Note 4 - Loans and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

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

4.           Loans and Allowance for Credit Losses

Additional information regarding the Company’s loan and ACL on loan policies and loan portfolios follow:

A substantial portion of the loan portfolio is represented by mortgage loans to customers in the Louisville, Kentucky metropolitan statistical area (MSA). The ability of the Company’s customers to honor their loan agreements is largely dependent upon the real estate and general economic conditions in this area.

The recognition of income on a loan is discontinued and previously accrued interest is reversed, when interest or principal payments become 90 days past due unless, in the opinion of management, the outstanding interest remains collectible. Past due status is determined based on contractual terms. Generally, by applying the cash receipts method, interest income is subsequently recognized only as received until the loan is returned to accrual status. The cash receipts method is used when the likelihood of further loss on the loan is remote. Otherwise, the Company applies the cost recovery method and applies all payments as a reduction of the unpaid principal balance until the loan qualifies for return to accrual status. Interest income on impaired loans is recognized using the cost recovery method, unless the likelihood of further loss on the loan is remote.

A loan is restored to accrual status when all principal and interest payments are brought current and the borrower has demonstrated the ability to make future payments of principal and interest as scheduled, which generally requires that the borrower demonstrate a period of performance of at least six consecutive months.

For portfolio segments other than consumer loans, the Company’s practice is to charge-off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, the loan’s classification as a loss by regulatory examiners, or for other reasons. A partial charge-off is recorded on a loan when the uncollectibility of a portion of the loan has been confirmed, such as when a loan is discharged in bankruptcy, the collateral is liquidated, a loan is restructured at a reduced principal balance, or other identifiable events that lead management to determine the full principal balance of the loan will not be repaid. A specific reserve is recognized as a component of the ACL on loans individually evaluated for impairment. Partial charge-offs on nonperforming and impaired loans are included in the Company’s historical loss experience used to estimate the collective (pooled) component of the ACL on loans as discussed below. Specific reserves are not considered charge-offs in management’s analysis of the ACL on loans because they are estimates and the outcome of the loan relationship is undetermined.

Consumer loans not secured by real estate are typically charged off at 90 days past due, or earlier if deemed uncollectible, unless the loans are in the process of collection. Overdrafts are charged off after 45 days past due. Charge-offs are typically recorded on loans secured by real estate when the property is foreclosed upon.

Refer to Note 2 ACL – Loans for additional information and accounting policies related to the ACL on loans.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, past loan modifications, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Values for collateral dependent loans are generally based on appraisals obtained from independent licensed real estate appraisers, with adjustments applied for estimated costs to sell the property, costs to complete unfinished or repair damaged property and other factors. New appraisals are generally obtained for all significant properties when a loan is identified as impaired, and a property is considered significant if the value of the property is estimated to exceed $200,000. Subsequent appraisals are obtained as needed or if management believes there has been a significant change in the market value of the property. In instances where it is not deemed necessary to obtain a new appraisal, management bases its impairment and ACL analysis on the original appraisal with adjustments for current conditions based on management’s assessment of market factors and management’s inspection of the property. At March 31, 2023 all of the Bank’s loans evaluated on an individual basis were considered collateral dependent.

The Company held no foreclosed real estate at March 31, 2023 or December 31, 2022. At March 31, 2023 and December 31, 2022, the amortized cost basis in loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $382,000 and $104,000, respectively.

Loans at March 31, 2023 and December 31, 2022 consisted of the following:

	March 31,			December 31,
(In thousands)	2023			2022
				(As reclassified)
1-4 Family Residential Mortgage	$	122,675		$	116,269
Home Equity and Second Mortgage		57,130			57,872
Multifamily Residential		39,656			38,973
1-4 Family Residential Construction		19,071			16,575
Other Construction, Development and Land		49,901			47,632
Commercial Real Estate		161,968			161,362
Commercial Business		67,228			68,066
Other Consumer		54,053			56,768
Principal loan balance		571,682			563,517
Deferred loan origination fees and costs, net		1,217			1,213
Allowance for credit losses		(7,323	)		(6,772	)
Loans, net	$	565,576		$	557,958

