| Allowance for Credit Losses | Allowance for Credit Losses The ACL is a valuation amount that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the allowance when they are deemed uncollectible. The ACL consists of three elements: (1) specific reserves for loans individually analyzed; (2) general reserves for each portfolio segment; and, (3) qualitative reserves. All outstanding loans are considered in evaluating the appropriateness of the allowance. Loans are segmented by common risk characteristics as delineated in the paragraph below. The Company provides for loan losses through the ACL which represents an estimated reserve for losses in the loan portfolio. To determine an appropriate level for general reserves, a discounted cash flow approach is applied to each portfolio segment implementing a probability of default and loss given default estimate based upon a number of factors including historical losses over an economic cycle, economic forecasts, loan prepayment speeds and curtailment rates. To determine an appropriate level for qualitative reserves, various factors are considered including underwriting policies, credit administration practices, experience, ability and depth of lending management, and economic factors not captured in the general reserve calculation. Loan Portfolio Composition & Risk Characteristics: The loan portfolio is segmented into eleven classes and credit risk is evaluated separately in each class. Major risk characteristics relevant to each portfolio segment are as follows: Commercial Real Estate Owner Occupied - commercial real estate owner occupied loans consist of mortgage loans to finance investments in real property such as retail space, offices, industrial buildings, hotels, educational facilities, and other specific or mixed use properties. Loans are typically written with amortizing payment structures. Collateral values are determined based on appraisals and evaluations in accordance with established policy and regulatory guidelines. Loans typically have a loan-to-value ratio of up to 80% based upon current valuation information at the time the loan is made, and are primarily paid by the cash flow generated from the real property, typically the operating entity of owner occupant. Risk factors typically include competitive market forces, net operating incomes of the operating entity, and overall economic demand. Loans in the recreational and tourism sector can be affected by weather conditions, such as unseasonably low winter snowfalls. Commercial real estate lending also carries a higher degree of environmental risk than other types of lending. Commercial Real Estate Non-Owner Occupied - commercial real estate loans non-owner occupied share many of the purpose, loan structure and risk characteristics of owner-occupied commercial real estate. The primary differentiating factor from Owner Occupied is that repayment is generally reliant upon cash flow generated from tenants rather than an operating entity. Risk factors are also influenced by vacancy rates, cap rates, lease renewals, and underlying financial health of lessees. Commercial Construction - commercial construction loans consist of loans to finance construction in a mix of owner- and non-owner occupied commercial real estate properties. Loans typically have construction periods of less than two years, and payment structures during the construction period are typically on an interest only basis, although principal payments may be established depending on the type of construction project being financed. During the construction phase, commercial construction loans are primarily paid by cash flow generated from the construction project or other operating cash flows from the borrower or guarantors, if applicable. Commercial construction loans will typically convert to permanent financing from the Company, or loan repayment may come from a third party source in the event that the Company will not be providing permanent term financing. Collateral valuation and loan-to-value guidelines follow those for commercial real estate loans. Commercial construction loans are impacted by factors similar to those for commercial real estate loans in addition to risks related to contractor financial capacity and ability to complete a project within acceptable time frames and within budget. Commercial and Industry - C&I 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. C&I