Quarterly report pursuant to Section 13 or 15(d)

Note 5 - Loans Receivable

v3.22.2.2
Note 5 - Loans Receivable
9 Months Ended
Sep. 30, 2022
Notes to Financial Statements  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 5 - Loans Receivable

 

The Bancorp’s current lending programs are described below:

 

Residential Real Estate. The primary lending activity of the Bancorp has been the granting of conventional mortgage loans to enable borrowers to purchase existing homes, refinance existing homes, or construct new homes. Conventional loans are made up to a maximum of 97% of the purchase price or appraised value, whichever is less. For loans made in excess of 80% of value, private mortgage insurance is generally required in an amount sufficient to reduce the Bancorp’s exposure to 80% or less of the appraised value of the property. Loans insured by private mortgage insurance companies can be made for up to 97% of value. Loans closed with over 20% of equity do not require private mortgage insurance because of the borrower’s level of equity investment.

 

Fixed rate loans currently originated generally conform to Freddie Mac guidelines for loans purchased under the one‑to‑four family program. Loan interest rates are determined based on secondary market yield requirements and local market conditions. Fixed rate mortgage loans with contractual maturities generally exceeding fifteen years and greater may be sold and/or classified as held for sale to control exposure to interest rate risk.

 

The 15 year mortgage loan program has gained wide acceptance in the Bancorp’s primary market area. As a result of the shortened maturity of these loans, this product has been priced below the comparable 20 and 30 year loan offerings. Mortgage applicants for 15 year loans tend to have a larger than normal down payment; this, coupled with the larger principal and interest payment amount, has caused the 15 year mortgage loan portfolio to consist, to a significant extent, of second time home buyers whose underwriting qualifications tend to be above average.

 

The Bancorp’s Adjustable Rate Mortgage Loans (“ARMs”) include offerings that reprice annually or are “mini-fixed.” The “mini‑fixed” mortgage reprices annually after a one, three, five, seven or ten year period. The ability of the Bancorp to successfully market ARM’s depends upon loan demand, prevailing interest rates, volatility of interest rates, public acceptance of such loans and terms offered by competitors.

 

Home Equity Line of Credit. The Bancorp offers a fixed and variable rate revolving line of credit secured by the equity in the borrower’s home. Both products offer an interest only option where the borrower pays interest only on the outstanding balance each month. Equity lines will typically require a second mortgage appraisal and a second mortgage lender’s title insurance policy. Loans are generally made up to a maximum of 89% of the appraised value of the property less any outstanding liens.

 

Fixed term home improvement and equity loans are made up to a maximum of 85% of the appraised value of the improved property, less any outstanding liens. These loans are offered on both a fixed and variable rate basis with a maximum term of 240 months. All home equity loans are made on a direct basis to borrowers.

 

Commercial Real Estate and Multifamily Loans. Commercial real estate loans are typically made to a maximum of 80% of the appraised value. Such loans are generally made on an adjustable rate basis. These loans are typically made for terms of 15 to 20 years. Loans with an amortizing term exceeding 15 years normally have a balloon feature calling for a full repayment within seven to ten years from the date of the loan. The balloon feature affords the Bancorp the opportunity to restructure the loan if economic conditions so warrant. Commercial real estate loans include loans secured by commercial rental units, apartments, condominium developments, small shopping centers, owner occupied commercial/industrial properties, hospitality units and other retail and commercial developments.

 

While commercial real estate lending is generally considered to involve a higher degree of risk than single‑family residential lending due to the concentration of principal in a limited number of loans and the effects of general economic conditions on real estate developers and managers, the Bancorp has endeavored to reduce this risk in several ways. In originating commercial real estate loans, the Bancorp considers the feasibility of the project, the financial strength of the borrowers and lessees, the managerial ability of the borrowers, the location of the project and the economic environment. Management evaluates the debt coverage ratio and analyzes the reliability of cash flows, as well as the quality of earnings. All such loans are made in accordance with well-defined underwriting standards and are generally supported by personal guarantees, which represent a secondary source of repayment.

