Loans and Related Allowance for Credit Losses

9 Months Ended

Sep. 30, 2023

Loans and Related Allowance for Credit Losses [Abstract]

Loans and Related Allowance for Credit Losses

Note 5 – Loans and Related Allowance for Credit Losses

The following table summarizes the primary segments of the loan portfolio at September 30, 2023 and December 31, 2022:

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Total
September 30, 2023
Individually evaluated for impairment	$	—	$	—	$	—	$	2,314	$	—	$	2,314
Collectively evaluated for impairment		491,284		79,796		254,650		489,372		62,603		1,377,705
Total loans	$	491,284	$	79,796	$	254,650	$	491,686	$	62,603	$	1,380,019
December 31, 2022
Individually evaluated for impairment	$	2,262	$	356	$	—	$	3,880	$	—	$	6,498
Collectively evaluated for impairment		456,569		70,240		245,396		440,531		60,260		1,272,996
Total loans	$	458,831	$	70,596	$	245,396	$	444,411	$	60,260	$	1,279,494

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans at September 30, 2023 and December 31, 2022:

(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due and Accruing		Non- Accrual		Total Loans
September 30, 2023
Commercial real estate:
Non-owner-occupied	$	293,932	$	—	$	229	$	—	$	229	$	—	$	294,161
All other CRE		196,524		599		—		—		599		—		197,123
Acquisition and development:
1-4 family residential construction		17,527		—		—		—		—		—		17,527
All other A&D		62,149		—		—		—		—		120		62,269
Commercial and industrial		254,193		75		382		—		457		—		254,650
Residential mortgage:
Residential mortgage - term		425,383		214		1,109		—		1,323		3,011		429,717
Residential mortgage - home equity		61,299		288		22		86		396		274		61,969
Consumer		61,786		541		143		59		743		74		62,603
Total	$	1,372,793	$	1,717	$	1,885	$	145	$	3,747	$	3,479	$	1,380,019
December 31, 2022
Commercial real estate:
Non-owner-occupied	$	269,971	$	—	$	—	$	—	$	—	$	87	$	270,058
All other CRE		188,715		—		—		—		—		58		188,773
Acquisition and development:
1-4 family residential construction		19,637		—		—		—		—		—		19,637
All other A&D		50,813		—		—		—		—		146		50,959
Commercial and industrial		245,342		54		—		—		54		—		245,396
Residential mortgage:
Residential mortgage - term		380,502		31		722		239		992		2,893		384,387
Residential mortgage - home equity		59,223		399		48		43		490		311		60,024
Consumer		59,789		363		83		25		471		—		60,260
Total	$	1,273,992	$	847	$	853	$	307	$	2,007	$	3,495	$	1,279,494

Non-accrual loans that have been subject to partial charge-offs totaled $0.1 million at September 30, 2023 and $0.1 million at December 31, 2022.  Loans secured by 1-4 family residential real estate properties in the process of foreclosure totaled $1.8

million at September 30, 2023.  There were no loans in the process of foreclosure at December 31, 2022.   As a percentage of the loan portfolio, accruing loans past due 30 days or more was 0.27% at September 30, 2023 compared to 0.16% at December 31, 2022. 

Effective January 1, 2023, the Corporation adopted the accounting guidance in ASU 2022-02, which eliminated the recognition and measurement of TDRs.  Due to the removal of the TDR designation, the Corporation evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan.  Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the above.  Therefore, the disclosures related to loan restructurings are only for modifications that directly affect cash flows.

A loan that is considered a non-accrual or restructured loan may be subject to the individually evaluated loan analysis if the commitment is $0.1 million or greater; otherwise, the restructured loan remains in the appropriate segment in the ACL model and associated reserves are adjusted based on changes in the discounted cash flows resulting from the modification of the restructured loan.  For a discussion with respect to reserve calculations regarding individually evaluated loans, refer to the “Nonrecurring Loans” section in Note 6, Fair Value Measurements.  There were no loan modifications made to borrowers facing financial difficulties in the three- or nine-month period ending September 30, 2023.

