
	September 30, 2021		December 31, 2020
	Amount		Amount
	(Dollars in thousands)
Commercial and Industrial	$	66,277	$	121,808
Construction	171,151		211,013
Real Estate Mortgage:
Commercial – Owner Occupied	127,352		132,207
Commercial – Non-owner Occupied	311,897		324,840
Residential – 1 to 4 Family	711,908		670,827
Residential – Multifamily	76,522		94,748
Consumer	8,709		10,364
Total Loans	$	1,473,816	$	1,565,807


September 30, 2021	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Not Accruing		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
	(Dollars in Thousands)
Commercial and Industrial	$	—	$	96	$	47	$	143	$	66,134	$	66,277	$	—
Construction	—		—		1,139		1,139		170,012		171,151		—
Real Estate Mortgage:
Commercial – Owner Occupied	—		—		2,170		2,170		125,182		127,352		—
Commercial – Non-owner Occupied	—		—		309		309		311,588		311,897		—
Residential – 1 to 4 Family	—		163		557		720		711,188		711,908		—
Residential – Multifamily	—		—		—		—		76,522		76,522		—
Consumer	—		—		178		178		8,531		8,709		—
Total Loans	$	—	$	259	$	4,400	$	4,659	$	1,469,157	$	1,473,816	$	—


December 31, 2020	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Not Accruing		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
	(Dollars in thousands)
Commercial and Industrial	$	—	$	—	$	50	$	50	$	121,758	$	121,808	$	—
Construction	—		—		1,365		1,365		209,648		211,013		—
Real Estate Mortgage:
Commercial – Owner Occupied	—		1,171		5,521		6,692		125,515		132,207		—
Commercial – Non-owner Occupied	—		872		69		941		323,899		324,840		—
Residential – 1 to 4 Family	—		662		1,669		2,331		668,496		670,827		—
Residential – Multifamily	—		—		—		—		94,748		94,748		—
Consumer	45		—		55		100		10,264		10,364		—
Total Loans	$	45	$	2,705	$	8,729	$	11,479	$	1,554,328	$	1,565,807	$	—

We maintain the ALLL at a level that we believe to be appropriate to absorb estimated probable credit losses incurred in the loan portfolios as of the balance sheet date. We established our allowance in accordance with guidance provided in Accounting Standard Codification ("ASC") - Contingencies ("ASC 450") and Receivables ("ASC 310").

The allowance for loan and lease losses represents management’s estimate of probable losses inherent in the Company’s lending activities excluding loans accounted for under fair value. The allowance for loan losses is maintained through charges to the provision for loan losses in the Consolidated Statements of Income as losses are estimated to have occurred. Loans or portions thereof that are determined to be uncollectible are charged against the allowance, and subsequent recoveries, if any, are credited to the allowance.

The Company performs periodic reviews of its loan and lease portfolios to identify credit risks and to assess the overall collectability of those portfolios. The Company's allowance for loan losses includes a general component and an asset-specific component. The asset-specific component of the allowance relates to loans considered to be impaired, which includes performing troubled debt restructurings (“TDRs”) as well as nonperforming loans. To determine the asset-specific component of the allowance, the loans are evaluated individually based on the borrower's ability to repay amounts owed, collateral, relative risk grade of the loans, and other factors given current events and conditions. The Company generally measures the asset-specific allowance as the difference between the net realizable value of loan collateral or present value of expected cash flow and the recorded investment of a loan.

The general component of the allowance evaluates the impairments of pools of the loan portfolio collectively. It incorporates a historical valuation allowance and general valuation allowance. The historical loss experience is measured by type of credit and internal risk grade, loss severity, specific homogeneous risk pools. A historical loss ratio and valuation allowance are established for each pool of similar loans and updated periodically based on actual charge-off experience and current events. The general valuation allowance is based on general economic conditions and other qualitative risk factors both internal and external to the Company. It is generally determined by evaluating, among other things: (i) the experience, ability and effectiveness of the Bank's lending management and staff; (ii) the effectiveness of the Bank's lending policies, procedures and internal controls;(iii) volume and severity of loan credit quality; (iv) nature and volume of portfolio and term of loans (v) the composition and concentrations of credit; (vi) the effectiveness of the internal loan review system; and (vii) national and local economic trends and conditions, and industry conditions. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. Each component is determined to have either a high, high-moderate, moderate, low-moderate or low degree of risk. The results are then input into a "general allocation matrix" to determine an appropriate general valuation allowance.


