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Loans and Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2022
Loans and Allowance for Credit Losses [Abstract]  
Loans and Allowance for Credit Losses

NOTE 4 – Loans and Allowance for Credit Losses

 

The Company makes loans to individuals and small businesses for various personal and commercial purposes primarily in the Upstate, Midlands, and Lowcountry regions of South Carolina, the Triangle and Triad regions of North Carolina as well as Atlanta, Georgia. The Company’s loan portfolio is not concentrated in loans to any single borrower or a relatively small number of borrowers. The Company focuses its lending activities primarily on the professional markets in these regions including doctors, dentists, and small business owners. The principal component of the loan portfolio is loans secured by real estate mortgages which account for 84.8% of total loans at December 31, 2022. Commercial loans comprise 57.1% of total real estate loans and consumer loans account for 42.9%. Commercial real estate loans are further categorized into owner occupied which represents 18.7% of total loans and non-owner occupied loans which represents 26.3%. Commercial construction loans represent only 3.4% of the total loan portfolio.

 

In addition to monitoring potential concentrations of loans to particular borrowers or groups of borrowers, industries and geographic regions, management monitors exposure to credit risk from concentrations of lending products and practices such as loans that subject borrowers to substantial payment increases (e.g. principal deferral periods, loans with initial interest-only periods, etc.), and loans with high loan-to-value ratios. Additionally, there are industry practices that could subject the Company to increased credit risk should economic conditions change over the course of a loan’s life. For example, the Company makes variable rate loans and fixed rate principal-amortizing loans with maturities prior to the loan being fully paid (i.e. balloon payment loans). The various types of loans are individually underwritten and monitored to manage the associated risks.

 

Paycheck Protection Program (“PPP”)

 

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES” Act or the “Act”) to provide emergency assistance and health care response for individuals, families, and businesses affected by the coronavirus pandemic. The Small Business Administration (“SBA”) received funding and authority through the Act to modify existing loan programs and establish a new loan program to assist small businesses nationwide adversely impacted by the COVID-19 emergency. The Act temporarily permits the SBA to guarantee 100% of certain loans under a new program titled the “Paycheck Protection Program” and also provides for forgiveness of up to the full principal amount of qualifying loans guaranteed under the PPP.

 

In an effort to assist our clients as best we could through the pandemic, we became an approved SBA lender in March 2020 and processed 853 loans under the PPP for a total of $97.5 million, receiving SBA lender fee income of $3.9 million. As the regulations and guidance for PPP loans and the forgiveness process continued to change and evolve, management recognized the operational risk and complexity associated with this portfolio and decided to pursue the sale of the PPP loan portfolio to a third party better suited to support and serve our PPP clients through the loan forgiveness process. The loan sale allowed our team to focus on serving our clients and proactively monitoring and addressing credit risk brought on by the pandemic. On June 26, 2020, we completed the sale of our PPP loan portfolio to The Loan Source Inc., together with its servicing partner, ACAP SME LLC, and immediately recognized SBA lender fee income of $2.2 million, net of sale and processing costs, which is included in other noninterest income in the consolidated financial statements.

 

The SBA offered a second round of PPP loans through May 31, 2021; however, we did not originate any new PPP loans. We did, however, receive referral fees of approximately $268,000 during the three months ended June 30, 2021 from The Loan Source Inc. for PPP loans they originated to our clients.

 

The following table summarizes the composition of our loan portfolio. Total gross loans are recorded net of deferred loan fees and costs, which totaled $7.3 million and $5.0 million as of December 31, 2022 and December 31, 2021, respectively.

