| ALLOWANCE FOR CREDIT LOSSES | ALLOWANCE FOR CREDIT LOSSES The Company maintains an ACL at a level determined to be adequate to absorb expected credit losses associated with the Company’s financial instruments over the life of those instruments as of the balance sheet date. The Company develops and documents a systematic ACL methodology based on the following portfolio segments: 1) CRE, 2) C&I, 3) Residential Mortgages, 4) Other Consumer, 5) Construction and 6) Other. The Company’s loan portfolio is segmented by homogeneous loan types that behave similarly to economic cycles. The segmentation in the current expected credit losses (“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. CRE loans are secured by commercial purpose real estate, including both owner occupied properties and investment properties, for various 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 sources 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 collateral type as well as the business. C&I 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 and state municipalities for various purposes including refinancing existing obligations, infrastructure up-fit and expansion, or to purchase new equipment. These loans may be secured by general obligations from the municipal authority or revenues generated by infrastructure and equipment financed by the Company. The primary repayment source for these loans 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 debt service requirements give this type of loan a very low risk profile in the continuum of the Company’s loan portfolio. Residential Mortgages are loans secured by first and second liens such as home equity loans, home equity lines of credit and 1-4 family residential mortgages, including purchase money 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 the debt. Other Consumer loans are made to individuals and may be either secured by assets other than 1-4 family residences or unsecured. This segment includes auto loans and unsecured loans and lines. 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. Construction 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 or supply of the property being constructed. Other loans include unique risk attributes considered inconsistent with our current underwriting standards. The ACL reserve for the Other segment is based on a discounted cash flow methodology and reserves will fluctuate based on expected cash flow changes in the future. These inconsistencies may include, but are not limited to i) transaction and/or relationship sizes that exceed limits established in 2018, ii) overreliance on secondary, tertiary or guarantor cash flow, iii) land acquisition loans without a defined source of amortization, and iv) loan structures on operating lines of credit dependent on the value of real estate rather than trading assets. Management continuously assesses underwriting standards, but significantly enhanced these standards in 2018. Our model is based on our best estimate of facts known with the most current information. Certain portions of the CECL model are inherently subjective and include, but are not limited to estimates with respect to: prepayment speeds, the timing of prepayments, potential losses given default, discount rates and the timing of future cash flows. Management utilizes widely published economic forecasts as the basis for the regression analysis used to estimate the probability of default in the baseline model. The