $ | 374 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 406 |
Ending balance: collectively evaluated for impairment |  | $ | 2,715 |  |  | $ | 1,737 |  |  | $ | 2,199 |  |  | $ | 2,091 |  |  | $ | 997 |  |  | $ | 387 |  |  | $ | 210 |  |  | $ | 10,336 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 85,475 |  |  | $ | 319,757 |  |  | $ | 491,364 |  |  | $ | 179,848 |  |  | $ | 107,877 |  |  | $ | 11,167 |  |  | $ | — |  |  | $ | 1,195,488 |
Ending balance individually evaluated for impairment |  | $ | 1,042 |  |  | $ | 3,482 |  |  | $ | 1,989 |  |  | $ | 453 |  |  | $ | 24 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,990 |
Ending balance collectively evaluated for impairment |  | $ | 84,433 |  |  | $ | 316,275 |  |  | $ | 489,375 |  |  | $ | 179,395 |  |  | $ | 107,853 |  |  | $ | 11,167 |  |  | $ | — |  |  | $ | 1,188,498 |
|  | December 31, 2021 |
|  | (in thousands) |
|  | Construction and Farmland |  |  | Residential Real Estate |  |  | Commercial Real Estate |  |  | Commercial |  |  | Consumer |  |  | All Other Loans |  |  | Unallocated |  |  | Total |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 1,604 |  |  | $ | 1,929 |  |  | $ | 1,645 |  |  | $ | 1,374 |  |  | $ | 198 |  |  | $ | 346 |  |  | $ | — |  |  | $ | 7,096 |
Charge-Offs |  |  | — |  |  |  | (13 | ) |  |  | — |  |  |  | (10 | ) |  |  | (19 | ) |  |  | (68 | ) |  |  | — |  |  |  | (110 | )
Recoveries |  |  | 12 |  |  |  | 240 |  |  |  | 7 |  |  |  | 18 |  |  |  | 29 |  |  |  | 12 |  |  |  | — |  |  |  | 318 |
Provision |  |  | 1,178 |  |  |  | (406 | ) |  |  | (2 | ) |  |  | 274 |  |  |  | 438 |  |  |  | 1 |  |  |  | — |  |  |  | 1,483 |
Ending balance |  | $ | 2,794 |  |  | $ | 1,750 |  |  | $ | 1,650 |  |  | $ | 1,656 |  |  | $ | 646 |  |  | $ | 291 |  |  | $ | — |  |  | $ | 8,787 |
Ending balance: Individually evaluated for impairment |  | $ | — |  |  | $ | 39 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 39 |
Ending balance: collectively evaluated for impairment |  | $ | 2,794 |  |  | $ | 1,711 |  |  | $ | 1,650 |  |  | $ | 1,656 |  |  | $ | 646 |  |  | $ | 291 |  |  | $ | — |  |  | $ | 8,748 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 84,901 |  |  | $ | 292,816 |  |  | $ | 377,051 |  |  | $ | 143,378 |  |  | $ | 67,281 |  |  | $ | 16,798 |  |  | $ | — |  |  | $ | 982,225 |
Ending balance individually evaluated for impairment |  | $ | 257 |  |  | $ | 2,778 |  |  | $ | 2,295 |  |  | $ | 108 |  |  | $ | 16 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,454 |
Ending balance collectively evaluated for impairment |  | $ | 84,644 |  |  | $ | 290,038 |  |  | $ | 374,756 |  |  | $ | 143,270 |  |  | $ | 67,265 |  |  | $ | 16,798 |  |  | $ | — |  |  | $ | 976,771 |
Impaired loans by class as of and for the periods ended September 30, 2022 and December 31, 2021 were as follows:
|  | As of |
|  | September 30, 2022 |
|  | (in thousands) |
|  | Unpaid Principal Balance |  |  | Recorded Investment |  |  | Related Allowance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
With no related allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - Non Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Industrial |  | $ | 91 |  |  | $ | 79 |  |  | $ | — |  |  | $ | 94 |  |  | $ | 4 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 208 |  |  |  | 204 |  |  |  | — |  |  |  | 209 |  |  |  | 9 |
Non-owner occupied |  |  | 2,029 |  |  |  | 1,785 |  |  |  | — |  |  |  | 1,792 |  |  |  | 15 |
Construction and Farmland: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial |  |  | 1,059 |  |  |  | 1,045 |  |  |  | — |  |  |  | 1,056 |  |  |  | 13 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Installment |  |  | 25 |  |  |  | 24 |  |  |  | — |  |  |  | 26 |  |  |  | 1 |
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | 23 |  |  |  | 19 |  |  |  | — |  |  |  | 20 |  |  |  | — |
Single family |  |  | 2,895 |  |  |  | 2,798 |  |  |  | — |  |  |  | 2,836 |  |  |  | 76 |
Multifamily |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other Loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 6,330 |  |  | $ | 5,954 |  |  | $ | — |  |  | $ | 6,033 |  |  | $ | 118 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - Non Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Industrial |  | $ | 379 |  |  | $ | 374 |  |  | $ | 374 |  |  | $ | 413 |  |  | $ | 17 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Non-owner occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Construction and Farmland: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Installment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Single family |  |  | 699 |  |  |  | 678 |  |  |  | 32 |  |  |  | 687 |  |  |  | 20 |
Multifamily |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other Loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 1,078 |  |  | $ | 1,052 |  |  | $ | 406 |  |  | $ | 1,100 |  |  | $ | 37 |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 470 |  |  | $ | 453 |  |  | $ | 374 |  |  | $ | 507 |  |  | $ | 21 |
