Loans Receivable | Note 4 – Loans Receivable Loans receivable, net at June 30, 2024 and December 31, 2023 were comprised of the following: June 30, December 31, (In thousands) Commercial real estate $ 1,194,279 $ 1,142,864 Commercial and industrial 50,290 50,961 Construction 287,290 310,187 Residential first-lien mortgage 36,075 38,040 Home equity/consumer 7,583 8,081 Total loans 1,575,517 1,550,133 Deferred fees and costs (2,165 ) (1,798 ) Loans, net $ 1,573,352 $ 1,548,335 Except for the Noah Bank acquisition during the three-month period ended June 30, 2023, the Company did not purchase any loans during the three and six months ended June 30, 2024, and 2023, respectively. The The following table presents the components of the allowance for credit losses: June 30, December 31, (In thousands) Allowance for credit losses - loans $ (18,464 ) $ (18,492 ) Allowance for credit losses - off balance sheet (524 ) (589 ) $ (18,988 ) $ (19,081 ) The following table presents nonaccrual loans by segment of the loan portfolio as of June 30, 2024 and December 31, 2023: June 30, 2024 December 31, 2023 With a Without a With a Without a (In thousands) Commercial real estate $ — $ 2,150 $ — $ 4,485 Commercial and industrial 32 $ 885 — 2,116 Construction — — — — Residential first-lien mortgage — 127 — 107 Home equity/consumer — 24 — — Total nonaccrual loans $ 32 $ 3,186 $ — $ 6,708 The calculation of the allowance for credit losses does not include any accrued interest receivable. The Company’s policy is to write off any interest not collected after 90 days. During the six-month six-month 30-59 60-89 >90 Total Current Total Loans Loans (In thousands) Commercial real estate $ 1,831 $ — $ 2,150 $ 3,981 $ 1,190,298 $ 1,194,279 $ — Commercial and industrial — 245 885 1,130 49,160 50,290 — Construction — — — — 287,290 287,290 — Residential first-lien mortgage 17 101 127 245 35,830 36,075 — Home equity/consumer — — 24 24 7,559 7,583 — Total $ 1,848 $ 346 $ 3,186 $ 5,380 $ 1,570,137 $ 1,575,517 $ — The following table presents the segments of the loan portfolio summarized by the past due status as of December 31, 2023: 30-59 60-89 >90 Total Current Total Loans Loans (In thousands) Commercial real estate $ 159 $ — $ 4,485 $ 4,644 $ 1,138,220 $ 1,142,864 $ — Commercial and industrial 303 — 2,116 2,419 48,542 50,961 — Construction — — — — 310,187 310,187 — Residential first-lien mortgage — — 107 107 37,933 38,040 — Home equity/consumer 29 — — 29 8,052 8,081 — Total $ 491 $ — $ 6,708 $ 7,199 $ 1,542,934 $ 1,550,133 $ — The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation and current economic trends, among other factors. The Company evaluates risk ratings on an ongoing basis and assigns one of the following ratings: pass, special mention, substandard and doubtful. The Company engages a third party to review its assessment on a semiannual basis. The Company classifies residential and consumer loans as either performing or nonperforming based on payment status. The following table summarizes total loans by year of origination, internally assigned credit grades and risk characteristics as of June 30, 2024. Gross charge-offs are included for the six months ended June 30, 2024. 