The following table provides the components of the Company’s amortized cost basis in loans at March 31, 2023:

										Other
	1-4 Family		Home Equity					1-4 Family		Construction,
	Residential		and Second		Multifamily			Residential		Development			Commercial			Commercial			Other
	Mortgage		Mortgage		Residential			Construction		and Land			Real Estate			Business			Consumer		Total
	(In thousands)
Amortized Cost Basis in Loans:
Principal loan balance	$	122,675	$	57,130	$	39,656		$	19,071	$	49,901		$	161,968		$	67,228		$	54,053	$	571,682
Net deferred loan origination fees and costs		127		1,210		(14	)		-		(3	)		(91	)		(12	)		-		1,217
Amortized cost basis in loans	$	122,802	$	58,340	$	39,642		$	19,071	$	49,898		$	161,877		$	67,216		$	54,053	$	572,899

An analysis of the changes in the ACL on loans for the three months ended March 31, 2023 is as follows:

													Other
	1-4 Family			Home Equity						1-4 Family			Construction,
	Residential			and Second			Multifamily			Residential			Development			Commercial			Commercial			Other
	Mortgage			Mortgage			Residential			Construction			and Land			Real Estate			Business			Consumer			Total
	(In thousands)
ACL on Loans:
Beginning balance, prior to adoption of ASC 326	$	1,036		$	531		$	346		$	206		$	587		$	2,029		$	1,156		$	881		$	6,772
Impact of adopting ASC 326		423			(26	)		(3	)		(9	)		13			(130	)		(142	)		435			561
Provision for credit losses		(43	)		(139	)		38			(10	)		(111	)		291			220			(53	)		193
Charge-offs		(2	)		-			-			-			-			-			(155	)		(118	)		(275	)
Recoveries		-			-			-			-			-			-			5			67			72
Ending balance	$	1,414		$	366		$	381		$	187		$	489		$	2,190		$	1,084		$	1,212		$	7,323

Accrued interest on loans of $1.9 million at March 31, 2023, is included in accrued interest receivable on the consolidated balance sheets and is excluded from the estimate of credit losses.

Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. There have been no significant changes to the types of collateral securing the Company’s collateral dependent loans. The following table presents the amortized cost basis of, and ACL allocation to, individually evaluated collateral-dependent loans by class of loans as of March 31, 2023:

	Real						ACL
	Estate		Other		Total		Allocation
1-4 Family Residential Mortgage	$	1,062	$	-	$	1,062	$	12
Home Equity and Second Mortgage		344		-		344		2
Multifamily Residential		-		-		-		-
1-4 Family Residential Construction		-		-		-		-
Other Construction, Development and Land		52		-		52		-
Commercial Real Estate		1,128		-		1,128		-
Commercial Business		-		162		162		-
Other Consumer		-		-		-		-
	$	2,586	$	162	$	2,748	$	14

Nonperforming loans consists of nonaccrual loans and loans over 90 days past due and still accruing interest. The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 89 days still accruing as of March 31, 2023:

					Loans 90+ Days		Total
	Nonaccrual Loans		Total		Past Due		Nonperforming
	with No ACL (1)		Nonaccrual		Still Accruing		Loans
	(In thousands)
1-4 Family Residential Mortgage	$	766	$	804	$	-	$	804
Home Equity and Second Mortgage		274		344		-		344
Multifamily Residential		-		-		-		-
1-4 Family Residential Construction		-		-		-		-
Other Construction, Development and Land		52		52		-		52
Commercial Real Estate		33		33		-		33
Commercial Business		-		27		-		27
Other Consumer		-		-		-		-
Total	$	1,125	$	1,260	$	-	$	1,260

(1) Includes nonaccrual loans with no ACL and are also included in Total Nonaccrual loans of $1,260.

No interest income was recognized on nonaccrual loans during the three months ended March 31, 2023.

