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Note 4 - Loans and Allowance for Loan Losses | 6 Months Ended
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Jun. 30, 2023
Notes to Financial Statements |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 4. Loans and Allowance for Credit Losses Additional information regarding the Company’s loan and ACL on loan policies and loan portfolios follow: A substantial portion of the loan portfolio is represented by mortgage loans to customers in the Louisville, Kentucky metropolitan statistical area (MSA). The ability of the Company’s customers to honor their loan agreements is largely dependent upon the real estate and general economic conditions in this area. The recognition of income on a loan is discontinued and previously accrued interest is reversed, when interest or principal payments become 90 days past due unless, in the opinion of management, the outstanding interest remains collectible. Past due status is determined based on contractual terms. Generally, by applying the cash receipts method, interest income is subsequently recognized only as received until the loan is returned to accrual status. The cash receipts method is used when the likelihood of further loss on the loan is remote. Otherwise, the Company applies the cost recovery method and applies all payments as a reduction of the unpaid principal balance until the loan qualifies for return to accrual status. Interest income on impaired loans is recognized using the cost recovery method, unless the likelihood of further loss on the loan is remote. A loan is restored to accrual status when all principal and interest payments are brought current and the borrower has demonstrated the ability to make future payments of principal and interest as scheduled, which generally requires that the borrower demonstrate a period of performance of at least six consecutive months. For portfolio segments other than consumer loans, the Company’s practice is to charge-off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, the loan’s classification as a loss by regulatory examiners, or for other reasons. A partial charge-off is recorded on a loan when the uncollectibility of a portion of the loan has been confirmed, such as when a loan is discharged in bankruptcy, the collateral is liquidated, a loan is restructured at a reduced principal balance, or other identifiable events that lead management to determine the full principal balance of the loan will not be repaid. A specific reserve is recognized as a component of the ACL on loans individually evaluated for impairment. Partial charge-offs on nonperforming and impaired loans are included in the Company’s historical loss experience used to estimate the collective (pooled) component of the ACL on loans as discussed below. Specific reserves are not considered charge-offs in management’s analysis of the ACL on loans because they are estimates and the outcome of the loan relationship is undetermined. Consumer loans not secured by real estate are typically charged off at 90 days past due, or earlier if deemed uncollectible, unless the loans are in the process of collection. Overdrafts are charged off after 45 days past due. Charge-offs are typically recorded on loans secured by real estate when the property is foreclosed upon. Refer to Note 2 ACL – Loans for additional information and accounting policies related to the ACL on loans. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, past loan modifications, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Values for collateral dependent loans are generally based on appraisals obtained from independent licensed real estate appraisers, with adjustments applied for estimated costs to sell the property, costs to complete unfinished or repair damaged property and other factors. New appraisals are generally obtained for all significant properties when a loan is identified as impaired, and a property is considered significant if the value of the property is estimated to exceed $200,000. Subsequent appraisals are obtained as needed or if management believes there has been a significant change in the market value of the property. In instances where it is not deemed necessary to obtain a new appraisal, management bases its impairment and ACL analysis on the original appraisal with adjustments for current conditions based on management’s assessment of market factors and management’s inspection of the property. At June 30, 2023 all of the Bank’s loans evaluated on an individual basis were considered collateral dependent. At June 30, 2023, the balance of foreclosed real estate included $63,000 of residential real estate properties where physical possession had been obtained. The Company held no foreclosed real estate at December 31, 2022. At June 30, 2023 and December 31, 2022, the amortized cost basis in loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $416,000 and $104,000, respectively. Loans at June 30, 2023 and December 31, 2022 consisted of the following:
|  | June 30, |  |  | December 31, |
(In thousands) |  | 2023 |  |  | 2022 |
