XML 31 R15.htm IDEA: XBRL DOCUMENT v3.22.0.1
Allowance For Loan Losses
 12 Months Ended
Dec. 31, 2021
Receivables [Abstract]  
Allowance For Loan Losses The following table summarizes the activity in the allowance for credit losses, by portfolio loan classification, for the years ended December 31, 2021, 2020 and 2019 (in thousands).  The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments.
Beginning BalanceCharge-offsRecoveriesImpact of adopting CECL(Recovery of) provision for credit lossesEnding Balance
December 31, 2021
Commercial and industrial$3,644 $(245)$171 $— $(90)$3,480 
   1-4 Family771 (311)125 — 13 598 
   Hotels4,088 (2,075)— — 413 2,426 
   Multi-family674 — — — (191)483 
   Non Residential Non-Owner Occupied3,223 (1)45 — (948)2,319 
   Non Residential Owner Occupied2,241 — 54 — (810)1,485 
Commercial real estate10,997 (2,387)224 — (1,523)7,311 
Residential real estate8,093 (265)127 — (2,239)5,716 
Home equity630 (177)90 — (26)517 
Consumer163 (242)255 — (70)106 
DDA overdrafts1,022 (2,151)1,382 — 783 1,036 
$24,549 $(5,467)$2,249 $— $(3,165)$18,166 
December 31, 2020
Commercial and industrial$2,059 $(843)$91 $1,715 $622 $3,644 
  1-4 Family— (188)316 886 (243)771 
  Hotels60 (35)48 577 3,438 4,088 
  Multi-family121 — — 343 210 674 
  Non Residential Non-Owner Occupied1,181 (728)83 852 1,835 3,223 
  Non Residential Owner Occupied1,244 (162)78 596 485 2,241 
Commercial real estate2,606 (1,113)525 3,254 5,725 10,997 
Residential real estate3,448 (1,250)184 2,139 3,572 8,093 
Home equity1,187 (420)136 (598)325 630 
Consumer975 (192)238 (810)(48)163 
DDA Overdrafts1,314 (2,345)1,467 60 526 1,022 
$11,589 $(6,163)$2,641 $5,760 $10,722 $24,549 
  
Beginning BalanceCharge-offsRecoveries(Recovery of) provision for credit lossesEnding Balance
December 31, 2019
Commercial and industrial4,060 (261)764 (2,504)2,059 
Commercial real estate4,495 (1,358)624 (1,155)2,606 
Residential real estate4,116 (787)369 (250)3,448 
Home equity1,268 (294)— 213 1,187 
Consumer319 (1,177)265 1,568 975 
DDA Overdrafts1,708 (2,777)1,505 878 1,314 
$15,966 $(6,654)$3,527 $(1,250)$11,589 

Management systematically monitors the loan portfolio and the appropriateness of the allowance for credit losses on a quarterly basis to provide for expected losses inherent in the portfolio.  Management assesses the risk in each loan type based on historical trends, the general economic environment of its local markets, individual loan performance and other relevant factors. The Company's estimate of future economic conditions utilized in its provision estimate is primarily dependent on expected unemployment ranges over a two-year period. Beyond two years, a straight line reversion to historical average loss rates is applied over the life of the loan pool in the migration methodology. The vintage methodology applies future average loss rates based on net losses in historical periods where the unemployment rate was within the forecasted range.
 
    Individual credits in excess of $1 million are selected at least annually for detailed loan reviews, which are utilized by management to assess the risk in the portfolio and the appropriateness of the allowance.  
 
Non-Performing Loans

The following table presents the amortized cost basis of loans on non-accrual status and loans past due over 90 days still accruing as of December 31, 2021 (in thousands):
Non-accrual With NoNon-accrual WithLoans Past Due
Allowance forAllowance forOver 90 Days
Credit LossesCredit LossesStill Accruing
Commercial & Industrial$— $996 $43 
   1-4 Family— 1,016 — 
   Hotels— 113 — 
   Multi-family— — — 
   Non Residential Non-Owner Occupied— 652 — 
   Non Residential Owner Occupied— 592 — 
Commercial Real Estate— 2,373 — 
Residential Real Estate63 2,746 — 
Home Equity— 40 — 
Consumer— — — 
Total$63 $6,155 $43 
The following table presents the amortized cost basis of loans on non-accrual status and loans past due over 90 days still accruing as of December 31, 2020 (in thousands):
Non-accrual With NoNon-accrual WithLoans Past Due
Allowance forAllowance forOver 90 Days
Credit LossesCredit LossesStill Accruing
Commercial & Industrial$172 $596 $— 
   1-4 Family— 2,056 — 
   Hotels— 2,951 — 
   Multi-family— — — 
   Non Residential Non-Owner Occupied— 508 — 
   Non Residential Owner Occupied2,297 589 — 
Commercial Real Estate2,297 6,104 — 
Residential Real Estate21 2,947 — 
Home Equity— 95 — 
Consumer— — — 
Total$2,490 $9,742 $— 

