Management extensively reviews recent trends in historical losses, qualitative factors, including concentrations of loans to related borrowers and concentrations of loans by collateral type, and specific reserve needs on loans individually evaluated for impairment in its determination of the adequacy of the allowance for loan losses. We recorded $59,000 in provision for loan losses for the three month period ended June 30, 2022, as compared to $929,000 for the three month period ended June 30, 2021. For the first six months of 2022, we recorded $161,000 in provision for loan losses as compared to $2.0 million in the same prior year six month period. The provisioning in 2022 and 2021 reflects management’s determination of additions to reserves considering loan mix changes, concentrations of loans in certain business sectors, factors related to loan quality metrics, and continued COVID-19 related economic uncertainty. The credit-sensitive portfolios continue to be carefully monitored, and the Bank will consistently apply its loan classification and reserve building methodologies to the analysis of these portfolios.

Summarized in the tables below are changes in the allowance for loan losses for the indicated periods and information pertaining to the allocation of the allowance for loan losses, balances of the allowance for loan losses, loans receivable based on individual, and collective impairment evaluation by loan portfolio class. An allocation of a portion of the allowance to a given portfolio class does not limit the Company’s ability to absorb losses in another portfolio class.


	For the three months ended June 30, 2022
	1-4 family
	first-lien			Residential								Other			Paycheck
	residential			construction		Commercial			Commercial			commercial			Protection
(In thousands)	mortgage			mortgage		real estate			lines of credit			and industrial			Program
Allowance for loan losses:
Beginning Balance	$	830		$	-	$	5,298		$	1,061		$	2,737		$	-
Charge-offs		(29	)		-		(23	)		(21	)		(200	)		-
Recoveries		-			-		250			-			46			-
Provisions (credits)		96			-		(3	)		117			33			-
Ending balance	$	897		$	-	$	5,522		$	1,157		$	2,616		$	-
Ending balance: related to loans individually evaluated for impairment	$	95		$	-	$	44		$	359		$	1,208		$	-
Ending balance: related to loans collectively evaluated for impairment	$	802		$	-	$	5,478		$	798		$	1,408		$	-
Loans receivables:
Ending balance	$	240,997		$	16,241	$	320,439		$	76,610		$	70,205		$	4,877
Ending balance: individually evaluated for impairment	$	1,141		$	-	$	144		$	6,956		$	1,974		$	-
Ending balance: collectively evaluated for impairment	$	239,856		$	16,241	$	320,295		$	69,654		$	68,231		$	4,877

				Home equity		Other
	Tax exempt			and junior liens		Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	4		$	676	$	1,422		$	989		$	13,017
Charge-offs		-			-		(51	)		-			(324	)
Recoveries		-			-		30			-			326
Provisions		-			74		142			(400	)		59
Ending balance	$	4		$	750	$	1,543		$	589		$	13,078
Ending balance: related to loans individually evaluated for impairment	$	-		$	114	$	-		$	-		$	1,820
Ending balance: related to loans collectively evaluated for impairment	$	4		$	636	$	1,543		$	589		$	11,258
Loans receivables:
Ending balance	$	5,390		$	33,267	$	99,326		$	-		$	867,352
Ending balance: individually evaluated for impairment	$	-		$	628	$	-		$	-		$	10,843
Ending balance: collectively evaluated for impairment	$	5,390		$	32,639	$	99,326		$	-		$	856,509


	For the six months ended June 30, 2022
	1-4 family
	first-lien			Residential									Other			Paycheck
	residential			construction			Commercial			Commercial			commercial			Protection
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial			Program
Allowance for loan losses:
Beginning Balance	$	872		$	-		$	5,308		$	935		$	2,762		$	-
Charge-offs		(29	)		-			(23	)		(38	)		(200	)		-
Recoveries		-			-			250			-			46			-
Provisions		54			-			(13	)		260			8			-
Ending balance	$	897		$	-		$	5,522		$	1,157		$	2,616		$	-

				Home equity			Other
	Tax exempt			and junior liens			consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	3		$	774		$	1,297		$	984		$	12,935
Charge-offs		-			-			(80	)		-			(370	)
Recoveries		-			-			56			-			352
Provisions		1			(24	)		270			(395	)		161
Ending balance	$	4		$	750		$	1,543		$	589		$	13,078


