XML 33 R11.htm IDEA: XBRL DOCUMENT v3.24.1
Loans Allowance for Loan Losses and Credit Quality
12 Months Ended
Dec. 31, 2023
Loans Allowance for Loan Losses and Credit Quality  
Loans Allowance For Loan Losses And Credit Quality

Note 4.  Loans, Allowance for Credit Losses, Credit Quality and Off-Balance Sheet Credit Exposures

 

The composition of net loans as of the balance sheet dates was as follows:

 

December 31,

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial

 

$121,705,707

 

 

 

14.40%

 

$112,951,873

 

 

 

15.09%

Purchased (1)

 

 

10,568,922

 

 

 

1.25%

 

 

7,530,458

 

 

 

1.00%

Commercial real estate

 

 

414,880,621

 

 

 

49.07%

 

 

356,892,986

 

 

 

47.68%

Municipal

 

 

54,466,988

 

 

 

6.44%

 

 

34,633,055

 

 

 

4.63%

Residential real estate - 1st lien

 

 

208,824,888

 

 

 

24.70%

 

 

198,743,375

 

 

 

26.55%

Residential real estate - Jr lien

 

 

31,668,811

 

 

 

3.75%

 

 

33,756,872

 

 

 

4.51%

Consumer

 

 

3,313,917

 

 

 

0.39%

 

 

4,039,989

 

 

 

0.54%

Total loans

 

 

845,429,854

 

 

 

100.00%

 

 

748,548,608

 

 

 

100.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACL

 

 

(9,842,725)

 

 

 

 

 

 

(8,709,225)

 

 

 

 

Deferred net loan costs

 

 

573,169

 

 

 

 

 

 

 

493,275

 

 

 

 

 

Net loans

 

$836,160,298

 

 

 

 

 

 

$740,332,658

 

 

 

 

 

 

(1) At December 31, 2023, Purchased loans consisted of $4,863,263 in commercial loans and $5,705,659 in consumer loans, compared to $7,530,458 and $0, respectively, at December 31, 2022.

 

The following is an age analysis of loans (including non-accrual), as of the balance sheet dates, by portfolio segment:

 

 

 

 

 

 

90 Days

 

 

Total

 

 

 

 

 

 

 

December 31, 2023

 

30-89 Days

 

 

or More

 

 

Past Due

 

 

Current

 

 

Total Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial

 

$253,974

 

 

$3,068,578

 

 

$3,322,552

 

 

$118,383,155

 

 

$121,705,707

 

Purchased

 

 

0

 

 

 

0

 

 

 

0

 

 

 

10,568,922

 

 

 

10,568,922

 

Commercial real estate

 

 

178,083

 

 

 

944,669

 

 

 

1,122,752

 

 

 

413,757,869

 

 

 

414,880,621

 

Municipal

 

 

0

 

 

 

0

 

 

 

0

 

 

 

54,466,988

 

 

 

54,466,988

 

Residential real estate - 1st lien

 

 

1,856,944

 

 

 

646,980

 

 

 

2,503,924

 

 

 

206,320,964

 

 

 

208,824,888

 

Residential real estate - Jr lien

 

 

245,856

 

 

 

25,007

 

 

 

270,863

 

 

 

31,397,948

 

 

 

31,668,811

 

Consumer

 

 

14,728

 

 

 

0

 

 

 

14,728

 

 

 

3,299,189

 

 

 

3,313,917

 

Totals

 

$2,549,585

 

 

$4,685,234

 

 

$7,234,819

 

 

$838,195,035

 

 

$845,429,854

 

  

 

 

 

 

 

90 Days

 

 

Total

 

 

 

 

 

 

 

December 31, 2022

 

30-89 Days

 

 

or More

 

 

Past Due

 

 

Current

 

 

Total Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial

 

$2,377,668

 

 

$879,802

 

 

$3,257,470

 

 

$109,694,403

 

 

$112,951,873

 

Purchased

 

 

0

 

 

 

0

 

 

 

0

 

 

 

7,530,458

 

 

 

7,530,458

 

Commercial real estate

 

 

1,395,444

 

 

 

353,842

 

 

 

1,749,286

 

 

 

355,143,700

 

