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Note 3 - Loans and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2022

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

3. LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans originated for investment are stated at their principal amount outstanding adjusted for partial charge-offs, the allowance, and net deferred loan fees and costs. Interest income on loans is accrued over the term of the loans primarily using the simple interest method based on the principal balance outstanding. Interest is not accrued on loans where collectibility is uncertain. Accrued interest is presented separately in the consolidated balance sheet. Loan origination fees and certain direct costs incurred to extend credit are deferred and amortized over the term of the loan or loan commitment period as an adjustment to the related loan yield.

Our total loans at September 30, 2022 were $3.88 billion compared to $3.45 billion at December 31, 2021, an increase of $427 million, or 12.4%. The components of our loan portfolio disaggregated by class of loan within the loan portfolio segments at September 30, 2022 and December 31, 2021, and the percentage change in loans from the end of 2021 to the end of the third quarter of 2022, are as follows:

											Percent
	September 30, 2022					December 31, 2021					Increase
	Balance		%			Balance		%			(Decrease)

Commercial:
Commercial and industrial (1)	$	1,213,630,000		31.3	%	$	1,137,419,000		32.9	%		6.7	%
Vacant land, land development, and residential construction		60,970,000		1.6			43,239,000		1.3			41.0
Real estate – owner occupied		643,577,000		16.6			565,758,000		16.4			13.8
Real estate – non-owner occupied		1,002,638,000		25.8			1,027,415,000		29.7			(2.4	)
Real estate – multi-family and residential rental		224,248,000		5.7			176,593,000		5.1			27.0
Total commercial		3,145,063,000		81.0			2,950,424,000		85.4			6.6

Retail:
1-4 family mortgages		705,441,000		18.2			442,547,000		12.8			59.4
Other consumer loans (2)		30,454,000		0.8			60,488,000		1.8			(49.7	)
Total retail		735,895,000		19.0			503,035,000		14.6			46.3

Total loans	$	3,880,958,000		100.0	%	$	3,453,459,000		100.0	%		12.4	%

(1)

For September 30, 2022, and December 31, 2021, includes $2.6 million and $40.1 million in loans originated under the Paycheck Protection Program, respectively.

(2)

In conjunction with the adoption of the CECL methodology effective January 1, 2022, home equity lines of credit were reclassified to 1-4 family mortgage loans from other consumer loans. Home equity lines of credit totaled $35.6 million and $29.5 million as of September 30, 2022 and December 31, 2021, respectively.

Nonperforming loans as of September 30, 2022 and December 31, 2021 were as follows:

	September 30, 2022		December 31, 2021

Loans past due 90 days or more still accruing interest	$	0	$	155,000
Nonaccrual loans		1,416,000		2,313,000

Total nonperforming loans	$	1,416,000	$	2,468,000

The recorded principal balance of nonperforming loans was as follows:

	September 30, 2022		December 31, 2021
Commercial:
Commercial and industrial	$	249,000	$	663,000
Vacant land, land development, and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		249,000		663,000

Retail:
1-4 family mortgages		1,167,000		1,686,000
Other consumer loans		0		119,000
Total retail		1,167,000		1,805,000

Total nonperforming loans	$	1,416,000	$	2,468,000

An age analysis of past due loans is as follows as of September 30, 2022:

	30 – 59 Days Past Due		60 – 89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Current		Total Loans		Recorded Balance > 89 Days and Accruing

Commercial:
Commercial and industrial	$	16,000	$	0	$	249,000	$	265,000	$	1,213,365,000	$	1,213,630,000	$	0
Vacant land, land development, and residential construction		32,000		0		0		32,000		60,938,000		60,970,000		0
Real estate – owner occupied		0		0		0		0		643,577,000		643,577,000		0
Real estate – non-owner occupied		0		0		0		0		1,002,638,000		1,002,638,000		0
Real estate – multi-family and residential rental		0		0		0		0		224,248,000		224,248,000		0
Total commercial		48,000		0		249,000		297,000		3,144,766,000		3,145,063,000		0

