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Loans, Allowance For Credit Losses And OREO | 9 Months Ended
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Sep. 30, 2023
Loans, Allowance For Credit Losses And OREO [Abstract] |
Loans, allowance for credit losses and OREO | ‎ Note 8 – Loans, allowance for credit losses and OREO On January 1, 2023, the Company adopted the amendments within ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Accordingly, the Company’s financials results for reporting periods beginning after January 1, 2023 are presented in accordance with ASC 326 while prior period amounts have not been adjusted and continue to be reported with legacy GAAP. For a detailed discussion of the impact of the adoption of ASU 2016-13 and information related to loans and credit quality, including accounting policies and methodologies used to estimate the allowance for credit losses, see Note 1. The Company’s primary portfolio segments have changed to align with the methodology applied in estimating the allowance for credit losses under CECL and are reflected as such in the disclosures as of and for the period ended September 30, 2023 as provided below. Previously, management’s established methodology used to determine the adequacy of the allowance for credit losses that assessed the risks and losses expected in the loan portfolio. For purposes of determining the allowance for credit losses prior to the adoption of CECL, the Bank segmented certain loans in the portfolio by product type. Within these segments, the Bank sub-segmented its portfolio into classes, based on the associated risks. The classifications set forth below for December 31, 2022 and prior periods do not correspond directly to the classifications set forth in the call report (Form FFIEC 041). Management determined that after the adoption of CECL, the classifications set forth below were more appropriate for use in identifying and managing risk in the loan portfolio.
Loan Segments After CECL Adoption: |  | Loan Classes After CECL Adoption:
Commercial |  | Commercial and Industrial Loans
Commercial Real Estate |  | Commercial Mortgages – Owner Occupied
|  | Commercial Mortgages – Non-Owner Occupied
|  | Commercial Construction/Land
Consumer |  | Consumer Open-End
|  | Consumer Closed-End
Residential |  | Residential Mortgages
|  | Residential Consumer Construction/Land
‎ Note 8 – Loans, allowance for credit losses and OREO (continued) A summary of loans, net (1) is as follows (dollars in thousands):
| As of
| September 30, 2023
Commercial | $ 65,827
Commercial Real Estate: |
Commercial Mortgages-Owner Occupied | 128,646
Commercial Mortgages-Non-Owner Occupied | 177,073
Commercial Construction/Land | 23,745
Consumer |
Consumer Open-End | 52,023
Consumer Closed-End | 25,908
Residential: |
Residential Mortgages | 103,273
Residential Consumer Construction/Land | 30,410
Total loans | $ 606,905
Less allowance for credit losses | 7,320
Net loans | $ 599,585
| As of
| December 31, 2022
Commercial | $ 95,885
Commercial Real Estate: |
Commercial Mortgages-Owner Occupied | 135,189
Commercial Mortgages-Non-Owner Occupied | 206,701
Commercial Construction | 12,135
Consumer |
Consumer Unsecured | 2,828
Consumer Secured | 95,131
Residential: |
Residential Mortgages | 43,049
Residential Consumer Construction | 20,707
Total loans | $ 611,625
Less allowance for credit losses | 6,259
Net loans | $ 605,366