loans may be secured or unsecured; when secured, collateral generally consists of pledges of business assets including, but not limited to, accounts receivable, inventory, equipment, and/or other tangible and intangible assets. C&I loans are primarily paid by the operating cash flow of the borrower. A weakened economy, soft consumer spending, and the rising cost of labor or raw materials are examples of issues that can impact the credit quality in this segment. Commercial Multifamily - multifamily loans share structure and risk characteristics with non-owner occupied commercial real estate; underlying collateral is residential in nature rather than commercial, consisting of properties with five or more units. Municipal Loans - municipal loans are comprised of loans to municipalities in Maine for capitalized expenditures, construction projects, or tax anticipation notes. All municipal loans are considered either general obligations of the municipality collateralized by the taxing ability of the municipality for repayment of debt or have a pledge of specific revenues. The overall health of the economy, including unemployment rates and housing prices, has an impact on the credit quality of this segment. Agriculture - agriculture loans consist mostly of amortizing term loans and revolving lines of credit made to borrowers in agriculture related industries. For the Company, this includes loans made to land based agricultural production and to participants in the fishing industry. Collateral values are determined based on appraisals and evaluations in accordance with established policy and regulatory guidelines. Loans are primarily paid by the cash flow generated from the agricultural property or operation of equipment. Risk factors typically include competitive market forces, overall economic demand for the product, and may be further influenced by weather conditions which impact growing and/or harvesting, or other factors such as changes in government regulation(s). Residential Real Estate Term - residential term loans consist of residential real estate loans 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 loan-to-value ratios within established policy and regulatory guidelines. Collateral values are determined based on appraisals and evaluations in accordance with established policy and regulatory guidelines. Residential loans typically have a loan-to-value ratio of up to 80% based on appraisal information at the time the loan is made. Collateral consists of mortgage liens on one-to four-family residential properties. Loans are offered with fixed or adjustable rates with amortization terms of up to thirty years. The overall health of the economy, including unemployment rates and housing prices, has an impact on the credit quality of this segment. Residential Real Estate Construction - residential construction loans typically consist of loans for the purpose of constructing single family residences to be owned and occupied by the borrower. Borrower qualifications include favorable credit history combined with supportive income requirements and loan-to-value ratios within established policy and regulatory guidelines. Residential construction loans normally have construction terms of one year or less and payment during the construction term is typically on an interest only basis from sources including interest reserves, borrower liquidity, and/or income. Residential construction loans will typically convert to permanent financing from the Company or have another financing commitment in place from an acceptable mortgage lender. Collateral valuation and loan-to-value guidelines are consistent with those for residential term loans. Residential construction loans are impacted by factors similar to those for residential real estate term loans in addition to risks related to contractor financial capacity and ability to complete a project within acceptable time frames and within budget. Home Equity Revolving and Term - home equity revolving and term loans 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. The home equity line of credit typically has a variable interest rate and is 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. Loan maturities are normally 300 months. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan-to-value ratios usually not exceeding 80% inclusive of priority liens. Collateral valuation guidelines follow those for residential real estate loans. The overall health of the economy, including unemployment rates and housing prices, has an impact on the credit quality of this segment. Consumer - consumer loans include personal lines of credit and amortizing loans made to qualified individuals for various purposes such as autos, recreational vehicles, debt consolidation, personal expenses, or overdraft protection. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines. Consumer loans may be secured or unsecured. The overall health of the economy, including unemployment rates, has an impact on the credit quality of this segment. Construction, land, and land development : CLLD loans, both commercial and residential, represented 43.2% of total Bank capital as of September 30, 2024 and remain below the regulatory guidance of 100.0% of total Bank capital. Construction loans and non-owner-occupied commercial real estate loans represented 225.9% of total Bank capital at September 30, 2024, below the regulatory guidance of 300.0% of total Bank capital. Composition of the ACL: A breakdown of the ACL as of September 30, 2024, by class of financing receivable and allowance element, is presented in the following table: As of September 30, 2024 Specific Reserves on Loans Evaluated Individually General Reserves on Loans Based on Historical Loss Experience Reserves for Qualitative Factors Total Reserves Commercial Real estate owner occupied $ — $ 4,484,000 $ 635,000 $ 5,119,000 Real estate non-owner occupied — 4,387,000 584,000 4,971,000 Construction — 762,000 45,000 807,000 C&I 223,000 3,872,000 567,000 4,662,000 Multifamily — 1,129,000 133,000 1,262,000 Agriculture — 462,000 151,000 613,000 Municipal — 35,000 231,000 266,000 Residential Term 22,000 4,593,000 436,000 5,051,000 Construction — 411,000 14,000 425,000 Home Equity Revolving and term — 584,000 79,000 663,000 Consumer — 151,000 9,000 160,000 $ 245,000 $ 20,870,000 $ 2,884,000 $ 23,999,000 A breakdown of the ACL as of December 31, 2023, by class of financing receivable and allowance element, is presented in the following table: As of December 31, 2023 Specific Reserves on Loans Evaluated Individually General Reserves on Loans Based on Historical Loss Experience Reserves for Qualitative Factors Total Reserves Commercial Real estate owner occupied $ — $ 3,891,000 $ 742,000 $ 4,633,000 Real estate non-owner occupied — 3,759,000 526,000 4,285,000 Construction — 1,849,000 129,000 1,978,000 C&I 223,000 4,238,000 540,000 5,001,000 Multifamily — 1,237,000 81,000 1,318,000 Municipal — 307,000 27,000 334,000 Residential Term 41,000 4,224,000 726,000 4,991,000 Construction — 642,000 (24,000) 618,000 Home Equity Revolving and term — 469,000 157,000 626,000 Consumer — 217,000 29,000 246,000 $ 264,000 $ 20,833,000 $ 2,933,000 $ 24,030,000 A breakdown of the ACL as of September 30, 2023, by class of financing receivable and allowance element, is presented in the following table: As of September 30, 2023 Specific Reserves on Loans Evaluated Individually General Reserves on Loans Based on Historical Loss Experience Reserves for Qualitative Factors Total Reserves Commercial Real estate owner occupied $ — $ 3,731,000 $ 780,000 $ 4,511,000 Real estate non-owner occupied — 3,855,000 574,000 4,429,000 Construction — 1,445,000 157,000 1,602,000 C&I 225,000 3,909,000 663,000 4,797,000 Multifamily — 1,184,000 93,000 1,277,000 Municipal — 332,000 44,000 376,000 Residential Term 41,000 4,020,000 825,000 4,886,000 Construction — 602,000 (26,000) 576,000 Home Equity Revolving and term — 442,000 175,000 617,000 Consumer — 219,000 32,000 251,000 $ 266,000 $ 19,739,000 $ 3,317,000 $ 23,322,000 The ACL as a percent of total loans stood at 1.04% as of September 30, 2024, 1.13% at December 31, 2023 and 1.12% as of September 30, 2023. Off-Balance Sheet Credit Exposures: In the ordinary course of business, the Company enters into commitments to extend credit, including construction lines of credit, revolving lines of credit, written commitments to provide financing, commercial letters of credit and standby letters of credit. Such financial instruments are recorded as loans when they are funded . Allowance for Credit Losses on Off-Balance Sheet Credit Exposures: The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The ACL on off-balance sheet credit exposures is adjusted through credit loss expense and any adjustment is recognized