XML 18 R11.htm IDEA: XBRL DOCUMENT v3.24.1.1.u2
Loans
3 Months Ended
Mar. 31, 2024
Receivables [Abstract]  
Loans

NOTE 3 – LOANS

The composition of net loans receivable as of March 31, 2024 and December 31, 2023:

(Dollars in thousands)

 

March 31,
2024

 

 

December 31, 2023

 

Commercial and industrial

 

$

146,300

 

 

$

152,125

 

Commercial real estate

 

 

191,717

 

 

 

190,702

 

Commercial lessors of buildings

 

 

94,195

 

 

 

82,687

 

Construction

 

 

52,543

 

 

 

49,214

 

Consumer mortgage

 

 

165,836

 

 

 

166,891

 

Home equity line of credit

 

 

44,113

 

 

 

43,269

 

Consumer installment

 

 

10,538

 

 

 

10,636

 

Consumer indirect

 

 

5,625

 

 

 

5,957

 

Total loans

 

 

710,867

 

 

 

701,481

 

Allowance for credit losses

 

 

(7,136

)

 

 

(6,607

)

Deferred loan fees, net

 

 

(45

)

 

 

(77

)

Net Loans

 

$

703,686

 

 

$

694,797

 

Loan Origination/Risk Management

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Underwriting standards are designed to promote relationship banking rather than transactional banking. The Company’s management examines current and occasionally projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers; however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable, inventory, and equipment, and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

 

NOTE 3 – LOANS (CONTINUED)

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single industry. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied.

The top ten collateral exposures in commercial real estate and commercial lessors of buildings at March 31, 2024 are as follows: Industrial, manufacturing and production $60 million; warehouses $40 million; retail $36 million; healthcare $26 million; senior housing $17 million; auto supply $16 million; lodging $11 million; office building $9 million; vacant land $9 million, and restaurants $8 million.

With respect to loans to developers and builders that are secured by non-owner-occupied properties, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success. Construction and land development loans are underwritten utilizing independent appraisal reviews, sensitivity analysis of absorption and lease rates, and financial analysis of the developers and property owners. Construction and land development loans are generally based upon estimates of costs and value associated with the completed project. These estimates may be inaccurate.

Construction and land development loans often involve the disbursement of substantial funds with repayment dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property, or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing.

The Company originates consumer loans utilizing a judgmental underwriting process. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, mitigates risk.

The Company maintains an independent credit department that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures.

Loans serviced for others approximated $135 million and $132 million on March 31, 2024 and December 31, 2023, respectively.

 

NOTE 3 – LOANS (CONTINUED)

Concentrations of Credit

Nearly all the Company’s lending activity occurs within the state of Ohio, including the four counties of Holmes, Stark, Tuscarawas and Wayne, as well as other markets. The majority of the Company’s loan portfolio consists of commercial and commercial real estate loans. Credit concentrations, including commitments, as determined using North American Industry Classification Codes (NAICS), to the two largest industries compared to total loans on March 31, 2024, included $76.4 million, or 11%, of total loans to lessors of non-residential buildings, and $39.4 million, or 6%, of total loans to manufacturers of animal food. These loans are generally secured by real property and equipment, with repayment expected from operational cash flow. Credit evaluation is based on a review of cash flow coverage of principal, interest payments, and the adequacy of the collateral received.

Allowance for Credit Losses

The following table details activity in the allowance for credit losses ("ACL") by portfolio segment for the three-months ended March 31, 2024 and 2023. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

For the three-months ended March 31, 2024, the increase in the provision for commercial and industrial loans primarily relates to one individually evaluated commercial loan relationship which has a collateral advance shortfall; however the loan is currently performing. The remaining provision amounts for the quarter are primarily a result of changes in loan volume and weighted average remaining maturities of the loans in each category.

