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Loans and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2022

Amortized Cost and Unpaid Principal Balance of Loans by Loan Segment

The following table presents amortized cost and unpaid principal balance of loans for the periods indicated:


	September 30, 2022			December 31, 2021
(In Thousands)	Amortized Cost	Unpaid Principal	Difference	Amortized Cost	Unpaid Principal	Difference
Commercial & industrial loans	$375,833	$377,674	($1,841)	$448,338	$454,106	($5,768)
Commercial real estate:
Owner occupied properties	329,813	331,385	(1,572)	300,200	301,623	(1,423)
Non-owner occupied and multifamily properties	449,760	453,242	(3,482)	435,311	438,631	(3,320)
Residential real estate:
1-4 family residential properties secured by first liens	39,208	39,244	(36)	32,542	32,602	(60)
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	23,176	23,029	147	19,610	19,489	121
1-4 family residential construction loans	47,779	48,004	(225)	36,222	36,542	(320)
Other construction, land development and raw land loans	77,442	78,266	(824)	88,094	88,604	(510)
Obligations of states and political subdivisions in the US	24,830	24,835	(5)	16,403	16,565	(162)
Agricultural production, including commercial fishing	32,073	32,236	(163)	27,959	28,082	(123)
Consumer loans	4,168	4,127	41	4,801	4,763	38
Other loans	3,184	3,197	(13)	4,406	4,422	(16)
Total	1,407,266	1,415,239	(7,973)	1,413,886	1,425,429	(11,543)
Allowance for credit losses	(11,982)			(11,739)
	$1,395,284	$1,415,239	($7,973)	$1,402,147	$1,425,429	($11,543)

Allowance for Credit Losses

The activity in the ACL related to loans held for investment is as follows:


Three Months Ended September 30,	Beginning Balance	Credit Loss Expense (Benefit)	Charge-offs	Recoveries	Ending Balance
	(In Thousands)
2022
Commercial & industrial loans	$2,961	($1,344)	($45)	$1,325	$2,897
Commercial real estate:
Owner occupied properties	2,573	132	—	55	2,760
Non-owner occupied and multifamily properties	3,107	120	—	—	3,227
Residential real estate:
1-4 family residential properties secured by first liens	620	73	—	5	698
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	327	30	—	9	366
1-4 family residential construction loans	231	50	—	—	281
Other construction, land development and raw land loans	1,462	15	—	—	1,477
Obligations of states and political subdivisions in the US	59	4	—	—	63
Agricultural production, including commercial fishing	127	13	—	—	140
Consumer loans	64	3	(3)	2	66
Other loans	6	1	—	—	7
Total	$11,537	($903)	($48)	$1,396	$11,982
2021
Commercial & industrial loans	$4,291	($332)	$—	$23	$3,982
Commercial real estate:
Owner occupied properties	3,340	151	—	2	3,493
Non-owner occupied and multifamily properties	3,841	35	—	—	3,876
Residential real estate:
1-4 family residential properties secured by first liens	630	(154)	—	—	476
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	340	(42)	—	9	307
1-4 family residential construction loans	231	(47)	—	—	184
Other construction, land development and raw land loans	1,670	(391)	—	—	1,279
Obligations of states and political subdivisions in the US	39	(3)	—	—	36
Agricultural production, including commercial fishing	57	32	—	5	94
Consumer loans	94	(11)	—	—	83
Other loans	6	—	—	—	6
Total	$14,539	($762)	$—	$39	$13,816


Nine Months Ended September 30,	Beginning Balance	Credit Loss Expense (Benefit)	Charge-offs	Recoveries	Ending Balance
	(In Thousands)
2022
Commercial & industrial loans	$3,027	($1,065)	($506)	$1,441	$2,897
Commercial real estate:
Owner occupied properties	3,176	(471)	—	55	2,760
Non-owner occupied and multifamily properties	2,930	297	—	—	3,227
Residential real estate:
1-4 family residential properties secured by first liens	439	254	—	5	698
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	215	121	—	30	366
1-4 family residential construction loans	120	161	—	—	281
Other construction, land development and raw land loans	1,635	(158)	—	—	1,477
Obligations of states and political subdivisions in the US	32	31	—	—	63
Agricultural production, including commercial fishing	91	34	—	15	140
Consumer loans	67	(1)	(3)	3	66
Other loans	7	—	—	—	7
Total	$11,739	($797)	($509)	$1,549	$11,982
2021
Commercial & industrial loans	$4,348	($328)	($273)	$235	$3,982
Commercial real estate:
Owner occupied properties	3,579	(92)	—	6	3,493
Non-owner occupied and multifamily properties	4,944	(1,068)	—	—	3,876
Residential real estate:
1-4 family residential properties secured by first liens	673	(197)	—	—	476
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	419	(141)	—	29	307
1-4 family residential construction loans	454	(270)	—	—	184
Other construction, land development and raw land loans	1,994	(715)	—	—	1,279
Obligations of states and political subdivisions in the US	44	(8)	—	—	36
Agricultural production, including commercial fishing	49	25	—	20	94
Consumer loans	118	(37)	—	2	83
Other loans	3	3	—	—	6
Total	$16,625	($2,828)	($273)	$292	$13,816

Portfolio of Risk-rated Loans by Grade and by Year of Origination

The following tables present the Company's portfolio of risk-rated loans by grade and by year of origination. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Generally, current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below.