 

 

356,892,986

 

Municipal

 

 

0

 

 

 

0

 

 

 

0

 

 

 

34,633,055

 

 

 

34,633,055

 

Residential real estate - 1st lien

 

 

1,517,653

 

 

 

641,141

 

 

 

2,158,794

 

 

 

196,584,581

 

 

 

198,743,375

 

Residential real estate - Jr lien

 

 

321,579

 

 

 

25,007

 

 

 

346,586

 

 

 

33,410,286

 

 

 

33,756,872

 

Consumer

 

 

18,745

 

 

 

0

 

 

 

18,745

 

 

 

4,021,244

 

 

 

4,039,989

 

Totals

 

$5,631,089

 

 

$1,899,792

 

 

$7,530,881

 

 

$741,017,727

 

 

$748,548,608

 

 

For all loan segments, loans over 30 days past due are considered delinquent.

 

The following tables present the amortized cost basis of loans on nonaccrual status and loans past due 90 days or more and still accruing as of the dates presented.  There were no nonaccrual loans with an ACL at December 31, 2023.

 

 

 

 

 

 

90 Days or

 

 

 

Nonaccrual

 

 

More and

 

December 31, 2023

 

with No ACL

 

 

Accruing

 

 

 

 

 

 

 

 

Commercial & industrial

 

$3,632,659

 

 

$0

 

Commercial real estate

 

 

2,818,283

 

 

 

38,779

 

Residential real estate - 1st lien

 

 

415,074

 

 

 

446,395

 

Residential real estate - Jr lien

 

 

89,030

 

 

 

0

 

Totals

 

$6,955,046

 

 

$485,174

 

 

 

 

 

 

 

 

 

 

 

 

 

90 Days or

 

 

 

Nonaccrual

 

 

Nonaccrual

 

 

Total

 

 

More and

 

December 31, 2022

 

with an ALL

 

 

with No ALL

 

 

Nonaccrual

 

 

Accruing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial

 

$452,963

 

 

$2,989,161

 

 

$3,442,124

 

 

$0

 

Commercial real estate

 

 

0

 

 

 

3,180,478

 

 

 

3,180,478

 

 

 

324,927

 

Residential real estate - 1st lien

 

 

278,026

 

 

 

858,304

 

 

 

1,136,330

 

 

 

248,157

 

Residential real estate - Jr lien

 

 

0

 

 

 

131,088

 

 

 

131,088

 

 

 

0

 

Totals

 

$730,989

 

 

$7,159,031

 

 

$7,890,020

 

 

$573,084

 

 

There were no residential mortgage loans in process of foreclosure at December 31, 2023 compared to one loan with a balance of $19,746 at December 31, 2022.

 

Credit Loss Expense

 

Credit loss expense was made up of the following components for the periods indicated:

 

Year Ended December 31,

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Credit loss expense - loans

 

$1,230,879

 

 

$978,000

 

Credit loss expense - OBS credit exposures

 

 

249,670

 

 

 

0

 

Credit loss expense

 

$1,480,549

 

 

$978,000

 

 

The following table presents the activity in the ACL on loans following adoption of ASU 2016-13 (CECL) on January 1, 2023 by portfolio segment for the period.

 

As of or for the year ended December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

Residential

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

Commercial

 

 

 

 

Real Estate

 

 

Real Estate

 

 

 

 

 

 

 

 

 

& Industrial

 

 

Purchased

 

 

Real Estate

 

 

Municipal

 

 

1st Lien

 

 

Jr Lien

 

 

Consumer

 

 

Unallocated

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACL beginning balance

 

$1,116,322

 

 

$53,090

 

 

$5,061,813

 

 

$62,339

 

 

$2,001,836

 

 

$241,950

 

 

$69,686

 

 

$102,189

 

 

$8,709,225

 

Impact of adopting CECL

 

 

(164,115)

 

 

(29,196)

 

 

(22,467)

 

 

24,243

 

 

 

273,167

 

 

 

297,746

 

 

 

(33,813)

 

 

(102,189)

 

 

243,376

 

Charge-offs

 

 

(386,578)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(1,625)

 

 

0

 

 

 

(131,332)

 

 

0

 

