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ALLOWANCE FOR CREDIT LOSSES - LOANS

12 Months Ended

Dec. 31, 2023

7. ALLOWANCE FOR CREDIT LOSSES – LOANS

The following tables summarize the rollforward of the allowance for credit losses by loan portfolio segment for the years ended December 31, 2023, 2022, and 2021 (in thousands).

BALANCE AT

IMPACT OF

CHARGE-

PROVISION

BALANCE AT

DECEMBER 31, 2022

ADOPTING ASU 2016-13

OFFS

RECOVERIES

(CREDIT)

DECEMBER 31, 2023

Commercial real estate (owner occupied)

—

1,380

—

125

1,529

Other commercial and industrial

—

2,908

(480)

599

3,030

Commercial real estate (non-owner occupied) - retail

—

1,432

(2,028)

—

4,084

3,488

Commercial real estate (non-owner occupied) - multi-family

—

1,226

—

198

1,430

Other commercial real estate (non-owner occupied)

5,972

(2,776)

(804)

1,022

3,428

Commercial (owner occupied real estate and other)

2,653

(2,653)

—

Residential mortgages

1,380

(355)

(54)

1,021

Consumer

695

(275)

123

499

1,127

Allocation for general risk

653

(653)

—

Total

10,743

1,204

(3,641)

184

6,563

15,053


	BALANCE AT		CHARGE-				PROVISION		BALANCE AT
	DECEMBER 31, 2021		OFFS		RECOVERIES		(CREDIT)		DECEMBER 31, 2022
Commercial	$	3,071	$	(97)	$	4	$	(325)	$	2,653
Commercial real estate (non-owner occupied)		6,392		(1,390)		54		916		5,972
Residential mortgages		1,590		(28)		19		(201)		1,380
Consumer		113		(334)		67		239		85
Allocation for general risk		1,232		—		—		(579)		653
Total	$	12,398	$	(1,849)	$	144	$	50	$	10,743


	BALANCE AT		CHARGE-				PROVISION		BALANCE AT
	DECEMBER 31, 2020		OFFS		RECOVERIES		(CREDIT)		DECEMBER 31, 2021
Commercial	$	3,472	$	(146)	$	89	$	(344)	$	3,071
Commercial real estate (non-owner occupied)		5,373		—		51		968		6,392
Residential mortgages		1,292		(17)		49		266		1,590
Consumer		115		(131)		58		71		113
Allocation for general risk		1,093		—		—		139		1,232
Total	$	11,345	$	(294)	$	247	$	1,100	$	12,398

The Company recorded a $6.6 million provision for credit losses on the loan portfolio in 2023 compared to a provision of $50,000 and $1.1 million for the years ended December 31, 2022 and 2021, respectively. The increased provision for credit losses on the loan portfolio during 2023 was necessary due primarily to charge-off activity during the year. Specifically, the Company recognized net loan charge-offs of approximately $3.5 million, or 0.35% of total average loans, for 2023 compared to net loan charge-offs of $1.7 million, or 0.17% of total average loans, for the 2022 year. Rite Aid, a national tenant in several commercial real estate properties financed by the Company, declared

bankruptcy in the fourth quarter of 2023. As a result of this action, the Company updated its comprehensive evaluation of its exposure to Rite Aid throughout its loan portfolio as it received information on leases that Rite Aid either rejected or modified. This evaluation required the recognition of $2.0 million in charge-offs related to two non-owner occupied commercial real estate (CRE) loans in which Rite Aid was the sole tenant. There was also a partial charge-down of $804,000 on another non-owner occupied CRE loan for a mixed-use retail/office property that has Rite Aid as the major tenant. The remaining balance of this loan transferred into non-accrual status which lead to an increase in non-performing assets. Also contributing to the significant increase in the provision for credit losses in 2023 was an unfavorable adjustment to the historical loss factors used to calculate the allowance for credit losses in accordance with CECL requirements and growth within the loan portfolio.