 

Loans for the construction of commercial properties are generally located within an area permitting physical inspection and regular review of business records. Projects financed outside of the Bancorp’s primary lending area generally involve borrowers and guarantors who are or were previous customers of the Bancorp or projects that are underwritten according to the Bank’s underwriting standards.

 

Construction and Land Development. Construction loans on residential properties are made primarily to individuals and contractors who are under contract with individual purchasers. These loans are personally guaranteed by the borrower. The maximum loan-to-value ratio is 89% of either the current appraised value or the cost of construction, whichever is less. Residential construction loans are typically made for periods of six months to one year.

 

Loans are also made for the construction of commercial properties. All such loans are made in accordance with well-defined underwriting standards. Generally if the loans are not owner occupied, these types of loans require proof of intent to lease and a confirmed end-loan takeout. In general, loans made do not exceed 80% of the appraised value of the property. Commercial construction loans are typically made for periods not to exceed two years or date of occupancy, whichever is less.

 

Commercial Business and Farmland Loans. Although the Bancorp’s priority in extending various types of commercial business loans changes from time to time, the basic considerations in determining the makeup of the commercial business loan portfolio are economic factors, regulatory requirements and money market conditions. The Bancorp seeks commercial loan relationships from the local business community and from its present customers. Conservative lending policies based upon sound credit analysis governs the extension of commercial credit. The following loans, although not inclusive, are considered preferable for the Bancorp’s commercial loan portfolio: loans collateralized by liquid assets; loans secured by general use machinery and equipment; secured short‑term working capital loans to established businesses secured by business assets; short‑term loans with established sources of repayment and secured by sufficient equity and real estate; and unsecured loans to customers whose character and capacity to repay are firmly established.

 

Consumer Loans. The Bancorp offers consumer loans to individuals for personal, household or family purposes. Consumer loans are either secured by adequate collateral, or unsecured. Unsecured loans are based on the strength of the applicant’s financial condition. All borrowers must meet current underwriting standards. The consumer loan program includes both fixed and variable rate products.

 

Manufactured Homes. The Bancorp purchases fixed rate closed loans from a third party that are subject to Bancorp’s underwriting requirements and secured by manufactured homes. The maturity date on these loans can range up to 25 years. In addition, these loans are partially secured by a reserve account held at the Bancorp.

 

Government Loans. The Bancorp is permitted to purchase non-rated municipal securities, tax anticipation notes and warrants within the local market area.

 

(Dollars in thousands)

               
   

September 30, 2022

   

December 31, 2021

 

Loans secured by real estate:

               

Residential real estate

  $ 471,565     $ 260,134  

Home equity

    37,578       34,612  

Commercial real estate

    452,852       317,145  

Construction and land development

    134,301       123,822  

Multifamily

    258,377       61,194  

Total loans secured by real estate

    1,354,673       796,907  

Commercial business

    95,372       115,772  

Consumer

    827       582  

Manufactured homes

    35,866       37,887  

Government

    9,649       8,991  

Loans receivable

    1,496,387       960,139  

Add (less):

               

Net deferred loan origination costs

    5,767       6,810  

Undisbursed loan funds and loan clearings

    542       (229 )

Loans receivable, net of deferred fees and costs

  $ 1,502,696     $ 966,720  

 

(Dollars in thousands)

 

Beginning Balance

   

Charge-offs

   

Recoveries

   

Provisions

   

Ending Balance

 

 

The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended September 30, 2022:

 

Allowance for loan losses:

                                       

Residential real estate

  $ 2,756     $ -     $ 8     $ 246     $ 3,010  

Home equity

    373       -       -       22       395  

Commercial real estate

    5,527       -       -       (27 )     5,500  

Construction and land development

    1,744       -       -       (229 )     1,515  

Multifamily

    1,128       -       -       108       1,236  

Commercial business

    1,808       (57 )     50       (100 )     1,701  

Consumer

    70       (13 )     4       (20 )     41  

Manufactured homes

    -       -       -       -       -  

Government

    -       -       -       -       -  

Total

  $ 13,406     $ (70 )   $ 62     $ -     $ 13,398  

 