Retail:
1-4 family mortgages		53,000		31,000		141,000		225,000		705,216,000		705,441,000		0
Other consumer loans		1,000		0		0		1,000		30,453,000		30,454,000		0
Total retail		54,000		31,000		141,000		226,000		735,669,000		735,895,000		0

Total past due loans	$	102,000	$	31,000	$	390,000	$	523,000	$	3,880,435,000	$	3,880,958,000	$	0

An age analysis of past due loans is as follows as of December 31, 2021:

	30 – 59 Days Past Due		60 – 89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Current		Total Loans		Recorded Balance > 89 Days and Accruing

Commercial:
Commercial and industrial	$	14,000	$	0	$	193,000	$	207,000	$	1,137,212,000	$	1,137,419,000	$	155,000
Vacant land, land development, and residential construction		13,000		0		0		13,000		43,226,000		43,239,000		0
Real estate – owner occupied		0		0		0		0		565,758,000		565,758,000		0
Real estate – non-owner occupied		0		0		0		0		1,027,415,000		1,027,415,000		0
Real estate – multi-family and residential rental		0		0		0		0		176,593,000		176,593,000		0
Total commercial		27,000		0		193,000		220,000		2,950,204,000		2,950,424,000		155,000

Retail:
Home equity and other		132,000		2,000		20,000		154,000		60,334,000		60,488,000		0
1-4 family mortgages		1,265,000		241,000		82,000		1,588,000		440,959,000		442,547,000		0
Total retail		1,397,000		243,000		102,000		1,742,000		501,293,000		503,035,000		0

Total past due loans	$	1,424,000	$	243,000	$	295,000	$	1,962,000	$	3,451,497,000	$	3,453,459,000	$	155,000

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. Identified problem loans, which exhibit characteristics (financial or otherwise) that could cause the loans to become nonperforming or require restructuring in the future, are included on an internal watch list. Senior management and the Board of Directors review this list regularly. Market value estimates of collateral on distressed lending relationships, as well as on foreclosed and repossessed assets, are reviewed periodically. We also have a process in place to monitor whether value estimates at each quarter-end are reflective of current market conditions. Our credit policies establish criteria for obtaining appraisals and determining internal value estimates. We may also adjust outside and internal valuations based on identifiable trends within our markets, such as recent sales of similar properties or assets, listing prices and offers received. In addition, we may discount certain appraised and internal value estimates to address distressed market conditions. Under CECL for collateral dependent loans in instances where the borrower is experiencing financial difficulties, we adopted the practical expedient to measure the allowance based on the fair value of collateral. The allowance is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral and the recorded principal balance. If the fair value of the collateral exceeds the recorded principal balance, no allowance is required.

Collateral dependent loans, representing the entire amount of loans on nonaccrual, totaled $1.4 million as of September 30, 2022. Residential real estate served as collateral on $1.2 million in loans categorized as 1-4 family mortgages, with non-real estate business assets serving as collateral on $0.2 million in loans categorized as commercial and industrial loans. Specific reserve allocations on nonaccrual loans totaled less than $0.1 million as of September 30, 2022. No interest income was recognized on nonaccrual loans during the third quarter and first nine months of 2022. Lost interest income on nonaccrual loans totaled less than $0.1 million and $0.1 million during the third quarter and first nine months of 2022, respectively.