 

 

(519,535)

Recoveries

 

 

10,237

 

 

 

0

 

 

 

22,058

 

 

 

0

 

 

 

72,588

 

 

 

29,240

 

 

 

44,657

 

 

 

0

 

 

 

178,780

 

Credit loss expense (reversal)

 

 

524,822

 

 

 

13,171

 

 

 

460,678

 

 

 

49,585

 

 

 

244,960

 

 

 

(137,929)

 

 

75,592

 

 

 

0

 

 

 

1,230,879

 

ACL ending balance

 

$1,100,688

 

 

$37,065

 

 

$5,522,082

 

 

$136,167

 

 

$2,590,926

 

 

$431,007

 

 

$24,790

 

 

$0

 

 

$9,842,725

 

 

The following table presents activity in the ALL and select loan information on impairment evaluation, by portfolio segment, under the incurred loss methodology, for the period indicated:

 

As of or for the year ended December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

Residential

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

Commercial

 

 

 

 

Real Estate

 

 

Real Estate

 

 

 

 

 

 

 

 

 

& Industrial

 

 

Purchased

 

 

Real Estate

 

 

Municipal

 

 

1st Lien

 

 

Jr Lien

 

 

Consumer

 

 

Unallocated

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALL beginning balance

 

$870,392

 

 

$68,655

 

 

$4,151,760

 

 

$76,728

 

 

$1,765,892

 

 

$182,014

 

 

$55,698

 

 

$539,117

 

 

$7,710,256

 

Charge-offs

 

 

(76,875)

 

 

0

 

 

 

(667,474)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(63,625)

 

 

0

 

 

 

(807,974)

Recoveries

 

 

14,112

 

 

 

0

 

 

 

667,474

 

 

 

0

 

 

 

111,763

 

 

 

5,089

 

 

 

30,505

 

 

 

0

 

 

 

828,943

 

Provision (credit)

 

 

308,693

 

 

 

(15,565)

 

 

910,053

 

 

 

(14,389)

 

 

124,181

 

 

 

54,847

 

 

 

47,108

 

 

 

(436,928)

 

 

978,000

 

ALL ending balance

 

$1,116,322

 

 

$53,090

 

 

$5,061,813

 

 

$62,339

 

 

$2,001,836

 

 

$241,950

 

 

$69,686

 

 

$102,189

 

 

$8,709,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALL evaluated for impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually

 

$2,322

 

 

$0

 

 

$0

 

 

$0

 

 

$106,280

 

 

$0

 

 

$0

 

 

$0

 

 

$108,602

 

Collectively

 

 

1,114,000

 

 

 

53,090

 

 

 

5,061,813

 

 

 

62,339

 

 

 

1,895,556

 

 

 

241,950

 

 

 

69,686

 

 

 

102,189

 

 

 

8,600,623

 

Total

 

$1,116,322

 

 

$53,090

 

 

$5,061,813

 

 

$62,339

 

 

$2,001,836

 

 

$241,950

 

 

$69,686

 

 

$102,189

 

 

$8,709,225

 

 

Loans evaluated for impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually

 

$3,442,124

 

 

$0

 

 

$3,176,835

 

 

$0

 

 

$3,816,012

 

 

$77,416

 

 

$0

 

 

 

 

 

 

$10,512,387

 

Collectively

 

 

109,509,749

 

 

 

7,530,458

 

 

 

353,716,151

 

 

 

34,633,055

 

 

 

194,927,363

 

 

 

33,679,456

 

 

 

4,039,989

 

 

 

 

 

 

 

738,036,221

 

Total

 

$112,951,873

 

 

$7,530,458

 

 

$356,892,986

 

 

$34,633,055

 

 

$198,743,375

 

 

$33,756,872

 

 

$4,039,989

 

 

 

 

 

 

$748,548,608

 

 

Impaired loans, by portfolio segment, prior to adoption of ASU 2022-02 (Troubled Debt Restructurings and Vintage Disclosures), were as follows:

 

 

 

As of December 31, 2022

 

 

 

 

 

Unpaid

 

 

 

 

 

Recorded

 

 

Principal

 

 

Related

 

 

 

Investment (1)

 

 