|  |  |  |  |  | (As reclassified) |
1-4 Family Residential Mortgage |  | $ | 128,216 |  |  | $ | 116,269 |
Home Equity and Second Mortgage |  |  | 57,401 |  |  |  | 57,872 |
Multifamily Residential |  |  | 39,331 |  |  |  | 38,973 |
1-4 Family Residential Construction |  |  | 17,657 |  |  |  | 16,575 |
Other Construction, Development and Land |  |  | 57,542 |  |  |  | 47,632 |
Commercial Real Estate |  |  | 169,310 |  |  |  | 161,362 |
Commercial Business |  |  | 65,055 |  |  |  | 68,066 |
Other Consumer |  |  | 54,727 |  |  |  | 56,768 |
Principal loan balance |  |  | 589,239 |  |  |  | 563,517 |
Deferred loan origination fees and costs, net |  |  | 1,220 |  |  |  | 1,213 |
Allowance for credit losses |  |  | (7,515 | ) |  |  | (6,772 | )
Loans, net |  | $ | 582,944 |  |  | $ | 557,958 |
The following table provides the components of the Company’s amortized cost basis in loans at June 30, 2023:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 1-4 Family |  |  | Home Equity |  |  |  |  |  |  | 1-4 Family |  |  | Construction, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Residential |  |  | and Second |  |  | Multifamily |  |  | Residential |  |  | Development |  |  | Commercial |  |  | Commercial |  |  | Other |  |  |  |  |
|  | Mortgage |  |  | Mortgage |  |  | Residential |  |  | Construction |  |  | and Land |  |  | Real Estate |  |  | Business |  |  | Consumer |  |  | Total |
|  | (In thousands) |
Amortized Cost Basis in Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Principal loan balance |  | $ | 128,216 |  |  | $ | 57,401 |  |  | $ | 39,331 |  |  | $ | 17,657 |  |  | $ | 57,542 |  |  | $ | 169,310 |  |  | $ | 65,055 |  |  | $ | 54,727 |  |  | $ | 589,239 |
Net deferred loan origination fees and costs |  |  | 129 |  |  |  | 1,231 |  |  |  | (14 | ) |  |  | - |  |  |  | (7 | ) |  |  | (108 | ) |  |  | (11 | ) |  |  | - |  |  |  | 1,220 |
Amortized cost basis in loans |  | $ | 128,345 |  |  | $ | 58,632 |  |  | $ | 39,317 |  |  | $ | 17,657 |  |  | $ | 57,535 |  |  | $ | 169,202 |  |  | $ | 65,044 |  |  | $ | 54,727 |  |  | $ | 590,459 |
An analysis of the changes in the ACL on loans for the three and six months ended June 30, 2023 is as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 1-4 Family |  |  | Home Equity |  |  |  |  |  |  | 1-4 Family |  |  | Construction, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Residential |  |  | and Second |  |  | Multifamily |  |  | Residential |  |  | Development |  |  | Commercial |  |  | Commercial |  |  | Other |  |  |  |  |
|  | Mortgage |  |  | Mortgage |  |  | Residential |  |  | Construction |  |  | and Land |  |  | Real Estate |  |  | Business |  |  | Consumer |  |  | Total |
|  | (In thousands) |
ACL on Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Changes in the ACL on Loans for the three months ended June 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 1,414 |  |  | $ | 366 |  |  | $ | 381 |  |  | $ | 187 |  |  | $ | 489 |  |  | $ | 2,190 |  |  | $ | 1,084 |  |  | $ | 1,212 |  |  | $ | 7,323 |
Provision for credit losses |  |  | 69 |  |  |  | 6 |  |  |  | 233 |  |  |  | (16 | ) |  |  | (29 | ) |  |  | (174 | ) |  |  | 510 |  |  |  | (249 | ) |  |  | 350 |
Charge-offs |  |  | (29 | ) |  |  | (9 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (33 | ) |  |  | (164 | ) |  |  | (235 | )
Recoveries |  |  | 15 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3 |  |  |  | 59 |  |  |  | 77 |
Ending balance |  | $ | 1,469 |  |  | $ | 363 |  |  | $ | 614 |  |  | $ | 171 |  |  | $ | 460 |  |  | $ | 2,016 |  |  | $ | 1,564 |  |  | $ | 858 |  |  | $ | 7,515 |
Changes in the ACL on Loans for the six months ended June 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance, prior to adoption of ASC 326 |  | $ | 1,036 |  |  | $ | 531 |  |  | $ | 346 |  |  | $ | 206 |  |  | $ | 587 |  |  | $ | 2,029 |  |  | $ | 1,156 |  |  | $ | 881 |  |  | $ | 6,772 |
Impact of adopting ASC 326 |  |  | 423 |  |  |  | (26 | ) |  |  | (3 | ) |  |  | (9 | ) |  |  | 13 |  |  |  | (130 | ) |  |  | (142 | ) |  |  | 435 |  |  |  | 561 |
Provision for credit losses |  |  | 26 |  |  |  | (133 | ) |  |  | 271 |  |  |  | (26 | ) |  |  | (140 | ) |  |  | 117 |  |  |  | 730 |  |  |  | (302 | ) |  |  | 543 |
Charge-offs |  |  | (31 | ) |  |  | (9 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (188 | ) |  |  | (282 | ) |  |  | (510 | )
Recoveries |  |  | 15 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 8 |  |  |  | 126 |  |  |  | 149 |
Ending balance |  | $ | 1,469 |  |  | $ | 363 |  |  | $ | 614 |  |  | $ | 171 |  |  | $ | 460 |  |  | $ | 2,016 |  |  | $ | 1,564 |  |  | $ | 858 |  |  | $ | 7,515 |
Accrued interest on loans of $1.9 million at June 30, 2023, is included in accrued interest receivable on the consolidated balance sheets and is excluded from the estimate of credit losses. Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. There have been no significant changes to the types of collateral securing the Company’s collateral dependent loans. The following table presents the amortized cost basis of, and ACL allocation to, individually evaluated collateral-dependent loans by class of loans as of June 30, 2023:
|  | Real |  |  |  |  |  |  |  |  |  |  | ACL |
|  | Estate |  |  | Other |  |  | Total |  |  | Allocation |
1-4 Family Residential Mortgage |  | $ | 1,718 |  |  | $ | - |  |  | $ | 1,718 |  |  | $ | 12 |
Home Equity and Second Mortgage |  |  | 539 |  |  |  | - |  |  |  | 539 |  |  |  | - |
Multifamily Residential |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
1-4 Family Residential Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other Construction, Development and Land |  |  | 52 |  |  |  | - |  |  |  | 52 |  |  |  | - |
Commercial Real Estate |  |  | 1,102 |  |  |  | - |  |  |  | 1,102 |  |  |  | - |
Commercial Business |  |  | - |  |  |  | 156 |  |  |  | 156 |  |  |  | - |
Other Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  | $ | 3,411 |  |  | $ | 156 |  |  | $ | 3,567 |  |  | $ | 12 |
Nonperforming loans consists of nonaccrual loans and loans past due and still accruing interest. The following table presents the amortized cost basis of loans on nonaccrual status and loans 90 days or more past due still accruing as of June 30, 2023:
|  |  |  |  |  |  |  |  |  | Loans 90+ Days |  |  | Total |
|  | Nonaccrual Loans |  |  | Total |  |  | Past Due |  |  | Nonperforming |
|  | with No ACL (1) |  |  | Nonaccrual |  |  | Still Accruing |  |  | Loans |
|  | (In thousands) |
1-4 Family Residential Mortgage |  | $ | 1,143 |  |  | $ | 1,182 |  |  | $ | - |  |  | $ | 1,182 |
Home Equity and Second Mortgage |  |  | 270 |  |  |  | 270 |  |  |  | - |  |  |  | 270 |
Multifamily Residential |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
1-4 Family Residential Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other Construction, Development and Land |  |  | 52 |  |  |  | 52 |  |  |  | - |  |  |  | 52 |
Commercial Real Estate |  |  | 21 |  |  |  | 21 |  |  |  | - |  |  |  | 21 |
Commercial Business |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 1,486 |  |  | $ | 1,525 |  |  | $ | - |  |  | $ | 1,525 |
(1) Includes nonaccrual loans with no ACL and are also included in Total Nonaccrual loans of $1,525. No interest income was recognized on nonaccrual loans during the three and six months ended June 30, 2023. The following table presents the aging of the amortized cost basis in loans at June 30, 2023:
|  | 30-59 Days |  |  | 60-89 Days |  |  | 90 Days or More |  |  | Total |  |  |  |  |  |  | Total |
|  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Current |  |  | Loans |
|  | (In thousands) |
1-4 Family Residential Mortgage |  | $ | 1,418 |  |  | $ | 260 |  |  | $ | 673 |  |  | $ | 2,351 |  |  | $ | 125,994 |  |  | $ | 128,345 |
Home Equity and Second Mortgage |  |  | 354 |  |  |  | 292 |  |  |  | - |  |  |  | 646 |  |  |  | 57,986 |  |  |  | 58,632 |
Multifamily Residential |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 39,317 |  |  |  | 39,317 |
1-4 Family Residential Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 17,657 |  |  |  | 17,657 |
Other Construction, Development and Land |  |  | - |  |  |  | 50 |  |  |  | 52 |  |  |  | 102 |  |  |  | 57,433 |  |  |  | 57,535 |
Commercial Real Estate |  |  | - |  |  |  | 58 |  |  |  | - |  |  |  | 58 |  |  |  | 169,144 |  |  |  | 169,202 |
Commercial Business |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 65,044 |  |  |  | 65,044 |
Other Consumer |  |  | 251 |  |  |  | 46 |  |  |  | - |  |  |  | 297 |  |  |  | 54,430 |  |  |  | 54,727 |
Total |  | $ | 2,023 |  |  | $ | 706 |  |  | $ | 725 |  |  | $ | 3,454 |  |  | $ | 587,005 |  |  | $ | 590,459 |
Occasionally, the Company modifies loans to borrowers in financial distress. During the three and six months ended June 30, 2023, no material loans to borrowers experiencing financial distress were modified. There were no loans to borrowers experiencing financial distress that were modified during the previous 12 months and which subsequently defaulted during the three and six months ended June 30, 2023. There were no unfunded commitments associated with loans modified for borrowers experiencing financial distress as of June 30, 2023 and December 31, 2022. There were no TDRs that were restructured during the three or six months ended June 30, 2022. There were no principal charge-offs recorded as a result of TDRs and there was no specific allowance for loan losses related to TDRs modified during the three or six months ended June 30, 2022. There were no TDRs modified within the previous 12 months for which there was a subsequent payment default during the three or six months ended June 30, 2022. Credit Quality Indicators The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, public information, historical payment experience, credit documentation, and current economic trends, among other factors. The Company classifies loans based on credit risk at least quarterly. The Company uses the following regulatory definitions for risk ratings: Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss: Loans classified as loss are considered uncollectible and of such little value that their continuance on the institution’s books as an asset is not warranted. Loans not meeting the criteria above that are analyzed individually as part of the described process are considered to be pass rated loans. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:
|  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |  |  |
|  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Revolving |  |  | Total |
|  | (In thousands) |
1-4 Family Residential Mortgage |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 20,860 |  |  | $ | 32,773 |  |  | $ | 29,299 |  |  | $ | 7,516 |  |  | $ | 9,985 |  |  | $ | 26,023 |  |  | $ | - |  |  | $ | 126,456 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 171 |  |  |  | - |  |  |  | 171 |
Substandard |  |  | - |  |  |  | - |  |  |  | 36 |  |  |  | - |  |  |  | 267 |  |  |  | 233 |  |  |  | - |  |  |  | 536 |
Doubtful |  |  | - |  |  |  | - |  |  |  | 179 |  |  |  | 83 |  |  |  | - |  |  |  | 920 |  |  |  | - |  |  |  | 1,182 |
|  | $ | 20,860 |  |  | $ | 32,773 |  |  | $ | 29,514 |  |  | $ | 7,599 |  |  | $ | 10,252 |  |  | $ | 27,347 |  |  | $ | - |  |  | $ | 128,345 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | 2 |  |  | $ | - |  |  | $ | - |  |  | $ | 29 |  |  | $ | - |  |  | $ | 31 |
Home Equity and Second Mortgage |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 2,114 |  |  | $ | 4,855 |  |  | $ | 573 |  |  | $ | 260 |  |  | $ | 232 |  |  | $ | 384 |  |  | $ | 49,675 |  |  | $ | 58,093 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 269 |  |  |  | 269 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 270 |  |  |  | - |  |  |  | - |  |  |  | 270 |
|  | $ | 2,114 |  |  | $ | 4,855 |  |  | $ | 573 |  |  | $ | 260 |  |  | $ | 502 |  |  | $ | 384 |  |  | $ | 49,944 |  |  | $ | 58,632 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 9 |  |  | $ | 9 |
Multifamily Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 1,555 |  |  | $ | 10,647 |  |  | $ | 9,903 |  |  | $ | 8,071 |  |  | $ | 4,438 |  |  | $ | 4,703 |  |  | $ | - |  |  | $ | 39,317 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  | $ | 1,555 |  |  | $ | 10,647 |  |  | $ | 9,903 |  |  | $ | 8,071 |  |  | $ | 4,438 |  |  | $ | 4,703 |  |  | $ | - |  |  | $ | 39,317 |
Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
|  |  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |  |  |
|  |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Revolving |  |  | Total |
|  |  | (In thousands) |
1-4 Family Residential Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Pass |  | $ | 3,742 |  |  | $ | 9,628 |  |  | $ | 3,112 |  |  | $ | 634 |  |  | $ | - |  |  | $ | 541 |  |  | $ | - |  |  | $ | 17,657 |
| Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
| Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
| Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  |  | $ | 3,742 |  |  | $ | 9,628 |  |  | $ | 3,112 |  |  | $ | 634 |  |  | $ | - |  |  | $ | 541 |  |  | $ | - |  |  | $ | 17,657 |
| Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Other Construction, Development and Land |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Pass |  | $ | 12,701 |  |  | $ | 28,853 |  |  | $ | 8,322 |  |  | $ | 2,814 |  |  | $ | 1,291 |  |  | $ | 3,452 |  |  | $ | - |  |  | $ | 57,433 |
| Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 50 |  |  |  | - |  |  |  | 50 |
| Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
| Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 52 |  |  |  | - |  |  |  | 52 |
|  |  | $ | 12,701 |  |  | $ | 28,853 |  |  | $ | 8,322 |  |  | $ | 2,814 |  |  | $ | 1,291 |  |  | $ | 3,554 |  |  | $ | - |  |  | $ | 57,535 |
| Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Pass |  | $ | 9,505 |  |  | $ | 40,875 |  |  | $ | 31,176 |  |  | $ | 21,547 |  |  | $ | 18,963 |  |  | $ | 42,806 |  |  | $ | 2,139 |  |  | $ | 167,011 |
| Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 401 |  |  |  | 424 |  |  |  | 64 |  |  |  | 199 |  |  |  | 1,088 |
| Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 235 |  |  |  | - |  |  |  | 847 |  |  |  | - |  |  |  | 1,082 |
| Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 21 |  |  |  | - |  |  |  | 21 |
|  |  | $ | 9,505 |  |  | $ | 40,875 |  |  | $ | 31,176 |  |  | $ | 22,183 |  |  | $ | 19,387 |  |  | $ | 43,738 |  |  | $ | 2,338 |  |  | $ | 169,202 |
| Current period gross write-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Commercial Business |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Pass |  | $ | 8,467 |  |  | $ | 16,581 |  |  | $ | 12,326 |  |  | $ | 6,275 |  |  | $ | 5,997 |  |  | $ | 4,084 |  |  | $ | 10,816 |  |  | $ | 64,546 |
| Special Mention |  |  | - |  |  |  | 30 |  |  |  | 20 |  |  |  | 54 |  |  |  | 166 |  |  |  | 3 |  |  |  | 69 |  |  |  | 342 |
| Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 45 |  |  |  | - |  |  |  | 111 |  |  |  | 156 |
| Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  |  | $ | 8,467 |  |  | $ | 16,611 |  |  | $ | 12,346 |  |  | $ | 6,329 |  |  | $ | 6,208 |  |  | $ | 4,087 |  |  | $ | 10,996 |  |  | $ | 65,044 |
| Current period gross write-offs |  | $ | - |  |  | $ | 154 |  |  | $ | 2 |  |  | $ | 26 |  |  | $ | - |  |  | $ | 6 |  |  | $ | - |  |  | $ | 188 |
|  |  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |  |  |
