Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 5. LOANS AND LEASES The classifications of loans and leases at December 31, 2022 2021 (dollars in thousands) December 31, 2022 December 31, 2021 Commercial and industrial $ 234,478 $ 236,304 Commercial real estate: Non-owner occupied 316,867 312,848 Owner occupied 270,810 248,755 Construction 18,941 21,147 Consumer: Home equity installment 59,118 47,571 Home equity line of credit 52,568 54,878 Auto loans 131,936 118,029 Direct finance leases 33,223 26,232 Other 7,611 8,013 Residential: Real estate 398,136 325,861 Construction 42,232 34,919 Total 1,565,920 1,434,557 Less: Allowance for loan losses (17,149 ) (15,624 ) Unearned lease revenue (1,746 ) (1,429 ) Loans and leases, net $ 1,547,025 $ 1,417,504 As of December 31, 2022 December 31, 2021 Commercial and industrial (C&I) loan balances were $234.5 million at December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2022 Direct finance leases include the lease receivable and the guaranteed lease residual. Unearned lease revenue represents the difference between the lessor’s investment in the property and the gross investment in the lease. Unearned revenue is accrued over the life of the lease using the effective interest method. The Company services real estate loans for investors in the secondary mortgage market which are not December 31, 2022 December 31, 2021 $1.7 December 31, 2022 2021 Management is responsible for conducting the Company’s credit risk evaluation process, which includes credit risk grading of individual commercial and industrial and commercial real estate loans. Commercial and industrial and commercial real estate loans are assigned credit risk grades based on the Company’s assessment of conditions that affect the borrower’s ability to meet its contractual obligations under the loan agreement. That process includes reviewing borrowers’ current financial information, historical payment experience, credit documentation, public information, and other information specific to each individual borrower. Upon review, the commercial loan credit risk grade is revised or reaffirmed. The credit risk grades may may Paycheck Protection Program Loans The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020, $2.0 19 7 As a qualified SBA lender, the Company was automatically authorized to originate PPP loans. The SBA guaranteed 100% On December 27, 2020, May 31, 2021, second March 11, 2021, 2021 first second Acquired loans Acquired loans are marked to fair value on the date of acquisition. For detailed information on calculating the fair value of acquired loans, see Footnote 20, The carryover of allowance for loan losses related to acquired loans is prohibited as any credit losses in the loans are included in the determination of the fair value of the loans at the acquisition date. The allowance for loan losses on acquired loans reflects only those losses incurred after acquisition and represents the present value of cash flows expected at acquisition that is no The Company reported fair value adjustments regarding the acquired MNB and Landmark loan portfolios. Therefore, the Company did not Upon acquisition, in accordance with U.S. GAAP, the Company has individually determined whether each acquired loan is within the scope of ASC 310 30 two 310 30: 1 2 not With regards to ASC 310 30 Over the life of the acquired ASC 310 30 Acquired ASC 310 30 not Acquired ASC 310 20 not Within the ASC 310 20 19 19, 60 The following table provides changes in accretable yield for all acquired loans accounted for under ASC 310 30. 310 20 not For the years ended (dollars in thousands) December 31, 2022 December 31, 2021 Balance at beginning of period $ 1,088 $ 563 Accretable yield on acquired loans - 589 Reclassification from non-accretable difference 543 453 Reclassification to loan balance due to charge-off (3 ) - Accretion of accretable yield (399 ) (517 ) Balance at end of period $ 1,229 $ 1,088 The above table excludes the $275 thousand in non-accretable yield accreted to interest income for the year ended December 31, 2021 During the twelve December 31, 2022 310 30 During the twelve December 31, 2021 third 2021; twelve December 31, 2021. Expected cash flows on acquired