NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

6 Months Ended

Jun. 30, 2023

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Salisbury segregates its loan portfolio into discrete loan pools for purposes of evaluating credit risk. Each loan pool possesses unique risk characteristics that are considered when determining the appropriate level of allowance. As of June 30, 2023, the Company aggregated the individual loan pools as follows:

Commercial & Industrial - Commercial loans consist of revolving and term loan obligations extended to businesses, municipalities and educational facilities for the purpose of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to, accounts receivable, inventory, plant and equipment, and/or real estate, if applicable. Commercial loans are primarily paid by the operating cash flow of the borrower. Commercial loans may be secured or unsecured.

Commercial Real Estate – Commercial real estate loans include non-owner-occupied and owner-occupied properties as well as loans for agricultural purposes and land development. Commercial real estate loans consist of mortgage loans to finance investments in real property such as multi-family residential, commercial/retail, office, industrial, hotels, health care facilities and other specific use properties. Commercial real estate loans are typically written with amortizing payment structures. Collateral values are determined based upon appraisals and evaluations in accordance with established policy guidelines. Maximum loan-to-value ratios at origination are governed by established policy and regulatory guidelines. Commercial real estate loans are primarily paid by the cash flow generated from the real property, such as operating leases, rents, or other operating cash flows from the borrower.

Residential Real Estate - Residential real estate loans are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan-to-value ratios within established policy guidelines. Collateral consists of mortgage liens on one-to four-family residences, including for investment purposes.

Consumer - Home equity loans and lines of credit are made to qualified individuals and are secured by senior or junior mortgage liens on owner-occupied one-to four-family homes, condominiums, or vacation homes. The home equity loan has a fixed rate and is billed as equal payments comprised of principal and interest. The home equity line of credit has a variable rate and is billed as interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the principal balance plus all accrued interest. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan-to-value ratios within established policy guidelines. Consumer loan products including personal lines of credit and amortizing loans made to qualified individuals for various purposes such as education, auto loans, debt consolidation, personal expenses or overdraft protection. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines, as applicable. Consumer loans may be secured or unsecured.

The table below provides the composition of loans receivable. Commercial and industrial loans include loans to businesses, municipalities and independent schools. Commercial real estate includes construction, commercial, residential 5+ multi-family, farm and vacant land loans. Residential real estate includes residential 1-4 family and residential construction loans. Consumer includes HELOC, consumer, indirect auto loans and overdrafts.

(In thousands)		June 30, 2023			December 31, 2022¹
Commercial & Industrial	$	215,372		$	239,997
Commercial real estate		525,364			491,659
Residential real estate		468,462			449,652
Consumer		42,891			46,208
Total Loans		1,252,089			1,227,516
Deferred loan origination costs, net		980			1,001
Allowance for credit losses		(15,558	)		(14,846	)
Loans receivable, net	$	1,237,511		$	1,213,671

¹Certain loan categories were reclassified from prior filings based on loan type.

On January 1, 2023, the Bank adopted ASU 326 to calculate the allowance for credit losses. The impact of adopting this standard during first quarter 2023 was a net increase in the allowance for credit losses of $0.3 million. See Note 1 for a summary of the impact of adopting this standard during first quarter 2023.

Also included within scope of the CECL standard are off-balance sheet loan commitments, which includes the unfunded portion of committed lines of credit and commitments “in-process”, which reflect loans that are not in Salisbury’s gross loans receivable balance as of the balance sheet date but rather negotiated loan/line of credit terms and rates that the Bank has offered to customers and is committed to honoring. In reference to “in-process” credits, the Bank defines an unfunded commitment as a credit that has been offered to and accepted by a borrower, which has not closed and by which the obligation is not unconditionally cancellable.

The Bank estimates expected credit losses over the contractual period in which the Bank is exposed to credit risk through a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Bank. The allowance for credit losses on off-balance sheet exposures includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments to be funded over its estimated life.

At June 30, 2023, the allowance for off-balance-sheet credit losses was $1.2 million compared with $0.2 million at December 31, 2022. This balance is included in “other liabilities” on Salisbury’s consolidated balance sheet. During second quarter 2023, the Bank recorded $10 thousand in credit loss benefit for off-balance-sheet items compared with $0.4 million for second quarter 2022. These balances are included in the “provision for credit losses” for 2023 and “other non-interest expense” in 2022 on Salisbury’s Consolidated Income Statement.