Impaired loans as of December 31, 2021, and average impaired loans for the three and nine months ended September 30, 2021, were as follows:

	Unpaid Contractual Principal Balance		Recorded Principal Balance		Related Allowance	Third Quarter Average Recorded Principal Balance		Year-To- Date Average Recorded Principal Balance

With no related allowance recorded
Commercial:
Commercial and industrial	$	2,893,000	$	2,818,000		$	2,759,000	$	3,836,000
Vacant land, land development and residential construction		0		0			0		0
Real estate – owner occupied		9,674,000		9,674,000			12,674,000		13,374,000
Real estate – non-owner occupied		0		0			0		163,000
Real estate – multi-family and residential rental		91,000		91,000			46,000		23,000
Total commercial		12,658,000		12,583,000			15,479,000		17,396,000
Retail:
Home equity and other		1,173,000		1,107,000			1,223,000		1,093,000
1-4 family mortgages		3,166,000		2,025,000			2,256,000		2,403,000
Total retail		4,339,000		3,132,000			3,479,000		3,496,000

Total with no related allowance recorded	$	16,997,000	$	15,715,000		$	18,958,000	$	20,892,000

	Unpaid Contractual Principal Balance		Recorded Principal Balance		Related Allowance		Third Quarter Average Recorded Principal Balance		Year-To- Date Average Recorded Principal Balance
With an allowance recorded
Commercial:
Commercial and industrial	$	2,192,000	$	2,192,000	$	266,000	$	2,888,000	$	1,617,000
Vacant land, land development and residential construction		0		0		0		0		0
Real estate – owner occupied		761,000		761,000		84,000		994,000		813,000
Real estate – non-owner occupied		146,000		146,000		4,000		152,000		156,000
Real estate – multi-family and residential rental		0		0		0		0		0
Total commercial		3,099,000		3,099,000		354,000		4,034,000		2,586,000
Retail:
Home equity and other		160,000		140,000		123,000		197,000		232,000
1-4 family mortgages		412,000		412,000		69,000		472,000		569,000
Total retail		572,000		552,000		192,000		669,000		801,000

Total with an allowance recorded	$	3,671,000	$	3,651,000	$	546,000	$	4,703,000	$	3,387,000

Total impaired loans:
Commercial	$	15,757,000	$	15,682,000	$	354,000	$	19,513,000	$	19,982,000
Retail		4,911,000		3,684,000		192,000		4,148,000		4,297,000
Total impaired loans	$	20,668,000	$	19,366,000	$	546,000	$	23,661,000	$	24,279,000

Impaired commercial loans for which no allocation of the allowance has been made in large part consist of performing troubled debt restructurings where the estimated collateral fair value exceeds the recorded principal balance, while impaired retail loans with no allowance allocation generally reflect situations whereby the recorded principal balances have been charged-down to estimated collateral fair value. Interest income recognized on accruing troubled debt restructurings totaled $0.4 million and $1.2 million during the third quarter and first nine months of 2021, respectively. No interest income was recognized on nonaccrual loans during the third quarter and first nine months of 2021. Lost interest income on nonaccrual loans totaled less than $0.1 million and $0.1 million during the third quarter and first nine months of 2021, respectively.

Credit Quality Indicators. We utilize a comprehensive grading system for our commercial loans. All commercial loans are graded on a ten grade rating system. The rating system utilizes standardized grade paradigms that analyze several critical factors such as cash flow, operating performance, financial condition, collateral, industry condition and management. All commercial loans are graded at inception and reviewed and, if appropriate, re-graded at various intervals thereafter. The risk assessment for retail loans is primarily based on the type of collateral.

Credit quality indicators were as follows as of September 30, 2022:

Commercial credit exposure – credit risk profiled by internal credit risk grades:

	Commercial and Industrial		Commercial Vacant Land, Land Development, and Residential Construction		Commercial Real Estate - Owner Occupied		Commercial Real Estate - Non-Owner Occupied		Commercial Real Estate - Multi-Family and Residential Rental

Internal credit risk grade groupings:
Grades 1 – 4 (1)	$	740,682,000	$	42,738,000	$	385,604,000	$	499,327,000	$	138,694,000
Grades 5 – 7		455,801,000		18,123,000		254,827,000		490,785,000		85,502,000
Grades 8 – 9		17,147,000		109,000		3,146,000		12,526,000		52,000
Total commercial	$	1,213,630,000	$	60,970,000	$	643,577,000	$	1,002,638,000	$	224,248,000

Retail credit exposure – credit risk profiled by collateral type:

	Other Consumer Loans		Retail 1-4 Family Mortgages

Performing	$	30,454,000	$	704,274,000
Nonperforming		0		1,167,000
Total retail	$	30,454,000	$	705,441,000

(1)

Included in Commercial and Industrial Loans Grades 1 – 4 are $2.6 million of loans originated under the Paycheck Protection Program.

