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Loans and Allowance for Credit Losses
12 Months Ended
Dec. 31, 2023
Loans and Allowance for Credit Losses  
Loans and Allowance for Credit Losses

NOTE 6 Loans and Allowance for Credit Losses

The following table presents total loans outstanding, by portfolio segment, as of December 31, 2023 and 2022:

​

​

​

​

​

​

​

​

​

    

December 31, 

    

December 31, 

(dollars in thousands)

    

2023

    

2022

Commercial

​

​

​

​

​

​

Commercial and industrial

​

$

598,321

​

$

583,876

Real estate construction

​

 

124,034

​

 

97,810

Commercial real estate

​

 

1,126,912

​

 

881,670

Total commercial

​

 

1,849,267

​

 

1,563,356

Consumer

​

 

  

​

 

  

Residential real estate first mortgage

​

 

726,879

​

 

679,551

Residential real estate junior lien

​

 

154,134

​

 

150,479

Other revolving and installment

​

 

29,303

​

 

50,608

Total consumer

​

 

910,316

​

 

880,638

Total loans

​

$

2,759,583

​

$

2,443,994

​

Total loans include net deferred loan fees and costs of $0.2 million and $0.9 million at December 31, 2023 and 2022, respectively. Unearned discounts associated with the acquisition of Metro Phoenix Bank totaled $5.1 million and $7.1 million as of December 31, 2023 and 2022, respectively.

Accrued interest receivable on loans is recorded within accrued interest receivable, and totaled $12.2 million at December 31, 2023 and $9.2 million at December 31, 2022.

The Company manages its loan portfolio proactively to effectively identify problem credits and assess trends early, implement effective work-out strategies, and take charge-offs as promptly as practical. In addition, the Company continuously reassesses its underwriting standards in response to credit risk posed by changes in economic conditions. The Company monitors and manages credit risk through the following governance structure:

​

●The Credit Risk team, Collection and Special Assets team and the Credit Governance Committee, which is an internal management committee comprised of various executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Collections and Special Assets, Risk, and Commercial and Retail Banking, oversee the Company's systems and procedures to monitor the credit quality of its loan portfolio, conduct a loan review program, and maintain the integrity of the loan rating system.

​

●The Loan Committee is responsible for reviewing and approving all credit requests that exceed individual limits that have not been countersigned by an individual with sufficient assigned authority. This committee has full authority to commit the Bank to any request that fits within its assigned approval authority.

​

●The adequacy of the ACL is overseen by the ACL Governance Committee, which is an internal management committee comprised of various Company executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Collections and Special Assets, Risk, and Commercial and Retail Banking. The ACL Governance Committee supports the oversight efforts of the Board of Directors.

​

●The Board of Directors has approval authority and responsibility for all matters regarding loan policy, reviews all loans approved or declined by the Loan Committee, approves lending authority and monitors asset quality and concentration levels.

​

●The ACL Governance Committee and Bank Board of Directors has approval authority and oversight responsibility for the ACL adequacy and methodology.

​

Loans with a carrying value of $1.6 billion and $1.5 billion were pledged at December 31, 2023 and 2022, respectively, to secure FHLB borrowings, public deposits, and for other purposes required or permitted by law.

​

Segmentation

For purposes of determining the ACL on loans, the Company disaggregates its loans into portfolio segments. Each portfolio segment possesses unique risk characteristics that are considered when determining the appropriate level of allowance. As of December 31, 2023, the Company's loan portfolio segments, as determined based on the unique risk characteristics of each, included the following:

​

Commercial & Industrial: Commercial loans consist of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to, accounts receivable, inventory, plant and equipment, and/or real estate, if applicable. Commercial loans are primarily paid by the operating cash flow of the borrower. Commercial loans may be secured or unsecured.

​

Commercial Real Estate – Construction, Land & Development: Construction, Land & Development commercial estate loans primarily consists of loans to commercial real estate construction projects until they are completed. The construction projects are for real property that may include, but are not limited to multifamily residential, commercial/retail office space, industrial/warehouse space, hotels, assisted living facilities and other specific use properties. Construction, Land & Development commercial real estate loans are typically written with interest only, variable rate, multi advance structures. Collateral values are determine based upon appraisals and evaluations in accordance with established policy guidelines. Maximum loan-to-value ratios at origination are governed by established policy and regulatory guidelines.

