| Allowance for Loan Credit Losses |
Note 4— Allowance for Loan Credit Losses The following tables present the activity in the allowance for loan credit losses for the six months ended June 30, 2025 and June 30, 2024. | | | | | | | | | | | | | | | | | | | | | June 30, 2025 | | | Real Estate | | | | | | | | | | | | | | | Construction & | | | | | | | | | | | | | | | | | | Land | | | | | | | | | | | | | Dollars in thousands | | Commercial | | Development | | Residential | | Commercial | | Consumer | | Total | Beginning balance, December 31, 2024 | | $ | 11,732 | | $ | 1,761 | | $ | 4,594 | | $ | 548 | | $ | 80 | | $ | 18,715 | Charge-offs | | | — | | | — | | | — | | | — | | | — | | | — | Recoveries | | | — | | | — | | | — | | | — | | | — | | | — | Provision for (recovery of) credit losses | | | 115 | | | 360 | | | 183 | | | (15) | | | (60) | | | 583 | Ending balance, June 30, 2025 | | $ | 11,847 | | $ | 2,121 | | $ | 4,777 | | $ | 533 | | $ | 20 | | $ | 19,298 |
| | | | | | | | | | | | | | | | | | | | | June 30, 2024 | | | Real Estate | | | | | | | | | | | | | | | Construction & | | | | | | | | | | | | | | | | | | Land | | | | | | | | | | | | | Dollars in thousands | | Commercial | | Development | | Residential | | Commercial | | Consumer | | Total | Beginning balance, December 31, 2023 | | $ | 12,841 | | $ | 1,787 | | $ | 4,323 | | $ | 495 | | $ | 97 | | $ | 19,543 | Charge-offs | | | — | | | — | | | — | | | — | | | — | | | — | Recoveries | | | — | | | — | | | — | | | 1 | | | — | | | 1 | Provision for (recovery of) credit losses | | | (44) | | | (626) | | | (360) | | | (1) | | | (80) | | | (1,111) | Ending balance, June 30, 2024 | | $ | 12,797 | | $ | 1,161 | | $ | 3,963 | | $ | 495 | | $ | 17 | | $ | 18,433 |
There were no collateral dependent or individually evaluated loans as of June 30, 2025. There was one collateral dependent loan totaling $10.0 million in outstanding principal that was individually evaluated as of December 31, 2024. Management concluded that the real estate secured collateral value of the loan, net of the estimated cost to sell, exceeded the carrying value of the loan and no reserve was necessary. The loan paid off, in full, on January 7, 2025. Delinquency Information The following tables present a summary of past due and nonaccrual loans by segment as of June 30, 2025 and December 31, 2024. | | | | | | | | | | | | | | | | | | | | | | | | | | | June 30, 2025 | | | 30-59 Days | | 60-89 Days | | 90 Days or | | | | | | | | | | | 90 Days or More | | | | | | Past | | Past | | More | | Total Past | | | | | Total | | Past Due and | | Nonaccrual | (Dollars in thousands) | | Due | | Due | | Past Due | | Due | | Current | | Loans | | Still Accruing | | Loans | Real Estate Loans | | | | | | | | | | | | | | | | | | | | | | | | | Commercial | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,192,067 | | $ | 1,192,067 | | $ | — | | $ | — | Construction and land development | | | — | | | — | | | — | | | — | | | 186,409 | | | 186,409 | | | — | | | — | Residential | | | — | | | — | | | — | | | — | | | 489,522 | | | 489,522 | | | — | | | — | Commercial | | | — | | | — | | | — | | | — | | | 43,282 | | | 43,282 | | | — | | | — | Consumer | | | — | | | — | | | — | | | — | | | 998 | | | 998 | | | — | | | — | Total Loans | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,912,278 | | $ | 1,912,278 | | $ | — | | $ | — |
| | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2024 | | | 30-59 Days | | 60-89 Days | | 90 Days or | | | | | | | | | | | 90 Days or More | | | | | | Past | | Past | | More | | Total Past | | | | | Total | | Past Due and | | Nonaccrual | (Dollars in thousands) | | Due | | Due | | Past Due | | Due | | Current | | Loans | | Still Accruing | | Loans | Real Estate Loans | | | | | | | | | | | | | | | | | | | | | | | | | Commercial | | $ | — | | $ | — | | $ | 9,978 | | $ | 9,978 | | $ | 1,171,112 | | $ | 1,181,090 | | $ | 9,978 | | $ | — | Construction and land development | | | — | | | — | | | — | | | — | | | 164,988 | | | 164,988 | | | — | | | — | Residential | | | — | | | — | | | — | | | — | | | 472,932 | | | 472,932 | | | — | | | — | Commercial | | | — | | | — | | | — | | | — | | | 47,736 | | | 47,736 | | | — | | | — | Consumer | | | — | | | — | | | — | | | — | | | 906 | | | 906 | | | — | | | — | Total Loans | | $ | — | | $ | — | | $ | 9,978 | | $ | 9,978 | | $ | 1,857,674 | | $ | 1,867,652 | | $ | 9,978 | | $ | — |