The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended September 30, 2021:

 

Allowance for loan losses:

                                       

Residential real estate

  $ 2,294     $ (28 )   $ 21     $ 188     $ 2,475  

Home equity

    371       -       -       3       374  

Commercial real estate

    5,939       -       -       413       6,352  

Construction and land development

    1,798       -       -       90       1,888  

Multifamily

    740       -       -       47       787  

Commercial business

    2,474       -       6       (594 )     1,886  

Consumer

    23       (4 )     1       (8 )     12  

Manufactured homes

    -       -       -       -       -  

Government

    -       -       -       -       -  

Total

  $ 13,639     $ (32 )   $ 28     $ 139     $ 13,774  

 

The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the nine months ended September 30, 2022:

 

Allowance for loan losses:

                                       

Residential real estate

  $ 2,480     $ -     $ 58     $ 472     $ 3,010  

Home equity

    357       -       -       38       395  

Commercial real estate

    5,515       -       -       (15 )     5,500  

Construction and land development

    2,119       -       -       (604 )     1,515  

Multifamily

    848       -       -       388       1,236  

Commercial business

    2,009       (57 )     88       (339 )     1,701  

Consumer

    15       (50 )     16       60       41  

Manufactured homes

    -       -       -       -       -  

Government

    -       -       -       -       -  

Total

  $ 13,343     $ (107 )   $ 162     $ -     $ 13,398  

 

The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the nine months ended September 30, 2021:

 

Allowance for loan losses:

                                       

Residential real estate

  $ 2,211     $ (32 )   $ 46     $ 250     $ 2,475  

Home equity

    276       (1 )     -       99       374  

Commercial real estate

    5,406       -       -       946       6,352  

Construction and land development

    1,405       -       -       483       1,888  

Multifamily

    626       -       -       161       787  

Commercial business

    2,508       -       25       (647 )     1,886  

Consumer

    26       (21 )     6       1       12  

Manufactured homes

    -       -       -       -       -  

Government

    -       -       -       -       -  

Total

  $ 12,458     $ (54 )   $ 77     $ 1,293     $ 13,774  

 

A deferred cost reserve is maintained for the portfolio of manufactured home loans that have been purchased. This reserve is available for use for manufactured home loan nonperformance and costs associated with nonperformance. If the segment performs in line with expectations, the deferred cost reserve is paid as a premium to the third party originator of the loan. The unamortized balance of the deferred cost reserve totaled $5.0 million and $5.8 million as of September 30, 2022, and December 31, 2021, respectively, and is included in net deferred loan origination costs.

 

 

The Bancorp's impairment analysis is summarized below:

 

   

Ending Balances

 
                                     

(Dollars in thousands)

 

Individually

evaluated for

impairment

reserves

   

Collectively

evaluated for

impairment

reserves

   

Loan receivables

   

Individually

evaluated for

impairment

   

Purchased credit

impaired

individually

evaluated for

impairment

   

Collectively

evaluated for

impairment

 

 

The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at September 30, 2022:

 

Residential real estate

  $ 27     $ 2,983     $ 471,565     $ 1,545     $ 1,778     $ 468,242  

Home equity

    3       392       37,578       116       127       37,335  

Commercial real estate

    456       5,044       452,852       2,264       2,965       447,623  

Construction and land development

    -       1,515       134,301       -       -       134,301  

Multifamily

    -       1,236       258,377       -       2,804       255,573  

Commercial business

    263       1,438       95,372       397       991       93,984  

Consumer

    -       41       827       -       19       808  

Manufactured homes

    -       -       35,866       -       -       35,866  

Government

    -       -       9,649       -       -       9,649  

Total

  $ 749     $ 12,649     $ 1,496,387     $ 4,322     $ 8,684     $ 1,483,381  

 

 

The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at December 31, 2021:

 