The following table presents the aging of the amortized cost basis in loans at March 31, 2023:

	30-59 Days		60-89 Days		90 Days or More		Total				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans
	(In thousands)
1-4 Family Residential Mortgage	$	2,114	$	-	$	384	$	2,498	$	120,304	$	122,802
Home Equity and Second Mortgage		638		-		70		708		57,632		58,340
Multifamily Residential		-		-		-		-		39,642		39,642
1-4 Family Residential Construction		-		-		-		-		19,071		19,071
Other Construction, Development and Land		50		-		52		102		49,796		49,898
Commercial Real Estate		58		-		-		58		161,819		161,877
Commercial Business		14		200		-		214		67,002		67,216
Other Consumer		213		48		-		261		53,792		54,053
Total	$	3,087	$	248	$	506	$	3,841	$	569,058	$	572,899

Occasionally, the Company modifies loans to borrowers in financial distress. During the three months ended March 31, 2023, no material loans to borrowers experiencing financial distress were modified. There were no loans to borrowers experiencing financial distress that were modified during the previous 12 months and which subsequently defaulted during the three months ended March 31, 2023. There were no unfunded commitments associated with loans modified for borrowers experiencing financial distress as of March 31, 2023 and December 31, 2022.

There were no TDRs that were restructured during the three months ended March 31, 2022. There were no principal charge-offs recorded as a result of TDRs and there was no specific allowance for loan losses related to TDRs modified during the three months ended March 31, 2022. There were no TDRs modified within the previous 12 months for which there was a subsequent payment default during the three months ended March 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, public information, historical payment experience, credit documentation, and current economic trends, among other factors. The Company classifies loans based on credit risk at least quarterly. The Company uses the following regulatory definitions for risk ratings:

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss: Loans classified as loss are considered uncollectible and of such little value that their continuance on the institution’s books as an asset is not warranted.

Loans not meeting the criteria above that are analyzed individually as part of the described process are considered to be pass rated loans.

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

	Term Loans Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving		Total
	(In thousands)
1-4 Family Residential Mortgage
Pass	$	9,390	$	34,819	$	30,244	$	7,916	$	10,734	$	28,638	$	-	$	121,741
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		257		-		257
Doubtful		-		19		175		-		-		610		-		804
	$	9,390	$	34,838	$	30,419	$	7,916	$	10,734	$	29,505	$	-	$	122,802
Current period gross write-offs	$	-	$	-	$	2	$	-	$	-	$	-	$	-	$	2
Home Equity and Second Mortgage
Pass	$	751	$	5,111	$	593	$	273	$	255	$	518	$	50,495	$	57,996
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		274		-		70		344
	$	751	$	5,111	$	593	$	273	$	529	$	518	$	50,565	$	58,340
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

	Term Loans Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving		Total
	(In thousands)
Multifamily Residential
Pass	$	1,557	$	10,726	$	9,940	$	8,134	$	4,469	$	4,816	$	-	$	39,642
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
	$	1,557	$	10,726	$	9,940	$	8,134	$	4,469	$	4,816	$	-	$	39,642
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
1-4 Family Residential Construction
Pass	$	2,306	$	12,362	$	3,082	$	-	$	-	$	1,321	$	-	$	19,071
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
	$	2,306	$	12,362	$	3,082	$	-	$	-	$	1,321	$	-	$	19,071
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

	Term Loans Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving		Total
	(In thousands)
Other Construction, Development and Land
Pass	$	3,580	$	26,348	$	11,714	$	2,954	$	1,325	$	3,875	$	-	$	49,796
Special Mention		-		-		-		-		-		50		-		50
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		52		-		52
	$	3,580	$	26,348	$	11,714	$	2,954	$	1,325	$	3,977	$	-	$	49,898
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial Real Estate
Pass	$	3,272	$	40,200	$	27,946	$	22,097	$	19,413	$	44,777	$	2,294	$	159,999
Special Mention		-		-		-		179		427		65		79		750
Substandard		-		-		-		237		-		858		-		1,095
Doubtful		-		-		-		-		-		33		-		33
	$	3,272	$	40,200	$	27,946	$	22,513	$	19,840	$	45,733	$	2,373	$	161,877
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