(1)Includes net deferred costs of $982 and $1,114 as of September 30, 2023 and December 31, 2022, respectively. ‎ Note 8 – Loans, allowance for credit losses and OREO (continued) The following table presents the amortized cost basis of collateral dependent loans by loan segment:
Collateral Dependent Loans |  | September 30, 2023
(dollars in thousands) |  | Business/Other Assets |  | Real Estate
Commercial |  | $ 394 |  | $ -
Commercial Real Estate |  | - |  | 3,736
Consumer |  | - |  | 307
Residential |  | - |  | 1,114
Total |  | $ 394 |  | $ 5,157
Impaired loans by class as of and for the period ended December 31, 2022 were as follows:
|  | Impaired Loans
|  | (dollars in thousands)
|  | As of and For the Year Ended December 31, 2022
|  |  |  | Unpaid |  |  |  | Average |  | Interest
|  | Recorded |  | Principal |  | Related |  | Recorded |  | Income
2022 |  | Investment (1) |  | Balance |  | Allowance |  | Investment |  | Recognized
With No Related Allowance Recorded: |  |  |  |  |  |  |  |  |
| Commercial | $ - |  | $ - |  | $ - |  | 9 |  | -
| Commercial Real Estate |  |  |  |  |  |  |  |  |
| Commercial Mortgages-Owner Occupied | 554 |  | 581 |  | - |  | 1,573 |  | 48
| Commercial Mortgage Non-Owner Occupied | 518 |  | 526 |  | - |  | 310 |  | 23
| Commercial Construction | - |  | - |  | - |  | - |  | -
| Consumer |  |  |  |  |  |  |  |  |
| Consumer Unsecured | - |  | - |  | - |  | - |  | -
| Consumer Secured | 249 |  | 249 |  | - |  | 154 |  | 12
| Residential |  |  |  |  |  |  |  |  |
| Residential Mortgages | 1,345 |  | 1,428 |  | - |  | 1,331 |  | 54
| Residential Consumer Construction | - |  | - |  | - |  | - |  | -
With an Allowance Recorded: |  |  |  |  |  |  |  |  |
| Commercial | $ - |  | $ - |  | $ - |  | - |  | -
| Commercial Real Estate |  |  |  |  |  |  |  |  |
| Commercial Mortgages-Owner Occupied | - |  | - |  | - |  | - |  | -
| Commercial Mortgage Non-Owner Occupied | - |  | - |  | - |  | - |  | -
| Commercial Construction | - |  | - |  | - |  | - |  | -
| Consumer |  |  |  |  |  |  |  |  |
| Consumer Unsecured | - |  | - |  | - |  | - |  | -
| Consumer Secured | - |  | - |  | - |  | - |  | -
| Residential |  |  |  |  |  |  |  |  |
| Residential Mortgages | - |  | - |  | - |  | - |  | -
| Residential Consumer Construction | - |  | - |  | - |  | - |  | -
Totals: |  |  |  |  |  |  |  |  |
| Commercial | $ - |  | $ - |  | $ - |  | $ 9 |  | $ -
| Commercial Real Estate |  |  |  |  |  |  |  |  |
| Commercial Mortgages-Owner Occupied | 554 |  | 581 |  | - |  | 1,573 |  | 48
| Commercial Mortgage Non-Owner Occupied | 518 |  | 526 |  | - |  | 310 |  | 23
| Commercial Construction | - |  | - |  | - |  | - |  | -
| Consumer |  |  |  |  |  |  |  |  |
| Consumer Unsecured | - |  | - |  | - |  | - |  | -
| Consumer Secured | 249 |  | 249 |  | - |  | 154 |  | 12
| Residential |  |  |  |  |  |  |  |  |
| Residential Mortgages | 1,345 |  | 1,428 |  | - |  | 1,331 |  | 54
| Residential Consumer Construction | - |  | - |  | - |  | - |  | -
|  | $ 2,666 |  | $ 2,784 |  | $ - |  | $ 3,377 |  | $ 137
(1)Recorded Investment is net of charge-offs and interest paid while a loan is in nonaccrual status. Note 8 – Loans, allowance for credit losses and OREO (continued) The following tables present the activity in the allowance for credit losses for the year-to-date periods ended and the distribution of the allowance by segment as of September 30, 2023 and December 31, 2022.