 

     
   December 31 
(dollars in thousands)  2022   2021 
Commercial                    
Owner occupied RE  $612,901    18.7%   488,965    19.6%
Non-owner occupied RE   862,579    26.3%   666,833    26.8%
Construction   109,726    3.4%   64,425    2.6%
Business   468,112    14.3%   333,049    13.4%
Total commercial loans   2,053,318    62.7%   1,553,272    62.4%
Consumer                    
Real estate   931,278    28.4%   694,401    27.9%
Home equity   179,300    5.5%   154,839    6.2%
Construction   80,415    2.5%   59,846    2.4%
Other   29,052    0.9%   27,519    1.1%
Total consumer loans   1,220,045    37.3%   936,605    37.6%
Total gross loans, net of deferred fees   3,273,363    100.0%   2,489,877    100.0%
Less – allowance for credit losses   (38,639)        (30,408)     
Total loans, net  $3,234,724         2,459,469      

 

The composition of gross loans by rate type is as follows:

 

     
   December 31, 
(dollars in thousands)  2022   2021 
Floating rate loans  $439,287    376,805 
Fixed rate loans   2,834,076    2,113,072 
   $3,273,363    2,489,877 

 

At December 31, 2022, approximately $1.05 billion of the Company’s mortgage loans were pledged as collateral for advances from the FHLB, as set forth in Note 10.

 

Credit Quality Indicators

 

Commercial

We manage a consistent process for assessing commercial loan credit quality by monitoring our loan grading trends and past due statistics. All loans are subject to individual risk assessment. Our risk categories include Pass, Watch, Special Mention, and Substandard, each of which is defined by banking regulatory agencies. Delinquency statistics are also an important indicator of credit quality in the establishment of our allowance for credit losses.

 

We categorize our loans into risk categories based on relevant information about the ability of the borrower to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. A description of the general characteristics of the risk grades is as follows:

 

●Pass—These loans range from minimal credit risk to average however still acceptable credit risk.

 

●Watch—A watch loan exhibits above average risk due to minor weaknesses and warrants closer scrutiny by management.

 

●Special mention—A special mention loan has 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 or the institution’s credit position at some future date.

 

●Substandard—A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

 

●Doubtful—A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.

 

The following table presents loan balances classified by credit quality indicators by year of origination as of December 31, 2022.

 

                                     
   December 31, 2022 
(dollars in thousands)  2022   2021   2020   2019   2018   Prior   Revolving   Revolving Converted to Term   Total 
Commercial                                             
Owner occupied RE                                             
Pass  $169,083    122,654    85,867    66,299    36,718    93,915    
-
    
-
    574,536 
Watch   14,648    479    9,339    3,658    
-
    6,792    
-
    
-
    34,916 
Special Mention   200    
-
    
-
    
-
    
-
    2,960    
-
    
-
    3,160 
Substandard   
-
    
-
    -    
-
    289    
-
    
-
    
-
    289 
Total Owner occupied RE   183,931    123,133    95,206    69,957    37,007    103,667    
-
    
-
    612,901 
                                              
Non-owner occupied RE                                             
Pass   281,890    169,599    113,264    59,550    79,722    106,967    604    137    811,733 
Watch   1,061    9,491    
-
    10,683    1,408    11,660    
-
    
-
    34,303 
Special Mention   
-
    202    
-
    6,087    
-
    930    
-
    
-
    7,219 
Substandard   
-
    134    
-
    7,992    327    871    
-
    
-
    9,324 
Total Non-owner occupied RE   282,951    179,426    113,264    84,312    81,457    120,428    604    137    862,579 
                                              
Construction                                             
Pass   48,420    55,129    4,811    247    
-
    
-
    
-
    
-
    108,607 
Watch   1,119    
-
    
-
    
-
    
-
    
-
    
-
    
-
    1,119 
Special Mention   
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
 
Substandard   
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
 
Total Construction   49,539    55,129    4,811    247    
-
    
-
    
-
    
-
    109,726 
                                              
Business                                             
Pass   136,489    57,804    29,864    21,807    35,249    28,914    136,337    709    447,174 
Watch   3,186    2,058    1,318    1,282    179    3,074    3,783    439    15,319 
Special Mention   1,137    260    386    210    
-
    252    115    642    3,002 
Substandard   498    
-
    188    233    315    911    472    
-
    2,617 
Total Business   141,310    60,122    31,756    23,533    35,743    33,151    140,707    1,790    468,112 
Total Commercial loans   657,731    417,810    245,037    178,049    154,207    257,246    141,311    1,927    2,053,318 
                                              