Salisbury has entered into loan participation agreements with other banks and transferred a portion of its originated loans to the participating banks. Transferred amounts are accounted for as sales and excluded from Salisbury’s loans receivable. Salisbury and its participating lenders share ratably in any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. Salisbury services the loans on behalf of the participating lenders and, as such, collects cash payments from the borrowers, remits payments (net of servicing fees) to participating lenders and disburses required escrow funds to relevant parties.

Salisbury also has entered into loan participation agreements with other banks and purchased a portion of the other banks’ originated loans. Purchased amounts are accounted for as loans without recourse to the originating bank. Salisbury and its originating lenders share ratably in any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. The originating banks service the loans on behalf of the participating lenders and, as such, collect cash payments from the borrowers, remit payments (net of servicing fees) to participating lenders and disburse required escrow funds to relevant parties.

At June 30, 2023 and December 31, 2022, Salisbury serviced commercial loans for other banks under loan participation agreements totaling $67.4 million and $64.1 million, respectively.

Concentrations of Credit Risk

Salisbury's loans consist primarily of residential and commercial real estate loans located principally in Litchfield County, Connecticut; Dutchess, Orange and Ulster Counties, New York; and Berkshire County, Massachusetts, which constitute Salisbury's service area. Salisbury offers a broad range of loan and credit facilities to borrowers in its service area, including residential mortgage loans, commercial real estate loans, construction loans, working capital loans, equipment loans, and a variety of consumer loans, including home equity lines of credit, installment loans and collateral loans. All residential and commercial mortgage loans are collateralized by first or second mortgages on real estate. The ability of single family residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the market area and real estate values. The ability of commercial borrowers to honor their repayment commitments is dependent on the general economy as well as the health of the real estate economic sector in Salisbury’s market area.

Salisbury’s commercial loan portfolio is comprised of loans to diverse industries, several of which may experience operating challenges due to the COVID-19 virus pandemic (“virus”). Approximately 33% of the Bank’s commercial loan portfolio are to entities who operate rental properties, which include commercial strip malls, smaller rental units as well as multi-unit dwellings. Approximately 10% of the Bank’s commercial loans are to entities in the hospitality industry, which includes hotels, bed & breakfast inns and restaurants. Approximately 9% of the Bank’s commercial loans are to educational institutions and approximately 4% of Salisbury’s commercial loans are to entertainment and recreation related businesses, which include camps and amusement parks. Salisbury’s commercial real estate exposure as a percentage of the Bank’s total risk-based capital, which represents Tier 1 plus Tier 2 capital, was approximately 210% as of June 30, 2023 and 198% at December 31, 2022 compared to the regulatory monitoring guideline of 300%. Salisbury’s commercial loan exposure is mitigated by a variety of factors including the personal liquidity of the borrower, real estate and/or non-real estate collateral, U.S. Department of Agriculture or Small Business Administration (“SBA”) guarantees, loan payment deferrals and economic stimulus loans from the U.S. government as a result of the virus, and other factors.

Credit Quality

Salisbury uses credit risk ratings as part of its determination of the allowance for credit losses. Credit risk ratings categorize loans by common financial and structural characteristics that measure the credit strength of a borrower. The rating model has eight risk rating grades, with each grade corresponding to a progressively greater risk of default. Grades 1 through 4 are considered not criticized and are aggregated as pass rated, and 5 through 8 are criticized as defined by the regulatory agencies. Risk ratings are assigned to differentiate risk within the portfolio and are reviewed on an ongoing basis and revised, if needed, to reflect changes in the borrowers' current financial position and outlook, risk profiles and the related collateral and structural positions.

Loans rated as "special mention" (5) possess credit deficiencies or potential weaknesses deserving management’s close attention that if left uncorrected may result in deterioration of the repayment prospects for the loans at some future date.

Loans rated as "substandard" (6) are loans where the Bank’s position is clearly not protected adequately by borrower current net worth or payment capacity. These loans have well defined weaknesses based on objective evidence and include loans where future losses to the Bank may result if deficiencies are not corrected, and loans where the primary source of repayment such as income is diminished and the Bank must rely on sale of collateral or other secondary sources of collection.