Commercial Real Estate |  |  | 2,237 |  |  |  | 1,989 |  |  |  | — |  |  |  | 2,001 |  |  |  | 24 |
Construction and Farmland |  |  | 1,059 |  |  |  | 1,045 |  |  |  | — |  |  |  | 1,056 |  |  |  | 13 |
Consumer |  |  | 25 |  |  |  | 24 |  |  |  | — |  |  |  | 26 |  |  |  | 1 |
Residential |  |  | 3,617 |  |  |  | 3,495 |  |  |  | 32 |  |  |  | 3,543 |  |  |  | 96 |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 7,408 |  |  | $ | 7,006 |  |  | $ | 406 |  |  | $ | 7,133 |  |  | $ | 155 |
(1) Recorded investment is defined as the summation of the outstanding principal balance, accrued interest, net deferred loan fees or costs, and any partial charge-offs. Accrued interest and net deferred loan fees or costs totaled $16 thousand at September 30, 2022.
|  | As of |
|  | December 31, 2021 |
|  | (in thousands) |
|  | Unpaid Principal Balance |  |  | Recorded Investment |  |  | Related Allowance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
With no related allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - Non Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Industrial |  | $ | 143 |  |  | $ | 109 |  |  | $ | — |  |  | $ | 166 |  |  | $ | 11 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 148 |  |  |  | 124 |  |  |  | — |  |  |  | 142 |  |  |  | — |
Non-owner occupied |  |  | 2,539 |  |  |  | 2,177 |  |  |  | — |  |  |  | 2,186 |  |  |  | — |
Construction and Farmland: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial |  |  | 271 |  |  |  | 257 |  |  |  | — |  |  |  | 267 |  |  |  | 9 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Installment |  |  | 17 |  |  |  | 16 |  |  |  | — |  |  |  | 19 |  |  |  | 1 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | 35 |  |  |  | 29 |  |  |  | — |  |  |  | 32 |  |  |  | — |
Single family |  |  | 2,088 |  |  |  | 1,974 |  |  |  | — |  |  |  | 2,012 |  |  |  | 62 |
Multifamily |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other Loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 5,241 |  |  | $ | 4,686 |  |  | $ | — |  |  | $ | 4,824 |  |  | $ | 83 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - Non Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Industrial |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Non-owner occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Construction and Farmland: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Installment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Single family |  |  | 811 |  |  |  | 787 |  |  |  | 39 |  |  |  | 802 |  |  |  | 30 |
Multifamily |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other Loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 811 |  |  | $ | 787 |  |  | $ | 39 |  |  | $ | 802 |  |  | $ | 30 |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 143 |  |  | $ | 109 |  |  | $ | — |  |  | $ | 166 |  |  | $ | 11 |
Commercial Real Estate |  |  | 2,687 |  |  |  | 2,301 |  |  |  | — |  |  |  | 2,328 |  |  |  | — |
Construction and Farmland |  |  | 271 |  |  |  | 257 |  |  |  | — |  |  |  | 267 |  |  |  | 9 |
Consumer |  |  | 17 |  |  |  | 16 |  |  |  | — |  |  |  | 19 |  |  |  | 1 |
Residential |  |  | 2,934 |  |  |  | 2,790 |  |  |  | 39 |  |  |  | 2,846 |  |  |  | 92 |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 6,052 |  |  | $ | 5,473 |  |  | $ | 39 |  |  | $ | 5,626 |  |  | $ | 113 |
(1) Recorded investment is defined as the summation of the outstanding principal balance, accrued interest, net deferred loan fees or costs, and any partial charge-offs. Accrued interest and net deferred loan fees or costs totaled $19 thousand at December 31, 2021. When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is in nonaccrual status, all payments are applied to principal under the cost-recovery method. For financial statement purposes, the recorded investment in nonaccrual loans is the actual principal balance reduced by payments that would otherwise have been applied to interest. When reporting information on these loans to the applicable customers, the unpaid principal balance is reported as if payments were applied to principal and interest under the original terms of the loan agreements. Therefore, the unpaid principal balance reported to the customer would be higher than the recorded investment in the loan for financial statement purposes. When the ultimate collectability of the total principal of the impaired loan is not in doubt and the loan is in nonaccrual status, contractual interest is credited to interest income when received under the cash-basis method. The Company uses a rating system for evaluating the risks associated with non-consumer loans. Consumer loans are not evaluated for risk unless the characteristics of the loan fall within classified categories. Consumer loans are evaluated for collection based on payment performance. Descriptions of these ratings are as follows:
Pass | Pass loans exhibit acceptable history of profits, cash flow ability and liquidity. Sufficient cash flow exists to service the loan. All obligations have been paid by the borrower in an as agreed manner.