in net income. To appropriately measure expected credit losses, management disaggregates the loan portfolio into similar risk characteristics, identical to those determined for the loan portfolio. An estimated funding rate is then applied to the qualifying unfunded loan commitments and letters of credit using the Company’s own historical experience to estimate the expected funded amount for each loan segment as of the reporting date. Once the expected funded amount for each loan segment is determined, the loss rate, which is the calculated expected loan loss as a percent of the amortized cost basis for each loan segment, is applied to calculate the ACL on off-balance sheet credit exposures as of the reporting date. The Company’s ACL on unfunded commitments is recognized as a liability, included within other liabilities on the consolidated balance sheet. The following table presents the activity in the ACL for off-balance sheet credit exposures for the nine months and quarters ended September 30, 2024 and 2023: For the nine months ended September 30, For the quarter ended September 30, 2024 2023 2024 2023 Allowance for credit losses: Beginning balance $ 1,255,000 $ 100,000 $ 902,000 $ 1,528,000 Impact of adopting ASC 326 — 1,297,000 — — Credit loss (reduction) expense (487,000) 89,000 (134,000) (42,000) Total ending allowance balance $ 768,000 $ 1,486,000 $ 768,000 $ 1,486,000 Credit Quality Indicators: To monitor the credit quality of its loan portfolio, management applies an internal risk rating system to categorize commercial loan segments. Approximately 60% of commercial loan outstanding balances are subject to review and validation annually by an independent consulting firm. Additionally, commercial loan relationships with exposure greater than or equal to $750,000 are subject to review annually by the Company's internal credit review function. The risk rating system has eight levels, defined as follows: 1 Strong Credits rated "1" are characterized by borrowers fully responsible for the credit with excellent capacity to pay principal and interest. Loans rated "1" may be secured with acceptable forms of liquid collateral. 2 Above Average Credits rated "2" are characterized by borrowers that have better than average liquidity, capitalization, earnings, and/or cash flow with a consistent record of solid financial performance. 3 Satisfactory Credits rated "3" are characterized by borrowers with favorable liquidity, profitability, and financial condition with adequate cash flow to pay debt service. 4 Average Credits rated "4" are characterized by borrowers that present risk more than 1, 2 and 3 rated loans and merit an ordinary level of ongoing monitoring. Financial condition is on par or somewhat below industry averages while cash flow is generally adequate to meet debt service requirements. 5 Watch Credits rated "5" are characterized by borrowers that warrant greater monitoring due to financial condition or unresolved and identified risk factors. 6 Other Assets Especially Mentioned Loans in this category are currently protected but are potentially weak and constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of substandard. OAEM have potential weaknesses which may, if not checked or corrected, weaken the asset or inadequately protect the Company's credit position at some future date. 7 Substandard Loans in this category are inadequately protected by the paying capacity of the borrower or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Substandard loans are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not corrected. 8 Doubtful Loans classified "Doubtful" have the same weaknesses as those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is high, but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Most residential real estate, home equity, and consumer loans are not assigned ratings; therefore they are categorized as performing and non-performing loans. Performing loans include loans that are current and loans that are past due less than 90 days. Loans that are past due more than 90 days are considered non-performing. The following table summarizes the credit quality for the Company's portfolio by risk category of loans and by class by vintage as of September 30, 2024: Term Loans Amortized Cost Basis by Origination Year Dollars in thousands 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total As of September 30, 