The $325,000 allowance for loan losses credit recorded during the year ended December 31, 2022 within the commercial portfolio was due to a lower level of criticized assets and, to a lesser extent, portfolio contraction. A $916,000 allowance for loan losses provision was recorded for the non-owner occupied commercial real estate portfolio as a result of the partial charge-down and transfer of one loan relationship into non-accrual status during the third quarter of the year while the borrower pursued the sale of the property. Additionally, the non-owner occupied commercial real estate portfolio was impacted by the risk rating downgrade of another loan relationship as well as portfolio growth. It is further noted that the allocation for general risk eased due to improvement in the qualitative adjustment as the economy demonstrated improvement coming out of the pandemic during 2022.

The $344,000 allowance for loan losses credit recorded during the year ended December 31, 2021 within the commercial portfolio was attributable to lower criticized commercial and industrial loans outstanding resulting from upgrades of certain credits originally impacted by the pandemic, as well as lower historical loss rates. While a $968,000 allowance for loan losses provision was recorded for the non-owner occupied commercial real estate portfolio which stemmed from overall portfolio growth as well as elevated classified commercial real estate balances.

The following tables summarize the loan portfolio and allowance for credit losses by the primary segments of the loan portfolio.

AT DECEMBER 31, 2023

COMMERCIAL

REAL ESTATE

OTHER COMMERCIAL

REAL ESTATE

OTHER COMMERCIAL

(NON-OWNER OCCUPIED) -

REAL ESTATE

RESIDENTIAL

Loans:

(OWNER OCCUPIED)

AND INDUSTRIAL

RETAIL

MULTI-FAMILY

(NON-OWNER OCCUPIED)

MORTGAGES

CONSUMER

TOTAL

(IN THOUSANDS)

Individually evaluated

187

1,694

—

8,780

173

—

10,834

Collectively evaluated

88,960

157,730

161,961

110,008

231,506

174,497

102,775

1,027,437

Total loans

89,147

159,424

161,961

110,008

240,286

174,670

102,775

1,038,271

AT DECEMBER 31, 2023

COMMERCIAL

REAL ESTATE

OTHER COMMERCIAL

Allowance for

REAL ESTATE

OTHER COMMERCIAL

(NON-OWNER OCCUPIED) -

REAL ESTATE

RESIDENTIAL

credit losses:

(OWNER OCCUPIED)

AND INDUSTRIAL

RETAIL

MULTI-FAMILY

(NON-OWNER OCCUPIED)

MORTGAGES

CONSUMER

TOTAL

(IN THOUSANDS)

Specific reserve allocation

—

414

—

414

General reserve allocation

1,529

2,616

3,488

1,430

3,428

1,021

1,127

14,639

Total allowance for credit losses

1,529

3,030

3,488

1,430

3,428

1,021

1,127

15,053


	AT DECEMBER 31, 2022
			COMMERCIAL
			REAL ESTATE		RESIDENTIAL
Loans:	COMMERCIAL		(NON-OWNER OCCUPIED)		MORTGAGES		CONSUMER		TOTAL

	(IN THOUSANDS)
Individually evaluated	$	1,989	$	1,586	$	—	$	—	$	3,575
Collectively evaluated		226,589		449,158		297,971		13,473		987,191
Total loans	$	228,578	$	450,744	$	297,971	$	13,473	$	990,766


	AT DECEMBER 31, 2022
			COMMERCIAL
Allowance for			REAL ESTATE		RESIDENTIAL				ALLOCATION FOR
credit losses:	COMMERCIAL		(NON-OWNER OCCUPIED)		MORTGAGES		CONSUMER		GENERAL RISK		TOTAL

	(IN THOUSANDS)
Specific reserve allocation	$	520	$	3	$	—	$	—	$	—	$	523
General reserve allocation		2,133		5,969		1,380		85		653		10,220
Total allowance for credit losses	$	2,653	$	5,972	$	1,380	$	85	$	653	$	10,743

The following table presents the amortized cost basis of collateral-dependent non-accrual loans by class of loans (in thousands).