 

(Dollars in thousands)

 

Beginning Balance

 

 

Charge-offs

 

 

Recoveries

 

 

Provisions (Recovery)

 

 

Ending Balance

 

Three Months Ended March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

1,737

 

 

$

(11

)

 

$

7

 

 

$

491

 

 

$

2,224

 

Commercial real estate

 

 

1,637

 

 

 

 

 

 

 

 

 

(25

)

 

 

1,612

 

Commercial lessors of buildings

 

 

1,200

 

 

 

 

 

 

 

 

 

144

 

 

 

1,344

 

Construction

 

 

333

 

 

 

 

 

 

 

 

 

(10

)

 

 

323

 

Consumer mortgage

 

 

1,107

 

 

 

 

 

 

1

 

 

 

(40

)

 

 

1,068

 

Home equity line of credit

 

 

288

 

 

 

 

 

 

 

 

 

(4

)

 

 

284

 

Consumer installment

 

 

76

 

 

 

(18

)

 

 

3

 

 

 

13

 

 

 

74

 

Consumer indirect

 

 

229

 

 

 

(59

)

 

 

3

 

 

 

34

 

 

 

207

 

 

 

$

6,607

 

 

$

(88

)

 

$

14

 

 

$

603

 

 

$

7,136

 

 

(Dollars in thousands)

 

Beginning Balance

 

 

Impact of Adopting ASC 326

 

 

Charge-offs

 

 

Recoveries

 

 

Provisions (Recovery)

 

 

Ending Balance

 

Three Months Ended March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

1,110

 

 

$

658

 

 

$

 

 

$

10

 

 

$

43

 

 

$

1,821

 

Commercial real estate

 

 

2,760

 

 

 

(541

)

 

 

 

 

 

1

 

 

 

16

 

 

 

2,236

 

Commercial lessors of buildings

 

 

 

 

 

974

 

 

 

 

 

 

 

 

 

(9

)

 

 

965

 

Construction

 

 

803

 

 

 

(515

)

 

 

 

 

 

 

 

 

(17

)

 

 

271

 

Consumer mortgage

 

 

1,268

 

 

 

(580

)

 

 

 

 

 

 

 

 

5

 

 

 

693

 

Home equity line of credit

 

 

 

 

 

201

 

 

 

 

 

 

 

 

 

(15

)

 

 

186

 

Consumer installment

 

 

233

 

 

 

(183

)

 

 

(8

)

 

 

 

 

 

5

 

 

 

47

 

Consumer indirect

 

 

 

 

 

91

 

 

 

(31

)

 

 

24

 

 

 

4

 

 

 

88

 

Unallocated

 

 

664

 

 

 

(664

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

6,838

 

 

$

(559

)

 

$

(39

)

 

$

35

 

 

$

32

 

 

$

6,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTE 3 – LOANS (CONTINUED)

Age Analysis of Past-Due Loans Receivable and Nonperforming Loans

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past-due status.

(Dollars in thousands)

 

Current

 

 

30-59
Days
Past
Due

 

 

60-89
Days
Past
Due

 

 

90 Days +
Past Due

 

 

Total Past Due

 

 

Total
Loans

 

March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

146,224

 

 

$

74

 

 

$

2

 

 

$

 

 

$

76

 

 

$

146,300

 

Commercial real estate

 

 

191,500

 

 

 

217

 

 

 

 

 

 

 

 

 

217

 

 

 

191,717

 

Commercial lessors of buildings

 

 

94,137

 

 

 

58

 

 

 

 

 

 

 

 

 

58

 

 

 

94,195

 

Construction

 

 

52,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

52,543

 

Consumer mortgage

 

 

164,788

 

 

 

836

 

 

 

212

 

 

 

 

 

 

1,048

 

 

 

165,836

 

Home equity line of credit

 

 

43,874

 

 

 

239

 

 

 

 

 

 

 

 

 

239

 

 

 

44,113

 

Consumer installment

 

 

10,486

 

 

 

48

 

 

 

4

 

 

 

 

 

 

52

 

 

 

10,538

 

Consumer indirect

 

 

5,516

 

 

 

101

 

 

 

8

 

 

 

 

 

 

109

 

 

 

5,625

 

Total Loans

 

$

709,068

 

 

$

1,573

 

 

$

226

 

 

$

 

 