​

Commercial Real Estate – Multifamily: Multifamily commercial estate loans are investment properties in which the primary source for repayment of the loan by the borrower is derived from rental income associated with the property or the proceeds of the sale, refinancing, or permanent refinancing of the property. Multifamily commercial real estate loans consist of mortgage loans to finance investments in real property including multifamily residential properties, Commercial real estate loans are typically written with amortizing payment structures. Collateral values are determined based upon appraisals and evaluations in accordance with established policy guidelines. Maximum loan-to-value ratios at origination are governed by established policy and regulatory guidelines.

​

Commercial Real Estate – Non-Owner Occupied: Non-owner occupied commercial estate loans are investment properties in which the primary source for repayment of the loan by the borrower is derived from rental income associated with the property or the proceeds of the sale, refinancing, or permanent refinancing of the property. Non owner occupied commercial real estate loans consist of mortgage loans to finance investments in real property that may include, but are not limited to, commercial/retail office space, industrial/warehouse space, hotels, assisted living facilities and other specific use properties. Commercial real estate loans are typically written with amortizing payment structures. Collateral values are determined based upon appraisals and evaluations in accordance with established policy guidelines. Maximum loan to value ratios at origination are governed by established policy and regulatory guidelines.

​

Commercial Real Estate – Owner Occupied: Generally, owner occupied commercial real estate loans are properties that are owned and operated by the borrower, and the primary source for repayment is the cash flow from the ongoing operations and activities conducted by the borrower's business. Owner occupied commercial real estate loans consist of mortgage loans to finance investments in real property that may include, but are not limited to, commercial/retail office space, restaurants, educational and medical practice facilities and other specific use properties. Commercial real estate loans are typically written with amortizing payment structures. Collateral values are determined based upon appraisals and evaluations in accordance with established policy guidelines. Maximum loan to value ratios at origination are governed by established policy and regulatory guidelines.

​

​

Agricultural: Agricultural loans include loans secured by farmland and loans for agricultural production. Farmland includes purposes such as crop and livestock production. Farmland loans are typically written with amortizing payment structures. Collateral values for farmland are determined based upon appraisals and evaluations in accordance with established policy guidelines and maximum loan-to-value ratios at origination are governed by established policy and regulatory guidelines. Agricultural production loans are for the purpose of financing working capital and/or capital investment for agriculture production activities. Collateral generally consists of pledges of business assets including, but not limited to, accounts receivable, inventory, plant and equipment, and/or real estate in applicable. Agricultural production loans are primarily paid by the operating cash flow of the borrower. Agricultural production loans may be secured or unsecured.

​

Residential – 1st Lien: Residential real estate loans held in the Company's loan portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan to value ratios within established policy guidelines. Collateral consists of senior mortgage liens on one to four family residences, including for investment purposes.

​

Residential – Construction: Residential real estate construction loans held in the Company's loan portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan-to-value ratios within established policy guidelines. Residential real estate construction loans are typically written with interest only, variable rate, multi advance structures. Collateral consists of residential construction projects for one to four family residences, including for investment purposes.

​

HELOC: Home equity lines of credit are made to qualified individuals and are secured by senior or junior mortgage liens on owner occupied one to four family homes, condominiums, or vacation homes. Home equity lines of credit have a variable rate and are billed as interest only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the principal balance plus all accrued interest. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan-to-value ratios within established policy guidelines.

​

Residential – Jr Lien: Residential real estate loans held in the Company's loan portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan to value ratios within established policy guidelines. Collateral consists of junior mortgage liens on one to four family residences, including for investment purposes.

​

Consumer: Consumer loan products including personal lines of credit and amortizing loans made to qualified individuals for various purposes such as education, auto loans, debt consolidation, personal expenses or overdraft protection. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines, as applicable. Consumer loans may be secured or unsecured.

​

​

ACL on Loans

The following tables present, by loan portfolio segment, a summary of the changes in the ACL for the three years ending December 31, 2023, 2022, and 2021:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year ended December 31, 2023

​

​

Beginning

​

Adoption

​

Provision for

​

Loan

​

Loan

​

Ending

(dollars in thousands)

    

Balance

    

of ASC 326

    

Credit Losses(1)

    

Charge-offs

    

Recoveries

    

Balance

Commercial

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial and industrial

​

$

9,233

​

$

(707)

​

$

645

​

$

(436)

​

$

1,159

​

$

9,894

Real estate construction

​

​

1,437

​

​

2,549

​

​

2,125

​

​

—

​

​

—

​

​

6,111

Commercial real estate

​

​

12,761

​

​

(131)

​

​

(778)

​

​

—

​

​

45

​

​

11,897

Total commercial

​

​

23,431

​

​

1,711

​

​

1,992

​

​

(436)

​

​

1,204

​

​

27,902

Consumer

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Residential real estate first mortgage