					Real Estate Mortgage
	Commercial and Industrial		Construction		Commercial Owner Occupied		Commercial Non-owner Occupied		Residential 1 to 4 Family		Residential Multifamily		Consumer		Total
Allowance for loan losses	(Dollars in thousands)
Three months ended September 30, 2021
June 30, 2021	$	312	$	3,482	$	3,502	$	8,514	$	12,883	$	1,250	$	125	$	30,068
Charge-offs	—		(226)		—		—		(49)		—		—		(275)
Recoveries	2		—		38		4		—		—		—		44
Provisions (benefits)	95		(349)		(105)		(350)		878		(166)		(2)		1
Ending Balance at September 30, 2021	$	409	$	2,907	$	3,435	$	8,168	$	13,712	$	1,084	$	123	$	29,838

Allowance for loan losses
Nine months ended September 30, 2021
December 31, 2020	$	492	$	3,359	$	3,078	$	8,398	$	12,595	$	1,639	$	137	$	29,698
Charge-offs	—		(226)		(153)		—		(49)		—		—		(428)
Recoveries	15		—		49		4		—		—		—		68
Provisions (benefits)	(98)		(226)		461		(234)		1,166		(555)		(14)		500
Ending Balance at September 30, 2021	$	409	$	2,907	$	3,435	$	8,168	$	13,712	$	1,084	$	123	$	29,838

Allowance for loan losses
Individually evaluated for impairment	$	9	$	300	$	6	$	235	$	63	$	—	$	—	$	613
Collectively evaluated for impairment	400		2,607		3,429		7,933		13,649		1,084		123		29,225
Ending Balance at September 30, 2021	$	409	$	2,907	$	3,435	$	8,168	$	13,712	$	1,084	$	123	$	29,838

Loans
Individually evaluated for impairment	$	47	$	1,139	$	2,443	$	5,625	$	1,022	$	—	$	178	$	10,454
Collectively evaluated for impairment	66,230		170,012		124,909		306,272		710,886		76,522		8,531		1,463,362
Ending Balance at September 30, 2021	$	66,277	$	171,151	$	127,352	$	311,897	$	711,908	$	76,522	$	8,709	$	1,473,816


					Real Estate Mortgage
	Commercial and Industrial		Construction		Commercial Owner Occupied		Commercial Non-owner Occupied		Residential 1 to 4 Family		Residential Multifamily		Consumer		Total
Allowance for loan losses	(Dollars in thousands)
Three months ended September 30, 2020
June 30, 2020	$	987	$	3,660	$	2,414	$	6,181	$	10,766	$	1,058	$	162	$	25,228
Charge-offs	—		—		—		—		(54)		—		—		(54)
Recoveries	11		—		1		2		—		—		—		14
Provisions (benefits)	(385)		1,284		421		648		(65)		511		(14)		2,400
Ending Balance at September 30, 2020	$	613	$	4,944	$	2,836	$	6,831	$	10,647	$	1,569	$	148	$	27,588

Allowance for loan losses
Nine months ended September 30, 2020
December 31, 2019	$	964	$	2,807	$	2,023	$	5,860	$	9,151	$	819	$	187	$	21,811
Charge-offs	—		—		—		—		(54)		—		—		(54)
Recoveries	18		—		9		8		—		—		—		35
Provisions (benefits)	(369)		2,137		804		963		1,550		750		(39)		5,796
Ending Balance at September 30, 2020	$	613	$	4,944	$	2,836	$	6,831	$	10,647	$	1,569	$	148	$	27,588

Allowance for loan losses
Individually evaluated for impairment	$	78	$	334	$	257	$	377	$	61	$	—	$	—	$	1,107
Collectively evaluated for impairment	535		4,610		2,579		6,454		10,586		1,569		148		26,481
Ending Balance at September 30, 2020	$	613	$	4,944	$	2,836	$	6,831	$	10,647	$	1,569	$	148	$	27,588