$

1,799

 

 

$

710,867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

151,964

 

 

$

111

 

 

$

50

 

 

$

 

 

$

161

 

 

$

152,125

 

Commercial real estate

 

 

190,702

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

190,702

 

Commercial lessors of buildings

 

 

82,687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

82,687

 

Construction

 

 

49,214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49,214

 

Consumer mortgage

 

 

166,411

 

 

 

307

 

 

 

173

 

 

 

 

 

 

480

 

 

 

166,891

 

Home equity line of credit

 

 

42,955

 

 

 

33

 

 

 

281

 

 

 

 

 

 

314

 

 

 

43,269

 

Consumer installment

 

 

10,602

 

 

 

25

 

 

 

9

 

 

 

 

 

 

34

 

 

 

10,636

 

Consumer indirect

 

 

5,821

 

 

 

52

 

 

 

84

 

 

 

 

 

 

136

 

 

 

5,957

 

Total Loans

 

$

700,356

 

 

$

528

 

 

$

597

 

 

$

 

 

$

1,125

 

 

$

701,481

 

 

 

NOTE 3 – LOANS (CONTINUED)

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of March 31, 2024 and December 31, 2023:

(Dollars in thousands)

 

Nonaccrual with no ACL

 

 

Nonaccrual with ACL

 

 

Total Nonaccrual

 

 

Loans Past Due Over 90 Days Still Accruing

 

 

Total Nonperforming

 

March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

53

 

 

$

 

 

$

53

 

 

$

 

 

$

53

 

Commercial real estate

 

 

61

 

 

 

 

 

 

61

 

 

 

 

 

 

61

 

Commercial lessors of buildings

 

 

14

 

 

 

 

 

 

14

 

 

 

 

 

 

14

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer mortgage

 

 

128

 

 

 

 

 

 

128

 

 

 

 

 

 

128

 

Home equity line of credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer installment

 

 

19

 

 

 

 

 

 

19

 

 

 

 

 

 

19

 

Consumer indirect

 

 

86

 

 

 

 

 

 

86

 

 

 

 

 

 

86

 

Total Loans

 

$

361

 

 

$

 

 

$

361

 

 

$

 

 

$

361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

59

 

 

$

 

 

$

59

 

 

$

 

 

$

59

 

Commercial real estate

 

 

62

 

 

 

 

 

 

62

 

 

 

 

 

 

62

 

Commercial lessors of buildings

 

 

15

 

 

 

 

 

 

15

 

 

 

 

 

 

15

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer mortgage

 

 

172

 

 

 

 

 

 

172

 

 

 

 

 

 

172

 

Home equity line of credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer installment

 

 

49

 

 

 

 

 

 

49

 

 

 

 

 

 

49

 

Consumer indirect

 

 

39

 

 

 

 

 

 

39

 

 

 

 

 

 

39

 

Total Loans

 

$

396

 

 

$

 

 

$

396

 

 

$

 

 

$

396

 

 

Interest income recognized on nonaccrual loans for the three-months ended March 31, 2024 was $5 thousand on consumer mortgage loans. Several of the nonaccrual consumer mortgage loans are at an amortized cost basis of $0 and all payments received are being recognized as interest income.

 

Collateral-Dependent Financial Assets

When loan repayment is expected to be provided substantially through the operation or sale of collateral and the borrower is experiencing financial difficulty, expected credit losses are based on the fair value of the collateral. The class of loan represents the primary collateral type associated with the loan. The following table presents the amortized cost basis of collateral dependent loans by class of loan:

 

 

 

Type of Collateral

 

(Dollars in thousands)

 

Real Estate

 

 

Blanket Liens

 

 

Vehicles

 

March 31, 2024

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

 

 

$

4,466

 

 

$

500

 

Commercial real estate

 

 

1,127

 

 

 

 

 

 

 

Total collateral dependent loans

 

$

1,127

 

 

$

4,466

 

 

$

500

 

 

 

NOTE 3 – LOANS (CONTINUED)

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis includes all commercial loans before origination and an annual review of those with an outstanding commitment greater than $500 thousand. The Company uses the following definitions for risk ratings:

Pass. Loans classified as pass (Cash Secured, Exceptional, Acceptable, Monitor, or Pass Watch) may exhibit a wide array of characteristics but at a minimum represent an acceptable risk to the Bank. Borrowers in this rating may have leveraged but acceptable balance sheet positions, satisfactory asset quality, stable to favorable sales and earnings trends, acceptable liquidity and adequate cash flow. Loans are considered fully collectible and require an average amount of administration. While generally adhering to credit policy, these loans may exhibit occasional exceptions that do not result in undue risk to the Bank. Borrowers are generally capable of absorbing setbacks, financial and otherwise, without the threat of failure.

Special Mention. Assets assigned a Special Mention grade are not considered classified assets but are considered criticized. These assets exhibit potential weaknesses that, deserve management’s close attention. If left uncorrected, those potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. Loans in this rating warrant special attention but have not yet reached the point of concern for loss. These assets have deteriorated sufficiently to the point they would have difficulty refinancing elsewhere. Similarly, purchasers of the business would not be eligible for bank financing unless they represent a significantly stronger credit risk.

Substandard. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

 

 

NOTE 3 – LOANS (CONTINUED)

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass rated loans. Based on the most recent analysis performed, the following tables present the recorded investment in non-homogeneous loans by internal risk rating system as of March 31, 2024 and December 31, 2023:

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

Revolving Loans Amortized Cost Basis

 

Revolving Loans Converted to Term

 

 

Total

 

March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

3,524

 

 

$

30,981

 

 

$

25,246

 

 

$

10,883

 

 

$

4,553

 

 

$

8,874

 

$

42,493

 

$

 

 

$

126,554

 

Special mention

 

 

65

 

 

 

74

 

 

 

193

 

 

 

389

 

 

 

29

 

 

 

58

 

 

3,545

 

 

 

 

 

4,353

 

Substandard

 

 

 

 

 

769

 

 

 

2,909

 

 

 

933

 

 

 

825

 

 

 

1,328

 

 

8,629

 

 

 

 

 

15,393

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

3,589

 

 

$

31,824

 

 

$

28,348

 

 

$

12,205

 

 

$

5,407

 

 

$

10,260

 

$

54,667

 

$

 

 

$

146,300

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

11

 

 

$

 

 

$

 

$

 

$

 

 

$

11

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

4,553

 

 

$

24,015

 

 

$

37,006

 

 

$

53,222

 

 

$

12,130

 

 

$

39,800

 

$

855

 

$

 

 

$

171,581

 

Special Mention

 

 

 

 

 

239

 

 

 

1,479

 

 

 

2,266

 

 

 

2,093

 

 

 

304

 

 

 

 

 

 

 

6,381

 

Substandard

 

 

350

 

 

 

1,128

 

 

 

 

 

 

873

 

 

 

 

 

 

11,404

 

 

 

 

 

 

 

13,755

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

4,903

 

 

$

25,382

 

 

$

38,485

 

 

$

56,361

 

 

$

14,223

 

 

$

51,508

 

$

855

 

$

 

 

$

191,717

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Commercial lessors of buildings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

11,074

 

 

$

20,194

 

 

$

22,312

 

 

$

16,520

 

 

$

5,992

 

 

$

15,811

 

$

307

 

$

 

 

$

92,210

 

Special Mention

 

 

 

 

 

 

 

 

 

 

 

186

 

 

 

 

 

 

 

 

 

 

 

 

 

186

 

Substandard

 

 

 

 

 

 

 

 

571

 

 

 

235

 

 

 

979

 

 

 

14

 

 

 

 

 

 

 

1,799

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

11,074

 

 

$

20,194

 

 

$

22,883

 

 

$

16,941

 

 

$

6,971

 

 

$

15,825

 

$

307

 

$

 

 

$

94,195

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Commercial Construction:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

144

 

 

$

27,032

 

 

$

13,768

 

 

$

561

 

 

$

269

 

 

$

503

 

$

1,183

 

$

 

 

