| Loans And Allowance For Credit Losses |
Note 8 – Loans and allowance for credit losses The Company’s primary portfolio segments align with the methodology applied in estimating the allowance for credit losses and are reflected in the disclosures as of and for the periods ended June 30, 2025 and 2024, as set forth below. Management has determined that the classifications presented below are appropriate for identifying and managing risk within the loan portfolio. | | | Loan Segments: | | Loan Classes: | Commercial | | Commercial and Industrial Loans | Commercial Real Estate | | Commercial Mortgages – Owner Occupied | | | Commercial Mortgages – Non-Owner Occupied | | | Commercial Construction/Land | Consumer | | Consumer Open-End | | | Consumer Closed-End | Residential | | Residential Mortgages | | | Residential Consumer Construction/Land |
Commercial and Commercial Real Estate Commercial loans are primarily underwritten based on the identified cash flows of the borrower, and secondarily on the underlying collateral provided. Borrower cash flows may not meet expectations, and the value of collateral securing these loans can fluctuate. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may include personal guarantees. Short-term loans may be made on an unsecured basis. For loans secured by accounts receivable, the availability of funds for repayment may substantially depend on the borrower’s ability to collect amounts due from its customers. Commercial real estate loans are viewed primarily as cash flow loans, with the collateral serving as a secondary source of repayment. Commercial real estate lending typically involves higher loan principal amounts, with repayment generally dependent on the successful operation of the property or the business conducted on the property. These loans may be more adversely affected by conditions in the real estate markets or the general economy. The properties securing the Company’s commercial real estate portfolio are diverse but are geographically concentrated almost entirely within the Company’s market area. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. In general, the Company avoids financing single-purpose projects unless other underwriting factors are present to help mitigate risk. Management also tracks the level of owner-occupied versus non-owner-occupied commercial real estate loans. Consumer and Residential Consumer and residential segments consist of residential mortgage loans and personal loans. The consumer loan segment includes home equity lines of credit (HELOCs) and other second mortgages. Home equity loans are typically secured by a subordinate interest in 1–4 family residences, while consumer personal loans may be secured by personal assets such as automobiles or recreational vehicles, or may be unsecured, such as small installment loans and certain lines of credit. For residential mortgage loans secured by 1–4 family, generally owner-occupied residences, the Company typically establishes a maximum loan-to-value ratio. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be affected by economic conditions in the market area, such as unemployment levels. Repayment can also be impacted by changes in property values. Risk is mitigated by the smaller individual loan amounts and the diversification provided by a large number of borrowers.
Note 8 – Loans and allowance for credit losses (continued) A summary of loans, net of deferred costs of $598,000 and $817,000 as of June 30, 2025 and December 31, 2024, respectively, is as follows (dollars in thousands): | | | | | As of | | As of | | June 30, 2025 | | December 31, 2024 | Commercial | $ 70,510 | | $ 66,418 | Commercial Real Estate: | | | | Commercial Mortgages-Owner Occupied | 153,526 | | 140,443 | Commercial Mortgages-Non-Owner Occupied | 202,147 | | 195,089 | Commercial Construction/Land | 10,678 | | 23,883 | Consumer: | | | | Consumer Open-End | 54,337 | | 50,041 | Consumer Closed-End | 26,280 | | 28,269 | Residential: | | | | Residential Mortgages | 108,875 | | 113,303 | Residential Consumer Construction/Land | 29,044 | | 26,150 | | | | | Total loans | $ 655,397 | | $ 643,596 | | | | | Less allowance for credit losses | 6,308 | | 7,044 | | | | | Net loans | $ 649,089 | | $ 636,552 |
