Annual report pursuant to Section 13 and 15(d)

Note 4 - Loans Receivable

v3.24.1
Note 4 - Loans Receivable
12 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 4 Loans Receivable

Year end loans are summarized below:

 

(Dollars in thousands)

               
   

December 31, 2023

   

December 31, 2022

 

Loans secured by real estate:

               

Residential real estate

  $ 484,948     $ 484,595  

Home equity

    46,599       38,978  

Commercial real estate

    503,202       486,431  

Construction and land development

    115,227       108,926  

Multifamily

    219,917       251,014  

Total loans secured by real estate

    1,369,893       1,369,944  

Commercial business

    97,386       93,278  

Consumer

    610       918  

Manufactured homes

    30,845       34,882  

Government

    10,021       9,549  

Loans receivable

    1,508,755       1,508,571  

Add (less):

               

Net deferred loan origination costs

    3,705       5,083  

Undisbursed loan funds

    135       (23 )

Loans receivable, net of deferred fees and costs

  $ 1,512,595     $ 1,513,631  

 

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

and Accruing

   

Total Past Due and Accruing

   

Current

   

Accruing Loans

   

Non-accrual

Loans

   

Total Loans

Receivable

 

December 31, 2023

                                                               

Residential real estate

  $ 5,857     $ 4,362     $ 1,131     $ 11,350     $ 471,905     $ 483,255     $ 1,693     $ 484,948  

Home equity

    226       18       -       244       45,887       46,131       468       46,599  

Commercial real estate

    3,168       262       712       4,142       498,227       502,369       833       503,202  

Construction and land development.

    2,523       -       -       2,523       112,704       115,227       -       115,227  

Multifamily

    5,333       -       -       5,333       210,869       216,202       3,715       219,917  

Commercial business

    105       29       -       134       94,355       94,489       2,897       97,386  

Consumer

    12       -       -       12       596       608       2       610  

Manufactured homes

    634       379       -       1,013       29,832       30,845       -       30,845  

Government

    -       -       -       -       10,021       10,021       -       10,021  

Total

  $ 17,858     $ 5,050     $ 1,843     $ 24,751     $ 1,474,396     $ 1,499,147     $ 9,608     $ 1,508,755  
                                                                 

December 31, 2022

                                                               

Residential real estate

  $ 3,758     $ 2,520     $ 166     $ 6,444     $ 472,804     $ 479,248     $ 5,347     $ 484,595  

Home equity

    315       42       -       357       38,027       38,384       594       38,978  

Commercial real estate

    1,399       150       -       1,549       481,640       483,189       3,242       486,431  

Construction and land development

    2,673       -       -       2,673       106,253       108,926       -       108,926  

Multifamily

    1,724       616       -       2,340       241,610       243,950       7,064       251,014  

Commercial business

    1,775       -       -       1,775       89,622       91,397       1,881       93,278  

Consumer

    3       -       -       3       915       918       -       918  

Manufactured homes

    601       256       82       939       33,943       34,882       -       34,882  

Government

    -       -       -       -       9,549       9,549       -       9,549  

Total

  $ 12,248     $ 3,584     $ 248     $ 16,080     $ 1,474,363     $ 1,490,443     $ 18,128     $ 1,508,571  

 

The following table shows the amortized cost of loans, segregated by portfolio segment, credit quality rating and year of origination as of December 31, 2023, and gross charge-offs for the year ended December 31, 2023.

 

December 31, 2023

 

2023

   

2022

   

2021

   

2020

   

2019

   

Prior

   

Revolving

   

Revolving

Converted to Term

   

Total

 

Total Loans Receivable

  $ 148,105     $ 323,820     $ 321,183     $ 234,861     $ 108,683     $ 274,027     $ 94,893     $ 3,183     $ 1,508,755  

Total current period gross charge-off

  $ (95 )   $ (150 )   $ -     $ (367 )   $ (50 )   $ (1,882 )   $ (27 )   $ -       (2,571 )
                                                                         

Residential real estate

                                                                       

Pass (1-6)

  $ 20,740     $ 97,671     $ 106,778     $ 115,001     $ 23,873     $ 113,987     $ 1,716     $ -     $ 479,766  

Special Mention (7)

    405       -       473       173       431       1,602       -       -       3,084  

Substandard (8)

    -       786       152       471       217       472       -       -       2,098  

Total

  $ 21,145     $ 98,457     $ 107,403     $ 115,645     $ 24,521     $ 116,061     $ 1,716     $ -     $ 484,948  

Current period gross charge-off

    -       (40 )     -       (25 )     (39 )     (893 )     -       -       (997 )
                                                                         