2024 2023 2022 2021 2020 Prior Revolving Total (Dollars in thousands) Commercial real estate Pass $ 65,889 $ 131,199 $ 243,186 $ 114,346 $ 61,325 $ 571,458 $ 2,061 $ 1,189,464 Special mention — — — — — 2,665 — 2,665 Substandard — — — — — 2,150 — 2,150 Total commercial real estate 65,889 131,199 243,186 114,346 61,325 576,273 2,061 1,194,279 Current period gross charge-offs (237 ) (237 ) Commercial and industrial Pass 3,224 (1,429 ) 3,425 11,491 (1,087 ) (15,366 ) 49,008 48,752 Special mention — — — — — 653 — 653 Substandard — — — — — 885 — 885 Total commercial and industrial 3,224 (1,429 ) 3,425 11,491 (1,087 ) (13,828 ) 49,008 50,290 Current period gross charge-offs (130 ) (130 ) Construction Pass (28,493 ) 20,506 55,100 117,590 16,064 259 106,263 287,290 Special mention — — — — — — — — Substandard — — — — — — — — Total construction (28,493 ) 20,506 55,100 117,590 16,064 259 106,263 287,290 Residential first-lien mortgage Performing — — 952 3,756 2,793 28,426 — 35,948 Nonperforming — — — — — 127 — 127 Total residential first-lien mortgage — — 952 3,756 2,793 28,553 — 36,075 Home equity/consumer Performing 431 1,203 632 (284 ) (384 ) 1,457 4,435 7,559 Nonperforming — — 24 — — — — 24 Total home equity/consumer 431 1,203 656 (284 ) (384 ) 1,457 4,435 7,583 Total Pass 41,051 151,479 303,295 246,899 78,711 586,234 161,767 1,569,013 Special mention — — — — — 3,318 — 3,318 Substandard — — 24 — — 3,162 — 3,186 Total loans $ 41,051 $ 151,479 $ 303,319 $ 246,899 $ 78,711 $ 592,714 $ 161,767 $ 1,575,517 The following table summarizes total loans by year of origination, internally assigned credit grades and risk characteristics as of December 31, 2023. Gross charge-offs are included for the year-ended December 31, 2023. 2023 2022 2021 2020 2019 Prior Revolving Total (Dollars in thousands) Commercial real estate Pass $ 132,834 $ 233,436 $ 116,836 $ 53,574 $ 175,991 $ 417,417 $ 5,551 $ 1,135,639 Special mention — — — — — 2,740 — 2,740 Substandard — — — — — 4,485 — 4,485 Total commercial real estate 132,834 233,436 116,836 53,574 175,991 424,642 5,551 1,142,864 Current period gross charge-offs 1,718 1,718 Commercial and industrial Pass 2,098 2,304 11,925 1,962 1,133 13,954 15,045 48,421 Special mention — — — — — 500 — 500 Substandard — — — — — 2,040 — 2,040 Total commercial and industrial 2,098 2,304 11,925 1,962 1,133 16,494 15,045 50,961 Current period gross charge-offs 55 55 Construction Pass 5,832 18,379 91,774 19,216 — 8,484 166,502 310,187 Special mention — — — — — — — — Substandard — — — — — — — — Total construction 5,832 18,379 91,774 19,216 — 8,484 166,502 310,187 Current period gross charge-offs 148 148 Residential first-lien mortgage Performing — 979 4,792 2,839 1,545 27,778 — 37,933 Nonperforming — — — — — 107 — 107 Total residential first-lien mortgage — 979 4,792 2,839 1,545 27,885 — 38,040 Current period gross charge-offs 2 2 Home equity/consumer Performing 1,153 1,016 1,172 — — 1,606 3,134 8,081 Nonperforming — — — — — — — — Total home equity/consumer 1,153 1,016 1,172 — — 1,606 3,134 8,081 Total Pass/performing 141,917 256,114 226,499 77,591 178,669 469,239 190,232 1,540,261 Special mention — — — — — 3,240 — 3,240 Substandard /nonperforming — — — — — 6,632 — 6,632 Total loans $ 141,917 $ 256,114 $ 226,499 $ 77,591 $ 178,669 $ 479,111 $ 190,232 $ 1,550,133 The following table presents the allowance for credit losses on loans receivable at and for the three months ended June 30, 2024: Commercial Commercial Construction Residential Home equity/ Total (In thousands) Allowance for credit losses: Beginning balance $ 16,446 $ 513 $ 1,021 $ 572 $ 66 $ 18,618 Provision (reversal) 1 106 (80 ) (277 ) 88 (6 ) (169 ) Charge-offs — (84 ) — — — (84 ) Recoveries 71 28 — — — 99 Total $ 16,623 $ 377 $ 744 $ 660 $ 60 $ 18,464 1 The reversal of