Credit Quality Indicators The Company assesses credit quality indicators based on internal risk rating of loans. Each loan is evaluated at least annually with more frequent evaluation of more severely criticized loans. The indicators that determine the rating for loans as of the date presented are based on the most recent credit review performed. Internal risk rating definitions are: Pass: These include satisfactory loans that have acceptable levels of risk. Special Mention: Loans classified as special mention have a potential weakness that requires close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. These credits do not expose the Company to sufficient risk to warrant further adverse classification. Substandard: A substandard asset is inadequately protected by the current worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful: Loans classified as doubtful have all the weaknesses inherent in a substandard asset with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss: Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be received in the future. The Company has a portfolio of smaller homogenous loans that are not individually risk rated and include residential permanent and construction mortgages, home equity lines of credit, and consumer installment loans. For these loans, management uses payment status as the primary credit quality indicator. The payment status of these loans is then translated into an internal risk rating. The following table summarizes the translation of past due status to risk rating for loans that are not individually risk rated. | | | | | Internal | Days Past Due | | Risk Rating | 0 - 29 days | | Pass | 30-59 days | | Special Mention | 60-89 days | | Substandard | 90-119 days | | Doubtful | 120+ days | | Loss |
The following table presents the Company’s recorded investment in loans by credit quality indicator by year of origination as of June 30, 2025. | | | | | | | | | | | | | | | | | | | | | | | | | | | Term Loans by Year of Origination | | | | | | | (Dollars in thousands) | | 2025 | | 2024 | | 2023 | | 2022 | | 2021 | | Prior | | Revolving | | Total | Real Estate Loans - Commercial | | | | | | | | | | | | | | | | | | | | | | | | | Pass | | $ | 64,607 | | $ | 145,068 | | $ | 66,343 | | $ | 263,937 | | $ | 163,887 | | $ | 454,027 | | $ | 3,818 | | $ | 1,161,687 | Special mention | | | — | | | — | | | — | | | 21,630 | | | — | | | 8,750 | | | — | | | 30,380 | Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Doubtful | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Total Real Estate Loans - Commercial | | $ | 64,607 | | $ | 145,068 | | $ | 66,343 | | $ | 285,567 | | $ | 163,887 | | $ | 462,777 | | $ | 3,818 | | $ | 1,192,067 | | | | | | | | | | | | | | | | | | | | | | | | | | Current period gross write-offs | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | Real Estate Loans - Construction and land development | | | | | | | | | | | | | | | | | | | | | | | | | Pass | | $ | 27,579 | | $ | 71,594 | | $ | 27,318 | | $ | 15,703 | | $ | 4,598 | | $ | 13,605 | | $ | 24,921 | | $ | 185,318 | Special mention | | | — | | | — | | | — | | | — | | | — | | | 1,091 | | | — | | | 1,091 | Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Doubtful | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Total Real Estate Loans - Construction and land development | | $ | 27,579 | | $ | 71,594 | | $ | 27,318 | | $ | 15,703 | | $ | 4,598 | | $ | 14,696 | | $ | 24,921 | | $ | 186,409 | | | | | | | | | | | | | | | | | | | | | | | | | | Current period gross write-offs | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | Real Estate Loans - Residential | | | | | | | | | | | | | | | | | | | | | | | | | Pass | | $ | 38,816 | | $ | 29,644 | | $ | 65,053 | | $ | 105,474 | | $ | 111,983 | | $ | 115,605 | | $ | 22,947 | | $ | 489,522 | Special mention | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Doubtful | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Total Real Estate Loans - Residential | | $ | 38,816 | | $ | 29,644 | | $ | 65,053 | | $ | 105,474 | | $ | 111,983 | | $ | 115,605 | | $ | 22,947 | | $ | 489,522 | | | | | | | | | | | | | | | | | | | | | | | | | | Current period gross write-offs | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | Commercial Loans | | | | | | | | | | | | | | | | | | | | | | | | | Pass | | $ | 5,284 | | $ | 5,775 | | $ | 3,936 | | $ | 5,223 | | $ | 857 | | $ | 7,286 | | $ | 14,921 | | $ | 43,282 | Special mention | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Doubtful | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Total Commercial Loans | | $ | 5,284 | | $ | 5,775 | | $ | 3,936 | | $ | 5,223 | | $ | 857 | | $ | 7,286 | | $ | 14,921 | | $ | 43,282 | | | | | | | | | | | | | | | | | | | | | | | | | | Current period gross write-offs | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | Consumer Loans | | | | | | | | | | | | | | | | | | | | | | | | | Pass | | $ | 403 | | $ | 537 | | $ | 42 | | $ | — | | $ | — | | $ | — | | $ | 16 | | $ | 998 | Special mention | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Doubtful | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Total Consumer Loans | | $ | 403 | | $ | 537 | | $ | 42 | | $ | — | | $ | — | | $ | — | | $ | 16 | | $ | 998 | | | | | | | | | | | | | | | | | | | | | | | | | | Current period gross write-offs | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — |
The following table presents the Company’s recorded investment in loans by credit quality indicator by year of origination as of December 31, 2024. | | | | | | | | | | | | | | | | | | | | | | | | | | | Term Loans by Year of Origination | | | | | | | (Dollars in thousands) | | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior | | Revolving | | Total | Real Estate Loans - Commercial | | | | | | | | | | | | | | | | | | | | | | | | | Pass | | $ | 133,591 | | $ | 66,453 | | $ | 287,181 | | $ | 176,424 | | $ | 116,364 | | $ | 362,135 | | $ | 1,474 | | $ | 1,143,622 | Special mention | | | — | | | — | | | 12,702 | | | — | | | — | | | 14,788 | | | — | | | 27,490 | Substandard | | | — | | | — | | | — | | | 9,978 | | | — | | | — | | | — | | | 9,978 | Doubtful | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Total Real Estate Loans - Commercial | | $ | 133,591 | | $ | 66,453 | | $ | 299,883 | | $ | 186,402 | | $ | 116,364 | | $ | 376,923 | | $ | 1,474 | | $ | 1,181,090 | | | | | | | | | | | | | | | | | | | | | | | | | | Current period gross write-offs | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | Real Estate Loans - Construction and land development | | | | | | | | | | | | | | | | | | | | | | | | | Pass | | $ | 64,826 | | $ | 40,190 | | $ | 17,635 | | $ | 4,395 | | $ | 2,254 | | $ | 11,974 | | $ | 22,613 | | $ | 163,887 | Special mention | | | — | | | — | | | — | | | — | | | — | | | 1,101 | | | — | | | 1,101 | Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Doubtful | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Total Real Estate Loans - Construction and land development | | $ | 64,826 | | $ | 40,190 | | $ | 17,635 | | $ | 4,395 | | $ | 2,254 | | $ | 13,075 | | $ | 22,613 | | $ | 164,988 | | | | | | | | | | | | | | | | | | | | | | | | | | Current period gross write-offs | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | Real Estate Loans - Residential | | | | | | | | | | | | | | | | | | | | | | | | | Pass | | $ | 31,815 | | $ | 71,489 | | $ | 110,724 | | $ | 114,991 | | $ | 81,482 | | $ | 39,868 | | $ | 22,563 | | $ | 472,932 | Special mention | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Doubtful | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Total Real Estate Loans - Residential | | $ | 31,815 | | $ | 71,489 | | $ | 110,724 | | $ | 114,991 | | $ | 81,482 | | $ | 39,868 | | $ | 22,563 | | $ | 472,932 | | | | | | | | | | | | | | | | | | | | | | | | | | Current period gross write-offs | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | Commercial Loans | | | | | | | | | | | | | | | | | | | | | | | | | Pass | | $ | 13,622 | | $ | 4,628 | | $ | 5,770 | | $ | 1,351 | | $ | 1,323 | | $ | 7,032 | | $ | 14,010 | | $ | 47,736 | Special mention | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Doubtful | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Total Commercial Loans | | $ | 13,622 | | $ | 4,628 | | $ | 5,770 | | $ | 1,351 | | $ | 1,323 | | $ | 7,032 | | $ | 14,010 | | $ | 47,736 | | | | | | | | | | | | | | | | | | | | | | | | | | Current period gross write-offs | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | Consumer Loans | | | | | | | | | | | | | | | | | | | | | | | | | Pass | | $ | 812 | | $ | 72 | | $ | — | | $ | — | | $ | — | | $ | 3 | | $ | 19 | | $ | 906 | Special mention | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Doubtful | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Total Consumer Loans | | $ | 812 | | $ | 72 | | $ | — | | $ | — | | $ | — | | $ | 3 | | $ | 19 | | $ | 906 | | | | | | | | | | | | | | | | | | | | | | | | | | Current period gross write-offs | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — |
Revolving loans that are converted to term loans are treated as new originations in both tables above and are presented by year of origination. Modifications with Borrowers Experiencing Financial Difficulty The allowance for loan credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination. The starting point for the estimate of the allowance for loan credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company may provide concessions to borrowers experiencing financial difficulty to minimize the economic loss and improve long-term loan performance and collectability. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. The Company did not make any loan modifications to borrowers experiencing financial difficulty during the six months ended June 30, 2025 or June 30, 2024. There were also no instances of defaults on loans that occurred during the six months ended June 30, 2025 and June 30, 2024 for loans that had been modified during the previous 12 months. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance because of the measurement methodologies used to estimate the allowance, a change to the allowance is generally not recorded upon modification. Unfunded Commitments The Company maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, as well as both standby and commercial letters of credit when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable by the Company. The allowance for off-balance sheet credit exposures is adjusted as a provision for (or recovery of) credit losses in the Consolidated Statements of Income. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for loan credit losses. The allowance for credit losses for unfunded loan commitments of $1.2 million and $1.1 million at June 30, 2025 and December 31, 2024, respectively, is separately classified within Other Liabilities on the Consolidated Balance Sheets. The provision for credit losses recorded during the six months ended June 30, 2025 was primarily due to an increase in unfunded commitments. The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the six months ended June 30, 2025 and June 30, 2024. | | | | | | Allowance for Credit Losses | (Dollars in thousands) | | Unfunded Commitments | Beginning balance, December 31, 2024 | | $ | 1,083 | Provision for credit losses | | | 124 | Ending balance, June 30, 2025 | | $ | 1,207 |
| | | | | | | | | | Allowance for Credit Losses | (Dollars in thousands) | | Unfunded Commitments | Beginning balance, December 31, 2023 | | $ | 620 | Provision for credit losses | | | 43 | Ending balance, June 30, 2024 | | $ | 663 |
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