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Loans and Allowance for Credit Losses on Loans
 12 Months Ended
Dec. 31, 2023
Receivables [Abstract]  
Loans and Allowance for Credit Losses on Loans Loans and Allowance for Credit Losses on Loans
The following table presents the composition of the loan portfolio as of December 31, 2023 and 2022:

December 31,
($ in thousands)20232022
Commercial real estate$885,585 $842,208 
SBA—real estate224,695 221,340 
SBA—non-real estate14,997 13,377 
C&I120,970 116,951 
Home mortgage518,024 482,949 
Consumer1,574 1,467 
Gross loans receivable1,765,845 1,678,292 
Allowance for credit losses(21,993)(19,241)
Loans receivable, net(1)
$1,743,852 $1,659,051 
(1)Includes net deferred loan costs and unamortized premiums of $140 thousand and $160 thousand as of December 31, 2023 and 2022, respectively.
No loans were outstanding to related parties as of December 31, 2023 and 2022.
The following table summarizes the activity in the allowance for credit losses on loans by portfolio segment for the years ended December 31, 2023, 2022 and 2021:

($ in thousands)
Commercial
Real Estate
SBA—
Real Estate
SBA —Non-
Real Estate
C&I
Home
Mortgage
ConsumerTotal
Balance as of January 1, 2021$8,505 $1,802 $278 $2,563 $2,185 $19 $15,352 
Provision for (reversal of) loan losses(1)
(355)279 54 285 706 (10)959 
Charge-offs— (59)(136)— — — (195)
Recoveries— — 3 — — 4 7 
Balance as of December 31, 20218,150 2,022 199 2,848 2,891 13 16,123 
Provision for (reversal of) loan losses(1)
(1,199)(409)66 (1,205)5,935 (7)3,181 
Charge-offs— (14)(127)— — — (141)
Recoveries— 8 69 — — 1 78 
Balance as of December 31, 20226,951 1,607 207 1,643 8,826 7 19,241 
Impact of CECL adoption875 (238)(142)(320)1,753 (4)1,924 
Provision for (reversal of) credit losses723 321 73 (11)466 10 1,582 
Charge-offs(686)(46)(35)(97)— — (864)
Recoveries52 13 44 — — 1 110 
Balance as of December 31, 2023$7,915 $1,657 $147 $1,215 $11,045 $14 $21,993 
(1)Excludes reversal of uncollectible accrued interest receivable of $205 thousand and $438 thousand for the year ended December 31, 2022 and 2021, respectively.
The following table presents the allowance for credit losses on loans and recorded investment (not including accrued interest receivable) by portfolio segment and impairment methodology as of December 31, 2023 and 2022:

($ in thousands)
Individually
Evaluated
for Impairment
Collectively
Evaluated
for Impairment
Total
As of December 31, 2023
Allowance for credit losses:
Commercial real estate$— $7,915 $7,915 
SBA—real estate355 1,302 1,657 
SBA—non-real estate— 147 147 
C&I— 1,215 1,215 
Home mortgage— 11,045 11,045 
Consumer— 14 14 
Total$355 $21,638 $21,993 
Loans(1):
Commercial real estate$— $885,585 $885,585 
SBA—real estate2,923 221,772 224,695 
SBA—non-real estate— 14,997 14,997 
C&I— 120,970 120,970 
Home mortgage2,241 515,783 518,024 
Consumer— 1,574 1,574 
Total$5,164 $1,760,681 $1,765,845 
As of December 31, 2022
Allowance for credit losses:
Commercial real estate$— $6,951 $6,951 
SBA—real estate— 1,607 1,607 
SBA—non-real estate— 207 207 
C&I279 1,364 1,643 
Home mortgage— 8,826 8,826 
Consumer— 7 7 
Total$279 $18,962 $19,241 
Loans(1):
Commercial real estate$— $842,208 $842,208 
SBA—real estate423 220,917 221,340 
SBA—non-real estate— 13,377 13,377 
C&I279 116,672 116,951 
Home mortgage— 482,949 482,949 
Consumer— 1,467 1,467 
Total$702 $1,677,590 $1,678,292 
(1)Excludes accrued interest receivables of $7.3 million and $6.4 million as of December 31, 2023 and 2022, respectively.
The following table presents the recorded investment in impaired loans and the specific allowance for loan losses as of December 31, 2022.

December 31, 2022(1)
($ in thousands)Unpaid Principal BalanceRecorded
Investment
With No
Allowance		Recorded
Investment
With
Allowance		Related
Allowance
SBA—real estate$423 $423 $— $— 
C&I279 — 279 279 
Total$702 $423 $279 $279 
(1)    The difference between the unpaid principal balance (net of partial charge-offs) and the recorded investment in the loans was not considered to be material

Collateral-dependent loans are loans where repayment is expected to be provided solely by the sale of the underlying collateral and there are no other available and reliable sources of repayment. The estimated credit losses for these loans are based on the collateral’s fair value less selling costs. In most cases, the Company records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less selling costs at the time of foreclosure.