credit losses on the Consolidated Statement of Income is $ 118 169 51 The following table presents the allowance for credit losses on loans receivable at and for the six months ended June 30, 2024: Commercial Commercial Construction Residential Home equity/ Total (In thousands) Allowance for credit losses: Beginning balance $ 16,047 $ 488 $ 1,145 $ 725 $ 87 $ 18,492 Provision (reversal) 1 737 (111 ) (401 ) (65 ) (27 ) 133 Charge-offs (237 ) (130 ) — — — (367 ) Recoveries 76 130 — — — 206 Total $ 16,623 $ 377 $ 744 $ 660 $ 60 $ 18,464 1 The provision for credit losses on the Consolidated Statement of Income is $ 68 133 65 The following table presents the allowance for credit losses on loans receivable at and for the three months ended June 30, 2023: Commercial Commercial Construction Residential Home equity/ Unallocated Total (In thousands) Allowance for credit losses: Beginning balance $ 10,037 $ 214 $ 5,349 $ 654 $ 253 $ — $ 16,507 Non-purchased 1,586 105 — 16 — — 1,707 Purchased credit deteriorated loans 498 103 — — — — 601 Provision 1 1,697 (19 ) (672 ) (7 ) (3 ) — 996 Charge-offs (1,718 ) — (148 ) (2 ) — — (1,868 ) Recoveries 23 4 — — — — 27 Total $ 12,123 $ 407 $ 4,529 $ 661 $ 250 $ — $ 17,970 1 The provision for credit losses on the Consolidated Statement of Income is $ 2.5 1.7 non-PCD 240 The following table presents the allowance for credit losses on loans receivable at and for the six months ended June 30, 2023: Commercial Commercial Construction Residential Home equity/ Unallocated Total (In thousands) Allowance for credit losses: Beginning balance $ 8,654 $ 271 $ 6,289 $ 236 $ 45 $ 966 $ 16,461 CECL adoption 1,384 (73 ) (1,269 ) 428 195 (966 ) (301 ) CECL day 1 provision 1,586 105 — 16 — — 1,707 Purchased credit deteriorated loans 498 103 — — — — 601 Provision 1 1,693 (3 ) (343 ) (17 ) 10 — 1,340 Charge-offs (1,718 ) — (148 ) (2 ) — — (1,868 ) Recoveries 26 4 — — — — 30 Total $ 12,123 $ 407 $ 4,529 $ 661 $ 250 $ — $ 17,970 1 The provision for credit losses on the Consolidated Statement of Income is $ 2.7 1.7 non-PCD 319 As of June 30, 2024, the Company had thirteen loans totaling $3.2 million that were individually analyzed for potential credit loss and all the loans have real estate as credit support. As of December 31, 2023, the Company had nine loans totaling $6.7 million that were individually analyzed for potential credit loss. Occasionally, the Company will modify the contractual terms of loans to a borrower experiencing financial difficulties as a way to mitigate loss, proactively work with borrowers in financial difficulty, or to comply with regulations regarding the treatment of certain bankruptcy filing and discharge situations. Typically, such concessions may consist of a reduction in interest rate to a below market rate, taking into account the credit quality of the note, extension of additional credit base on receipt of adequate collateral, or a deferment or reduction of payments (principal or interest) which materially alters the Company’s position or significantly extends the note’s maturity date, such that the present value of cash flows to be received is materially less than those contractually established at the loan’s origination. When principal forgiveness is provided, the amount forgiven is charged off against the allowance for credit losses on loans. There were no modifications to borrowers with financial difficulties and no loans that defaulted for the six-month periods ended June 30, 2024, and June 30, 2023. |