peaks and troughs of these forecasts serve as guardrails for potential subjective adjustments. In addition to considering the outcomes based on the range of forecasts, management recognizes that the assumptions used in economic forecasts may not perfectly align with our market area, risk profile or unique attributes of our portfolio along with other important considerations. Severe changes in forecasts can also create significant variability and management must assess not only the absolute balance of reserves but also consider the appropriateness of the velocity of change. Therefore, management developed a framework to assess the tolerance and reasonableness of the CECL modeling process by challenging certain elements of the forecasts, when appropriate. These outcomes, known as “challenger models,” provide opportunities to examine and subjectively adjust the CECL model output and are designed to be counter cyclical, thereby reducing variability. Credit Quality Indicators: The Company’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 Company’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 a pass grade until a loan migrates to past due status. The Company 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: 1) credit quality of the loan portfolio, 2) compliance with the loan policy, 3) adequacy of documentation in credit files and 4) validity of risk ratings. Since 2020 and continuing into 2022, the Company used a five step approach for loan review in the following categories: • Individual reviews of the top twenty large loan relationships (“LLRs”), which are defined as any individual commercial loan or aggregate commercial relationship totaling $2.0 million or more; • A sampling of small LLRs, which are defined as individual commercial loans or relationships with aggregate exposure of $2.0 million or more but not included in the top twenty LLRs; • A sampling review of Credit Risk Committee modifications, including new and existing loans to provide perspective on the appropriateness of the modification in relation to established policies and procedures; • A sampling review of non-organic commercial loans and those commercial loans approved outside of the Credit Risk Committee; and • Focus reviews of office and land development to evaluate segment risk rather than individual loan risk. Focus reviews are performed annually on a rotational basis. The Company’s internally assigned grades are as follows: Pass – The Company 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 the 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 or desirable 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 the periods presented: June 30, 2022 Risk Rating (Dollars in Thousands) 2022 2021 2020 2019 2018 2017 and Prior Revolving Total Commercial Real Estate Pass $ 201,249 $ 178,791 $ 152,964 $ 173,805 $ 240,312 $ 394,640 $ 31,059 $ 1,372,820 Special Mention — 223 — — 10,018 2,720 — 12,961 Substandard — — — 300 2,668 368 — 3,336 Total Commercial Real Estate $ 201,249 $ 179,014 $ 152,964 $ 174,105 $ 252,998 $ 397,728 $ 31,059 $ 1,389,117 YTD Gross Charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial and Industrial Pass $ 21,454 $ 50,526 $ 44,896 $ 10,827 $ 30,823 $ 158,283 $ 11,650 $ 328,459 Special Mention — — — — — — — — Substandard — 56 — 69 4,954 2,800 139 8,018 Total Commercial and Industrial $ 21,454 $ 50,582 $ 44,896 $ 10,896 $ 35,777 $ 161,083 $ 11,789 $ 336,477 YTD Gross Charge-offs $ — $ — $ — $ — $ 22 $ — $ — $ 22 Residential Mortgages Pass $ 107,475 $ 172,332 $ 83,199 $ 54,059 $ 73,812 $ 44,230 $ 19,923 $ 555,030 Special Mention — — — — 434 536 — 970 Substandard — — — 1,000 645 1,668 — 3,313 Total Residential Mortgages $ 107,475 $ 172,332 $ 83,199 $ 55,059 $ 74,891 $ 46,434 $ 19,923 $ 559,313 YTD Gross Charge-offs $ — $ — $ — $ — $ — $ 23 $ — $ 23 Other Consumer Pass $ 6,963 $ 6,784 $ 8,411 $ 484 $ 277 $ 24,696 $ 349 $ 47,964 Special Mention — — — — — — — — Substandard — 37 2 3 3 24 — 69 Total Other Consumer $ 6,963 $ 6,821 $ 8,413 $ 487 $ 280 $ 24,720 $ 349 $ 48,033 YTD Gross Charge-offs $ 34 $ 297 $ 184 $ 225 $ 26 $ 60 $ — $ 826 Construction Pass $ 51,136 $ 141,951 $ 68,062 $ 11,531 $ 20,843 $ 17,849 $ 10,176 $ 321,548 Special Mention — — — — — 73 — 73 Substandard — — 136 — 94 880 — 1,110 Total Construction $ 51,136 $ 141,951 $ 68,198 $ 11,531 $ 20,937 $ 18,802 $ 10,176 $ 322,731 YTD Gross Charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Other Pass $ — $ — $ — $ — $ — $ 180,792 $ — $ 180,792 Special Mention — — — — — 3,185 — 3,185 Substandard — — — — 87,329 70,919 — 158,248 Total Other Loans $ — $ — $ — $ — $ 87,329 $ 254,896 $ — $ 342,225 YTD Gross Charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Total Portfolio Loans Pass $ 388,277 $ 550,384 $ 357,532 $ 250,706 $ 366,067 $ 820,490 $ 73,157 $ 2,806,613 Special Mention — 223 — — 10,452 6,514 — 17,189 Substandard — 93 138 1,372 95,693 76,659 139 174,094 Total Portfolio Loans $ 388,277 $ 550,700 $ 357,670 $ 252,078 $ 472,212 $ 903,663 $ 73,296 $ 2,997,896 Current YTD Period: YTD Gross Charge-offs $ 34 $ 297 $ 184 $ 225 $ 48 $ 83 $ — $ 871 December 31, 2021 Risk Rating (Dollars in Thousands) 2021 2020 2019 2018 2017 2016 and Prior Revolving Total Commercial Real Estate Pass $ 195,441 $ 165,100 $ 215,575 $ 292,857 $ 115,024 $ 292,197 $ 38,382 $ 1,314,576 Special Mention 229 — — — 4,205 826 — 5,260 Substandard — — 314 2,742 215 145 — 3,416 Total Commercial Real Estate $ 195,670 $ 165,100 $ 215,889 $ 295,599 $ 119,444 $ 293,168 $ 38,382 $ 1,323,252 YTD Gross Charge-offs $ — $ — $ 10,471 $ 1,424 $ 6,577 $ 1,190 $ — $ 19,662 Commercial and Industrial Pass $ 55,173 $ 50,087 $ 15,648 $ 38,298 $ 23,575 $ 150,656 $ 3,857 $ 337,294 Special Mention — — — 8 — — — 8 Substandard 14 — 308 4,815 2,798 — 139 8,074 Total Commercial and Industrial $ 55,187 $ 50,087 $ 15,956 $ 43,121 $ 26,373 $ 150,656 $ 3,996 $ 345,376 YTD Gross Charge-offs $ — $ 109 $ 261 $ 3 $ — $ 1 $ — $ 374 Residential Mortgages Pass $ 155,892 $ 91,023 $ 63,682 $ 73,333 $ 8,640 $ 48,087 $ 13,237 $ 453,894 Special Mention — — — — — 553 — 553 Substandard — — 1,008 743 188 1,602 — 3,541 Total Residential Mortgages $ 155,892 $ 91,023 $ 64,690 $ 74,076 $ 8,828 $ 50,242 $ 13,237 $ 457,988 YTD Gross Charge-offs $ — $ — $ — $ 172 $ — $ 101 $ — $ 273 Other Consumer Pass $ 9,353 $ 10,199 $ 979 $ 450 $ 186 $ 23,048 $ 339 $ 44,554 Special Mention — — — — — — — — Substandard 11 3 11 57 30 — — 112 Total Other Consumer $ 9,364 $ 10,202 $ 990 $ 507 $ 216 $ 23,048 $ 339 $ 44,666 YTD Gross Charge-offs $ 152 $ 661 $ 905 $ 247 $ 170 $ 121 $ — $ 2,256 Construction Pass $ 140,639 $ 82,523 $ 24,336 $ 9,739 $ 5,328 $ 3,407 $ 15,269 $ 281,241 Special Mention — — 175 — — 429 — 604 Substandard — 107 809 95 — 91 — 1,102 Total Construction $ 140,639 $ 82,630 $ 25,320 $ 9,834 $ 5,328 $ 3,927 $ 15,269 $ 282,947 YTD Gross Charge-offs $ — $ — $ 1,859 $ — $ — $ — $ — $ 1,859 Other Pass $ — $ — $ — $ — $ 122,848 $ 62,399 $ — $ 