Consumer                                             
Real estate                                             
Pass   243,589    269,565    189,075    72,499    39,042    76,172    
-
    
-
    889,942 
Watch   6,196    8,256    3,847    2,278    494    3,671    
-
    
-
    24,742 
Special Mention   3,114    1,938    2,644    2,258    955    2,639    
-
    
-
    13,548 
Substandard   
-
    648    227    341    408    1,422    
-
    
-
    3,046 
Total Real estate   252,899    280,407    195,793    77,376    40,899    83,904    
-
    
-
    931,278 
                                              
Home equity                                             
Pass   
-
    
-
    
-
    
-
    
-
    
-
    165,847    
-
    165,847 
Watch   
-
    
-
    
-
    
-
    
-
    
-
    7,226    
-
    7,226 
Special Mention   
-
    
-
    
-
    
-
    
-
    
-
    4,055    
-
    4,055 
Substandard   
-
    
-
    
-
    
-
    
-
    
-
    2,172    
-
    2,172 
Total Home equity   
-
    
-
    
-
    
-
    
-
    
-
    179,300    
-
    179,300 
                                              
Construction                                             
Pass   41,138    34,039    4,923    
-
    
-
    
-
    
-
    
-
    80,100 
Watch   
-
    
-
    -    
-
    
-
    
-
    
-
    
-
    - 
Special Mention   
-
    
-
    
-
    315    
-
    
-
    
-
    
-
    315 
Substandard   
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
 
Total Construction   41,138    34,039    4,923    315    
-
    
-
    
-
    
-
    80,415 
                                              
Other                                             
Pass   3,894    3,038    1,702    1,534    341    3,015    14,465    
-
    27,989 
Watch   46    367    15    5    16    175    93    
-
    717 
Special Mention   94    
-
    
-
    44    75    23    97    
-
    332 
Substandard   
-
    -    
-
    5    
-
    
-
    9    
-
    14 
Total Other   4,034    3,405    1,717    1,588    432    3,213    14,663    
-
    29,052 
Total Consumer loans   298,071    317,851    202,433    79,279    41,331    87,117    193,963    
-
    1,220,045 
Total loans  $955,802    735,661    447,470    257,328    195,538    344,363    335,274    1,927    3,273,363 

 

The following table presents loan balances classified by credit quality indicators and loan categories as of December 31, 2021.

 

     
   December 31, 2021 
   Commercial   Consumer       
(dollars in thousands)  Owner
occupied RE		   Non-owner occupied RE   Construction   Business   Real Estate   Home Equity   Construction   Other   Total 
Pass  $487,422    589,280    64,425    328,371    684,923    148,933    59,846    27,365    2,390,565 
Special mention   327    48,310    
-
    1,530    4,294    2,986    
-
    129    57,576 
Substandard   1,216    29,243    
-
    3,148    5,184    2,920    
-
    25    41,736 
Total loans  $488,965    666,833    64,425    333,049    694,401    154,839    59,846    27,519    2,489,877 

 

The following tables present loan balances by payment status.

 

                 
   December 31, 2022 
(dollars in thousands)  Accruing 30-59 days past due   Accruing 60-89 days past due   Accruing 90 days or more past due   Nonaccrual loans   Accruing current   Total 
Commercial                              
Owner occupied RE  $
-
    
-
    
-
    
-
    612,901    612,901 
Non-owner occupied RE   119    757    
-
    247    861,456    862,579 
Construction   
-
    
-
    
-
    
-
    109,726    109,726 
Business   24    1    
-
    182    467,905    468,112 
Consumer                              
Real estate   330    -    
-
    1,099    929,849    931,278 
Home equity   50    
-
    
-
    1,099    178,151    179,300 
Construction   
-
    
-
    
-
    
-
    80,415    80,415 
Other   88    
-
    
-
    
-
    28,964    29,052 
Total loans  $611    758    -    2,627    3,269,367    3,273,363 

 

   December 31, 2021 
(dollars in thousands)  Accruing 30-59 days past due   Accruing 60-89 days past due   Accruing 90 days or more past due   Nonaccrual loans   Accruing current   Total 
Commercial                              
Owner occupied RE  $
-
    