Home equity

                                                                       

Pass (1-6)

  $ 110     $ 114     $ 101     $ 14     $ 61     $ 2,051     $ 42,801     $ 700     $ 45,952  

Special Mention (7)

    -       -       -       -       4       31       70       63       168  

Substandard (8)

    -       161       -       -       -       67       251       -       479  

Total

  $ 110     $ 275     $ 101     $ 14     $ 65     $ 2,149     $ 43,122     $ 763     $ 46,599  

Current period gross charge-off

    -       -       -       -       -       (16 )     (27 )     -       (43 )
                                                                         

Commercial real estate

                                                                       

Pass (1-6)

  $ 52,880     $ 127,607     $ 90,108     $ 55,236     $ 56,255     $ 108,489     $ 2,649     $ -     $ 493,224  

Special Mention (7)

    -       69       2,429       1,274       1,123       2,397       142       -       7,434  

Substandard (8)

    -       -       -       230       -       2,314       -       -       2,544  

Total

  $ 52,880     $ 127,676     $ 92,537     $ 56,740     $ 57,378     $ 113,200     $ 2,791     $ -     $ 503,202  

Current period gross charge-off

    -       -       -       -       -       (372 )     -       -       (372 )
                                                                         

Construction and land development

                                                                 

Pass (1-6)

  $ 48,518     $ 24,948     $ 13,411     $ 1,732     $ 4,284     $ 473     $ 12,539     $ 2,420     $ 108,325  

Special Mention (7)

    365       76       4,205       2,256       -       -       -       -       6,902  

Total

  $ 48,883     $ 25,024     $ 17,616     $ 3,988     $ 4,284     $ 473     $ 12,539     $ 2,420     $ 115,227  

Current period gross charge-off

    -       -       -       -       -       -       -       -       -  
                                                                         

Multifamily

                                                                       

Pass (1-6)

  $ 9,333     $ 53,493     $ 78,122     $ 41,773     $ 13,156     $ 19,609     $ 186     $ -     $ 215,672  

Substandard (8)

    -       -       1,666       1,562       -       1,017       -       -       4,245  

Total

  $ 9,333     $ 53,493     $ 79,788     $ 43,335     $ 13,156     $ 20,626     $ 186     $ -     $ 219,917  

Current period gross charge-off

    -       -       -       -       -       -       -       -       -  
                                                                         

Commercial business

                                                                       

Pass (1-6)

  $ 13,110     $ 13,774     $ 9,327     $ 5,705     $ 4,105     $ 12,905     $ 33,954     $ -     $ 92,880  

Special Mention (7)

    373       197       58       -       129       436       417       -       1,610  

Substandard (8)

    43       1,094       256       214       -       1,121       168       -       2,896  

Total

  $ 13,526     $ 15,065     $ 9,641     $ 5,919     $ 4,234     $ 14,462     $ 34,539     $ -     $ 97,386  

Current period gross charge-off

    -       (110 )     -       (342 )     (11 )     (601 )     -       -       (1,064 )
                                                                         

Consumer

                                                                       

Pass (1-6)

  $ 338     $ 73     $ 108     $ 4     $ 14     $ 71     $ -     $ -     $ 608  

Substandard (8)

    -       -       -       2       -       -       -       -       2  

Total

  $ 338     $ 73     $ 108     $ 6     $ 14     $ 71     $ -     $ -     $ 610  

Current period gross charge-off

    (95 )     -       -       -       -       -       -       -       (95 )
                                                                         

Manufactured homes

                                                                       

Pass (1-6)

  $ -     $ 1,942     $ 12,556     $ 9,214     $ 5,031     $ 2,102     $ -     $ -     $ 30,845  

Total

  $ -     $ 1,942     $ 12,556     $ 9,214     $ 5,031     $ 2,102     $ -     $ -     $ 30,845  

Current period gross charge-off

    -       -       -       -       -       -       -       -       -  
                                                                         

Government

                                                                       

Pass (1-6)

  $ 1,890     $ 1,815     $ 1,433     $ -     $ -     $ 4,883     $ -     $ -     $ 10,021  

Total

  $ 1,890     $ 1,815     $ 1,433     $ -     $ -     $ 4,883     $ -     $ -     $ 10,021  

Current period gross charge-off

    -       -       -       -       -       -       -       -       -  

 

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

 

   

December 31, 2022

 

(Dollars in thousands)

 

1-6

   

7

   

8

         
                                 

Loan Segment

 

Pass

   

Special mention

   

Substandard

   

Total

 

Residential real estate

  $ 477,222     $ 1,338     $ 6,035     $ 484,595  

Home equity

    37,981       385       612       38,978  

Commercial real estate

    474,055       4,955       7,421       486,431  

Construction and land development

    106,580       2,346       -       108,926  

Multifamily

    242,091       1,859       7,064       251,014  

Commercial business

    90,694       703       1,881       93,278  

Consumer

    918       -       -       918  

Manufactured homes

    34,882       -       -       34,882  

Government

    9,549       -       -       9,549  

Total

  $ 1,473,972     $ 11,586     $ 23,013     $ 1,508,571  

 

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. Thehe Bancorp reassesses its risk ratings annually, and no changes to our credit quality indicators have occurred. 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 Bank’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Bank 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.