Credit quality indicators were as follows as of December 31, 2021:

Commercial credit exposure – credit risk profiled by internal credit risk grades:

	Commercial and Industrial		Commercial Vacant Land, Land Development, and Residential Construction		Commercial Real Estate - Owner Occupied		Commercial Real Estate - Non-Owner Occupied		Commercial Real Estate - Multi-Family and Residential Rental

Internal credit risk grade groupings:
Grades 1 – 4 (1)	$	729,224,000	$	28,390,000	$	346,082,000	$	503,482,000	$	119,473,000
Grades 5 – 7		398,378,000		14,730,000		208,060,000		511,280,000		56,968,000
Grades 8 – 9		9,817,000		119,000		11,616,000		12,653,000		152,000
Total commercial	$	1,137,419,000	$	43,239,000	$	565,758,000	$	1,027,415,000	$	176,593,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail Home Equity and Other		Retail 1-4 Family Mortgages

Performing	$	60,369,000	$	440,861,000
Nonperforming		119,000		1,686,000
Total retail	$	60,488,000	$	442,547,000

(1)

Included in Commercial and Industrial Loans Grades 1 – 4 are $40.1 million of loans originated under the Paycheck Protection Program.

All commercial loans are graded using the following criteria:

Grade 1.

“Exceptional” Loans with this rating contain very little, if any, risk.

Grade 2.

“Outstanding” Loans with this rating have excellent and stable sources of repayment and conform to bank policy and regulatory requirements.

Grade 3.

“Very Good” Loans with this rating have strong sources of repayment and conform to bank policy and regulatory requirements. These are loans for which repayment risks are acceptable.

Grade 4.

“Good” Loans with this rating have solid sources of repayment and conform to bank policy and regulatory requirements. These are loans for which repayment risks are modest.

Grade 5.

“Acceptable” Loans with this rating exhibit acceptable sources of repayment and conform with most bank policies and all regulatory requirements. These are loans for which repayment risks are satisfactory.

Grade 6.

“Monitor” Loans with this rating are considered to have emerging weaknesses which may include negative current cash flow, high leverage, or operating losses. Generally, if further deterioration is observed, these credits will be downgraded to the criticized asset report.

Grade 7.

“Special Mention” Loans with this rating have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan at some future date.

Grade 8.

“Substandard” Loans with this rating are inadequately protected by current sound net worth, paying capacity of the obligor, or of the pledged collateral, if any. A Substandard loan normally has one or more well-defined weaknesses that jeopardize the repayment of the debt. They are characterized by the distinct possibility of loss if the deficiencies are not corrected.

Grade 9.

“Doubtful” Loans with this rating exhibit all the weaknesses inherent in the Substandard classification and where collection or liquidation in full is highly questionable and improbable.

Grade 10.

“Loss” Loans with this rating are considered uncollectable, and of such little value that continuance as an active asset is not warranted.

The primary risk elements with respect to commercial loans are the financial condition of the borrower, the sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers and employ a disciplined and formalized review of the existence of collateral and its value. The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments; loans 90 days or more past due are considered nonperforming. We have a reporting system that monitors past due loans and have adopted policies to pursue creditors’ rights in order to preserve our collateral position.