loans are estimated quarterly by incorporating several key assumptions. These key assumptions include probability of default and the number of actual prepayments after the acquisition date. Prepayments affect the estimated life of the loans and could change the amount of interest income, and possibly principal expected to be collected. In reforecasting future estimated cash flows, credit loss expectations are adjusted as necessary. Improved cash flow expectations for loans or pools are recorded first Non-accrual loans Non-accrual loans, segregated by class, at December 31, (dollars in thousands) December 31, 2022 December 31, 2021 Commercial and industrial $ 719 $ 154 Commercial real estate: Non-owner occupied 383 478 Owner occupied 1,066 1,570 Consumer: Home equity installment - - Home equity line of credit 211 97 Auto loans 153 78 Residential: Real estate 3 572 Total $ 2,535 $ 2,949 The table above excludes $4.7 million and $4.7 million in purchased credit impaired loans, net of unamortized fair value adjustments as of December 31, 2022 2021 The decision to place loans on non-accrual status is made on an individual basis after considering factors pertaining to each specific loan. C&I and CRE loans are placed on non-accrual status when management has determined that payment of all contractual principal and interest is in doubt or the loan is past due 90 90 90 Troubled Debt Restructuring A modification of a loan constitutes a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession. The Company considers all TDRs to be impaired loans. The Company typically considers the following concessions when modifying a loan, which may not The following presents by class, information related to loans modified in a TDR: Loans modified as TDRs for the twelve months ended: (dollars in thousands) December 31, 2022 December 31, 2021 Recorded Increase in Recorded Increase in Number investment allowance Number investment allowance of (as of (as of of (as of (as of contracts period end) period end) contracts period end) period end) Commercial real estate - owner occupied - $ - $ - 1 $ 512 $ - Total - $ - $ - 1 $ 512 $ - In the above table, the period end balance is inclusive of all partial pay downs and charge-offs since the modification date. For all loans modified in a TDR, the pre-modification recorded investment was the same as the post-modification recorded investment. Of the TDRs outstanding as of December 31, 2022 2021 Loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, the Company evaluates the loan for possible further impairment. There were no loans modified as a TDR within the previous twelve 90 twelve December 31, 2022 2021. The allowance for loan losses (allowance) may may may As of December 31, 2022 2021 December 31, 2022 2021 Past due loans Loans are considered past due when the contractual principal and/or interest is not 30 59 two Recorded Past due investment past 30 - 59 Days 60 - 89 Days 90 days Total Total due ≥ 90 days December 31, 2022 past due past due or more (1) past due Current loans (3) and accruing Commercial and industrial $ - $ - $ 719 $ 719 $ 233,759 $ 234,478 $ - Commercial real estate: Non-owner occupied - - 383 383 316,484 316,867 - Owner occupied 42 - 1,066 1,108 269,702 270,810 - Construction - - - - 18,941 18,941 - Consumer: Home equity installment 239 - - 239 58,879 59,118 - Home equity line of credit 110 151 211 472 52,096 52,568 - Auto loans 563 201 169 933 131,003 131,936 16 Direct finance leases 186 - 17 203 31,274 31,477 (2) 17 Other 12 7 - 19 7,592 7,611 - Residential: Real estate - 327 3 330 397,806 398,136 - Construction - - - - 42,232 42,232 - Total $ 1,152 $ 686 $ 2,568 $ 4,406 $ 1,559,768 $ 1,564,174 $ 33 ( 1 ( 2 ( 3 Recorded Past due investment past 30 - 59 Days 60 - 89 Days 90 days Total Total due ≥ 90 days December 31, 2021 past due past due or more (1) past due Current loans (3) and accruing Commercial and industrial $ - $ 4 $ 154 $ 158 $ 236,146 $ 236,304 $ - Commercial real estate: Non-owner occupied - 675 478 1,153 311,695 312,848 - Owner occupied - - 1,570 1,570 247,185 248,755 - Construction - - - - 21,147 21,147 - Consumer: Home equity installment 87 32 - 119 47,452 47,571 - Home equity line of credit - - 97 97 54,781 54,878 - Auto loans 410 45 78 533 117,496 118,029 - Direct finance leases 173 38 64 275 24,528 24,803 (2) 64 Other 49 17 - 66 7,947 8,013 - Residential: Real estate - 452 572 1,024 324,837 325,861 - Construction - - - - 34,919 34,919 - Total $ 719 $ 1,263 $ 3,013 $ 4,995 $ 1,428,133 $ 1,433,128 $ 64 ( 1 ( 2 ( 3 Impaired loans Impaired loans, segregated by class, as of the period indicated are detailed below: Recorded Recorded Unpaid investment investment Total principal with with no recorded Related (dollars in thousands) balance allowance allowance investment allowance December 31, 2022 Commercial and industrial $ 942 $ 139 $ 580 $ 719 $ 48 Commercial real estate: Non-owner occupied 762 215 547 762 42 Owner occupied 2,347 1,304 716 2,020 70 Consumer: Home equity installment 33 - - - - Home equity line of credit 255 - 211 211 - Auto loans 213 18 135 153 1 Residential: Real estate 50 - 3 3 - Total $ 4,602 $ 1,676 $ 2,192 $ 3,868 $ 161 Recorded Recorded Unpaid investment investment Total principal with with no recorded Related (dollars in thousands) balance allowance allowance investment allowance December 31, 2021 Commercial and industrial $ 218 $ 18 $ 136 $ 154 $ 18 Commercial real estate: Non-owner occupied 2,470 1,674 796 2,470 474 Owner occupied 3,185 1,802 762 2,564 763 Consumer: Home equity installment 33 - - - - Home equity line of credit 137 - 97 97 - Auto loans 98 10 68 78 4 Residential: Real estate 699 - 572 572 - Total $ 6,840 $ 3,504 $ 2,431 $ 5,935 $ 1,259 At December 31, 2022 December 31, 2021 December 31, 2022 two December 31, 2021 A loan is considered impaired when, based on current information and events; it is probable that the Company will be unable to collect the payments in accordance with the contractual terms of the loan. Factors considered in determining impairment include payment status, collateral value, and the probability of collecting payments when due. The significance of payment delays and/or shortfalls is determined on a case-by-case basis. All circumstances surrounding the loan are considered. Such factors include the length of the delinquency, the underlying reasons and the borrower’s prior payment record. Impairment is measured on these loans on a loan-by-loan basis. Impaired loans include non-accrual loans, TDRs and other loans deemed to be impaired based on the aforementioned factors. The following table presents the average recorded investments in impaired loans and related amount of interest income recognized during the periods indicated below. The average balances are calculated based on the quarter-end balances of impaired loans. Payments received from non-accruing impaired loans are first December 31, 2022 December 31, 2021 Cash basis Cash basis Average Interest interest Average Interest interest recorded income income recorded income income (dollars in thousands) investment recognized recognized investment recognized recognized Commercial and industrial $ 468 $ - $ - $ 380 $ 2 $ - Commercial real estate: Non-owner occupied 1,263 104 - 2,698 195 - Owner occupied 2,279 125 - 1,883 55 - Construction - - - - - - Consumer: Home equity installment - - - 28 6 - Home equity line of credit 153 7 - 202 20 - Auto loans 162 5 - 42 2 - Direct finance leases - - - - - - Other - - - - - - Residential: Real estate 158 41 - 682 - - Construction - - - - - - Total $ 4,483 $ 282 $ - $ 5,915 $ 280 $ - Average recorded investment refers to the five The average recorded investment for the year ended December 31, 2020 Credit Quality Indicators Commercial and industrial and commercial real estate The Company utilizes a loan grading system and assigns a credit risk grade to its loans in the C&I and CRE portfolios. The grading system provides a means to measure portfolio quality and aids in the monitoring of the credit quality of the overall loan portfolio. The credit risk grades are arrived at using a risk rating matrix to assign a grade to each of the loans in the C&I and CRE portfolios. The following is a description of each risk rating category the Company uses to classify each of its C&I and CRE loans: Pass Loans in this category have an acceptable level of risk and are graded in a range of one no one five Special Mention Loans in this category are graded a six