|  |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Revolving |  |  | Total |
|  |  | (In thousands) |
Other Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Pass |  | $ | 13,350 |  |  | $ | 17,963 |  |  | $ | 10,222 |  |  | $ | 3,868 |  |  | $ | 1,610 |  |  | $ | 5,853 |  |  | $ | 1,802 |  |  | $ | 54,668 |
| Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
| Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 59 |  |  |  | 59 |
| Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  |  | $ | 13,350 |  |  | $ | 17,963 |  |  | $ | 10,222 |  |  | $ | 3,868 |  |  | $ | 1,610 |  |  | $ | 5,853 |  |  | $ | 1,861 |  |  | $ | 54,727 |
| Current period gross write-offs |  | $ | - |  |  | $ | 49 |  |  | $ | 85 |  |  | $ | 17 |  |  | $ | 23 |  |  | $ | 45 |  |  | $ | 63 |  |  | $ | 282 |
Total Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Pass |  | $ | 72,294 |  |  | $ | 162,175 |  |  | $ | 104,933 |  |  | $ | 50,985 |  |  | $ | 42,516 |  |  | $ | 87,846 |  |  | $ | 64,432 |  |  | $ | 585,181 |
| Special Mention |  |  | - |  |  |  | 30 |  |  |  | 20 |  |  |  | 455 |  |  |  | 590 |  |  |  | 288 |  |  |  | 268 |  |  |  | 1,651 |
| Substandard |  |  | - |  |  |  | - |  |  |  | 36 |  |  |  | 235 |  |  |  | 312 |  |  |  | 1,080 |  |  |  | 439 |  |  |  | 2,102 |
| Doubtful |  |  | - |  |  |  | - |  |  |  | 179 |  |  |  | 83 |  |  |  | 270 |  |  |  | 993 |  |  |  | - |  |  |  | 1,525 |
|  |  | $ | 72,294 |  |  | $ | 162,205 |  |  | $ | 105,168 |  |  | $ | 51,758 |  |  | $ | 43,688 |  |  | $ | 90,207 |  |  | $ | 65,139 |  |  | $ | 590,459 |
| Current period gross write-offs |  | $ | - |  |  | $ | 203 |  |  | $ | 89 |  |  | $ | 43 |  |  | $ | 23 |  |  | $ | 80 |  |  | $ | 72 |  |  | $ | 510 |
Allowance for Loan Losses Prior to the adoption of ASC 326 on January 1, 2023, the Company calculated the allowance for loan losses using the incurred loss methodology. The following tables are disclosures related to the allowance for loan losses in prior periods. The following table provides the components of the Company’s recorded investment in loans at June 30, 2022:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Home Equity |  |  |  |  |  |  |  |  |
|  | Residential |  |  |  |  |  |  |  |  |  |  | Commercial |  |  | Commercial |  |  | and Second |  |  | Other |  |  |  |  |
|  | Real Estate |  |  | Land |  |  | Construction |  |  | Real Estate |  |  | Business |  |  | Mortgage |  |  | Consumer |  |  | Total |
|  | (In thousands) |
Recorded Investment in Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Principal loan balance |  | $ | 142,849 |  |  | $ | 19,552 |  |  | $ | 40,101 |  |  | $ | 154,046 |  |  | $ | 56,055 |  |  | $ | 58,213 |  |  | $ | 61,711 |  |  | $ | 532,527 |
Accrued interest receivable |  |  | 451 |  |  |  | 109 |  |  |  | 86 |  |  |  | 296 |  |  |  | 209 |  |  |  | 195 |  |  |  | 200 |  |  |  | 1,546 |
Net deferred loan origination fees and costs |  |  | 103 |  |  |  | 13 |  |  |  | (13 | ) |  |  | (76 | ) |  |  | (19 | ) |  |  | 1,168 |  |  |  | - |  |  |  | 1,176 |
Recorded investment in loans |  | $ | 143,403 |  |  | $ | 19,674 |  |  | $ | 40,174 |  |  | $ | 154,266 |  |  | $ | 56,245 |  |  | $ | 59,576 |  |  | $ | 61,911 |  |  | $ | 535,249 |
Recorded Investment in Loans as Evaluated for Impairment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 916 |  |  | $ | 50 |  |  | $ | - |  |  | $ | 580 |  |  | $ | 158 |  |  | $ | 354 |  |  | $ | - |  |  | $ | 2,058 |
Collectively evaluated for impairment |  |  | 142,219 |  |  |  | 19,624 |  |  |  | 40,174 |  |  |  | 153,683 |  |  |  | 56,087 |  |  |  | 59,222 |  |  |  | 61,911 |  |  |  | 532,920 |
Acquired with deteriorated credit quality |  |  | 268 |  |  |  | - |  |  |  | - |  |  |  | 3 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 271 |
Ending balance |  | $ | 143,403 |  |  | $ | 19,674 |  |  | $ | 40,174 |  |  | $ | 154,266 |  |  | $ | 56,245 |  |  | $ | 59,576 |  |  | $ | 61,911 |  |  | $ | 535,249 |
The following table provides the components of the Company’s recorded investment in loans at December 31, 2022:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Home Equity |  |  |  |  |  |  |  |  |
|  | Residential |  |  |  |  |  |  |  |  |  |  | Commercial |  |  | Commercial |  |  | and Second |  |  | Other |  |  |  |  |
|  | Real Estate |  |  | Land |  |  | Construction |  |  | Real Estate |  |  | Business |  |  | Mortgage |  |  | Consumer |  |  | Total |
|  | (In thousands) |
Recorded Investment in Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Principal loan balance |  | $ | 155,334 |  |  | $ | 21,860 |  |  | $ | 42,271 |  |  | $ | 161,425 |  |  | $ | 60,817 |  |  | $ | 57,781 |  |  | $ | 64,029 |  |  | $ | 563,517 |
Accrued interest receivable |  |  | 493 |  |  |  | 123 |  |  |  | 105 |  |  |  | 343 |  |  |  | 170 |  |  |  | 348 |  |  |  | 236 |  |  |  | 1,818 |
Net deferred loan origination fees and costs |  |  | 111 |  |  |  | 14 |  |  |  | (12 | ) |  |  | (93 | ) |  |  | (11 | ) |  |  | 1,204 |  |  |  | - |  |  |  | 1,213 |
Recorded investment in loans |  | $ | 155,938 |  |  | $ | 21,997 |  |  | $ | 42,364 |  |  | $ | 161,675 |  |  | $ | 60,976 |  |  | $ | 59,333 |  |  | $ | 64,265 |  |  | $ | 566,548 |
