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LOANS (Tables)

3 Months Ended

Mar. 31, 2021

Portfolio loans were as follows (dollars in thousands):

	March 31, 2021			December 31, 2020
Commercial and industrial
Commercial and industrial, excluding PPP	$	392,208		$	436,331
PPP		253,811			229,079
Total commercial and industrial		646,019			665,410

Commercial real estate:
Residential developed		8,651			8,549
Vacant and unimproved		41,375			47,122
Commercial development		841			857
Residential improved		112,618			114,392
Commercial improved		264,122			266,006
Manufacturing and industrial		112,995			115,247
Total commercial real estate		540,602			552,173
Consumer
Residential mortgage		139,727			149,556
Unsecured		134			161
Home equity		52,709			57,975
Other secured		3,760			4,056
Total consumer		196,330			211,748
Total loans		1,382,951			1,429,331
Allowance for loan losses		(17,452	)		(17,408	)
	$	1,365,499		$	1,411,923

Activity in Allowance for Loan Losses by Portfolio Segment

Activity in the allowance for loan losses by portfolio segment was as follows (dollars in thousands):

Three months ended March 31, 2021	Commercial and Industrial			Commercial Real Estate		Consumer			Unallocated		Total
Beginning balance	$	6,632		$	7,999	$	2,758		$	19	$	17,408
Charge-offs		—			—		(50	)		—		(50	)
Recoveries		20			39		35			—		94
Provision for loan losses		(851	)		860		(25	)		16		—
Ending Balance	$	5,801		$	8,898	$	2,718		$	35	$	17,452

Three months ended March 31, 2020	Commercial and Industrial		Commercial Real Estate			Consumer			Unallocated		Total
Beginning balance	$	7,658	$	6,521		$	3,009		$	12	$	17,200
Charge-offs		—		—			(39	)		—		(39	)
Recoveries		19		974			35			—		1,028
Provision for loan losses		1,130		(582	)		125			27		700
Ending Balance	$	8,807	$	6,913		$	3,130		$	39	$	18,889

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment Based on Impairment Method

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method (dollars in thousands):

March 31, 2021	Commercial and Industrial		Commercial Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance attributable to loans:
Individually reviewed for impairment	$	511	$	181	$	295	$	—	$	987
Collectively evaluated for impairment		5,290		8,717		2,423		35		16,465
Total ending allowance balance	$	5,801	$	8,898	$	2,718	$	35	$	17,452
Loans:
Individually reviewed for impairment	$	4,987	$	2,481	$	3,817	$	—	$	11,285
Collectively evaluated for impairment		641,032		538,121		192,513		—		1,371,666
Total ending loans balance	$	646,019	$	540,602	$	196,330	$	—	$	1,382,951

December 31, 2020	Commercial and Industrial		Commercial Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance attributable to loans:
Individually reviewed for impairment	$	587	$	313	$	310	$	—	$	1,210
Collectively evaluated for impairment		6,045		7,686		2,448		19		16,198
Total ending allowance balance	$	6,632	$	7,999	$	2,758	$	19	$	17,408
Loans:
Individually reviewed for impairment	$	3,957	$	2,613	$	4,049	$	—	$	10,619
Collectively evaluated for impairment		661,453		549,560		207,699		—		1,418,712
Total ending loans balance	$	665,410	$	552,173	$	211,748	$	—	$	1,429,331

Loans Individually Evaluated for Impairment by Class of Loans

The following table presents loans individually evaluated for impairment by class of loans as of March 31, 2021 (dollars in thousands):

March 31, 2021	Unpaid Principal Balance		Recorded Investment		Allowance Allocated
With no related allowance recorded:
Commercial and industrial	$	143	$	143	$	—
Commercial real estate:
Residential improved		87		87		—
Commercial improved		1,035		1,035		—
		1,122		1,122		—
Consumer		—		—		—
Total with no related allowance recorded	$	1,265	$	1,265	$	—

With an allowance recorded:
Commercial and industrial	$	4,844	$	4,844	$	511
Commercial real estate:
Commercial improved		1,161		1,161		173
Manufacturing and industrial		198		198		8
		1,359		1,359		181
Consumer:
Residential mortgage		3,292		3,292		254
Unsecured		104		104		8
Home equity		400		400		31
Other secured		21		21		2
		3,817		3,817		295
Total with an allowance recorded	$	10,020	$	10,020	$	987
Total	$	11,285	$	11,285	$	987

