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Loans and Allowance for loan losses
12 Months Ended
Dec. 31, 2021
Loans and Allowance for loan losses  
Loans and Allowance for loan losses

4.    Loans and Allowance for loan losses

A summary of the Company’s loan portfolio is as follows:

December 31, 

December 31, 

    

2021

    

2020

Commercial real estate loans:

 

 

  

Construction

$

10,095

$

5,392

Non-residential

 

245,568

 

248,349

Multi-family

 

55,926

 

30,379

Residential real estate loans

 

35,646

 

39,239

Commercial and industrial loans(1)

 

104,323

 

154,016

Consumer loans:

 

  

 

  

Indirect automobile

 

382,088

 

376,260

Home equity

 

11,857

 

14,165

Other consumer

 

7,955

 

8,816

Total gross loans

 

853,458

 

876,616

Net deferred loan costs

 

9,068

 

8,830

Allowance for loan losses

 

(7,559)

 

(11,633)

Total net loans

$

854,967

$

873,813

(1)

Includes $29,464 and $75,366 in SBA PPP loans at December 31, 2021 and 2020.

At December 31, 2021 and 2020, the unpaid principal balances of loans held for sale, included in the residential real estate category above, were $3,950 and $2,718, respectively.

The following tables present the classes of the loan portfolio summarized by the pass category and the criticized categories of special mention and substandard within the internal risk system:

December 31, 2021

    

Pass

    

Special Mention

    

Substandard

    

Total

Commercial real estate:

  

  

  

  

Construction

$

10,095

$

$

$

10,095

Non-residential

232,253

10,341

2,974

245,568

Multifamily

 

55,926

 

 

 

55,926

Residential real estate

 

33,416

 

 

2,230

 

35,646

Commercial and industrial

 

98,171

 

5,377

 

775

 

104,323

Consumer:

 

 

  

 

  

 

  

Indirect automobile

 

381,354

 

 

734

 

382,088

Home equity

 

11,587

 

 

270

 

11,857

Other consumer

 

7,908

 

 

47

 

7,955

Total

$

830,710

$

15,718

$

7,030

$

853,458

    

December 31, 2020

    

Pass

    

Special Mention

    

Substandard

    

Total

Commercial real estate:

  

  

  

  

Construction

$

5,392

$

$

$

5,392

Non-residential

240,778

5,468

2,103

248,349

Multifamily

 

30,379

 

 

 

30,379

Residential real estate

 

36,597

 

 

2,642

 

39,239

Commercial and industrial

 

147,748

 

5,395

 

873

 

154,016

Consumer:

 

  

 

  

 

  

 

  

Indirect automobile

 

375,270

 

 

990

 

376,260

Home equity

 

13,819

 

 

346

 

14,165

Other consumer

 

8,768

 

 

48

 

8,816

Total

$

858,751

$

10,863

$

7,002

$

876,616

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The past due status of all classes of loans is determined based on contractual due dates for loan payments.

The Company has transferred a portion of its originated commercial real estate loans to participating lenders. The amounts transferred have been accounted for as sales and are therefore not included in the Company’s accompanying statements of financial condition. The Company and participating lenders share ratably in any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. The Company continues to service the loans on behalf of the participating lenders and, as such, collects cash payments from the borrowers, remits payments to participating lenders and disburses required escrow funds to relevant parties. At December 31, 2021 and 2020, the Company was servicing loans for participants aggregating $3,962 and $4,291, respectively.

The Company services certain loans that it has sold without recourse to third parties. The aggregate balances of loans serviced for others were $314,953 and $300,700 as of December 31, 2021 and 2020, respectively.

The balance of capitalized servicing rights, included in other assets at December 31, 2021 and 2020, were $2,633 and $2,390, respectively. Fair value exceeds carrying value. No impairment charges related to servicing rights were recognized during the years ended December 31, 2021 or 2020.