	COLLATERAL TYPE
DECEMBER 31, 2023	REAL ESTATE
Commercial:
Commercial real estate (owner occupied)	$	187
Commercial real estate (non-owner occupied):
Other		8,780
Residential mortgages		173
Total	$	9,140

Non-Performing Assets

Non-performing assets are comprised of (i) loans which are on a non-accrual basis, (ii) loans which are contractually past due 90 days or more as to interest or principal payments, and (iii) other real estate owned (OREO – real estate acquired through foreclosure and in-substance foreclosures) and repossessed assets.

Loans will be transferred to non-accrual status 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 evaluating the loan include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. 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, and the amount of the shortfall in relation to the principal and interest owed. The following table presents non-accrual loans, loans past due over 90 days still accruing interest, and OREO and repossessed assets by portfolio class (in thousands).


	AT DECEMBER 31, 2023
	NON-ACCRUAL WITH NO ACL		NON-ACCRUAL WITH ACL		TOTAL NON-ACCRUAL		LOANS PAST DUE OVER 90 DAYS STILL ACCRUING		OREO AND REPOSSESSED ASSETS		TOTAL NON-PERFORMING ASSETS
Commercial real estate (owner occupied)	$	187	$	—	$	187	$	—	$	—	$	187
Other commercial and industrial		—		1,694		1,694		211		—		1,905
Commercial real estate (non-owner occupied) - retail		—		—		—		—		—		—
Commercial real estate (non-owner occupied) - multi-family		—		—		—		—		—		—
Other commercial real estate (non-owner occupied)		8,780		—		8,780		—		—		8,780
Residential mortgages		173		545		718		—		15		733
Consumer		—		788		788		—		—		788
Total	$	9,140	$	3,027	$	12,167	$	211	$	15	$	12,393


	AT DECEMBER 31, 2022
Non-accrual loans:
Commercial and industrial	$	1,989
Commercial real estate (non-owner occupied)		1,586
Residential mortgages		1,577
Consumer		9
Total		5,161

Other real estate owned and repossessed assets:
Residential mortgages		38
Consumer		1
Total		39
Total non-performing assets	$	5,200

It should be noted that the Company has elected to exclude accrued interest receivable from the measurement of its ACL. When a loan is placed in non-accrual status, any outstanding interest is reversed against interest income.

Non-performing assets increased from $5.2 million at December 31, 2022 to $12.4 million at December 31, 2023 primarily due to the partial charge-down and transfer into non-accrual status of one commercial real estate loan for a mixed-use retail/office property that has Rite Aid as a major tenant. Foreclosed assets acquired in settlement of loans carried at fair value less estimated costs to sell are included in other assets on the Consolidated Balance Sheets. As of December 31, 2023 and 2022, a total of $15,000 and $38,000, respectively, of residential real estate foreclosed assets were included in other assets. As of December 31, 2023, the Company had initiated formal foreclosure procedures on $332,000 of residential mortgages.

Overall, the Company has built its allowance for credit losses and maintained solid coverage of both total loans and non-performing assets at December 31, 2023 as indicated by the allowance for credit losses coverage ratio of non-performing assets at 121% while the allowance for credit losses as a percentage of total loans increased to 1.45%. This compares to allowance coverage of non-performing assets of 207%, and total loans of 1.08% as of December 31, 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, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually to classify the loans as to credit risk.

Management uses a nine-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized. The first five pass categories are aggregated, while the pass-6, special mention, substandard and doubtful categories are disaggregated to separate pools. The criticized rating categories

utilized by management generally follow bank regulatory definitions. The special mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a substandard classification. Loans in the substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. Loans in the doubtful category 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. All loans greater than 90 days past due, or for which any portion of the loan represents a specific allocation of the allowance for credit losses are placed in substandard or doubtful.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan rating process, which dictates that, at a minimum, credit reviews are mandatory for all commercial and commercial mortgage loan relationships with aggregate balances in excess of $1,000,000 within a 12-month period. Generally, consumer and residential mortgage loans are included in the pass categories unless a specific action, such as bankruptcy, delinquency, or death occurs to raise awareness of a possible credit event. The Company’s commercial relationship managers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis. Risk ratings are assigned by the account officer, but require independent review and rating concurrence from the Company’s internal Loan Review Department. The Loan Review Department is an experienced, independent function which reports directly to the Board’s Audit Committee. The scope of commercial portfolio coverage by the Loan Review Department is defined and presented to the Audit Committee for approval on an annual basis. The approved scope of coverage for the year ending December 31, 2023 requires review of approximately 25% of the commercial loan portfolio.