-
    
-
    
-
    488,965    488,965 
Non-owner occupied RE   
-
    
-
    
-
    1,069    665,764    666,833 
Construction   
-
    
-
    
-
    
-
    64,425    64,425 
Business   
-
    
-
    
-
    
-
    333,049    333,049 
Consumer                              
Real estate   136    
-
    
-
    1,750    692,515    694,401 
Home equity   417    174    
-
    2,045    152,203    154,839 
Construction   
-
    
-
    
-
    
-
    59,846    59,846 
Other   5    
-
    
-
    
-
    27,514    27,519 
Total loans  $558    174    
-
    4,864    2,484,281    2,489,877 

 

As of December 31, 2022 and December 31, 2021, loans 30 days or more past due represented 0.11% and 0.09% of the Company’s total loan portfolio, respectively. Commercial loans 30 days or more past due were 0.03% and 0.00% of the Company’s total loan portfolio as of December 31, 2022 and December 31, 2021, respectively. Consumer loans 30 days or more past due were 0.08% and 0.09% of total loans as of December 31, 2022 and December 31, 2021, respectively.

 

Nonperforming assets

 

The following table shows the nonperforming assets and the related percentage of nonperforming assets to total assets and gross loans. Generally, a loan is placed on nonaccrual status when it becomes 90 days past due as to principal or interest, or when we believe, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that collection of the contractual principal or interest on the loan is doubtful. A payment of interest on a loan that is classified as nonaccrual is recognized as a reduction in principal when received.

 

         
   December 31, 
(dollars in thousands)  2022   2021 
Nonaccrual loans  $831    1,912 
Nonaccruing TDRs   1,796    2,952 
Total nonaccrual loans, including nonaccruing TDRs   2,627    4,864 
Other real estate owned   
-
    
-
 
Total nonperforming assets  $2,627    4,864 
Nonperforming assets as a percentage of:          
Total assets   0.07%   0.17%
Gross loans   0.08%   0.20%
Total loans over 90 days past due  $402    554 
Loans over 90 days past due and still accruing   
-
    
-
 
Accruing troubled debt restructurings   4,503    3,299 

 

The table below summarizes nonaccrual loans by major categories for the periods presented.

 

                 
   CECL   Incurred loss 
   December 31, 2022   December 31, 2021 
   Nonaccrual   Nonaccrual         
   loans   loans   Total   Total 
   with no   with an   nonaccrual   nonaccrual 
(dollars in thousands)  allowance   allowance   loans   loans 
Commercial                    
Owner occupied RE  $
-
    
-
    
-
    
-
 
Non-owner occupied RE   114    133    247    1,070 
Construction   
-
    
-
    
-
    
-
 
Business   
-
    182    182    
-
 
Total commercial   114    315    429    1,070 
Consumer                    
Real estate   
-
    1,099    1,099    1,750 
Home equity   194    905    1,099    2,044 
Construction   
-
    
-
    
-
    
-
 
Other   
-
    
-
    
-
    
-
 
Total consumer   194    2,004    2,198    3,794 
Total  $308    2,319    2,627    4,864 

 

Foregone interest income on the nonaccrual loans for the year ended December 31, 2022 was approximately $28,000 and approximately $55,000 for the same period in 2021.

 

The table below summarizes key information for loans individually evaluated for impairment loans under the incurred loss methodology. These loans include loans on nonaccrual status and loans modified in a TDR, whether on accrual or nonaccrual status. These loans may have estimated impairment which is included in the allowance for credit losses.