185,247 Special Mention — — — — — 3,281 — 3,281 Substandard — — — 87,329 40,882 41,161 — 169,372 Total Other Loans $ — $ — $ — $ 87,329 $ 163,730 $ 106,841 $ — $ 357,900 YTD Gross Charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Total Portfolio Loans Pass $ 556,498 $ 398,932 $ 320,220 $ 414,677 $ 275,601 $ 579,794 $ 71,084 $ 2,616,806 Special Mention 229 — 175 8 4,205 5,089 — 9,706 Substandard 25 110 2,450 95,781 44,113 42,999 139 185,617 Total Portfolio Loans $ 556,752 $ 399,042 $ 322,845 $ 510,466 $ 323,919 $ 627,882 $ 71,223 $ 2,812,129 Current YTD Period: YTD Gross Charge-offs $ 152 $ 770 $ 13,496 $ 1,846 $ 6,747 $ 1,413 $ — $ 24,424 The following table presents loan balances by year of origination and performing and nonperforming status for our portfolio segments as of the periods presented. June 30, 2022 (Dollars in Thousands) 2022 2021 2020 2019 2018 2017 and Prior Revolving Total Commercial Real Estate Performing $ 201,249 $ 179,014 $ 152,964 $ 173,804 $ 250,330 $ 397,439 $ 31,059 $ 1,385,859 Nonperforming — — — 301 2,668 289 — 3,258 Total Commercial Real Estate $ 201,249 $ 179,014 $ 152,964 $ 174,105 $ 252,998 $ 397,728 $ 31,059 $ 1,389,117 Commercial and Industrial Performing $ 21,454 $ 50,536 $ 44,896 $ 10,827 $ 30,823 $ 161,081 $ 11,650 $ 331,267 Nonperforming — 46 — 69 4,954 2 139 5,210 Total Commercial and Industrial $ 21,454 $ 50,582 $ 44,896 $ 10,896 $ 35,777 $ 161,083 $ 11,789 $ 336,477 Residential Mortgages Performing $ 107,475 $ 172,332 $ 83,199 $ 54,059 $ 74,474 $ 45,296 $ 19,923 $ 556,758 Nonperforming — — — 1,000 417 1,138 — 2,555 Total Residential Mortgages $ 107,475 $ 172,332 $ 83,199 $ 55,059 $ 74,891 $ 46,434 $ 19,923 $ 559,313 Other Consumer Performing $ 6,963 $ 6,821 $ 8,411 $ 487 $ 277 $ 24,719 $ 349 $ 48,027 Nonperforming — — 2 — 3 1 — 6 Total Other Consumer $ 6,963 $ 6,821 $ 8,413 $ 487 $ 280 $ 24,720 $ 349 $ 48,033 Construction Performing $ 51,136 $ 141,951 $ 68,062 $ 11,531 $ 20,937 $ 17,938 $ 10,176 $ 321,731 Nonperforming — — 136 — — 864 — 1,000 Total Construction $ 51,136 $ 141,951 $ 68,198 $ 11,531 $ 20,937 $ 18,802 $ 10,176 $ 322,731 Other Performing $ — $ — $ — $ — $ 87,329 $ 254,896 $ — $ 342,225 Nonperforming — — — — — — — — Total Other Loans $ — $ — $ — $ — $ 87,329 $ 254,896 $ — $ 342,225 Total Portfolio Loans Performing $ 388,277 $ 550,654 $ 357,532 $ 250,708 $ 464,170 $ 901,369 $ 73,157 $ 2,985,867 Nonperforming — 46 138 1,370 8,042 2,294 139 12,029 Total Portfolio Loans $ 388,277 $ 550,700 $ 357,670 $ 252,078 $ 472,212 $ 903,663 $ 73,296 $ 2,997,896 December 31, 2021 (Dollars in Thousands) 2021 2020 2019 2018 2017 2016 and Prior Revolving Total Commercial Real Estate Performing $ 195,670 $ 165,100 $ 215,575 $ 292,857 $ 119,229 $ 293,102 $ 38,382 $ 1,319,915 Nonperforming — — 314 2,742 215 66 — 3,337 Total Commercial Real Estate $ 195,670 $ 165,100 $ 215,889 $ 295,599 $ 119,444 $ 293,168 $ 38,382 $ 1,323,252 Commercial and Industrial Performing $ 55,187 $ 50,087 $ 15,648 $ 43,117 $ 26,373 $ 150,656 $ 3,857 $ 344,925 Nonperforming — — 308 4 — — 139 451 Total Commercial and Industrial $ 55,187 $ 50,087 $ 15,956 $ 43,121 $ 26,373 $ 150,656 $ 3,996 $ 345,376 Residential Mortgages Performing $ 155,892 $ 91,023 $ 63,682 $ 73,564 $ 8,640 $ 49,399 $ 13,237 $ 455,437 Nonperforming — — 1,008 512 188 843 — 2,551 Total Residential Mortgages $ 155,892 $ 91,023 $ 64,690 $ 74,076 $ 8,828 $ 50,242 $ 13,237 $ 457,988 Other Consumer Performing $ 9,364 $ 10,202 $ 979 $ 450 $ 211 $ 