The Corporation maintains an ACL at a level determined to be adequate to absorb expected credit losses associated with the Corporation’s financial instruments over the life of those instruments as of the balance sheet date.  The Corporation develops and documents a systematic ACL methodology based on the following portfolio segments: (i) commercial real estate, (ii) acquisition and development, (iii) commercial and industrial, (iv) residential mortgage, and (v) consumer.  The Corporation’s loan portfolio is segmented by homogeneous loan types that behave similarly to economic cycles.  The segmentation in the CECL model is different from the segmentation in the Incurred Loss model.  The following is a discussion of the key risks by portfolio segment that management assesses in preparing the ACL.

Commercial Real Estate- loans are secured by commercial purpose real estate, including both owner occupied properties and properties obtained for investment purposes, such as hotels, strip malls and apartments.  Operations of the individual projects as well as global cash flows of the debtors are the primary source of repayment of these loans.  The condition of the local economy is an important indicator of risk, but there are more specific risks depending on the collateral type as well as the business.

Acquisition and Development- loans include both commercial and consumer.  Commercial loans are made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes.  While the risk of these loans is generally confined to the construction period, if there are problems, the project may not be completed, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal.  The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer.  Consumer loans are made for the construction of residential homes for which a binding sales contract exists and generally are for a period of time sufficient to complete construction.  Residential construction loans to individuals generally provide for the payment of interest only during the construction phase.  Credit risk for residential real estate construction loans can arise from construction delays, cost overruns, failure of the contractor to complete the project to specifications and economic conditions that could impact demand for supply of the property being constructed.

Commercial and Industrial- loans are made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing.  Cash flow from the operations of the borrower is the primary source of repayment for these loans.  The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the industry of the borrower.  Collateral for these types of loans often do not have sufficient value in a distressed or liquidation scenario to satisfy the outstanding debt.  These loans are also made to local municipalities for various purposes including refinancing existing obligations, infrastructure up-fit and expansion, or to purchase new equipment.  The primary repayment source for local municipalities include the tax base of the municipality, specific revenue streams related to the infrastructure financed, and other business operations of the municipal authority.  The health and stability of state and local economies directly impacts each municipality’s tax basis and are important indicators of risk for this segment.  The ability of each

municipality to increase taxes and fees to offset service requirements give this type of loan a very low risk profile in the continuum of the Corporation’s loan portfolio.

Residential mortgage- loans are secured by first and second liens such as home equity lines of credit and 1-4 family residential mortgages.  The primary source of repayment for these loans is the income of the borrower.  The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment.  The state of the local housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy debt.

Consumer- loans are made to individuals and may be either secured by assets other than 1-4 family residences or unsecured.  This segment includes automobile loans and unsecured loans and lines of credit.  The primary source of repayment for these loans is the income and assets of the borrower.  The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment.  The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

The following table summarizes the primary segments of the ACL at September 30, 2023 and allowance for loan loss (“ALL”) at December 31, 2022, segregated by the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment:

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
September 30, 2023
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		5,038		1,065		3,477		6,642		924		—		17,146
Total ACL	$	5,038	$	1,065	$	3,477	$	6,642	$	924	$	—	$	17,146
December 31, 2022
Individually evaluated for impairment	$	—	$	—	$	—	$	26	$	—	$	—	$	26
Collectively evaluated for impairment		6,345		979		2,845		3,134		877		430		14,610
Total ALL	$	6,345	$	979	$	2,845	$	3,160	$	877	$	430	$	14,636

Changes in the fair value of the types of collateral for individually evaluated loans are reported as provision for credit loss in the period of change.  The evaluation of the need and amount of a specific allocation of the ACL and whether a loan can be removed from impairment status is made on a quarterly basis.

The following table presents the amortized cost basis of collateral-dependent individually evaluated loans as of September 30, 2023.  

