Note 3 - Loans and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2024

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Portfolio loans were as follows (dollars in thousands):

	March 31,			December 31,
	2024			2023
Commercial and industrial	$	516,400		$	506,974

Commercial real estate:
Residential developed		4,977			5,809
Unsecured to residential developers		—			800
Vacant and unimproved		38,895			39,534
Commercial development		78			84
Residential improved		107,860			123,875
Commercial improved		261,256			260,188
Manufacturing and industrial		159,703			154,809
Total commercial real estate		572,769			585,099
Consumer:
Residential mortgage		195,923			189,818
Unsecured		89			129
Home equity		53,751			53,039
Other secured		3,276			3,327
Total consumer		253,039			246,313
Total loans		1,342,208			1,338,386
Allowance for credit losses		(17,440	)		(17,442	)
	$	1,324,768		$	1,320,944

The totals above are shown net of deferred fees and costs. Deferred fees on loans totaled $1.3 million at both March 31, 2024 and December 31, 2023. Deferred costs on loans totaled $1.5 million at both March 31, 2024 and December 31, 2023.

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Activity in the allowance for credit losses by portfolio segment was as follows (dollars in thousands):

	Commercial
	and			Commercial
Three months ended March 31, 2024	Industrial			Real Estate			Consumer			Unallocated		Total
Beginning balance	$	6,871		$	7,164		$	3,375		$	32	$	17,442
Charge-offs		—			—			(32	)		—		(32	)
Recoveries		10			1			19			—		30
Provision for credit losses		(123	)		(189	)		224			88		—
Ending Balance	$	6,758		$	6,976		$	3,586		$	120	$	17,440

	Commercial
	and		Commercial
Three months ended March 31, 2023	Industrial		Real Estate			Consumer			Unallocated		Total
Beginning balance	$	5,596	$	7,180		$	2,458		$	51	$	15,285
Impact of adoption of ASU 2016-03		1,299		(212	)		389			—		1,476
Charge-offs		—		—			(21	)		—		(21	)
Recoveries		9		3			42			—		54
Provision for credit losses		220		(201	)		(50	)		31		—
Ending Balance	$	7,124	$	6,770		$	2,818		$	82	$	16,794

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The following table presents gross charge-offs for the three months ended March 31, 2024 by portfolio class and origination year (dollars in thousands):

	*Term Loans By Origination Year*
													*Revolving*
March 31, 2024	*2024*		*2023*		*2022*		*2021*		*2020*		*Prior*		*Loans*		*Total*


Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial development		—		—		—		—		—		—		—		—
Commercial improved		—		—		—		—		—		—		—		—
Manufacturing and industrial		—		—		—		—		—		—		—		—
Residential development		—		—		—		—		—		—		—		—
Residential improved		—		—		—		—		—		—		—		—
Vacant and unimproved		—		—		—		—		—		—		—		—
Total commercial		—		—		—		—		—		—		—		—

Residential mortgage		—		—		—		—		—		—		—		—
Consumer unsecured		—		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		32		32
Total consumer		—		—		—		—		—		—		32		32

Total loans	$	—	$	—	$	—	$	—	$	—	$	—	$	32	$	32

The following table presents gross charge-offs for the three months ended March 31, 2023 by portfolio class and origination year (dollars in thousands):

	Term Loans By Origination Year
													Revolving
March 31, 2023	2023		2022		2021		2020		2019		Prior		Loans		Total


Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial development		—		—		—		—		—		—		—		—
Commercial improved		—		—		—		—		—		—		—		—
Manufacturing and industrial		—		—		—		—		—		—		—		—
Residential development		—		—		—		—		—		—		—		—
Residential improved		—		—		—		—		—		—		—		—
Vacant and unimproved		—		—		—		—		—		—		—		—
Total commercial		—		—		—		—		—		—		—		—

Residential mortgage		—		—		—		—		—		—		—		—
Consumer unsecured		—		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		21		21
Total consumer		—		—		—		—		—		—		21		21

Total loans	$	—	$	—	$	—	$	—	$	—	$	—	$	21	$	21

Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. Under CECL for collateral dependent loans, the Company has adopted the practical expedient to measure the allowance on the fair value of collateral.