23,048 $ 339 $ 44,593 Nonperforming — — 11 57 5 — — 73 Total Other Consumer $ 9,364 $ 10,202 $ 990 $ 507 $ 216 $ 23,048 $ 339 $ 44,666 Construction Performing $ 140,639 $ 82,523 $ 24,511 $ 9,834 $ 5,328 $ 3,858 $ 15,269 $ 281,962 Nonperforming — 107 809 — — 69 — 985 Total Construction $ 140,639 $ 82,630 $ 25,320 $ 9,834 $ 5,328 $ 3,927 $ 15,269 $ 282,947 Other Performing $ — $ — $ — $ 87,329 $ 163,730 $ 106,841 $ — $ 357,900 Nonperforming — — — — — — — Total Other Loans $ — $ — $ — $ 87,329 $ 163,730 $ 106,841 $ — $ 357,900 Total Portfolio Loans Performing $ 556,752 $ 398,935 $ 320,395 $ 507,151 $ 323,511 $ 626,904 $ 71,084 $ 2,804,732 Nonperforming — 107 2,450 3,315 408 978 139 7,397 Total Portfolio Loans $ 556,752 $ 399,042 $ 322,845 $ 510,466 $ 323,919 $ 627,882 $ 71,223 $ 2,812,129 June 30, 2022 (Dollars in Thousands) Current Loans Loans Total Nonaccrual Total Portfolio Commercial Real Estate $ 1,385,239 $ 620 $ — $ 620 $ 3,258 $ 1,389,117 Commercial and Industrial 331,236 26 5 31 5,210 336,477 Residential Mortgages 555,190 1,568 — 1,568 2,555 559,313 Other Consumer 47,776 139 112 251 6 48,033 Construction 321,643 88 — 88 1,000 322,731 Other 342,225 — — — — 342,225 Total $ 2,983,309 $ 2,441 $ 117 $ 2,558 $ 12,029 $ 2,997,896 December 31, 2021 (Dollars in Thousands) Current Loans Loans Total Nonaccrual Total Portfolio Commercial Real Estate $ 1,319,686 $ 229 $ — $ 229 $ 3,337 $ 1,323,252 Commercial and Industrial 344,628 80 217 297 451 345,376 Residential Mortgages 454,754 683 — 683 2,551 457,988 Other Consumer 44,132 367 94 461 73 44,666 Construction 281,962 — — — 985 282,947 Other 357,900 — — — — 357,900 Total $ 2,803,062 $ 1,359 $ 311 $ 1,670 $ 7,397 $ 2,812,129 There were no loans past due 90 days or more and still accruing at June 30, 2022 and December 31, 2021. Loans past due 90 days are automatically transferred to nonaccrual status. Loans past due 30 to 89 days or more and still accruing increased $0.9 million to $2.6 million at June 30, 2022 compared to $1.7 million at December 31, 2021. There were no nonaccrual or past due loans related to loans held-for-sale at June 30, 2022 or December 31, 2021. The following table presents loans on nonaccrual status and loans past due 90 days or more and still accruing by class of loan for the periods presented. June 30, 2022 (Dollars in Thousands) Beginning of End of Nonaccrual Past Due Commercial Real Estate $ 3,337 $ 3,258 $ — $ — Commercial and Industrial 451 5,210 — — Residential Mortgages 2,551 2,555 — — Other Consumer 73 6 — — Construction 985 1,000 — — Other — — — — Total Portfolio Loans $ 7,397 $ 12,029 $ — $ — As of and for the December 31, 2021 (Dollars in Thousands) Beginning of End of Nonaccrual Past Due Commercial Real Estate $ 21,891 $ 3,337 $ — $ — Commercial and Industrial 456 451 — — Residential Mortgages 4,135 2,551 — — Other Consumer 184 73 — — Construction 5,331 985 808 — Other — — — — Total Portfolio Loans $ 31,997 $ 7,397 $ 808 $ — A loan is considered to be experiencing financial difficulty when it is transferred to nonaccrual status. Loans experiencing financial difficulty with a commitment of $1.0 million or more are individually evaluated. During the three and six months ended June 30, 2022 and the twelve months ended December 31, 2021, no material amount of interest income was recognized on individually evaluated loans subsequent to their classification as individually evaluated loans. The following table presents the amortized cost basis