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2020 (dollars in thousands):

December 31, 2020	Unpaid Principal Balance		Recorded Investment		Allowance Allocated
With no related allowance recorded:
Commercial and industrial	$	156	$	156	$	—
Commercial real estate:
Residential improved		107		107		—
Commercial improved		714		714		—
		821		821		—
Consumer		—		—		—
Total with no related allowance recorded	$	977	$	977	$	—

With an allowance recorded:
Commercial and industrial	$	3,801	$	3,801	$	587
Commercial real estate:
Residential developed		67		67		3
Commercial improved		1,524		1,524		301
Manufacturing and industrial		201		201		9
		1,792		1,792		313
Consumer:
Residential mortgage		3,484		3,484		266
Unsecured		123		123		10
Home equity		419		419		32
Other secured		23		23		2
		4,049		4,049		310
Total with an allowance recorded	$	9,642	$	9,642	$	1,210
Total	$	10,619	$	10,619	$	1,210

Average Balances of Impaired Loans and Interest Recognized on Impaired Loans

The following table presents information regarding average balances of impaired loans and interest recognized on impaired loans for the three month periods ended March 31, 2021 and 2020 (dollars in thousands):

	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
Average of impaired loans during the period:
Commercial and industrial	$	4,586	$	6,615
Commercial real estate:
Residential developed		45		74
Residential improved		87		267
Commercial improved		2,208		5,822
Manufacturing and industrial		199		356
Consumer		3,941		4,914
Interest income recognized during impairment:
Commercial and industrial		134		273
Commercial real estate		31		99
Consumer		38		57
Cash-basis interest income recognized
Commercial and industrial		125		275
Commercial real estate		31		128
Consumer		36		60

Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans

The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2021 and 2020:

March 31, 2021	Nonaccrual		Over 90 days Accruing
Commercial and industrial	$	—	$	—
Commercial real estate:
Residential improved		87		—
Commercial improved		345		—
		432		—
Consumer:
Residential mortgage		93		—
		93		—
Total	$	525	$	—

December 31, 2020	Nonaccrual		Over 90 days Accruing
Commercial and industrial	$	—	$	—
Commercial real estate:
Residential improved		87		—
Commercial improved		351		—
		438		—
Consumer:
Residential mortgage		95		—
		95		—
Total	$	533	$	—

Aging of Recorded Investment in Past Due Loans by Class of Loans

The following table presents the aging of the recorded investment in past due loans as of March 31, 2021 and December 31, 2020 by class of loans (dollars in thousands):

March 31, 2021	30-90 Days		Greater Than 90 Days		Total Past Due		Loans Not Past Due		Total
Commercial and industrial	$	39		—	$	39	$	645,980	$	646,019
Commercial real estate:
Residential developed		—		—		—		8,651		8,651
Vacant and unimproved		—		—		—		41,375		41,375
Commercial development		—		—		—		841		841
Residential improved		—		87		87		112,531		112,618
Commercial improved		—		—		—		264,122		264,122
Manufacturing and industrial		—		—		—		112,995		112,995
		—		87		87		540,515		540,602
Consumer:
Residential mortgage		—		91		91		139,636		139,727
Unsecured		—		—		—		134		134
Home equity		—		—		—		52,709		52,709
Other secured		—		—		—		3,760		3,760
		—		91		91		196,239		196,330
Total	$	39	$	178	$	217	$	1,382,734	$	1,382,951

December 31, 2020	30-90 Days		Greater Than 90 Days		Total Past Due		Loans Not Past Due		Total
Commercial and industrial	$	45	$	—	$	45	$	665,365	$	665,410
Commercial real estate:
Residential developed		—		—		—		8,549		8,549
Vacant and unimproved		—		—		—		47,122		47,122
Commercial development		—		—		—		857		857
Residential improved		—		87		87		114,305		114,392
Commercial improved		353		—		353		265,653		266,006
Manufacturing and industrial		—		—		—		115,247		115,247
		353		87		440		551,733		552,173
Consumer:
Residential mortgage		—		94		94		149,462		149,556
Unsecured		—		—		—		161		161
Home equity		—		—		—		57,975		57,975
Other secured		2		—		2		4,054		4,056
		2		94		96		211,652		211,748
Total	$	400	$	181	$	581	$	1,428,750	$	1,429,331

