Allowance for Credit Losses (Tables)
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3 Months Ended |
Mar. 31, 2023 |
Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract] |
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Schedule of allocation of the allowance for loan and lease losses |
The following table provides the activity of our allowance for credit losses for the three months ended March 31, 2023 under the CECL model in accordance with ASC 326 (as adopted on January 1, 2023): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended March 31, 2023 | (dollars in thousands) | Beginning Balance, prior to adoption of ASU No. 2016-13 for CECL | | Adjustment to initially apply ASU No. 2016-13 for CECL | | Charge-offs | | Recoveries | | Provision (recovery of provision) for credit losses | | Ending balance | Commercial mortgage | $ | 4,095 | | | $ | (526) | | | $ | — | | | $ | — | | | $ | (94) | | | $ | 3,475 | | Home equity lines and loans | 188 | | | 439 | | | (33) | | | 2 | | | 19 | | | 615 | | Residential mortgage | 948 | | | 17 | | | — | | | — | | | (97) | | | 868 | | Construction | 3,075 | | | (1,763) | | | — | | | — | | | (193) | | | 1,119 | | Commercial and industrial | 4,012 | | | (1,023) | | | — | | | 39 | | | (295) | | | 2,733 | | Small business loans | 4,909 | | | 1,110 | | | — | | | — | | | 297 | | | 6,316 | | Consumer | 3 | | | (3) | | | — | | | — | | | — | | | — | | Leases | 1,598 | | | 3,345 | | | (1,464) | | | 3 | | | 1,834 | | | 5,316 | | Total | $ | 18,828 | | | $ | 1,596 | | | $ | (1,497) | | | $ | 44 | | | $ | 1,471 | | | $ | 20,442 | |
The following table provides the activity of the allowance for loan and lease losses for the three months ended March 31, 2022 under the incurred loss model: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended March 31, 2022 | (dollars in thousands) | Beginning Balance | | Charge-offs | | Recoveries | | Provision (Reversal) | | Ending Balance | Commercial mortgage | $ | 4,950 | | | $ | — | | | $ | — | | | $ | (800) | | | $ | 4,150 | | Home equity lines and loans | 224 | | | — | | | 6 | | | (22) | | | 208 | | Residential mortgage | 283 | | | — | | | 2 | | | 72 | | | 357 | | Construction | 2,042 | | | — | | | — | | | 215 | | | 2,257 | | Commercial and industrial | 6,533 | | | — | | | 11 | | | 825 | | | 7,369 | | Small business loans | 3,737 | | | — | | | — | | | (365) | | | 3,372 | | Consumer | 3 | | | — | | | — | | | — | | | 3 | | Leases | 986 | | | (566) | | | — | | | 690 | | | 1,110 | | Total | $ | 18,758 | | | $ | (566) | | | $ | 19 | | | $ | 615 | | | $ | 18,826 | |
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Allowance For Credit Losses On Financing Receivables Portfolio Segment |
The following tables detail the allocation of the allowance for loan and lease losses and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment at the dates indicated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | | Allowance for credit losses | | Carrying value of loans and leases | (dollars in thousands) | Individually evaluated for impairment | | Collectively evaluated for impairment | | Total | | Individually evaluated for impairment | | Collectively evaluated for impairment | | Total | Commercial mortgage | $ | — | | | $ | 3,475 | | | $ | 3,475 | | | $ | 2,263 | | | $ | 614,800 | | | $ | 617,063 | | Home equity lines and loans | — | | | 615 | | | 615 | | | 985 | | | 61,065 | | | 62,050 | | Residential mortgage | — | | | 868 | | | 868 | | | 1,440 | | | 222,957 | | | 224,397 | | Construction | — | | | 1,119 | | | 1,119 | | | 1,206 | | | 266,182 | | | 267,388 | | Commercial and industrial | 903 | | | 1,830 | | | 2,733 | | | 13,233 | | | 317,849 | | | 331,082 | | Small business loans | 1,555 | | | 4,761 | | | 6,316 | | | 5,324 | | | 143,246 | | | 148,570 | | Consumer | — | | | — | | | — | | | — | | | 387 | | | 387 | | Leases, net | — | | | 5,316 | | | 5,316 | | | 367 | | | 150,690 | | | 151,057 | | Total (1) | $ | 2,458 | | | $ | 17,984 | | | $ | 20,442 | | | $ | 24,818 | | | $ | 1,777,176 | | | $ | 1,801,994 | |
(1) Excludes deferred fees and loans carried at fair value.