of collateral-dependent individually evaluated loans as of the periods presented. Changes in the fair value of the types of collateral for individually evaluated loans are reported as provision for credit loss on loans or a reversal of the provision for credit loss on loans in the period of change. Type of Collateral June 30, 2022 December 31, 2021 (Dollars in Thousands) Real Estate Real Estate Commercial Real Estate $ 2,668 $ 2,742 Commercial and Industrial — — Residential Mortgages — — Other Consumer — — Construction — 808 Other — — Total $ 2,668 $ 3,550 The following tables present activity in the ACL for the periods presented: Three Months Ended June 30, 2022 (Dollars in Thousands) Commercial Real Estate Commercial and Industrial Residential Mortgage Other Consumer Construction Other Total Loans Allowance for Credit Losses on Loans: Balance at Beginning of Period $ 17,518 $ 3,583 $ 4,520 $ 1,470 $ 7,554 $ 61,731 $ 96,376 Provision for Credit Losses on Loans 290 2,127 545 526 (722) (952) 1,814 Charge-offs — (22) (6) (391) — — (419) Recoveries — — 96 114 — — 210 Net (Charge-offs) / Recoveries — (22) 90 (277) — — (209) Balance at End of Period $ 17,808 $ 5,688 $ 5,155 $ 1,719 $ 6,832 $ 60,779 $ 97,981 Six Months Ended June 30, 2022 (Dollars in Thousands) Commercial Real Estate Commercial and Industrial Residential Mortgage Other Consumer Construction Other Total Loans Allowance for Credit Losses on Loans: Balance at Beginning of Period $ 17,297 $ 4,111 $ 4,368 $ 1,493 $ 6,939 $ 61,731 $ 95,939 Provision for Credit Losses on Loans 511 1,598 714 829 (256) (952) 2,444 Charge-offs — (22) (23) (826) — — (871) Recoveries — 1 96 223 149 — 469 Net (Charge-offs) / Recoveries — (21) 73 (603) 149 — (402) Balance at End of Period $ 17,808 $ 5,688 $ 5,155 $ 1,719 $ 6,832 $ 60,779 $ 97,981 Three Months Ended June 30, 2021 (Dollars in Thousands) Commercial Real Estate Commercial and Industrial Residential Mortgage Other Consumer Construction Other Total Loans Allowance for Credit Losses on Loans: Balance at Beginning of Period $ 42,342 $ 4,905 $ 5,171 $ 1,347 $ 7,106 $ 56,001 $ 116,872 Provision for Credit Losses on Loans (6,103) (185) 217 269 1,039 5,730 967 Charge-offs (8,238) (7) (22) (539) — — (8,806) Recoveries 140 1 1 144 — — 286 Net (Charge-offs) / Recoveries (8,098) (6) (21) (395) — — (8,520) Balance at End of Period $ 28,141 $ 4,714 $ 5,367 $ 1,221 $ 8,145 $ 61,731 $ 109,319 Six Months Ended June 30, 2021 (Dollars in Thousands) Commercial Real Estate Commercial and Industrial Residential Mortgage Other Consumer Construction Other Total Loans Allowance for Credit Losses on Loans: Balance at Beginning of Period $ 36,428 $ 5,064 $ 2,099 $ 2,479 $ 8,004 $ — $ 54,074 Impact of CECL Adoption 6,587 1,379 3,356 (877) (80) 51,277 $ 61,642 Provision for Credit Losses on Loans (6,776) (1,723) (38) 747 160 10,454 2,824 Charge-offs (8,238) (8) (217) (1,409) — — (9,872) Recoveries 140 2 167 281 61 — 651 Net (Charge-offs) / Recoveries (8,098) (6) (50) (1,128) 61 — (9,221) Balance at End of Period $ 28,141 $ 4,714 $ 5,367 $ 1,221 $ 8,145 $ 61,731 $ 109,319 The adoption of ASU 2016-13 resulted in an increase to our ACL of $61.6 million on January 1, 2021 and $2.9 million related to the life-of-loss reserve on unfunded loan commitments. The increase primarily included an expected credit loss of $51.3 million established based on a modified discounted cash flow method on expected cash flow changes in the future for the Other segment. |
