Allowance For Loan Losses

12 Months Ended

Dec. 31, 2022

Receivables [Abstract]

Allowance For Loan Losses

ALLOWANCE FOR CREDIT LOSSES

    The following table summarizes the activity in the allowance for credit losses, by portfolio loan classification, for the years ended December 31, 2022, 2021 and 2020 (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 Balance		Charge-offs		Recoveries		Impact of adopting CECL		Provision for (recovery of) credit losses		Ending Balance
December 31, 2022
Commercial and industrial	$	3,480	$	(562)	$	334	$	—	$	316	$	3,568
1-4 Family	598		(55)		160		—		(137)		566
Hotels	2,426		—		—		—		(94)		2,332
Multi-family	483		—		—		—		(103)		380
Non Residential Non-Owner Occupied	2,319		—		47		—		(347)		2,019
Non Residential Owner Occupied	1,485		—		—		—		(170)		1,315
Commercial real estate	7,311		(55)		207		—		(851)		6,612
Residential real estate	5,716		(265)		99		—		(123)		5,427
Home equity	517		(279)		56		—		(4)		290
Consumer	106		(63)		107		—		(40)		110
DDA overdrafts	1,036		(2,624)		1,513		—		1,176		1,101
	$	18,166	$	(3,848)	$	2,316	$	—	$	474	$	17,108
December 31, 2021
Commercial and industrial	$	3,644	$	(245)	$	171	$	—	$	(90)	$	3,480
1-4 Family	771		(311)		125		—		13		598
Hotels	4,088		(2,075)		—		—		413		2,426
Multi-family	674		—		—		—		(191)		483
Non Residential Non-Owner Occupied	3,223		(1)		45		—		(948)		2,319
Non Residential Owner Occupied	2,241		—		54		—		(810)		1,485
Commercial real estate	10,997		(2,387)		224		—		(1,523)		7,311
Residential real estate	8,093		(265)		127		—		(2,239)		5,716
Home equity	630		(177)		90		—		(26)		517
Consumer	163		(242)		255		—		(70)		106
DDA Overdrafts	1,022		(2,151)		1,382		—		783		1,036
	$	24,549	$	(5,467)	$	2,249	$	—	$	(3,165)	$	18,166

	Beginning Balance		Charge-offs		Recoveries		Impact of adopting CECL		Provision for (recovery of) credit losses		Ending Balance
December 31, 2020
Commercial and industrial	2,059		(843)		91		1,715		622		3,644
1-4 Family	—		(188)		316		886		(243)		771
Hotels	60		(35)		48		577		3,438		4,088
Multi-family	121		—		—		343		210		674
Non Residential Non-Owner Occupied	1,181		(728)		83		852		1,835		3,223
Non Residential Owner Occupied	1,244		(162)		78		596		485		2,241
Commercial real estate	2,606		(1,113)		525		3,254		5,725		10,997
Residential real estate	3,448		(1,250)		184		2,139		3,572		8,093
Home equity	1,187		(420)		136		(598)		325		630
Consumer	975		(192)		238		(810)		(48)		163
DDA Overdrafts	1,314		(2,345)		1,467		60		526		1,022
	$	11,589	$	(6,163)	$	2,641	$	5,760	$	10,722	$	24,549

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, 2022 (in thousands):

	Non-accrual With No		Non-accrual With		Loans Past Due
	Allowance for		Allowance for		Over 90 Days
	Credit Losses		Credit Losses		Still Accruing
Commercial & Industrial	$	—	$	1,015	$	—
1-4 Family	—		937		—
Hotels	—		115		—
Multi-family	—		—		—
Non Residential Non-Owner Occupied	—		816		—
Non Residential Owner Occupied	—		298		—
Commercial Real Estate	—		2,166		—
Residential Real Estate	228		1,741		164
Home Equity	—		55		—
Consumer	—		—		23
Total	$	228	$	4,977	$	187

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 No		Non-accrual With		Loans Past Due
	Allowance for		Allowance for		Over 90 Days
	Credit Losses		Credit Losses		Still 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 Estate	63		2,746		—
Home Equity	—		40		—
Consumer	—		—		—
Total	$	63	$	6,155	$	43

The Company recognized less than $0.1 million of interest income on nonaccrual loans during each of the years ended December 31, 2022, 2021 and 2020, respectively.