Balance

 

 

Allowance

 

 

 

 

 

 

 

 

 

 

 

Related allowance recorded

 

 

 

 

 

 

 

 

 

Commercial & industrial

 

$452,963

 

 

$462,745

 

 

$2,322

 

Residential real estate – 1st lien

 

 

1,041,730

 

 

 

1,073,350

 

 

 

106,280

 

Total with related allowance

 

 

1,494,693

 

 

 

1,536,095

 

 

 

108,602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No related allowance recorded

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial

 

 

2,989,161

 

 

 

3,078,769

 

 

 

 

 

Commercial real estate

 

 

3,176,962

 

 

 

3,671,196

 

 

 

 

 

Residential real estate - 1st lien

 

 

2,785,669

 

 

 

3,805,682

 

 

 

 

 

Residential real estate - Jr lien

 

 

77,419

 

 

 

126,250

 

 

 

 

 

Total with no related allowance

 

 

9,029,211

 

 

 

10,681,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total impaired loans

 

$10,523,904

 

 

$12,217,992

 

 

$108,602

 

 

(1) Recorded investment in impaired loans in the table above includes accrued interest receivable and deferred net loan costs of $11,517.

 

 

 

For the Year Ended

December 31, 2022

 

 

 

Average

 

 

Interest

 

 

 

Recorded

 

 

Income

 

 

 

Investment

 

 

Recognized

 

 

 

 

 

 

 

 

Related allowance recorded

 

 

 

 

 

 

Commercial & industrial

 

$281,412

 

 

$0

 

Commercial real estate

 

 

49,942

 

 

 

0

 

Residential real estate - 1st lien

 

 

983,944

 

 

 

64,479

 

Residential real estate - Jr lien

 

 

506

 

 

 

0

 

Total with related allowance

 

 

1,315,804

 

 

 

64,479

 

 

 

 

 

 

 

 

 

 

No related allowance recorded

 

 

 

 

 

 

 

 

Commercial & industrial

 

 

1,180,935

 

 

 

204

 

Commercial real estate

 

 

3,680,783

 

 

 

115,651

 

Residential real estate - 1st lien

 

 

2,808,989

 

 

 

177,892

 

Residential real estate - Jr lien

 

 

82,261

 

 

 

314

 

Total with no related allowance

 

 

7,752,968

 

 

 

294,061

 

 

 

 

 

 

 

 

 

 

Total impaired loans

 

$9,068,772

 

 

$358,540

 

 

Credit Quality Grouping

 

In developing the ACL, management uses credit quality groupings to help evaluate trends in credit quality. The Company groups credit risk into Groups A, B and C. The manner the Company utilizes to assign risk grouping is driven by loan purpose. Commercial purpose loans are individually risk graded while the retail portion of the portfolio is generally grouped by delinquency pool.

 

Group A loans - Pass – are loans that are expected to perform as agreed under their respective terms.  Such loans carry a normal level of risk that does not require management attention beyond that warranted by the loan or loan relationship characteristics, such as loan size or relationship size. Group A loans include commercial purpose loans that are individually risk rated and retail loans that are rated by pool. Group A retail loans include performing consumer and residential real estate loans. Residential real estate loans are loans to individuals secured by 1-4 family homes, including first mortgages, home equity and home improvement loans. Loan balances fully secured by deposit accounts or that are fully guaranteed by the federal government are considered acceptable risk.

 

Group B loans – Special Mention - are loans that require greater attention than the acceptable risk loans in Group A. Characteristics of such loans may include, but are not limited to, borrowers that are experiencing negative operating trends such as reduced sales or margins, borrowers that have exposure to adverse market conditions such as increased competition or regulatory burden, or borrowers that have had unexpected or adverse changes in management. These loans have a greater likelihood of migrating to an unacceptable risk level if these characteristics are left unchecked. Group B is limited to commercial purpose loans that are individually risk rated.