​

​

5,857

​

​

2,269

​

​

(1,829)

​

​

(49)

​

​

330

​

​

6,578

Residential real estate junior lien

​

​

1,318

​

​

(27)

​

​

(115)

​

​

(77)

​

​

52

​

​

1,151

Other revolving and installment

​

​

540

​

​

(96)

​

​

(273)

​

​

(51)

​

​

92

​

​

212

Total consumer

​

​

7,715

​

​

2,146

​

​

(2,217)

​

​

(177)

​

​

474

​

​

7,941

Total

​

$

31,146

​

$

3,857

​

$

(225)

​

$

(613)

​

$

1,678

​

$

35,843

(1)The difference in the credit loss expense reported herein compared to the consolidated statements of income is associated with the credit loss expense of $2.2 million related to off-balance sheet credit exposure and $40 thousand related to investment securities held-to-maturity.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year ended December 31, 2022

​

​

Beginning

​

Provision for

​

Loan

​

Loan

​

Ending

(dollars in thousands)

    

Balance

    

Loan Losses

    

Charge-offs

    

Recoveries

    

Balance

Commercial

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

Commercial and industrial

​

$

9,218

​

$

950

​

$

(1,396)

​

$

461

​

$

9,233

Real estate construction

​

 

810

​

 

551

​

 

—

​

 

76

​

 

1,437

Commercial real estate

​

 

12,778

​

 

(151)

​

 

—

​

 

134

​

 

12,761

Total commercial

​

 

22,806

​

 

1,350

​

 

(1,396)

​

 

671

​

 

23,431

Consumer

​

 

​

​

 

  

​

 

  

​

 

  

​

 

  

Residential real estate first mortgage

​

 

6,874

​

 

(1,017)

​

 

—

​

 

—

​

 

5,857

Residential real estate junior lien

​

 

1,380

​

 

(344)

​

 

—

​

​

282

​

 

1,318

Other revolving and installment

​

 

512

​

 

11

​

 

(153)

​

 

170

​

 

540

Total consumer

​

 

8,766

​

 

(1,350)

​

 

(153)

​

 

452

​

 

7,715

Total

​

$

31,572

​

$

—

​

$

(1,549)

​

$

1,123

​

$

31,146

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year ended December 31, 2021

​

​

Beginning

​

Provision for

​

Loan

​

Loan

​

Ending

(dollars in thousands)

    

Balance

    

Loan Losses

    

Charge-offs

    

Recoveries

    

Balance

Commercial

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

Commercial and industrial

​

$

10,547

​

$

(1,759)

​

$

(1,230)

​

$

1,660

​

$

9,218

Real estate construction

​

 

690

​

 

120

​

 

—

​

 

—

​

 

810

Commercial real estate

​

 

14,574

​

 

(2,082)

​

 

(536)

​

 

822

​

 

12,778

Total commercial

​

 

25,811

​

 

(3,721)

​

 

(1,766)

​

 

2,482

​

 

22,806

Consumer

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

Residential real estate first mortgage

​

 

6,174

​

 

700

​

 

—

​

 

—

​

 

6,874

Residential real estate junior lien

​

 

1,472

​

 

(215)

​

 

—

​

 

123

​

 

1,380

Other revolving and installment

​

 

789

​

 

(264)

​

 

(156)

​

 

143

​

 

512

Total consumer

​

 

8,435

​

 

221

​

 

(156)

​

 

266

​

 

8,766

Total

​

$

34,246

​

$

(3,500)

​

$

(1,922)

​

$

2,748

​

$

31,572

​

​

The ACL on loans at December 31, 2023, was $35.8 million, an increase of $4.7 million, or 15.1%, since December 31, 2022. The increase was primarily due to the adoption of CECL, which resulted in an additional allowance of $3.9 million in the ACL on loans. As of December 31, 2023 and 2022, the significant model inputs and assumptions used within the discounted cash flow model for purposes of estimating the ACL on loans were:

​

●Macroeconomic (loss) drivers: As of December 31, 2023 and 2022, the following loss drivers for each loan segment were used to calculate the expected PD over the forecast and reversion period:
●Commercial & Industrial – National Unemployment; Change in National GDP
●CRE – Construction, Land & Development – National Unemployment; Change in National GDP
●CRE – Multifamily – National Unemployment
●CRE – Non-Owner Occupied – National Unemployment; Change in National GDP
●CRE – Owner Occupied – National Unemployment
●Agricultural – (None)
●Residential – 1st Lien – National Unemployment; Change in National Home Price Index (“HPI”)
●Residential – Construction – National Unemployment; Change in National HPI
●Residential – HELOC – National Unemployment; Change in National HPI
●Residential – Jr Lien – National Unemployment; Change in National HPI
●Consumer – National Unemployment; Change in National GDP
●Paycheck Protection Program – (None)

​

After adoption of ASU 2016-13, given the strong loan growth and the future economic uncertainty, the reserve increased $840 thousand during 2023. This increase was partially offset by the release of certain qualitative factors due to strong asset quality and the continued maturity of the overall model. The increase in the reserve represents the elevated risk of credit loss within the Company's portfolio.