The following presents the aging of the amortized cost basis in past-due loans as of December 31, 2022 and 2021 by class of loan (in thousands):

	December 31, 2022
	30-59 Past Due		60-89 Past Due		90+ Past Due		Total Past Due		Current Loans		Non-accrual		Total Loans
Commercial and industrial	$	201	$	33	$	—	$	234	$	372,641	$	1,015	$	373,890
1-4 Family	17		—		—		17		115,238		937		116,192
Hotels	—		—		—		—		340,289		115		340,404
Multi-family	—		—		—		—		174,786		—		174,786
Non Residential Non-Owner     Occupied	—		—		—		—		585,148		816		585,964
Non Residential Owner Occupied	505		188		—		693		173,970		298		174,961
Commercial real estate	522		188		—		710		1,389,431		2,166		1,392,307
Residential real estate	6,843		84		164		7,091		1,684,463		1,969		1,693,523
Home equity	622		28		—		650		133,612		55		134,317
Consumer	52		25		23		100		48,706		—		48,806
Overdrafts	386		5		—		391		3,024		—		3,415
Total	$	8,626	$	363	$	187	$	9,176	$	3,631,877	$	5,205	$	3,646,258
	December 31, 2021
	30-59 Past Due		60-89 Past Due		90+ Past Due		Total Past Due		Current Loans		Non-accrual		Total Loans
Commercial and industrial	$	116	$	177	$	43	$	336	$	344,852	$	996	$	346,184
1-4 Family	21		—		—		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 estate	21		—		—		21		1,476,522		2,373		1,478,916
Residential real estate	5,166		156		—		5,322		1,540,834		2,809		1,548,965
Home equity	592		26		—		618		121,687		40		122,345
Consumer	59		1		—		60		40,841		—		40,901
Overdrafts	485		4		—		489		6,014		—		6,503
Total	$	6,439	$	364	$	43	$	6,846	$	3,530,750	$	6,218	$	3,543,814

There were no individually evaluated impaired collateral-dependent loans as of December 31, 2022 or December 31, 2021. 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.

Troubled Debt Restructurings ("TDRs")

The following tables set forth the Company’s TDRs (in thousands):

	December 31, 2022		December 31, 2021
Commercial and industrial	$	333	$	414
1-4 Family	102		112
Hotels	—		—
Multi-family	—		1,802
Non Residential Non-Owner Occupied	—		—
Non Residential Owner Occupied	—		—
Commercial real estate	102		1,914
Residential real estate	15,857		16,943
Home equity	1,286		1,784
Consumer	64		225
Total TDRs	$	17,642	$	21,280

The Company has allocated $0.3 million of the allowance for credit losses for these loans as of both December 31, 2022 and December 31, 2021. As of December 31, 2022, the Company has not committed to lend any additional in relation to these loans.

The Company had no material TDRs that defaulted during 2022. The Company had one TDR that defaulted and a partial charge-off of $2.1 million during 2021. The Company had no TDRs that subsequently defaulted in 2020.

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, 2022, 2021 and 2020, respectively (dollars in thousands):

	New TDRs					New TDRs					New TDRs
	For the year ended					For the year ended					For the year ended
	December 31, 2022					December 31, 2021					December 31, 2020
		Pre		Post			Pre		Post			Pre		Post
		Modification		Modification			Modification		Modification			Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial and industrial	—	$	—	$	—	1	$	430	$	430	—	$	—	$	—
1-4 Family	—	—		—		—	—		—		—	—		—
Hotels	—	—		—		—	—		—		—	—		—
Multi-family	—	—		—		—	—		—		—	—		—
Non Owner Non-     Owner Occupied	—	—		—		—	—		—		—	—		—
Non Owner     Owner Occupied	—	—		—		—	—		—		—	—		—
Commercial real   estate	—	—		—		—	—		—		—	—		—
Residential real   estate	15	1,588		1,588		14	1,130		1,130		29	2,724		2,720
Home equity	1	30		30		2	45		45		3	94		94
Consumer	—	—		—		—	—		—		—	—		—
Total	16	$	1,618	$	1,618	17	$	1,605	$	1,605	32	$	2,818	$	2,814

    The TDRs above increased the allowance for credit losses by less than $0.1 million for each of the years ended December 31, 2022, 2021 and 2020 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.

Since March of 2020, the Company has granted deferrals of approximately $142 million to its mortgage customers. These deferral arrangements ranged from 30 days to 90 days. As of December 31, 2022, approximately $0.4 million of these loans were still deferring, while approximately $142 million have resumed making their normal loan payment. As of December 31, 2022, approximately $3.5 million of these deferrals were previously and currently considered TDRs due to Chapter 7 bankruptcies.

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 Rating	Description
Pass Ratings:
(a) Exceptional	Loans 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) Good	Loans 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) Acceptable	Loans 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/watch	Loans 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 mention	Loans 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.
Substandard	Loans 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.
Doubtful	Loans 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, 2022 is as follows (in thousands). Retail and mortgage loans are considered performing if they are less than 90 days delinquent and non-performing if they are 90 days or more delinquent.