Recorded Investment in Loans as Evaluated for Impairment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 854 |  |  | $ | 51 |  |  | $ | - |  |  | $ | 463 |  |  | $ | 195 |  |  | $ | 372 |  |  | $ | - |  |  | $ | 1,935 |
Collectively evaluated for impairment |  |  | 154,798 |  |  |  | 21,946 |  |  |  | 42,364 |  |  |  | 161,212 |  |  |  | 60,781 |  |  |  | 58,961 |  |  |  | 64,265 |  |  |  | 564,327 |
Acquired with deteriorated credit quality |  |  | 286 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 286 |
Ending balance |  | $ | 155,938 |  |  | $ | 21,997 |  |  | $ | 42,364 |  |  | $ | 161,675 |  |  | $ | 60,976 |  |  | $ | 59,333 |  |  | $ | 64,265 |  |  | $ | 566,548 |
An analysis of the allowance for loan losses as of June 30, 2022 is as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Home Equity |  |  |  |  |  |  |  |  |
|  | Residential |  |  |  |  |  |  |  |  |  |  | Commercial |  |  | Commercial |  |  | and Second |  |  | Other |  |  |  |  |
|  | Real Estate |  |  | Land |  |  | Construction |  |  | Real Estate |  |  | Business |  |  | Mortgage |  |  | Consumer |  |  | Total |
|  | (In thousands) |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 2 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 1 |  |  | $ | - |  |  | $ | 3 |
Collectively evaluated for impairment |  |  | 1,253 |  |  |  | 241 |  |  |  | 496 |  |  |  | 1,991 |  |  |  | 888 |  |  |  | 532 |  |  |  | 980 |  |  |  | 6,381 |
Acquired with deteriorated credit quality |  |  | 10 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 10 |
Ending balance |  | $ | 1,265 |  |  | $ | 241 |  |  | $ | 496 |  |  | $ | 1,991 |  |  | $ | 888 |  |  | $ | 533 |  |  | $ | 980 |  |  | $ | 6,394 |
An analysis of the allowance for loan losses as of December 31, 2022 is as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Home Equity |  |  |  |  |  |  |  |  |
|  | Residential |  |  |  |  |  |  |  |  |  |  | Commercial |  |  | Commercial |  |  | and Second |  |  | Other |  |  |  |  |
|  | Real Estate |  |  | Land |  |  | Construction |  |  | Real Estate |  |  | Business |  |  | Mortgage |  |  | Consumer |  |  | Total |
|  | (In thousands) |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 155 |  |  | $ | - |  |  | $ | - |  |  | $ | 155 |
Collectively evaluated for impairment |  |  | 1,383 |  |  |  | 265 |  |  |  | 526 |  |  |  | 2,031 |  |  |  | 891 |  |  |  | 530 |  |  |  | 991 |  |  |  | 6,617 |
Acquired with deteriorated credit quality |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Ending balance |  | $ | 1,383 |  |  | $ | 265 |  |  | $ | 526 |  |  | $ | 2,031 |  |  | $ | 1,046 |  |  | $ | 530 |  |  | $ | 991 |  |  | $ | 6,772 |
An analysis of the changes in the allowance for loan losses for the three and six months ended June 30, 2022 is as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Home Equity |  |  |  |  |  |  |  |  |
|  | Residential |  |  |  |  |  |  |  |  |  |  | Commercial |  |  | Commercial |  |  | and Second |  |  | Other |  |  |  |  |
|  | Real Estate |  |  | Land |  |  | Construction |  |  | Real Estate |  |  | Business |  |  | Mortgage |  |  | Consumer |  |  | Total |
|  | (In thousands) |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Changes in Allowance for Loan Losses for the three months ended June 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 1,228 |  |  | $ | 235 |  |  | $ | 387 |  |  | $ | 1,927 |  |  | $ | 994 |  |  | $ | 517 |  |  | $ | 957 |  |  | $ | 6,245 |
Provisions for loan losses |  |  | 32 |  |  |  | 6 |  |  |  | 109 |  |  |  | 64 |  |  |  | (106 | ) |  |  | 14 |  |  |  | 81 |  |  |  | 200 |
Charge-offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (9 | ) |  |  | - |  |  |  | (127 | ) |  |  | (136 | )
Recoveries |  |  | 5 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 9 |  |  |  | 2 |  |  |  | 69 |  |  |  | 85 |
Ending balance |  | $ | 1,265 |  |  | $ | 241 |  |  | $ | 496 |  |  | $ | 1,991 |  |  | $ | 888 |  |  | $ | 533 |  |  | $ | 980 |  |  | $ | 6,394 |
Changes in Allowance for Loan Losses for the six months ended June 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 1,174 |  |  | $ | 234 |  |  | $ | 403 |  |  | $ | 1,884 |  |  | $ | 873 |  |  | $ | 527 |  |  | $ | 988 |  |  | $ | 6,083 |
Provisions for loan losses |  |  | 81 |  |  |  | 7 |  |  |  | 93 |  |  |  | 107 |  |  |  | 15 |  |  |  | 4 |  |  |  | 68 |  |  |  | 375 |
Charge-offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (9 | ) |  |  | - |  |  |  | (201 | ) |  |  | (210 | )
Recoveries |  |  | 10 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 9 |  |  |  | 2 |  |  |  | 125 |  |  |  | 146 |
Ending balance |  | $ | 1,265 |  |  | $ | 241 |  |  | $ | 496 |  |  | $ | 1,991 |  |  | $ | 888 |  |  | $ | 533 |  |  | $ | 980 |  |  | $ | 6,394 |