Residential real estate

  $ 17     $ 2,463     $ 260,134     $ 755     $ 1,016     $ 258,363  

Home equity

    4       353       34,612       147       137       34,328  

Commercial real estate

    386       5,129       317,145       1,600       -       315,545  

Construction and land development

    -       2,119       123,822       -       -       123,822  

Multifamily

    -       848       61,194       -       556       60,638  

Commercial business

    277       1,732       115,772       524       1,073       114,175  

Consumer

    -       15       582       -       -       582  

Manufactured homes

    -       -       37,887       -       -       37,887  

Government

    -       -       8,991       -       -       8,991  

Total

  $ 684     $ 12,659     $ 960,139     $ 3,026     $ 2,782     $ 954,331  

 

The Bancorp's credit quality indicators are summarized below at September 30, 2022 and December 31, 2021:

 

   

Credit Exposure - Credit Risk Portfolio By Creditworthiness Category

 
   

September 30, 2022

 

(Dollars in thousands)

 

1-6

   

7

   

8

         
                                 

Loan Segment

 

Pass

   

Special mention

   

Substandard

   

Total

 

Residential real estate

  $ 464,241     $ 1,297     $ 6,027     $ 471,565  

Home equity

    36,589       391       598       37,578  

Commercial real estate

    432,797       11,754       8,301       452,852  

Construction and land development

    132,129       2,172       -       134,301  

Multifamily

    253,001       2,608       2,768       258,377  

Commercial business

    92,213       2,931       228       95,372  

Consumer

    827       -       -       827  

Manufactured homes

    35,866       -       -       35,866  

Government

    9,649       -       -       9,649  

Total

  $ 1,457,312     $ 21,153     $ 17,922     $ 1,496,387  

 

 

   

December 31, 2021

 

(Dollars in thousands)

 

1-6

   

7

   

8

         
                                 

Loan Segment

 

Pass

   

Special mention

   

Substandard

   

Total

 

Residential real estate

  $ 253,472     $ 2,940     $ 3,722     $ 260,134  

Home equity

    33,565       415       632       34,612  

Commercial real estate

    301,572       12,011       3,562       317,145  

Construction and land development

    120,192       3,630       -       123,822  

Multifamily

    60,657       153       384       61,194  

Commercial business

    113,470       1,915       387       115,772  

Consumer

    582       -       -       582  

Manufactured homes

    37,828       59       -       37,887  

Government

    8,991       -       -       8,991  

Total

  $ 930,329     $ 21,123     $ 8,687     $ 960,139  

 

 

The Bancorp has established a standard loan grading system to assist management, lenders and review personnel in their analysis and supervision of the loan portfolio. The use and application of these grades by the Bancorp is uniform and conforms to regulatory definitions. The loan grading system is as follows:

 

1 Superior Quality

Loans in this category are substantially risk free. Loans fully collateralized by a Bank certificate of deposit or Bank deposits with a hold are substantially risk free.

 

2 Excellent Quality

The borrower generates excellent and consistent cash flow for debt coverage, excellent average credit scores, excellent liquidity and net worth and are reputable operators with over 15 years experience. Current and debt to tangible net worth ratios are excellent. Loan to value is substantially below policy and collateral condition is excellent.

 

3 Great Quality

The borrower generates more than sufficient cash flow to fund debt service and cash flow is improving. Average credit scores are very strong. Operators are reputable with significant years of experience. Liquidity, net worth, current and debt to tangible net worth ratios are very strong. Loan to value is significantly below policy and collateral condition is significantly above average.

 

4 Above Average Quality

The borrower generates more than sufficient cash flow to fund debt service but cash flow trends may be stable or slightly declining. Average credit scores are strong. The borrower is a reputable operator with many years of experience. Liquidity, net worth, current and debt to tangible net worth ratios are strong. Loan to value is below policy and collateral condition is above average.

 

5 Average Quality

Borrowers are considered creditworthy and can repay the debt in the normal course of business, however, cash flow trends may be inconsistent or fluctuating. Average credit scores are satisfactory and years of experience is acceptable. Liquidity and net worth are satisfactory. Current and debt to tangible net worth ratios are average. Loan to value is slightly below policy and the collateral condition is slightly above average.