The following table details the pre-CECL allocation of the allowance for loan and lease losses and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment at the dates indicated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2022 | | Allowance on loans and leases | | Carrying value of loans and leases | (dollars in thousands) | Individually evaluated for impairment | | Collectively evaluated for impairment | | Total | | Individually evaluated for impairment | | Collectively evaluated for impairment | | Total | Commercial mortgage | $ | — | | | $ | 4,095 | | | $ | 4,095 | | | $ | 2,445 | | | $ | 562,955 | | | $ | 565,400 | | Home equity lines and loans | — | | | 188 | | | 188 | | | 1,097 | | | 58,302 | | | 59,399 | | Residential mortgage | — | | | 948 | | | 948 | | | 1,454 | | | 205,881 | | | 207,335 | | Construction | — | | | 3,075 | | | 3,075 | | | 1,206 | | | 270,749 | | | 271,955 | | Commercial and industrial | 776 | | | 3,236 | | | 4,012 | | | 12,547 | | | 328,831 | | | 341,378 | | Small business loans | 1,449 | | | 3,460 | | | 4,909 | | | 4,527 | | | 131,628 | | | 136,155 | | Consumer | — | | | 3 | | | 3 | | | — | | | 488 | | | 488 | | Leases, net | — | | | 1,598 | | | 1,598 | | | 902 | | | 138,084 | | | 138,986 | | Total (1) | $ | 2,225 | | | $ | 16,603 | | | $ | 18,828 | | | $ | 24,178 | | | $ | 1,696,918 | | | $ | 1,721,096 | |
(1) Excludes deferred fees and loans carried at fair value.
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Schedule of carrying value of loans and leases by portfolio segment based on the credit quality indicators |
The following tables detail the carrying value of loans and leases by portfolio segment based on the credit quality indicators used to determine the allowance for credit losses at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | | Revolving Loans Converted to Term Loans | | Revolving Loans | | Total | | Term Loans | | | | | 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior | | | | Commercial mortgage | | | | | | | | | | | | | | | | | Pass/Watch | $ | 24,466 | | | $ | 128,528 | | | $ | 140,094 | | | $ | 99,498 | | | $ | 54,655 | | | $ | 143,017 | | | $ | 511 | | | $ | 378 | | | $ | 591,147 | | Special Mention | — | | | 4,749 | | | — | | | — | | | 5,872 | | | 10,893 | | | — | | | — | | | 21,514 | | Substandard | — | | | — | | | — | | | — | | | 1,675 | | | 2,394 | | | — | | | 333 | | | 4,402 | | | | | | | | | | | | | | | | | | | | Total | $ | 24,466 | | | $ | 133,277 | | | $ | 140,094 | | | $ | 99,498 | | | $ | 62,202 | | | $ | 156,304 | | | $ | 511 | | | $ | 711 | | | $ | 617,063 | | Current period gross charge-offs | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | | | | Construction | | | | | | | | | | | | | | | | | | Pass/Watch | $ | 8,301 | | | $ | 92,502 | | | $ | 66,901 | | | $ | 47,378 | | | $ | 4,739 | | | $ | 2,493 | | | $ | — | | | $ | 26,126 | | | $ | 248,440 | | Special Mention | — | | | — | | | 67 | | | — | | | 4,449 | | | 13,226 | | | — | | | — | | | 17,742 | | Substandard | — | | | — | | | — | | | — | | | — | | | 1,206 | | | — | | | — | | | 1,206 | | | | | | | | | | | | | | | | | | | | Total | $ | 8,301 | | | $ | 92,502 | | | $ | 66,968 | | | $ | 47,378 | | | $ | 9,188 | | | $ | 16,925 | | | $ | — | | | $ | 26,126 | | | $ | 267,388 | | Current period gross charge-offs | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | | | | Commercial and industrial | | | | | | | | | | | | | | | | | Pass/Watch | $ | 8,954 | | | $ | 51,139 | | | $ | 