$

43,460

 

Special Mention

 

 

 

 

 

 

 

 

 

 

 

137

 

 

 

635

 

 

 

 

 

 

 

 

 

 

772

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

78

 

 

 

 

 

 

 

78

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

144

 

 

$

27,032

 

 

$

13,768

 

 

$

698

 

 

$

904

 

 

$

581

 

$

1,183

 

$

 

 

$

44,310

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

19,295

 

 

$

102,222

 

 

$

98,332

 

 

$

81,186

 

 

$

22,944

 

 

$

64,988

 

$

44,838

 

$

 

 

$

433,805

 

Special Mention

 

 

65

 

 

 

313

 

 

 

1,672

 

 

 

2,978

 

 

 

2,757

 

 

 

362

 

 

3,545

 

 

 

 

 

11,692

 

Substandard

 

 

350

 

 

 

1,897

 

 

 

3,480

 

 

 

2,041

 

 

 

1,804

 

 

 

12,824

 

 

8,629

 

 

 

 

 

31,025

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

19,710

 

 

$

104,432

 

 

$

103,484

 

 

$

86,205

 

 

$

27,505

 

 

$

78,174

 

$

57,012

 

$

 

 

$

476,522

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

11

 

 

$

 

 

$

 

$

 

$

 

 

$

11

 

 

 

 

 

 

 

 

 

 

NOTE 3 – LOANS (CONTINUED)

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

Revolving Loans Amortized Cost Basis

 

Revolving Loans Converted to Term

 

 

Total

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

32,037

 

 

$

25,996

 

 

$

12,196

 

 

$

5,207

 

 

$

3,388

 

 

$

7,112

 

$

45,423

 

$

 

 

$

131,359

 

Special mention

 

 

76

 

 

 

225

 

 

 

522

 

 

 

33

 

 

 

33

 

 

 

65

 

 

3,872

 

 

 

 

 

4,826

 

Substandard

 

 

782

 

 

 

2,968

 

 

 

1,021

 

 

 

1,017

 

 

 

106

 

 

 

1,416

 

 

8,630

 

 

 

 

 

15,940

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

32,895

 

 

$

29,189

 

 

$

13,739

 

 

$

6,257

 

 

$

3,527

 

 

$

8,593

 

$

57,925

 

$

 

 

$

152,125

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

22,206

 

 

$

38,696

 

 

$

54,830

 

 

$

12,233

 

 

$

19,543

 

 

$

21,938

 

$

647

 

$

 

 

$

170,093

 

Special Mention

 

 

241

 

 

 

1,380

 

 

 

2,292

 

 

 

2,496

 

 

 

 

 

 

322

 

 

 

 

 

 

 

6,731

 

Substandard

 

 

1,150

 

 

 

 

 

 

888

 

 

 

 

 

 

466

 

 

 

11,374

 

 

 

 

 

 

 

13,878

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

23,597

 

 

$

40,076

 

 

$

58,010

 

 

$

14,729

 

 

$

20,009

 

 

$

33,634

 

$

647

 

$

 

 

$

190,702

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Commercial lessors of buildings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

18,353

 

 

$

22,762

 

 

$

15,455

 

 

$

6,429

 

 

$

3,543

 

 

$

8,934

 

$

360

 

$

 

 

$

75,836

 

Special Mention

 

 

 

 

 

436

 

 

 

1,687

 

 

 

 

 

 

3,578

 

 

 

 

 

 

 

 

 

 

5,701

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

989

 

 

 

 

 

 

161

 

 

 

 

 

 

 

1,150

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

18,353

 

 

$

23,198

 

 

$

17,142

 

 

$

7,418

 

 

$

7,121

 

 

$

9,095

 

$

360

 

$

 

 

$

82,687

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Commercial construction:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

24,119

 

 

$

14,855

 

 

$

576

 

 

$

272

 

 

$

281

 

 

$

256

 

$

 

$

 

 

$

40,359

 

Special Mention

 

 

 

 

 

258

 

 

 

43

 

 

 

635

 

 

 

 

 

 

 

 

 

 

 