At June 30, 2022 and December 31, 2022, management applied qualitative factor adjustments to each portfolio segment as they determined that the historical loss experience was not indicative of the level of risk in the remaining balance of those portfolio segments. As part of their analysis of qualitative factors, management considers the changes and trends in the following: Peer Data, Underwriting Standards, Economic Conditions, Past Due Loans, Collateral and Other Internal and External Factors. The following table summarizes the Company’s impaired loans as of June 30, 2022 and for the three and six months ended June 30, 2022. The Company did not recognize any interest income on impaired loans using the cash receipts method of accounting for the three and six month periods ended June, 2022:
|  | At June 30, 2022 |  |  | Three Months Ended June 30, 2022 |  |  | Six Months Ended June 30, 2022 |
|  |  |  |  |  | Unpaid |  |  |  |  |  |  | Average |  |  | Interest |  |  | Average |  |  | Interest |
|  | Recorded |  |  | Principal |  |  | Related |  |  | Recorded |  |  | Income |  |  | Recorded |  |  | Income |
|  | Investment |  |  | Balance |  |  | Allowance |  |  | Investment |  |  | Recognized |  |  | Investment |  |  | Recognized |
|  | (In thousands) |
Loans with no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 887 |  |  | $ | 1,035 |  |  | $ | - |  |  | $ | 842 |  |  | $ | 2 |  |  | $ | 906 |  |  | $ | 7 |
Land |  |  | 50 |  |  |  | 50 |  |  |  | - |  |  |  | 76 |  |  |  | - |  |  |  | 85 |  |  |  | - |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 580 |  |  |  | 597 |  |  |  | - |  |  |  | 590 |  |  |  | 7 |  |  |  | 627 |  |  |  | 14 |
Commercial business |  |  | 158 |  |  |  | 157 |  |  |  | - |  |  |  | 163 |  |  |  | 2 |  |  |  | 166 |  |  |  | 4 |
Home equity and second mortgage |  |  | 71 |  |  |  | 69 |  |  |  | - |  |  |  | 36 |  |  |  | - |  |  |  | 29 |  |  |  | - |
Other consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  |  | 1,746 |  |  |  | 1,908 |  |  |  | - |  |  |  | 1,707 |  |  |  | 11 |  |  |  | 1,813 |  |  |  | 25 |
Loans with an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | 29 |  |  |  | 29 |  |  |  | 2 |  |  |  | 29 |  |  |  | - |  |  |  | 19 |  |  |  | - |
Land |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial business |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Home equity and second mortgage |  |  | 283 |  |  |  | 297 |  |  |  | 1 |  |  |  | 285 |  |  |  | - |  |  |  | 286 |  |  |  | - |
Other consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  |  | 312 |  |  |  | 326 |  |  |  | 3 |  |  |  | 314 |  |  |  | - |  |  |  | 305 |  |  |  | - |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | 916 |  |  |  | 1,064 |  |  |  | 2 |  |  |  | 871 |  |  |  | 2 |  |  |  | 925 |  |  |  | 7 |
Land |  |  | 50 |  |  |  | 50 |  |  |  | - |  |  |  | 76 |  |  |  | - |  |  |  | 85 |  |  |  | - |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 580 |  |  |  | 597 |  |  |  | - |  |  |  | 590 |  |  |  | 7 |  |  |  | 627 |  |  |  | 14 |
Commercial business |  |  | 158 |  |  |  | 157 |  |  |  | - |  |  |  | 163 |  |  |  | 2 |  |  |  | 166 |  |  |  | 4 |
Home equity and second mortgage |  |  | 354 |  |  |  | 366 |  |  |  | 1 |  |  |  | 321 |  |  |  | - |  |  |  | 315 |  |  |  | - |
Other consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  | $ | 2,058 |  |  | $ | 2,234 |  |  | $ | 3 |  |  | $ | 2,021 |  |  | $ | 11 |  |  | $ | 2,118 |  |  | $ | 25 |
The following table summarizes the Company’s impaired loans as of December 31, 2022:
|  |  |  |  |  | Unpaid |  |  |  |  |
|  | Recorded |  |  | Principal |  |  | Related |
|  | Investment |  |  | Balance |  |  | Allowance |
|  | (In thousands) |
Loans with no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 854 |  |  | $ | 996 |  |  | $ | - |
Land |  |  | 51 |  |  |  | 51 |  |  |  | - |
Construction |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 463 |  |  |  | 484 |  |  |  | - |
Commercial business |  |  | 40 |  |  |  | 40 |  |  |  | - |
Home equity and second mortgage |  |  | 372 |  |  |  | 389 |  |  |  | - |
Other consumer |  |  | - |  |  |  | - |  |  |  | - |
|  | $ | 1,780 |  |  | $ | 1,960 |  |  | $ | - |
Loans with an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | - |  |  | $ | - |  |  | $ | - |
Land |  |  | - |  |  |  | - |  |  |  | - |
Construction |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | - |  |  |  | - |  |  |  | - |
Commercial business |  |  | 155 |  |  |  | 155 |  |  |  | 155 |
Home equity and second mortgage |  |  | - |  |  |  | - |  |  |  | - |
Other consumer |  |  | - |  |  |  | - |  |  |  | - |
|  | $ | 155 |  |  | $ | 155 |  |  | $ | 155 |
Total: |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 854 |  |  | $ | 996 |  |  | $ | - |
Land |  |  | 51 |  |  |  | 51 |  |  |  | - |
Construction |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 463 |  |  |  | 484 |  |  |  | - |
Commercial business |  |  | 195 |  |  |  | 195 |  |  |  | 155 |
Home equity and second mortgage |  |  | 372 |  |  |  | 389 |  |  |  | - |
Other consumer |  |  | - |  |  |  | - |  |  |  | - |
|  | $ | 1,935 |  |  | $ | 2,115 |  |  | $ | 155 |
The following table presents the recorded investment in nonperforming loans at December 31, 2022:
|  | December 31, 2022 |
|  |  |  |  |  | Loans 90+ Days |  |  | Total |
|  | Nonaccrual |  |  | Past Due |  |  | Nonperforming |
|  | Loans |  |  | Still Accruing |  |  | Loans |
|  | (In thousands) |