As of December 31, 2023, there were $5.2 million of collateral-dependent loans which are primarily secured by residential and commercial real estate, as well as equipment. The allowance for credit losses allocated to these loans as of December 31, 2023 was $355 thousand.

The following table represents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2023, for which repayment is expected to be obtained through the sale of the underlying collateral.

($ in thousands)Hotel / MotelSingle-Family ResidentialTotal
SBA—real estate$2,923 $— $2,923 
Home mortgage— 2,241 2,241 
Total$2,923 $2,241 $5,164 

The following table presents the recorded investment in nonaccrual loans and loans past due 90 or more days and still accruing interest, by portfolio as of December 31, 2023 and 2022:

($ in thousands)Nonaccrual Loans with a Related Allowance for Credit LossesNonaccrual Loans without a Related Allowance for Credit LossesTotal Nonaccrual Loans
90 or More
Days
Past Due &
Still Accruing
Total(1)
As of December 31, 2023
SBA—real estate$2,302 $1,136 $3,438 $— $3,438 
SBA—non-real estate154 — 154 — 154 
Home mortgage249 2,241 2,490 — 2,490 
Total$2,705 $3,377 $6,082 $— $6,082 
As of December 31, 2022
SBA—real estate$423 $— $423 
SBA—non-real estate51 — 51 
C&I279 — 279 
Home mortgage1,280 — 1,280 
Total$2,033 $— $2,033 
(1)     Excludes guaranteed portion of SBA loans of $2.0 million and $1.0 million as of December 31, 2023 and 2022, respectively.
Nonaccrual loans and loans past due 90 or more days and still accruing interest include both homogeneous loans that are collectively and individually evaluated for impairment and individually classified impaired loans.

The following table represents the aging analysis of the recorded investment in past due loans as of December 31, 2023 and 2022:

($ in thousands)
30-59
Days
Past Due
60-89
Days
Past Due
> 90 Days
Past Due
Total
Past Due(1)
Loans Not
Past Due
Total(2)
As of December 31, 2023
Commercial real estate$— $— $— $— $885,585 $885,585 
SBA—real estate1,868 932 1,983 4,783 219,912 224,695 
SBA—non-real estate154 — — 154 14,843 14,997 
C&I— — — — 120,970 120,970 
Home mortgage4,076 2,730 2,491 9,297 508,727 518,024 
Consumer— — — — 1,574 1,574 
Total$6,098 $3,662 $4,474 $14,234 $1,751,611 $1,765,845 
As of December 31, 2022
Commercial real estate$— $— $— $— $842,208 $842,208 
SBA—real estate199 175 — 374 220,966 221,340 
SBA—non-real estate38 — 26 64 13,313 13,377 
C&I— — — — 116,951 116,951 
Home mortgage1,707 1,522 342 3,571 479,378 482,949 
Consumer— — — — 1,467 1,467 
Total$1,944 $1,697 $368 $4,009 $1,674,283 $1,678,292 
(1)Excludes guaranteed portion of SBA loans of $1.9 million and $924 thousand as of December 31, 2023 and 2022, respectively..
(2)Excludes accrued interest receivables of $7.3 million and $6.4 million as of December 31, 2023 and 2022, respectively.

Loan Modifications to Borrowers Experiencing Financial Difficult: On January 1, 2023, the Company adopted ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures”, which eliminated the accounting guidance for troubled debt restructurings (“TDRs”) while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty. This guidance was applied on a prospective basis. Upon adoption of this guidance, the Company no longer establishes a specific reserve for modifications to borrowers experiencing financial difficulty, unless those loans do not share the same risk characteristics with other loans in the portfolio. Provided that is not the case, these modifications are included in their respective cohort and the allowance for credit losses is estimated on a pooled basis consistent with the other loans with similar risk characteristics.

Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, other than insignificant payment deferrals, other than insignificant term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. The disclosure below provide information on loan modification to borrowers experiencing financial difficulty. No charge-offs of previously modified loans were recorded for the year ended December 31, 2023.
The following table presents the amortized cost of modified loans and the financial effects of the modification as of December 31, 2023 by loan class and modification type:

Financial Effects of Loan Modification
($ in thousands)Payment DelayTerm ExtensionTotalPercentage to Each Loan TypeWeighted-Average Payment Deferral (in years)
Commercial real estate$— $625 $625 0.07 %1.0
SBA—real estate5,378 — 5,378 2.39 %0.8
SBA—non-real estate131 — 131 0.87 %0.2
Home mortgage354 — 354 0.07 %0.5
Total$5,863 $625 $6,488 

The Company tracks the performance of modified loans. A modified loan may become delinquent and may result in a payment default (generally 90 days past due) subsequent to modification. There were no loans that received a modification during the three year ended December 31, 2023 that subsequently defaulted.