Loans
Individually evaluated for impairment	$	116	$	4,990	$	7,447	$	10,187	$	2,855	$	—	$	—	$	25,595
Collectively evaluated for impairment	126,392		258,884		129,050		290,847		648,039		84,819		10,985		1,549,016
Ending Balance at September 30, 2020	$	126,508	$	263,874	$	136,497	$	301,034	$	650,894	$	84,819	$	10,985	$	1,574,611

A loan is considered impaired when, based on the current information and events, it is probable that the Company will be unable to collect the payments of principal and interest as of the date such payments were due. Loans are placed on non-accrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when a loan is 90 days past due, unless the loan is well secured and in the process of collection, as required by regulatory provisions. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

All our impaired loans are assessed for recoverability based on an independent third-party full appraisal to determine the net realizable value (“NRV”) based on the fair value of the underlying collateral, less cost to sell and other costs or the present value of discounted cash flows in the case of certain impaired loans that are not collateral dependent.


September 30, 2021	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded:
Commercial and Industrial	$	38	$	38	$	—
Construction	—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied	2,238		2,238		—
Commercial – Non-owner Occupied	173		173		—
Residential – 1 to 4 Family	488		621		—
Residential – Multifamily	—		—		—
Consumer	178		178		—
	3,115		3,248		—
With an allowance recorded:
Commercial and Industrial	9		17		9
Construction	1,139		5,856		300
Real Estate Mortgage:
Commercial – Owner Occupied	205		205		6
Commercial – Non-owner Occupied	5,452		5,452		235
Residential – 1 to 4 Family	534		534		63
Residential – Multifamily	—		—		—
Consumer	—		—		—
	7,339		12,064		613
Total:
Commercial and Industrial	47		55		9
Construction	1,139		5,856		300
Real Estate Mortgage:
Commercial – Owner Occupied	2,443		2,443		6
Commercial – Non-owner Occupied	5,625		5,625		235
Residential – 1 to 4 Family	1,022		1,155		63
Residential – Multifamily	—		—		—
Consumer	178		178		—
	$	10,454	$	15,312	$	613


	Three Months Ended September 30,
	2021				2020
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
Commercial and Industrial	$	48	$	—	$	221	$	1
Construction	1,290		—		4,990		40
Real Estate Mortgage:
Commercial – Owner Occupied	2,446		3		7,515		14
Commercial – Non-owner Occupied	5,651		123		10,240		158
Residential – 1 to 4 Family	1,332		8		2,994		33
Residential – Multifamily	—		—		—		—
Consumer	178		2		—		—
Total	$	10,945	$	136	$	25,960	$	246


	Nine Months Ended September 30,
	2021				2020
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
Commercial and Industrial	$	48	$	1	$	281	$	13
Construction	1,309		—		5,020		119
Real Estate Mortgage:
Commercial – Owner Occupied	2,447		10		6,167		95
Commercial – Non-owner Occupied	5,662		256		10,302		312
Residential – 1 to 4 Family	1,377		24		2,314		87
Residential – Multifamily	—		—		—		—
Consumer	178		4		—		—
Total	$	11,021	$	295	$	24,084	$	626

We reported performing TDR loans (not reported as non-accrual loans) of $6.1 million and $13.9 million, respectively, at September 30, 2021 and December 31, 2020. Nonperforming TDR loans were zero and $274,000 at September 30, 2021 and December 31, 2020, respectively. There were no new loans modified as a TDR and no additional commitments to lend additional funds to debtors whose loans have been modified in TDRs for the three and nine months ended September 30, 2021 and the year ended December 31, 2020, respectively. Under Interagency Statement ("Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised)") issued by Federal banking agencies, financial institutions generally do not need to categorize COVID-19-related modifications as TDRs. As a result, loans that have been restructured for short term deferrals through our loan deferral program for COVID-19 related hardships and meet certain other criteria specified in the Interagency Statement are not categorized as TDRs.