The following table presents the amortized cost basis of collateral dependent loans by loan segment (dollars in thousands): | | | | | Collateral Dependent Loans | | June 30, 2025 | (dollars in thousands) | | Business/Other Assets | | Real Estate | Commercial | | $ 3,961 | | $ - | Commercial Real Estate | | - | | 7,137 | Consumer | | - | | 575 | Residential | | - | | 1,603 | Total | | $ 3,961 | | $ 9,315 | | | | | | | | | | | Collateral Dependent Loans | | December 31, 2024 | (dollars in thousands) | | Business/Other Assets | | Real Estate | Commercial | | $ 3,315 | | $ - | Commercial Real Estate | | - | | 7,350 | Consumer | | - | | 592 | Residential | | - | | 1,369 | Total | | $ 3,315 | | $ 9,311 |
Note 8 – Loans and allowance for credit losses (continued) The following tables present the activity in the allowance for credit losses for the three and six-month periods ended and the distribution of the allowance by segment as of June 30, 2025, and 2024. | | | | | | | | | | | Allowance for Credit Losses and Recorded Investment in Loans | | (dollars in thousands) | | As of and For the Three Months Ended June 30, 2025 | | | | | | | | | | | | | | Commercial | | | | | | | 2025 | Commercial | | Real Estate | | Consumer | | Residential | | Total | | | | | | | | | | | Allowance for Credit Losses: | | | | | | | | | | | | | | | | | | | | Beginning Balance, March 31, 2025 | $ 532 | | $ 3,915 | | $ 837 | | $ 1,737 | | $ 7,021 | Charge-Offs | - | | - | | (160) | | - | | (160) | Recoveries | 1 | | - | | 1 | | - | | 2 | Provision for (recovery of) credit losses | 214 | | (868) | | 121 | | (22) | | (555) | Ending Balance, June 30, 2025 | $ 747 | - | $ 3,047 | | $ 799 | | $ 1,715 | | $ 6,308 | | | | | | | | | | | | Allowance for Credit Losses and Recorded Investment in Loans | | (dollars in thousands) | | As of and For the Six Months Ended June 30, 2025 | | | | | | | | | | | | | | Commercial | | | | | | | 2025 | Commercial | | Real Estate | | Consumer | | Residential | | Total | | | | | | | | | | | Allowance for Credit Losses: | | | | | | | | | | | | | | | | | | | | Beginning Balance, December 31, 2024 | 686 | | 3,719 | | 842 | | 1,797 | | 7,044 | Charge-Offs | - | | - | | (212) | | (9) | | (221) | Recoveries | 5 | | 1 | | 7 | | - | | 13 | Provision for (recovery of) credit losses | 56 | | (673) | | 162 | | (73) | | (528) | Ending Balance, June 30, 2025 | 747 | | 3,047 | | 799 | | 1,715 | | $ 6,308 |
| | | | | | | | | | | Allowance for Credit Losses and Recorded Investment in Loans | | (dollars in thousands) | | As of and For the Three Months Ended June 30, 2024 | | | | | | | | | | | | | | Commercial | | | | | | | 2024 | Commercial | | Real Estate | | Consumer | | Residential | | Total | | | | | | | | | | | Allowance for Credit Losses: | | | | | | | | | | | | | | | | | | | | Beginning Balance, March 31, 2024 | $ 644 | | $ 3,642 | | $ 884 | | $ 1,750 | | $ 6,920 | Charge-Offs | - | - | - | | (19) | | - | | (19) | Recoveries | 133 | - | 3 | | 13 | | - | | 149 | Provision for (recovery of) credit losses | (171) | - | 103 | | 19 | | (50) | | (99) | Ending Balance, June 30, 2024 | $ 606 | | $ 3,748 | | $ 897 | | $ 1,700 | | $ 6,951 | | | | | | | | | | |
