Loans	9 Months Ended
Loans	Sep. 30, 2022
Loans [Abstract]
Loans	3. LOANS The following table is a summary of the distribution of loans held for investment by type (in thousands): At September 30, 2022 and December 31, 2021, the Company had $ 253.9 million and $ 185.1 million respectively, of commercial real estate and residential mortgage loans pledged as collateral for lines of credit with the FHLB and the Federal Reserve Bank of Atlanta. The Company was a participant in the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) loans. These loans were designed to provide a direct incentive for small businesses to keep their workers on payroll and the funds had to be used towards payroll cost, mortgage interest, rent, utilities and other costs related to COVID-19. These loans are forgivable under specific criteria as determined by the SBA. The Company had PPP loans totaling $ 1.4 million at September 30, 2022 and $ 42.4 million at December 31, 2021, which are categorized as commercial and industrial loans. These PPP loans had deferred loan fees of $ 19 thousand at September 30, 2022 and $ 1.5 million at December 31, 2021. The Company recognized $ 1.6 million and $ 3.5 million in PPP loan fees and interest income during the nine months ended September 30, 2022 and 2021, respectively, which is reported under loans, including fees, within the Consolidated Statements of Operations. The Company segments the portfolio by pools grouping loans that share similar risk characteristics and employing collateral type and lien position to group loans according to risk. The Company determines historical loss rates for each loan pool based on its own loss experience. In estimating credit losses, the Company also considers qualitative and environmental factors that may cause estimated credit losses for the loan portfolio to differ from historical losses. Changes in the allowance for credit losses for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands): Allowance for credit losses and the outstanding balances in the specified loan categories as of September 30, 2022 and December 31, 2021 are as follows (in thousands): Credit Quality Indicators The Company grades loans based on the estimated capability of the borrower to repay the contractual obligation of the loan agreement based on relevant information which may include: current financial information on the borrower, historical payment experience, credit documentation and other current economic trends. Internal credit risk grades are evaluated periodically. The Company's internally assigned credit risk grades are as follows: Pass – Loans indicate different levels of satisfactory financial condition and performance. 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 institution’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 obligator 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 at 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. Loss – Loans classified as loss are considered uncollectible. Loan credit exposures by internally assigned grades are presented below for the periods indicated (in thousands): Loan Aging The Company also considers the performance of loans in grading and in evaluating the credit quality of the loan portfolio. The Company analyzes credit quality and loan grades based on payment performance and the aging status of the loan. The following tables include an aging analysis of accruing loans and total non-accruing loans as of September 30, 2022 and December 31, 2021 (in thousands): There was no interest income recognized attributable to nonaccrual loans outstanding during the three months ended September 30, 2022 and 2021. Interest income on these loans for the three months ended September 30, 2022 and 2021, would have been approximately $ 0 and $ 1 thousand, respectively, had these loans performed in accordance with their original terms. Impaired Loans The following table includes the unpaid principal balances for impaired loans with the associated allowance amount, if applicable, on the basis of impairment methodology at the dates indicated (in thousands): Net investment balance is the unpaid principal balance of the loan adjusted for the remaining net deferred loan fees. The following table presents the average recorded investment balance on impaired loans for the dates indicated (in thousands): Interest income recognized on impaired loans for the three months ended September 30, 2022 and 2021 was $ 90 thousand and $ 99 thousand, respectively. Interest income recognized