2024 Commercial Real estate owner occupied Pass (risk rating 1-5) $ 29,267 $ 67,088 $ 84,626 $ 39,744 $ 27,003 $ 79,134 $ 11,246 $ 960 $ 339,068 Special Mention (risk rating 6) — 1,903 — — — 6,276 50 — 8,229 Substandard (risk rating 7) 41 268 — — 162 519 — — 990 Doubtful (risk rating 8) — — — — — — — — — Total Real Estate Owner Occupied 29,308 69,259 84,626 39,744 27,165 85,929 11,296 960 348,287 Current period gross write-offs — — — — — — — — — Real estate non-owner occupied Pass (risk rating 1-5) 24,631 30,610 74,749 115,687 46,646 104,014 10,197 1,520 408,054 Special Mention (risk rating 6) — — — 46 — 261 — — 307 Substandard (risk rating 7) — — — — — — — — — Doubtful (risk rating 8) — — — — — — — — — Total Real Estate Non-Owner Occupied 24,631 30,610 74,749 115,733 46,646 104,275 10,197 1,520 408,361 Current period gross write-offs — — — — — — — — — Construction Pass (risk rating 1-5) 24,354 22,535 29,047 7,921 1,398 2,523 — — 87,778 Special Mention (risk rating 6) — — — — — — — — — Substandard (risk rating 7) 145 — — 69 — — — — 214 Doubtful (risk rating 8) — — — — — — — — — Total Construction 24,499 22,535 29,047 7,990 1,398 2,523 — — 87,992 Current period gross write-offs — — — — — — — — — C&I Pass (risk rating 1-5) 56,398 28,644 48,523 41,554 16,016 24,307 114,851 4,446 334,739 Special Mention (risk rating 6) 25 24,308 502 495 470 2,857 4,399 — 33,056 Substandard (risk rating 7) — 13 348 84 16 22 137 — 620 Doubtful (risk rating 8) — — — — — — — — — Total C&I 56,423 52,965 49,373 42,133 16,502 27,186 119,387 4,446 368,415 Current period gross write-offs — — — (19) (24) (45) — — (88) Multifamily Pass (risk rating 1-5) 14,874 12,392 34,069 17,458 14,657 13,028 721 — 107,199 Special Mention (risk rating 6) — — — — — — — — — Substandard (risk rating 7) — — 1,020 1,341 912 — — — 3,273 Doubtful (risk rating 8) — — — — — — — — — Total Multifamily 14,874 12,392 35,089 18,799 15,569 13,028 721 — 110,472 Current period gross write-offs — — — — — — — — — Agriculture Pass (risk rating 1-5) 9,413 2,845 6,068 4,054 15,121 6,532 4,183 224 48,440 Special Mention (risk rating 6) — 500 706 85 — 587 600 — 2,478 Substandard (risk rating 7) — 87 — 31 — 238 — — 356 Doubtful (risk rating 8) — — — — — — — — — Total Agriculture 9,413 3,432 6,774 4,170 15,121 7,357 4,783 224 51,274 Current period gross write-offs — — — — — — — — — Term Loans Amortized Cost Basis by Origination Year Dollars in thousands 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total As of September 30, 2024 Municipal Pass (risk rating 1-5) 9,355 19,626 4,344 3,985 9,026 16,608 — — 62,944 Special Mention (risk rating 6) — — — — — — — — — Substandard (risk rating 7) — — — — — — — — — Doubtful (risk rating 8) — — — — — — — — — Total Municipal 9,355 19,626 4,344 3,985 9,026 16,608 — — 62,944 Current period gross write-offs — — — — — — — — — Residential Term Performing 37,770 85,791 151,882 132,413 87,730 198,196 2,479 121 696,382 Non-performing — — 300 262 399 725 — — 1,686 Total Term 37,770 85,791 152,182 132,675 88,129 198,921 2,479 121 698,068 Current period gross write-offs — — — — — (36) — — (36) Construction Performing 15,512 17,342 1,091 — 683 — — — 34,628 Non-performing — — — — — — — — — Total Construction 15,512 17,342 1,091 — 683 — — — 34,628 Current period gross write-offs — — — — — — — — — Home Equity Revolving and Term Performing 7,515 9,459 8,516 1,940 1,140 1,985 76,231 9,977 116,763 Non-performing — — — — — 98 16 151 265 Total Home Equity Revolving and Term 7,515 9,459 8,516 1,940 1,140 2,083 76,247 10,128 117,028 Current period gross write-offs — — — — — (7) — — (7) Consumer Performing 2,771 2,714 1,377 817 1,275 4,913 5,917 — 19,784 Non-performing — — — — — — — — — Total Consumer 2,771 2,714 1,377 817 1,275 4,913 5,917 — 19,784 Current period gross write-offs (6) (46) (62) (37) (19) (40) — — (210) Total loans $ 232,071 $ 326,125 $ 447,168 $ 367,986 $ 222,654 $ 462,823 $ 231,027 $ 17,399 $ 2,307,253 The following table summarizes the credit quality for the Company's portfolio by risk category of loans and by class by vintage as of December 31, 2023: Term Loans Amortized Cost Basis by Origination Year Dollars in thousands 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total As of December 31, 2023 Commercial Real estate owner occupied Pass (risk rating 1-5) $ 64,693 $ 73,920 $ 40,782 $ 28,716 $ 29,856 $ 59,236 $ 8,993 $ — $ 306,196 Special Mention (risk rating 6) 1,903 — — — 5,605 313 — — 7,821 Substandard (risk rating 7) 283 — — — 503 16 — — 802 Doubtful (risk rating 8) — — — — — — — — — Total Real Estate Owner Occupied 66,879 73,920 40,782 28,716 35,964 59,565 8,993 — 314,819 Current period gross write-offs — — — — — (40) — — (40) Real estate non-owner occupied Pass (risk rating 1-5) 30,666 70,442 129,299 47,959 27,159 83,820 4,230 — 393,575 Special Mention (risk rating 6) — — — — — — — — — Substandard (risk rating 7) — — — — — 61 — — 61 Doubtful (risk rating 8) — — — — — — — — — Total Real Estate Non-Owner Occupied 30,666 70,442 129,299 47,959 27,159 83,881 4,230 — 393,636 Current period gross write-offs — — — — — — — — — Construction Pass (risk rating 1-5) 29,781 45,130 8,705 1,581 1,034 2,373 — — 88,604 Special Mention (risk rating 6) — — 69 — — — — — 69 Substandard (risk rating 7) — — — — — — — — — Doubtful (risk rating 8) — — — — — — — — — Total Construction 29,781 45,130 8,774 1,581 1,034 2,373 — — 88,673 Current period gross write-offs — — — — — — — — — C&I Pass (risk rating 1-5) 49,147 61,628 51,848 33,955 6,103 32,032 87,949 973 323,635 Special Mention (risk rating 6) 23,970 3,414 267 546 — 3,373 330 — 31,900 Substandard (risk rating 7) 126 354 35 — 180 455 102 — 1,252 Doubtful (risk rating 8) — — — — — — — — — Total C&I 73,243 65,396 52,150 34,501 6,283 35,860 88,381 973 356,787 Current period gross write-offs — (114) — — (16) (23) — — (153) Multifamily Pass (risk rating 1-5) 12,046 30,565 18,053 15,033 5,540 8,527 416 — 90,180 Special Mention (risk rating 6) — 1,020 — 912 — — — — 1,932 Substandard (risk rating 7) — — 1,364 — — — — — 1,364 Doubtful (risk rating 8) — — — — — — — — — Total Multifamily 12,046 31,585 19,417 15,945 5,540 8,527 416 — 93,476 Current period gross write-offs — — — — — — — — — Municipal Pass (risk rating 1-5) 20,210 4,741 3,982 9,775 5,156 7,559 — — 51,423 Special Mention (risk rating 6) — — — — — — — — — Substandard (risk rating 7) — — — — — — — — — Doubtful (risk rating 8) — — — — — — — — — Total Municipal 20,210 4,741 3,982 9,775 5,156 7,559 — — 51,423 Current period gross write-offs — — — — — — — — — Term Loans Amortized Cost Basis by Origination Year Dollars in thousands 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total As of December 31, 2023 Residential Term Performing 65,605 156,495 140,254 93,774 39,896 174,341 3,046 129 673,540 Non-performing — 304 — 40 300 671 — — 1,315 Total Term 65,605 156,799 140,254 93,814 40,196 175,012 3,046 129 674,855 Current period gross write-offs — — — — — — — — — Construction Performing 25,007 6,012 — 1,339 — — — — 32,358 Non-performing — — — — — — — — — Total Construction 25,007 6,012 — 1,339 — — — — 32,358 Current period gross write-offs — — — — — — — — — Home Equity Revolving and Term Performing 10,519 9,319 2,031 1,197 584 1,655 68,006 10,419 103,730 Non-performing — — — — — 112 19 165 296 Total Home Equity Revolving and Term 10,519 9,319 2,031 1,197 584 1,767 68,025 10,584 104,026 Current period gross write-offs — (50) — — — — — — (50) Consumer Performing 3,664 2,042 1,175 1,794 455 4,564 5,707 — 19,401 Non-performing — — — — — — — — — Total Consumer 3,664 2,042 1,175 1,794 455 4,564 5,707 — 19,401 Current period gross write-offs (5) (46) (31) (30) (7) (75) — — (194) Total loans $ 337,620 $ 465,386 $ 397,864 $ 236,621 $ 122,371 $ 379,108 $ 178,798 $ 11,686 $ 2,129,454 The following table summarizes the credit quality for the Company's portfolio by risk category of loans and by class by vintage as of September 30, 2023: Term Loans Amortized Cost Basis by Origination Year Dollars in thousands 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total As of September 30, 2023 Commercial Real estate owner occupied Pass (risk rating 1-5) $ 43,022 $ 75,590 $ 41,851 $ 28,387 $ 35,696 $ 65,064 $ 9,355 $ 175 $ 299,140 Special Mention (risk rating 6) — — — — — — — — — Substandard (risk rating 7) 283 — — — 503 17 — — 803 Doubtful (risk rating 8) — — — — — — — — — Total Real Estate Owner Occupied 43,305 75,590 41,851 28,387 36,199 65,081 9,355 175 299,943 Current period gross write-offs — — — — — (40) — — (40) Real estate non-owner occupied Pass (risk rating 1-5) 27,875 71,474 130,132 49,160 27,670 85,559 5,092 — 396,962 Special Mention (risk rating 6) — — — — — — — — — Substandard (risk rating 7) — — — — — 62 — — 62 Doubtful (risk rating 8) — — — — — — — — — Total Real Estate Non-Owner Occupied 27,875 71,474 130,132 49,160 