​

Credit Concentrations

The Company focuses on maintaining a well-balanced and diversified loan portfolio. Despite such efforts, it is recognized that credit concentrations may occasionally emerge as a result of economic conditions, changes in local demand, natural loan growth and runoff. To identify credit concentrations effectively, all commercial and industrial and owner occupied real estate loans are assigned Standard Industrial Classification codes, North American Industry Classification System codes, and state and county codes. Property type coding is used for investment real estate. As of December 31, 2023, the Company's total exposure to the general business industry was 10.7% of total loans. There were no other industry concentrations exceeding 10% of the Company's total loan portfolio as of December 31, 2023.

​

Credit Quality Indicators

The Company’s consumer loan portfolio is primarily comprised of secured loans that are evaluated at origination on a centralized basis against standardized underwriting criteria. The Company generally does not risk rate consumer loans unless a default event such as bankruptcy or extended nonperformance takes place. Credit quality for the consumer loan portfolio is measured by delinquency rates, nonaccrual amounts and actual losses incurred. These loans are rated as either performing or non-performing.

The Company assigns a risk rating to all commercial loans, except pools of homogeneous loans, and performs detailed internal and external reviews of risk rated loans over a certain threshold to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by the Company’s regulators. During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate and the estimated fair values of collateral securing the loans. These credit quality indicators are used to assign a risk rating to each individual loan.

​

The Company’s ratings are aligned to pass and criticized categories. The criticized category includes special mention, substandard, and doubtful risk ratings. The risk ratings are defined as follows:

●Pass: A pass loan is a credit with no existing or known potential weaknesses deserving of management’s close attention.
●Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, this potential weakness may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.
●Substandard: Loans classified as substandard are not adequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Well-defined weaknesses include a borrower’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time, or the failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
●Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
●Loss: Loans classified as loss are considered uncollectible and charged off immediately.

​

The following table sets forth the amortized cost basis of loans by credit quality indicator and vintage based on the most recent analysis performed, as of December 31, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revolving

​

​

​

(dollars in thousands)

    

Term Loans Amortized Cost Basis by Origination Year

​

Loans Amortized

​

​

​

As of December 31, 2023

​

2023

​

2022

​

2021

​

2020

​

2019

​

Prior

​

Cost Basis

​

Total

Commercial and industrial

​

​

​

    

​

​

    

​

​

    

​

​

    

​

​

    

​

​

    

​

​

    

​

​

Pass

​

$

197,533

​

$

89,090

​

$

67,691

​

$

64,272

​

$

34,603

​

$

15,053

​

$

100,239

​

$

568,481

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

464

​

​

4,844

​

​

236

​

​

6,328

​

​

94

​

​

2,513

​

​

15,361

​

​

29,840

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Subtotal

​

$

197,997

​

$

93,934

​

$

67,927

​

$

70,600

​

$

34,697

​

$

17,566

​

$

115,600

​

$

598,321

Gross charge-offs for the year ended

​

$

39

​

$

—

​

$

49

​

$

11

​

$

247

​

$

90

​

$

—

​

$

436

Real estate construction

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

29,902

​

$

57,944

​

$

14,326

​

$

122

​

$

—

​

$

952

​

$

121

​

$

103,367

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

 

​

20,667

 

​

—

 

​

—

 

​

—

 

​

—

​

​

—

 

​

20,667

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Subtotal

​

$

29,902

​

$

78,611

​

$

14,326

​

$

122

​

$

—

​

$

952

​

$

121

​

$

124,034

Gross charge-offs for the year ended

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Commercial real estate

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

272,261

​

$

265,549

​

$

142,027

​

$

153,796

​

$

116,861

​

$

159,454

​

$

7,794

​

$

1,117,742

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

262

​

​

—

​

​

262

Substandard

​

​

—

​

​

587

​

​

2,872

​

​

—

​

​

3,690

​

​

1,759

​

​

—

 

​

8,908

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Subtotal

​

$

272,261

​

$

266,136

​

$

144,899

​

$

153,796

​

$

120,551

​

$

161,475

​

$

7,794

​

$

1,126,912

Gross charge-offs for the year ended

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Residential real estate first mortgage