 

Non-performing loans include those loans that are 90 days or more past due and those loans that have

been placed on non-accrual status.

 

Loan Modification Disclosures Pursuant to ASU 2022-02

 

The following table shows the amortized cost of loans at December 31, 2023, that were both experiencing financial difficulty and modified during the year ended December 31, 2023, segregated by portfolio segment and type of modification. The percentage of the amortized cost of loans that were modified to borrowers in financial distress as compared to the amortized cost of each segment of financial receivable is also presented below.

 

   

For the year ended December 31, 2023

 

(Dollars in thousands)

 

Payment

Delay

   

Term

Extension

   

Interest

Rate

Reduction

   

Combination

Term Extension

and Interest Rate

Reduction

   

% of Total

Segment

Financing

Receivables

 

Residential Real Estate

  $ -     $ 868     $ -     $ -       0.18 %

Total

  $ -     $ 868     $ -     $ -       0.06 %

 

There were no commitments to lend additional amounts to the borrowers included in the previous table.

 

The Bancorp closely monitors the performance of loans and leases that have been modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table shows the performance of such loans and leases that have been modified during the year ended December 31, 2023.

 

(Dollars in thousands)

 

Current

   

30-59 Days

Past Due

   

60-89 Days

Past Due

   

Greater Than 90

Days Past Due

 

Residential Real Estate

  $ 868     $ -     $ -     $ -  

Total

  $ 868     $ -     $ -     $ -  

 

The borrowers with term extension have had their maturity dates extended and as a result their monthly payments were reduced.

 

Upon the Bancorp’s determination that a modified loan has subsequently been deemed uncollectible, the loan or lease is written off. Therefore, the amortized cost of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

 

Troubled Debt Restructuring (TDR) Disclosures Prior to the Adoption of ASU 2022-02

 

During the year ending December 31, 2022, nine residential real estate loans to nine customers totaling $743 thousand were modified to include deferral of principal or interest resulting in troubled debt restructuring classification. Two home equity loans to two customers totaling $189 thousand were modified to include deferral of principal or interest resulting in troubled debt restructuring classification. One commercial real estate loan totaling $1.4 million was provided a short-term renewal resulting in troubled debt restructuring classification. No troubled debt restructuring loans had subsequently defaulted during the year ending December 31, 2022.

 

As of December 31, 2023, the Bancorp had one residential real estate loan in the process of foreclosure totaling $32 thousand. The Bancorp was not in the process of foreclosing on any residential real estate loan as of December 31, 2022.

 

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.

 

Acquired Loan Purchase Discounts

 

As part of the fair value of loans receivable, there was a net fair value discount for loans acquired of $5.2 million at December 31, 2023, compared to $5.5 million at December 31, 2022.

 

Accretable yield, or income recorded for the twelve months ended December 31, is as follows:

 

(dollars in thousands)

 

Total

 

2022

  $ 1,010  

2023

    1,078  

 

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

 

(dollars in thousands)

 

Total

 
2024   $ 673  
2025     667  
2026     484  
2027     313  

2028 and thereafter

    3,068  

Total

  $ 5,205  

 

AllowanceforCreditLosses

 

The allowance for credit losses is established for current expected credit losses on the Bancorp’s loan portfolios utilizing guidance in Accounting Standards Codification (ASC) Topic 326. The Bancorp adopted ASU 2016-13 on January 1, 2023. Therefore, as of December 31, 2022, the provision for credit losses and other allowance for loan loss disclosures for the year ended December 31, 2022, were calculated under the incurred loss method.

 

The determination of the allowance requires significant judgment to estimate credit losses measured on a collective pool basis when similar risk characteristics exist, and for loans evaluated individually. In determining the allowance, the Bancorp estimates expected future losses for the loan’s entire contractual term adjusted for expected payments when appropriate. The allowance estimate considers relevant available information, from internal and external sources relating to the historical loss experience, current conditions, and reasonable and supportable forecasts for the Bancorp’s outstanding loan balances. The allowance is an estimation that reflects management’s evaluation of expected losses related to the Bancorp’s financial assets measured at amortized cost. To ensure that the allowance is maintained at an adequate level, a detailed analysis is performed on a quarterly basis and an appropriate provision is made to adjust the allowance.