The Company recognized less than $0.1 million of interest income on nonaccrual loans during each of the years ended December 31, 2021, 2020 and 2019, respectively.
The following presents the aging of the amortized cost basis in past-due loans as of December 31, 2021 and 2020 by class of loan (in thousands):
December 31, 2021
30-59
Past Due		60-89
Past Due		90+
Past Due		Total
Past Due		Current
Loans		Non-accrualTotal
Loans
Commercial and industrial$116 $177 $43 $336 $344,852 $996 $346,184 
   1-4 Family21 — — 21 106,836 1,016 107,873 
   Hotels — — — — 311,202 113 311,315 
   Multi-family— — — — 215,677 — 215,677 
   Non Residential Non-Owner
    Occupied		— — — — 639,166 652 639,818 
   Non Residential Owner Occupied— — — — 203,641 592 204,233 
Commercial real estate21 — — 21 1,476,522 2,373 1,478,916 
Residential real estate5,166 156 — 5,322 1,540,834 2,809 1,548,965 
Home equity592 26 — 618 121,687 40 122,345 
Consumer59 1 — 60 40,841 — 40,901 
Overdrafts485 4 — 489 6,014 — 6,503 
Total$6,439 $364 $43 $6,846 $3,530,750 $6,218 $3,543,814 
December 31, 2020
30-59
Past Due		60-89
Past Due		90+
Past Due		Total
Past Due		Current
Loans		Non-accrualTotal
Loans
Commercial and industrial$1,213 $27 $— $1,240 $370,981 $768 $372,989 
   1-4 Family484 — — 484 107,272 2,056 109,812 
   Hotels— — — — 291,513 2,951 294,464 
   Multi-family— — — — 215,671 — 215,671 
   Non Residential Non-Owner
    Occupied		119 — — 119 640,724 508 641,351 
   Non Residential Owner Occupied22 — — 22 210,576 2,886 213,484 
Commercial real estate625 — — 625 1,465,756 8,401 1,474,782 
Residential real estate5,177 816 — 5,993 1,578,733 2,968 1,587,694 
Home equity575 — — 575 135,799 95 136,469 
Consumer63 50 — 113 47,575 — 47,688 
Overdrafts334 7 — 341 2,156 — 2,497 
Total$7,987 $900 $— $8,887 $3,601,000 $12,232 $3,622,119 

     
The following table presents the amortized cost basis of individually evaluated impaired collateral-dependent loans as of December 31, 2021 (in thousands). Changes in the fair value of the collateral for collateral-dependent loans are reported as credit loss expense or a reversal of credit loss expense in the period of change.

December 31, 2021December 31, 2020
Secured bySecured by
Real EstateEquipmentReal EstateEquipment
Commercial and industrial$— $— $173 $— 
   1-4 Family— — — — 
   Hotels— — 2,837 — 
   Multi-family— — — — 
   Non Residential Non-Owner Occupied— — — — 
   Non Residential Owner Occupied— — 2,296 — 
Commercial real estate— — 5,133 — 
Total$— $— $5,306 $— 

The following table presents information related to the average recorded investment and interest income recognized on the Company's impaired loans, by class (in thousands), for the year ended December 31, 2019.
December 31, 2019
AverageInterest
RecordedIncome
InvestmentRecognized
With no related allowance recorded:
Commercial and industrial$578 $— 
Commercial real estate4,388 41 
Total$4,966 $41 
With an allowance recorded:
Commercial and industrial$— $— 
Commercial real estate4,261 162 
Total$4,261 $162 

There were no significant commitments to provide additional funds on non-accrual or impaired loans at December 31, 2021.
Troubled Debt Restructurings ("TDRs")

The following tables set forth the Company’s TDRs (in thousands):
December 31, 2021December 31, 2020
Commercial and industrial$414 $— 
   1-4 Family112 121 
   Hotels— 2,634 
   Multi-family1,802 1,883 
   Non Residential Non-Owner Occupied— — 
   Non Residential Owner Occupied— — 
Commercial real estate1,914 4,638 
Residential real estate16,943 19,226 
Home equity1,784 2,001 
Consumer225 277 
   Total TDRs$21,280 $26,142 

The Company has allocated $0.3 million and $1.6 million of the allowance for credit losses for these loans as of December 31, 2021 and December 31, 2020, respectively. As of December 31, 2021, the Company has not committed to lend any additional in relation to these loans.