 

 

936

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

30

 

 

 

80

 

 

 

 

 

 

 

 

 

 

110

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

24,119

 

 

$

15,113

 

 

$

619

 

 

$

937

 

 

$

361

 

 

$

256

 

$

 

$

 

 

$

41,405

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

96,715

 

 

$

102,309

 

 

$

83,057

 

 

$

24,141

 

 

$

26,755

 

 

$

38,240

 

$

46,430

 

$

 

 

$

417,647

 

Special Mention

 

 

317

 

 

 

2,299

 

 

 

4,544

 

 

 

3,164

 

 

 

3,611

 

 

 

387

 

 

3,872

 

 

 

 

 

18,194

 

Substandard

 

 

1,932

 

 

 

2,968

 

 

 

1,909

 

 

 

2,036

 

 

 

652

 

 

 

12,951

 

 

8,630

 

 

 

 

 

31,078

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

98,964

 

 

$

107,576

 

 

$

89,510

 

 

$

29,341

 

 

$

31,018

 

 

$

51,578

 

$

58,932

 

$

 

 

$

466,919

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTE 3 – LOANS (CONTINUED)

The Company monitors the credit risk profile by payment activity for the loan classes listed below. Loans past due 90 days or more and loans on nonaccrual status are considered nonperforming. The following table presents the amortized cost in consumer loans based on payment activity as of March 31, 2024 and December 31, 2023:

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

Revolving Loans Amortized Cost Basis

 

Revolving Loans Converted to Term

 

 

Total

 

March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

2,099

 

 

$

25,363

 

 

$

34,084

 

 

$

35,158

 

 

$

31,278

 

 

$

37,726

 

$

 

$

 

 

$

165,708

 

Nonperforming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

128

 

 

 

 

 

 

 

128

 

Total

 

$

2,099

 

 

$

25,363

 

 

$

34,084

 

 

$

35,158

 

 

$

31,278

 

 

$

37,854

 

$

 

$

 

 

$

165,836

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Consumer Construction:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

222

 

 

$

5,918

 

 

$

1,324

 

 

$

258

 

 

$

391

 

 

$

120

 

$

 

$

 

 

$

8,233

 

Nonperforming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

222

 

 

$

5,918

 

 

$

1,324

 

 

$

258

 

 

$

391

 

 

$

120

 

$

 

$

 

 

$

8,233

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Home equity line of credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

44,070

 

$

43

 

 

$

44,113

 

Nonperforming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

44,070

 

$

43

 

 

$

44,113

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Consumer installment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

1,299

 

 

$

5,073

 

 

$

2,614

 

 

$

807

 

 

$

429

 

 

$

237

 

$

60

 

$

 

 

$

10,519

 

Nonperforming

 

 

 

 

 

8

 

 

 

3

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

 

19

 

Total

 

$

1,299

 

 

$

5,081

 

 

$

2,617

 

 

$

807

 

 

$

429

 

 

$

245

 

$

60

 

$

 

 

$

10,538

 

YTD gross charge-offs

 

$

 

 

$

5

 

 

$

8

 

 

$

1

 

 

$

 

 

$

4

 

$

 

$

 

 

$

18

 

Consumer indirect:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

77

 

 

$

821

 

 

$

1,040

 

 

$

569

 

 

$

547

 

 

$

2,485

 

$

 

$

 

 

$

5,539

 

Nonperforming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

86

 

 

 

 

 

 

 

86

 

Total

 

$

77

 

 

$

821

 

 

$

1,040

 

 

$

569

 

 

$

547

 

 

$

2,571

 

$

 

$

 

 

$

5,625

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

59

 

$

 

$

 

 

$

59

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

3,697

 

 

$

37,175

 

 

$

39,062

 

 

$

36,792

 

 

$

32,645

 

 

$

40,568

 

$

44,130

 

$

43

 

 

$

234,112

 

Nonperforming

 

 

 

 

 

8

 

 

 

3

 

 

 

 

 

 

 

 

 

222

 

 

 

 

 

 

 

233

 

Total

 

$

3,697

 

