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Loans and Allowance for Loan Losses
6 Months Ended
Jun. 30, 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:

June 30, 

December 31, 

    

2022

    

2021

Commercial real estate loans:

 

 

  

Construction

$

11,568

$

10,095

Non-residential

 

258,179

 

245,568

Multi-family

 

67,953

 

55,926

Residential real estate loans

 

39,622

 

35,646

Commercial and industrial loans(1)

 

91,454

 

104,323

Consumer loans:

 

  

 

  

Indirect automobile

 

434,579

 

382,088

Home equity

 

11,588

 

11,857

Other consumer

 

9,021

 

7,955

Total gross loans

 

923,964

 

853,458

Net deferred loan costs

 

11,393

 

9,068

Allowance for loan losses

 

(8,169)

 

(7,559)

Total net loans

$

927,188

$

854,967

(1)

Includes $3,560 and $29,464 in U.S. Small Business Administration (“SBA”), paycheck protection program (“PPP”) loans at June 30, 2022 and December 31, 2021, respectively.

At June 30, 2022 and December 31, 2021, the unpaid principal balances of loans held for sale, included in the residential real estate category above, were $2,232 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:

June 30, 2022

    

Pass

    

Special Mention

    

Substandard

    

Total

Commercial real estate:

  

  

  

  

Construction

$

11,568

$

$

$

11,568

Non-residential

246,805

8,026

3,348

258,179

Multifamily

 

67,953

 

 

 

67,953

Residential real estate

 

37,746

 

 

1,876

 

39,622

Commercial and industrial

 

86,772

 

4,201

 

481

 

91,454

Consumer:

 

 

  

 

  

 

  

Indirect automobile

 

434,045

 

 

534

 

434,579

Home equity

 

11,466

 

 

122

 

11,588

Other consumer

 

8,983

 

 

38

 

9,021

Total

$

905,338

$

12,227

$

6,399

$

923,964

    

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:

June 30, 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

$

11,568

$

$

$

$

11,568

$

Non-residential

256,336

29

1,814

258,179

1,814

Multifamily

67,953

67,953

Residential real estate

 

37,695

 

1,322

 

 

605

 

39,622

 

1,876

Commercial and industrial

 

90,702

 

456

 

90

 

206

 

91,454

 

206

Consumer:

 

  

 

  

 

 

  

 

  

 

Indirect automobile

 

426,047

 

7,051

959

 

522

 

434,579

 

534

Home equity

 

11,378

 

96

 

90

 

24

 

11,588

 

122

Other consumer

 

8,868

 

73

 

42

 

38

 

9,021

 

38

Total

$

910,547

$

8,998

$

1,210

$

3,209

$

923,964

$

4,590

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:

June 30, 2022

Recorded

Unpaid Principal

Related

Average Recorded

    

Investment

    

Balance

    

Allowance

    

Investment

With no related allowance recorded:

Commercial real estate:

Non-residential

$

1,814

$

2,885

$

$

2,461

Residential real estate

 

1,876

 

2,476

 

 

2,162

Commercial and industrial

 

199

 

252

 

 

608

Consumer:

 

 

  

 

  

 

Indirect automobile

 

308

 

378

 

 

294

Home equity

 

122

 

123

 

 

185

Other consumer

 

38

 

42

 

 

42

Total

$

4,357

$

6,156

$

$

5,752

With an allowance recorded:

 

  

 

  

 

  

 

  

Commercial and industrial

$

7

$

7

$

7

$

2

Consumer:

 

  

 

  

 

 

Indirect automobile

226

233

30

291

Other consumer

 

 

 

 

9

Total

$

233

$

240

$

37

$

302

Total:

 

  

 

  

 

  

 

  

Commercial real estate:

 

  

 

  

 

  

 

  

Non-residential

$

1,814

$

2,885

$

$

2,461

Residential real estate

 

1,876

 

2,476

 

 

2,162

Commercial and industrial

 

206

 

259

 

7

 

610

Consumer:

 

  

 

  

 

  

 

  

Indirect automobile

 

534

 

611

 

30

 

585

Home equity

 

122

 

123

 

 

185

Other consumer

 

38

 

42

 

 

51

Total

$

4,590

$

6,396

$

37

$

6,054

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 June 30, 2022 and December 31, 2021, three loans totaling $1,368 and $1,440, included in impaired loans, were identified as TDRs. There were no new TDRs in 2021 or the first six months of 2022. At June 30, 2022 and December 31, 2021, all TDR loans were performing in accordance with their restructured terms. At June 30, 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 the 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 June 30, 2022 and December 31, 2021, the Company was servicing loans for participants aggregating $7,779 and $3,962, respectively.

Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $649 and $935 at June 30, 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 $310,670 and $314,953 as of June 30, 2022 and December 31, 2021, respectively.

The balances of capitalized servicing rights, included in other assets at June 30, 2022 and December 31, 2021, were $2,598 and $2,633, respectively. Fair value exceeds carrying value, and thus, no impairment charges related to servicing rights were recognized during the period ended June 30, 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 

    

    

Commercial 

    

    

    

    

Real Estate

    

Residential

    

and Industrial

    

Indirect

    

Consumer

    

Totals

    

Three months ended June 30, 2022

Allowance for loan losses:

Beginning balance

$

3,314

$

55

$

743

$

3,535

$

53

$

7,700

Provision for loan losses

126

4

115

60

41

346

Loans charged-off

(407)

(38)

(445)

Recoveries

 

 

 

1

 

550

 

17

 

568

Ending balance

$

3,440

$

59

$

859

$

3,738

$

73

$

8,169

Commercial

Residential

Commercial

    

Real Estate

    

Real Estate

    

and Industrial

    

Indirect

Consumer

    

Totals

Three months ended June 30, 2021

Allowance for loan losses:

Beginning balance

$

4,162

$

131

$

1,319

$

5,512

$

137

$

11,261

(Credit to) provision for loan losses

671

(11)

(647)

(1,366)

205

(1,148)

Loans charged-off

(1)

(491)

(6)

(498)

Recoveries

 

 

 

88

 

416

 

7

 

511

Ending balance

$

4,833

$

120

$

759

$

4,071

$

343

$

10,126

Commercial

Residential

Commercial

    

Real Estate

    

Real Estate

    

and Industrial

    

Indirect

    

Consumer

    

Totals

Six months ended June 30, 2022

Allowance for loan losses:

Beginning balance

$

3,317

$

54

$

725

$

3,416

$

47

$

7,559

Provision for (credit to) loan losses

123

(105)

133

355

61

567

Loans charged-off

(44)

(1,054)

(61)

(1,159)

Recoveries

 

 

154

 

1

 

1,021

 

26

 

1,202

Ending balance

$

3,440

$

59

$

859

$

3,738

$

73

$

8,169

Ending balance:

 

  

 

  

 

  

 

  

 

  

 

  

Loans deemed impaired

$

$

$

7

$

30

$

$

37

Loans not deemed impaired

$

3,440

$

59

$

852

$

3,708

$

73

$

8,132

Loan receivables:

 

  

 

  

 

  

 

  

 

  

 

  

Ending balance

$

337,700

$

39,622

$

91,454

$

434,579

$

20,609

$

923,964

Ending balance:

 

  

 

 

  

 

  

 

  

 

  

Loans deemed impaired

$

1,814

$

1,876

$

206

$

534

$

160

$

4,590

Loans not deemed impaired

$

335,886

$

37,746

$

91,248

$

434,045

$

20,449

$

919,374

Commercial

Residential

Commercial

    

Real Estate

    

Real Estate

    

and Industrial

    

Indirect

Consumer

    

Totals

Six months ended June 30, 2021

Allowance for loan losses:

Beginning balance

$

5,354

$

117

$

1,050

$

4,974

$

138

$

11,633

(Credit to) provision for loan losses

(521)

(378)

(509)

191

(1,217)

Loans charged-off

(1)

(1,117)

(9)

(1,127)

Recoveries

 

 

3

 

88

 

723

 

23

 

837

Ending balance

$

4,833

$

120

$

759

$

4,071

$

343

$

10,126

Ending balance:

 

  

 

  

 

  

 

  

 

  

 

  

Loans deemed impaired

$

$

$

285

$

51

$

$

336

Loans not deemed impaired

$

4,833

$

120

$

474

$

4,020

$

343

$

9,790

Loan receivables:

 

  

 

  

 

  

 

  

 

  

 

  

Ending balance

$

287,920

$

38,392

$

144,620

$

372,479

$

21,496

$

864,907

Ending balance:

 

  

 

  

 

  

 

  

 

  

 

  

Loans deemed impaired

$

2,426

$

2,537

$

848

$

396

$

468

$

6,675

Loans not deemed impaired

$

285,494

$

35,855

$

143,772

$

372,083

$

21,028

$

858,232

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.