Residential |  | $ | 744 |  |  | $ | 83 |  |  | $ | 827 |
Land |  |  | 51 |  |  |  | - |  |  |  | 51 |
Construction |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 81 |  |  |  | - |  |  |  | 81 |
Commercial business |  |  | 155 |  |  |  | - |  |  |  | 155 |
Home equity and second mortgage |  |  | 372 |  |  |  | - |  |  |  | 372 |
Other consumer |  |  | - |  |  |  | 4 |  |  |  | 4 |
Total |  | $ | 1,403 |  |  | $ | 87 |  |  | $ | 1,490 |
The following table presents the aging of the recorded investment in loans at December 31, 2022:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Purchased |  |  |  |  |
|  | 30-59 Days |  |  | 60-89 Days |  |  | 90 Days or More |  |  | Total |  |  |  |  |  |  | Credit |  |  | Total |
|  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Current |  |  | Impaired Loans |  |  | Loans |
|  | (In thousands) |
Residential |  | $ | 2,229 |  |  | $ | 226 |  |  | $ | 543 |  |  | $ | 2,998 |  |  | $ | 152,654 |  |  | $ | 286 |  |  | $ | 155,938 |
Land |  |  | 119 |  |  |  | - |  |  |  | 51 |  |  |  | 170 |  |  |  | 21,827 |  |  |  | - |  |  |  | 21,997 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 42,364 |  |  |  | - |  |  |  | 42,364 |
Commercial real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 161,675 |  |  |  | - |  |  |  | 161,675 |
Commercial business |  |  | - |  |  |  | - |  |  |  | 155 |  |  |  | 155 |  |  |  | 60,821 |  |  |  | - |  |  |  | 60,976 |
Home equity and second mortgage |  |  | 206 |  |  |  | 278 |  |  |  | 93 |  |  |  | 577 |  |  |  | 58,756 |  |  |  | - |  |  |  | 59,333 |
Other consumer |  |  | 211 |  |  |  | 72 |  |  |  | 4 |  |  |  | 287 |  |  |  | 63,978 |  |  |  | - |  |  |  | 64,265 |
Total |  | $ | 2,765 |  |  | $ | 576 |  |  | $ | 846 |  |  | $ | 4,187 |  |  | $ | 562,075 |  |  | $ | 286 |  |  | $ | 566,548 |
The following table presents the recorded investment in loans by risk category as of December 31, 2022:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Home Equity |  |  |  |  |  |  |  |  |
|  | Residential |  |  |  |  |  |  |  |  |  |  | Commercial |  |  | Commercial |  |  | and Second |  |  | Other |  |  |  |  |
|  | Real Estate |  |  | Land |  |  | Construction |  |  | Real Estate |  |  | Business |  |  | Mortgage |  |  | Consumer |  |  | Total |
|  | (In thousands) |
Pass |  | $ | 154,429 |  |  | $ | 21,827 |  |  | $ | 42,364 |  |  | $ | 159,842 |  |  | $ | 60,261 |  |  | $ | 58,937 |  |  | $ | 64,149 |  |  | $ | 561,809 |
Special Mention |  |  | - |  |  |  | 60 |  |  |  | - |  |  |  | 679 |  |  |  | 388 |  |  |  | - |  |  |  | 116 |  |  |  | 1,243 |
Substandard |  |  | 765 |  |  |  | 59 |  |  |  | - |  |  |  | 1,073 |  |  |  | 172 |  |  |  | 24 |  |  |  | - |  |  |  | 2,093 |
Doubtful |  |  | 744 |  |  |  | 51 |  |  |  | - |  |  |  | 81 |  |  |  | 155 |  |  |  | 372 |  |  |  | - |  |  |  | 1,403 |
Loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 155,938 |  |  | $ | 21,997 |  |  | $ | 42,364 |  |  | $ | 161,675 |  |  | $ | 60,976 |  |  | $ | 59,333 |  |  | $ | 64,265 |  |  | $ | 566,548 |
Purchased Credit Deteriorated (“PCD”) Loans The Company has purchased groups of loans, some of which have experienced more than insignificant credit deterioration since origination. An ACL for PCD loans is determined using the same methodology as other loans held for investment. Upon adoption of ASC 326, the Company elected to maintain pools of loans that were previously accounted for as purchased credit impairment (“PCI”) loans under ASC 310-30 and will continue to account for these pools as a unit of account. Loans are only removed from the existing pools if they are written off, paid off or sold. Upon adoption of ASC 326, the ACL was determined for each pool and added to the pool’s carrying amount to establish a new amortized cost basis. The difference between the unpaid principal balance of the pool and the new amortized cost basis will be amortized into interest income over the remaining life of the pool. Changes to the ACL after adoption are recorded through the provision for credit losses. The carrying amount of PCD loans at June 30, 2023 and December 31, 2022 was $239,000 and $244,000, respectively. There was no ACL related to PCD loans at June 30, 2023 and December 31, 2022. ACL on Off-Balance-Sheet Credit Exposures The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The Company recorded an ACL for unfunded commitments of $131,000 in conjunction with the Company’s adoption of ASU 2016-13 on January 1, 2023. The ACL for off-balance-sheet credit exposures is presented in accrued expenses and other liabilities on the consolidated balance sheets. Changes in the ACL for off-balance-sheet credit exposures are reflected in the provision for credit losses on the consolidated statements of income. There were no changes to the ACL for off-balance-sheet credit exposures during the three and six months ended June 30, 2023.

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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 -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//310-10/tableOfContent + Details
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