	September 30, 2023
(dollars in thousands)	Real Estate		Non-Accrual Loans with No Allowance
Residential mortgage	$	2,314	$	2,314
Total Loans	$	2,314	$	2,314

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required at September 30, 2023 and December 31, 2022:

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance		Total Impaired Loans
(in thousands)	Recorded Investment		Related Allowances		Recorded Investment		Recorded Investment (1)		Unpaid Principal Balance
September 30, 2023
Commercial real estate
Non-owner-occupied	$	—	$	—	$	—	$	—	$	—
All other CRE		—		—		—		—		—
Acquisition and development
1-4 family residential construction		—		—		—		—		—
All other A&D		—		—		—		—		—
Commercial and industrial		—		—		—		—		—
Residential mortgage
Residential mortgage – term		—		—		2,314		2,314		—
Residential mortgage – home equity		—		—		—		—		—
Consumer		—		—		—		—		—
Total impaired loans	$	—	$	—	$	2,314	$	2,314	$	—
December 31, 2022
Commercial real estate
Non-owner-occupied	$	—	$	—	$	187	$	187	$	—
All other CRE		—		—		2,075		2,075		—
Acquisition and development
1-4 family residential construction		—		—		210		210		—
All other A&D		—		—		146		146		109
Commercial and industrial		—		—		—		—		—
Residential mortgage
Residential mortgage – term		345		26		3,225		3,570		41
Residential mortgage – home equity		—		—		310		310		—
Consumer		—		—		—		—		—
Total impaired loans	$	345	$	26	$	6,153	$	6,498	$	150

(1) Recorded investment consists of unpaid principal balance, net of charge-offs, interest payments received applied to principal and unamortized deferred loan origination fees and cost.

The following tables present the activity in the ACL and ALL for the nine- and three-month periods ended September 30, 2023 and 2022:

Nine months ended (in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
Beginning balance at January 1, 2023 prior to adoption of ASC 326	$	6,345	$	979	$	2,845	$	3,160	$	877	$	430	$	14,636
Impact of adopting ASC 326		(1,143)		(15)		1,334		2,112		208		(430)		2,066
Loan charge-offs		(87)		—		(301)		(55)		(681)		—		(1,124)
Recoveries collected		5		8		176		56		153		—		398
Credit loss (credit)/expense		(82)		93		(577)		1,369		367		—		1,170
ACL balance at September 30, 2023	$	5,038	$	1,065	$	3,477	$	6,642	$	924	$	—	$	17,146
ALL balance at January 1, 2022	$	6,032	$	2,615	$	2,460	$	3,484	$	934	$	430	$	15,955
Loan Charge-offs		—		(20)		(134)		(34)		(726)		—		(914)
Recoveries collected		1		21		92		172		117		—		403
Loan loss expense/(credit)		323		(1,117)		984		(645)		552		—		97
ALL balance at September 30, 2022	$	6,356	$	1,499	$	3,402	$	2,977	$	877	$	430	$	15,541

Three months ended (in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
ACL balance at July 1, 2023	$	4,946	$	1,134	$	3,549	$	6,417	$	859	$	—	$	16,905
Loan charge-offs		—		—		(135)		(31)		(163)		—		(329)
Recoveries collected		—		1		167		20		60		—		248
Credit loss expense/(credit)		92		(70)		(104)		236		168		—		322
ACL balance at September 30, 2023	$	5,038	$	1,065	$	3,477	$	6,642	$	924	$	—	$	17,146
ALL balance at July 1, 2022	$	6,220	$	2,172	$	2,830	$	3,112	$	973	$	430	$	15,737
Charge-offs		—		(20)		(82)		(1)		(181)		—		(284)
Recoveries		—		1		83		71		41		—		196
Loan loss expense/(credit)		136		(654)		571		(205)		44		—		(108)
ALL balance at September 30, 2022	$	6,356	$	1,499	$	3,402	$	2,977	$	877	$	430	$	15,541

The Corporation’s methodology for estimating the ACL includes:

Segmentation.  The Corporation’s loan portfolio is segmented by homogeneous loan types that behave similarly to economic cycles.