September 30, 2022	2022	2021	2020	2019	2018	Prior	Total
	(In Thousands)
Commercial & industrial loans
Pass	$146,662	$97,528	$43,070	$20,251	$10,710	$42,069	$360,290
Classified	139	9,087	1,296	99	2,895	2,027	15,543
Total commercial & industrial loans	$146,801	$106,615	$44,366	$20,350	$13,605	$44,096	$375,833

Commercial real estate:
Owner occupied properties
Pass	$39,723	$79,521	$88,235	$35,145	$13,396	$67,189	$323,209
Classified	—	—	—	—	168	6,436	6,604
Total commercial real estate owner occupied properties	$39,723	$79,521	$88,235	$35,145	$13,564	$73,625	$329,813

Non-owner occupied and multifamily properties
Pass	$48,606	$83,078	$73,444	$59,521	$17,058	$157,691	$439,398
Classified	—	—	—	275	5	10,082	10,362
Total commercial real estate non-owner occupied and multifamily properties	$48,606	$83,078	$73,444	$59,796	$17,063	$167,773	$449,760

Residential real estate:
1-4 family residential properties secured by first liens
Pass	$16,382	$9,846	$6,301	$2,566	$480	$3,421	$38,996
Classified	—	—	—	—	81	131	212
Total residential real estate 1-4 family residential properties secured by first liens	$16,382	$9,846	$6,301	$2,566	$561	$3,552	$39,208

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens
Pass	$5,629	$5,571	$2,437	$2,988	$3,220	$3,079	$22,924
Classified	—	—	—	—	243	9	252


Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	$5,629	$5,571	$2,437	$2,988	$3,463	$3,088	$23,176

1-4 family residential construction loans
Pass	$29,616	$5,350	$61	$—	$—	$12,643	$47,670
Classified	—	—	—	—	—	109	109
Total residential real estate 1-4 family residential construction loans	$29,616	$5,350	$61	$—	$—	$12,752	$47,779

Other construction, land development and raw land loans
Pass	$15,264	$31,615	$14,932	$4,574	$3,589	$5,632	$75,606
Classified	—	—	—	—	369	1,467	1,836
Total other construction, land development and raw land loans	$15,264	$31,615	$14,932	$4,574	$3,958	$7,099	$77,442

Obligations of states and political subdivisions in the US
Pass	$11,360	$9,694	$3,525	$—	$251	$—	$24,830
Classified	—	—	—	—	—	—	—
Total obligations of states and political subdivisions in the US	$11,360	$9,694	$3,525	$—	$251	$—	$24,830

Agricultural production, including commercial fishing
Pass	$6,624	$18,377	$3,857	$669	$939	$1,607	$32,073
Classified	—	—	—	—	—	—	—
Total agricultural production, including commercial fishing	$6,624	$18,377	$3,857	$669	$939	$1,607	$32,073

Consumer loans
Pass	$1,133	$458	$511	$364	$271	$1,423	$4,160
Classified	—	—	—	—	—	8	8
Total consumer loans	$1,133	$458	$511	$364	$271	$1,431	$4,168

Other loans
Pass	$242	$1,129	$1,325	$398	$—	$90	$3,184
Classified	—	—	—	—	—	—	—
Total other loans	$242	$1,129	$1,325	$398	$—	$90	$3,184

Total loans
Pass	$321,241	$342,167	$237,698	$126,476	$49,914	$294,844	$1,372,340
Classified	139	9,087	1,296	374	3,761	20,269	34,926
Total loans	$321,380	$351,254	$238,994	$126,850	$53,675	$315,113	$1,407,266

Total pass loans	$321,241	$342,167	$237,698	$126,476	$49,914	$294,844	$1,372,340
Government guarantees	(28,553)	(41,099)	(10,580)	(13,066)	(3,038)	(5,171)	(101,507)
Total pass loans, net of government guarantees	$292,688	$301,068	$227,118	$113,410	$46,876	$289,673	$1,270,833

Total classified loans	$139	$9,087	$1,296	$374	$3,761	$20,269	$34,926
Government guarantees	—	(8,178)	(1,167)	—	—	(12,152)	(21,497)
Total classified loans, net government guarantees	$139	$909	$129	$374	$3,761	$8,117	$13,429