may not may no may not Substandard Loans in this category are graded a seven may may may not may 90 Doubtful Loans in this category are graded an eight 50% may eight Consumer and residential The consumer and residential loan segments are regarded as homogeneous loan pools and as such are not 90 not The following table presents loans including $4.6 million and $3.0 million of deferred costs, segregated by class, categorized into the appropriate credit quality indicator category as of December 31, 2022 2021 Commercial credit exposure Credit risk profile by creditworthiness category December 31, 2022 (dollars in thousands) Pass Special mention Substandard Doubtful Total Commercial and industrial $ 231,614 $ 229 $ 2,635 $ - $ 234,478 Commercial real estate - non-owner occupied 301,386 4,227 11,254 - 316,867 Commercial real estate - owner occupied 255,921 803 14,086 - 270,810 Commercial real estate - construction 18,941 - - - 18,941 Total commercial $ 807,862 $ 5,259 $ 27,975 $ - $ 841,096 Consumer & Mortgage lending credit exposure Credit risk profile based on payment activity December 31, 2022 (dollars in thousands) Performing Non-performing Total Consumer Home equity installment $ 59,118 $ - $ 59,118 Home equity line of credit 52,357 211 52,568 Auto loans 131,767 169 131,936 Direct finance leases (1) 31,460 17 31,477 Other 7,611 - 7,611 Total consumer 282,313 397 282,710 Residential Real estate 398,133 3 398,136 Construction 42,232 - 42,232 Total residential 440,365 3 440,368 Total consumer & residential $ 722,678 $ 400 $ 723,078 ( 1 Commercial credit exposure Credit risk profile by creditworthiness category December 31, 2021 (dollars in thousands) Pass Special mention Substandard Doubtful Total Commercial and industrial $ 233,565 $ 339 $ 2,400 $ - $ 236,304 Commercial real estate - non-owner occupied 289,679 16,614 6,555 - 312,848 Commercial real estate - owner occupied 230,146 7,089 11,520 - 248,755 Commercial real estate - construction 21,147 - - - 21,147 Total commercial $ 774,537 $ 24,042 $ 20,475 $ - $ 819,054 Consumer & Mortgage lending credit exposure Credit risk profile based on payment activity December 31, 2021 (dollars in thousands) Performing Non-performing Total Consumer Home equity installment $ 47,571 $ - $ 47,571 Home equity line of credit 54,781 97 54,878 Auto loans 117,951 78 118,029 Direct finance leases (2) 24,739 64 24,803 Other 8,013 - 8,013 Total consumer 253,055 239 253,294 Residential Real estate 325,289 572 325,861 Construction 34,919 - 34,919 Total residential 360,208 572 360,780 Total consumer & residential $ 613,263 $ 811 $ 614,074 ( 2 Allowance for loan losses Management continually evaluates the credit quality of the Company’s loan portfolio and performs a formal review of the adequacy of the allowance on a quarterly basis. The allowance reflects management’s best estimate of the amount of credit losses in the loan portfolio. Management’s judgment is based on the evaluation of individual loans, experience, the assessment of current economic conditions and other relevant factors including the amounts and timing of cash flows expected to be received on impaired loans. Those estimates may Management applies two two not ■ identification of specific impaired loans by loan category; ■ identification of specific loans that are not ■ calculation of specific allowances where required for the impaired loans based on collateral and other objective and quantifiable evidence; ■ determination of loans with similar credit characteristics within each class of the loan portfolio segment and eliminating the impaired loans; ■ application of historical loss percentages (trailing twelve ■ application of qualitative factor adjustment percentages to historical losses for trends or changes in the loan portfolio. ■ Qualitative factor adjustments include: o levels of and trends in delinquencies and non-accrual loans; o levels of and trends in charge-offs and recoveries; o trends in volume and terms of loans; o changes in risk selection and underwriting standards; o changes in lending policies and legal and regulatory requirements; o experience, ability and depth of lending management; o national and local economic trends and conditions; and o changes in credit