	Term Loans Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving		Total
	(In thousands)
Commercial Business
Pass	$	5,459	$	17,812	$	13,160	$	6,586	$	6,735	$	4,340	$	12,672	$	66,764
Special Mention		-		31		22		-		168		4		38		263
Substandard		-		-		-		-		48		-		114		162
Doubtful		-		-		-		27		-		-		-		27
	$	5,459	$	17,843	$	13,182	$	6,613	$	6,951	$	4,344	$	12,824	$	67,216
Current period gross write-offs	$	-	$	155	$	-	$	-	$	-	$	-	$	-	$	155
Other Consumer
Pass	$	6,502	$	20,535	$	11,963	$	4,649	$	2,136	$	6,146	$	2,068	$	53,999
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		54		54
Doubtful		-		-		-		-		-		-		-		-
	$	6,502	$	20,535	$	11,963	$	4,649	$	2,136	$	6,146	$	2,122	$	54,053
Current period gross write-offs	$	-	$	18	$	23	$	10	$	6	$	32	$	29	$	118
Total Loans
Pass	$	32,817	$	167,913	$	108,642	$	52,609	$	45,067	$	94,431	$	67,529	$	569,008
Special Mention		-		31		22		179		595		119		117		1,063
Substandard		-		-		-		237		48		1,115		168		1,568
Doubtful		-		19		175		27		274		695		70		1,260
	$	32,817	$	167,963	$	108,839	$	53,052	$	45,984	$	96,360	$	67,884	$	572,899
Current period gross write-offs	$	-	$	173	$	25	$	10	$	6	$	32	$	29	$	275

Allowance for Loan Losses

Prior to the adoption of ASC 326 on January 1, 2023, the Company calculated the allowance for loan losses using the incurred loss methodology. The following tables are disclosures related to the allowance for loan losses in prior periods.

The following table provides the components of the Company’s recorded investment in loans at March 31, 2022:

														Home Equity
	Residential							Commercial			Commercial			and Second		Other
	Real Estate		Land		Construction			Real Estate			Business			Mortgage		Consumer		Total
	(In thousands)
Recorded Investment in Loans:
Principal loan balance	$	137,762	$	19,489	$	31,702		$	148,492		$	58,031		$	55,893	$	59,670	$	511,039
Accrued interest receivable		468		103		74			300			163			166		199		1,473
Net deferred loan origination fees and costs		99		13		(11	)		(72	)		(21	)		1,148		-		1,156
Recorded investment in loans	$	138,329	$	19,605	$	31,765		$	148,720		$	58,173		$	57,207	$	59,869	$	513,668
Recorded Investment in Loans as Evaluated for Impairment:
Individually evaluated for impairment	$	824	$	102	$	-		$	599		$	167		$	287	$	-	$	1,979
Collectively evaluated for impairment		137,236		19,503		31,765			148,113			58,006			56,920		59,869		511,412
Acquired with deteriorated credit quality		269		-		-			8			-			-		-		277
Ending balance	$	138,329	$	19,605	$	31,765		$	148,720		$	58,173		$	57,207	$	59,869	$	513,668

The following table provides the components of the Company’s recorded investment in loans at December 31, 2022:

														Home Equity
	Residential							Commercial			Commercial			and Second		Other
	Real Estate		Land		Construction			Real Estate			Business			Mortgage		Consumer		Total
	(In thousands)
Recorded Investment in Loans:
Principal loan balance	$	155,334	$	21,860	$	42,271		$	161,425		$	60,817		$	57,781	$	64,029	$	563,517
Accrued interest receivable		493		123		105			343			170			348		236		1,818
Net deferred loan origination fees and costs		111		14		(12	)		(93	)		(11	)		1,204		-		1,213
Recorded investment in loans	$	155,938	$	21,997	$	42,364		$	161,675		$	60,976		$	59,333	$	64,265	$	566,548
Recorded Investment in Loans as Evaluated for Impairment:
Individually evaluated for impairment	$	854	$	51	$	-		$	463		$	195		$	372	$	-	$	1,935
Collectively evaluated for impairment		154,798		21,946		42,364			161,212			60,781			58,961		64,265		564,327
Acquired with deteriorated credit quality		286		-		-			-			-			-		-		286
Ending balance	$	155,938	$	21,997	$	42,364		$	161,675		$	60,976		$	59,333	$	64,265	$	566,548