													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2022		2021		2020		2019		2018		Prior		Cost Basis		Total
Commercial and industrial
Pass	$	51,268	$	91,097	$	60,251	$	26,356	$	19,497	$	6,917	$	109,645	$	365,031
Special mention	—		—		392		9		—		19		3,245		3,665
Substandard	955		203		1,025		1,175		224		1,533		79		5,194
Total	$	52,223	$	91,300	$	61,668	$	27,540	$	19,721	$	8,469	$	112,969	$	373,890

Commercial real estate -
1-4 Family
Pass	$	31,331	$	21,640	$	12,565	$	8,609	$	4,826	$	22,949	$	11,107	$	113,027
Special mention	228		—		115		—		—		836		—		1,179
Substandard	83		—		264		56		—		1,583		—		1,986
Total	$	31,642	$	21,640	$	12,944	$	8,665	$	4,826	$	25,368	$	11,107	$	116,192

Commercial real estate -
Hotels
Pass	$	85,590	$	35,849	$	12,275	$	60,429	$	14,921	$	90,686	$	323	$	300,073
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		3,593		24,229		—		12,509		—		40,331
Total	$	85,590	$	35,849	$	15,868	$	84,658	$	14,921	$	103,195	$	323	$	340,404

Commercial real estate -
Multi-family
Pass	$	13,761	$	21,312	$	65,542	$	37,698	$	2,189	$	33,560	$	724	$	174,786
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Total	$	13,761	$	21,312	$	65,542	$	37,698	$	2,189	$	33,560	$	724	$	174,786

													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2022		2021		2020		2019		2018		Prior		Cost Basis		Total
Commercial real estate -
Non Residential Non-Owner Occupied
Pass	$	110,501	$	108,290	$	89,943	$	68,027	$	87,413	$	113,287	$	2,781	$	580,242
Special mention	—		110		170		176		—		—		—		456
Substandard	—		601		—		1,330		2,089		1,244		2		5,266
Total	$	110,501	$	109,001	$	90,113	$	69,533	$	89,502	$	114,531	$	2,783	$	585,964

Commercial real estate -
Non Residential Owner Occupied
Pass	$	21,782	$	36,186	$	17,216	$	22,274	$	17,622	$	39,861	$	3,238	$	158,179
Special mention	—		—		—		329		—		493		113		935
Substandard	943		193		110		2,479		772		10,350		1,000		15,847
Total	$	22,725	$	36,379	$	17,326	$	25,082	$	18,394	$	50,704	$	4,351	$	174,961

Commercial real estate -
Total
Pass	$	262,965	$	223,277	$	197,541	$	197,037	$	126,971	$	300,343	$	18,173	$	1,326,307
Special mention	228		110		285		505		—		1,329		113		2,570
Substandard	1,026		794		3,967		28,094		2,861		25,686		1,002		63,430
Total	$	264,219	$	224,181	$	201,793	$	225,636	$	129,832	$	327,358	$	19,288	$	1,392,307

Residential real estate
Performing	$	405,059	$	336,462	$	270,197	$	122,559	$	86,317	$	382,652	$	88,308	$	1,691,554
Non-performing	—		207		—		755		79		738		190		1,969
Total	$	405,059	$	336,669	$	270,197	$	123,314	$	86,396	$	383,390	$	88,498	$	1,693,523

Home equity
Performing	$	16,670	$	7,394	$	5,000	$	3,035	$	1,823	$	5,116	$	95,224	$	134,262
Non-performing	—		—		—		—		—		—		55		55
Total	$	16,670	$	7,394	$	5,000	$	3,035	$	1,823	$	5,116	$	95,279	$	134,317

Consumer
Performing	$	25,296	$	7,954	$	5,482	$	4,299	$	2,246	$	2,064	$	1,465	$	48,806
Non-performing	—		—		—		—		—		—		—		—
Total	$	25,296	$	7,954	$	5,482	$	4,299	$	2,246	$	2,064	$	1,465	$	48,806

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 Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2021		2020		2019		2018		2017		Prior		Cost Basis		Total
Commercial and industrial
Pass	$	87,148	$	82,946	$	41,908	$	27,355	$	23,895	$	6,755	$	65,775	$	335,782
Special mention	3		480		17		—		21		—		3,324		3,845
Substandard	319		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 mention	103		—		29,914		—		—		—		—		$	30,017
Substandard	398		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 Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2021		2020		2019		2018		2017		Prior		Cost Basis		Total
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 mention	119		183		186		257		—		138		—		883
Substandard	640		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
Substandard	199		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 mention	222		334		34,647		299		319		3,151		—		38,972
Substandard	1,238		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