Loans rated "doubtful" (7) have the same weaknesses as substandard loans with the added characteristic that the weakness makes collection or liquidation in full, given current facts, conditions, and values, to be highly improbable. The possibility of loss is high, but due to certain important and reasonably specific pending factors, which may work to strengthen the loan, its reclassification as an estimated loss is deferred until its exact status can be determined.

Loans classified as "loss" (8) are considered uncollectible and of such little value that continuance as Bank assets is unwarranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather, it is not practical or desirable to defer writing off this loan even though partial recovery may be made in the future.

Management actively reviews and tests its credit risk ratings against actual experience and engages an independent third-party to annually validate its assignment of credit risk ratings. In addition, the Bank’s loan portfolio is examined periodically by its regulatory agencies, the FDIC and the CTDOB.

Based on the most recent analysis performed, the risk category of loans by segment and by vintage, reported under the CECL methodology, is presented below. Commercial and industrial loans include loans to businesses, municipalities and independent schools. Commercial real estate includes construction, commercial, residential 5+ multi-family, farm and vacant land loans. Residential real estate includes residential 1-4 family and residential construction loans. Consumer includes HELOC, consumer, indirect auto loans and overdrafts.

(in thousands)	2023			2022			2021			2020		2019		Prior			Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of June 30, 2023
Commercial & industrial
Risk rating
Pass	$	12,115		$	41,250		$	40,502		$	29,466	$	15,974	$	38,085		$	30,691	$	—	$	208,083
Special mention		—			—			—			—		616		5,456			350		—		6,422
Substandard		—			300			—			—		10		—			557		—		867
Doubtful		—			—			—			—		—		—			—		—		—
Loss		—			—			—			—		—		—			—		—		—
Total commercial & industrial	$	12,115		$	41,550		$	40,502		$	29,466	$	16,600	$	43,541		$	31,598	$	—	$	215,372
Commercial real estate
Risk rating
Pass	$	46,897		$	150,311		$	103,226		$	66,452	$	25,628	$	121,807		$	—	$	—		514,321
Special mention		—			—			—			3,554		3,716		2,920			—		—		10,190
Substandard		—			—			—			—		—		853			—		—		853
Doubtful		—			—			—			—		—		—			—		—		—
Loss		—			—			—			—		—		—			—		—		—
Total commercial real estate	$	46,897		$	150,311		$	103,226		$	70,006	$	29,344	$	125,580		$	—	$	—	$	525,364
Residential real estate
Risk rating
Pass	$	30,996		$	104,583		$	114,161		$	63,316	$	26,509	$	123,627		$	170	$	—	$	463,362
Special mention		—			—			—			20		—		3,204			—		—		3,224
Substandard		—			—			662			—		—		1,214			—		—		1,876
Doubtful		—			—			—			—		—		—			—		—		—
Loss		—			—			—			—		—		—			—		—		—
Total residential real estate	$	30,996		$	104,583		$	114,823		$	63,336	$	26,509	$	128,045		$	170	$	—	$	468,462
Consumer
Risk rating
Pass	$	952		$	1,521		$	955		$	216	$	380	$	14,024		$	22,292	$	2,281	$	42,621
Special mention		—			—			—			—		—		1			96		43		140
Substandard		—			45			—			—		—		2			70		13		130
Doubtful		—			—			—			—		—		—			—		—		—
Loss		—			—			—			—		—		—			—		—		—
Total consumer	$	952		$	1,566		$	955		$	216	$	380	$	14,027		$	22,458	$	2,337	$	42,891
Total loans	$	90,960		$	298,010		$	259,506		$	163,024	$	72,833	$	311,193		$	54,226	$	2,337	$	1,252,089
Total Gross Charge-offs	$	(48	)	$	(13	)	$	(4	)	$	—	$	—	$	(20	)	$	—	$	—	$	(85	)
Total Recoveries		4			—			—			—		—		1			—		—		5
Total Net Charge-offs	$	(44	)	$	(13	)	$	(4	)	$	—	$	—	$	(19	)	$	—	$	—	$	(80	)

The composition of loans receivable by risk rating grade, under the incurred loss methodology is as follows:

(in thousands)	Pass		Special mention		Substandard		Doubtful		Loss		Total
December 31, 2022
Commercial & industrial	$	232,259	$	6,195	$	1,543	$	—	$	—	$	239,997
Commercial real estate		477,006		8,798		5,855		—		—		491,659
Residential real estate		444,778		2,995		1,879		—		—		449,652
Consumer		46,041		162		5		—		—		46,208
Loans receivable, gross	$	1,200,084	$	18,150	$	9,282	$	—	$	—	$	1,227,516

A financial asset is considered collateral dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. Expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. Significant quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value. The following table presents the amortized cost basis of individually analyzed collateral-dependent loans by loan portfolio segment:

The following table presents the amortized cost basis of collateral-dependent non-accrual loans as of June 30, 2023. Commercial and industrial loans include loans to businesses, municipalities and independent schools. Commercial real estate includes construction, commercial, residential 5+ multi-family, farm and vacant land loans. Residential real estate includes residential 1-4 family and residential construction loans. Consumer includes HELOC, consumer, indirect auto loans and overdrafts.


		Collateral Type
(in thousands)		Real Estate		Business Assets		Total Collateral-Dependent Non-Accrual Loans
June 30, 2023
Commercial & industrial	$	—	$	—	$	—
Commercial real estate		85		—		85
Residential real estate		839		—		839
Consumer		83		14		97
Total	$	1,007	$	14	$	1,021

The following is a summary of loans by past due status at June 30, 2023:


			Past due
(in thousands)	Current		30-59 days		60-89 days		90 days or Greater Past Due		Total Past Due		Total Loans Outstanding		Loans Greater than 90 Days Past Due and Accruing
June 30, 2023
Commercial & industrial	$	215,070	$	—	$	2	$	300	$	302	$	215,372	$	300
Commercial real estate		524,923		356		—		85		441		525,364		—
Residential real estate		468,286		111		65		—		176		468,462		—
Consumer		42,604		204		48		35		287		42,891		—
Total	$	1,250,883	$	671	$	115	$	420	$	1,206	$	1,252,089	$	300

The following is a summary of the amortized cost basis of loans on non-accrual status.


		June 30, 2023						December 31, 2022
(in thousands)		Non-Accrual Loans with an Allowance		Non-Accrual Loans without an Allowance		Total Non-Accrual Loans		Total Non-Accrual Loans
Commercial & industrial	$	—	$	—	$	—	$	189
Commercial real estate		—		85		85		1,648
Residential real estate		—		839		839		820
Consumer		14		83		97		5
Total	$	14	$	1,007	$	1,021	$	2,662


			Past due

									180		30		Accruing
(in thousands)									days		days		90 days
			30-59		60-89		90-179		and		and		and		Non-
	Current		days		days		days		over		over		over		accrual
December 31, 2022
Commercial & industrial	$	239,847	$	149	$	1	$	—	$	—	$	150	$	—	$	189
Commercial real estate		491,574		—		—		85		—		85		—		1,648
Residential real estate		448,935		672		30		—		15		717		—		820
Consumer		45,677		442		84		5		—		531		—		5
Loans receivable, gross	$	1,226,033	$	1,263	$	115	$	90	$	15	$	1,483	$	—	$	2,662

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset origination. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. Salisbury uses a probability of default/loss given default model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses as a result of the measurement methodologies used to estimate the allowance, a change in the allowance for credit losses is generally not recorded upon modification. In certain instances, Salisbury will modify a loan by providing multiple types of concessions. Typically, one type of concession, such as term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as an interest rate reduction, may be granted. Salisbury did not restructure any troubled debt in the second quarter of 2023 or 2022.

The components of troubled debt restructured loans at December 31, 2022 are as follows:

(in thousands)		December 31, 2022
Commercial & industrial	$	—
Commercial real estate		1,381
Residential real estate		1,289
Consumer		—
Accruing troubled debt restructured loans		2,670
Commercial & industrial		—
Commercial real estate		—
Residential real estate		67
Consumer		—
Non-accrual troubled debt restructured loans		67
Troubled debt restructured loans	$	2,737

The past due status of troubled debt restructured loans at December 31, 2022 is as follows:

(in thousands)		December 31, 2022
Current	$	2,670
Past due 30-59 days		—
Past due 60-89 days		—
Accruing troubled debt restructured loans		2,670
Current		—
Past due 30-59 days		67
Past due 180 days and over		—
Non-accrual troubled debt restructured loans		67
Total troubled debt restructured loans	$	2,737