In addition to loan monitoring by the account officer and Loan Review Department, the Company also requires presentation of all credits rated pass-6 with aggregate balances greater than $2,000,000, all credits rated special mention or substandard with aggregate balances greater than $250,000, and all credits rated doubtful with aggregate balances greater than $100,000 on an individual basis to the Company’s Loan Loss Reserve Committee on a quarterly basis. Additionally, the Asset Quality Task Force, which is a group comprised of senior level personnel, meets monthly to monitor the status of problem loans.

The following table presents the classes of the commercial and commercial real estate loan portfolios summarized by the aggregate pass and the criticized categories of special mention, substandard and doubtful within the internal risk rating system.


	AT DECEMBER 31, 2023
													REVOLVING		REVOLVING
													LOANS		LOANS
													AMORTIZED		CONVERTED
	TERM LOANS AMORTIZED COST BASIS BY ORIGINATION YEAR												COST		TO
	2023		2022		2021		2020		2019		PRIOR		BASIS		TERM		TOTAL

	(IN THOUSANDS)
Commercial real estate (owner occupied)
Pass	$	17,801	$	6,750	$	15,067	$	8,415	$	10,322	$	26,538	$	351	$	—	$	85,244
Special Mention		—		—		464		—		2,252		—		923		—		3,639
Substandard		—		—		—		—		—		264		—		—		264
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	17,801	$	6,750	$	15,531	$	8,415	$	12,574	$	26,802	$	1,274	$	—	$	89,147
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Other commercial and industrial
Pass	$	22,662	$	34,816	$	12,767	$	5,831	$	4,912	$	19,587	$	56,391	$	70	$	157,036
Special Mention		—		—		127		—		—		—		—		—		127
Substandard		—		619		—		—		—		1,578		64		—		2,261
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	22,662	$	35,435	$	12,894	$	5,831	$	4,912	$	21,165	$	56,455	$	70	$	159,424
Current period gross charge-offs	$	—	$	75	$	—	$	—	$	—	$	405	$	—	$	—	$	480
Commercial real estate (non-owner occupied) - retail
Pass	$	35,545	$	23,368	$	33,110	$	23,146	$	9,226	$	35,102	$	983	$	—	$	160,480
Special Mention		—		314		—		—		—		1,167		—		—		1,481
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	35,545	$	23,682	$	33,110	$	23,146	$	9,226	$	36,269	$	983	$	—	$	161,961
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	2,028	$	—	$	—	$	2,028
Commercial real estate (non-owner occupied) - multi-family
Pass	$	22,620	$	16,767	$	16,622	$	12,041	$	9,638	$	28,632	$	1,321	$	—	$	107,641
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		966		1,278		123		—		—		2,367
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	22,620	$	16,767	$	16,622	$	13,007	$	10,916	$	28,755	$	1,321	$	—	$	110,008
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Other commercial real estate (non-owner occupied)
Pass	$	29,591	$	36,398	$	48,267	$	20,168	$	23,025	$	54,792	$	5,670	$	—	$	217,911
Special Mention		—		—		—		—		—		3,777		—		—		3,777
Substandard		—		1,043		—		—		6,243		11,113		—		199		18,598
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	29,591	$	37,441	$	48,267	$	20,168	$	29,268	$	69,682	$	5,670	$	199	$	240,286
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	804	$	—	$	—	$	—	$	804
Total by risk rating
Pass	$	128,219	$	118,099	$	125,833	$	69,601	$	57,123	$	164,651	$	64,716	$	70	$	728,312
Special Mention		—		314		591		—		2,252		4,944		923		—		9,024
Substandard		—		1,662		—		966		7,521		13,078		64		199		23,490
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	128,219	$	120,075	$	126,424	$	70,567	$	66,896	$	182,673	$	65,703	$	269	$	760,826
Current period gross charge-offs	$	—	$	75	$	—	$	—	$	804	$	2,433	$	—	$	—	$	3,312