The following table presents the performance of loans that were modified as of December 31, 2023 since the adoption of ASU 2022-02 on January 1, 2023:

($ in thousands)Current30-89 Days Past Due> 90 Days Past DueTotal
Commercial real estate$625 $— $— $625 
SBA—real estate4,641 — 737 5,378 
SBA—non-real estate131 — — 131 
Home mortgage354 — — 354 
Total$5,751 $— $737 $6,488 

The Company had no additional commitments to lend to borrowers whose loans were modified as of December 31, 2023.
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. For consumer loans, a credit grade is established at inception, and generally only adjusted based on performance. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:
Special Mention—Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.
Substandard—Loans classified as substandard are inadequately protected by the current net 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 existing facts, conditions, and values, highly questionable and improbable.
Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

The following table presents the loan portfolio's amortized cost by loan type, risk rating and year of origination as of December 31, 2023:

December 31, 2023
Term Loans by Origination YearRevolving LoansRevolving Loans Converted to Term Loans
Total(1)
($ in thousands)2023
2022
202120202019Prior
Commercial real estate
Pass$97,114 $207,860 $154,872 $97,137 $138,908 $163,320 $21,059 $— $880,270 
Special mention— — — — — — — — — 
Substandard— 319 — — — 4,996 — — 5,315 
Doubtful— — — — — — — — — 
Subtotal$97,114 $208,179 $154,872 $97,137 $138,908 $168,316 $21,059 $— $885,585 
Current period charge-offs$— $457 $121 $— $91 $17 $— $— $686 
SBA— real estate
Pass$31,920 $44,504 $26,188 $22,732 $28,244 $64,442 $— $— $218,030 
Special mention— — — — — 1,428 — — 1,428 
Substandard— 1,787 1,079 1,136 — 1,235 — — 5,237 
Doubtful— — — — — — — — — 
Subtotal$31,920 $46,291 $27,267 $23,868 $28,244 $67,105 $— $— $224,695 
Current period charge-offs$— $— $46 $— $— $— $— $— $46 
SBA—non-real estate
Pass$5,408 $2,584 $200 $1,556 $950 $3,423 $— $— $14,121 
Special mention— — — — — — — — — 
Substandard— 591 — — — 187 — — 778 
Doubtful— — — — — 98 — — 98 
Subtotal$5,408 $3,175 $200 $1,556 $950 $3,708 $— $— $14,997 
Current period charge-offs$— $— $— $— $— $35 $— $— $35 
C&I
Pass$15,117 $17,939 $22,098 $4,695 $1,720 $1,734 $55,106 $2,561 $120,970 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Subtotal$15,117 $17,939 $22,098 $4,695 $1,720 $1,734 $55,106 $2,561 $120,970 
Current period charge-offs$17 $— $80 $— $— $— $— $— $97 
Home mortgage
Pass$72,182 $304,346 $79,585 $18,634 $8,939 $31,848 $— $— $515,534 
Special mention— — — — — — — — — 
Substandard— 2,241 249 — — — — — 2,490 
Doubtful— — — — — — — — — 
Subtotal$72,182 $306,587 $79,834 $18,634 $8,939 $31,848 $— $— $518,024 
Current period charge-offs$— $— $— $— $— $— $— $— $— 
Consumer
Pass$4 $— $— $— $77 $— $1,493 $— $1,574 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Subtotal$4 $— $— $— $77 $— $1,493 $— $1,574 
Current period charge-offs$— $— $— $— $— $— $— $— $— 
Total loans
Pass$221,745 $577,233 $282,943 $144,754 $178,838 $264,767 $77,658 $2,561 $1,750,499 
Special mention— — — — — 1,428 — — 1,428 
Substandard— 4,938 1,328 1,136 — 6,418 — — 13,820 
Doubtful— — — — — 98 — — 98 
Subtotal$221,745 $582,171 $284,271 $145,890 $178,838 $272,711 $77,658 $2,561 $1,765,845 
Current period charge-offs$17 $457 $247 $— $91 $52 $— $— $864 
(1)Excludes accrued interest receivables of $7.3 million as of December 31, 2023.

The following table presents the loan portfolio's amortized cost by loan type and risk rating of as of December 31, 2022:

($ in thousands)Pass
Special
Mention
SubstandardDoubtful
Total(1)
Commercial real estate$841,645 $563 $— $— $842,208 
SBA—real estate220,348 — 992 — 221,340 
SBA—non-real estate12,897 — 480 — 13,377 
C&I116,396 — 279 276 116,951 
Home mortgage481,669 — 1,280 — 482,949 
Consumer1,467 — — — 1,467 
Total$1,674,422 $563 $3,031 $276 $1,678,292 
(1)Excludes accrued interest receivables of $6.4 million as of December 31, 2022.