The allowance is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and the loan's amortized cost. If the fair value of the collateral exceeds the loan's amortized cost, no allowance is necessary. The Company's policy is to obtain appraisals on any significant pieces of collateral. For real estate collateral that is in industries that are undergoing significant stress, or properties that are specialized use or have limited marketability, higher discounts are applied in determining fair value.

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

There have been no significant changes to the types of collateral securing our collateral dependent loans.

The amortized cost of collateral-dependent loans by class as of March 31, 2024 was as follows (dollars in thousands):

	Collateral Type
					Allowance
March 31, 2024	Real Estate		Other		Allocated

Commercial and industrial	$	—	$	—	$	—
Commercial real estate:
Residential developed		—		—		—
Unsecured to residential developers		—		—		—
Vacant and unimproved		—		—		—
Commercial development		—		—		—
Residential improved		25		—		—
Commercial improved		289		—		14
Manufacturing and industrial		1,126		—		—
		1,440		—		14
Consumer
Residential mortgage		—		—		—
Unsecured		—		—		—
Home equity		—		—		—
Other secured		—		—		—
Consumer		—		—		—
Total	$	1,440	$	—	$	14

The amortized cost of collateral-dependent loans by class as of December 31, 2023 was as follows (dollars in thousands):

	Collateral Type
					Allowance
December 31, 2023	Real Estate		Other		Allocated

Commercial and industrial	$	—	$	—	$	—
Commercial real estate:
Residential developed		—		—		—
Unsecured to residential developers		—		—		—
Vacant and unimproved		—		—		—
Commercial development		—		—		—
Residential improved		26		—		—
Commercial improved		292		—		17
Manufacturing and industrial		1,136		—		—
		1,454		—		17
Consumer
Residential mortgage		—		—		—
Unsecured		—		—		—
Home equity		—		—		—
Other secured		—		—		—
Consumer		—		—		—
Total	$	1,454	$	—	$	17

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified collateral dependent loans. The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2024 and December 31, 2023 (dollars in thousands):

							Over 90		Total
	Nonaccrual with		Nonaccrual with				days		Nonperforming
March 31, 2024	No Allowance		Allowance		Total Nonaccrual		Accruing		Loans
Commercial and industrial	$	—	$	—	$	—	$	—	$	—

Commercial real estate:
Residential developed		—		—		—		—		—
Unsecured to residential developers		—		—		—		—		—
Vacant and unimproved		—		—		—		—		—
Commercial development		—		—		—		—		—
Residential Improved		—		—		—		—		—
Commercial improved		—		—		—		—		—
Manufacturing and industrial		—		—		—		—		—
		—		—		—		—		—
Consumer:
Residential mortgage		—		1		1		—		1
Unsecured		—		—		—		—		—
Home equity		—		—		—		—		—
Other secured		—		—		—		—		—
		—		1		1		—		1
Total	$	—	$	1	$	1	$	—	$	1

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

							Over 90		Total
	Nonaccrual with		Nonaccrual with				days		Nonperforming
December 31, 2023	No Allowance		Allowance		Total Nonaccrual		Accruing		Loans
Commercial and industrial	$	—	$	—	$	—	$	—	$	—

Commercial real estate:
Residential developed		—		—		—		—		—
Unsecured to residential developers		—		—		—		—		—
Vacant and unimproved		—		—		—		—		—
Commercial development		—		—		—		—		—
Residential improved		—		—		—		—		—
Commercial improved		—		—		—		—		—
Manufacturing and industrial		—		—		—		—		—
		—		—		—		—		—
Consumer:
Residential mortgage		—		1		1		—		1
Unsecured		—		—		—		—		—
Home equity		—		—		—		—		—
Other secured		—		—		—		—		—
		—		1		1		—		1
Total	$	—	$	1	$	1	$	—	$	1

No interest income was recognized on nonaccrual loans during the three month periods ended March 31, 2024 and 2023.