| Allowance for Credit Losses and Recorded Investment in Loans
| (dollars in thousands)
| As of and For the Nine Months Ended September 30, 2023
|  |  | Commercial |  |  |  |  |  |
2023 | Commercial |  | Real Estate |  | Consumer |  | Residential |  | Total
Allowance for Credit Losses: |  |  |  |  |  |  |  |  |
Beginning Balance, December 31, 2022 | $ 1,102 |  | $ 2,902 |  | $ 904 |  | $ 1,351 |  | $ 6,259
Adoption of ASU 2016-13 | (526) |  | 1,157 |  | 257 |  | 357 |  | 1,245
Charge-Offs | (137) |  | - |  | (56) |  | (3) |  | (196)
Recoveries | 50 |  | 91 |  | 42 |  | 17 |  | 200
Provision (Recovery of) | 23 |  | (187) |  | (41) |  | 17 |  | (188)
Ending Balance, September 30, 2023 | 512 |  | 3,963 |  | 1,106 |  | 1,739 |  | 7,320
Ending Balance: Individually evaluated | - |  | - |  | - |  | - |  | -
Ending Balance: Collectively evaluated | 512 |  | 3,963 |  | 1,106 |  | 1,739 |  | 7,320
Totals: | $ 512 |  | $ 3,963 |  | $ 1,106 |  | $ 1,739 |  | $ 7,320
Financing Receivables: |  |  |  |  |  |  |  |  |
Ending Balance: Individually evaluated | $ 394 |  | $ 3,736 |  | $ 307 |  | $ 1,114 |  | $ 5,551
Ending Balance: Collectively evaluated | 65,433 |  | 325,728 |  | 77,624 |  | 132,569 |  | 601,354
Totals: | $ 65,827 |  | $ 329,464 |  | $ 77,931 |  | $ 133,683 |  | $ 606,905
‎ Note 8 – Loans, allowance for credit losses and OREO (continued)
| As of and For the Year Ended December 31, 2022
|  |  | Commercial |  |  |  |  |  |
2022 | Commercial |  | Real Estate |  | Consumer |  | Residential |  | Total
Allowance for Credit Losses: |  |  |  |  |  |  |  |  |
Beginning Balance | $ 1,471 |  | $ 3,637 |  | $ 860 |  | $ 947 |  | $ 6,915
Charge-Offs | - |  | (137) |  | (25) |  | - |  | (162)
Recoveries | 104 |  | 212 |  | 18 |  | 72 |  | 406
Provision (Recovery of) | (473) |  | (810) |  | 51 |  | 332 |  | (900)
Ending Balance | 1,102 |  | 2,902 |  | 904 |  | 1,351 |  | 6,259
Ending Balance: Individually evaluated for impairment | - |  | - |  | - |  | - |  | -
Ending Balance: Collectively evaluated for impairment | 1,102 |  | 2,902 |  | 904 |  | 1,351 |  | 6,259
Totals: | $ 1,102 |  | $ 2,902 |  | $ 904 |  | $ 1,351 |  | $ 6,259
Financing Receivables: |  |  |  |  |  |  |  |  |
Ending Balance: Individually evaluated for impairment | $ - |  | $ 1,072 |  | $ 249 |  | $ 1,345 |  | $ 2,666
Ending Balance: Collectively evaluated for impairment | 95,885 |  | 352,953 |  | 97,710 |  | 62,411 |  | 608,959
Totals: | $ 95,885 |  | $ 354,025 |  | $ 97,959 |  | $ 63,756 |  | $ 611,625
‎ Note 8 – Loans, allowance for credit losses and OREO (continued) Credit Quality Indicators The Bank’s internal risk rating system is in place to grade commercial and commercial real estate loans. Category ratings are reviewed periodically by lenders and the credit review area of the Bank based on the borrower’s individual situation. Additionally, internal and external monitoring and review of credits are conducted on an annual basis. Below is a summary and definition of the Bank’s risk rating categories:
RATING 1 |  | Excellent
RATING 2 |  | Above Average
RATING 3 |  | Satisfactory
RATING 4 |  | Acceptable / Low Satisfactory
RATING 5 |  | Monitor
RATING 6 |  | Special Mention
RATING 7 |  | Substandard
RATING 8 |  | Doubtful
RATING 9 |  | Loss
We segregate loans into the above categories based on the following criteria and we review the characteristics of each rating at least annually, generally during the first quarter. The characteristics of these ratings are as follows: “Pass.” These are loans having risk ratings of 1 through 4. Pass loans are to persons or business entities with an acceptable financial condition, appropriate collateral margins, appropriate cash flow to service the existing loan, and an appropriate leverage ratio. The borrower has paid all obligations as agreed and it is expected that this type of payment history will continue. When necessary, acceptable personal guarantors support the loan. “Monitor.” These are loans having a risk rating of 5. Monitor loans have currently acceptable risk but may have the potential for a specific defined weakness in the borrower’s operations and the borrower’s ability to generate positive cash flow on a sustained basis. The borrower’s recent payment history may currently or in the future be characterized by late payments. The Bank’s risk exposure is mitigated by collateral supporting the loan. The collateral is considered to be well-margined, well maintained, accessible and readily marketable. “Special Mention.” These are loans having a risk rating of 6. Special Mention loans have weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the bank’s credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. These loans do warrant more than routine monitoring due to a weakness caused by adverse events. “Substandard.” These are loans having a risk rating of 7. Substandard loans are considered to have specific and well-defined weaknesses that jeopardize the viability of the Bank’s credit extension. The payment history for the loan has been inconsistent and the expected or projected primary repayment source may be inadequate to service the loan. The estimated net liquidation value of the collateral pledged and/or ability of the personal guarantor(s) to pay the loan may not adequately protect the Bank. There is a distinct possibility that the Bank will sustain some loss if the deficiencies associated with the loan are not corrected in the near term. A substandard loan would not automatically meet our definition of impaired unless the loan is significantly past due and the borrower’s performance and financial condition provides evidence that it is probable that the Bank will be unable to collect all amounts due. “Doubtful.” These are loans having a risk rating of 8. Doubtful rated loans have all the weaknesses inherent in a loan that is classified substandard but 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. The possibility of loss is extremely high. “Loss.” These are loans having a risk rating of 9. Loss rated loans are not considered collectible under normal circumstances and there is no realistic expectation for any future payment on the loan. Loss rated loans are fully charged off. ‎ Note 8 – Loans, allowance for credit losses and OREO (continued) The table below details the amortized cost of the classes of loans by credit quality indicator and year of origination as of September 30, 2023.
| Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |
| 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans Amortized Cost Basis |  | Total |  | Revolving Loans Converted to Term
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ 5,114 |  | $ 4,921 |  | $ 9,499 |  | $ 7,010 |  | $ 2,974 |  | $ 19,014 |  | $ 16,426 |  | $ 64,958 |  | $ 43
Special Mention | - |  | - |  | - |  | 134 |  | - |  | - |  | 269 |  | 403 |  | -
Substandard | - |  | 19 |  | 233 |  | - |  | 7 |  | 207 |  | - |  | 466 |  | 180
Total | $ 5,114 |  | $ 4,940 |  | $ 9,732 |  | $ 7,144 |  | $ 2,981 |  | $ 19,221 |  | $ 16,695 |  | $ 65,827 |  | $ 223
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Mort. - Owner Occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ 6,944 |  | $ 22,122 |  | $ 46,430 |  | $ 8,181 |  | $ 9,141 |  | $ 32,094 |  | $ 1,115 |  | $ 126,027 |  | $ 162
Special Mention | - |  | - |  | - |  | - |  | - |  | 462 |  | - |  | 462 |  | -
Substandard | 94.00 |  | 107 |  | - |  | 46 |  | 290 |  | 1,620 |  | - |  | 2,157 |  | -
Total | $ 7,038 |  | $ 22,229 |  | $ 46,430 |  | $ 8,227 |  | $ 9,431 |  | $ 34,176 |  | $ 1,115 |  | $ 128,646 |  | $ 162
Commercial Mort. - Non-Owner Occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ 11,874 |  | $ 52,960 |  | $ 35,694 |  | $ 10,344 |  | $ 4,466 |  | $ 54,146 |  | $ 6,416 |  | $ 175,900 |  | $ -
Special Mention | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Substandard | - |  | - |  | - |  | - |  | 1,173 |  | - |  | - |  | 1,173 |  | -
Total | $ 11,874 |  | $ 52,960 |  | $ 35,694 |  | $ 10,344 |  | $ 5,639 |  | $ 54,146 |  | $ 6,416 |  | $ 177,073 |  | $ -
Commercial Construction/Land |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ 553 |  | $ 6,290 |  | $ 9,935 |  | $ 3,096 |  | $ 635 |  | $ 473 |  | $ 2,357 |  | $ 23,339 |  | $ -
Special Mention | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Substandard | - |  | - |  | 406 |  | - |  | - |  | - |  | - |  | 406 |  | -
Total | $ 553 |  | $ 6,290 |  | $ 10,341 |  | $ 3,096 |  | $ 635 |  | $ 473 |  | $ 2,357 |  | $ 23,745 |  | $ -
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer - Open-End |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ - |  | $ - |  | $ - |  | $ - |  | $ - |  | $ - |  | $ 51,804 |  | $ 51,804 |  | $ 1,081
Special Mention | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Substandard | - |  | - |  | - |  | - |  | - |  | - |  | 219 |  | 219 |  | -
Total | $ - |  | $ - |  | $ - |  | $ - |  | $ - |  | $ - |  | $ 52,023 |  | $ 52,023 |  | $ 1,081
Consumer - Closed-End |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ 4,128 |  | $ 11,680 |  | $ 675 |  | $ 562 |  | $ 8,034 |  | $ 665 |  | $ - |  | $ 25,744 |  | $ -
Special Mention | - |  | - |  | - |  | 15 |  | - |  | - |  | - |  | 15 |  | -
Substandard | - |  | - |  | - |  | - |  | 32 |  | 117 |  | - |  | 149 |  | -