The following table reflects loan balances as of September 30, 2022 based on year of origination (dollars in thousands):

	2022		2021		2020		2019		2018		Prior		Term Total		Revolving Loans		Grand Total
Commercial:
Commercial and Industrial:
Grades 1 – 4	$	84,723	$	172,209	$	49,083	$	12,173	$	2,826	$	10,313	$	331,327	$	409,355	$	740,682
Grades 5 – 7		144,180		46,989		34,404		9,322		1,866		238		236,999		218,802		455,801
Grades 8 – 9		3,849		249		0		0		51		36		4,185		12,962		17,147
Total	$	232,752	$	219,447	$	83,487	$	21,495	$	4,743	$	10,587	$	572,511	$	641,119	$	1,213,630

Vacant Land, Land Development and Residential Construction:
Grades 1 – 4	$	26,719	$	11,956	$	3,432	$	0	$	0	$	343	$	42,450	$	288	$	42,738
Grades 5 – 7		8,274		8,519		558		52		0		718		18,121		2		18,123
Grades 8 – 9		0		0		0		0		16		93		109		0		109
Total	$	34,993	$	20,475	$	3,990	$	52	$	16	$	1,154	$	60,680	$	290	$	60,970

Real Estate – Owner Occupied:
Grades 1 – 4	$	129,640	$	159,735	$	58,119	$	19,107	$	9,589	$	9,414	$	385,604	$	0	$	385,604
Grades 5 – 7		120,184		60,281		37,008		11,893		22,890		2,571		254,827		0		254,827
Grades 8 – 9		2,689		250		45		0		162		0		3,146		0		3,146
Total	$	252,513	$	220,266	$	95,172	$	31,000	$	32,641	$	11,985	$	643,577	$	0	$	643,577

Real Estate – Non-Owner Occupied:
Grades 1 – 4	$	88,916	$	182,620	$	132,805	$	68,453	$	10,300	$	16,233	$	499,327	$	0	$	499,327
Grades 5 – 7		117,989		167,936		122,665		22,901		14,092		45,202		490,785		0		490,785
Grades 8 – 9		6,780		5,746		0		0		0		0		12,526		0		12,526
Total	$	213,685	$	356,302	$	255,470	$	91,354	$	24,392	$	61,435	$	1,002,638	$	0	$	1,002,638

Real Estate – Multi-Family and Residential Rental:
Grades 1 – 4	$	31,627	$	56,824	$	37,519	$	5,387	$	3,067	$	4,270	$	138,694	$	0	$	138,694
Grades 5 – 7		38,003		26,696		13,441		3,249		3,131		982		85,502		0		85,502
Grades 8 – 9		0		0		0		0		0		52		52		0		52
Total	$	69,630	$	83,520	$	50,960	$	8,636	$	6,198	$	5,304	$	224,248	$	0	$	224,248
Total Commercial	$	803,573	$	900,010	$	489,079	$	152,537	$	67,990	$	90,465	$	2,503,654	$	641,409	$	3,145,063

	2022		2021		2020		2019		2018		Prior		Term Total		Revolving Loans		Grand Total
Retail:
1-4 Family Mortgages:
Performing	$	258,124	$	243,023	$	95,502	$	12,576	$	15,111	$	44,741	$	669,077	$	35,197	$	704,274
Nonperforming		20		86		0		0		0		1,061		1,167		0		1,167
Total	$	258,144	$	243,109	$	95,502	$	12,576	$	15,111	$	45,802	$	670,244	$	35,197	$	705,441
Other Consumer Loans:
Performing	$	3,810	$	3,251	$	1,264	$	1,247	$	497	$	549	$	10,618	$	19,836	$	30,454
Nonperforming		0		0		0		0		0		0		0		0		0
Total	$	3,810	$	3,251	$	1,264	$	1,247	$	497	$	549	$	10,618	$	19,836	$	30,454
Total Retail	$	261,954	$	246,360	$	96,766	$	13,823	$	15,608	$	46,351	$	680,862	$	55,033	$	735,895

Grand Total	$	1,065,527	$	1,146,370	$	585,845	$	166,360	$	83,598	$	136,816	$	3,184,516	$	696,442	$	3,880,958