27,670 85,621 5,092 — 397,024 Current period gross write-offs — — — — — — — — — Construction Pass (risk rating 1-5) 16,892 41,852 8,506 1,665 1,039 2,470 — — 72,424 Special Mention (risk rating 6) — — — — — — — — — Substandard (risk rating 7) — — — — — — — — — Doubtful (risk rating 8) — — — — — — — — — Total Construction 16,892 41,852 8,506 1,665 1,039 2,470 — — 72,424 Current period gross write-offs — — — — — — — — — C&I Pass (risk rating 1-5) 43,648 66,873 53,712 37,052 6,526 38,003 90,748 11,937 348,499 Special Mention (risk rating 6) — 129 268 — — 8 400 — 805 Substandard (risk rating 7) 94 363 35 — 188 545 67 — 1,292 Doubtful (risk rating 8) — — — — — — — — — Total C&I 43,742 67,365 54,015 37,052 6,714 38,556 91,215 11,937 350,596 Current period gross write-offs — — — — (16) — — — (16) Multifamily Pass (risk rating 1-5) 8,435 32,082 18,172 16,103 5,553 8,796 329 207 89,677 Special Mention (risk rating 6) — — 1,364 — — — — — 1,364 Substandard (risk rating 7) — — — — — — — — — Doubtful (risk rating 8) — — — — — — — — — Total Multifamily 8,435 32,082 19,536 16,103 5,553 8,796 329 207 91,041 Current period gross write-offs — — — — — — — — — Municipal Pass (risk rating 1-5) 24,527 6,239 4,121 10,226 5,270 8,064 — — 58,447 Special Mention (risk rating 6) — — — — — — — — — Substandard (risk rating 7) — — — — — — — — — Doubtful (risk rating 8) — — — — — — — — — Total Municipal 24,527 6,239 4,121 10,226 5,270 8,064 — — 58,447 Current period gross write-offs — — — — — — — — — Term Loans Amortized Cost Basis by Origination Year Dollars in thousands 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total As of September 30, 2023 Residential Term Performing 47,019 149,470 143,048 97,350 40,621 179,788 1,301 132 658,729 Non-performing — 304 — 81 340 595 — — 1,320 Total Term 47,019 149,774 143,048 97,431 40,961 180,383 1,301 132 660,049 Current period gross write-offs — — — — — — — — — Construction Performing 15,966 11,715 — 1,305 — — — — 28,986 Non-performing — — — — — — — — — Total Construction 15,966 11,715 — 1,305 — — — — 28,986 Current period gross write-offs — — — — — — — — — Home Equity Revolving and Term Performing 8,154 9,472 2,073 1,214 609 1,754 67,639 10,575 101,490 Non-performing — — — — — 115 198 177 490 Total Home Equity Revolving and Term 8,154 9,472 2,073 1,214 609 1,869 67,837 10,752 101,980 Current period gross write-offs — — — — — — — — — Consumer Performing 3,072 2,338 1,296 1,951 538 4,404 5,771 — 19,370 Non-performing — — — — — — — — — Total Consumer 3,072 2,338 1,296 1,951 538 4,404 5,771 — 19,370 Current period gross write-offs (5) (41) (30) (30) (7) (39) — — (152) Total loans $ 238,987 $ 467,901 $ 404,578 $ 244,494 $ 124,553 $ 395,244 $ 180,900 $ 23,203 $ 2,079,860 Loss Recognition: Commercial loans are generally charged off when all or a portion of the principal amount is determined to be uncollectible. This determination is based on circumstances specific to a borrower including repayment ability, analysis of collateral, and other factors as applicable. Consumer loans greater than 120 days past due are generally charged off. Residential loans 90 days or more past due are placed on non-accrual status unless the loans are both well secured and in the process of collection. One- to four-family residential real estate loans and home equity loans are written down or charged-off no later than 180 days past due, or for residential real estate secured loans having a borrower in bankruptcy, within 60 days of receipt of notification of filing from the bankruptcy court, whichever is sooner. This is subject to completion of a current assessment of the value of the collateral with any outstanding loan balance in excess of the fair value of the property, less costs to sell, written down or charged-off. The following table presents ACL activity by class for the nine months and quarter ended September 30, 2024: Dollars in thousands Commercial Municipal Residential Home Equity Consumer Total Real Estate Owner Occupied Real Estate Non-Owner Occupied Construction C&I Multifamily Agriculture Term Construction Revolving and term For the nine months ended September 30, 2024 Beginning balance $ 4,633 $ 4,285 $ 1,978 $ 5,001 $ 1,318 $ — $ 334 $ 4,991 $ 618 $ 626 $ 246 $ 24,030 Charge offs — — — (88) — — — (36) — (7) (210) (341) Recoveries 100 — — 24 — — — 30 — 21 77 252 Credit loss (reduction) expense 386 686 (1,171) (275) (56) 613 (68) 66 (193) |