Allowance for Credit Losses for Loans

The ACL on loans at June 30, 2023, was $15.6 million, an increase of $0.7 million, or 4.8%, since December 31, 2022. The increase reflected the adoption of CECL, effective January 1, 2023, and the estimate of expected credit losses based on certain macro-economic factors, partially offset by the release of reserves associated with $8.2 million of shared national credit loans, which Salisbury sold in second quarter 2023. At June 30, 2023, the ACL on loans estimate used a reasonable and supportable forecast period of one year across all of its loan segments. At June 30, 2023, the reasonable and supportable forecast used to estimate the ACL on loans used the following loss drivers by loan segment: (i) Commercial & Industrial – National Gross Domestic Product (“GDP”) and National Unemployment; (ii) Commercial Real Estate - National GDP and National Unemployment; (iii) Residential Real Estate – National Housing Price Index and National Unemployment; (iv) Consumer - National Unemployment. National GDP and National Unemployment are sourced from the Federal Reserve Open Market Committee’s published forecast whereas the National Housing Price Index is sourced from the Federal National Mortgage Association’s published forecast. The Company's qualitative factors at June 30, 2023, included consideration of the level of uncertainty surrounding the impact of macro-economic factors such as interest rates, inflation, supply chain disruption, geo-political events as well as other factors. At June 30, 2023, the ACL estimate for loans used a reversion period of two years for each loan segment.

The net decrease in the ACL for the commercial & industrial loan segment was primarily driven by the release of reserves associate with the sale of shared national credit loans noted above as well as changes in current and forecasted economic conditions between reporting periods.

The activity in Salisbury’s allowance for credit losses for loans is presented below. Commercial and industrial loans include loans to businesses, municipalities and independent schools. Commercial real estate includes construction, commercial, residential 5+ multi-family, farm and vacant land loans. Residential real estate includes residential 1-4 family and residential construction loans. Consumer includes HELOC, consumer, indirect auto loans and overdrafts.


	Three months ended June 30, 2023
(in thousands)	Beginning balance		(Release) provision for Credit Losses			Charge-offs			Recoveries		Ending balance
Commercial & industrial	$	4,279	$	(427	)	$	—		$	—	$	3,852
Commercial real estate		5,894		(29	)		—			—		5,865
Residential real estate		5,226		15			—			—		5,241
Consumer		610		38			(50	)		2		600
Totals	$	16,009	$	(403	)	$	(50	)	$	2	$	15,558


	Six Months Ended June 30, 2023
(in thousands)	Beginning balance		Impact of Adopting ASC 326			Subtotal		Provision for Credit Losses			Charge-offs			Recoveries		Ending balance
Commercial & industrial	$	1,921	$	2,447		$	4,368	$	(516	)	$	—		$	—	$	3,852
Commercial real estate		8,425		(3,236	)		5,189		676			—			—		5,865
Residential real estate		4,108		831			4,939		301			—			1		5,241
Consumer		392		229			621		60			(85	)		4		600
Total allowance for credit losses	$	14,846	$	271		$	15,117	$	521		$	(85	)	$	5	$	15,558


	Three months ended June 30, 2022
(in thousands)	Beginning balance		Provision		Charge-offs			Recoveries		Ending balance
Commercial & industrial	$	1,593	$	367	$	—		$	—	$	1,960
Commercial real estate		6,900		35		(39	)		1		6,897
Residential real estate		3,253		598		(239	)		—		3,612
Consumer		302		66		(39	)		4		333
Unallocated		867		34		—			—		901
Totals	$	12,915	$	1,100	$	(317	)	$	5	$	13,703


	Six months ended June 30, 2022
(in thousands)	Beginning balance		Provision		Charge-offs			Recoveries		Ending balance
Commercial & industrial	$	1,811	$	194	$	(46	)	$	1	$	1,960
Commercial real estate		6,973		296		(373	)		1		6,897
Residential real estate		3,020		851		(259	)		—		3,612
Consumer		277		102		(56	)		10		333
Unallocated		881		20		—			—		901
Totals	$	12,962	$	1,463	$	(734	)	$	12	$	13,703

