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Loans and Allowance for Loan Losses
3 Months Ended
Mar. 31, 2022
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:

March 31, 

December 31, 

    

2022

    

2021

Commercial real estate loans:

 

 

  

Construction

$

8,011

$

10,095

Non-residential

 

248,980

 

245,568

Multi-family

 

48,949

 

55,926

Residential real estate loans

 

35,914

 

35,646

Commercial and industrial loans(1)

 

90,575

 

104,323

Consumer loans:

 

  

 

  

Indirect automobile

 

404,582

 

382,088

Home equity

 

11,762

 

11,857

Other consumer

 

8,816

 

7,955

Total gross loans

 

857,589

 

853,458

Net deferred loan costs

 

10,301

 

9,068

Allowance for loan losses

 

(7,700)

 

(7,559)

Total net loans

$

860,190

$

854,967

(1)

Includes $13,756 and $29,464 in U.S. Small Business Administration (“SBA”), paycheck protection program (“PPP”) loans at March 31, 2022 and December 31, 2021, respectively.

At March 31, 2022 and December 31, 2021, the unpaid principal balances of loans held for sale, included in the residential real estate category above, were $1,197 and $3,950, respectively.

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

March 31, 2022

    

Pass

    

Special Mention

    

Substandard

    

Total

Commercial real estate:

  

  

  

  

Construction

$

8,011

$

$

$

8,011

Non-residential

235,827

9,683

3,470

248,980

Multifamily

 

48,949

 

 

 

48,949

Residential real estate

 

33,857

 

 

2,057

 

35,914

Commercial and industrial

 

84,523

 

5,254

 

798

 

90,575

Consumer:

 

 

  

 

  

 

  

Indirect automobile

 

403,987

 

 

595

 

404,582

Home equity

 

11,640

 

 

122

 

11,762

Other consumer

 

8,741

 

 

75

 

8,816

Total

$

835,535

$

14,937

$

7,117

$

857,589

    

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

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 following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans:

March 31, 2022

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

$

8,011

$

$

$

$

8,011

$

Non-residential

245,597

161

3,222

248,980

3,222

Multifamily

48,949

48,949

Residential real estate

 

34,408

 

257

 

411

 

838

 

35,914

 

2,057

Commercial and industrial

 

89,917

 

7

 

100

 

551

 

90,575

 

665

Consumer:

 

  

 

  

 

 

  

 

  

 

Indirect automobile

 

398,155

 

5,121

729

 

577

 

404,582

 

595

Home equity

 

11,563

 

132

 

42

 

25

 

11,762

 

122

Other consumer

 

8,584

 

131

 

26

 

75

 

8,816

 

75

Total

$

845,184

$

5,809

$

1,308

$

5,288

$

857,589

$

6,736

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

The following tables summarize information regarding impaired loans by loan portfolio class:

March 31, 2022

Recorded

Unpaid Principal

Related

Average Recorded

    

Investment

    

Balance

    

Allowance

    

Investment

With no related allowance recorded:

Commercial real estate:

Non-residential

$

3,222

$

4,328

$

$

2,614

Residential real estate

 

2,057

 

2,628

 

 

2,327

Commercial and industrial

 

665

 

905

 

 

700

Consumer:

 

 

  

 

  

 

Indirect automobile

 

326

 

389

 

 

260

Home equity

 

122

 

123

 

 

260

Other consumer

 

38

 

41

 

 

44

Total

$

6,430

$

8,414

$

$

6,205

With an allowance recorded:

 

  

 

  

 

  

 

  

Commercial and industrial

$

$

$

$

71

Consumer:

 

  

 

  

 

 

Indirect automobile

269

279

43

291

Other consumer

 

37

 

37

 

1

 

9

Total

$

306

$

316

$

44

$

371

Total:

 

  

 

  

 

  

 

  

Commercial real estate:

 

  

 

  

 

  

 

  

