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Allowance for Credit Losses

9 Months Ended

Sep. 30, 2024

6.	Allowance for Credit Losses:

The following tables show activity in the allowance for credit losses by portfolio class for the nine months ended September 30, 2024 and 2023 as well as the corresponding recorded investment in loans at the end of each period. Effective January 1, 2023, the Company adopted the provisions of ASC 326 (CECL) using a modified retrospective basis. The difference between the December 31, 2022 incurred allowance and the CECL allowance is reflected as a cumulative effect of change in accounting principle in the table below.

The calculation of the allowance for credit losses under CECL is performed using two primary approaches: a collective approach for pools of loans that have similar risk characteristics using a loss rate analysis, and a specific reserve analysis for credits individually evaluated.

Transactions in the allowance for credit losses on loans and leases for the three and nine months ended September 30, 2024 and 2023, and the balances of loans, individually and collectively evaluated for impairment, as of September 30, 2024 and 2023, are as follows (in thousands):


	Real Estate,		Real Estate,		Real Estate,		Commercial
	Residential		Construction		Nonresidential		and Industrial		Other		Total
Nine months ended September 30, 2024
Allowance for credit losses on loans and leases
Beginning balance	$	971	$	173	$	1,807	$	54	$	219	$	3,224
Charge-offs		(57)		—		—		—		(165)		(222)
Recoveries		55		29		3		—		102		189
Net provision for credit losses		(272)		(17)		37		26		126		(100)
Ending Balance	$	697	$	185	$	1,847	$	80	$	282	$	3,091
Reserve for unfunded lending commitments
Beginning balance	$	2	$	34	$	5	$	10	$	4	$	55
Provision for losses on unfunded commitments		1		5		6		2		38		52
Ending balance-reserve for unfunded commitments	$	3	$	39	$	11	$	12	$	42	$	107
Total allowance for credit losses on loans and unfunded commitments	$	700	$	224	$	1,858	$	92	$	324	$	3,198
Quarter ended September 30, 2024
Allowance for credit losses on loans and leases
Beginning balance	$	781	$	203	$	1,857	$	74	$	235	$	3,150
Charge-offs		(11)		—		—		—		(33)		(44)
Recoveries		—		9		1		—		15		25
Net provision for credit losses		(73)		(27)		(11)		6		65		(40)
Ending Balance	$	697	$	185	$	1,847	$	80	$	282	$	3,091
Reserve for unfunded lending commitments
Beginning balance	$	2	$	44	$	12	$	11	$	46	$	115
Provision for losses on unfunded commitments		1		(5)		(1)		1		(4)		(8)
Ending balance-reserve for unfunded commitments	$	3	$	39	$	11	$	12	$	42	$	107
Total allowance for credit losses on loans and unfunded commitments	$	700	$	224	$	1,858	$	92	$	324	$	3,198
Allowance for credit losses on loans and leases
Individually evaluated	$	—	$	—	$	—	$	—	$	11	$	11
Collectively evaluated		697		185		1,847		80		271		3,080
Total allowance for credit losses on loans:	$	697	$	185	$	1,847	$	80	$	282	$	3,091
Reserve for unfunded lending commitments
Individually evaluated	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated		3		39		11		12		42		107
Reserve for unfunded lending commitments:		3		39		11		12		42		107
Total allowance for credit losses, September 30, 2024	$	700	$	224	$	1,858	$	92	$	324	$	3,198
Loans, Quarter ended September 30, 2024
Individually evaluated	$	1,064	$	203	$	464	$	23	$	36	$	1,790
Collectively evaluated		80,383		23,036		111,525		12,113		10,412		237,469
Total loans, September 30, 2024	$	81,447	$	23,239	$	111,989	$	12,136	$	10,448	$	239,259