Specific Analysis.  A specific reserve analysis is applied to certain individually evaluated loans.  These loans are evaluated quarterly generally based on collateral value, observable market value or the present value of expected future cash flows.  A specific reserve is established if the fair value is less than the loan balance.  A charge-off is recognized when the loss is quantifiable.  Individually evaluated loans not specifically analyzed reside in the Quantitative Analysis.

Quantitative Analysis.  The Corporation elected to use discounted cash flows.  Economic forecasts include but are not limited to unemployment, the Consumer Price Index, the Housing Affordability Index, and Gross State Product.  These forecasts are assumed to revert to the long term average and are utilized in the model to estimate the probability of default and the loss given default is the estimated loss rate, which varies over time.  The estimated loss rate is applied within the appropriate periods in the cash flow model to determine the net present value.  Net present value is also impacted by assumption related to the duration between default and recovery.  The reserve is based on the difference between the summation of the principal balances taking amortized costs into consideration and the summation of the net present values.

Qualitative Analysis.  Based on management’s review and analysis of internal, external and model risks, management may adjust the model output.  Management reviews the peaks and troughs of the model’s calibrations, taking into account economic forecasts to develop guardrails that serve as the basis for determining the reasonableness of the model’s output and makes adjustments as necessary.  This process challenges unexpected variability resulting from outputs beyond the model’s calibrations that appear to be unreasonable.  Management also enhances the calculation through the use of Moody’s economic forecast data in its calculation. Additionally, management may adjust the economic forecast if it is incompatible with known market conditions based on management’s experience and perspective.

The ACL is based on estimates, and actual losses may vary from current estimates.  Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ACL that is representative of the risk found in the components of the portfolio at any given date.

Credit Quality Indicators:

The Corporation’s portfolio grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all.  The Corporation’s internal credit risk grading system is based on debt service coverage, collateral values and other subjective factors.  Mortgage and consumer loans are defaulted to pass grade until a loan migrates to past due status.  

The Corporation has a loan review policy and annual scope report that details the level of loan review for loans in a given year.  The annual loan review provides the Credit Risk Committee with an independent analysis of the following:  (i) credit quality of the loan portfolio, (ii) compliance with loan policy, (iii) adequacy of documentation in credit files and (iv) validity of risk ratings.  

The Corporation’s internally assigned grades are as follows:

Pass-  The Corporation uses six grades of pass, including its watch rating.  Generally, a pass rating indicates that the loan is currently performing and is of high quality.

Special Mention- Assets with potential weaknesses that warrant management’s close attention and if left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date.

Substandard-  Assets that are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any.  Assets so classified have a well-defined weakness, or weaknesses that jeopardize the liquidation of

the debt.  Such assets are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful- Assets with all weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

Loss- Assets considered of such little value that its continuance on the books is not warranted.  This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical to defer writing off this basically worthless asset even though partial recovery may be affected in the future.

The ability of borrowers to repay commercial loans is dependent upon the success of their business and general economic conditions.  Due to the greater potential for loss within our commercial portfolio, we monitor the commercial loan portfolio through an internal risk rating system.  Loan risk ratings are assigned based upon the creditworthiness of the borrower and are reviewed on an ongoing basis according to our internal policies.  Loans rated special mention or substandard have potential or well-defined weaknesses not generally found in high quality, performing loans, and require attention from management to limit loss.

The following table presents loan balances by year of origination and internally assigned risk rating for our portfolio segments as of dates presented:

(in thousands)	2023		2022		2021		2020		2019		2018 and Prior		Revolving		Total Portfolio Loans
September 30, 2023
Commercial real estate:
Non-owner-occupied
Pass	$	20,580	$	66,381	$	30,726	$	54,643	$	39,758	$	63,496	$	1,111	$	276,695
Special Mention		—		—		—		—		—		6,098		—		6,098
Substandard		—		—		—		—		—		11,368		—		11,368
Total non-owner occupied		20,580		66,381		30,726		54,643		39,758		80,962		1,111		294,161
Current period gross charge-offs		—		—		—		—		—		87		—		87
All other CRE
Pass		21,848		27,791		25,848		22,666		24,603		65,306		4,057		192,119
Special Mention		—		—		—		—		—		—		1,095		1,095
Substandard		—		—		—		—		1,871		1,438		600		3,909
Total all other CRE		21,848		27,791		25,848		22,666		26,474		66,744		5,752		197,123
Current period gross charge-offs		—		—		—		—		—		—		—		—
Acquisition and development:
1-4 family residential construction
Pass		7,716		9,311		—		—		—		—		500		17,527
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total acquisition and development		7,716		9,311		—		—		—		—		500		17,527
Current period gross charge-offs		—		—		—		—		—		—		—		—
All other A&D
Pass		14,592		23,197		3,994		3,101		2,512		10,631		4,122		62,149
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		120		—		120
Total all other A&D		14,592		23,197		3,994		3,101		2,512		10,751		4,122		62,269
Current period gross charge-offs		—		—		—		—		—		—		—		—
Commercial and industrial:
Pass		28,861		71,185		25,176		12,868		9,915		12,253		71,371		231,629
Special Mention		—		—		—		—		—		329		562		891
Substandard		—		8,923		2,022		6,885		117		842		3,341		22,130
Total commercial and industrial		28,861		80,108		27,198		19,753		10,032		13,424		75,274		254,650
Current period gross charge-offs		100		—		35		166		—		—		—		301
Residential mortgage:
Residential mortgage - term
Pass		43,211		87,386		91,415		40,083		25,855		132,866		1,723		422,539
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		7,120		58		7,178
Total residential mortgage - term		43,211		87,386		91,415		40,083		25,855		139,986		1,781		429,717
Current period gross charge-offs		—		—		—		—		—		13		—		13
Residential mortgage - home equity
Pass		1,194		5,131		887		490		296		523		52,821		61,342
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		40		—		17		570		627
Total residential mortgage - home equity		1,194		5,131		887		530		296		540		53,391		61,969
Current period gross charge-offs		—		—		—		—		—		42		—		42
Consumer:
Pass		15,997		11,773		7,254		2,503		718		21,278		2,807		62,330
Special Mention		—		—		—		—		—		—		—		—
Substandard		48		35		139		25		7		7		12		273
Total consumer		16,045		11,808		7,393		2,528		725		21,285		2,819		62,603
Current period gross charge-offs		158		184		55		3		—		281		—		681
Total Portfolio Loans
Pass		153,999		302,155		185,300		136,354		103,657		306,353		138,512		1,326,330
Special Mention		—		—		—		—		—		6,427		1,657		8,084
Substandard		48		8,958		2,161		6,950		1,995		20,912		4,581		45,605
Total Portfolio Loans	$	154,047	$	311,113	$	187,461	$	143,304	$	105,652	$	333,692	$	144,750	$	1,380,019
Current YTD Period:
Current period gross charge-offs	$	258	$	184	$	90	$	169	$	—	$	423	$	—	$	1,124