 

Group C loans – Substandard/Doubtful – are loans that have distinct shortcomings that require a greater degree of management attention.  Examples of these shortcomings include a borrower’s inadequate capacity to service debt, poor operating performance, or insolvency.  These loans are more likely to result in repayment through collateral liquidation. Group C loans range from those that are likely to sustain some loss if the shortcomings are not corrected, to those for which loss is imminent and non-accrual treatment is warranted. Group C loans include individually rated commercial purpose loans and retail loans adversely rated in accordance with the Federal Financial Institutions Examination Council’s Uniform Retail Credit Classification Policy. Group C retail loans include 1-4 family residential real estate loans and home equity loans past due 90 days or more with loan-to-value ratios greater than 60%, home equity loans 90 days or more past due where the Bank does not hold first mortgage, irrespective of loan-to-value, loans in bankruptcy where repayment is likely but not yet established, and lastly consumer loans that are 90 days or more past due.

 

Commercial purpose loan ratings are assigned by the commercial account officer; for larger and more complex commercial loans, the credit rating is a collaborative assignment by the lender and the credit analyst. The credit risk rating is based on the borrower’s expected performance, i.e., the likelihood that the borrower will be able to service its obligations in accordance with the loan terms. Credit risk ratings are meant to measure risk versus simply record history.  Assessment of expected future payment performance requires consideration of numerous factors.  While past performance is part of the overall evaluation, expected performance is based on an analysis of the borrower’s financial strength, and historical and projected factors such as size and financing alternatives, capacity and cash flow, balance sheet and income statement trends, the quality and timeliness of financial reporting, and the quality of the borrower’s management.  Other factors influencing the credit risk rating to a lesser degree include collateral coverage and control, guarantor strength and commitment, documentation, structure and covenants and industry conditions.  There are uncertainties inherent in this process.

 

Credit risk ratings are dynamic and require updating whenever relevant information is received.  Risk ratings are assessed on an ongoing basis and at various points, including at delinquency or at the time of other adverse events.  For larger, more complex or adversely rated loans, risk ratings are also assessed at the time of annual or periodic review.  Lenders are required to make immediate disclosure to the Chief Credit Officer of any known increase in loan risk, even if considered temporary in nature.

 

The risk ratings within the loan portfolio and current period gross charge-offs, by loan segment and origination year were as follows:

 

As of or for the year ended,

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolving

 

 

Revolving

 

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

Loans

 

 

 

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

Amortized

 

 

Converted

 

 

 

(In thousands)

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Cost Basis

 

 

to Term

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$15,876

 

 

$18,645

 

 

$12,964

 

 

$2,776

 

 

$3,744

 

 

$3,957

 

 

$46,645

 

 

$0

 

 

$104,607

 

Special mention

 

 

310

 

 

 

887

 

 

 

750

 

 

 

0

 

 

 

10

 

 

 

560

 

 

 

9,285

 

 

 

0

 

 

 

11,802

 

Substandard/Doubtful

 

 

0

 

 

 

419

 

 

 

167

 

 

 

453

 

 

 

258

 

 

 

1,548

 

 

 

2,451

 

 

 

0

 

 

 

5,296

 

Total commercial

 

$16,186

 

 

$19,951

 

 

$13,881

 

 

$3,229

 

 

$4,012

 

 

$6,065

 

 

$58,381

 

 

$0

 

 

$121,705

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current period gross charge-offs

 

$0

 

 

$150

 

 

$25

 

 

$0

 

 

$0

 

 

$212

 

 

$0

 

 

$0

 

 

$387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchased:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$5,186

 

 

$94

 

 

$1,581

 

 

$1,464

 

 

$2,244

 

 

$0

 

 

$0

 

 

$0

 

 

$10,569

 

Total purchased

 

$5,186

 

 

$94

 

 

$1,581

 

 

$1,464

 

 

$2,244

 

 

$0

 

 

$0

 

 

$0

 

 

$10,569

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$70,549

 

 

$83,453

 

 

$38,942

 

 

$43,405

 

 

$34,725

 

 

$85,688

 

 

$49,721

 

 

$0

 

 

$406,483

 

Special mention

 

 

0

 

 

 

373

 

 

 

1,471

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

1,844

 

Substandard/Doubtful

 

 

356

 

 

 

0

 

 

 

0

 

 

 

3,318

 

 

 

1,361

 

 

 

1,519

 

 

 

0

 

 

 

0

 

 

 

6,554

 

Total commercial real estate

 