The Company had one TDR that had defaulted and had a partial charge-off of $2.1 million during 2021. The Company had no significant TDRs that subsequently defaulted in 2020. The Company had one TDR that subsequently defaulted in 2019. The loan balance was approximately $3.0 million and the subsequent default resulted in a charge-off of $0.7 million and the remaining balance was transferred to OREO during 2019.

Most TDRs are reported due to filing Chapter 7 bankruptcy. Regulatory guidance requires that loans be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged by the bankruptcy court and the borrower has not reaffirmed the debt. The filing of bankruptcy is deemed to be evidence that the borrower is in financial difficulty and the discharge of debt by the bankruptcy court is deemed to be a concession granted to the borrower.
The following table presents loans by class, modified as TDRs, that occurred during the years ended December 31, 2021, 2020 and 2019, respectively (dollars in thousands):
New TDRsNew TDRsNew TDRs
For the year endedFor the year endedFor the year ended
December 31, 2021December 31, 2020December 31, 2019
PrePostPrePostPrePost
ModificationModificationModificationModificationModificationModification
OutstandingOutstandingOutstandingOutstandingOutstandingOutstanding
Number ofRecordedRecordedNumber ofRecordedRecordedNumber ofRecordedRecorded
ContractsInvestmentInvestmentContractsInvestmentInvestmentContractsInvestmentInvestment
Commercial and industrial— $— $— — $— $— — $— $— 
   1-4 Family— — — — — — N/RN/RN/R
   Hotels— — — — — — N/RN/RN/R
   Multi-family— — — — — — N/RN/RN/R
   Non Owner Non-
    Owner Occupied		— — — — — — N/RN/RN/R
   Non Owner
    Owner Occupied		— — — — — — N/RN/RN/R
Commercial real
  estate		— — — — — — — — — 
Residential real
  estate		3 425 425 29 2,724 2,720 31 2,531 2,531 
Home equity2 45 45 3 94 94 10 967 967 
Consumer— — — — — — — — — 
Total5 $470 $470 32 $2,818 $2,814 41 $3,498 $3,498 
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

    The TDRs above increased the allowance for credit losses by less than $0.1 million for each of the years ended December 31, 2021, 2020 and 2019 and resulted in no significant charge-offs during those same time periods.

COVID-19 Pandemic

In March of 2020, in response to the COVID-19 pandemic, regulatory guidance was issued that clarified the accounting for loan modifications. Modifications of loan terms do not automatically result in a TDR. Short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extension of repayment terms, or other delays that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time the modification program was implemented. In addition, modifications or deferrals pursuant to the CARES Act do not represent TDRs. However, these deferrals do not absolve the company from performing its normal risk rating and therefore a loan could be current and have a less than satisfactory risk rating.

Through December 31, 2021, the Company had granted deferrals of approximately $144 million to its mortgage customers. These deferral arrangements ranged from 30 days to 90 days. As of December 31, 2021, approximately $2 million of these loans were still deferring, while approximately $142 million have resumed making their normal loan payment. As of December 30, 2021, approximately $4 million of these deferrals were previously and currently considered TDRs due to Chapter 7 bankruptcies.

Through December 31, 2021, the Company granted deferrals of approximately $479 million to its commercial customers. These deferral arrangements ranged from one month to six months. As of December 31, 2021, none of these loans were still deferring and all have resumed making their normal loan payment.
Credit Quality Indicators
 
All commercial loans within the portfolio are subject to internal risk rating.  All non-commercial loans are evaluated based on payment history.  The Company’s internal risk ratings for commercial loans are:  Exceptional, Good, Acceptable, Pass/Watch, Special Mention, Substandard and Doubtful.  Each internal risk rating is defined in the loan policy using the following criteria:  balance sheet yields; ratios and leverage; cash flow spread and coverage; prior history; capability of management; market position/industry; potential impact of changing economic, legal, regulatory or environmental conditions; purpose; structure; collateral support; and guarantor support.  Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process.  Based on an individual loan’s risk grade, estimated loss percentages are applied to the outstanding balance of the loan to determine the amount of expected loss.
 