Activity in the allowance for credit losses during the three months and nine months ended September 30, 2022 is as follows (dollars in thousands):

	Commercial and industrial			Commercial vacant land, land development and residential construction			Commercial real estate – owner occupied			Commercial real estate – non-owner occupied			Commercial real estate – multi-family and residential rental			1-4 family mortgages			Other consumer loans			Unallocated			Total
Allowance for credit losses:
Balance at 6-30-22	$	8,608		$	446		$	5,578		$	9,614		$	1,274		$	10,267		$	165		$	22		$	35,974
Provision for credit losses		1,110			21			372			(108	)		(21	)		1,530			(13	)		9			2,900
Charge-offs		0			0			0			0			0			0			0			0			0
Recoveries		22			1			22			0			23			154			24			0			246
Ending balance	$	9,740		$	468		$	5,972		$	9,506		$	1,276		$	11,951		$	176		$	31		$	39,120

Balance at 12-31-21	$	10,782		$	420		$	6,045		$	13,301		$	1,695		$	2,449		$	626		$	45		$	35,363
Adoption of ASU 2016-13		(1,571	)		(43	)		(560	)		(2,534	)		(621	)		5,395			(411	)		(55	)		(400	)
Provision for credit losses		518			117			407			(1,261	)		165			3,587			(74	)		41			3,500
Charge-offs		(170	)		(29	)		0			0			0			(2	)		(18	)		0			(219	)
Recoveries		181			3			80			0			37			522			53			0			876
Ending balance	$	9,740		$	468		$	5,972		$	9,506		$	1,276		$	11,951		$	176		$	31		$	39,120

Activity in the allowance for loan losses during the three months and nine months ended September 30, 2021 and the recorded investments in loans as of December 31, 2021 are as follows (dollars in thousands):

	Commercial and industrial			Commercial vacant land, land development and residential construction			Commercial real estate – owner occupied			Commercial real estate – non-owner occupied		Commercial real estate – multi-family and residential rental		Home equity and other			1–4 family mortgages			Unallocated		Total
Allowance for loan losses:
Balance at 6-30-21	$	9,340		$	479		$	7,701		$	12,785	$	1,787	$	742		$	2,894		$	185	$	35,913
Provision for loan losses		1,518			(180	)		(1,151	)		1,523		157		(64	)		97			0		1,900
Charge-offs		(690	)		0			0			0		0		(23	)		(30	)		0		(743	)
Recoveries		10			127			76			0		0		42			98			0		353
Ending balance	$	10,178		$	426		$	6,626		$	14,308	$	1,944	$	697		$	3,059		$	185	$	37,423

Balance at 12-31-20	$	9,424		$	679		$	8,246		$	13,611	$	1,819	$	889		$	3,240		$	59	$	37,967
Provision for loan losses		647			307			(2,028	)		697		125		(271	)		(503	)		126		(900	)
Charge-offs		(54	)		(705	)		(12	)		0		0		(30	)		(64	)		0		(865	)
Recoveries		161			145			420			0		0		109			386			0		1,221
Ending balance	$	10,178		$	426		$	6,626		$	14,308	$	1,944	$	697		$	3,059		$	185	$	37,423

Ending balance: individually evaluated for impairment	$	449		$	0		$	89		$	6	$	0	$	142		$	79		$	0	$	765

Ending balance: collectively evaluated for impairment	$	9,729		$	426		$	6,537		$	14,302	$	1,944	$	555		$	2,980		$	185	$	36,658

Total loans (*):
Ending balance	$	1,097,309		$	43,239		$	565,758		$	1,027,415	$	176,593	$	60,488		$	442,547				$	3,413,349

Ending balance: individually evaluated for impairment	$	5,010		$	0		$	10,435		$	146	$	91	$	1,247		$	2,437				$	19,366

Ending balance: collectively evaluated for impairment	$	1,092,299		$	43,239		$	555,323		$	1,027,269	$	176,502	$	59,241		$	440,110				$	3,393,983

(*) Excludes $40.1 million in loans originated under the Paycheck Protection Program.