38,432 | | | $ | 10,429 | | | $ | 14,175 | | | $ | 46,074 | | | $ | 9,981 | | | $ | 110,982 | | | $ | 290,166 | | Special Mention | — | | | 4,724 | | | — | | | — | | | — | | | 2,689 | | | — | | | 1,578 | | | 8,991 | | Substandard | — | | | — | | | 3,636 | | | 933 | | | 300 | | | 8,827 | | | — | | | 18,229 | | | 31,925 | | | | | | | | | | | | | | | | | | | | Total | $ | 8,954 | | | $ | 55,863 | | | $ | 42,068 | | | $ | 11,362 | | | $ | 14,475 | | | $ | 57,590 | | | $ | 9,981 | | | $ | 130,789 | | | $ | 331,082 | | Current period gross charge-offs | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | | | | Small business loans | | | | | | | | | | | | | | | | | | Pass/Watch | $ | 15,999 | | | $ | 38,100 | | | $ | 50,952 | | | $ | 16,419 | | | $ | 5,979 | | | $ | 1,405 | | | $ | 2,638 | | | $ | 11,799 | | | $ | 143,291 | | Special Mention | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Substandard | — | | | — | | | 2,489 | | | 890 | | | 912 | | | — | | | — | | | 988 | | | 5,279 | | | | | | | | | | | | | | | | | | | | Total | $ | 15,999 | | | $ | 38,100 | | | $ | 53,441 | | | $ | 17,309 | | | $ | 6,891 | | | $ | 1,405 | | | $ | 2,638 | | | $ | 12,787 | | | $ | 148,570 | | Current period gross charge-offs | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | | | | Total by risk rating | | | | | | | | | | | | | | | | | | Pass/Watch | $ | 57,720 | | | $ | 310,269 | | | $ | 296,379 | | | $ | 173,724 | | | $ | 79,548 | | | $ | 192,989 | | | $ | 13,130 | | | $ | 149,285 | | | $ | 1,273,044 | | Special Mention | — | | | 9,473 | | | 67 | | | — | | | 10,321 | | | 26,808 | | | — | | | 1,578 | | | 48,247 | | Substandard | — | | | — | | | 6,125 | | | 1,823 | | | 2,887 | | | 12,427 | | | — | | | 19,550 | | | 42,812 | | Doubtful | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Total | $ | 57,720 | | | $ | 319,742 | | | $ | 302,571 | | | $ | 175,547 | | | $ | 92,756 | | | $ | 232,224 | | | $ | 13,130 | | | $ | 170,413 | | | $ | 1,364,103 | | Total current period gross charge-offs | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
The Corporation had no loans with a risk rating of Doubtful included within recorded investment in loans and leases held for investment at March 31, 2023. In addition to credit quality indicators as shown in the above tables, allowance allocations for residential mortgages, consumer loans and leases are also applied based on their performance status at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | | Revolving Loans | | Total | | Term Loans | | | | 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior | | | Home equity lines and loans | | | | | | | | | | | | | | | | Performing | $ | — | | | $ | 816 | | | $ | 402 | | | $ | 371 | | | $ | 2,374 | | | $ | 2,514 | | | $ | 54,588 | | | $ | 61,065 | | Nonperforming | — | | | — | | | — | | | — | | | — | | | — | | | 985 | | | 985 | | Total | $ | — | | | $ | 816 | | | $ | 402 | | | $ | 371 | | | $ | 2,374 | | | $ | 2,514 | | | $ | 55,573 | | | $ | 62,050 | | Current period gross charge-offs | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | (33) | | | $ | — | | | $ | (33) | | | | | | | | | | | | | | | | | | Residential mortgage (1) | | | | | | | | | | | | | | | | Performing | $ | 18,023 | | | $ | 159,453 | | | $ | 24,365 | | | $ | 7,228 | | | $ | 466 | | | $ | 13,353 | | | $ | — | | | $ | 222,888 | | Nonperforming | — | | | — | | | — | | | 316 | | | — | | | 1,193 | | | — | | | 1,509 | | Total | $ | 18,023 | | | $ | 159,453 | | | $ | 24,365 | | | $ | 7,544 | | | $ | 466 | | | $ | 14,546 | | | $ | — | | | $ | 224,397 | | Current period gross charge-offs | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | | Consumer | | | | | | | | | | | | | | | | Performing | $ | — | | | $ | 45 | | | $ | — | | | $ | — | | | $ | 43 | | | $ | 256 | | | $ | 43 | | | $ | 387 | | Nonperforming | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Total | $ | — | | | $ | 45 | | | $ | — | | | $ | — | | | $ | 43 | | | $ | 256 | | | $ | 43 | | | $ | 387 | | Current period gross charge-offs | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | | Leases, net | | | | | | | | | | | | | | | | Performing | $ | 16,610 | | | $ | 74,726 | | | $ | 44,180 | | | $ | 15,174 | | | $ | — | | | $ | — | | | $ | — | | | $ | 150,690 | | Nonperforming | — | | | 198 | | | 152 | | | 17 | | | — | | | — | | | — | | | 367 | | Total | $ | 16,610 | | | $ | 74,924 | | | $ | 44,332 | | | $ | 15,191 | | | $ | — | | | $ | — | | | $ | — | | | $ | 151,057 | | Current period gross charge-offs | $ | — | | | $ | (561) | | | $ | (881) | | | $ | (22) | | | $ | — | | | $ | — | | | $ | — | | | $ | (1,464) | | | | | | | | | | | | | | | | | | Total by Payment Performance | | | | | | | | | | | | | | | | Performing | $ | 34,633 | | | $ | 235,040 | | | $ | 68,947 | | | $ | 22,773 | | | $ | 2,883 | | | $ | 16,123 | | | $ | 54,631 | | | $ | 435,030 | | Nonperforming | — | | | 198 | | | 152 | | | 333 | | | — | | | 1,193 | | | 985 | | | 2,861 | | Total | $ | 34,633 | | | $ | 235,238 | | | $ | 69,099 | | | $ | 23,106 | | | $ | 2,883 | | | $ | 17,316 | | | $ | 55,616 | | | $ | 437,891 | | Total current period gross charge-offs | $ | — | | | $ | (561) | | | $ | (881) | | | $ | (22) | | | $ | — | | | $ | (33) | | | $ | — | | | $ | (1,497) | | (1) Excludes $14,434 of loans at fair value. | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2022 | (dollars in thousands) | Pass | | Special mention | | Substandard | | Doubtful | | Total | Commercial mortgage | $ | 536,705 | | | $ | 25,309 | | | $ | 3,386 | | | $ | — | | | $ | 565,400 | | Home equity lines and loans | 57,822 | | | — | | | 1,577 | | | — | | | 59,399 | | Construction | 260,085 | | | 11,870 | | | — | | | — | | | 271,955 | | Commercial and industrial | 295,502 | | | 6,587 | | | 39,289 | | | — | | | 341,378 | | Small business loans | 131,690 | | | — | | | 4,465 | | | — | | | 136,155 | | Total | $ | 1,281,804 | | | $ | 43,766 | | | $ | 48,717 | | | $ | — | | | $ | 1,374,287 | |
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Schedule of allocations based on the credit quality indicators |
In addition to credit quality indicators as shown in the above tables, allowance allocations for residential mortgages, consumer loans and leases are also applied based on their performance status at the dates indicated: | | | | | | | | | | | | | | | | | | | | | | | December 31, 2022 | (dollars in thousands) | | Performing | | Non- performing | | Total | Residential mortgage (1) | | $ | 205,881 | | | $ | 1,454 | | | $ | 207,335 | | Consumer | | 488 | | | — | | | 488 | | Leases, net | | 138,084 | | | 902 | | | 138,986 | | Total | | $ | 344,453 | | | $ | 2,356 | | | $ | 346,809 | |
(1) There were four nonperforming residential mortgage loans at March 31, 2023 and four nonperforming residential mortgage loans at December 31, 2022 with a combined outstanding principal balance of $560 thousand and $558 thousand, respectively, which were carried at fair value and not included in the table above.