	For the three months ended June 30, 2021
	1-4 family
	first-lien			Residential									Other			Paycheck
	residential			construction			Commercial			Commercial			commercial			Protection
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial			Program
Allowance for loan losses:
Beginning Balance	$	975		$	-		$	5,721		$	1,916		$	3,016		$	-
Charge-offs		(20	)		-			(6	)		-			-			-
Recoveries		-			-			-			62			-			-
Provisions		(80	)		-			405			(168	)		432			-
Ending balance	$	875		$	-		$	6,120		$	1,810		$	3,448		$	-
Ending balance: related to loans individually evaluated for impairment	$	80		$	-		$	222		$	904		$	1,852		$	-
Ending balance: related to loans collectively evaluated for impairment	$	795		$	-		$	5,898		$	906		$	1,596		$	-
Loans receivables:
Ending balance	$	226,896		$	8,133		$	291,678		$	60,097		$	74,416		$	53,611
Ending balance: individually evaluated for impairment	$	1,499		$	-		$	6,946		$	1,004		$	7,266		$	-
Ending balance: collectively evaluated for impairment	$	225,397		$	8,133		$	284,732		$	59,093		$	67,150		$	53,611

				Home equity			Other
	Tax exempt			and junior liens			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	827		$	1,237		$	-		$	13,693
Charge-offs		-			-			(76	)		-			(102	)
Recoveries		-			-			21			-			83
Provisions		-			(22	)		68			294			929
Ending balance	$	1		$	805		$	1,250		$	294		$	14,603
Ending balance: related to loans individually evaluated for impairment	$	-		$	223		$	-		$	-		$	3,281
Ending balance: related to loans collectively evaluated for impairment	$	1		$	582		$	1,250		$	294		$	11,322
Loans receivables:
Ending balance	$	6,554		$	34,649		$	80,269		$	713		$	837,016
Ending balance: individually evaluated for impairment	$	-		$	578		$	79		$	-		$	17,372
Ending balance: collectively evaluated for impairment	$	6,554		$	34,071		$	80,190		$	713		$	819,644


	For the six months ended June 30, 2021
	1-4 family
	first-lien			Residential								Other			Paycheck
	residential			construction		Commercial			Commercial			commercial			Protection
(In thousands)	mortgage			mortgage		real estate			lines of credit			and industrial			Program
Allowance for loan losses:
Beginning Balance	$	931		$	-	$	4,776		$	1,670		$	2,992		$	-
Charge-offs		(20	)		-		(6	)		-			(100	)		-
Recoveries		-			-		-			63			-			-
Provisions (credits)		(36	)		-		1,350			77			556			-
Ending balance	$	875		$	-	$	6,120		$	1,810		$	3,448		$	-

				Home equity		Other
	Tax exempt			and junior liens		consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	739	$	1,123		$	545		$	12,777
Charge-offs		-			-		(119	)		-			(245	)
Recoveries		-			-		51			-			114
Provisions (credits)		-			66		195			(251	)		1,957
Ending balance	$	1		$	805	$	1,250		$	294		$	14,603

The Company’s methodology for determining its allowance for loan losses includes an analysis of qualitative factors that are added to the historical loss rates in arriving at the total allowance for loan losses needed for this general pool of loans. The qualitative factors include:

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. These qualitative factors, applied to each product class, make the evaluation inherently subjective, as it requires material estimates that may be susceptible to significant revision as more information becomes available. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan losses analysis and calculation.

The allocation of the allowance for loan losses summarized on the basis of the Company’s calculation methodology was as follows:


	June 30, 2022
(In thousands)	1-4 family first-lien residential mortgage		Residential construction mortgage		Commercial real estate		Commercial lines of credit		Other Commercial and industrial
Specifically reserved	$	95	$	-	$	44	$	359	$	1,208
Historical loss rate		85		-		1		37		83
Qualitative factors		717		-		5,477		761		1,325
Total	$	897	$	-	$	5,522	$	1,157	$	2,616


	Tax exempt		Home equity and junior liens		Other consumer		Unallocated		Total
Specifically reserved	$	-	$	114	$	-	$	-	$	1,820
Historical loss rate		-		321		1,246		-		1,773
Qualitative factors		4		315		297		-		8,896
Other		-		-		-		589		589
Total	$	4	$	750	$	1,543	$	589	$	13,078


	June 30, 2021
	1-4 family
	first-lien		Residential						Other
	residential		construction		Commercial		Commercial		commercial
(In thousands)	mortgage		mortgage		real estate		lines of credit		and industrial
Specifically reserved	$	80	$	-	$	222	$	904	$	1,852
Historical loss rate		85		-		1		33		38
Qualitative factors		710		-		5,897		873		1,558
Total	$	875	$	-	$	6,120	$	1,810	$	3,448

			Home equity		Other
	Tax exempt		and junior liens		consumer		Unallocated		Total
Specifically reserved	$	-	$	223	$	-	$	-	$	3,281
Historical loss rate		-		325		992		-		1,474
Qualitative factors		1		257		258		-		9,554
Other		-		-		-		294		294
Total	$	1	$	805	$	1,250	$	294	$	14,603