December 31, 2021	2021	2020	2019	2018	2017	Prior	Total
	(In Thousands)
Commercial & industrial loans
Pass	$227,376	$54,478	$29,846	$37,339	$23,205	$44,554	$416,798
Classified	18,853	714	3,564	3,118	517	4,774	31,540
Total commercial & industrial loans	$246,229	$55,192	$33,410	$40,457	$23,722	$49,328	$448,338

Commercial real estate:
Owner occupied properties
Pass	$81,533	$83,975	$39,254	$14,841	$14,452	$57,717	$291,772
Classified	—	1,399	—	522	—	6,507	8,428


Total commercial real estate owner occupied properties	$81,533	$85,374	$39,254	$15,363	$14,452	$64,224	$300,200

Non-owner occupied and multifamily properties
Pass	$77,205	$77,961	$61,147	$34,307	$19,833	$154,561	$425,014
Classified	—	—	—	10	10,286	1	10,297
Total commercial real estate non-owner occupied and multifamily properties	$77,205	$77,961	$61,147	$34,317	$30,119	$154,562	$435,311

Residential real estate:
1-4 family residential properties secured by first liens
Pass	$7,756	$8,023	$3,689	$531	$1,466	$8,812	$30,277
Classified	417	1,077	472	90	—	209	2,265
Total residential real estate 1-4 family residential properties secured by first liens	$8,173	$9,100	$4,161	$621	$1,466	$9,021	$32,542

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens
Pass	$5,806	$2,535	$3,229	$3,464	$259	$4,046	$19,339
Classified	—	—	—	259	—	12	271
Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	$5,806	$2,535	$3,229	$3,723	$259	$4,058	$19,610

1-4 family residential construction loans
Pass	$21,409	$1,056	$1,707	$62	$—	$11,879	$36,113
Classified	—	—	—	—	109	—	109
Total residential real estate 1-4 family residential construction loans	$21,409	$1,056	$1,707	$62	$109	$11,879	$36,222

Other construction, land development and raw land loans
Pass	$39,624	$26,458	$11,044	$3,315	$139	$5,544	$86,124
Classified	—	—	—	460	—	1,510	1,970
Total other construction, land development and raw land loans	$39,624	$26,458	$11,044	$3,775	$139	$7,054	$88,094

Obligations of states and political subdivisions in the US
Pass	$4,120	$812	$1,875	$343	$2,733	$6,520	$16,403
Classified	—	—	—	—	—	—	—
Total obligations of states and political subdivisions in the US	$4,120	$812	$1,875	$343	$2,733	$6,520	$16,403

Agricultural production, including commercial fishing
Pass	$19,970	$3,929	$810	$1,118	$741	$1,391	$27,959
Classified	—	—	—	—	—	—	—
Total agricultural production, including commercial fishing	$19,970	$3,929	$810	$1,118	$741	$1,391	$27,959

Consumer loans
Pass	$873	$815	$653	$403	$291	$1,766	$4,801
Classified	—	—	—	—	—	—	—
Total consumer loans	$873	$815	$653	$403	$291	$1,766	$4,801

Other loans
Pass	$2,028	$1,645	$430	$95	$—	$208	$4,406
Classified	—	—	—	—	—	—	—
Total other loans	$2,028	$1,645	$430	$95	$—	$208	$4,406

Total loans
Pass	$487,700	$261,687	$153,684	$95,818	$63,119	$296,998	$1,359,006
Classified	19,270	3,190	4,036	4,459	10,912	13,013	54,880
Total loans	$506,970	$264,877	$157,720	$100,277	$74,031	$310,011	$1,413,886

Total pass loans	$487,700	$261,687	$153,684	$95,818	$63,119	$296,998	$1,359,006
Government guarantees	(145,713)	(12,725)	(14,429)	(3,299)	(306)	(6,562)	(183,034)
Total pass loans, net of government guarantees	$341,987	$248,962	$139,255	$92,519	$62,813	$290,436	$1,175,972

Total classified loans	$19,270	$3,190	$4,036	$4,459	$10,912	$13,013	$54,880


Government guarantees	(7,201)	(1,259)	—	—	—	(10,571)	(19,031)
Total classified loans, net government guarantees	$12,069	$1,931	$4,036	$4,459	$10,912	$2,442	$35,849

Aging of Contractually Past Due Loans

The following tables present an aging of contractually past due loans as of the periods presented:


(In Thousands)	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days Past Due	Total Past Due	Current	Total	Greater Than 90 Days Past Due Still Accruing
September 30, 2022
Commercial & industrial loans	$2,596	$3,082	$223	$5,901	$369,932	$375,833	$—
Commercial real estate:
Owner occupied properties	—	—	824	824	328,989	329,813	—
Non-owner occupied and multifamily properties	275	275	—	550	449,210	449,760	—
Residential real estate:
1-4 family residential properties secured by first liens	70	—	—	70	39,138	39,208	—
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	22	—	130	152	23,024	23,176	—
1-4 family residential construction loans	—	—	109	109	47,670	47,779	—
Other construction, land development and raw land loans	1,600	—	1,545	3,145	74,297	77,442	—
Obligations of states and political subdivisions in the US	—	—	—	—	24,830	24,830	—
Agricultural production, including commercial fishing	—	—	—	—	32,073	32,073	—
Consumer loans	—	—	—	—	4,168	4,168	—
Other loans	—	—	—	—	3,184	3,184	—
Total	$4,563	$3,357	$2,831	$10,751	$1,396,515	$1,407,266	$—
December 31, 2021
Commercial & industrial loans	$206	$51	$469	$726	$447,612	$448,338	$—
Commercial real estate:
Owner occupied properties	12	—	1,176	1,188	299,012	300,200	—
Non-owner occupied and multifamily properties	—	—	—	—	435,311	435,311	—
Residential real estate:
1-4 family residential properties secured by first liens	—	—	90	90	32,452	32,542	—
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	—	—	139	139	19,471	19,610	—
1-4 family residential construction loans	—	—	109	109	36,113	36,222	—
Other construction, land development and raw land loans	—	—	1,636	1,636	86,458	88,094	—
Obligations of states and political subdivisions in the US	—	—	—	—	16,403	16,403	—
Agricultural production, including commercial fishing	—	—	—	—	27,959	27,959	—
Consumer loans	—	—	—	—	4,801	4,801	—
Other loans	—	—	—	—	4,406	4,406	—
Total	$218	$51	$3,619	$3,888	$1,409,998	$1,413,886	$—

Loans on Nonaccrual Status

The following table presents loans on nonaccrual status and loans on nonaccrual

status for the periods presented for which there was no related ACL. All loans with no ACL are individually evaluated for credit losses in the Company's Current Expected Credit Losses methodology.


	September 30, 2022		December 31, 2021
(In Thousands)	Nonaccrual	Nonaccrual With No ACL	Nonaccrual	Nonaccrual With No ACL

Commercial & industrial loans	$3,228	$3,228	$4,350	$4,298
Commercial real estate:
Owner occupied properties	1,531	1,531	3,506	3,506
Non-owner occupied and multifamily properties	275	275	—	—
Residential real estate:
1-4 family residential properties secured by first liens	151	151	1,778	1,778
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	252	203	271	215
1-4 family residential construction loans	109	109	109	109
Other construction, land development and raw land loans	1,546	1,546	1,636	1,636




Total nonaccrual loans	7,092	7,043	11,650	11,542
Government guarantees on nonaccrual loans	(619)	(619)	(978)	(978)
Net nonaccrual loans	$6,473	$6,424	$10,672	$10,564

Non Troubled Debt Restructuring

The Company has made the following types of loan modifications related to COVID-19, which are not classified as TDRs with principal balance outstanding of:


Loan Modifications due to COVID-19 as of September 30, 2022
(Dollars in thousands)	Interest Only	Full Payment Deferral	Total
Portfolio loans	$8,439	$—	$8,439
Number of modifications	2	—	2


Loan Modifications due to COVID-19 as of December 31, 2021
(Dollars in thousands)	Interest Only	Full Payment Deferral	Total
Portfolio loans	$49,219	$—	$49,219
Number of modifications	16	—	16

Troubled Debt Restructured Loans

The disclosed loan restructurings on the table below were not related to COVID-19 modifications.


	Accrual Status	Nonaccrual Status	Total Modifications
(In Thousands)






Troubled Debt Restructurings	$3,033	$5,075	$8,108
Total	$3,033	$5,075	$8,108

The following table presents newly restructured loans that occurred during the nine months ended September 30, 2021, by concession (terms modified):


		September 30, 2021
	Number of Contracts	Rate Modification	Term Modification	Payment Modification	Combination Modification	Total Modifications
(In Thousands)
Pre-Modification Outstanding Recorded Investment:
Commercial - AQR substandard	1	$—	$254	$—	$—	$254
Commercial real estate:
Owner occupied properties	1	—	360	—	—	360
Other construction, land development and raw land loans	1	—	577	—	—	577
Total	3	$—	$1,191	$—	$—	$1,191
Post-Modification Outstanding Recorded Investment:
Commercial - AQR substandard	1	$—	$249	$—	$—	$249
Commercial real estate:
Owner occupied properties	1	—	360	—	—	360
Other construction, land development and raw land loans	1	—	577	—	—	577
Total	3	$—	$1,186	$—	$—	$1,186