Special Mention | Special mention loans exhibit negative trends and potential weakness that, if left uncorrected, may negatively affect the borrower’s ability to repay its obligations. The risk of default is not imminent and the borrower still demonstrates sufficient financial strength to service debt.
Substandard | Substandard loans exhibit well defined weaknesses resulting in a higher probability of default. The borrowers exhibit adverse financial trends and a diminishing ability or willingness to service debt.
Doubtful | Doubtful loans exhibit all of the characteristics inherent in substandard loans; however given the severity of weaknesses, the collection of 100% of the principal is unlikely under current conditions.
Loss | Loss loans are considered uncollectible over a reasonable period of time and of such little value that its continuance as a bankable asset is not warranted.
Credit quality information by class at September 30, 2022 and December 31, 2021 was as follows:
|  | As of |
|  | September 30, 2022 |
|  | (in thousands) |
INTERNAL RISK RATING GRADES |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Total |
Commercial - Non Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Industrial |  | $ | 179,618 |  |  | $ | 157 |  |  | $ | 73 |  |  | $ | — |  |  | $ | — |  |  | $ | 179,848 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 200,192 |  |  |  | 19,279 |  |  |  | 22 |  |  |  | — |  |  |  | — |  |  |  | 219,493 |
Non-owner occupied |  |  | 261,315 |  |  |  | 8,556 |  |  |  | 2,000 |  |  |  | — |  |  |  | — |  |  |  | 271,871 |
Construction and Farmland: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | 9,818 |  |  |  | 208 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10,026 |
Commercial |  |  | 63,482 |  |  |  | 3,203 |  |  |  | 8,764 |  |  |  | — |  |  |  | — |  |  |  | 75,449 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity Lines |  |  | 40,952 |  |  |  | — |  |  |  | 20 |  |  |  | — |  |  |  | — |  |  |  | 40,972 |
Single family |  |  | 235,445 |  |  |  | 3,041 |  |  |  | 1,306 |  |  |  | 116 |  |  |  | — |  |  |  | 239,908 |
Multifamily |  |  | 38,877 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 38,877 |
All other loans |  |  | 11,167 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11,167 |
Total |  | $ | 1,040,866 |  |  | $ | 34,444 |  |  | $ | 12,185 |  |  | $ | 116 |  |  | $ | — |  |  | $ | 1,087,611 |
|  | Performing |  |  | Nonperforming |
Consumer Credit Exposure by Payment Activity |  | $ | 107,876 |  |  | $ | 1 |
|  | As of |
|  | December 31, 2021 |
|  | (in thousands) |
INTERNAL RISK RATING GRADES |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Total |
Commercial - Non Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & Industrial |  | $ | 143,197 |  |  | $ | 176 |  |  | $ | 5 |  |  | $ | — |  |  | $ | — |  |  | $ | 143,378 |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner Occupied |  |  | 185,978 |  |  |  | 2,703 |  |  |  | 158 |  |  |  | — |  |  |  | — |  |  |  | 188,839 |
Non-owner occupied |  |  | 180,830 |  |  |  | 4,819 |  |  |  | 2,563 |  |  |  | — |  |  |  | — |  |  |  | 188,212 |
Construction and Farm land: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | 10,077 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10,077 |
Commercial |  |  | 59,318 |  |  |  | 15,198 |  |  |  | 308 |  |  |  | — |  |  |  | — |  |  |  | 74,824 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity Lines |  |  | 35,832 |  |  |  | — |  |  |  | 30 |  |  |  | — |  |  |  | — |  |  |  | 35,862 |
Single family |  |  | 224,510 |  |  |  | 1,601 |  |  |  | 1,633 |  |  |  | 117 |  |  |  | — |  |  |  | 227,861 |
Multifamily |  |  | 26,952 |  |  |  | 2,141 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 29,093 |
All other loans |  |  | 16,798 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 16,798 |
Total |  | $ | 883,492 |  |  | $ | 26,638 |  |  | $ | 4,697 |  |  | $ | 117 |  |  | $ | — |  |  | $ | 914,944 |
|  | Performing |  |  | Nonperforming |
Consumer Credit Exposure by Payment Activity |  | $ | 67,275 |  |  | $ | 6 |

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI https://asc.fasb.org/subtopic&trid=2196772 + Details
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