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The following table presents the aging of the recorded investment in past due loans as of March 31, 2024 and December 31, 2023 by class of loans (dollars in thousands):

	30-90		Greater Than		Total
March 31, 2024	Days		90 Days		Past Due		Current		Total
Commercial and industrial	$	—	$	—	$	—	$	516,400	$	516,400
Commercial real estate:
Residential developed		—		—		—		4,977		4,977
Unsecured to residential developers		—		—		—		—		—
Vacant and unimproved		—		—		—		38,895		38,895
Commercial development		—		—		—		78		78
Residential improved		—		—		—		107,860		107,860
Commercial improved		—		—		—		261,256		261,256
Manufacturing and industrial		—		—		—		159,703		159,703
		—		—		—		572,769		572,769
Consumer:
Residential mortgage		310		—		310		195,613		195,923
Unsecured		—		—		—		89		89
Home equity		30		—		30		53,721		53,751
Other secured		—		—		—		3,276		3,276
		340		—		340		252,699		253,039
Total	$	340	$	—	$	340	$	1,341,868	$	1,342,208

	30-90		Greater Than		Total
December 31, 2023	Days		90 Days		Past Due		Current		Total
Commercial and industrial	$	—	$	—	$	—	$	506,974	$	506,974
Commercial real estate:
Residential developed		—		—		—		5,809		5,809
Unsecured to residential developers		—		—		—		800		800
Vacant and unimproved		—		—		—		39,534		39,534
Commercial development		—		—		—		84		84
Residential improved		—		—		—		123,875		123,875
Commercial improved		—		—		—		260,188		260,188
Manufacturing and industrial		—		—		—		154,809		154,809
		—		—		—		585,099		585,099
Consumer:
Residential mortgage		44		—		44		189,774		189,818
Unsecured		—		—		—		129		129
Home equity		—		—		—		53,039		53,039
Other secured		—		—		—		3,327		3,327
		44		—		44		246,269		246,313
Total	$	44	$	—	$	44	$	1,338,342	$	1,338,386

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

At times, the Company will modify terms of a loan to allow the customer to mitigate the risk of foreclosure by meeting a lower loan payment requirement based upon their current cash flow. These may also include loans that renewed at existing contractual rates, but below market rates for comparable credit. For commercial loans, these modifications typically include an interest only period and, in some cases, a lowering of the interest rate on the loan. In some cases, the modification will include separating the note into two notes with the first note structured to be supported by current cash flows and collateral, and the second note made for the remaining unsecured debt. The second note is charged off immediately and collected only after the first note is paid in full. This modification type is commonly referred to as an A-B note structure. For consumer mortgage loans, the restructuring typically includes a lowering of the interest rate to provide payment and cash flow relief. For each restructuring, a comprehensive credit underwriting analysis of the borrower’s financial condition and prospects of repayment under the revised terms is performed to assess whether the structure can be successful and that cash flows will be sufficient to support the restructured debt. An analysis is also performed to determine whether the restructured loan should be on accrual status. Generally, if the loan is on accrual status at the time of restructure, it will remain on accrual status after the restructuring. In some cases, a nonaccrual loan may be placed on accrual status at restructuring if the loan’s actual payment history demonstrates it would have cash flowed under the restructured terms. After six consecutive payments under the restructured terms, a nonaccrual restructured loan is reviewed for possible upgrade to accrual status.

As with other individually reviewed loans, an allowance for credit loss is estimated for each such modification made to borrowers experiencing financial difficulty based on the most likely source of repayment for each loan. For commercial real estate loans that are collateral dependent, the allowance is computed based on the fair value of the underlying collateral, less estimated costs to sell. For individually reviewed commercial loans where repayment is expected from cash flows from business operations, the allowance is computed based on a discounted cash flow computation. Certain groups of such loans, such as residential mortgages, have common characteristics and for them the allowance is computed based on a discounted cash flow computation on the change in weighted rate for the pool. The allowance allocations for commercial modifications to borrowers experiencing financial difficulty where we have reduced the contractual interest rate are computed by measuring cash flows using the new payment terms discounted at the original contractual rate.

The following table presents information regarding modifications to borrowers experiencing financial difficulty as of March 31, 2024 (dollars in thousands):

	March 31, 2024
			Outstanding		Percentage to
	Number of		Recorded		Total
	Loans		Balance		Loans
Commercial and industrial		2	$	232		0.04	%
Commercial real estate		3		478		0.08	%
Consumer		31		2,550		1.01	%
		36	$	3,260		0.24	%

At March 31, 2024, approximately 50% of the balance of modified loans to borrowers experiencing financial difficulty involved interest rate reductions, 36% involved extensions of maturity and the remainder were a combination of capitalized interest, renewals at below market rates and A-B note restructures. At March 31, 2024, the amortized cost of these modified loans was $1.6 million, $1.2 million and $460,000, respectively. There have been no payment defaults for all modifications to borrowers experiencing financial difficulty within the past twelve months. Additionally, all such modifications were current at March 31, 2024. All of the modifications involving interest rate reductions occurred prior to 2015 and the financial statement effect of these interest rate reductions was immaterial.