on impaired loans for the nine months ended September 30, 2022 and 2021 was $ 271 thousand and $ 313 thousand, respectively. Troubled Debt Restructuring s A troubled debt restructuring (“TDR”) occurs when the Company has agreed to a loan modification in the form of a concession for a borrower who is experiencing financial difficulty. Modifications to loans can be made for rate, term, payment, conversion of loan to interest only for a limited period of time or a combination to include more than one type of modification. The following table presents performing and non-performing TDR loans at the dates indicated (in thousands): The Company had allocated $ 309 thousand and $ 360 thousand of specific allowance for TDR loans at September 30, 2022 and December 31, 2021, respectively. There were no charge-offs on TDR loans during the three and nine months ended September 30, 2022 and 2021. There were no commitments outstanding to lend additional funds to any of these TDR loan customers as of September 30, 2022. During the quarter ended September 30, 2022 and 2021, there were no defaults on loans which were modified as a TDR within the prior 12 months. The Company also did no t have any new TDR loans during the three and nine months ended September 30, 2022 and 2021. September 30, 2022 December 31, 2021 Total Percent of Total Total Percent of Total Residential Real Estate $ 186,551 13.0 % $ 201,359 16.9 % Commercial Real Estate 928,531 64.9 % 704,988 59.2 % Commercial and Industrial 121,145 8.5 % 146,592 12.3 % Foreign Banks 94,450 6.6 % 59,491 5.0 % Consumer and Other 100,845 7.0 % 79,229 6.6 % Total gross loans 1,431,522 100.0 % 1,191,659 100.0 % Less: Deferred fees (cost) 9 1,578 Total loans net of deferred fees (cost) 1,431,513 1,190,081 Less: Allowance for credit losses 16,604 15,057 Total net loans $ 1,414,909 $ 1,175,024 Residential Real Estate Commercial Real Estate Commercial and Industrial Foreign Banks Consumer and Other Total Three Months Ended September 30, 2022 Beginning balance $ 2,366 $ 9,290 $ 2,671 $ 651 $ 808 $ 15,786 Provision for credit losses (1,009) 695 1,126 74 24 910 Recoveries 1 - - - - 1 Charge-offs - - (88) - (5) (93) Ending Balance $ 1,358 $ 9,985 $ 3,709 $ 725 $ 827 $ 16,604 Nine Months Ended September 30, 2022 Beginning balance $ 2,498 $ 8,758 $ 2,775 $ 457 $ 569 $ 15,057 Provision for credit losses (1,157) 1,227 1,011 268 266 1,615 Recoveries 33 - 11 - 3 47 Charge-offs (16) - (88) - (11) (115) Ending Balance $ 1,358 $ 9,985 $ 3,709 $ 725 $ 827 $ 16,604 Residential Real Estate Commercial Real Estate Commercial and Industrial Foreign Banks Consumer and Other Total Three Months Ended September 30, 2021 Beginning balance $ 2,540 $ 8,752 $ 2,467 $ 554 $ 535 $ 14,848 Provision for credit losses (787) 719 277 (29) (180) - Recoveries 48 - 3 - 3 54 Charge-offs - - - - (2) (2) Ending Balance $ 1,801 $ 9,471 $ 2,747 $ 525 $ 356 $ 14,900 Nine Months Ended September 30, 2021 Beginning balance $ 3,408 $ 9,453 $ 1,689 $ 348 $ 188 $ 15,086 Provision for credit losses (1,434) 18 904 177 175 (160) Recoveries 56 - 154 - 5 215 Charge-offs (229) - - - (12) (241) Ending Balance $ 1,801 $ 9,471 $ 2,747 $ 525 $ 356 $ 14,900 Residential Real Estate Commercial Real Estate Commercial and Industrial Foreign Banks Consumer and Other Total September 30, 2022: Allowance for credit losses: Individually evaluated for impairment $ 160 $ - $ 48 $ - $ 101 $ 309 Collectively evaluated for impairment 1,198 9,985 3,661 725 726 16,295 Balances, end of period $ 1,358 $ 9,985 $ 3,709 $ 725 $ 827 $ 16,604 Loans: Individually evaluated for impairment $ 7,257 $ 586 $ 92 $ - $ 203 $ 8,138 Collectively evaluated for impairment 179,294 927,945 121,053 94,450 100,642 1,423,384 Balances, end of period $ 186,551 $ 928,531 $ 121,145 $ 94,450 $ 100,845 $ 1,431,522 December 31, 2021: Allowance for credit losses: Individually evaluated for impairment $ 178 $ - $ 71 $ - $ 111 $ 360 Collectively evaluated for impairment 2,320 8,758 2,704 457 458 14,697 Balances, end of period $ 2,498 $ 8,758 $ 2,775 $ 457 $ 569 $ 15,057 Loans: Individually evaluated for impairment $ 9,006 $ 696 $ 141 $ - $ 224 $ 10,067 Collectively evaluated for impairment 192,353 704,292 146,451 59,491 79,005 1,181,592 Balances, end of period $ 201,359 $ 704,988 $ 146,592 $ 59,491 $ 79,229 $ 1,191,659 As of September 30, 2022 Pass Special Mention Substandard Doubtful Total Loans Residential real estate: Home equity line of credit and other $ 723 $ - $ - $ - $ 723 1-4 family residential 129,240 - - - 129,240 Condo