$70,905

 

 

$83,826

 

 

$40,413

 

 

$46,723

 

 

$36,086

 

 

$87,207

 

 

$49,721

 

 

$0

 

 

$414,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$29,055

 

 

$695

 

 

$3,263

 

 

$4,571

 

 

$527

 

 

$10,180

 

 

$6,176

 

 

$0

 

 

$54,467

 

Total municipal

 

$29,055

 

 

$695

 

 

$3,263

 

 

$4,571

 

 

$527

 

 

$10,180

 

 

$6,176

 

 

$0

 

 

$54,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate - 1st lien:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$30,378

 

 

$39,540

 

 

$41,214

 

 

$32,966

 

 

$10,018

 

 

$50,585

 

 

$1,440

 

 

$0

 

 

$206,141

 

Special mention

 

 

164

 

 

 

299

 

 

 

129

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

592

 

Substandard/Doubtful

 

 

0

 

 

 

0

 

 

 

0

 

 

 

1,831

 

 

 

36

 

 

 

225

 

 

 

0

 

 

 

0

 

 

 

2,092

 

Total residential real estate - 1st lien

 

$30,542

 

 

$39,839

 

 

$41,343

 

 

$34,797

 

 

$10,054

 

 

$50,810

 

 

$1,440

 

 

$0

 

 

$208,825

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current period gross charge-offs

 

$0

 

 

$0

 

 

$0

 

 

$0

 

 

$0

 

 

$2

 

 

$0

 

 

$0

 

 

$2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate - Jr lien:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$2,239

 

 

$1,940

 

 

$350

 

 

$596

 

 

$489

 

 

$1,069

 

 

$23,298

 

 

$1,659

 

 

$31,640

 

Substandard/Doubtful

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

29

 

 

 

0

 

 

 

0

 

 

 

29

 

Total residential real estate - Jr lien

 

$2,239

 

 

$1,940

 

 

$350

 

 

$596

 

 

$489

 

 

$1,098

 

 

$23,298

 

 

$1,659

 

 

$31,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$1,685

 

 

$829

 

 

$405

 

 

$211

 

 

$97

 

 

$87

 

 

$0

 

 

$0

 

 

$3,314

 

Total consumer

 

$1,685

 

 

$829

 

 

$405

 

 

$211

 

 

$97

 

 

$87

 

 

$0

 

 

$0

 

 

$3,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current period gross charge-offs

 

$33

 

 

$32

 

 

$1

 

 

$0

 

 

$4

 

 

$61

 

 

$0

 

 

$0

 

 

$131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Loans

 

$155,798

 

 

$147,174

 

 

$101,236

 

 

$91,591

 

 

$53,509

 

 

$155,447

 

 

$139,016

 

 

$1,659

 

 

$845,430

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current period gross charge-offs

 

$33

 

 

$182

 

 

$26

 

 

$0

 

 

$4

 

 

$275

 

 

$0

 

 

$0

 

 

$520

 

 

As of or for the year ended, December 31, 2023, there were (i) no current period gross charge-offs within the Purchased, CRE, Municipal and Residential real estate Jr lien loan segments, (ii) no Special mention loans within the Residential real estate Jr line loan segment and (iii) no Special mention or Substandard/Doubtful loans within the Purchased, Municipal and Consumer loan segments.

 

Before the adoption of ASC 326 (CECL), the risk ratings within the loan portfolio, by segment, as of December 31, 2022 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

Residential

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

Commercial

 

 

 

 

 

Real Estate

 

 

Real Estate

 

 

 

 

 

 

 

 

 

& Industrial

 

 

Purchased

 

 

Real Estate

 

 

Municipal

 

 

1st Lien

 

 

Jr Lien

 

 

Consumer

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group A

 

$104,697,047

 

 

$7,530,458

 

 

$347,732,935

 

 

$34,633,055

 

 

$195,269,893

 

 

$33,538,767

 

 

$4,039,989

 

 

$727,442,144

 

Group B

 

 

6,296,411

 

 

 

0

 

 

 

2,754,649

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

9,051,060

 

Group C

 

 

1,958,415

 

 

 

0

 

 

 

6,405,402

 

 

 