An analysis of the allowance for loan losses as of March 31, 2022 is as follows:

											Home Equity
	Residential						Commercial		Commercial		and Second		Other
	Real Estate		Land		Construction		Real Estate		Business		Mortgage		Consumer		Total
	(In thousands)
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1	$	-	$	-	$	-	$	-	$	5	$	-	$	6
Collectively evaluated for impairment		1,196		235		387		1,927		994		512		957		6,208
Acquired with deteriorated credit quality		31		-		-		-		-		-		-		31
Ending balance	$	1,228	$	235	$	387	$	1,927	$	994	$	517	$	957	$	6,245

An analysis of the allowance for loan losses as of December 31, 2022 is as follows:

											Home Equity
	Residential						Commercial		Commercial		and Second		Other
	Real Estate		Land		Construction		Real Estate		Business		Mortgage		Consumer		Total
	(In thousands)
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	155	$	-	$	-	$	155
Collectively evaluated for impairment		1,383		265		526		2,031		891		530		991		6,617
Acquired with deteriorated credit quality		-		-		-		-		-		-		-		-
Ending balance	$	1,383	$	265	$	526	$	2,031	$	1,046	$	530	$	991	$	6,772

An analysis of the changes in the allowance for loan losses for the three months ended March 31, 2022 is as follows:

												Home Equity
	Residential							Commercial		Commercial		and Second			Other
	Real Estate		Land		Construction			Real Estate		Business		Mortgage			Consumer			Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	1,174	$	234	$	403		$	1,884	$	873	$	527		$	988		$	6,083
Provisions for loan losses		49		1		(16	)		43		121		(10	)		(13	)		175
Charge-offs		-		-		-			-		-		-			(74	)		(74	)
Recoveries		5		-		-			-		-		-			56			61
Ending balance	$	1,228	$	235	$	387		$	1,927	$	994	$	517		$	957		$	6,245

At March 31, 2022 and December 31, 2022, management applied qualitative factor adjustments to each portfolio segment as they determined that the historical loss experience was not indicative of the level of risk in the remaining balance of those portfolio segments. As part of their analysis of qualitative factors, management considers the changes and trends in the following: Peer Data, Underwriting Standards, Economic Conditions, Past Due Loans, Collateral and Other Internal and External Factors.

The following table summarizes the Company’s impaired loans as of March 31, 2022 and for the three months ended March 31, 2022. The Company did not recognize any interest income on impaired loans using the cash receipts method of accounting for the three month period ended March 31, 2022:

	At March 31, 2022						Three Months Ended March 31, 2022
			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
	(In thousands)
Loans with no related allowance recorded:
Residential	$	796	$	926	$	-	$	915	$	5
Land		102		104		-		102		-
Construction		-		-		-		-		-
Commercial real estate		599		616		-		651		6
Commercial business		167		166		-		171		2
Home equity and second mortgage		-		-		-		8		-
Other consumer		-		-		-		-		-
		1,664		1,812		-		1,847		13
Loans with an allowance recorded:
Residential		28		28		1		14		-
Land		-		-		-		-		-
Construction		-		-		-		-		-
Commercial real estate		-		-		-		-		-
Commercial business		-		-		-		-		-
Home equity and second mortgage		287		297		5		288		-
Other consumer		-		-		-		-		-
		315		325		6		302		-
Total:
Residential		824		954		1		929		5
Land		102		104		-		102		-
Construction		-		-		-		-		-
Commercial real estate		599		616		-		651		6
Commercial business		167		166		-		171		2
Home equity and second mortgage		287		297		5		296		-
Other consumer		-		-		-		-		-
	$	1,979	$	2,137	$	6	$	2,149	$	13

The following table summarizes the Company’s impaired loans as of December 31, 2022:

			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In thousands)
Loans with no related allowance recorded:
Residential	$	854	$	996	$	-
Land		51		51		-
Construction		-		-		-
Commercial real estate		463		484		-
Commercial business		40		40		-
Home equity and second mortgage		372		389		-
Other consumer		-		-		-
	$	1,780	$	1,960	$	-
Loans with an allowance recorded:
Residential	$	-	$	-	$	-
Land		-		-		-
Construction		-		-		-
Commercial real estate		-		-		-
Commercial business		155		155		155
Home equity and second mortgage		-		-		-
Other consumer		-		-		-
	$	155	$	155	$	155
Total:
Residential	$	854	$	996	$	-
Land		51		51		-
Construction		-		-		-
Commercial real estate		463		484		-
Commercial business		195		195		155
Home equity and second mortgage		372		389		-
Other consumer		-		-		-
	$	1,935	$	2,115	$	155

The following table presents the recorded investment in nonperforming loans at December 31, 2022:

	December 31, 2022
			Loans 90+ Days		Total
	Nonaccrual		Past Due		Nonperforming
	Loans		Still Accruing		Loans
	(In thousands)
Residential	$	744	$	83	$	827
Land		51		-		51
Construction		-		-		-
Commercial real estate		81		-		81
Commercial business		155		-		155
Home equity and second mortgage		372		-		372
Other consumer		-		4		4
Total	$	1,403	$	87	$	1,490

The following table presents the aging of the recorded investment in loans at December 31, 2022:

											Purchased
	30-59 Days		60-89 Days		90 Days or More		Total				Credit		Total
	Past Due		Past Due		Past Due		Past Due		Current		Impaired Loans		Loans
	(In thousands)
Residential	$	2,229	$	226	$	543	$	2,998	$	152,654	$	286	$	155,938
Land		119		-		51		170		21,827		-		21,997
Construction		-		-		-		-		42,364		-		42,364
Commercial real estate		-		-		-		-		161,675		-		161,675
Commercial business		-		-		155		155		60,821		-		60,976
Home equity and second mortgage		206		278		93		577		58,756		-		59,333
Other consumer		211		72		4		287		63,978		-		64,265
Total	$	2,765	$	576	$	846	$	4,187	$	562,075	$	286	$	566,548

The following table presents the recorded investment in loans by risk category as of December 31, 2022:

											Home Equity
	Residential						Commercial		Commercial		and Second		Other
	Real Estate		Land		Construction		Real Estate		Business		Mortgage		Consumer		Total
	(In thousands)
Pass	$	154,429	$	21,827	$	42,364	$	159,842	$	60,261	$	58,937	$	64,149	$	561,809
Special Mention		-		60		-		679		388		-		116		1,243
Substandard		765		59		-		1,073		172		24		-		2,093
Doubtful		744		51		-		81		155		372		-		1,403
Loss		-		-		-		-		-		-		-		-
Total	$	155,938	$	21,997	$	42,364	$	161,675	$	60,976	$	59,333	$	64,265	$	566,548

Purchased Credit Deteriorated (“PCD”) Loans

The Company has purchased groups of loans, some of which have experienced more than insignificant credit deterioration since origination. An ACL for PCD loans is determined using the same methodology as other loans held for investment. Upon adoption of ASC 326, the Company elected to maintain pools of loans that were previously accounted for as purchased credit impairment (“PCI”) loans under ASC 310-30 and will continue to account for these pools as a unit of account. Loans are only removed from the existing pools if they are written off, paid off or sold. Upon adoption of ASC 326, the ACL was determined for each pool and added to the pool’s carrying amount to establish a new amortized cost basis. The difference between the unpaid principal balance of the pool and the new amortized cost basis will be amortized into interest income over the remaining life of the pool. Changes to the ACL after adoption are recorded through the provision for credit losses. The carrying amount of PCD loans at March 31, 2023 and December 31, 2022 was $242,000 and $244,000, respectively. There was no ACL related to PCD loans at March 31, 2023 and December 31, 2022.

ACL on Off-Balance-Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The Company recorded an ACL for unfunded commitments of $131,000 in conjunction with the Company’s adoption of ASU 2016-13 on January 1, 2023. The ACL for off-balance-sheet credit exposures is presented in accrued expenses and other liabilities on the consolidated balance sheets. Changes in the ACL for off-balance-sheet credit exposures are reflected in the provision for credit losses on the consolidated statements of income. There were no changes to the ACL for off-balance-sheet credit exposures during the three months ended March 31, 2023.