The Company has an established methodology to determine the adequacy of the allowance for credit losses that assesses the risks and losses inherent in the loan portfolio. At a minimum, the adequacy of the allowance for credit losses is reviewed by management on a quarterly basis. The allowance is increased by provisions charged to expense and is reduced by net charge-offs. For purposes of determining the allowance for credit losses, the Company has segmented the loans in its portfolio by loan type. Loans are segmented into the following pools: SBA, commercial, residential mortgages, consumer and residential construction loans. Certain portfolio segments are further broken down into classes based on the associated risks within those segments and the type of collateral underlying each loan. Commercial loans are divided into the following four classes: commercial real estate, commercial real estate construction, commercial other and SBA 504. Consumer loans are divided into two classes as follows: home equity and other.

The standardized methodology used to assess the adequacy of the allowance includes the allocation of specific and general reserves. The same standard methodology is used, regardless of loan type. Specific reserves are evaluated for individually evaluated loans. The general reserve is set based upon a representative average historical net charge-off rate adjusted for the following environmental factors: delinquency and impairment trends, charge-off and recovery trends, volume and loan term trends, changes in risk and underwriting policy trends, staffing and experience changes, national and local economic trends, industry conditions and credit concentration changes. Within the historical net charge-off rate, the Company weights the data dating back to 2015 on a straight line basis and projects the losses on a weighted average remaining maturity basis for each segment. All of the environmental factors are ranked and assigned a basis points value based on the following scale: low, low moderate, moderate, high moderate and high risk. Each environmental factor is evaluated separately for each class of loans and risk weighted based on its individual characteristics.

According to the Company’s policy, a loss (“charge-off”) is to be recognized and charged to the allowance for credit losses as soon as a loan is recognized as uncollectable. All credits which are 90 days past due must be analyzed for the Company’s ability to collect on the credit. Once a loss is known to exist, the charge-off approval process is immediately expedited. This charge-off policy is followed for all loan types.

The following tables detail the activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2023 and 2022:

For the three months ended March 31, 2023

Residential

(In thousands)

SBA

Commercial

Residential

Consumer

construction

Total

Balance, beginning of period

875

15,254

5,450

990

2,627

25,196

Effect of adopting Accounting Standards Update ("ASU") No. 2016-13 ("CECL")

163

171

376

101

847

Charge-offs

(113)

—

(120)

—

(233)

Recoveries

—

271

—

283

Net (charge-offs) recoveries

(113)

271

—

(108)

—

Provision for (credit to) credit losses charged to expense

178

(395)

309

(21)

108

Balance, end of period

1,103

15,301

6,135

1,020

2,642

26,201


	For the three months ended March 31, 2022
										Residential
(In thousands)	SBA		Commercial		Residential		Consumer		construction			Total
Balance, beginning of period	$	1,074	$	15,053	$	4,114	$	671	$	1,390		$	22,302
Charge-offs		—		—		—		(6)		—	a		(6)
Recoveries		22		28		—		—		—			50
Net recoveries (charge-offs)		22		28		—		(6)		—			44
Provision for (credit to) credit losses charged to expense		(155)		(376)		170		(23)		206			(178)
Balance, end of period	$	941	$	14,705	$	4,284	$	642	$	1,596		$	22,168

The following tables present loans and their related allowance for credit losses, by portfolio segment, as of March 31, 2023 and December 31, 2022:

March 31, 2023

Residential

(In thousands)

SBA

Commercial

Residential

Consumer

construction

Total

Allowance for credit losses ending balance:

Individually evaluated

173

331

—

1,130

1,670

Collectively evaluated

930

14,970

6,099

1,020

1,512

24,531

Total

1,103

15,301

6,135

1,020

2,642

26,201

Loan ending balances:

Individually evaluated

658

1,602

5,760

—

3,458

11,478

Collectively evaluated

64,571

1,204,040

613,380

76,784

160,666

2,119,441

Total

65,229

1,205,642

619,140

76,784

164,124

2,130,919


	December 31, 2022
										Residential
(In thousands)	SBA		Commercial		Residential		Consumer		construction			Total
Allowance for credit losses ending balance:
Individually evaluated for impairment	$	115	$	516	$	36	$	—	$	1,112	a	$	1,779
Collectively evaluated for impairment		760		14,738		5,414		990		1,515			23,417
Total	$	875	$	15,254	$	5,450	$	990	$	2,627		$	25,196
Loan ending balances:
Individually evaluated for impairment	$	690	$	3,101	$	3,361	$	—	$	3,432		$	10,584
Collectively evaluated for impairment		71,614		1,184,442		601,730		78,164		160,025			2,095,975
Total	$	72,304	$	1,187,543	$	605,091	$	78,164	$	163,457		$	2,106,559

Reserve for Unfunded Loan Commitments

In addition to the allowance for credit losses, the Company maintains a reserve for unfunded loan commitments at a level that management believes is adequate to absorb estimated probable losses. Adjustments to the reserve are made through other expense and applied to the reserve which is classified as other liabilities. At March 31, 2023, a $0.6 million commitment reserve was reported on the balance sheet as “Accrued expenses and other liabilities”, compared to a $0.5 million commitment reserve at December 31, 2022.