 

             
                   December 31, 2021 
       Recorded investment       
           Impaired loans   Impaired loans     
   Unpaid       with no related   with related   Related 
   Principal   Impaired   allowance for   allowance for   allowance for 
(dollars in thousands)  Balance   loans   loan losses   loan losses   loan losses 
Commercial                         
Owner occupied RE  $1,261    1,261    1,261    
-
    
-
 
Non-owner occupied RE   2,012    1,070    270    800    171 
Construction   
-
    
-
    
-
    
-
    
-
 
Business   1,104    1,104    
-
    1,104    452 
Total commercial   4,377    3,435    1,531    1,904    623 
Consumer                         
Real estate   2,638    2,561    1,743    818    144 
Home equity   2,206    2,044    1,989    55    55 
Construction   
-
    
-
    
-
    
-
    
-
 
Other   123    123    
-
    123    14 
Total consumer   4,967    4,728    3,732    996    213 
Total  $9,344    8,163    5,263    2,900    836 

 

The following table provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans after impairment by portfolio segment and class under the incurred loss methodology.

 

     
   Year ended December 31, 
   2021   2020 
   Average   Recognized   Average   Recognized 
   recorded   interest   recorded   interest 
(dollars in thousands)  investment   income   investment   income 
Commercial                    
Owner occupied RE  $1,387    65    2,423    88 
Non-owner occupied RE   3,128    182    4,217    221 
Construction   55    -    56    6 
Business   2,218    62    2,306    243 
Total commercial   6,788    309    9,002    558 
Consumer                    
Real estate   3,641    98    3,372    170 
Home equity   1,964    85    2,128    5 
Construction   
-
    
-
    
-
    
-
 
Other   129    4    141    79 
Total consumer   5,734    187    5,641    254 
Total  $12,522    496    14,643    812 

 

Allowance for Credit Losses

 

The following table summarizes the activity related to the allowance for credit losses for the year ended December 31, 2022 under the CECL methodology. On January 1, 2022, we adopted the Current Expected Credit Loss (CECL) methodology for estimating credit losses, which resulted in an increase of $1.5 million in our allowance for credit losses. The $5.4 million provision for credit losses for the 12 months ended December 31, 2022 was driven primarily by $783.5 million in loan growth for the year. In addition to loan growth, the provision for credit losses was impacted by slightly lower expected loss rates due to historically low charge-offs during 2022, while minor adjustments to two internal qualitative factors increased the qualitative component of the allowance and related provision expense.

 

                 
   Twelve months ended December 31, 2022 
   Commercial                             Consumer       
(dollars in thousands)  Owner occupied RE   Non-owner occupied RE   Construction   Business   Real Estate   Home
Equity		   Construction   Other   Total 
Balance, beginning of period  $4,700    10,518    625    4,887    7,083    1,697    578    320    30,408 
Adjustment for CECL   (313)   333    154    1,057    (294)   438    130    (5)   1,500 
Provision for credit losses   1,480    (2,015)   513    1,764    2,698    663    185    87    5,375 
Loan charge-offs   
-
    
-
    
-
    (55)   
-
    (339)   
-
    (91)   (485)
Loan recoveries   
-
    1,540    
-
    208    
-
    92    
-
    1    1,841 
Net loan recoveries (charge-offs)   
-
    1,540    
-
    153    
-
    (247)   
-
    (90)   1,356 
Balance, end of period  $5,867    10,376    1,292    7,861    9,487    2,551    893    312    38,639 
Net recoveries to average loans (annualized)                           (0.05%)
Allowance for credit losses to gross loans                                 1.18%
Allowance for credit losses to nonperforming loans                             1470.84%

 

Prior to the adoption of ASC 326 on January 1, 2022, the Company calculated the allowance for loan losses under the incurred loss methodology. The following table summarizes the activity related to the allowance for loan losses in prior periods under this methodology.

 

                 
   Twelve months ended December 31, 2021 
   Commercial                     Consumer       
(dollars in thousands)  Owner occupied RE   Non-owner occupied RE   Construction   Business   Real Estate   Home
Equity		   Construction   Other   Total 
Balance, beginning of period  $8,092    12,050    1,154    7,870    10,482    3,248    746    507    44,149 
Provision for credit losses   (3,486)   (958)   (529)   (2,041)   (3,417)   (1,613)   (168)   (188)   (12,400)
Loan charge-offs   
-
    (837)   
-
    (1,181)   
-
    (139)   
-
    (9)   (2,166)
Loan recoveries   94    263    
-
    239    18    201    
-
    10    825 
Net loan recoveries (charge-offs)   94    (574)   
-
    (942)   18    62    
-
    1    (1,341)
Balance, end of period  $4,700    10,518    625    4,887    7,083    1,697    578    320    30,408 

