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Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2022

Amortized Cost and Unpaid Principal Balance of Loans by Loan Segment

The following table presents amortized cost and unpaid principal balance of loans for the periods indicated:


	June 30, 2022			December 31, 2021
(In Thousands)	Amortized Cost	Unpaid Principal	Difference	Amortized Cost	Unpaid Principal	Difference
Commercial & industrial loans	$394,841	$397,154	($2,313)	$448,338	$454,106	($5,768)
Commercial real estate:
Owner occupied properties	313,174	314,761	(1,587)	300,200	301,623	(1,423)
Non-owner occupied and multifamily properties	446,592	449,987	(3,395)	435,311	438,631	(3,320)
Residential real estate:
1-4 family residential properties secured by first liens	37,298	37,346	(48)	32,542	32,602	(60)
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	21,953	21,821	132	19,610	19,489	121
1-4 family residential construction loans	43,915	44,215	(300)	36,222	36,542	(320)
Other construction, land development and raw land loans	87,163	87,669	(506)	88,094	88,604	(510)
Obligations of states and political subdivisions in the US	24,005	24,152	(147)	16,403	16,565	(162)
Agricultural production, including commercial fishing	29,482	29,638	(156)	27,959	28,082	(123)
Consumer loans	4,092	4,054	38	4,801	4,763	38
Other loans	3,194	3,208	(14)	4,406	4,422	(16)
Total	1,405,709	1,414,005	(8,296)	1,413,886	1,425,429	(11,543)
Allowance for credit losses	(11,537)			(11,739)
	$1,394,172	$1,414,005	($8,296)	$1,402,147	$1,425,429	($11,543)

Allowance for Credit Losses

The activity in the ACL related to loans held for investment is as follows:


Three Months Ended June 30,	Beginning Balance	Credit Loss Expense (Benefit)	Charge-offs	Recoveries	Ending Balance
	(In Thousands)
2022
Commercial & industrial loans	$2,901	$123	($166)	$103	$2,961
Commercial real estate:
Owner occupied properties	2,513	60	—	—	2,573
Non-owner occupied and multifamily properties	3,063	44	—	—	3,107
Residential real estate:
1-4 family residential properties secured by first liens	510	110	—	—	620
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	301	17	—	9	327
1-4 family residential construction loans	210	21	—	—	231
Other construction, land development and raw land loans	1,550	(88)	—	—	1,462
Obligations of states and political subdivisions in the US	52	7	—	—	59
Agricultural production, including commercial fishing	128	(8)	—	7	127
Consumer loans	75	(12)	—	1	64
Other loans	7	(1)	—	—	6
Total	$11,310	$273	($166)	$120	$11,537
2021
Commercial & industrial loans	$4,269	$105	($110)	$27	$4,291
Commercial real estate:
Owner occupied properties	3,366	(28)	—	2	3,340
Non-owner occupied and multifamily properties	3,704	137	—	—	3,841
Residential real estate:
1-4 family residential properties secured by first liens	813	(183)	—	—	630
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	342	(12)	—	10	340
1-4 family residential construction loans	260	(29)	—	—	231
Other construction, land development and raw land loans	1,821	(151)	—	—	1,670
Obligations of states and political subdivisions in the US	36	3	—	—	39
Agricultural production, including commercial fishing	46	4	—	7	57
Consumer loans	104	(10)	—	—	94
Other loans	3	3	—	—	6
Total	$14,764	($161)	($110)	$46	$14,539


Six Months Ended June 30,	Beginning Balance	Credit Loss Expense (Benefit)	Charge-offs	Recoveries	Ending Balance
	(In Thousands)
2022
Commercial & industrial loans	$3,027	$279	($461)	$116	$2,961
Commercial real estate:
Owner occupied properties	3,176	(603)	—	—	2,573
Non-owner occupied and multifamily properties	2,930	177	—	—	3,107
Residential real estate:
1-4 family residential properties secured by first liens	439	181	—	—	620
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	215	91	—	21	327
1-4 family residential construction loans	120	111	—	—	231
Other construction, land development and raw land loans	1,635	(173)	—	—	1,462
Obligations of states and political subdivisions in the US	32	27	—	—	59
Agricultural production, including commercial fishing	91	21	—	15	127
Consumer loans	67	(4)	—	1	64
Other loans	7	(1)	—	—	6
Total	$11,739	$106	($461)	$153	$11,537
2021
Commercial & industrial loans	$4,348	$4	($273)	$212	$4,291
Commercial real estate:
Owner occupied properties	3,579	(243)	—	4	3,340
Non-owner occupied and multifamily properties	4,944	(1,103)	—	—	3,841
Residential real estate:
1-4 family residential properties secured by first liens	673	(43)	—	—	630
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	419	(99)	—	20	340
1-4 family residential construction loans	454	(223)	—	—	231
Other construction, land development and raw land loans	1,994	(324)	—	—	1,670
Obligations of states and political subdivisions in the US	44	(5)	—	—	39
Agricultural production, including commercial fishing	49	(7)	—	15	57
Consumer loans	118	(26)	—	2	94
Other loans	3	3	—	—	6
Total	$16,625	($2,066)	($273)	$253	$14,539

Portfolio of Risk-rated Loans by Grade and by Year of Origination

The following tables present the Company's portfolio of risk-rated loans by grade and by year of origination. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Generally, current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below.


