Loans | 3. On accordance allowance for credit losses (“ACL”) methodology that replaces its previous allowance ACL section in this note for further information regarding the Company’s ACL. Prior periods balance for ACL are presented under legacy GAAP and may not be comparable to current The following table is a summary of the distribution of At 582.9 338.1 commercial real estate Reserve Bank of Atlanta. The Company was a participant loans. These the funds had to be used towards payroll cost, mortgage loans are forgivable under specific criteria as 299 at June 30, 2023 and $ 1.3 The Company 4 1.5 ended Statements of Operations. Allowance for Credit Losses In general, the Company utilizes to estimate cash flow analyses. in development of from FFIEC Call Report forecasts in projective receivables use at least one product growth long-term average loss rate is calculated and applied on a quarterly basis for the remaining life of the pool. Adjustments for economic expectations are made through qualitative factors Qualitative factors used in the ACL methodology include: • • • • • • • • ACL for the three in 2022, it was estimated under the incurred loss model. Changes in the allowance for credit losses for the three (in thousands): At June 18.8 17.5 31, 2022, 1.3 1.1 of the ASU 2016-13 on loan receivables, $ 242 20 thousand decrease due to net charge offs The Company 40 21 charge offs related to loans were originated in 2015 19 The Company had 45 21 of charge offs related to loans were originated 24 unemployment and lesser extent than Family loan portfolio with a qualitative factor because Florida The ACL are as follows (in thousands): Credit Quality Indicators The Company grades loans based on the estimated capability of the borrower to repay the contractual obligation of the loan agreement based payment periodically. The Company's internally assigned credit risk Pass – Loans indicate different levels of satisfactory financial Special Mention close attention. If left uncorrected, these potential weaknesses prospects for the loan or of the institution’s Substandard – Loans classified as substandard are inadequately protected capacity of the obligator or of the collateral pledged, if weaknesses that jeopardize the liquidation of the debt. institution will sustain some loss if the deficiencies are Doubtful the added characteristic that the weaknesses make collection or facts, conditions, and values, highly questionable and improbable. Loss – Loans classified as loss are considered uncollectible. Loan credit exposures by internally assigned grades are Loan Aging The Company The Company The December 31, 2022 (in thousands): Nonaccrual Status The following and still accruing as of June 30 2023: The Company did no t have loans in nonaccrual status as of December Accrued interest no attributable to these loans 13 0 thousand, respectively, Collateral-Dependent Loans A expected to no loans as of June 30 2023 and as of December 31, 2022. Impaired Loans The following table includes applicable, on the basis of impairment methodology as of Net investment balance is the unpaid principal balance The following table thousands): Interest income recognized on impaired loans for the three months ended June 30, 90 six months ended June 30, 2022 was $ 181 Loan Modifications to Borrowers Experiencing Financial The following table present newly restructured June 30, 2023: The Company one ended June 30, 2023. No June 30, 2023 December 31, 2022 Total Percent of Total Total Percent of Total Residential Real Estate $ 183,093 11.5 % $ 185,636 12.3 % Commercial Real Estate 989,401 62.0 % 970,410 64.4 % Commercial and Industrial 169,401 10.6 % 126,984 8.4 % Foreign Banks 85,409 5.4 % 93,769 6.2 % Consumer and Other 167,845 10.5 % 130,429 8.7 % Total 1,595,149 100.0 % 1,507,228 100.0 % Less: Deferred fees (cost) (810) (110) Total 1,595,959 1,507,338 Less: Allowance for credit losses 18,815 17,487 Total $ 1,577,144 $ 