Total | $ 4,128 |  | $ 11,680 |  | $ 675 |  | $ 577 |  | $ 8,066 |  | $ 782 |  | $ - |  | $ 25,908 |  | $ -
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential Mortgages |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ 22,245 |  | $ 24,834 |  | $ 10,276 |  | $ 9,110 |  | $ 7,260 |  | $ 26,378 |  | $ - |  | $ 100,103 |  | $ -
Special Mention | - |  | - |  | - |  | - |  | - |  | 1,716 |  | - |  | 1,716 |  | -
Substandard | - |  | - |  | - |  | 105 |  | 56 |  | 1,293 |  | - |  | 1,454 |  | -
Total | $ 22,245 |  | $ 24,834 |  | $ 10,276 |  | $ 9,215 |  | $ 7,316 |  | $ 29,387 |  | $ - |  | $ 103,273 |  | $ -
Residential Consumer Constr./Land |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ 6,116 |  | $ 10,745 |  | $ 6,270 |  | $ 2,520 |  | $ 2,173 |  | $ 2,586 |  | $ - |  | $ 30,410 |  | $ -
Special Mention | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Substandard | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Total | $ 6,116 |  | $ 10,745 |  | $ 6,270 |  | $ 2,520 |  | $ 2,173 |  | $ 2,586 |  | $ - |  | $ 30,410 |  | $ -
Totals: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ 56,974 |  | $ 133,552 |  | $ 118,779 |  | $ 40,823 |  | $ 34,683 |  | $ 135,356 |  | $ 78,118 |  | $ 598,285 |  | $ 1,286
Special Mention | - |  | - |  | - |  | 149 |  | - |  | 2,178 |  | 269 |  | 2,596 |  | -
Substandard | 94 |  | 126 |  | 639 |  | 151 |  | 1,558 |  | 3,237 |  | 219 |  | 6,024 |  | 180
Total | $ 57,068 |  | $ 133,678 |  | $ 119,418 |  | $ 41,123 |  | $ 36,241 |  | $ 140,771 |  | $ 78,606 |  | $ 606,905 |  | $ 1,466
‎ Note 8 – Loans, allowance for credit losses and OREO (continued) The following table details the current period gross charge-offs of loans by year of origination as of September 30, 2023
Current Period Gross Charge-Offs by Origination Year (in thousands)
| 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Revolving Loans Amortized Cost Basis | Total | Revolving Loans Converted to Term
Commercial | $ - | $ - | $ - | $ 17 | $ - | $ 120 | $ - | $ 137 | $ -
Commercial Real Estate: |  |  |  |  |  |  |  |  |
Commercial Mortgages-Owner Occupied | - | - | - | - | - | - | - | - | -
Commercial Mortgages-Non-Owner Occupied | - | - | - | - | - | - | - | - | -
Commercial Construction/Land | - | - | - | - | - | - | - | - | -
Consumer: |  |  |  |  |  |  |  |  |
Consumer Open-End | - | - | - | - | - | 6 | 6 | 12 | -
Consumer Closed-End | - | 25 | 19 | - | - | - | - | 44 | -
Residential: |  |  |  |  |  |  |  |  |
Residential Mortgages | - | - | - | - | - | 3 | - | 3 | -
Residential Consumer Construction/Land | - | - | - | - | - | - | - | - | -
Total | $ - | $ 25 | $ 19 | $ 17 | $ - | $ 129 | $ 6 | $ 196 | $ -
‎ Note 8 – Loans, allowance for credit losses and OREO (continued) The following tables present credit quality information by class of loans as of December 31, 2022.