Non-residential

$

3,222

$

4,328

$

$

2,614

Residential real estate

 

2,057

 

2,628

 

 

2,327

Commercial and industrial

 

665

 

905

 

 

771

Consumer:

 

  

 

  

 

  

 

  

Indirect automobile

 

595

 

668

 

43

 

551

Home equity

 

122

 

123

 

 

260

Other consumer

 

75

 

78

 

1

 

53

Total

$

6,736

$

8,730

$

44

$

6,576

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 real estate:

 

  

 

  

 

  

 

  

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

A loan is considered impaired when based on current information and events it is probable that the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming loans and loans modified as TDRs. Loan modifications, which resulted in these loans being considered TDRs, are primarily in the form of rate concessions and extensions of maturity dates that are made specifically due to hardships experienced by the customer. The Company does not generally recognize interest income on a loan in an impaired status. At March 31, 2022 and December 31, 2021, three loans totaling $1,409 and $1,440, included in impaired loans, were identified as TDRs. There were no new TDRs in 2021 or the first three months of 2022. At March 31, 2022 and December 31, 2021, all TDR loans were performing in accordance with their restructured terms. At March 31, 2022 and December 31, 2021, the Company had no commitments to advance additional funds to borrowers under TDR loans.

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 March 31, 2022 and December 31, 2021, the Company was servicing loans for participants aggregating $3,879 and $3,962, respectively.

Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $790 and $935 at March 31, 2022 and December 31, 2021, respectively.

The Company services certain loans that it has sold without recourse to third parties. The aggregate balances of loans serviced for others were $315,695 and $314,953 as of March 31, 2022 and December 31, 2021, respectively.

The balances of capitalized servicing rights, included in other assets at March 31, 2022 and December 31, 2021, were $2,641 and $2,633, respectively. Fair value exceeds carrying value, and thus, no impairment charges related to servicing rights were recognized during the period ended March 31, 2022 or the year ended December 31, 2021.

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

Three months ended March 31, 2022

Allowance for loan losses:

Beginning balance

$

3,317

$

54

$

725

$

3,416

$

47

$

7,559

(Credit to) provision for loan losses

(3)

(109)

18

295

20

221

Loans charged-off

(44)

(647)

(23)

(714)

Recoveries

 

 

154

 

 

471

 

9

 

634

Ending balance

$

3,314

$

55

$

743

$

3,535

$

53

$

7,700

Ending balance:

 

  

 

  

 

  

 

  

 

  

 

  

Loans deemed impaired

$

$

$

$

43

$

1

$

44

Loans not deemed impaired

$

3,314

$

55

$

743

$

3,492

$

52

$

7,656

Loan receivables:

 

  

 

  

 

  

 

  

 

  

 

  

Ending balance

$

305,940

$

35,914

$

90,575

$

404,582

$

20,578

$

857,589

Ending balance:

 

  

 

 

  

 

  

 

  

 

  

Loans deemed impaired

$

3,222

$

2,057

$

665

$

595

$

197

$

6,736

Loans not deemed impaired

$

302,718

$

33,857

$

89,910

$

403,987

$

20,381

$

850,853

Commercial

Residential

Commercial

    

Real Estate

    

Real Estate

    

and Industrial

    

Indirect

Consumer

    

Totals

Three months ended March 31, 2021

Allowance for loan losses:

Beginning balance

$

5,354

$

117

$

1,050

$

4,974

$

138

$

11,633

(Credit to) provision for loan losses

(1,192)

11

269

857

(14)

(69)

Loans charged-off

(626)

(3)

(629)

Recoveries

 

 

3

 

 

307

 

16

 

326

Ending balance

$

4,162

$

131

$

1,319

$

5,512

$

137

$

11,261

Commercial

Residential

Commercial

    

Real Estate

    

Real Estate

    

and Industrial

    

Indirect

    

Consumer

    

Totals

December 31, 2021

Allowance for loan losses:

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

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 periods presented were not material.