The Bank’s allowance for credit losses on unfunded commitments is recognized as a liability (in other liabilities on consolidated balance sheet), with adjustments to the reserve recognized in the provision for credit losses in the consolidated income statement. The Bank’s activity in the allowance for credit losses on unfunded commitments for the three and six month periods ended June 30, 2023 and 2022 was as follows:

	Six months ended June 30, 2023		Three months ended June 30, 2023
Balance at the beginning of period	$	178	$	1,183
Impact of adopting ASC 326		913		—
Subtotal		1,091		1,083
Provision (release) for credit losses		82		(10	)
Balance at the end of period June 30, 2023	$	1,173	$	1,173

	Six months ended June 30, 2022		Three months ended June 30, 2022
Balance at the beginning of period	$	146	$	183
Other expense – unfunded commitments		41		4
Balance at the end of period June 30, 2022	$	187	$	187

The composition of loans receivable and the allowance for credit losses is presented in the tables below. The loan categories for previously reported periods have been updated to conform to the current presentation.



(in thousands)	Collectively evaluated				Individually evaluated				Total portfolio
		Loans		Allowance		Loans		Allowance		Loans		Allowance
June 30, 2023
Commercial & industrial	$	215,372	$	3,852	$	—	$	—	$	215,372	$	3,852
Commercial real estate		525,279		5,865		85		—		525,364		5,865
Residential real estate		467,623		5,241		839		—		468,462		5,241
Consumer		42,808		600		83		—		42,891		600
Totals	$	1,251,082	$	15,558	$	1,007	$	—	$	1,252,089	$	15,558



(in thousands)	Collectively evaluated				Individually evaluated				Total portfolio
		Loans		Allowance		Loans		Allowance		Loans		Allowance
December 31, 2022
Commercial & industrial	$	239,808	$	1,780	$	189	$	—	$	239,997	$	1,780
Commercial real estate		488,630		7,781		3,029		22		491,659		7,803
Residential real estate		447,543		3,805		2,109		—		449,652		3,805
Consumer		46,203		363		5		—		46,208		363
Unallocated allowance		—		1,095		—		—		—		1,095
Totals	$	1,222,184	$	14,824	$	5,332	$	22	$	1,227,516	$	14,846

Certain data with respect to loans individually evaluated for impairment is presented as follows as of and for the six months ended June 30, 2023. The loan categories for previously reported periods have been updated to conform to the current presentation.


	Loans with no specific allowance
	Loan balance						Income
	Book		Note		Average		Recognized
June 30, 2023
Commercial & industrial	$	—	$	—	$	115	$	1
Commercial real estate		85		85		867		44
Residential real estate		839		859		1,083		1
Consumer		83		84		54		1
Totals	$	1,007	$	1,028	$	2,119	$	47

Certain data with respect to loans individually evaluated for impairment is as follows as of and for the six months ended June 30, 2022:



	Impaired loans with specific allowance										Impaired loans with no specific allowance
(in thousands)	Loan balance							Specific		Income	Loan balance							Income
		Book		Note		Average		allowance		recognized		Book		Note		Average		recognized
June 30, 2022
Commercial & industrial	$	73	$	73	$	115	$	3	$	2	$	63	$	60	$	62	$	1
Commercial real estate		584		584		633		23		15		2,488		3,059		2,999		24
Residential real estate		2,100		2,106		568		141		24		1,853		1,938		2,531		26
Consumer		—		—		—		—		—		—		—		15		—
Totals	$	2,757	$	2,763	$	1,316	$	167	$	41	$	4,404	$	5,057	$	5,607	$	51

Certain data with respect to loans individually evaluated for impairment is as follows as of and for the twelve months ended December 31, 2022:



	Impaired loans with specific allowance										Impaired loans with no specific allowance
(in thousands)	Loan balance							Specific		Income	Loan balance							Income
		Book		Note		Average		allowance		recognized		Book		Note		Average		recognized
December 31, 2022
Commercial & industrial	$	—	$	—	$	64	$	—	$	—	$	189	$	195	$	88	$	13
Commercial real estate		559		559		604		22		30		2,470		2,705		2,717		51
Residential real estate		—		—		306		—		—		2,109		2,169		2,192		55
Consumer		—		—		—		—		—		5		5		9		—
Totals	$	559	$	559	$	974	$	22	$	30	$	4,773	$	5,074	$	5,006	$	119

SALISBURY BANCORP, INC. 10-Q