Loans modified as troubled debt restructurings generally reflect other than insignificant payment delays and below market interest rates.

Loans modified as troubled debt restructurings during the three months ended September 30, 2022 were as follows:

	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Commercial:
Commercial and industrial		1	$	19,000	$	19,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		0		0		0
Real estate – non-owner occupied		0		0		0
Real estate – multi-family and residential rental		0		0		0
Total commercial		1		19,000		19,000
Retail:
1-4 family mortgages		2		289,000		289,000
Other consumer loans		0		0		0
Total retail		2		289,000		289,000

Total loans		3	$	308,000	$	308,000

Loans modified as troubled debt restructurings during the nine months ended September 30, 2022 were as follows:

	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Commercial:
Commercial and industrial		3	$	6,593,000	$	6,593,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		0		0		0
Real estate – non-owner occupied		0		0		0
Real estate – multi-family and residential rental		0		0		0
Total commercial		3		6,593,000		6,593,000
Retail:
1-4 family mortgages		5		501,000		500,000
Other consumer loans		0		0		0
Total retail		5		501,000		500,000

Total loans		8	$	7,094,000	$	7,093,000

Loans modified as troubled debt restructurings during the three months ended September 30, 2021 were as follows:

	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Commercial:
Commercial and industrial		2	$	186,000	$	185,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		0		0		0
Real estate – non-owner occupied		0		0		0
Real estate – multi-family and residential rental		1		93,000		93,000
Total commercial		3		279,000		278,000
Retail:
Home equity and other		0		0		0
1-4 family mortgages		0		0		0
Total retail		0		0		0

Total loans		3	$	279,000	$	278,000

Loans modified as troubled debt restructurings during the nine months ended September 30, 2021 were as follows:

	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Commercial:
Commercial and industrial		10	$	3,017,000	$	3,016,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		1		692,000		692,000
Real estate – non-owner occupied		0		0		0
Real estate – multi-family and residential rental		1		93,000		93,000
Total commercial		12		3,802,000		3,801,000
Retail:
Home equity and other		4		485,000		482,000
1-4 family mortgages		2		46,000		46,000
Total retail		6		531,000		528,000

Total loans		18	$	4,333,000	$	4,329,000

We had no loans modified as troubled debt restructurings within the previous twelve months that became over 30 days past due within the three months or nine months ended September 30, 2022.

We had one loan with a balance of less than $0.1 million modified as a troubled debt restructuring within the previous twelve months that became over 30 days past due within the three months ended September 30, 2021; this loan was the only troubled debt restructured loan that became over 30 days past due within the first nine months of 2021.

Activity for loans categorized as troubled debt restructurings during the three months ended September 30, 2022 is as follows:

	Commercial and Industrial			Commercial Vacant Land, Land Development, and Residential Construction		Commercial Real Estate - Owner Occupied			Commercial Real Estate - Non-Owner Occupied			Commercial Real Estate - Multi-Family and Residential Rental

Commercial Loan Portfolio:
Beginning Balance	$	9,938,000		$	0	$	87,000		$	139,000		$	88,000
Charge-Offs		0			0		0			0			0
Payments (net)		(891,000	)		0		(3,000	)		(4,000	)		(88,000	)
Transfers to ORE		0			0		0			0			0
Net Additions/Deletions		19,000			0		0			0			0
Ending Balance	$	9,066,000		$	0	$	84,000		$	135,000		$	0

	Retail			Retail
	1-4 Family			Other Consumer
	Mortgages			Loans
Retail Loan Portfolio:
Beginning Balance	$	2,339,000		$	3,000
Charge-Offs		0			0
Payments (net)		(84,000	)		(1,000	)
Transfers to ORE		0			0
Net Additions/Deletions		289,000			0
Ending Balance	$	2,544,000		$	2,000