	AT DECEMBER 31, 2022
			SPECIAL
	PASS		MENTION		SUBSTANDARD		DOUBTFUL		TOTAL

	(IN THOUSANDS)
Commercial and industrial	$	148,361	$	—	$	5,037	$	—	$	153,398
Paycheck Protection Program (PPP)		22		—		—		—		22
Commercial real estate (owner occupied)		74,187		—		971		—		75,158
Commercial real estate (non-owner occupied)		423,486		11,015		16,240		3		450,744
Total	$	646,056	$	11,015	$	22,248	$	3	$	679,322

It is generally the policy of the Bank that the outstanding balance of any residential mortgage or home equity loan that exceeds 90-days past due as to principal and/or interest is transferred to non-accrual status and an evaluation is completed to determine the fair value of the collateral less selling costs, unless the balance is minor. A charge-down is recorded for any deficiency balance determined from the collateral evaluation. It is generally the policy of the Bank that the outstanding balance of any unsecured consumer loan that exceeds 90-days past due as to principal and/or interest is charged-off. Loans past due 90 days or more and loans in non-accrual status are considered non-performing. The following tables present the performing and non-performing outstanding balances of the residential mortgage and consumer loan portfolio classes.


	AT DECEMBER 31, 2023
													REVOLVING		REVOLVING
													LOANS		LOANS
													AMORTIZED		CONVERTED
	TERM LOANS AMORTIZED COST BASIS BY ORIGINATION YEAR												COST		TO
	2023		2022		2021		2020		2019		PRIOR		BASIS		TERM		TOTAL

	(IN THOUSANDS)
Residential mortgages
Performing	$	14,576	$	11,620	$	61,172	$	44,049	$	7,092	$	35,443	$	—	$	—	$	173,952
Non-performing		—		—		—		—		—		718		—		—		718
Total	$	14,576	$	11,620	$	61,172	$	44,049	$	7,092	$	36,161	$	—	$	—	$	174,670
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	54	$	—	$	—	$	54
Consumer
Performing	$	13,890	$	20,430	$	9,782	$	3,190	$	1,169	$	4,515	$	48,344	$	667	$	101,987
Non-performing		15		—		—		73		42		280		157		221		788
Total	$	13,905	$	20,430	$	9,782	$	3,263	$	1,211	$	4,795	$	48,501	$	888	$	102,775
Current period gross charge-offs	$	9	$	35	$	43	$	7	$	8	$	173	$	—	$	—	$	275
Total by payment performance
Performing	$	28,466	$	32,050	$	70,954	$	47,239	$	8,261	$	39,958	$	48,344	$	667	$	275,939
Non-performing		15		—		—		73		42		998		157		221		1,506
Total	$	28,481	$	32,050	$	70,954	$	47,312	$	8,303	$	40,956	$	48,501	$	888	$	277,445
Current period gross charge-offs	$	9	$	35	$	43	$	7	$	8	$	227	$	—	$	—	$	329


	AT DECEMBER 31, 2022
			NON-
	PERFORMING		PERFORMING		TOTAL

	(IN THOUSANDS)
Residential mortgages	$	296,401	$	1,570	$	297,971
Consumer		13,457		16		13,473
Total	$	309,858	$	1,586	$	311,444

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans.