1,489,851 Residential Real Estate Commercial Real Estate Commercial and Industrial Foreign Banks Consumer and Other Total Three Months Ended June 30, 2023 Beginning balance $ 2,819 $ 10,453 $ 2,367 $ 772 $ 2,476 $ 18,887 Provision for credit losses (1) (148) (270) 125 (95) 345 (43) Recoveries 2 - 8 - 1 11 Charge-offs - - - - (40) (40) Ending Balance $ 2,673 $ 10,183 $ 2,500 $ 677 $ 2,782 $ 18,815 Six Months Ended June 30, 2023 Beginning balance $ 1,352 $ 10,143 $ 4,163 $ 720 $ 1,109 $ 17,487 Cumulative effect of adoption of accounting principle (2) 1,238 1,105 (2,158) 23 858 1,066 Provision for credit losses (3) 73 (1,065) 443 (66) 857 242 Recoveries 10 - 52 - 3 65 Charge-offs - - - - (45) (45) Ending Balance $ 2,673 $ 10,183 $ 2,500 $ 677 $ 2,782 $ 18,815 (1) Provision for credit losses excludes $ 62 19 thousand expense due to investment securities held to maturity. (2) Impact of CECL adoption on January 1, 2023 (3) Provision for credit losses excludes $ 22 19 thousand expense due to investment securities held to maturity. Residential Real Estate Commercial Real Estate Commercial and Industrial Foreign Banks Consumer and Other Total Three Months Ended June 30, 2022 Beginning balance $ 2,357 $ 9,183 $ 2,355 $ 491 $ 688 $ 15,074 Provision for credit losses 9 107 311 160 118 705 Recoveries - - 5 - 3 8 Charge-offs - - - - (1) (1) Ending Balance $ 2,366 $ 9,290 $ 2,671 $ 651 $ 808 $ 15,786 Six Months Ended June 30, 2022 Beginning balance $ 2,498 $ 8,758 $ 2,775 $ 457 $ 569 $ 15,057 Provision for credit losses (148) 532 (115) 194 242 705 Recoveries 32 - 11 - 3 46 Charge-offs (16) - - - (6) (22) Ending Balance $ 2,366 $ 9,290 $ 2,671 $ 651 $ 808 $ 15,786 Residential Real Estate Commercial Real Estate Commercial and Industrial Foreign Banks Consumer and Other Total June 30, 2023: Allowance for credit losses: Individually evaluated for impairment $ 144 $ - $ 82 $ - $ - $ 226 Collectively evaluated for impairment 2,529 10,183 2,418 677 2,782 18,589 Balances, end of period $ 2,673 $ 10,183 $ 2,500 $ 677 $ 2,782 $ 18,815 Loans: Individually evaluated for impairment $ 7,105 $ - $ 547 $ - $ - $ 7,652 Collectively evaluated for impairment 175,988 989,401 168,854 85,409 167,845 1,587,497 Balances, end of period $ 183,093 $ 989,401 $ 169,401 $ 85,409 $ 167,845 $ 1,595,149 December 31, 2022: Allowance for credit losses: Individually evaluated for impairment $ 155 $ - $ 41 $ - $ 98 $ 294 Collectively evaluated for impairment 1,197 10,143 4,122 720 1,011 17,193 Balances, end of period $ 1,352 $ 10,143 $ 4,163 $ 720 $ 1,109 $ 17,487 Loans: Individually evaluated for impairment $ 7,206 $ 393 $ 82 $ - $ 196 $ 7,877 Collectively evaluated for impairment 178,430 970,017 126,902 93,769 130,233 1,499,351 Balances, end of period $ 185,636 $ 970,410 $ 126,984 $ 93,769 $ 130,429 $ 1,507,228 As of June 30, 2023 Term Loans by Origination Year Revolving Loans Total 2023 2022 2021 2020 2019 Prior Residential real estate Pass $ 5,028 $ 38,626 $ 26,459 $ 7,189 $ 9,813 $ 87,326 $ 8,652 $ 183,093 Total 5,028 38,626 26,459 7,189 9,813 87,326 8,652 183,093 Commercial real estate Pass 38,191 341,882 227,443 103,150 80,974 191,613 3,621 986,874 Substandard - - 1,828 699 - - - 2,527 Total 38,191 341,882 229,271 103,849 80,974 191,613 3,621 989,401 Commercial and industrial Pass 48,282 38,589 35,029 7,757 17,243 2,740 18,925 168,565 Substandard - - 350 - 486 - - 836 Total 48,282 38,589 35,379 7,757 17,729 2,740 18,925 169,401 Foreign banks Pass 80,909 4,500 - - - - - 85,409 Total 80,909 4,500 - - - - - 85,409 Consumer and other loans Pass 39,715 75,831 48,250 724 513 1,424 1,388 167,845 Substandard - - - - - - - - Total 39,715 75,831 48,250 724 513 1,424 1,388 167,845 Total Pass 212,125 499,428 337,181 118,820 108,543 283,103 32,586 1,591,786 Special Mention - - - - - - - - Substandard - - 2,178 699 486 - - 3,363 Doubtful - - - - - - - - Total $ 212,125 $ 499,428 $ 339,359 $ 119,519 $ 109,029 $ 283,103 $ 32,586 $ 1,595,149 As