0

 

 

 

3,473,482

 

 

 

218,105

 

 

 

0

 

 

 

12,055,404

 

Total

 

$112,951,873

 

 

$7,530,458

 

 

$356,892,986

 

 

$34,633,055

 

 

$198,743,375

 

 

$33,756,872

 

 

$4,039,989

 

 

$748,548,608

 

 

The following table presents the amortized cost basis of collateral-dependent loans as of December 31, 2023, by collateral type:

 

 

 

Business

 

 

 

 

 

 

 

 

 

Assets (1)

 

 

Real Estate

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$1,298,717

 

 

$0

 

 

$1,298,717

 

Commercial real estate

 

 

0

 

 

 

1,263,495

 

 

 

1,263,495

 

Residential real estate - 1st lien

 

 

0

 

 

 

167,363

 

 

 

167,363

 

 

 

$1,298,717

 

 

$1,430,858

 

 

$2,729,575

 

 

(1) Including, but not limited to, inventory, equipment, and accounts receivable, but excluding real estate.

 

Modifications of Loans

 

A loan is considered modified if, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider.

 

The Company is deemed to have granted such a concession if it has modified a loan in any of the following ways:

 

 

·

Reduced accrued interest;

 

·

Reduced the original contractual interest rate to a rate that is below the current market rate for the borrower;

 

·

Converted a variable-rate loan to a fixed-rate loan;

 

·

Extended the term of the loan beyond an insignificant delay;

 

·

Deferred or forgiven principal in an amount greater than three months of payments;

 

·

Performed a refinancing and deferred or forgiven principal on the original loan;

 

·

Capitalized protective advance to pay delinquent real estate taxes; or

 

·

Capitalized delinquent accrued interest.

 

An insignificant delay or insignificant shortfall in the number of payments typically would not require the loan to be accounted for as modified.  However, pursuant to regulatory guidance, any payment delays longer than three months is generally not considered insignificant.  Management’s assessment of whether a concession has been granted also takes into consideration payments expected to be received from third parties, including third-party guarantors, provided the third party can perform on the guarantee. 

 

The Company’s modified loans are principally a result of extending loan repayment terms to relieve cash flow difficulties. The Company has only, on a limited basis, reduced accrued interest or reduced interest rates for borrowers below the current market rate for the borrower.  The Company has not generally forgiven principal within the terms of original restructurings, nor converted variable rate terms to fixed rate terms.  However, the Company evaluates each potential loan modification on its own merits and does not foreclose the granting of any concession.  In connection with modifications, the Company considers applicable regulatory guidance, including a 2023 interagency Policy Statement on Prudent Commercial Real Estate Loan Accommodations and Workouts.

 

There were no loan modifications during 2023.

 

Prior to adoption of ASU 2022-02, new TDRs, by portfolio segment, for the periods presented were as follows:

 

Year ended December 31, 2022

 

 

 

 

 

 

Pre-

 

 

Post-

 

 

 

 

 

 

Modification

 

 

Modification

 

 

 

 

 

 

Outstanding

 

 

Outstanding

 

 

 

Number of

 

 

Recorded

 

 

Recorded

 

 

 

Contracts

 

 

Investment

 

 

Investment

 

 

 

 

 

 

 

 

 

 

 

Residential real estate -1st lien

 

 

2

 

 

$562,592

 

 

$562,592

 

 

There were no TDRs for which there was a payment default during the twelve-month period ended December 31, 2022.

 

Prior to adoption of ASU 2022-02, TDRs were treated as other impaired loans and carried individual specific reserves with respect to the calculation of the ALL.  These loans were categorized as non-performing, may have been past due, and were generally adversely risk rated. The TDRs that had defaulted under their restructured terms were generally in collection status and their ALL reserve was typically calculated using the fair value of collateral method.

 

Prior to adoption of ASU 2022-02, the specific allowances within the ALL related to TDRs as of December 31, 2022 totaled $106,280.

 

As of the balance sheet dates, the Company evaluates whether it is contractually committed to lend additional funds to debtors with impaired, non-accrual or modified loans.  The Company is contractually committed to lend on one SBA guaranteed line of credit to a borrower whose lending relationship was previously modified.