June 30, 2022	2022	2021	2020	2019	2018	Prior	Total
	(In Thousands)
Commercial & industrial loans
Pass	$97,229	$126,148	$50,617	$21,259	$29,661	$57,889	$382,803
Classified	2,689	5,459	—	119	2,950	821	12,038
Total commercial & industrial loans	$99,918	$131,607	$50,617	$21,378	$32,611	$58,710	$394,841

Commercial real estate:
Owner occupied properties
Pass	$35,493	$70,745	$81,000	$38,694	$13,415	$65,980	$305,327
Classified	—	—	1,331	—	498	6,018	7,847
Total commercial real estate owner occupied properties	$35,493	$70,745	$82,331	$38,694	$13,913	$71,998	$313,174

Non-owner occupied and multifamily properties
Pass	$26,141	$82,850	$74,798	$56,709	$33,807	$161,854	$436,159
Classified	—	—	—	277	6	10,150	10,433
Total commercial real estate non-owner occupied and multifamily properties	$26,141	$82,850	$74,798	$56,986	$33,813	$172,004	$446,592

Residential real estate:
1-4 family residential properties secured by first liens
Pass	$8,410	$9,846	$6,490	$3,402	$494	$8,373	$37,015
Classified	—	—	—	—	90	193	283
Total residential real estate 1-4 family residential properties secured by first liens	$8,410	$9,846	$6,490	$3,402	$584	$8,566	$37,298

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens
Pass	$3,219	$5,467	$2,570	$2,861	$3,447	$4,109	$21,673
Classified	—	—	—	—	270	10	280


Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	$3,219	$5,467	$2,570	$2,861	$3,717	$4,119	$21,953

1-4 family residential construction loans
Pass	$21,804	$8,522	$441	$481	$—	$12,558	$43,806
Classified	—	—	—	—	—	109	109
Total residential real estate 1-4 family residential construction loans	$21,804	$8,522	$441	$481	$—	$12,667	$43,915

Other construction, land development and raw land loans
Pass	$5,651	$41,340	$19,578	$9,402	$3,396	$5,945	$85,312
Classified	—	—	—	—	369	1,482	1,851
Total other construction, land development and raw land loans	$5,651	$41,340	$19,578	$9,402	$3,765	$7,427	$87,163

Obligations of states and political subdivisions in the US
Pass	$285	$9,669	$2,667	$1,864	$282	$9,238	$24,005
Classified	—	—	—	—	—	—	—
Total obligations of states and political subdivisions in the US	$285	$9,669	$2,667	$1,864	$282	$9,238	$24,005

Agricultural production, including commercial fishing
Pass	$3,549	$18,683	$3,764	$678	$1,073	$1,735	$29,482
Classified	—	—	—	—	—	—	—
Total agricultural production, including commercial fishing	$3,549	$18,683	$3,764	$678	$1,073	$1,735	$29,482

Consumer loans
Pass	$770	$499	$541	$397	$306	$1,570	$4,083
Classified	—	—	—	—	—	9	9
Total consumer loans	$770	$499	$541	$397	$306	$1,579	$4,092

Other loans
Pass	$568	$1,143	$1,598	$408	$—	($523)	$3,194
Classified	—	—	—	—	—	—	—
Total other loans	$568	$1,143	$1,598	$408	$—	($523)	$3,194

Total loans
Pass	$203,119	$374,912	$244,064	$136,155	$85,881	$328,728	$1,372,859
Classified	2,689	5,459	1,331	396	4,183	18,792	32,850
Total loans	$205,808	$380,371	$245,395	$136,551	$90,064	$347,520	$1,405,709

Total pass loans	$203,119	$374,912	$244,064	$136,155	$85,881	$328,728	$1,372,859
Government guarantees	(4,441)	(62,412)	(11,051)	(13,290)	(3,117)	(4,898)	(99,209)
Total pass loans, net of government guarantees	$198,678	$312,500	$233,013	$122,865	$82,764	$323,830	$1,273,650