 

6 Pass

Borrowers are considered credit worthy but financial condition may show signs of weakness due to internal or external factors. Cash flow trends may be declining annually. Average credit scores may be low but remain acceptable. Borrower has limited years of experience. Liquidity, net worth, current and debt to tangible net worth ratios are below average. Loan to value is nearing policy limits and collateral condition is average.

 

7 Special Mention

A special mention asset has identified weaknesses that deserve Management’s close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. There is still adequate protection by the current sound worth and paying capacity of the obligor or of the collateral pledged. The Special Mention rating is viewed as transitional and will be monitored closely.

 

Loans in this category may exhibit some of the following risk factors. Cash flow trends may be consistently declining or may be questionable. Debt coverage ratios may be at or near 1:1. Average credit scores may be very weak or the borrower may have minimal years of experience. Liquidity, net worth, current and debt to tangible net worth ratios may be very weak. Loan to value may be at policy limits or may exceed policy limits. Collateral condition may be below average.

 

8 Substandard

This classification consists of loans which are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. Financial statements normally reveal some or all of the following: poor trends, lack of earnings and cash flow, excessive debt, lack of liquidity, and the absence of creditor protection. Loans are still considered collectible, but due to increased risks and defined weaknesses of the credit, some loss could be incurred in collection if the deficiencies are not corrected.

 

9 Doubtful

Such loans have been placed on nonaccrual status and may be heavily dependent upon collateral possessing a value that is difficult to determine or based upon some near-term event which lacks clear certainty. These loans have all of the weaknesses of those classified as Substandard; however, based on existing conditions, these weaknesses make full collection of the principal balance highly improbable.

 

10 Loss

Loans that are considered uncollectible and of such little value that continuing to carry them as assets is not warranted.

 

Performing loans are loans that are paying as agreed and are approximately less than ninety days past due on payments of interest and principal.

 

During the nine months ending September 30, 2022, nine residential real estate loans totaling $1.5 million, one commercial real estate loan totaling 1.4 million, and one home equity loan totaling $5 thousand, were modified to include deferral of principal resulting in troubled debt restructuring classification. No trouble debt restructuring loans had subsequently defaulted during the nine months ending September 30, 2022. During the nine months ending September 30, 2021, two residential real estate loans to one customer totaling $148 thousand were modified to include deferral of principal and interest resulting in troubled debt restructuring classification. One commercial real estate loan totaling $835 thousand was restructured with a reduced interest rate and extended amortization resulting in troubled debt restructuring classification. One commercial business loan totaling $601 thousand was provided a short-term renewal and a pending long term restructure resulting in troubled debt restructuring classification. One residential real estate trouble debt restructuring loan totaling $37 thousand had subsequently defaulted during the nine months ending September 30, 2021. All of the loans classified as troubled debt restructurings are also considered impaired. The valuation basis for the Bancorp’s troubled debt restructurings is based on the present value of cash flows, unless consistent cash flows are not present, then the fair value of the collateral securing the loan is the basis for valuation.

 

The Bancorp’s individually evaluated impaired loans are summarized below.

 

 

(Dollars in thousands)

                         

For the nine months ended

   

For the three months ended

 

(unaudited)

 

As of September 30, 2022

   

September 30, 2022

   

September 30, 2022

 
   

Recorded

Investment

   

Unpaid Principal

Balance

   

Related Allowance

   

Average

Recorded

Investment

   

Interest Income

Recognized

   

Average

Recorded

Investment

   

Interest Income

Recognized

 

With no related allowance recorded:

                                                       

Residential real estate

  $ 3,069     $ 4,559     $ -     $ 2,596     $ 206     $ 2,563     $ 51  

Home equity

    222       238       -       216       14       178       1  

Commercial real estate

    4,384       4,572       -       2,932       196       3,677       (24 )

Construction and land development

    -       -       -       430       13       400       13  

Multifamily

    2,804       3,253       -       2,454       86       2,872       24  

Commercial business

    1,072       1,181       -       1,137       79       1,048       3  

Consumer

    19       19       -       15       1       20       1  

Manufactured homes

    -       -       -       -       -       -       -  

Government

    -       -       -       -       -       -       -  
                                                      -  

With an allowance recorded:

                                                    -  

Residential real estate

  $ 254     $ 278     $ 27     $ 179     $ 5     $ 272     $ (4 )

Home equity

    21       21       3       21       1       21       -  

Commercial real estate

    845       845       456       844       -       846       -  

Construction and land development

    -       -       -       -       -       -       -  

Multifamily

    -       -       -       -       -       -       -  

Commercial business

    316       321       263       332       14       311       (2 )

Consumer

    -       -       -       -       -       -       -  

Manufactured homes

    -       -       -       -       -       -       -  

Government

    -       -       -       -       -       -       -  
                                                         

Total:

                                                       

Residential real estate

  $ 3,323     $ 4,837     $ 27     $ 2,775     $ 211     $ 2,835     $ 47  

Home equity

  $ 243     $ 259     $ 3     $ 237     $ 15     $ 199     $ 1  

Commercial real estate

  $ 5,229     $ 5,417     $ 456     $ 3,776     $ 196     $ 4,523     $ (24 )

Construction & land development

  $ -     $ -     $ -     $ 430     $ 13     $ 400     $ 13  

Multifamily

  $ 2,804     $ 3,253     $ -     $ 2,454     $ 86     $ 2,872     $ 24  

Commercial business

  $ 1,388     $ 1,502     $ 263     $ 1,469     $ 93     $ 1,359     $ 1  

Consumer

  $ 19     $ 19     $ -     $ 15     $ 1     $ 20     $ 1  

Manufactured homes

  $ -     $ -     $ -     $ -     $ -     $ -     $ -  

Government

  $ -     $ -     $ -     $ -     $ -     $ -     $ -  

 

                           

For the nine months ended

   

For the three months ended

 
   

As of December 31, 2021

   

September 30, 2021

   

September 30, 2021

 

(Dollars in thousands)

 

Recorded

Investment

   

Unpaid Principal

Balance

   

Related Allowance

   

Average

Recorded

Investment

   

Interest Income

Recognized

   

Average

Recorded

Investment

   

Interest Income

Recognized

 

With no related allowance recorded:

                                                       

Residential real estate

  $ 1,683     $ 3,017     $ -     $ 1,691     $ 83     $ 1,565     $ 41  

Home equity

    262       275       -       307       7       273       2  

Commercial real estate

    765       765       -       1,268       39       1,362       13  

Construction & land development

    -       -       -       -       -       -       -  

Multifamily

    556       647       -       647       20       587       9  

Commercial business

    1,205       1,324       -       1,410       33       1,354       (3 )

Consumer

    -       -       -       -       -       -       -  

Manufactured homes

    -       -       -       -       -       -       -  

Government

    -       -       -       -       -       -       -  
                                                         

With an allowance recorded:

                                                       

Residential real estate

  $ 88     $ 88     $ 17     $ 159     $ 1     $ 102     $ (4 )

Home equity

    22       22       4       17       1       22       1  

Commercial real estate

    835       835       386       5,700       145       5,852       32  

Construction & land development

    -       -       -       -       -       -       -  

Multifamily

    -       -       -       -       -       -       -  

Commercial business

    392       392       277       698       15       659       (7 )

Consumer

    -       -       -       -       -       -       -  

Manufactured homes

    -       -       -       -       -       -       -  

Government

    -       -       -       -       -       -       -  
                                                         

Total:

                                                       

Residential real estate

  $ 1,771     $ 3,105     $ 17     $ 1,850     $ 84     $ 1,667     $ 37  

Home equity

  $ 284     $ 297     $ 4     $ 324     $ 8     $ 295     $ 3  

Commercial real estate

  $ 1,600     $ 1,600     $ 386     $ 6,968     $ 184     $ 7,214     $ 45  

Construction & land development

  $ -     $ -     $ -     $ -     $ -     $ -     $ -  

Multifamily

  $ 556     $ 647     $ -     $ 647     $ 20     $ 587     $ 9  

Commercial business

  $ 1,597     $ 1,716     $ 277     $ 2,108     $ 48     $ 2,012     $ (10 )