The Company categorizes loans into risk categories based on relevant information regarding the customer’s debt service ability, capacity and overall collateral position, along with other economic trends and historical payment performance.  The risk rating for each credit is updated when the Company receives current financial information, the loan is reviewed by the Company’s internal loan review and credit administration departments, or the loan becomes delinquent or impaired.  The risk grades are updated a minimum of annually for loans rated Exceptional, Good, Acceptable, or Pass/Watch.  Loans rated Special Mention, Substandard or Doubtful are reviewed at least quarterly.  The Company uses the following definitions for its risk ratings:
Risk RatingDescription
Pass Ratings:
   (a) ExceptionalLoans classified as exceptional are secured with liquid collateral conforming to the internal loan policy.  Loans rated within this category pose minimal risk of loss to the bank.
   (b) GoodLoans classified as good have similar characteristics that include a strong balance sheet, satisfactory debt service coverage ratios, strong management and/or guarantors, and little exposure to economic cycles. Loans in this category generally have a low chance of loss to the bank.
   (c) AcceptableLoans classified as acceptable have acceptable liquidity levels, adequate debt service coverage ratios, experienced management, and have average exposure to economic cycles.  Loans within this category generally have a low risk of loss to the bank.
   (d) Pass/watchLoans classified as pass/watch have erratic levels of leverage and/or liquidity, cash flow is volatile and the borrower is subject to moderate economic risk.  A borrower in this category poses a low to moderate risk of loss to the bank.
Special mentionLoans classified as special mention have a potential weakness(es) that deserves management’s close attention.  The potential weakness could result in deterioration of the loan repayment or the bank’s credit position at some future date.  A loan rated in this category poses a moderate loss risk to the bank.
SubstandardLoans classified as substandard reflect a customer with a well defined weakness that jeopardizes the liquidation of the debt.  Loans in this category have the possibility that the bank will sustain some loss if the deficiencies are not corrected and the bank’s collateral value is weakened by the financial deterioration of the borrower.
DoubtfulLoans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that make collection of the full contract amount highly improbable.  Loans rated in this category are most likely to cause the bank to have a loss due to a collateral shortfall or a negative capital position.