of December 31, 2022 Pass Special Mention Substandard Doubtful Total Loans Residential real estate: Home equity line of credit and other $ 623 $ - $ - $ - $ 623 1-4 family residential 132,178 - - - 132,178 Condo residential 52,835 - - - 52,835 185,636 - - - 185,636 - Commercial real estate: Land and construction 38,687 - - - 38,687 Multi-family residential 176,820 - - - 176,820 Condo commercial 49,601 - 393 - 49,994 Commercial property 702,357 - 2,552 - 704,909 967,465 - 2,945 - 970,410 Commercial and industrial: Secured 120,873 - 807 - 121,680 Unsecured 5,304 - - - 5,304 126,177 - 807 - 126,984 Foreign banks 93,769 - - - 93,769 Consumer and other loans 130,233 - 196 - 130,429 Total $ 1,503,280 $ - $ 3,948 $ - $ 1,507,228 Accruing As of June 30, 2023 Current Past Due 30- 89 Days Past Due 90 Days or > and Still Accruing Total Accruing Non-Accrual Total Loans Residential real estate: Home equity line of credit and other $ 543 $ - $ - $ 543 $ - $ 543 1-4 family residential 129,987 - - 129,987 - 129,987 Condo residential 52,563 - - 52,563 - 52,563 183,093 - - 183,093 - 183,093 Commercial real estate: Land and construction 33,606 - - 33,606 - 33,606 Multi-family residential 173,360 - - 173,360 - 173,360 Condo commercial 56,255 - - 56,255 - 56,255 Commercial property 726,129 - - 726,129 - 726,129 Leasehold improvements 51 - - 51 - 51 989,401 - - 989,401 - 989,401 Commercial and industrial: Secured 149,392 224 - 149,616 486 150,102 Unsecured 19,299 - - 19,299 - 19,299 168,691 224 - 168,915 486 169,401 Foreign banks 85,409 - - 85,409 - 85,409 Consumer and other 167,845 - - 167,845 - 167,845 Total $ 1,594,439 $ 224 $ - $ 1,594,663 $ 486 $ 1,595,149 Accruing As of December 31, 2022: Current Past Due 30-89 Days Past Due 90 Days or > and Still Accruing Total Accruing Non-Accrual Total Loans Residential real estate: Home equity line of credit and other $ 623 $ - $ - $ 623 $ - $ 623 1-4 family residential 131,120 1,058 - 132,178 - 132,178 Condo residential 50,310 2,525 - 52,835 - 52,835 182,053 3,583 - 185,636 - 185,636 Commercial real estate: Land and construction 38,687 - - 38,687 - 38,687 Multi-family residential 176,820 - - 176,820 - 176,820 Condo commercial 49,994 - - 49,994 - 49,994 Commercial property 704,884 25 - 704,909 - 704,909 Leasehold improvements - - - - - - 970,385 25 - 970,410 - 970,410 Commercial and industrial: Secured 121,649 31 - 121,680 - 121,680 Unsecured 4,332 972 - 5,304 - 5,304 125,981 1,003 - 126,984 - 126,984 Foreign banks 93,769 - - 93,769 - 93,769 Consumer and other 130,169 260 - 130,429 - 130,429 Total $ 1,502,357 $ 4,871 $ - $ 1,507,228 $ - $ 1,507,228 June 30, 2023 Nonaccrual Loans With No Related Allowance Nonaccrual Loans With Related Allowance Total Nonaccruals Loans Past Due Over 90 Days and Still Accruing Residential real estate $ - $ - $ - $ - Commercial real estate - - - - Commercial and industrial - 486 486 - Consumer and other - - - - $ - $ 486 $ 486 $ - December 31, 2022 Unpaid Principal Balance Net Investment Balance Valuation Allowance Impaired Loans with No Specific Allowance: Residential real estate $ 3,551 $ 3,544 $ - Commercial real estate 393 393 - 3,944 3,937 - Impaired Loans with Specific Allowance: Residential real estate 3,655 3,626 155 Commercial and industrial 82 82 41 Consumer and other 196 196 98 3,933 3,904 294 Total $ 7,877 $ 7,841 $ 294 Three Months Ended June 30, 2022 Six Months Ended June 30, 2022 Residential real estate $ 7,332 $ 7,890 Commercial real estate 599 631 Commercial and industrial 115 124 Consumer and other 214 217 Total $ 8,260 $ 8,862 Recorded Investment Prior to Modification Recorded Investment After Modification Number of Loans Combination Modifications Total Modifications Number of Loans Combination Modifications Total Modifications Residential real estate - $ - $ - - $ - $ - Commercial real estate - - - - - - Commercial and industrial 1 350 350 1 350 350 Consumer and other - - - - - - 1 $ 350 $ 350 1 $ 350 $ 350 |