(in thousands)	2022		2021		2020		2019		2018		2017 and Prior		Revolving		Total Portfolio Loans
December 31, 2022
Commercial real estate:
Non-owner-occupied
Pass	$	67,429	$	31,710	$	48,421	$	41,221	$	19,414	$	42,069	$	1,570	$	251,834
Special Mention		—		—		—		—		—		6,289		—		6,289
Substandard		—		—		—		—		—		11,935		—		11,935
Total non-owner occupied		67,429		31,710		48,421		41,221		19,414		60,293		1,570		270,058
Current period gross charge-offs		—		—		—		—		—		—		—		—
All other CRE
Pass		24,655		26,947		22,906		27,213		8,873		67,691		4,790		183,075
Special Mention		—		1,111		—		—		—		—		—		1,111
Substandard		—		—		—		3,006		—		357		1,224		4,587
Total all other CRE		24,655		28,058		22,906		30,219		8,873		68,048		6,014		188,773
Current period gross charge-offs		—		—		—		—		—		—		—		—
Acquisition and development:
1-4 family residential construction
Pass		15,629		1,453		151		—		—		210		2,194		19,637
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total acquisition and development		15,629		1,453		151		—		—		210		2,194		19,637
Current period gross charge-offs		—		—		—		—		—		20		—		20
All other A&D
Pass		18,733		4,979		9,755		1,408		558		12,961		2,419		50,813
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		146		—		146
Total all other A&D		18,733		4,979		9,755		1,408		558		13,107		2,419		50,959
Current period gross charge-offs		—		—		—		—		—		—		—		—
Commercial and industrial:
Pass		83,608		30,451		15,982		12,707		5,013		9,528		63,668		220,957
Special Mention		—		2,555		—		—		—		338		2,134		5,027
Substandard		8,923		—		7,167		173		634		311		2,204		19,412
Total commercial and industrial		92,531		33,006		23,149		12,880		5,647		10,177		68,006		245,396
Current period gross charge-offs		—		97		34		3		—		—		—		134
Residential mortgage:
Residential mortgage - term
Pass		64,930		93,665		42,784		27,120		14,132		133,397		2,306		378,334
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		16		237		143		5,634		23		6,053
Total residential mortgage - term		64,930		93,665		42,800		27,357		14,275		139,031		2,329		384,387
Current period gross charge-offs		—		—		—		—		—		28		—		28
Residential mortgage - home equity
Pass		5,739		957		538		328		97		478		51,232		59,369
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		44		—		21		40		550		655
Total residential mortgage - home equity		5,739		957		582		328		118		518		51,782		60,024
Current period gross charge-offs		—		—		—		—		12		6		—		18
Consumer:
Pass		16,748		10,495		3,845		1,596		687		24,096		2,654		60,121
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		92		27		9		7		—		4		139
Total consumer		16,748		10,587		3,872		1,605		694		24,096		2,658		60,260
Current period gross charge-offs		36		494		18		37		11		40		—		636
Total Portfolio Loans
Pass		297,471		200,657		144,382		111,593		48,774		290,430		130,833		1,224,140
Special Mention		—		3,666		—		—		—		6,627		2,134		12,427
Substandard		8,923		92		7,254		3,425		805		18,423		4,005		42,927
Total Portfolio Loans	$	306,394	$	204,415	$	151,636	$	115,018	$	49,579	$	315,480	$	136,972	$	1,279,494
Current YTD Period:
Current period gross charge-offs	$	36	$	591	$	52	$	40	$	23	$	94	$	—	$	836

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.

The following tables present loan balances by year of origination segregated by performing and non-performing loans for the periods presented:

(in thousands)	2023		2022		2021		2020		2019		2018 and Prior		Revolving		Total Portfolio Loans
September 30, 2023
Commercial real estate:
Non-owner-occupied
Performing	$	20,580	$	66,381	$	30,726	$	54,643	$	39,758	$	80,962	$	1,111	$	294,161
Nonperforming		—		—		—		—		—		—		—		—
Total non-owner occupied		20,580		66,381		30,726		54,643		39,758		80,962		1,111		294,161
All other CRE
Performing		21,848		27,791		25,848		22,666		26,474		66,744		5,752		197,123
Nonperforming		—		—		—		—		—		—		—		—
Total all other CRE		21,848		27,791		25,848		22,666		26,474		66,744		5,752		197,123
Acquisition and development:
1-4 family residential construction
Performing		7,716		9,311		—		—		—		—		500		17,527
Nonperforming		—		—		—		—		—		—		—		—
Total acquisition and development		7,716		9,311		—		—		—		—		500		17,527
All other A&D
Performing		14,592		23,197		3,994		3,101		2,512		10,631		4,122		62,149
Nonperforming		—		—		—		—		—		120		—		120
Total all other A&D		14,592		23,197		3,994		3,101		2,512		10,751		4,122		62,269
Commercial and industrial:
Performing		28,861		80,108		27,198		19,753		10,032		13,424		75,274		254,650
Nonperforming		—		—		—		—		—		—		—		—
Total commercial and industrial		28,861		80,108		27,198		19,753		10,032		13,424		75,274		254,650
Residential mortgage:
Residential mortgage - term
Performing		43,211		87,386		91,415		40,083		25,755		137,107		1,749		426,706
Nonperforming		—		—		—		—		100		2,879		32		3,011
Total residential mortgage - term		43,211		87,386		91,415		40,083		25,855		139,986		1,781		429,717
Residential mortgage - home equity
Performing		1,194		5,131		887		490		296		524		53,087		61,609
Nonperforming		—		—		—		40		—		16		304		360
Total residential mortgage - home equity		1,194		5,131		887		530		296		540		53,391		61,969
Consumer:
Performing		16,045		11,793		7,384		2,504		725		21,200		2,819		62,470
Nonperforming		—		15		9		24		—		85		—		133
Total consumer		16,045		11,808		7,393		2,528		725		21,285		2,819		62,603
Total Portfolio Loans
Performing		154,047		311,098		187,452		143,240		105,552		330,592		144,414		1,376,395
Nonperforming		—		15		9		64		100		3,100		336		3,624
Total Portfolio Loans	$	154,047	$	311,113	$	187,461	$	143,304	$	105,652	$	333,692	$	144,750	$	1,380,019