	Real Estate,		Real Estate,		Real Estate,		Commercial
	Residential		Construction		Nonresidential		and Industrial		Other		Total
Nine months ended September 30, 2023
Allowance for credit losses on loans and leases
Beginning balance	$	913	$	392	$	1,639	$	143	$	251	$	3,338
Cumulative effect of change in accounting principle		396		(58)		(215)		(84)		(49)		(10)
Charge-offs		—		—		(270)		—		(157)		(427)
Recoveries		—		—		487		—		93		580
Net provision for credit losses		(299)		(150)		169		(8)		8		(280)
Ending Balance	$	1,010	$	184	$	1,810	$	51	$	146	$	3,201
Reserve for unfunded lending commitments
Beginning balance	$	—	$	—	$	—	$	—	$	—	$	—
Cumulative effect of change in accounting principle		4		30		5		15		18		72
Provision for losses on unfunded commitments		1		18		(1)		(2)		(11)		5
Ending balance-reserve for unfunded commitments	$	5	$	48	$	4	$	13	$	7	$	77
Total allowance for credit losses on loans and unfunded commitments	$	1,015	$	232	$	1,814	$	64	$	153	$	3,278
Quarter ended September 30, 2023
Allowance for credit losses on loans and leases
Beginning balance	$	649	$	217	$	2,144	$	67	$	147	$	3,224
Charge-offs		—		—		—		—		(40)		(40)
Recoveries		—		—		—		—		17		17
Net provision for credit losses		361		(33)		(334)		(16)		22		—
Ending Balance	$	1,010	$	184	$	1,810	$	51	$	146	$	3,201
Reserve for unfunded lending commitments
Beginning balance	$	6	$	38	$	4	$	—	$	7	$	55
Provision for losses on unfunded commitments		(1)		10		—		13		—		22
Ending balance-reserve for unfunded commitments	$	5	$	48	$	4	$	13	$	7	$	77
Total allowance for credit losses on loans and unfunded commitments	$	1,015	$	232	$	1,814	$	64	$	153	$	3,278
Allowance for credit losses on loans and leases
Individually evaluated	$	44	$	—	$	—	$	—	$	7	$	51
Collectively evaluated		966		184		1,810		51		139		3,150
Total allowance for credit losses on loans:	$	1,010	$	184	$	1,810	$	51	$	146	$	3,201
Reserve for unfunded lending commitments
Individually evaluated	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated		5		48		4		13		7		77
Reserve for unfunded lending commitments:		5		48		4		13		7		77
Total allowance for credit losses, September 30, 2023	$	1,015	$	232	$	1,814	$	64	$	153	$	3,278
Loans, Quarter ended September 30, 2023
Individually evaluated	$	726	$	92	$	103	$	—	$	12	$	933
Collectively evaluated		72,299		26,815		110,468		10,831		8,336		228,749
Total loans, September 30, 2023	$	73,025	$	26,907	$	110,571	$	10,831	$	8,348	$	229,682

The following table further disaggregates gross charge-off disclosures by amortized cost by credit quality indicator, class, and year of origination for the nine month periods ended September 30, 2024 and September 30, 2023 (in thousands). The Company defines vintage as the later of origination or restructure date.


	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2024		2023		2022		2021		2020		Prior		Loans		Term Loans		Total
September 30, 2024:
Real estate, residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
A,B, or C		—		—		—		—		—		—		—		—		—
S		—		—		—		—		—		—		—		—		—
D		—		—		—		—		—		—		—		—		—
E		—		—		—		—		—		57		—		—		57
F		—		—		—		—		—		—		—		—		—
Total Real estate, nonresidential loans	$	—	$	—	$	—	$	—	$	—	$	57	$	—	$	—	$	57
Consumer/Other
A,B, or C	$	121	$	1	$	—	$	—	$	—	$	—	$	—	$	—	$	122
S		—		—		—		—		—		—		—		—		—
D		—		6		—		—		—		7		—		—		13
E		—		7		20		—		—		3		—		—		30
F		—		—		—		—		—		—		—		—		—
Total Consumer/Other Loans	$	121	$	14	$	20	$	—	$	—	$	10	$	—	$	—	$	165
Total Gross Loan Chargeoffs:	$	121	$	14	$	20	$	—	$	—	$	67	$	—	$	—	$	222


	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2023		2022		2021		2020		2019		Prior		Loans		Term Loans		Total
September 30, 2023:
Real estate, nonresidential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
A,B, or C		—		—		—		—		—		—		—		—		—
S		—		—		—		—		—		—		—		—		—
D		—		—		—		—		—		—		—		—		—
E		—		—		—		—		—		270		—		—		270
F		—		—		—		—		—		—		—		—		—
Total Real estate, nonresidential loans	$	—	$	—	$	—	$	—	$	—	$	270	$	—	$	—	$	270
Consumer/Other
A,B, or C	$	152	$	2	$	—	$	—	$	—	$	—	$	—	$	—	$	154
S		—		—		—		—		—		—		—		—		—
D		—		—		—		—		—		—		—		—		—
E		—		—		—		3		—		—		—		—		3
F		—		—		—		—		—		—		—		—		—
Total Consumer/Other Loans	$	152	$	2	$	—	$	3	$	—	$	—	$	—	$	—	$	157
Total Gross Loan Chargeoffs:	$	152	$	2	$	—	$	3	$	—	$	270	$	—	$	—	$	427