Consumer

  $ -     $ -     $ -     $ -     $ -     $ -     $ -  

Manufactured homes

  $ -     $ -     $ -     $ -     $ -     $ -     $ -  

Government

  $ -     $ -     $ -     $ -     $ -     $ -     $ -  

 

 

The Bancorp's age analysis of past due loans is summarized below:

 

(Dollars in thousands)

 

30-59 Days Past

Due

   

60-89 Days Past

Due

   

Greater Than 90

Days Past Due

   

Total Past Due

   

Current

   

Total Loans

   

Recorded

Investments

Greater than 90

Days Past Due

and Accruing

 

September 30, 2022

                                                       

Residential real estate

  $ 2,266     $ 1,929     $ 2,539     $ 6,734     $ 464,831     $ 471,565     $ 348  

Home equity

    193       -       521       714       36,864       37,578       -  

Commercial real estate

    1,004       162       3,350       4,516       448,336       452,852       1,071  

Construction and land development

    46       -       -       46       134,255       134,301       -  

Multifamily

    474       908       288       1,670       256,707       258,377       181  

Commercial business

    1,662       1,466       532       3,660       91,712       95,372       342  

Consumer

    -       -       -       -       827       827       -  

Manufactured homes

    572       313       41       926       34,940       35,866       40  

Government

    -       -       -       -       9,649       9,649       -  

Total

  $ 6,217     $ 4,778     $ 7,271     $ 18,266     $ 1,478,121     $ 1,496,387     $ 1,982  
                                                         

December 31, 2021

                                                       

Residential real estate

  $ 2,507     $ 824     $ 2,142     $ 5,473     $ 254,661     $ 260,134     $ 31  

Home equity

    169       67       565       801       33,811       34,612       34  

Commercial real estate

    231       1,960       944       3,135       314,010       317,145       91  

Construction and land development

    5,148       283       -       5,431       118,391       123,822       -  

Multifamily

    -       -       109       109       61,085       61,194       -  

Commercial business

    573       1,594       242       2,409       113,363       115,772       49  

Consumer

    -       3       -       3       579       582       -  

Manufactured homes

    633       171       -       804       37,083       37,887       -  

Government

    -       -       -       -       8,991       8,991       -  

Total

  $ 9,261     $ 4,902     $ 4,002     $ 18,165     $ 941,974     $ 960,139     $ 205  

 

The Bancorp's loans on nonaccrual status are summarized below:

 

(Dollars in thousands)

               
   

September 30,

2022

   

December 31,

2021

 

Residential real estate

  $ 4,965     $ 4,651  

Home equity

    585       623  

Commercial real estate

    2,807       940  

Construction and land development

    -       -  

Multifamily

    367       455  

Commercial business

    219       387  

Consumer

    -       -  

Manufactured homes

    -       -  

Government

    -       -  

Total

  $ 8,943     $ 7,056  

 

As a result of acquisition activity, the Bancorp acquired loans for which there was evidence of credit quality deterioration since origination and it was determined that it was probable that the Bancorp would be unable to collect all contractually required principal and interest payments. At September 30, 2022, total purchased credit impaired loans with unpaid principal balances totaled $10.6 million with a recorded investment of $8.7 million. At December 31, 2021, purchased credit impaired loans with unpaid principal balances totaled $4.2 million with a recorded investment of $2.8 million.

 

As part of the fair value of loans receivable, there was a net fair value discount for loans acquired of $5.8 million at September 30, 2022, compared to $1.1 million at December 31, 2021.

 

Accretable yield, or income recorded for the three months ended September 30, is as follows:

 

(dollars in thousands)

 

Total

 

2021

  $ 188  

2022

    176  

 

Accretable yield, or income recorded for the nine months ended September 30, is as follows:

 

(dollars in thousands)

 

Total

 

2021

  $ 793  

2022

    723  

 

Accretable yield, or income expected to be recorded in the future is as follows:

 

(dollars in thousands)

 

Total

 

Remainder 2022

  $ 164  

2023

    665  

2024

    649  

2025

    507  

2026

    332  

2027 and thereafter

    3,464  

Total

  $ 5,781