 

$

37,183

 

 

$

39,065

 

 

$

36,792

 

 

$

32,645

 

 

$

40,790

 

$

44,130

 

$

43

 

 

$

234,345

 

YTD consumer gross charge-offs

 

$

 

 

$

5

 

 

$

8

 

 

$

1

 

 

$

 

 

$

63

 

$

 

$

 

 

$

77

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTE 3 – LOANS (CONTINUED)

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

Revolving Loans Amortized Cost Basis

 

Revolving Loans Converted to Term

 

 

Total

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

24,521

 

 

$

34,798

 

 

$

35,802

 

 

$

32,259

 

 

$

8,931

 

 

$

30,408

 

$

 

$

 

 

$

166,719

 

Nonperforming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

172

 

 

 

 

 

 

 

172

 

Total

 

$

24,521

 

 

$

34,798

 

 

$

35,802

 

 

$

32,259

 

 

$

8,931

 

 

$

30,580

 

$

 

$

 

 

$

166,891

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Consumer construction:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

5,463

 

 

$

1,477

 

 

$

264

 

 

$

483

 

 

$

81

 

 

$

41

 

$

 

$

 

 

$

7,809

 

Nonperforming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

5,463

 

 

$

1,477

 

 

$

264

 

 

$

483

 

 

$

81

 

 

$

41

 

$

 

$

 

 

$

7,809

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Home equity line of credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

43,223

 

$

46

 

 

$

43,269

 

Nonperforming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

43,223

 

$

46

 

 

$

43,269

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

$

 

$

 

 

$

 

Consumer installment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

5,705

 

 

$

3,067

 

 

$

981

 

 

$

513

 

 

$

118

 

 

$

184

 

$

68

 

$

 

 

$

10,636

 

Nonperforming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

5,705

 

 

$

3,067

 

 

$

981

 

 

$

513

 

 

$

118

 

 

$

184

 

$

68

 

$

 

 

$

10,636

 

YTD gross charge-offs

 

$

2

 

 

$

12

 

 

$

19

 

 

$

5

 

 

$

2

 

 

$

6

 

$

 

$

 

 

$

46

 

Consumer indirect:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

858

 

 

$

1,086

 

 

$

622

 

 

$

568

 

 

$

607

 

 

$

2,128

 

$

 

$

 

 

$

5,869

 

Nonperforming

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

81

 

 

 

4

 

 

 

 

 

 

 

88

 

Total

 

$

858

 

 

$

1,089

 

 

$

622

 

 

$

568

 

 

$

688

 

 

$

2,132

 

$

 

$

 

 

$

5,957

 

YTD gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

66

 

$

 

$

 

 

$

66

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

36,547

 

 

$

40,428

 

 

$

37,669

 

 

$

33,823

 

 

$

9,737

 

 

$

32,761

 

$

43,291

 

$

46

 

 

$

234,302

 

Nonperforming

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

81

 

 

 

176

 

 

 

 

 

 

 

260

 

Total

 

$

36,547

 

 

$

40,431

 

 

$

37,669

 

 

$

33,823

 

 

$

9,818

 

 

$

32,937

 

$

43,291

 

$

46

 

 

$

234,562

 

YTD consumer gross charge-offs

 

$

2

 

 

$

12

 

 

$

19

 

 

$

5

 

 

$

2

 

 

$

72

 

$

 

$

 

 

$

112

 

Consumer mortgages are substantially secured by one to four family owner occupied properties and consumer indirect loans are substantially secured by recreational vehicles. All nonperforming consumer loans are evaluated when placed on nonaccrual status and may be charged down based on the collateral fair value less cost to sell if that value is lower than the outstanding balance. As of March 31, 2024 there were two loans secured by consumer real estate totaling $38 thousand in process of foreclosure.

Modifications to Borrowers Experiencing Financial Difficulty

Occasionally, the Bank modifies loans to borrowers in financial distress by providing – principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

In some cases, the Bank may provide multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

There were no modifications of loans to borrowers in financial distress completed during the three-months ended March 31, 2024 and 2023.