AT DECEMBER 31, 2023

30 – 59

60 – 89

DAYS

90 DAYS

TOTAL

CURRENT

PAST DUE

LOANS

(IN THOUSANDS)

Commercial real estate (owner occupied)

88,960

—

187

89,147

Other commercial and industrial

158,290

526

586

1,134

159,424

Commercial real estate (non-owner occupied) - retail

161,961

—

161,961

Commercial real estate (non-owner occupied) - multi-family

110,008

—

110,008

Other commercial real estate (non-owner occupied)

239,243

—

1,043

240,286

Residential mortgages

173,647

437

568

1,023

174,670

Consumer

101,664

741

347

1,111

102,775

Total

1,033,773

1,704

2,731

4,498

1,038,271


	AT DECEMBER 31, 2022

			30 – 59		60 – 89
			DAYS		DAYS		90 DAYS		TOTAL		TOTAL
	CURRENT		PAST DUE		PAST DUE		PAST DUE		PAST DUE		LOANS

	(IN THOUSANDS)
Commercial and industrial	$	152,314	$	797	$	287	$	—	$	1,084	$	153,398
Paycheck Protection Program (PPP)		22		—		—		—		—		22
Commercial real estate (owner occupied)		74,960		198		—		—		198		75,158
Commercial real estate (non-owner occupied)		446,809		3,935		—		—		3,935		450,744
Residential mortgages		295,790		489		422		1,270		2,181		297,971
Consumer		13,290		60		114		9		183		13,473
Total	$	983,185	$	5,479	$	823	$	1,279	$	7,581	$	990,766

Loan Modifications to Borrowers Experiencing Financial Difficulty

Occasionally, the Company modifies loans to borrowers experiencing financial difficulty as a result of our loss mitigation activities. A variety of solutions are offered to borrowers, including loan modifications that may result in principal forgiveness, interest rate reductions, term extensions, payment delays, or combinations thereof.

●

Principal forgiveness includes principal and accrued interest forgiveness. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL.

●

Interest rate reductions include modifications where the interest rate is reduced and interest is deferred.

●

Term extensions extend the original contractual maturity date of the loan.

●

Payment delays consist of modifications where we expect to collect the contractual amounts due, but result in a delay in the receipt of payments specified under the original loan terms. We generally consider payment delays to be insignificant when the delay is three months or less.

The following table summarizes the amortized cost basis, as of December 31, 2023, of loans modified to borrowers experiencing financial difficulty during the year ended December 31, 2023 (in thousands).


	TERM EXTENSION
	AMORTIZED COST BASIS		% OF TOTAL CLASS OF LOANS
Residential mortgages	$	37		0.02	%
Total	$	37

	COMBINATION - INTEREST RATE REDUCTION AND TERM EXTENSION
	AMORTIZED COST BASIS		% OF TOTAL CLASS OF LOANS
Other commercial real estate (non-owner occupied)	$	6,243		2.60	%
Total	$	6,243

At December 31, 2023, the Company had no unfunded loan commitments associated with the loan modifications to borrowers experiencing financial difficulty.

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty during the year ended December 31, 2023.


TERM EXTENSION
LOAN TYPE		FINANCIAL EFFECT
Residential mortgages		During the fourth quarter, provided a maturity date extension of approximately 15 years.

COMBINATION - INTEREST RATE REDUCTION AND TERM EXTENSION
LOAN TYPE		FINANCIAL EFFECT
Other commercial real estate (non-owner occupied)		During the second quarter, provided seven months of interest only payments at a reduced rate with the remaining portion of interest, totaling approximately $303,000, being deferred until maturity. Additionally, provided three month maturity date extension. A partial charge-down of $804,000 was recorded on this loan in the fourth quarter.

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. During 2023, there was an additional loan modification made to a borrower experiencing financial difficulty in the form of a term extension. This non-accrual, other commercial and industrial loan, in the amount of $405,000, was charged off in the fourth quarter. As of December 31, 2023, the modified loans described in the tables above were current as to payments.

The following table details the loans modified as troubled debt restructurings (TDR) during the year ended December 31, 2022 (dollars in thousands).


Loans in non-accrual status	# of Loans	Current Balance		Concession Granted
Commercial and industrial	1	$	452	Subsequent modification of a TDR - Extension of maturity date with a below market interest rate
Commercial real estate (non-owner occupied)	1	$	1,583	Extension of maturity date with an interest only period at below market interest rate