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Schedule of recorded investment and principal balance of impaired loans |
The following tables detail the recorded investment and principal balance of individually evaluated loans by portfolio segment, their related Allowance and interest income recognized at the dates indicated. The following tables detail the pre-CECL recorded investment and principal balance of individually evaluated loans by portfolio segment, their related Allowance and interest income recognized at the dates indicated. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | | December 31, 2022 | (dollars in thousands) | Recorded investment | | Principal balance | | Related allowance | | Recorded investment | | Principal balance | | Related allowance | Individually evaluated loans with related allowance: | Commercial and industrial | $ | 10,986 | | | $ | 12,319 | | | $ | 903 | | | $ | 11,099 | | | $ | 12,095 | | | $ | 776 | | Small business loans | 4,544 | | | 4,584 | | | 1,555 | | | 3,730 | | | 3,730 | | | 1,449 | | | | | | | | | | | | | | | | | | | | | | | | | | Total | $ | 15,530 | | | $ | 16,903 | | | $ | 2,458 | | | $ | 14,829 | | | $ | 15,825 | | | $ | 2,225 | | Individually evaluated loans without related allowance: | Commercial mortgage | $ | 2,263 | | | $ | 2,263 | | | $ | — | | | $ | 2,445 | | | $ | 2,456 | | | $ | — | | Commercial and industrial | 2,247 | | | 2,277 | | | — | | | 1,448 | | | 1,494 | | | — | | Small business loans | 780 | | | 780 | | | — | | | 797 | | | 797 | | | — | | Home equity lines and loans | 985 | | | 987 | | | — | | | 1,097 | | | 1,097 | | | — | | Residential mortgage | 1,440 | | | 1,440 | | | — | | | 1,454 | | | 1,454 | | | — | | Construction | 1,206 | | | 1,206 | | | — | | | 1,206 | | | 1,206 | | | — | | Leases | 367 | | | 367 | | | — | | | 902 | | | 902 | | | — | | Total | $ | 9,288 | | | $ | 9,320 | | | $ | — | | | $ | 9,349 | | | $ | 9,406 | | | $ | — | | Grand Total | $ | 24,818 | | | $ | 26,223 | | | $ | 2,458 | | | $ | 24,178 | | | $ | 25,231 | | | $ | 2,225 | |
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Schedule of average recorded investment on impaired loans |
The following table details the average recorded investment and interest income recognized on individually evaluated loans by portfolio segment. | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended March 31, 2023 | | Three Months Ended March 31, 2022 | (dollars in thousands) | Average Recorded Investment | | Interest Income Recognized | | Average recorded investment | | Interest income recognized | Individually evaluated loans with related allowance: | | | | | | | | Commercial and industrial | $ | 10,917 | | | $ | — | | | $ | 16,487 | | | $ | — | | Small business loans | 4,584 | | | — | | | 666 | | | — | | | | | | | | | | | | | | | | | | Total | $ | 15,501 | | | $ | — | | | $ | 17,153 | | | $ | — | | Individually evaluated loans without related allowance: | | | | | | | | Commercial mortgage | 2,311 | | | 58 | | | 3,547 | | | 19 | | Commercial and industrial | 2,170 | | | — | | | 454 | | | — | | Small business loans | 796 | | | 2 | | | 117 | | | 3 | | Home equity lines and loans | 998 | | | — | | | 1,002 | | | — | | Residential mortgage | 1,445 | | | 30 | | | 1,796 | | | 2 | | Construction | 1,032 | | | — | | | 1,206 | | | 15 | | Leases | 423 | | | — | | | — | | | — | | Total | $ | 9,175 | | | $ | 90 | | | $ | 8,122 | | | $ | 39 | | Grand Total | $ | 24,676 | | | $ | 90 | | | $ | 25,275 | | | $ | 39 | |
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Schedule of TDRs |
The following table presents information about TDRs at the dates indicated: | | | | | | | | (dollars in thousands) | | | December 31, 2022 | TDRs included in nonperforming loans and leases | | | $ | 207 | | TDRs in compliance with modified terms | | | 3,573 | | Total TDRs | | | $ | 3,780 | |
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