The following table presents information regarding modifications to borrowers experiencing financial difficulty as of December 31, 2023 (dollars in thousands):

	December 31, 2023
			Outstanding		Percentage to
	Number of		Recorded		Total
	Loans		Balance		Loans
Commercial and industrial		2	$	244		0.05	%
Commercial real estate		3		485		0.08	%
Consumer		31		2,584		1.05	%
		36	$	3,313		0.25	%

At December 31, 2023, approximately 50% of the balance of modified loans to borrowers experiencing financial difficulty involved interest rate reductions, 36% involved extensions of maturity and the remainder were a combination of capitalized interest, renewals at below market rates and A-B note restructures. At December 31, 2023, the amortized cost of these modified loans was $1.6 million, $1.2 million and $471,000, respectively. There have been no payment defaults for all modifications to borrowers experiencing financial difficulty within the past twelve months. Additionally, all such modifications were current at December 31, 2023. All of the modifications involving interest rate reductions occurred prior to 2015 and the financial statement effect of these interest rate reductions was immaterial.

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The following table presents the amount of accruing modifications that were on nonaccrual status prior to the modification, accruing at the time of modification and those that were upgraded to accruing status after receiving six consecutive monthly payments in accordance with the modified terms as of the period reported (dollars in thousands):

	March 31,		December 31,
	2024		2023
Accruing - nonaccrual at modification	$	—	$	—
Accruing - accruing at modification		3,260		3,313
Accruing - upgraded to accruing after six consecutive payments		—		—
	$	3,260	$	3,313

There were no modifications made to borrowers experiencing financial difficulty during the three month periods ended March 31, 2024 or March 31, 2023.

There were no defaults on loans with modifications to borrowers experiencing financial difficulty during the three month period ended March 31, 2024 and the balance of loans that became delinquent by more than 90 days past due or that were transferred to nonaccrual within 12 months of modification was $0.

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes commercial loans individually and classifies these relationships by credit risk grading. The Company uses an eight point grading system, with grades 5 through 8 being considered classified, or watch, credits. The higher the risk grade, the stronger likelihood of loss. At grade 7, a loan is placed on nonaccrual status. All commercial loans are assigned a grade at origination, at each renewal or any amendment. When a credit is first downgraded to a watch credit (either through renewal, amendment, loan officer identification or the loan review process), an Administrative Loan Review (“ALR”) is generated by the credit department and the loan officer. All watch credits have an ALR completed quarterly which analyzes the collateral position and cash flow of the borrower and its guarantors. Management meets quarterly with loan officers to discuss each of these credits in detail and to help formulate solutions where progress has stalled. When necessary, the loan officer proposes changes to the assigned loan grade as part of the ALR. Additionally, Loan Review reviews all loan grades upon origination, renewal or amendment and again as loans are selected though the loan review process. The credit will stay on the ALR until either its grade has improved to a 4 or the credit relationship is at a zero balance. The Company uses the following definitions for the risk grades in ascending order of likelihood of loss:

1. Excellent - Loans supported by extremely strong financial condition or secured by the Bank’s own deposits. Minimal risk to the Bank and the probability of serious rapid financial deterioration is extremely small.

2. Above Average - Loans supported by sound financial statements that indicate the ability to repay or borrowings secured (and margined properly) with marketable securities. Nominal risk to the Bank and probability of serious financial deterioration is highly unlikely. The overall quality of these credits is very high.

3. Good Quality - Loans supported by satisfactory asset quality and liquidity, good debt capacity coverage, and good management in all critical positions. Loans are secured by acceptable collateral with adequate margins. There is a slight risk of deterioration if adverse market conditions prevail.

4. Acceptable Risk - Loans carrying an acceptable risk to the Bank, which may be slightly below average quality. The borrower has limited financial strength with considerable leverage. There is some probability of deterioration if adverse market conditions prevail. These credits should be monitored closely by the Relationship Manager.

5. Marginally Acceptable - Loans are of marginal quality with above normal risk to the Bank. The borrower shows acceptable asset quality but very little liquidity with high leverage. There is inconsistent earning performance without the ability to sustain adverse market conditions. The primary source of repayment is questionable, but the secondary source of repayment still remains an option. Very close attention by the Relationship Manager and management is needed.