| | | | | | | | | | | Allowance for Credit Losses and Recorded Investment in Loans | | (dollars in thousands) | | As of and For the Six Months Ended June 30, 2024 | | | | | | | | | | | | | | Commercial | | | | | | | 2024 | Commercial | | Real Estate | | Consumer | | Residential | | Total | | | | | | | | | | | Allowance for Credit Losses: | | | | | | | | | | | | | | | | | | | | Beginning Balance, December 31, 2023 | $ 514 | | $ 3,985 | | $ 1,093 | | $ 1,820 | | $ 7,412 | Charge-Offs | (8) | | - | | (76) | | - | | (84) | Recoveries | 198 | | 4 | | 20 | | 1 | | 223 | Provision for (recovery of) | (98) | | (241) | | (140) | | (121) | | (600) | Ending Balance, June 30, 2024 | $ 606 | | $ 3,748 | | $ 897 | | $ 1,700 | | $ 6,951 |
Note 8 – Loans and allowance for credit losses (continued) In the second quarter of 2025, the Company, in collaboration with its third‑party model vendor and as part of ongoing model governance, implemented updates to the quantitative CECL loss models for collectively evaluated loan segments that use discounted cash flow techniques (all segments other than agricultural loans, which uses the weighted-average remaining life method). The updates (i) revised certain maximum loss‑rate parameters and (ii) incorporated additional post‑COVID historical loss data, and (iii) as is customary for each quarter, we refreshed the economic forecasts. Using the prior-period model specification as a sensitivity, management estimates the quarter would have resulted in a provision of approximately $232,000; under the updated specifications, the Company recorded a net recovery of $555,000 on loans. Credit Quality Indicators The Bank’s internal risk rating system is in place to grade commercial and commercial real estate loans. Category ratings are reviewed periodically by lenders and the credit review area of the Bank based on the borrower’s individual situation. Additionally, internal and external monitoring and review of credits are conducted on an annual basis. Below is a summary and definition of the Bank’s risk rating categories: | | | RATING 1 | | Excellent | RATING 2 | | Above Average | RATING 3 | | Satisfactory | RATING 4 | | Acceptable / Low Satisfactory | RATING 5 | | Monitor | RATING 6 | | Special Mention | RATING 7 | | Substandard | RATING 8 | | Doubtful | RATING 9 | | Loss |
We segregate commercial and commercial real estate loans into the above categories based on the following criteria and we review the characteristics of each rating at least annually, generally during the first quarter. The characteristics of these ratings are as follows: “Pass.” These are loans having risk ratings of 1 through 4. Pass loans are to persons or business entities with an acceptable financial condition, appropriate collateral margins, appropriate cash flow to service the existing loan, and an appropriate leverage ratio. The borrower has paid all obligations as agreed and it is expected that this type of payment history will continue. When necessary, acceptable personal guarantors support the loan. “Monitor.” These are loans having a risk rating of 5. Monitor loans have currently acceptable risk but may have the potential for a specific defined weakness in the borrower’s operations and the borrower’s ability to generate positive cash flow on a sustained basis. The borrower’s recent payment history may currently or in the future be characterized by late payments. The Bank’s risk exposure is mitigated by collateral supporting the loan. The collateral is considered to be well-margined, well maintained, accessible and readily marketable. “Special Mention.” These are loans having a risk rating of 6. Special Mention loans have weaknesses that deserve management’s close attention. If left uncorrected, these potential 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 loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. These loans do warrant more than routine monitoring due to a weakness caused by adverse events.