Credit Quality Information - by Class
December 31, 2022
2022 |  | Pass |  |  | Monitor |  |  | Special |  |  | Substandard |  |  | Doubtful |  |  | Totals
|  |  |  |  |  |  |  | Mention |  |  |  |  |  |  |  |  |
Commercial | $ | 89,889 |  | $ | 4,418 |  | $ | 1,465 |  | $ | 113 |  | $ | — |  | $ | 95,885
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Mortgages-Owner Occupied |  | 132,686 |  |  | 1,931 |  |  | — |  |  | 572 |  |  | — |  |  | 135,189
Commercial Mortgages-Non-Owner Occupied |  | 204,810 |  |  | — |  |  | 1,182 |  |  | 709 |  |  | — |  |  | 206,701
Commercial Construction |  | 12,126 |  |  | 9 |  |  | — |  |  | — |  |  | — |  |  | 12,135
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Unsecured |  | 2,809 |  |  | — |  |  | 19 |  |  | — |  |  | — |  |  | 2,828
Consumer Secured |  | 94,788 |  |  | — |  |  | — |  |  | 343 |  |  | — |  |  | 95,131
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential Mortgages |  | 41,591 |  |  | — |  |  | — |  |  | 1,458 |  |  | — |  |  | 43,049
Residential Consumer Construction |  | 19,178 |  |  | 1,529 |  |  | — |  |  | — |  |  | — |  |  | 20,707
Totals | $ | 597,877 |  | $ | 7,887 |  | $ | 2,666 |  | $ | 3,195 |  | $ | — |  | $ | 611,625
Loans on Non-Accrual Status (dollars in thousands)
| CECL |  | Incurred Loss
| September 30, 2023 |  | December 31, 2022
| Nonaccrual Loans |  | Nonaccrual Loans
| With No Allowance | With an Allowance | Total |  |
Commercial | $ 72 | $ - | $ 72 |  | $ -
Commercial Real Estate: |  |  |  |  |
Commercial Mortgages – Owner Occupied | 107 | - | 107 |  | -
Commercial Mortgages-Non-Owner Occupied | - | - | - |  | 518
Commercial Construction/Land | 406 | - | 406 |  | -
Consumer |  |  |  |  |
Consumer Open-End | - | - | - |  | -
Consumer Closed-End | - | - | - |  | 20
Residential: |  |  |  |  |
Residential Mortgages | - | - | - |  | 95
Residential Consumer Construction | - | - | - |  | -
Total | $ 585 | $ - | $ 585 |  | $ 633
‎ Note 8 – Loans, allowance for credit losses and OREO (continued) The following tables present an aging analysis of the loan portfolio by class and past due as of September 30, 2023 and December 31, 2022.
Age Analysis of Past Due Loans as of September 30, 2023
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Recorded
|  |  |  |  |  |  |  | Greater |  |  |  |  |  |  |  |  |  |  |  | Investment
2023 |  | 30-59 Days |  |  | 60-89 Days |  |  | than |  |  | Total Past |  |  |  |  |  | Total |  |  | > 90 Days &
|  | Past Due |  |  | Past Due |  |  | 90 Days |  |  | Due |  |  | Current |  |  | Loans |  |  | Accruing
Commercial | $ | 72 |  | $ | — |  | $ | — |  | $ | 72 |  | $ | 65,755 |  | $ | 65,827 |  | $ | —
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Mortgages-Owner Occupied |  | — |  |  | 107 |  |  | — |  |  | 107 |  |  | 128,539 |  |  | 128,646 |  |  | —
Commercial Mortgages-Non-Owner Occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | 177,073 |  |  | 177,073 |  |  | —
Commercial Construction/Land |  | — |  |  | — |  |  | — |  |  | — |  |  | 23,745 |  |  | 23,745 |  |  | —
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Open-End |  | 175 |  |  | — |  |  | — |  |  | 175 |  |  | 51,848 |  |  | 52,023 |  |  | —
Consumer Closed-End |  | 162 |  |  | — |  |  | — |  |  | 162 |  |  | 25,746 |  |  | 25,908 |  |  | —
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential Mortgages |  | 595 |  |  | — |  |  | — |  |  | 595 |  |  | 102,678 |  |  | 103,273 |  |  | —
Residential Consumer Construction/Land |  | — |  |  | — |  |  | — |  |  | — |  |  | 30,410 |  |  | 30,410 |  |  | —
Total | $ | 1,004 |  | $ | 107 |  | $ | — |  | $ | 1,111 |  | $ | 605,794 |  | $ | 606,905 |  | $ | —
Age Analysis of Past Due Loans as of December 31, 2022
2022 |  |  |  |  |  |  |  | Greater |  |  |  |  |  |  |  |  |  |  |  | Investment
|  | 30-59 Days |  |  | 60-89 Days |  |  | than |  |  | Total Past |  |  |  |  |  | Total |  |  | > 90 Days &
|  | Past Due |  |  | Past Due |  |  | 90 Days |  |  | Due |  |  | Current |  |  | Loans |  |  | Accruing
Commercial | $ | 52 |  | $ | 194 |  | $ | — |  | $ | 246 |  | $ | 95,639 |  | $ | 95,885 |  | $ | —
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Mortgages-Owner Occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | 135,189 |  |  | 135,189 |  |  | —