6. Substandard - Loans are inadequately protected by the net worth and paying capacity of the borrower or the collateral pledged. The primary and secondary sources of repayment are questionable. Heavy debt condition may be evident and volume and earnings deterioration may be underway. It is possible that the Bank will sustain some loss if the deficiencies are not immediately addressed and corrected.

7. Doubtful - Loans supported by weak or no financial statements, as well as the ability to repay the entire loan, are questionable. Loans in this category are normally characterized less than adequate collateral, insolvent, or extremely weak financial condition. A loan classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses makes collection or liquidation in full highly questionable. The possibility of loss is extremely high, however, activity may be underway to minimize the loss or maximize the recovery.

8. Loss - Loans are considered uncollectible and of little or no value as a bank asset.

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The following table summarizes loan ratings by grade for commercial loans as of March 31, 2024 (dollars in thousands):

	*Term Loans Amortized Cost Basis By Origination Year and Risk Grades*
March 31, 2024	*2024*		*2023*		*2022*		*2021*		*2020*		*Prior*		*Revolving*		*Total*
Commercial
Commercial and industrial
Grades 1-3	$	14,068	$	38,897	$	40,494	$	9,235	$	5,778	$	45,398	$	68,809	$	222,679
Grade 4		14,526		83,078		46,939		20,807		10,148		47,312		62,804		285,614
Grade 5		—		—		1,200		37		253		1,473		5,133		8,096
Grade 6		—		—		—		—		—		11		—		11
Grade 7-8		—		—		—		—		—		—		—		—
	$	28,594	$	121,975	$	88,633	$	30,079	$	16,179	$	94,194	$	136,746	$	516,400
Residential development
Grades 1-3	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Grade 4		1,693		2,328		57		—		—		—		899		4,977
Grade 5		—		—		—		—		—		—		—		—
Grade 6		—		—		—		—		—		—		—		—
Grade 7-8		—		—		—		—		—		—		—		—
	$	1,693	$	2,328	$	57	$	—	$	—	$	—	$	899	$	4,977
Unsecured to residential developers
Grades 1-3	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Grade 4		—		—		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—		—		—
Grade 6		—		—		—		—		—		—		—		—
Grade 7-8		—		—		—		—		—		—		—		—
	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Vacant and unimproved
Grades 1-3	$	—	$	1,111	$	6,768	$	9,492	$	6,531	$	57	$	230	$	24,189
Grade 4		151		4,274		1,309		690		7,636		—		646		14,706
Grade 5		—		—		—		—		—		—		—		—
Grade 6		—		—		—		—		—		—		—		—
Grade 7-8		—		—		—		—		—		—		—		—
	$	151	$	5,385	$	8,077	$	10,182	$	14,167	$	57	$	876	$	38,895
Commercial development
Grades 1-3	$	—	$	—	$	78	$	—	$	—	$	—	$	—	$	78
Grade 4		—		—		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—		—		—
Grade 6		—		—		—		—		—		—		—		—
Grade 7-8		—		—		—		—		—		—		—		—
	$	—	$	—	$	78	$	—	$	—	$	—	$	—	$	78
Residential improved
Grades 1-3	$	298	$	6,205	$	14,809	$	1,203	$	8,026	$	4,133	$	1,059	$	35,733
Grade 4		187		2,008		538		35,546		1,148		22,009		10,666		72,102
Grade 5		—		—		—		25		—		—		—		25
Grade 6		—		—		—		—		—		—		—		—
Grade 7-8		—		—		—		—		—		—		—		—
	$	485	$	8,213	$	15,347	$	36,774	$	9,174	$	26,142	$	11,725	$	107,860
Commercial improved
Grades 1-3	$	80	$	14,337	$	19,595	$	48,674	$	17,417	$	22,746	$	5,266	$	128,115
Grade 4		242		16,709		34,150		19,913		30,226		25,580		1,216		128,036
Grade 5		—		—		16		—		—		4,800		—		4,816
Grade 6		—		—		—		289		—		—		—		289
Grade 7-8		—		—		—		—		—		—		—		—
	$	322	$	31,046	$	53,761	$	68,876	$	47,643	$	53,126	$	6,482	$	261,256
Manufacturing and industrial
Grades 1-3	$	3,768	$	7,875	$	42,733	$	5,518	$	6,204	$	7,878	$	642	$	74,618
Grade 4		8,786		18,849		25,603		11,801		7,247		9,292		261		81,839
Grade 5		—		—		—		—		—		448		—		448
Grade 6		232		—		—		—		—		2,566		—		2,798
Grade 7-8		—		—		—		—		—		—		—		—
	$	12,786	$	26,724	$	68,336	$	17,319	$	13,451	$	20,184	$	903	$	159,703