Note 8 – Loans and allowance for credit losses (continued) “Substandard.” These are loans having a risk rating of 7. Substandard loans are considered to have specific and well-defined weaknesses that jeopardize the viability of the Bank’s credit extension. The payment history for the loan has been inconsistent and the expected or projected primary repayment source may be inadequate to service the loan. The estimated net liquidation value of the collateral pledged and/or ability of the personal guarantor(s) to pay the loan may not adequately protect the Bank. There is a distinct possibility that the Bank will sustain some loss if the deficiencies associated with the loan are not corrected in the near term. A substandard loan would not automatically meet our definition of impaired unless the loan is significantly past due and the borrower’s performance and financial condition provides evidence that it is probable that the Bank will be unable to collect all amounts due. “Doubtful.” These are loans having a risk rating of 8. Doubtful rated loans have all the weaknesses inherent in a -
Note 8 – Loans and allowance for credit losses (continued) The table below details the amortized cost of the classes of loans by credit quality indicator and year of origination as of June 30, 2025 (dollars in thousands). | | | | | | | | | | | Term Loans Amortized Cost Basis by Origination Year | | | | | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving Loans Amortized Cost Basis | Revolving Loans Converted to Term | Total | Commercial: | | | | | | | | | | Risk Rating | | | | | | | | | | Pass | $ 8,626 | $ 6,625 | $ 3,162 | $ 2,721 | $ 6,169 | $ 15,205 | $ 23,972 | $ 20 | $ 66,500 | Special Mention | - | - | - | - | - | - | - | - | - | Substandard | - | - | 900 | 11 | 38 | 543 | 2,371 | 147 | 4,010 | Total | $ 8,626 | $ 6,625 | $ 4,062 | $ 2,732 | $ 6,207 | $ 15,748 | $ 26,343 | $ 167 | $ 70,510 | | | | | | | | | | | Commercial Real Estate: | | | | | | | | | | Commercial Mort. - Owner Occupied | | | | | | | | | | Risk Rating | | | | | | | | | | Pass | $ 8,504 | $ 25,908 | $ 7,541 | $ 22,021 | $ 44,716 | $ 38,612 | $ 1,382 | $ 150 | $ 148,834 | Special Mention | - | - | - | - | - | - | - | - | - | Substandard | - | - | 91 | - | 2,804 | 1,797 | - | - | 4,692 | Total | $ 8,504 | $ 25,908 | $ 7,633 | $ 22,021 | $ 47,520 | $ 40,409 | $ 1,382 | $ 150 | $ 153,526 | | | | | | | | | | | Commercial Mort. - Non-Owner Occupied | | | | | | | | | | Risk Rating | | | | | | | | | | Pass | $ 10,349 | $ 40,351 | $ 11,895 | $ 48,124 | $ 26,563 | $ 55,895 | $ 6,776 | $ - | $ 199,954 | Special Mention | - | - | - | - | - | - | - | - | - | Substandard | - | - | - | 937 | - | 1,255 | - | - | 2,192 | Total | $ 10,349 | $ 40,351 | $ 11,895 | $ 49,061 | $ 26,563 | $ 57,151 | $ 6,776 | $ - | $ 202,147 | | | | | | | | | | | Commercial Construction/Land | | | | | | | | | | Risk Rating | | | | | | | | | | Pass | $ 2,228 | $ 1,794 | $ 555 | $ 375 | $ 2,657 | $ 2,435 | $ 300 | $ - | $ 10,343 | Special Mention | - | - | - | - | - | - | - | - | - | Substandard | - | - | - | - | 335 | - | - | - | 335 | Total | $ 2,228 | $ 1,794 | $ 555 | $ 375 | $ 2,992 | $ 2,435 | $ 300 | $ - | $ 10,678 | | | | | | | | | | | Consumer: | | | | | | | | | | Consumer - Open-End | | | | | | | | | | Risk Rating | | | | | | | | | | Pass | $ - | $ - | $ - | $ - | $ - | $ - | $ 52,409 | $ 1,493 | $ 53,902 | Special Mention | - | - | - | - | - | - | - | - | - | Substandard | - | - | - | - | - | - | - | 435 | 435 | Total | $ - | $ - | $ - | $ - | $ - | $ - | $ 52,409 | $ 1,928 | $ 54,337 | | | | | | | | | | | Consumer - Closed-End | | | | | | | | | |