concentrations. Allocation of the allowance for different categories of loans is based on the methodology as explained above. A key element of the methodology to determine the allowance is the Company’s credit risk evaluation process, which includes credit risk grading of individual C&I and CRE loans. C&I and CRE loans are assigned credit risk grades based on the Company’s assessment of conditions that affect the borrower’s ability to meet its contractual obligations under the loan agreement. That process includes reviewing borrowers’ current financial information, historical payment experience, credit documentation, public information and other information specific to each individual borrower. Upon review, the commercial loan credit risk grade is revised or reaffirmed. The credit risk grades may may Each quarter, management performs an assessment of the allowance. The Company’s Special Assets Committee meets quarterly, and the applicable lenders discuss each relationship under review and reach a consensus on the appropriate estimated loss amount, if applicable, based on current accounting guidance. The Special Assets Committee’s focus is on ensuring the pertinent facts are considered regarding not may The Company’s policy is to charge-off unsecured consumer loans when they become 90 Information related to the change in the allowance for loan losses and the Company’s recorded investment in loans by portfolio segment as of the period indicated is as follows: As of and for the year ended December 31, 2022 Commercial & Commercial Residential (dollars in thousands) industrial real estate Consumer real estate Unallocated Total Allowance for Loan Losses: Beginning balance $ 2,204 $ 7,422 $ 2,404 $ 3,508 $ 86 $ 15,624 Charge-offs (371 ) (67 ) (377 ) - - (815 ) Recoveries 11 153 74 2 - 240 Provision 1,080 (346 ) 726 659 (19 ) 2,100 Ending balance $ 2,924 $ 7,162 $ 2,827 $ 4,169 $ 67 $ 17,149 Ending balance: individually evaluated for impairment $ 48 $ 112 $ 1 $ - $ - $ 161 Ending balance: collectively evaluated for impairment $ 2,876 $ 7,050 $ 2,826 $ 4,169 $ 67 $ 16,988 Loans Receivables: Ending balance (2) $ 234,478 $ 606,618 $ 282,710 (1) $ 440,368 $ - $ 1,564,174 Ending balance: individually evaluated for impairment $ 719 $ 2,782 $ 364 $ 3 $ - $ 3,868 Ending balance: collectively evaluated for impairment $ 233,759 $ 603,836 $ 282,346 $ 440,365 $ - $ 1,560,306 ( 1 ( 2 As of and for the year ended December 31, 2021 Commercial & Commercial Residential (dollars in thousands) industrial real estate Consumer real estate Unallocated Total Allowance for Loan Losses: Beginning balance $ 2,407 $ 6,383 $ 2,552 $ 2,781 $ 79 $ 14,202 Charge-offs (130 ) (491 ) (206 ) (162 ) - (989 ) Recoveries 23 250 138 - - 411 Provision (96 ) 1,280 (80 ) 889 7 2,000 Ending balance $ 2,204 $ 7,422 $ 2,404 $ 3,508 $ 86 $ 15,624 Ending balance: individually evaluated for impairment $ 18 $ 1,237 $ 4 $ - $ - $ 1,259 Ending balance: collectively evaluated for impairment $ 2,186 $ 6,185 $ 2,400 $ 3,508 $ 86 $ 14,365 Loans Receivables: Ending balance (2) $ 236,304 $ 582,750 $ 253,294 (1) $ 360,780 $ - $ 1,433,128 Ending balance: individually evaluated for impairment $ 154 $ 5,034 $ 175 $ 572 $ - $ 5,935 Ending balance: collectively evaluated for impairment $ 236,150 $ 577,716 $ 253,119 $ 360,208 $ - $ 1,427,193 ( 1 ( 2 As of and for the year ended December 31, 2020 Commercial & Commercial Residential (dollars in thousands) industrial real estate Consumer real estate Unallocated Total Allowance for Loan Losses: Beginning balance $ 1,484 $ 3,933 $ 2,013 $ 2,278 $ 39 $ 9,747 Charge-offs (372 ) (465 ) (296 ) (35 ) - (1,168 ) Recoveries 26 30 120 197 - 373 Provision 1,269 2,885 715 341 40 5,250 Ending balance $ 2,407 $ 6,383 $ 2,552 $ 2,781 $ 79 $ 14,202 Direct finance leases The Company originates direct finance leases through two December 31, 2022 2021 December 31, 2022 2021 The undiscounted cash flows to be received on an annual basis for the direct finance leases are as follows: (dollars in thousands) Amount 2023 $ 10,838 2024 10,035 2025 10,889 2026 1,433 2027 28 2028 and thereafter - Total future minimum lease payments receivable 33,223 Less: Unearned income (1,746 ) Undiscounted cash flows to be received $ 31,477 |