Commercial Mortgages-Non-Owner Occupied |  | 55 |  |  | — |  |  | — |  |  | 55 |  |  | 206,646 |  |  | 206,701 |  |  | —
Commercial Construction |  | — |  |  | 397 |  |  | — |  |  | 397 |  |  | 11,738 |  |  | 12,135 |  |  | —
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Unsecured |  | 15 |  |  | — |  |  | — |  |  | 15 |  |  | 2,813 |  |  | 2,828 |  |  | —
Consumer Secured |  | 62 |  |  | — |  |  | 13 |  |  | 75 |  |  | 95,056 |  |  | 95,131 |  |  | —
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential Mortgages |  | 139 |  |  | — |  |  | 95 |  |  | 234 |  |  | 42,815 |  |  | 43,049 |  |  | —
Residential Consumer Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | 20,707 |  |  | 20,707 |  |  | —
Total | $ | 323 |  | $ | 591 |  | $ | 108 |  | $ | 1,022 |  | $ | 610,603 |  | $ | 611,625 |  | $ | —
‎ Note 8 – Loans, allowance for credit losses and OREO (continued) Occasionally, the Bank modifies loans to borrowers experiencing financial difficulties by providing principal forgiveness, term extensions, interest rate reductions or payment deferrals. As the effect of most modifications is already included in the allowance for credit losses due to the measurement methodologies used in its estimate, the allowance for credit losses is typically not adjusted upon modification. When principal forgiveness is provided at modification, the amount forgiven is charged against the allowance for credit losses. There were no loan modifications to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2023. Troubled Debt Restructurings (TDR) There were no loan modifications that would have been classified as TDRs during the three and nine months ended September 30, 2022. There were no loan modifications classified as TDRs within the last twelve months that defaulted during the three and nine months ended September 30, 2022. The Company adopted ASU 2022-02 on January 1, 2023, which eliminated the accounting guidance for TDRs. ACL on Unfunded Commitments The Company maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, as well as both standby and commercial letters of credit when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable by the Company. The allowance for off-balance sheet credit exposures is adjusted as a provision for (or recovery of) credit losses in the Consolidated Statements of Income. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for loan credit losses. The allowance for credit losses for unfunded loan commitments of $690,000 at September 30, 2023, is separately classified within Other Liabilities on the Consolidated Balance Sheets. The following table presents the balance and activity in the ACL for unfunded commitments for the nine months ended September 30, 2023:
Allowance for Credit Losses on Unfunded Commitments |
Balance, December 31, 2022 | $ -
Adoption of ASU 2016-13 | 779
Recovery of credit losses | (89)
Balance September 30, 2023 | $ 690
‎ Note 8 – Loans, allowance for credit losses and OREO (continued) Other Real Estate Owned We also classify other real estate owned (OREO) as a nonperforming asset. OREO represents real property owned by the Bank which was acquired through purchase at foreclosure or from the borrower through a deed in lieu of foreclosure. OREO decreased to $0 on September 30, 2023 from $566 on December 31, 2022. The decrease was a result of the sale of two OREO properties for a total of $540, one of which had previously been written down by $26. The following table represents the changes in OREO balance during the nine months ended September 30, 2023 and year ended December 31, 2022. OREO Changes (dollars in thousands)
| Nine Months Ended Year Ended
| September 30, 2023 |  | December 31, 2022
Balance at the beginning of the year (net) | $ | 566 |  | $ | 761
Transfers from loans |  | — |  |  | —
Capitalized costs |  | — |  |  | —
Valuation adjustments |  | (23) |  |  | (195)
Sales proceeds |  | (540) |  |  | —
Loss on disposition |  | (3) |  |  | —
Balance at the end of the period (net) | $ | — |  | $ | 566
At September 30, 2023 and December 31, 2022, the Company had no consumer mortgage loans secured by residential real estate for which foreclosure was in process. The Company held no residential real estate properties in other real estate owned as of September 30, 2023 and December 31, 2022.

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