    
Based on the most recent analysis performed, the risk category of loans by class of loans at December 31, 2021 is as follows (in thousands):
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
20212020201920182017PriorCost BasisTotal
Commercial and industrial
Pass$87,148 $82,946 $41,908 $27,355 $23,895 $6,755 $65,775 $335,782 
Special mention3 480 17 — 21 — 3,324 3,845 
Substandard319 1,531 1,574 510 395 1,550 678 6,557 
Total$87,470 $84,957 $43,499 $27,865 $24,311 $8,305 $69,777 $346,184 
Commercial real estate -
1-4 Family
Pass$26,425 $16,163 $10,659 $6,208 $4,250 $28,734 $10,877 $103,316 
Special mention— 122 — — — 718 — 840 
Substandard— 276 158 — 722 2,561 — 3,717 
Total$26,425 $16,561 $10,817 $6,208 $4,972 $32,013 $10,877 $107,873 
Commercial real estate -
Hotels
Pass$38,197 $16,183 $64,107 $21,222 $41,526 $55,895 $279 $237,409 
Special mention103 — 29,914 — — — — 30,017 
Substandard398 140 15,413 — 5,601 22,337 — 43,889 
Total$38,698 $16,323 $109,434 $21,222 $47,127 $78,232 $279 $311,315 
Commercial real estate -
Multi-family
Pass$20,434 $78,837 $53,033 $2,264 $19,783 $38,918 $540 $213,809 
Special mention— — 1,802 — — — — 1,802 
Substandard— — — — — 66 — 66 
Total$20,434 $78,837 $54,835 $2,264 $19,783 $38,984 $540 $215,677 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
20212020201920182017PriorCost BasisTotal
Commercial real estate -
Non Residential Non-Owner Occupied
Pass$144,927 $135,423 $85,296 $99,618 $33,770 $130,342 $2,655 $632,031 
Special mention119 183 186 257 — 138 — 883 
Substandard640 16 1,365 2,134 22 2,727 — 6,904 
Total$145,686 $135,622 $86,847 $102,009 $33,792 $133,207 $2,655 $639,818 
Commercial real estate -
Non Residential Owner Occupied
Pass$46,445 $28,535 $25,647 $22,197 $15,296 $37,806 $2,509 $178,435 
Special mention— 30 2,744 42 319 2,294 — 5,429 
Substandard199 114 2,372 634 6,677 9,503 870 20,369 
Total$46,644 $28,679 $30,763 $22,873 $22,292 $49,603 $3,379 $204,233 
Commercial real estate -
Total
Pass$276,429 $275,141 $238,742 $151,509 $114,626 $291,696 $16,860 $1,365,003 
Special mention222 334 34,647 299 319 3,151 — 38,972 
Substandard1,238 546 19,308 2,769 13,023 37,191 866 74,941 
Total$277,889 $276,021 $292,697 $154,577 $127,968 $332,038 $17,726 $1,478,916 
Residential real estate
Performing$375,465 $326,107 $155,829 $110,551 $87,870 $389,519 $100,815 $1,546,156 
Non-performing— — 232 29 120 692 1,736 2,809 
Total$375,465 $326,107 $156,061 $110,580 $87,990 $390,211 $102,551 $1,548,965 
Home equity
Performing$9,008 $6,474 $3,582 $2,949 $1,431 $8,176 $90,685 $122,305 
Non-performing— — — — — — 40 40 
Total$9,008 $6,474 $3,582 $2,949 $1,431 $8,176 $90,725 $122,345 
Consumer
Performing$13,584 $9,545 $8,313 $4,920 $1,324 $1,624 $1,591 $40,901 
Non-performing— — — — — — — — 
Total$13,584 $9,545 $8,313 $4,920 $1,324 $1,624 $1,591 $40,901 
Based on the most recent analysis performed, the risk category of loans by class of loans at December 31, 2020 is as follows (in thousands):
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
20202019201820172016PriorCost BasisTotal
Commercial and industrial
Pass$123,920 $51,972 $59,152 $30,440 $16,673 $6,942 $75,018 $364,117 
Special mention72 27 13 47 — 433 508 1,100 
Substandard783 1,553 918 589 268 1,733 1,928 7,772 
Total$124,775 $53,552 $60,083 $31,076 $16,941 $9,108 $77,454 $372,989 
Commercial real estate -
1-4 Family
Pass$19,970 $17,540 $8,217 $7,444 $6,158 $33,075 $10,274 $102,678 
Special mention192 — — — 159 753 — 1,104 
Substandard119 343 — 863 102 4,603 — 6,030 
Total$20,281 $17,883 $8,217 $8,307 $6,419 $38,431 $10,274 $109,812 
Commercial real estate -
Hotels
Pass$23,886 $95,269 $26,206 $42,593 $21,490 $43,686 $— $253,130 
Substandard343 15,412 — 6,750 4,465 14,364 — 41,334 
Total$24,229 $110,681 $26,206 $49,343 $25,955 $58,050 $— $294,464 
Commercial real estate -
Multi-family
Pass$81,127 $56,371 $2,688 $20,730 $23,873 $27,009 $1,363 $213,161 
Special mention— 1,883 551 — — — — 2,434 
Substandard— — — — — 76 — 76 
Total$81,127 $58,254 $3,239 $20,730 $23,873 $27,085 $1,363 $215,671 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
20202019201820172016PriorCost BasisTotal
Commercial real estate -
Non Residential Non-Owner Occupied
Pass$155,937 $101,011 $115,524 $51,329 $76,219 $125,349 $8,825 $634,194 
Special mention16 504 592 37 — 147 — 1,296 
Substandard580 1,385 1,159 52 1,187 1,338 160 5,861 
Total$156,533 $102,900 $117,275 $51,418 $77,406 $126,834 $8,985 $641,351 
Commercial real estate -
Non Residential Owner Occupied
Pass$31,443 $26,685 $26,403 $20,582 $20,032 $50,988 $5,098 $181,231 
Special mention234 2,901 53 90 — 2,470 — 5,748 
Substandard117 5,084 696 6,069 3,820 10,557 162 26,505 
Total$31,794 $34,670 $27,152 $26,741 $23,852 $64,015 $5,260 $213,484 
Commercial real estate -
Total
Pass$312,363 $296,876 $179,038 $142,678 $147,772 $280,107 $25,560 $1,384,394 
Special mention442 5,288 1,196 127 159 3,370 — 10,582 
Substandard1,159 22,224 1,855 13,734 9,574 30,938 322 79,806 
Total$313,964 $324,388 $182,089 $156,539 $157,505 $314,415 $25,882 $1,474,782 
Residential real estate
Performing$407,135 $233,709 $176,523 $134,425 $102,828 $416,473 $113,633 $1,584,726 
Non-performing— — — 164 41 1,184 1,579 2,968 
Total$407,135 $233,709 $176,523 $134,589 $102,869 $417,657 $115,212 $1,587,694 
Home equity
Performing$9,038 $6,241 $5,375 $2,126 $1,309 $11,573 $100,712 $136,374 
Non-performing— — — — — — 95 95 
Total$9,038 $6,241 $5,375 $2,126 $1,309 $11,573 $100,807 $136,469 
Consumer
Performing$15,342 $14,977 $9,229 $3,154 $1,688 $1,422 $1,876 $47,688 
Non-performing— — — — — — — — 
Total$15,342 $14,977 $9,229 $3,154 $1,688 $1,422 $1,876 $47,688