 

The Bancorp categorizes the loan portfolios into nine segments based on similar risk characteristics. Loans within each segment are collectively evaluated using the Probability of Default (“PD”)/Loss Given Default (“LGD”) methodology (PD/LGD). In creating the CECL model, the Bancorp has established a two-year reasonable and supportable forecast period with a two-year straight line reversion to the long-term historical average. Due to its minimal loss history, the Bancorp elected to use peer data for a more reasonable calculation. The following table shows the changes in the allowance for loan losses, segregated by portfolio segment, for the year ended December 31, 2023, and 2022.

 

(Dollars in thousands)

 

Beginning Balance

   

Adoption of ASC 326

   

PCD Gross-up

   

Charge-offs

   

Recoveries

   

Provisions

   

Ending Balance

 
                                                         

The Bancorp's activity in the allowance for credit losses, by loan segment, is summarized below for the twelve months ended December 31, 2023:

                 
                                                         

Allowance for credit losses:

                                                       

Residential real estate

  $ 3,021     $ 1,688     $ 535     $ (997 )   $ 149     $ (412 )   $ 3,984  

Home equity

    410       99       29       (43 )     -       203       698  

Commercial real estate

    5,784       1,003       443       (372 )     3       184       7,045  

Construction and land development

    1,253       1,735       -       -       -       1,218       4,206  

Multifamily

    1,007       141       -       -       131       (346 )     933  

Commercial business

    1,365       320       5       (1,064 )     265       758       1,649  

Consumer

    57       5       17       (95 )     15       8       7  

Manufactured homes

    -       112       -       -       -       69       181  

Government

    -       55       -       -       -       10       65  

Total

  $ 12,897     $ 5,158     $ 1,029     $ (2,571 )   $ 563     $ 1,692     $ 18,768  

                              

The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the twelve months ended December 31, 2022:        

                              

Allowance for loan losses:

                                                       

Residential real estate

  $ 2,480     $ -     $ -     $ (29 )   $ 53     $ 517     $ 3,021  

Home equity

    357       -       -       -       -       53       410  

Commercial real estate

    5,515       -       -       (431 )     -       700       5,784  

Construction and land development

    2,119       -       -       -       -       (866 )     1,253  

Multifamily

    848       -       -       -       -       159       1,007  

Commercial business

    2,009       -       -       (57 )     89       (676 )     1,365  

Consumer

    15       -       -       (91 )     20       113       57  

Manufactured homes

    -       -       -       -       -       -       -  

Government

    -       -       -       -       -       -       -  

Total

  $ 13,343     $ -     $ -     $ (608 )   $ 162     $ -     $ 12,897  

 

A collateral dependent loan relies solely on the operation or sale of the collateral for repayment. In evaluating the overall risk associated with the loan, the Bancorp considers character, overall financial condition and resources, and payment record of the borrower; the prospects for support from any financially responsible guarantors; and the nature and degree of protection provided by the cash flow and value of any underlying collateral. However, as other sources of repayment become inadequate over time, the significance of the collateral's value increases and the loan may become collateral dependent.

 

The table below presents the amortized cost basis and allowance for credit losses (“ACL”) allocated for collateral dependent loans in accordance with ASC 326, which are individually evaluated to determine expected credit losses.

 

(Dollars in thousands)

 

December 31, 2023

         
   

Real Estate

   

Equipment/Inventory

   

Accounts Receivable

   

Other

   

Total

   

ACL Allocation

 

Residential real estate

  $ 30     $ -     $ -     $ -     $ -     $ 30  

Commercial real estate

    2,541       -       -       -       2,541       53  

Multifamily

    4,244       -       -       -       4,244       85  

Commercial business

    -       1,583       1,557       192       3,332       738  
    $ 6,815     $ 1,583     $ 1,557     $ 192     $ 10,117     $ 906  

 

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 $3.5 million and $4.6 million as of December 31, 2023, and December 31, 2022, respectively, and is included in net deferred loan origination cost.