Total Commercial
Grades 1-3	$	18,214	$	68,425	$	124,477	$	74,122	$	43,956	$	80,212	$	76,006	$	485,412
Grade 4		25,585		127,246		108,596		88,757		56,405		104,193		76,492		587,274
Grade 5		—		—		1,216		62		253		6,721		5,133		13,385
Grade 6		232		—		—		289		—		2,577		—		3,098
Grade 7-8		—		—		—		—		—		—		—		—
	$	44,031	$	195,671	$	234,289	$	163,230	$	100,614	$	193,703	$	157,631	$	1,089,169

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The following table summarizes loan ratings by grade for commercial loans as of December 31, 2023 (dollars in thousands):

	Term Loans Amortized Cost Basis By Origination Year and Risk Grades
December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Commercial
Commercial and industrial
Grades 1-3	$	44,605	$	50,019	$	14,727	$	4,795	$	11,941	$	33,652	$	64,840	$	224,579
Grade 4		83,219		41,778		18,081		12,245		1,954		42,601		70,902		270,780
Grade 5		—		1,254		49		269		2		1,559		8,459		11,592
Grade 6		—		—		5		—		—		18		—		23
Grade 7-8		—		—		—		—		—		—		—		—
	$	127,824	$	93,051	$	32,862	$	17,309	$	13,897	$	77,830	$	144,201	$	506,974
Residential development
Grades 1-3	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Grade 4		887		102		—		—		—		—		4,820		5,809
Grade 5		—		—		—		—		—		—		—		—
Grade 6		—		—		—		—		—		—		—		—
Grade 7-8		—		—		—		—		—		—		—		—
	$	887	$	102	$	—	$	—	$	—	$	—	$	4,820	$	5,809
Unsecured to residential developers
Grades 1-3	$	—	$	—	$	—	$	—	$	—	$	—	$	800	$	800
Grade 4		—		—		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—		—		—
Grade 6		—		—		—		—		—		—		—		—
Grade 7-8		—		—		—		—		—		—		—		—
	$	—	$	—	$	—	$	—	$	—	$	—	$	800	$	800
Vacant and unimproved
Grades 1-3	$	928	$	7,118	$	9,694	$	6,703	$	—	$	70	$	520	$	25,033
Grade 4		2,961		1,315		729		7,811		154		—		207		13,177
Grade 5		1,324		—		—		—		—		—		—		1,324
Grade 6		—		—		—		—		—		—		—		—
Grade 7-8		—		—		—		—		—		—		—		—
	$	5,213	$	8,433	$	10,423	$	14,514	$	154	$	70	$	727	$	39,534
Commercial development
Grades 1-3	$	—	$	84	$	—	$	—	$	—	$	—	$	—	$	84
Grade 4		—		—		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—		—		—
Grade 6		—		—		—		—		—		—		—		—
Grade 7-8		—		—		—		—		—		—		—		—
	$	—	$	84	$	—	$	—	$	—	$	—	$	—	$	84
Residential improved
Grades 1-3	$	5,708	$	13,755	$	1,235	$	8,408	$	248	$	4,511	$	719	$	34,584
Grade 4		2,106		545		34,461		1,173		7,021		15,188		28,771		89,265
Grade 5		—		—		26		—		—		—		—		26
Grade 6		—		—		—		—		—		—		—		—
Grade 7-8		—		—		—		—		—		—		—		—
	$	7,814	$	14,300	$	35,722	$	9,581	$	7,269	$	19,699	$	29,490	$	123,875
Commercial improved
Grades 1-3	$	13,475	$	19,837	$	49,452	$	18,894	$	11,866	$	11,526	$	4,851	$	129,901
Grade 4		11,627		34,347		20,551		30,722		24,118		2,033		1,754		125,152
Grade 5		—		22		—		—		1,761		3,060		—		4,843
Grade 6		—		—		292		—		—		—		—		292
Grade 7-8		—		—		—		—		—		—		—		—
	$	25,102	$	54,206	$	70,295	$	49,616	$	37,745	$	16,619	$	6,605	$	260,188
Manufacturing and industrial
Grades 1-3	$	8,005	$	41,463	$	5,742	$	6,417	$	4,261	$	3,756	$	802	$	70,446
Grade 4		16,604		26,292		12,028		7,412		5,467		12,924		350		81,077
Grade 5		167		—		—		—		—		295		—		462
Grade 6		232		—		—		—		—		2,592		—		2,824
Grade 7-8		—		—		—		—		—		—		—		—
	$	25,008	$	67,755	$	17,770	$	13,829	$	9,728	$	19,567	$	1,152	$	154,809