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

$

72,180

​

$

207,177

​

$

218,719

​

$

108,100

​

$

33,102

​

$

87,212

​

$

284

​

$

726,774

Non-performing

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

105

​

​

—

​

​

105

Subtotal

​

$

72,180

​

$

207,177

​

$

218,719

​

$

108,100

​

$

33,102

​

$

87,317

​

$

284

​

$

726,879

Gross charge-offs for the year ended

​

$

—

​

$

—

​

$

9

​

$

—

​

$

—

​

$

40

​

$

—

​

$

49

Residential real estate junior lien

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

$

18,408

​

$

15,655

​

$

5,946

​

$

4,857

​

$

1,769

​

$

5,280

​

$

100,438

​

$

152,353

Non-performing

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

1,781

​

​

1,781

Subtotal

​

$

18,408

​

$

15,655

​

$

5,946

​

$

4,857

​

$

1,769

​

$

5,280

​

$

102,219

​

$

154,134

Gross charge-offs for the year ended

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

77

​

$

—

​

$

77

Other revolving and installment

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

$

5,320

​

$

6,395

​

$

980

​

$

4,489

​

$

1,554

​

$

952

​

$

9,613

​

$

29,303

Non-performing

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Subtotal

​

$

5,320

​

$

6,395

​

$

980

​

$

4,489

​

$

1,554

​

$

952

​

$

9,613

​

$

29,303

Gross charge-offs for the year ended

​

$

4

​

$

2

​

$

—

​

$

31

​

$

6

​

$

8

​

$

—

​

$

51

Total loans

​

$

596,068

​

$

667,908

​

$

452,797

​

$

341,964

​

$

191,673

​

$

273,542

​

$

235,631

​

$

2,759,583

Gross charge-offs for the year ended

​

$

43

​

$

2

​

$

58

​

$

42

​

$

253

​

$

215

​

$

—

​

$

613

​

The following table sets forth the risk category of loans by class and credit quality indicator used on the most recent analysis performed as of December 31, 2022:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2022

​

​

​

​

​

Criticized

​

​

​

​

​

​

​

​

Special

​

​

​

​

​

​

​

​

​

(dollars in thousands)

    

Pass

    

Mention

    

Substandard

    

Doubtful

    

Total

Commercial

 

​

  

 

​

  

 

​

  

 

​

  

 

​

  

Commercial and industrial

​

$

558,694

​

$

21,969

​

$

3,213

​

$

—

​

$

583,876

Real estate construction

​

 

97,548

​

 

—

​

 

262

​

 

—

​

 

97,810

Commercial real estate

​

 

873,270

​

 

—

​

 

8,400

​

 

—

​

 

881,670

Total commercial

​

​

1,529,512

​

​

21,969

​

​

11,875

​

​

—

​

​

1,563,356

Consumer

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

Residential real estate first mortgage

​

 

678,743

​

 

63

​

 

745

​

 

—

​

 

679,551

Residential real estate junior lien

​

 

149,847

​

 

—

​

 

632

​

 

—

​

 

150,479

Other revolving and installment

​

 

50,607

​

 

—

​

 

1

​

 

—

​

 

50,608

Total consumer

​

 

879,197

​

 

63

​

 

1,378

​

 

—

​

 

880,638

Total loans

​

$

2,408,709

​

$

22,032

​

$

13,253

​

$

—

​

$

2,443,994

​

Past Due and Nonaccrual Loans

The Company closely monitors the performance of its loan portfolio. A loan is placed on non-accrual when the financial condition of the borrower is deteriorating, payment in full of both principal and interest is not expected as scheduled or principal or interest has been in default for 90 days or more. Exceptions may be made if the asset is secured by collateral sufficient to satisfy both the principal and accrued interest in full and collection is reasonably assured. When one loan to a borrower is placed on non-accrual, all other loans to the borrower are re-evaluated to determine if they should also be placed on non-accrual. All previously accrued and unpaid interest is reversed at that time. A loan will return to accrual when collection of principal and interest is assured and the borrower has demonstrated timely payments of principal and interest for a reasonable period, generally at least six months.