Total classified loans	$2,689	$5,459	$1,331	$396	$4,183	$18,792	$32,850
Government guarantees	(2,420)	(4,913)	(1,198)	—	—	(9,818)	(18,349)
Total classified loans, net government guarantees	$269	$546	$133	$396	$4,183	$8,974	$14,501


December 31, 2021	2021	2020	2019	2018	2017	Prior	Total
	(In Thousands)
Commercial & industrial loans
Pass	$227,376	$54,478	$29,846	$37,339	$23,205	$44,554	$416,798
Classified	18,853	714	3,564	3,118	517	4,774	31,540
Total commercial & industrial loans	$246,229	$55,192	$33,410	$40,457	$23,722	$49,328	$448,338

Commercial real estate:
Owner occupied properties
Pass	$81,533	$83,975	$39,254	$14,841	$14,452	$57,717	$291,772
Classified	—	1,399	—	522	—	6,507	8,428


Total commercial real estate owner occupied properties	$81,533	$85,374	$39,254	$15,363	$14,452	$64,224	$300,200

Non-owner occupied and multifamily properties
Pass	$77,205	$77,961	$61,147	$34,307	$19,833	$154,561	$425,014
Classified	—	—	—	10	10,286	1	10,297
Total commercial real estate non-owner occupied and multifamily properties	$77,205	$77,961	$61,147	$34,317	$30,119	$154,562	$435,311

Residential real estate:
1-4 family residential properties secured by first liens
Pass	$7,756	$8,023	$3,689	$531	$1,466	$8,812	$30,277
Classified	417	1,077	472	90	—	209	2,265
Total residential real estate 1-4 family residential properties secured by first liens	$8,173	$9,100	$4,161	$621	$1,466	$9,021	$32,542

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens
Pass	$5,806	$2,535	$3,229	$3,464	$259	$4,046	$19,339
Classified	—	—	—	259	—	12	271
Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	$5,806	$2,535	$3,229	$3,723	$259	$4,058	$19,610

1-4 family residential construction loans
Pass	$21,409	$1,056	$1,707	$62	$—	$11,879	$36,113
Classified	—	—	—	—	109	—	109
Total residential real estate 1-4 family residential construction loans	$21,409	$1,056	$1,707	$62	$109	$11,879	$36,222

Other construction, land development and raw land loans
Pass	$39,624	$26,458	$11,044	$3,315	$139	$5,544	$86,124
Classified	—	—	—	460	—	1,510	1,970
Total other construction, land development and raw land loans	$39,624	$26,458	$11,044	$3,775	$139	$7,054	$88,094

Obligations of states and political subdivisions in the US
Pass	$4,120	$812	$1,875	$343	$2,733	$6,520	$16,403
Classified	—	—	—	—	—	—	—
Total obligations of states and political subdivisions in the US	$4,120	$812	$1,875	$343	$2,733	$6,520	$16,403

Agricultural production, including commercial fishing
Pass	$19,970	$3,929	$810	$1,118	$741	$1,391	$27,959
Classified	—	—	—	—	—	—	—
Total agricultural production, including commercial fishing	$19,970	$3,929	$810	$1,118	$741	$1,391	$27,959

Consumer loans
Pass	$873	$815	$653	$403	$291	$1,766	$4,801
Classified	—	—	—	—	—	—	—
Total consumer loans	$873	$815	$653	$403	$291	$1,766	$4,801

Other loans
Pass	$2,028	$1,645	$430	$95	$—	$208	$4,406
Classified	—	—	—	—	—	—	—
Total other loans	$2,028	$1,645	$430	$95	$—	$208	$4,406

Total loans
Pass	$487,700	$261,687	$153,684	$95,818	$63,119	$296,998	$1,359,006
Classified	19,270	3,190	4,036	4,459	10,912	13,013	54,880
Total loans	$506,970	$264,877	$157,720	$100,277	$74,031	$310,011	$1,413,886

Total pass loans	$487,700	$261,687	$153,684	$95,818	$63,119	$296,998	$1,359,006
Government guarantees	(145,713)	(12,725)	(14,429)	(3,299)	(306)	(6,562)	(183,034)
Total pass loans, net of government guarantees	$341,987	$248,962	$139,255	$92,519	$62,813	$290,436	$1,175,972

Total classified loans	$19,270	$3,190	$4,036	$4,459	$10,912	$13,013	$54,880


Government guarantees	(7,201)	(1,259)	—	—	—	(10,571)	(19,031)
Total classified loans, net government guarantees	$12,069	$1,931	$4,036	$4,459	$10,912	$2,442	$35,849

Aging of Contractually Past Due Loans

The following tables present an aging of contractually past due loans as of the periods presented:


(In Thousands)	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days Past Due	Total Past Due	Current	Total	Greater Than 90 Days Past Due Still Accruing
June 30, 2022
Commercial & industrial loans	$246	$132	$387	$765	$394,076	$394,841	$—
Commercial real estate:
Owner occupied properties	737		1,076	1,813	311,361	313,174	—
Non-owner occupied and multifamily properties	—	—	—	—	446,592	446,592	—
Residential real estate:
1-4 family residential properties secured by first liens	65	—	147	212	37,086	37,298	—
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	—	—	133	133	21,820	21,953	—
1-4 family residential construction loans	—	—	109	109	43,806	43,915	—
Other construction, land development and raw land loans	—	—	1,546	1,546	85,617	87,163	—
Obligations of states and political subdivisions in the US	—	—	—	—	24,005	24,005	—
Agricultural production, including commercial fishing	—	—	—	—	29,482	29,482	—
Consumer loans	—	—	—	—	4,092	4,092	—
Other loans	—	—	—	—	3,194	3,194	—
Total	$1,048	$132	$3,398	$4,578	$1,401,131	$1,405,709	$—
December 31, 2021
Commercial & industrial loans	$206	$51	$469	$726	$447,612	$448,338	$—
Commercial real estate:
Owner occupied properties	12	—	1,176	1,188	299,012	300,200	—
Non-owner occupied and multifamily properties	—	—	—	—	435,311	435,311	—
Residential real estate:
1-4 family residential properties secured by first liens	—	—	90	90	32,452	32,542	—
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	—	—	139	139	19,471	19,610	—
1-4 family residential construction loans	—	—	109	109	36,113	36,222	—
Other construction, land development and raw land loans	—	—	1,636	1,636	86,458	88,094	—
Obligations of states and political subdivisions in the US	—	—	—	—	16,403	16,403	—
Agricultural production, including commercial fishing	—	—	—	—	27,959	27,959	—
Consumer loans	—	—	—	—	4,801	4,801	—
Other loans	—	—	—	—	4,406	4,406	—
Total	$218	$51	$3,619	$3,888	$1,409,998	$1,413,886	$—

Loans on Nonaccrual Status

The following table presents loans on nonaccrual status and loans on nonaccrual status

for which there was no related ACL. All loans with no ACL are individually evaluated for credit losses in the Company's Current Expected Credit Losses methodology.


	June 30, 2022		December 31, 2021
(In Thousands)	Nonaccrual	Nonaccrual With No ACL	Nonaccrual	Nonaccrual With No ACL

Commercial & industrial loans	$3,496	$3,496	$4,350	$4,298
Commercial real estate:
Owner occupied properties	2,352	2,348	3,506	3,506

Residential real estate:
1-4 family residential properties secured by first liens	219	219	1,778	1,778
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	280	207	271	215
1-4 family residential construction loans	109	109	109	109
Other construction, land development and raw land loans	1,545	1,545	1,636	1,636


Consumer loans	—	—	—	—

Total nonaccrual loans	8,001	7,924	11,650	11,542
Government guarantees on nonaccrual loans	(683)	(683)	(978)	(978)
Net nonaccrual loans	$7,318	$7,241	$10,672	$10,564

Non Troubled Debt Restructuring

The Company has made the following types of loan modifications related to COVID-19, which are not classified as TDRs with principal balance outstanding of:


Loan Modifications due to COVID-19 as of June 30, 2022
(Dollars in thousands)	Interest Only	Full Payment Deferral	Total
Portfolio loans	$23,573	$—	$23,573
Number of modifications	5	—	5


Loan Modifications due to COVID-19 as of December 31, 2021
(Dollars in thousands)	Interest Only	Full Payment Deferral	Total
Portfolio loans	$49,219	$—	$49,219
Number of modifications	16	—	16

Troubled Debt Restructured Loans

As discussed above, the CARES Act provided banks an option to elect to not account for certain loan modifications related to COVID-19 between March 1, 2020 and December 31, 2021 as TDRs as long as the borrowers were not more than 30 days past due as of December 31, 2019. The disclosed loan restructurings were not related to COVID-19 modifications.


	Accrual Status	Nonaccrual Status	Total Modifications
(In Thousands)






Existing Troubled Debt Restructurings	$3,008	$5,844	$8,852
Total	$3,008	$5,844	$8,852

The following table presents newly restructured loans that occurred during the six months ended June 30, 2021, by concession (terms modified):


		June 30, 2021
	Number of Contracts	Rate Modification	Term Modification	Payment Modification	Combination Modification	Total Modifications
(In Thousands)
Pre-Modification Outstanding Recorded Investment:
Commercial - AQR substandard	1	$—	$254	$—	$—	$254
Total	1	$—	$254	$—	$—	$254
Post-Modification Outstanding Recorded Investment:
Commercial - AQR substandard	1	$—	$251	$—	$—	$251
Total	1	$—	$251	$—	$—	$251