Troubled Debt Restructurings

The following table presents information regarding troubled debt restructurings as of March 31, 2021 and December 31, 2020 (dollars in thousands):

	March 31, 2021				December 31, 2020
	Number of Loans		Outstanding Recorded Balance		Number of Loans		Outstanding Recorded Balance
Commercial and industrial		6	$	4,987		7	$	3,957
Commercial real estate		7		1,320		9		1,439
Consumer		57		3,817		60		4,049
		70	$	10,124		76	$	9,445

The following table presents information related to accruing troubled debt restructurings as of March 31, 2021 and December 31, 2020. The table presents the amount of accruing troubled debt restructurings that were on nonaccrual status prior to the restructuring, accruing at the time of restructuring and those that were upgraded to accruing status after receiving six consecutive monthly payments in accordance with the restructured terms as of each period reported (dollars in thousands):

	March 31, 2021		December 31, 2020
Accruing TDR - nonaccrual at restructuring	$	—	$	—
Accruing TDR - accruing at restructuring		5,176		5,479
Accruing TDR - upgraded to accruing after six consecutive payments		4,516		3,529
	$	9,692	$	9,008

Risk Grade Category of Loans by Class of Loans

As of March 31, 2021 and December 31, 2020, the risk grade category of commercial loans by class of loans were as follows (dollars in thousands):

March 31, 2021		1		2		3		4		5		6		7		8	Total
Commercial and industrial	$	268,809	$	15,062	$	92,769	$	261,340	$	2,929	$	5,110	$	—	$	—	$	646,019

Commercial real estate:
Residential developed		—		—		—		8,651		—		—		—		—		8,651
Vacant and unimproved		—		2,640		8,469		30,266		—		—		—		—		41,375
Commercial development		—		—		296		545		—		—		—		—		841
Residential improved		—		—		21,118		91,211		202		—		87		—		112,618
Commercial improved		—		6,158		53,139		200,785		2,535		1,160		345		—		264,122
Manufacturing & industrial		—		2,075		28,462		78,800		3,658		—		—		—		112,995
	$	268,809	$	25,935	$	204,253	$	671,598	$	9,324	$	6,270	$	432	$	—	$	1,186,621

December 31, 2020		1		2		3		4		5		6		7		8	Total
Commercial and industrial	$	244,079	$	14,896	$	111,611	$	276,728	$	13,957	$	4,139	$	—	$	—	$	665,410

Commercial real estate:
Residential developed		—		—		—		8,549		—		—		—		—		8,549
Vacant and unimproved		—		3,473		9,427		32,751		1,471		—		—		—		47,122
Commercial development		—		—		302		555		—		—		—		—		857
Residential improved		—		—		23,706		90,372		227		—		87		—		114,392
Commercial improved		—		6,328		58,483		192,030		7,641		1,174		350		—		266,006
Manufacturing & industrial		—		—		31,451		80,075		3,721		—		—		—		115,247
	$	244,079	$	24,697	$	234,980	$	681,060	$	27,017	$	5,313	$	437	$	—	$	1,217,583

Commercial Loans Classified as Substandard or Worse

Commercial loans rated a 6 or worse per the Company’s internal risk rating system are considered substandard, doubtful or loss. Commercial loans classified as substandard or worse were as follows at period-end (dollars in thousands):

	March 31, 2021		December 31, 2020
Not classified as impaired	$	591	$	591
Classified as impaired		6,111		5,159
Total commercial loans classified substandard or worse	$	6,702	$	5,750

Recorded Investment in Consumer Loans Based on Payment Activity

The following table presents the recorded investment in consumer loans based on payment activity (dollars in thousands):

March 31, 2021	Residential Mortgage		Consumer Unsecured		Home Equity		Consumer Other
Performing	$	139,636	$	134	$	52,709	$	3,760
Nonperforming		91		—		—		—
Total	$	139,727	$	134	$	52,709	$	3,760

December 31, 2020	Residential Mortgage		Consumer Unsecured		Home Equity		Consumer Other
Performing	$	149,462	$	161	$	57,975	$	4,056
Nonperforming		94		—		—		—
Total	$	149,556	$	161	$	57,975	$	4,056