The following tables present past due aging analysis of total loans outstanding, by portfolio segment, as of December 31, 2023 and 2022, respectively:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

​

​

​

​

​

​

​

​

​

​

90 Days

​

​

​

​

​

​

​

​

Accruing

​

30 - 59 Days

​

60 - 89 Days

​

or More

​

​

​

​

Total

(dollars in thousands)

    

Current

    

Past Due

    

Past Due

    

Past Due

    

Nonaccrual

    

Loans

Commercial

 

​

  

 

​

  

 

​

  

 

​

  

 

​

  

 

​

  

Commercial and industrial

​

$

590,663

​

$

924

​

$

—

​

$

139

​

$

6,595

​

$

598,321

Real estate construction

​

 

124,034

​

 

—

​

 

—

​

 

—

​

 

—

​

 

124,034

Commercial real estate

​

 

1,125,669

​

 

128

​

 

—

​

 

—

​

 

1,115

​

 

1,126,912

Total commercial

​

 

1,840,366

​

 

1,052

​

 

—

​

 

139

​

 

7,710

​

 

1,849,267

Consumer

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

Residential real estate first mortgage

​

 

724,786

​

 

901

​

 

554

​

 

—

​

​

638

​

 

726,879

Residential real estate junior lien

​

 

153,220

​

 

666

​

 

—

​

 

—

​

 

248

​

 

154,134

Other revolving and installment

​

 

29,086

​

 

170

​

 

47

​

 

—

​

 

—

​

 

29,303

Total consumer

​

 

907,092

​

 

1,737

​

 

601

​

 

—

​

 

886

​

 

910,316

Total loans

​

$

2,747,458

​

$

2,789

​

$

601

​

$

139

​

$

8,596

​

$

2,759,583

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2022

​

​

​

​

​

​

​

​

​

​

​

90 Days

​

​

​

​

​

​

​

​

Accruing

​

30 - 59 Days

​

60 - 89 Days

​

or More

​

​

​

​

Total

(dollars in thousands)

    

Current

    

Past Due

    

Past Due

    

Past Due

    

Nonaccrual

    

Loans

Commercial

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

Commercial and industrial

​

$

580,288

​

$

2,332

​

$

94

​

$

—

​

$

1,162

​

$

583,876

Real estate construction

​

 

97,370

​

 

—

​

 

—

​

 

—

​

 

440

​

 

97,810

Commercial real estate

​

 

879,830

​

 

368

​

 

—

​

 

—

​

 

1,472

​

 

881,670

Total commercial

​

 

1,557,488

​

 

2,700

​

 

94

​

 

—

​

 

3,074

​

 

1,563,356

Consumer

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

Residential real estate first mortgage

​

 

677,471

​

 

1,234

​

 

311

​

 

—

​

 

535

​

 

679,551

Residential real estate junior lien

​

 

149,918

​

 

377

​

 

—

​

 

—

​

 

184

​

 

150,479

Other revolving and installment

​

 

50,360

​

 

237

​

 

10

​

 

—

​

 

1

​

 

50,608

Total consumer

​

 

877,749

​

 

1,848

​

 

321

​

 

—

​

 

720

​

 

880,638

Total loans

​

$

2,435,237

​

$

4,548

​

$

415

​

$

—

​

$

3,794

​

$

2,443,994

​

​

​

In calculating expected credit losses, the Company includes loans on nonaccrual status and loans 90 days or more past due and still accruing. The following table presents the amortized cost basis on nonaccrual status loans and loans 90 days or more past due and still accruing as of December 31, 2023 and 2022:

​

​

​

​

​

​

​

​

​

​

​

​

​

As of December 31, 2023

​

​

​

​

​

​

​

90 Days

​

​

Nonaccrual

​

​

​

​

or More

​

​

with no Allowance

​

​

​

​

Past Due

(dollars in thousands)

​

for Credit Losses

​

Nonaccrual

​

and Accruing

Commercial

​

​

​

​

​

​

​

​

​

Commercial and industrial

​

$

79

​

$

6,595

​

$

139

Real estate construction

​

​

—

​

​

—

​

​

—

Commercial real estate

​

​

95

​

​

1,115

​

​

—

Total commercial

​

​

174

​

​

7,710

​

​

139

Consumer

​

​

​

​

​

​

​

​

​

Residential real estate first mortgage

​

​

632

​

​

638

​

​

—

Residential real estate junior lien

​

​

185

​

​

248

​

​

—

Other revolving and installment

​

​

—

​

​

—

​

​

—

Total consumer

​

​

817

​

​

886

​

​

—

Total loans

​

$

991

​

$

8,596

​

$

139

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2022

​

​

​

​

​

​

​

90 Days

​

​

Nonaccrual

​

​

​

​

or More

​

​

with no Allowance

​

​

​

​

Past Due

(dollars in thousands)