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans:

December 31, 2021

Greater Than

30-59 Days

60-89 Days

90 Days Past

Total Loans

    

Current

    

Past Due

    

Past Due

    

Due

    

Receivable

    

Non-accrual

Commercial real estate:

  

  

  

  

  

  

Construction

$

10,095

$

$

$

$

10,095

$

Non-residential

242,205

115

527

2,721

245,568

2,721

Multifamily

55,926

55,926

Residential real estate

 

34,363

 

57

 

242

 

984

 

35,646

 

2,230

Commercial and industrial

 

103,517

 

246

 

 

560

 

104,323

 

687

Consumer:

 

  

 

  

 

 

  

 

  

 

Indirect automobile

 

374,729

 

5,977

715

 

667

 

382,088

 

734

Home equity

 

11,429

 

149

 

106

 

173

 

11,857

 

270

Other consumer

 

7,702

 

153

 

53

 

47

 

7,955

 

47

Total

$

839,966

$

6,697

$

1,643

$

5,152

$

853,458

$

6,689

December 31, 2020

Greater Than

30-59 Days

60-89 Days

90 Days Past

Total Loans

    

Current

    

Past Due

    

Past Due

    

Due

    

Receivable

    

Non-accrual

Commercial real estate:

  

  

  

  

  

  

Construction

$

5,392

$

$

$

$

5,392

$

Non-residential

244,387

1,985

33

1,944

248,349

1,944

Multifamily

30,379

30,379

Residential real estate

 

36,581

 

1,351

 

138

 

1,169

 

39,239

 

2,641

Commercial and industrial

 

151,771

 

1,551

 

511

 

183

 

154,016

 

366

Consumer:

 

  

 

  

 

 

  

 

  

 

Indirect automobile

 

367,929

 

6,321

 

1,063

 

947

 

376,260

 

990

Home equity

 

13,506

 

310

 

101

 

248

 

14,165

 

346

Other consumer

 

8,663

 

98

 

7

 

48

 

8,816

 

48

Total

$

858,608

$

11,616

$

1,853

$

4,539

$

876,616

$

6,335

There were no loans greater than 90 days past due and still accruing as of December 31, 2021 or 2020.

The following tables summarize information in regard to impaired loans by loan portfolio class:

December 31, 2021

Recorded

Unpaid Principal

Related

Average Recorded

    

Investment

    

Balance

    

Allowance

    

Investment

With no related allowance recorded:

Commercial real estate:

Non-residential

$

2,721

$

3,797

$

$

2,290

Residential real estate

 

2,230

 

2,786

 

 

2,459

Commercial and industrial

 

687

 

921

 

 

674

Consumer:

 

 

  

 

  

 

Indirect automobile

 

345

 

408

 

 

219

Home equity

 

270

 

276

 

 

338

Other consumer

 

47

 

48

 

 

50

Total

$

6,300

$

8,236

$

$

6,030

With an allowance recorded:

 

  

 

  

 

  

 

  

Commercial and industrial

$

$

$

$

148

Consumer:

 

  

 

  

 

 

Indirect automobile

389

395

68

286

Total

$

389

$

395

$

68

$

434

Total:

 

  

 

  

 

  

 

  

Commercial real estate:

 

  

 

  

 

  

 

  

Non-residential

$

2,721

$

3,797

$

$

2,290

Residential real estate

 

2,230

 

2,786

 

 

2,459

Commercial and industrial

 

687

 

921

 

 

822

Consumer:

 

  

 

  

 

  

 

  

Indirect automobile

 

734

 

803

 

68

 

505

Home equity

 

270

 

276

 

 

338

Other consumer

 

47

 

48

 

 

50

Total

$

6,689

$

8,631

$

68

$

6,464

December 31, 2020

Recorded 

Unpaid Principal 

Related 

Average Recorded 

    

Investment

    

Balance

    

Allowance

    

Investment

With no related allowance recorded:

  

  

  

  

Commercial real estate:

  

  

  

  

Non-residential

$

1,944

$

2,973

$

$

3,086

Multifamily

 

 

 

 

184

Residential real estate

 

2,641

 

3,086

 

 

2,554

Commercial and industrial

 

345

 

586

 

 

426

Consumer:

 

 

  

 

  

 

Indirect automobile

 

397

 

467

 

 

293

Home equity

 

346

 

351

 

 

449

Other consumer

 

 

 

 

21

Total

$

5,673

$

7,463

$

$

7,013

With an allowance recorded:

 

  

 

  

 

  

 

  

Commercial real estate:

 

  

 

  

 

  

 

  

Commercial and industrial

$

21

$

21

$

11

$

30

Consumer:

 

  

 

  

 

 

  

Indirect automobile

593

613

135

591

Other consumer

 

48

 

49

 

7

 