(in thousands)	2022		2021		2020		2019		2018		2017 and Prior		Revolving		Total Portfolio Loans
December 31, 2022
Commercial real estate:
Non-owner-occupied
Performing	$	67,429	$	31,710	$	48,421	$	41,221	$	19,414	$	60,206	$	1,570	$	269,971
Nonperforming		—		—		—		—		—		87		—		87
Total non-owner occupied		67,429		31,710		48,421		41,221		19,414		60,293		1,570		270,058
All other CRE
Performing		24,655		28,058		22,906		30,219		8,873		67,990		6,014		188,715
Nonperforming		—		—		—		—		—		58		—		58
Total all other CRE		24,655		28,058		22,906		30,219		8,873		68,048		6,014		188,773
Acquisition and development:
1-4 family residential construction
Performing		15,629		1,453		151		—		—		210		2,194		19,637
Nonperforming		—		—		—		—		—		—		—		—
Total acquisition and development		15,629		1,453		151		—		—		210		2,194		19,637
All other A&D
Performing		18,733		4,979		9,755		1,408		558		12,962		2,419		50,814
Nonperforming		—		—		—		—		—		145		—		145
Total all other A&D		18,733		4,979		9,755		1,408		558		13,107		2,419		50,959
Commercial and industrial:
Performing		92,531		33,006		23,149		12,880		5,647		10,177		68,006		245,396
Nonperforming		—		—		—		—		—		—		—		—
Total commercial and industrial		92,531		33,006		23,149		12,880		5,647		10,177		68,006		245,396
Residential mortgage:
Residential mortgage - term
Performing		64,930		93,665		42,800		27,120		14,198		136,228		2,313		381,254
Nonperforming		—		—		—		237		77		2,803		16		3,133
Total residential mortgage - term		64,930		93,665		42,800		27,357		14,275		139,031		2,329		384,387
Residential mortgage - home equity
Performing		5,739		957		538		328		115		478		51,515		59,670
Nonperforming		—		—		44		—		3		40		267		354
Total residential mortgage - home equity		5,739		957		582		328		118		518		51,782		60,024
Consumer:
Performing		16,748		10,581		3,872		1,605		694		24,077		2,658		60,235
Nonperforming		—		6		—		—		—		19		—		25
Total consumer		16,748		10,587		3,872		1,605		694		24,096		2,658		60,260
Total Portfolio Loans
Performing		306,394		204,409		151,592		114,781		49,499		312,328		136,689		1,275,692
Nonperforming		—		6		44		237		80		3,152		283		3,802
Total Portfolio Loans	$	306,394	$	204,415	$	151,636	$	115,018	$	49,579	$	315,480	$	136,972	$	1,279,494