A TDR is a loan the terms of which have been restructured in a manner that grants a concession to a borrower experiencing financial difficulty. TDRs result from our loss mitigation activities that include rate reductions, extension of maturity, or a combination of both, which are intended to minimize economic loss and to avoid foreclosure or repossession of collateral. TDRs are classified as impaired loans and are included in the impaired loan disclosures. TDRs are also evaluated to determine whether

TDRs are generally included in nonaccrual loans and may return to performing status after a minimum of six consecutive monthly payments under restructured terms and also meeting other performance indicators. We review the financial performance of the borrower over the past year to be reasonably assured of repayment and performance according to the modified terms. This review consists of an analysis of the borrower’s historical results; the borrower’s projected results over the next four quarters; and current financial information of the borrower and any guarantors. The projected repayment source needs to be reliable, verifiable, quantifiable and sustainable. At the time of restructuring, the amount of the loan principal for which we are not reasonably assured of repayment is charged-off, but not forgiven.

All TDRs are also reviewed quarterly to determine the amount of any impairment. The nature and extent of impairment of TDRs, including those that have experienced a subsequent default, is considered in the determination of an appropriate level of allowance for loan losses. For TDR loans, we had specific reserves of $261,006 and $420,000 in the allowance at September 30, 2021 and December 31, 2020, respectively. Some loan modifications classified as TDRs may not ultimately result in the full collection of principal and interest, as modified, and result in potential incremental losses. These potential incremental losses have been factored into our overall allowance for loan losses estimate.

Credit Quality Indicators: As part of the on-going monitoring of the credit quality of the Company's loan portfolio, management tracks certain credit quality indicators including trends related to the risk grades of loans, the level of classified loans, net charge-offs, nonperforming loans (see details above) and the general economic conditions in the region.

5.Other Assets Especially Mentioned (OAEM): Financial condition is such that assets in this category have a potential weakness or pose unwarranted financial risk to the Bank even though the asset value is not currently impaired. The asset does not currently warrant adverse classification but if not corrected could weaken and could create future increased risk exposure. Includes loans that require an increased degree of monitoring or servicing as a result of internal or external changes.

6.Substandard: This classification represents more severe cases of #5 (OAEM) characteristics that require increased monitoring. Assets are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Assets are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral. Asset has a well-defined weakness or weaknesses that impairs the ability to repay debt and jeopardizes the timely liquidation or realization of the collateral at the asset’s net book value.

7.Doubtful: Assets which have all the weaknesses inherent in those assets classified #6 (Substandard) but the risks are more severe relative to financial deterioration in capital and/or asset value; accounting/evaluation techniques may be questionable and the overall possibility for collection in full is highly improbable. Borrowers in this category require constant monitoring, are considered work-out loans and present the potential for future loss to the Bank.


At September 30, 2021	Pass		OAEM		Substandard		Doubtful		Total
	(Dollars in thousands)
Commercial and Industrial	$	66,230	$	—	$	47	$	—	$	66,277
Construction	170,012		—		1,139		—		171,151
Real Estate Mortgage:
Commercial – Owner Occupied	122,153		3,029		2,170		—		127,352
Commercial – Non-owner Occupied	297,208		14,380		309		—		311,897
Residential – 1 to 4 Family	710,810		449		649		—		711,908
Residential – Multifamily	76,522		—		—		—		76,522
Consumer	8,531		—		178		—		8,709
Total	$	1,451,466	$	17,858	$	4,492	$	—	$	1,473,816


At December 31, 2020	Pass		OAEM		Substandard		Doubtful		Total
	(Dollars in thousands)
Commercial and Industrial	$	121,715	$	43	$	50	$	—	$	121,808
Construction	209,648		—		1,365		—		211,013
Real Estate Mortgage:
Commercial – Owner Occupied	123,657		3,029		5,521		—		132,207
Commercial – Non-owner Occupied	324,649		—		191		—		324,840
Residential – 1 to 4 Family	668,593		462		1,772		—		670,827
Residential – Multifamily	94,748		—		—		—		94,748
Consumer	10,309		—		55		—		10,364
Total	$	1,553,319	$	3,534	$	8,954	$	—	$	1,565,807