​

for Credit Losses

​

Nonaccrual

​

and Accruing

Commercial

​

​

​

​

​

​

​

​

​

Commercial and industrial

​

$

638

​

$

1,162

​

$

—

Real estate construction

​

​

—

​

​

440

​

​

—

Commercial real estate

​

​

576

​

​

1,472

​

​

—

Total commercial

​

​

1,214

​

​

3,074

​

​

—

Consumer

​

​

​

​

​

​

​

​

​

Residential real estate first mortgage

​

​

535

​

​

535

​

​

—

Residential real estate junior lien

​

​

184

​

​

184

​

​

—

Other revolving and installment

​

​

1

​

​

1

​

​

—

Total consumer

​

​

720

​

​

720

​

​

—

Total loans

​

$

1,934

​

$

3,794

​

$

—

​

Interest income that would have been recognized if loans on nonaccrual status had been current in accordance with their original terms for the years ended December 31, 2023, 2022, and 2021 is estimated to have been $469 thousand, $155 thousand, and $183 thousand, respectively.

The Company’s policy is to reverse previously recorded interest income when a loan is placed on nonaccrual. As a result, the Company did not record any interest income on its nonaccrual loans for the years ended years ended December 31, 2023, 2022 and 2021. As of December 31, 2023 and 2022, total accrued interest receivable on loans, which had been excluded from reported amortized cost basis on loans; was $12.2 million and $9.2 million, respectively, and was reported within accrued interest receivable on the consolidated statements of condition. An allowance was not carried on the accrued interest receivable at either date.

​

In cases where a borrower experiences financial difficulty, the Company may make certain concessions for which the terms of the loan are modified. Loans experiencing financial difficulty can include modifications for an interest rate reduction below current market rates, a forgiveness of principal balance, an extension of the loan term, an-other than significant payment delay, or some combination of similar types of modifications. During the years ended

December 31, 2023 and 2022, the Company did not provide any modifications to loans under these circumstances that were experiencing financial difficulty.

The following table presents the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine credit losses, and the related ACL allocated to these loans, as of December 31, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of December 31, 2023

​

​

Primary Type of Collateral

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Allowance for

(dollars in thousands)

​

Real estate

​

Equipment

​

Other

​

Total

​

Credit Losses

Commercial

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial and industrial

​

$

6,124

​

$

—

​

$

—

​

$

6,124

​

$

2,384

Commercial real estate

​

​

695

​

​

—

​

​

96

​

​

791

​

​

601

Total commercial

​

​

6,819

​

​

—

​

​

96

​

​

6,915

​

​

2,985

Consumer

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Residential real estate first mortgage

​

​

638

​

​

—

​

​

—

​

​

638

​

​

3

Residential real estate junior lien

​

​

134

​

​

22

​

​

93

​

​

249

​

​

6

Total consumer

​

​

772

​

​

22

​

​

93

​

​

887

​

​

9

Total loans

​

$

7,591

​

$

22

​

$

189

​

$

7,802

​

$

2,994

​

Collateral dependent loans are loans for which the repayment is expected to be provided substantially by the underlying collateral and there are no other available and reliable sources of repayment.

Pre-ASC 326 Adoption impaired loan disclosures

The following tables present the recorded investment in loans and related allowance for the loan losses, by portfolio segment, disaggregated on the basis of the Company’s impairment methodology, as of December 31, 2023 and 2022:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2022

​

​

Recorded Investment

​

Allowance for Loan Losses

​

​

Individually

​

Collectively

​

​

​

​

Individually

​

Collectively

​

​

​

(dollars in thousands)

    

Evaluated

    

Evaluated

    

Total

    

Evaluated

    

Evaluated

    

Total

Commercial

​

​

  

 

​

  

 

​

  

​

​

​

​

​

​

​

​

​

Commercial and industrial

​

$

1,313

​

$

582,563

​

$

583,876

​

$

275

​

$

8,958

​

$

9,233

Real estate construction

​

 

262

​

 

97,548

​

 

97,810

​

​

97

​

​

1,340

​

​

1,437

Commercial real estate

​

 

1,472

​

 

880,198

​

 

881,670

​

​

582

​

​

12,179

​

​

12,761

Total commercial

​

 

3,047

​

 

1,560,309

​

 

1,563,356

​

​

954

​

​

22,477

​

​

23,431

Consumer

​

 

  

​

 

  

​

 

  

​

​

​

​

​

​

​

​

​

Residential real estate first mortgage

​

 

535

​

 

679,016

​

 

679,551

​

​

—

​

​

5,857

​

​

5,857

Residential real estate junior lien

​

 

184

​

​

150,295

​

 

150,479

​

​

—

​

​

1,318

​

​

1,318

Other revolving and installment

​

 

1

​

 

50,607

​

 