Activity for loans categorized as troubled debt restructurings during the nine months ended September 30, 2022 is as follows:

	Commercial and Industrial			Commercial Vacant Land, Land Development, and Residential Construction		Commercial Real Estate - Owner Occupied			Commercial Real Estate - Non-Owner Occupied			Commercial Real Estate - Multi-Family and Residential Rental

Commercial Loan Portfolio:
Beginning Balance	$	4,973,000		$	0	$	10,435,000		$	146,000		$	91,000
Charge-Offs		(95,000	)		0		0			0			0
Payments (net)		(378,000	)		0		(9,682,000	)		(11,000	)		(91,000	)
Transfers to ORE		0			0		0			0			0
Net Additions/Deletions		4,566,000			0		(669,000	)		0			0
Ending Balance	$	9,066,000		$	0	$	84,000		$	135,000		$	0

	Retail			Retail
	1-4 Family			Other Consumer
	Mortgages			Loans
Retail Loan Portfolio:
Beginning Balance	$	627,000		$	1,202,000
Charge-Offs		0			0
Payments (net)		(253,000	)		(13,000	)
Transfers to ORE		0			0
Net Additions/Deletions (1)		2,170,000			(1,187,000	)
Ending Balance	$	2,544,000		$	2,000

(1)

Includes $1.2 million in the transfer of home equity lines of credit from other consumer loans to 1-4 family mortgages in association with the adoption of the CECL methodology effective January 1, 2022.

Activity for loans categorized as troubled debt restructurings during the three months ended September 30, 2021 is as follows:

	Commercial and Industrial			Commercial Vacant Land, Land Development, and Residential Construction		Commercial Real Estate - Owner Occupied			Commercial Real Estate - Non-Owner Occupied			Commercial Real Estate - Multi-Family and Residential Rental

Commercial Loan Portfolio:
Beginning Balance	$	5,563,000		$	0	$	13,888,000		$	153,000		$	0
Charge-Offs		(17,000	)		0		0			0			0
Payments (net)		(75,000	)		0		(439,000	)		(2,000	)		0
Transfers to ORE		0			0		0			0			0
Net Additions/Deletions		184,000			0		0			0			92,000
Ending Balance	$	5,655,000		$	0	$	13,449,000		$	151,000		$	92,000

	Retail Home Equity and Other			Retail 1-4 Family Mortgages
Retail Loan Portfolio:
Beginning Balance	$	1,396,000		$	699,000
Charge-Offs		0			0
Payments (net)		(91,000	)		(51,000	)
Transfers to ORE		0			0
Net Additions/Deletions		0			0
Ending Balance	$	1,305,000		$	648,000

Activity for loans categorized as troubled debt restructurings during the nine months ended September 30, 2021 is as follows:

	Commercial and Industrial			Commercial Vacant Land, Land Development, and Residential Construction		Commercial Real Estate - Owner Occupied			Commercial Real Estate - Non-Owner Occupied			Commercial Real Estate - Multi-Family and Residential Rental

Commercial Loan Portfolio:
Beginning Balance	$	6,414,000		$	0	$	14,797,000		$	480,000		$	0
Charge-Offs		(17,000	)		0		0			0			0
Payments (net)		(3,596,000	)		0		(2,034,000	)		(329,000	)		0
Transfers to ORE		0			0		0			0			0
Net Additions/Deletions		2,854,000			0		686,000			0			92,000
Ending Balance	$	5,655,000		$	0	$	13,449,000		$	151,000		$	92,000

	Retail Home Equity and Other			Retail 1-4 Family Mortgages
Retail Loan Portfolio:
Beginning Balance	$	1,146,000		$	806,000
Charge-Offs		0			0
Payments (net)		(323,000	)		(204,000	)
Transfers to ORE		0			0
Net Additions/Deletions		482,000			46,000
Ending Balance	$	1,305,000		$	648,000