Total Commercial
Grades 1-3	$	72,721	$	132,276	$	80,850	$	45,217	$	28,316	$	53,515	$	72,532	$	485,427
Grade 4		117,404		104,379		85,850		59,363		38,714		72,746		106,804		585,260
Grade 5		1,491		1,276		75		269		1,763		4,914		8,459		18,247
Grade 6		232		—		297		—		—		2,610		—		3,139
Grade 7-8		—		—		—		—		—		—		—		—
	$	191,848	$	237,931	$	167,072	$	104,849	$	68,793	$	133,785	$	187,795	$	1,092,073

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses. For consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following tables present the recorded investment in consumer loans by year of origination and based on delinquency status at March 31, 2024 and December 31, 2023 (dollars in thousands):

	*Term Loans Amortized Cost Basis By Origination Year*
March 31, 2024	*2024*		*2023*		*2022*		*2021*		*2020*		*Prior*		*Revolving*		*Total*
Retail
Residential mortgage
Performing	$	9,265	$	68,930	$	38,956	$	24,798	$	9,293	$	30,950	$	13,731	$	195,923
Nonperforming		—		—		—		—		—		—		—		—
	$	9,265	$	68,930	$	38,956	$	24,798	$	9,293	$	30,950	$	13,731	$	195,923
Consumer unsecured
Performing	$	—	$	—	$	—	$	—	$	10	$	79	$	—	$	89
Nonperforming		—		—		—		—		—		—		—		—
	$	—	$	—	$	—	$	—	$	10	$	79	$	—	$	89
Home equity
Performing	$	135	$	490	$	626	$	211	$	443	$	1,939	$	49,907	$	53,751
Nonperforming		—		—		—		—		—		—		—		—
	$	135	$	490	$	626	$	211	$	443	$	1,939	$	49,907	$	53,751
Other
Performing	$	260	$	1,638	$	564	$	506	$	185	$	123	$	—	$	3,276
Nonperforming		—		—		—		—		—		—		—		—
	$	260	$	1,638	$	564	$	506	$	185	$	123	$	—	$	3,276

Total Retail	$	9,660	$	71,058	$	40,146	$	25,515	$	9,931	$	33,091	$	63,638	$	253,039

	Term Loans Amortized Cost Basis By Origination Year
December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Retail
Residential mortgage
Performing	$	71,574	$	39,537	$	25,400	$	9,588	$	4,868	$	27,510	$	11,341	$	189,818
Nonperforming		—		—		—		—		—		—		—		—
	$	71,574	$	39,537	$	25,400	$	9,588	$	4,868	$	27,510	$	11,341	$	189,818
Consumer unsecured
Performing	$	—	$	—	$	—	$	11	$	13	$	—	$	105	$	129
Nonperforming		—		—		—		—		—		—		—		—
	$	—	$	—	$	—	$	11	$	13	$	—	$	105	$	129
Home equity
Performing	$	518	$	661	$	217	$	451	$	209	$	1,866	$	49,117	$	53,039
Nonperforming		—		—		—		—		—		—		—		—
	$	518	$	661	$	217	$	451	$	209	$	1,866	$	49,117	$	53,039
Other
Performing	$	1,752	$	658	$	545	$	220	$	32	$	120	$	—	$	3,327
Nonperforming		—		—		—		—		—		—		—		—
	$	1,752	$	658	$	545	$	220	$	32	$	120	$	—	$	3,327

Total Retail	$	73,844	$	40,856	$	26,162	$	10,270	$	5,122	$	29,496	$	60,563	$	246,313

MACATAWA BANK CORP 10-Q