13

Total

$

662

$

683

$

153

$

634

Total:

 

  

 

  

 

  

 

  

Commercial real estate:

 

  

 

  

 

  

 

  

Non-residential

$

1,944

$

2,973

$

$

3,086

Multifamily

 

 

 

 

184

Residential real estate

 

2,641

 

3,086

 

 

2,554

Commercial and industrial

 

366

 

607

 

11

 

456

Consumer:

 

  

 

  

 

  

 

  

Indirect automobile

 

990

 

1,080

 

135

 

884

Home equity

 

346

 

351

 

 

449

Other consumer

 

48

 

49

 

7

 

34

Total

$

6,335

$

8,146

$

153

$

7,647

The Company does not generally recognize interest income on a loan in an impaired status. At December 31, 2021 and 2020, the same three loans totaling $1,440 and $1,571, respectively, which were included in impaired loans, were identified as TDRs. The initial modifications of these loans took place prior to 2020 and included two residential mortgages and one home equity loan that included both rate and term modifications. In 2020 and 2021, there were no new TDRs. Interest income on impaired loans was immaterial during each of the periods presented. At December 31, 2021 and 2020, all loans were performing in accordance with their restructured terms. At December 31, 2021 and 2020, the Company had no commitments to advance additional funds to borrowers under TDR loans.

Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $935 and $636 at December 31, 2021 and 2020, respectively.

The following tables summarize the segments of the loan portfolio and the allowance for loan losses, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment and the activity in the allowance for loan losses for the periods then ended:

Commercial

Residential

Commercial

    

Real Estate

    

Real Estate

    

and Industrial

    

Indirect

    

Consumer

    

Totals

Year ended December 31, 2021

Allowance for loan losses:

Beginning balance

$

5,354

$

117

$

1,050

$

4,974

$

138

$

11,633

(Credit to) provision for loan losses

(2,037)

(69)

(414)

(1,035)

(112)

(3,667)

Loans charged-off

(12)

(2,048)

(24)

(2,084)

Recoveries

 

 

6

 

101

 

1,525

 

45

 

1,677

Ending balance

$

3,317

$

54

$

725

$

3,416

$

47

$

7,559

Ending balance:

 

  

 

  

 

  

 

  

 

  

 

  

Loans deemed impaired

$

$

$

$

68

$

$

68

Loans not deemed impaired

$

3,317

$

54

$

725

$

3,348

$

47

$

7,491

Loan receivables:

 

  

 

  

 

  

 

  

 

  

 

  

Ending balance

$

311,589

$

35,646

$

104,323

$

382,088

$

19,812

$

853,458

Ending balance:

 

  

 

 

  

 

  

 

  

 

  

Loans deemed impaired

$

2,721

$

2,230

$

687

$

734

$

317

$

6,689

Loans not deemed impaired

$

308,868

$

33,416

$

103,636

$

381,354

$

19,495

$

846,769

Commercial

Residential

Commercial

    

Real Estate

    

Real Estate

    

and Industrial

    

Indirect

    

Consumer

    

Totals

Year ended December 31, 2020

Allowance for loan losses:

Beginning balance

$

2,009

$

99

$

603

$

3,117

$

126

$

5,954

Provision for loan losses

3,341

18

585

3,166

28

7,138

Loans charged-off

(153)

(2,307)

(47)

(2,507)

Recoveries

 

4

 

 

15

 

998

 

31

 

1,048

Ending balance

$

5,354

$

117

$

1,050

$

4,974

$

138

$

11,633

Ending balance:

 

  

 

  

 

  

 

  

 

  

 

  

Loans deemed impaired

$

$

$

11

$

135

$

7

$

153

Loans not deemed impaired

$

5,354

$

117

$

1,039

$

4,839

$

131

$

11,480

Loan receivables:

 

  

 

  

 

  

 

  

 

  

 

  

Ending balance

$

284,120

$

39,239

$

154,016

$

376,260

$

22,981

$

876,616

Ending balance:

 

  

 

 

  

 

  

 

  

 

  

Loans deemed impaired

$

1,944

$

2,641

$

366

$

990

$

394

$

6,335

Loans not deemed impaired

$

282,176

$

36,598

$

153,650

$

375,270

$

22,587

$

870,281

In the normal course of business, the Company grants loans to officers, directors and other related parties. Balances and activity of such loans during the years presented were not material.