 

The following table presents non–accrual loans, and loans past due over 90 days still on accrual by class of loans:

 

As of December 31, 2023

 

Nonaccrual with

No Allowance for

Credit Loss

   

Nonaccrual

   

Loans Past Due

over 90 Days Still

Accruing

 

Residential real estate

  $ 442     $ 1,251     $ 1,131  

Home equity

    161       307       -  

Commercial real estate

    603       230       712  

Construction and land development

    -       -       -  

Multifamily

    2,357       1,358       -  

Commercial business

    1,724       1,173       -  

Consumer

    -       2       -  

Manufactured homes

    -       -       -  

Government

    -       -       -  

Total

  $ 5,287     $ 4,321     $ 1,843  

 

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 December 31, 2022:

                 
                                                 

Residential real estate

  $ 24     $ 2,997     $ 484,595     $ 1,518     $ 988     $ 482,089  

Home equity

    3       407       38,978       294       125       38,559  

Commercial real estate

    13       5,771       486,431       2,392       2,935       481,104  

Construction and land development

    -       1,253       108,926       -       -       108,926  

Multifamily

    -       1,007       251,014       6,739       382       243,893  

Commercial business

    297       1,068       93,278       1,758       953       90,567  

Consumer

    -       57       918       -       17       901  

Manufactured homes

    -       -       34,882       -       -       34,882  

Government

    -       -       9,549       -       -       9,549  

Total

  $ 337     $ 12,560     $ 1,508,571     $ 12,701     $ 5,400     $ 1,490,470  

 

   

December 31, 2023

 

(dollars in thousands)

 

Interest income recognized

during the period on

nonaccrual loans

 

Residential real estate

  $ 173  

Home equity

    19  

Commercial real estate

    70  

Construction and land development

    9  

Multifamily

    31  

Commercial business

    156  

Consumer

    2  

Total

  $ 460  

 

                           

For the twelve months ended

 
   

As of December 31, 2022

   

December 31, 2022

 

(Dollars in thousands)

 

Recorded

Investment

   

Unpaid Principal

Balance

   

Related Allowance

   

Average Recorded

Investment

   

Interest Income

Recognized

 

With no related allowance recorded:

                                       

Residential real estate

  $ 2,255     $ 3,711     $ -     $ 2,528     $ 202  

Home equity

    399       416       -       253       12  

Commercial real estate

    5,314       5,406       -       3,409       205  

Construction & land development

    -       -       -       344       -  

Multifamily

    7,121       7,163       -       3,387       16  

Farmland

    -       -       -       -       -  

Commercial business

    2,278       2,392       -       1,365       76  

Consumer

    17       17       -       15       -  

Manufactured homes

    -       -       -       -       -  

Government

    -       -       -       -       -  
                                         

With an allowance recorded:

                                       

Residential real estate

  $ 251     $ 276     $ 24     $ 194     $ 5  

Home equity

    20       20       3       21       1  

Commercial real estate

    13       14       13       678       -  

Construction & land development

    -       -       -       -       -  

Multifamily

    -       -       -       -       -  

Farmland

    -       -       -       -       -  

Commercial business

    433       561       297       352       13  

Consumer

    -       -       -       -       -  

Manufactured homes

    -       -       -       -       -  

Government

    -       -       -       -       -  
                                         

Total:

                                       

Residential real estate

  $ 2,506     $ 3,987     $ 24     $ 2,722     $ 207  

Home equity

  $ 419     $ 436     $ 3     $ 274     $ 13  

Commercial real estate

  $ 5,327     $ 5,420     $ 13     $ 4,087     $ 205  

Construction & land development

  $ -     $ -     $ -     $ 344     $ -  

Multifamily

  $ 7,121     $ 7,163     $ -     $ 3,387     $ 16  

Farmland

  $ -     $ -     $ -     $ -     $ -  

Commercial business

  $ 2,711     $ 2,953     $ 297     $ 1,717     $ 89  

Consumer

  $ 17     $ 17     $ -     $ 15     $ -  

Manufactured homes

  $ -     $ -     $ -     $ -     $ -  

Government

  $ -     $ -     $ -     $ -     $ -  

 

Accrued interest receivable on loans totaled $5.7 million and is excluded from the estimate of credit losses. The Bancorp made the accounting policy election to not measure an ACL for accrued interest receivable. Accrued interest deemed uncollectible will be written off through interest income.

 

Liability for Credit Losses on Unfunded Loan Commitments

 

The liability for credit losses inherent in unfunded loan commitments is included in accrued expenses and other liabilities on the Consolidated Balance Sheet. The adequacy of the reserve for unfunded commitments is determined quarterly based on methodology similar to the methodology for determining the ACL. The following table shows the changes in the liability for credit losses on unfunded loan commitments.

 

   

Year ended,

 
   

December 31,

 

(Dollars in thousands)

 

2023

 

Balance, beginning of period

  $ -  

Adoption of ASC 326

    3,108  

Provision

    333  

Balance, end of period

  $ 3,441