 

   Twelve months ended December 31, 2020 
   Commercial                             Consumer       
(dollars in thousands)  Owner occupied RE   Non-owner occupied RE   Construction   Business   Real Estate   Home
Equity		   Construction   Other   Total 
Balance, beginning of period  $2,782    4,305    541    3,716    3,308    1,446    268    276    16,642 
Provision for credit losses   5,339    8,583    613    4,993    7,290    2,032    478    272    29,600 
Loan charge-offs   (94)   (1,508)   
-
    (1,309)   (134)   (299)   
-
    (70)   (3,414)
Loan recoveries   65    670    
-
    470    18    69    
-
    29    1,321 
Net loan recoveries (charge-offs)   (29)   (838)   -    (839)   (116)   (230)   
-
    (41)   (2,093)
Balance, end of period  $8,092    12,050    1,154    7,870    10,482    3,248    746    507    44,149 

 

The following tables summarize the activity in the allowance for loan losses by our commercial and consumer portfolio segments under the incurred loss methodology.

 

                 
   Year ended December 31, 
   2021   2020 
(dollars in thousands)  Commercial   Consumer   Total   Commercial   Consumer   Total 
Balance, beginning of period  $29,166    14,983    44,149    11,372    5,270    16,642 
Provision   (7,014)   (5,386)   (12,400)   19,500    10,100    29,600 
Loan charge-offs   (2,018)   (148)   (2,166)   (2,911)   (503)   (3,414)
Loan recoveries   596    229    825    1,205    116    1,321 
Net loan charge-offs   (1,422)   81    (1,341)   (1,706)   (387)   (2,093)
Balance, end of period  $20,730    9,678    30,408    29,166    14,983    44,149 

 

The following table disaggregates the allowance for loan losses and recorded investment in loans by impairment methodology under the incurred loss methodology.

 

 
   December 31, 2021 
   Allowance for loan losses   Recorded investment in loans 
(dollars in thousands)  Commercial   Consumer   Total   Commercial   Consumer   Total 
Individually evaluated  $623    213    836    3,435    4,728    8,163 
Collectively evaluated   20,107    9,465    29,572    1,549,837    931,877    2,481,714 
Total  $20,730    9,678    30,408    1,553,272    936,605    2,489,877 

 

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. The Company reviews individually evaluated loans for designation as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses.

 

The following table presents an analysis of collateral-dependent loans of the Company as of December 31, 2022.

 

     
   December 31, 2022 
   Real   Business         
(dollars in thousands)  estate   assets   Other   Total 
Commercial                    
Owner occupied RE  $
-
    
-
    
-
    
-
 
Non-owner occupied RE   114    
-
    
-
    114 
Construction   
-
    
-
    
-
    
-
 
Business   30    
-
    
-
    30 
Total commercial   144    
-
    
-
    144 
Consumer                    
Real estate   207    
-
    
-
    207 
Home equity   194    
-
    
-
    194 
Construction   
-
    
-
    
-
    
-
 
Other   
-
    
-
    
-
    
-
 
Total consumer   401    
-
    
-
    401 
Total  $545    
-
    
-
    545 

 

Under CECL, for collateral dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

 

Allowance for Credit Losses - Unfunded Loan Commitments

 

The allowance for credit losses for unfunded loan commitments was $2.8 million at December 31, 2022 and is separately classified on the balance sheet within other liabilities. Prior to the adoption of CECL, the Company’s reserve for unfunded

 

commitments was not material. The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the twelve months ended December 31, 2022.

 

     
   Twelve months ended 
(dollars in thousands)  December 31, 2022 
Balance, beginning of period   
-
 
Adjustment for adoption of CECL  $2,000 
Provision for credit losses   780 
Balance, end of period  $2,780 
Unfunded Loan Commitments   878,324 
Reserve for Unfunded Commitments to Unfunded Loan Commitments   0.32%