residential 56,588 - - - 56,588 186,551 - - - 186,551 Commercial real estate: Land and construction 35,977 - - - 35,977 Multi-family residential 155,018 - - - 155,018 Condo commercial 55,451 - 400 - 55,851 Commercial property 681,685 - - - 681,685 928,131 - 400 - 928,531 Commercial and industrial: (1) Secured 115,444 - 339 - 115,783 Unsecured 5,362 - - - 5,362 120,806 - 339 - 121,145 Foreign banks 94,450 - - - 94,450 Consumer and other loans 100,642 - 203 - 100,845 Total $ 1,430,580 $ - $ 942 $ - $ 1,431,522 (1) All outstanding PPP loans were internally graded pass. As of December 31, 2021 Pass Special Mention Substandard Doubtful Total Loans Residential real estate: Home equity line of credit and other $ 701 $ - $ - $ - $ 701 1-4 family residential 130,840 - 4,581 - 135,421 Condo residential 65,237 - - - 65,237 196,778 - 4,581 - 201,359 Commercial real estate: Land and construction 24,581 - - - 24,581 Multi-family residential 127,489 - - - 127,489 Condo commercial 41,983 - 417 - 42,400 Commercial property 509,189 1,222 - - 510,411 Leasehold improvements 107 - - - 107 703,349 1,222 417 - 704,988 Commercial and industrial: (1) Secured 97,605 - 536 - 98,141 Unsecured 48,434 - 17 - 48,451 146,039 - 553 - 146,592 Foreign banks 59,491 - - - 59,491 Consumer and other loans 79,005 - 224 - 79,229 Total $ 1,184,662 $ 1,222 $ 5,775 $ - $ 1,191,659 (1) All outstanding PPP loans were internally graded pass. Accruing As of September 30, 2022: Current Past Due 30- 89 Days Past Due 90 Days or > and Still Accruing Total Accruing Non-Accrual Total Loans Residential real estate: Home equity line of credit and other $ 723 $ - $ - $ 723 $ - $ 723 1-4 family residential 128,703 537 - 129,240 - 129,240 Condo residential 55,911 677 - 56,588 - 56,588 185,337 1,214 - 186,551 - 186,551 Commercial real estate: - Land and construction 35,977 - - 35,977 - 35,977 Multi-family residential 155,018 - - 155,018 - 155,018 Condo commercial 55,851 - - 55,851 - 55,851 Commercial property 679,058 2,627 - 681,685 - 681,685 925,904 2,627 - 928,531 - 928,531 Commercial and industrial: - Secured 115,783 - - 115,783 - 115,783 Unsecured 4,324 1,038 - 5,362 - 5,362 120,107 1,038 - 121,145 - 121,145 Foreign banks 94,450 - - 94,450 - 94,450 Consumer and other 100,845 - - 100,845 - 100,845 Total $ 1,426,643 $ 4,879 $ - $ 1,431,522 $ - $ 1,431,522 Accruing As of December 31, 2021: Current Past Due 30-89 Days Past Due 90 Days or > and Still Accruing Total Accruing Non-Accrual Total Loans Residential real estate: Home equity line of credit and other $ 701 $ - $ - $ 701 $ - $ 701 1-4 family residential 133,942 289 - 134,231 1,190 135,421 Condo residential 64,243 994 - 65,237 - 65,237 198,886 1,283 - 200,169 1,190 201,359 Commercial real estate: Land and construction 24,581 - - 24,581 - 24,581 Multi-family residential 127,053 436 - 127,489 - 127,489 Condo commercial 42,400 - - 42,400 - 42,400 Commercial property 510,411 - - 510,411 - 510,411 Leasehold improvements 107 - - 107 - 107 704,552 436 - 704,988 - 704,988 Commercial and industrial: Secured 98,141 - - 98,141 - 98,141 Unsecured 48,041 410 - 48,451 - 48,451 146,182 410 - 146,592 - 146,592 Foreign banks 59,491 - - 59,491 - 59,491 Consumer and other 78,969 260 - 79,229 - 79,229 Total $ 1,188,080 $ 2,389 $ - $ 1,190,469 $ 1,190 $ 1,191,659 September 30, 2022 December 31, 2021 Unpaid Principal Balance Net Investment Balance Valuation Allowance Unpaid Principal Balance Net Investment Balance Valuation Allowance Impaired Loans with No Specific Allowance: Residential real estate $ 3,574 $ 3,567 $ - $ 5,021 $ 5,035 $ - Commercial real estate 586 586 - 696 695 - 4,160 4,153 - 5,717 5,730 - Impaired Loans with Specific Allowance: Residential real estate 3,683 3,653 160 3,985 3,950 178 Commercial and industrial 92 92 48 141 141 71 Consumer and other 203 203 101 224 224 111 3,978 3,948 309 4,350 4,315 360 Total $ 8,138 $ 8,101 $ 309 $ 10,067 $ 10,045 $ 360 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Residential real estate $ 7,282 $ 7,980 $ 7,732 $ 8,738 Commercial real estate 590 709 619 611 Commercial and industrial 95 177 116 187 Consumer and other 207 248 214 262 Total $ 8,174 $ 9,114 $ 8,681 $ 9,798 September 30, 2022 December 31, 2021 Accrual Status Non-Accrual Status Total TDRs Accrual Status Non-Accrual Status Total TDRs Residential real estate $ 7,257 $ - $ 7,257 $ 7,815 $ - $ 7,815 Commercial real estate 586 - 586 696 - 696 Commercial and industrial 92 - 92 141 - 141 Consumer and other 203 - 203 224 - 224 Total $ 8,138 $ - $ 8,138 $ 8,876 $ - $ 8,876