50,608

​

​

—

​

​

540

​

​

540

Total consumer

​

 

720

​

 

879,918

​

 

880,638

​

​

—

​

​

7,715

​

​

7,715

Total loans

​

$

3,767

​

$

2,440,227

​

$

2,443,994

​

$

954

​

$

30,192

​

$

31,146

​

The table below summarizes key information on impaired loans as of December 31, 2022:

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2022

​

​

Recorded

​

Unpaid

​

Related

(dollars in thousands)

    

Investment

    

Principal

    

Allowance

Impaired loans with a valuation allowance

​

​

​

​

​

​

​

​

​

Commercial and industrial

​

$

675

​

$

711

​

$

275

Real estate construction

​

​

262

​

​

440

​

​

97

Commercial real estate

​

 

896

​

 

900

​

 

582

Residential real estate first mortgage

​

​

—

​

​

—

​

​

—

Total impaired loans with a valuation allowance

​

​

1,833

​

​

2,051

​

​

954

Impaired loans without a valuation allowance

 

​

  

 

​

  

 

​

  

Commercial and industrial

​

​

638

​

​

767

​

​

—

Real estate construction

​

​

—

​

​

—

​

​

—

Commercial real estate

​

​

576

​

 

660

​

 

—

Residential real estate first mortgage

​

​

535

​

 

573

​

 

—

Residential real estate junior lien

​

​

184

​

 

218

​

 

—

Other revolving and installment

​

​

1

​

 

1

​

 

—

Total impaired loans without a valuation allowance

​

​

1,934

​

​

2,219

​

​

—

Total impaired loans

​

​

  

​

 

  

​

 

  

Commercial and industrial

​

​

1,313

​

​

1,478

​

​

275

Real estate construction

​

​

262

​

​

440

​

​

97

Commercial real estate

​

 

1,472

​

 

1,560

​

 

582

Residential real estate first mortgage

​

​

535

​

​

573

​

​

—

Residential real estate junior lien

​

 

184

​

 

218

​

 

—

Other revolving and installment

​

 

1

​

 

1

​

 

—

Total impaired loans

​

$

3,767

​

$

4,270

​

$

954

​

​

The table below presents the average recorded investment in impaired loans and interest income for the two years ending December 31, 2022 and 2021:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended December 31, 

​

​

2022

​

2021

​

​

Average

​

​

​

​

Average

​

​

​

​

​

Recorded

​

Interest

​

Recorded

​

Interest

(dollars in thousands)

    

Investment

    

Income

    

Investment

    

Income

Impaired loans with a valuation allowance

​

 

  

​

 

  

​

​

​

​

​

​

Commercial and industrial

​

$

722

​

$

13

​

$

517

​

$

13

Real estate construction

​

​

442

​

​

—

​

​

—

​

​

—

Commercial real estate

​

 

935

​

 

—

​

​

187

​

 

7

Residential real estate first mortgage

​

​

—

​

​

—

​

​

—

​

​

​

Residential real estate junior lien

​

 

—

​

 

—

​

​

—

​

 

—

Other revolving and installment

​

 

—

​

 

—

​

​

—

​

 

—

Total impaired loans with a valuation allowance

​

​

2,099

​

​

13

​

​

704

​

​

20

Impaired loans without a valuation allowance

​

​

  

 

​

  

 

​

  

 

​

  

Commercial and industrial

​

​

707

​

​

—

​

​

1,988

​

​

20

Real estate construction

​

​

—

​

​

—

​

​

—

​

​

—

Commercial real estate

​

 

618

​

 

—

​

​

672

​

 

—

Residential real estate first mortgage

​

 

575

​

 

—

​

​

23

​

 

—

Residential real estate junior lien

​

 

191

​

​

—

​

​

98

​

​

—

Other revolving and installment

​

 

1

​

 

—

​

​

1

​

 

—

Total impaired loans without a valuation allowance

​

​

2,092

​

​

—

​

​

2,782

​

​

20

Total impaired loans

​

 

  

​

 

  

​

​

  

​

 

  

Commercial and industrial

​

​

1,429

​

​

13

​

​

2,505

​

​

33

Real estate construction

​

​

442

​

​

—

​

​

—

​

​

—

Commercial real estate

​

 

1,553

​

 

—

​

​

859

​

 

7

Residential real estate first mortgage

​

 

575

​

 

—

​

​

23

​

 

—

Residential real estate junior lien

​

 

191

​

 

—

​

​

98

​

 

—

Other revolving and installment

​

 

1

​

 

—

​

​

1

​

 

—

Total impaired loans

​

$

4,191

​

$

13

​

$

3,486

​

$

40

​