Risk Rating | | | | | | | | | | Pass | $ 941 | $ 5,945 | $ 4,037 | $ 8,810 | $ 306 | $ 5,965 | $ - | $ - | $ 26,003 | Special Mention | - | - | - | - | - | - | - | - | - | Substandard | - | 35 | - | 112 | - | 129 | - | - | 276 | Total | $ 941 | $ 5,980 | $ 4,037 | $ 8,922 | $ 306 | $ 6,094 | $ - | $ - | $ 26,280 | | | | | | | | | | | Residential: | | | | | | | | | | Residential Mortgages | | | | | | | | | | Risk Rating | | | | | | | | | | Pass | $ 5,700 | $ 17,851 | $ 20,311 | $ 20,361 | $ 7,800 | $ 34,758 | $ - | $ - | $ 106,781 | Special Mention | - | - | - | - | - | 70 | - | - | 70 | Substandard | - | - | - | 509 | - | 1,516 | - | - | 2,025 | Total | $ 5,700 | $ 17,851 | $ 20,311 | $ 20,870 | $ 7,800 | $ 36,344 | $ - | $ - | $ 108,875 | | | | | | | | | | | Residential Consumer Construction/Land | | | | | | | | | | Risk Rating | | | | | | | | | | Pass | $ 9,374 | $ 9,548 | $ 4,158 | $ 2,198 | $ 1,111 | $ 2,650 | $ 5 | $ - | $ 29,044 | Special Mention | - | - | - | - | - | - | - | - | - | Substandard | - | - | - | - | - | - | - | - | - | Total | $ 9,374 | $ 9,548 | $ 4,158 | $ 2,198 | $ 1,111 | $ 2,650 | $ 5 | $ - | $ 29,044 | | | | | | | | | | | Totals: | | | | | | | | | | Risk Rating | | | | | | | | | | Pass | $ 45,722 | $ 108,021 | $ 51,660 | $ 104,609 | $ 89,321 | $ 155,520 | $ 84,845 | $ 1,663 | $ 641,361 | Special Mention | - | - | - | - | - | 70 | - | - | 70 | Substandard | - | 35 | 992 | 1,569 | 3,177 | 5,240 | 2,371 | 582 | 13,966 | Total | $ 45,722 | $ 108,056 | $ 52,652 | $ 106,178 | $ 92,499 | $ 160,829 | $ 87,216 | $ 2,245 | $ 655,397 |
Note 8 – Loans and allowance for credit losses (continued) The table below details the amortized cost of the classes of loans by credit quality indicator and year of origination as of December 31, 2024 (dollars in thousands). | | | | | | | | | | | | | | | | | | | Term Loans Amortized Cost Basis by Origination Year | | | | | | | | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior | | Revolving Loans Amortized Cost Basis | | Revolving Loans Converted to Term | | Total | Commercial | | | | | | | | | | | | | | | | | | Risk Rating | | | | | | | | | | | | | | | | | | Pass | $ 10,412 | | $ 3,680 | | $ 2,901 | | $ 7,188 | | $ 734 | | $ 16,070 | | $ 21,602 | | $ 341 | | $ 62,928 | Special Mention | - | | - | | 41 | | 79 | | - | | - | | - | | - | | 120 | Substandard | - | | 922 | | 13 | | 43 | | - | | 569 | | 1,654 | | 169 | | 3,370 | Total | $ 10,412 | | $ 4,602 | | $ 2,955 | | $ 7,310 | | $ 734 | | $ 16,639 | | $ 23,256 | | $ 510 | | $ 66,418 | | | | | | | | | | | | | | | | | | | Commercial Real Estate: | | | | | | | | | | | | | | | | | | Commercial Mort. - Owner Occupied | | | | | | | | | | | | | | | | | | Risk Rating | | | | | | | | | | | | | | | | | | Pass | $ 21,261 | | $ 8,959 | | $ 21,770 | | $ 39,881 | | $ 5,663 | | $ 35,869 | | $ 1,564 | | $ 153 | | $ 135,120 | Special Mention | - | | - | | - | | - | | - | | 451 | | - | | - | | 451 | Substandard | - | | 93 | | - | | 2,898 | | 44 | | 1,837 | | - | | - | | 4,872 | Total | $ 21,261 | | $ 9,052 | | $ 21,770 | | $ 42,779 | | $ 5,707 | | $ 38,157 | | $ 1,564 | | $ 153 | | $ 140,443 | | | | | | | | | | | | | | | | | | | Commercial Mort. - Non-Owner Occupied | | | | | | | | | | | | | | | | | | Risk Rating | | | | | | | | | | | | | | | | | | Pass | $ 39,659 | | $ 12,203 | | $ 49,273 | | $ 27,410 | | $ 9,698 | | $ 49,206 | | $ 6,467 | | $ - | | $ 193,916 | Special Mention | - | | - | | - | | - | | - | | - | | - | | - | | - | Substandard | - | | - | | - | | - | | 1,173 | | - | | - | | - | | 1,173 | Total | $ 39,659 | | $ 12,203 | | $ 49,273 | | $ 27,410 | | $ 10,871 | | $ 49,206 | | $ 6,467 | | $ - | | $ 195,089 | | | | | | | | | | | | | | | | | | | Commercial Construction/Land | | | | | | | | | | | | | | | | | | Risk Rating | | | | | | | | | | | | | | | | | | Pass | $ 7,180 | | $ 1,496 | | $ 768 | | $ 9,497 | | $ 1,976 | | $ 1,020 | | $ 641 | | $ - | | $ 22,578 | Special Mention | - | | - | | - | | - | | - | | - | | - | | - | | - | Substandard | - | | - | | 951 | | 354 | | - | | - | | - | | - | | 1,305 | Total | $ 7,180 | | $ 1,496 | | $ 1,719 | | $ 9,851 | | $ 1,976 | | $ 1,020 | | $ 641 | | $ - | | $ 23,883 | | | | | | | | | | | | | | | | | | | Consumer: | | | | | | | | | | | | | | | | | | Consumer - Open-End | | | | | | | | | | | | | | | | | | Risk Rating | | | | | | | | | | | | | | | | | | Pass | $ - | | $ - | | $ - | | $ - | | $ - | | $ - | | $ 48,531 | | $ 1,110 | | $ 49,641 | Special Mention | - | | - | | - | | - | | - | | - | | - | | - | | - | Substandard | - | | - | | - | | - | | - | | - | | - | | 400 | | 400 | Total | $ - | | $ - | | $ - | | $ - | | $ - | | $ - | | $ 48,531 | | $ 1,510 | | $ 50,041 | | | | | | | | | | | | | | | | | | | Consumer - Closed-End | | | | | | | | | | | | | | | | | | Risk Rating | | | | | | | | | | | | | | | | | | Pass | $ 6,660 | | $ 4,548 | | $ 9,634 | | $ 382 | | $ 398 | | $ 6,366 | | $ - | | $ - | | $ 27,988 | Special Mention | - | | - | | - | | - | | - | | - | | - | | - | | - | Substandard | 37 | | - | | 119 | | - | | - | | 125 | | - | | - | | 281 | Total | $ 6,697 | | $ 4,548 | | $ 9,753 | | $ 382 | | $ 398 | | $ 6,491 | | $ - | | $ - | | $ 28,269 |
| | | | | | | | | | | | | | | | | | Residential: | | | | | | | | | | | | | | | | | | Residential Mortgages | | | | | | | | | | | | | | | | | | Risk Rating | | | | | | | | | | | | | | | | | | Pass | $ 18,418 | | $ 23,905 | | $ 22,954 | | $ 9,082 | | $ 8,376 | | $ 28,572 | | $ - | | $ - | | $ 111,307 | Special Mention | - | | - | | - | | - | | - | | 73 | | - | | - | | 73 | Substandard | - | | - | | 265 | | - | | 103 | | 1,555 | | - | | - | | 1,923 | Total | $ 18,418 | | $ 23,905 | | $ 23,219 | | $ 9,082 | | $ 8,479 | | $ 30,200 | | $ - | | $ - | | $ 113,303 | | | | | | | | | | | | | | | | | | | Residential Consumer Construction/Land | | | | | | | | | | | | | | | | | | Risk Rating | | | | | | | | | | | | | | | | | | Pass | $ 12,522 | | $ 6,375 | | $ 2,436 | | $ 1,161 | | $ 848 | | $ 2,808 | | $ - | | $ - | | $ 26,150 | Special Mention | - | | - | | - | | - | | - | | - | | - | | - | | - | Substandard | - | | - | | - | | - | | - | | - | | - | | - | | - | Total | $ 12,522 | | $ 6,375 | | $ 2,436 | | $ 1,161 | | $ 848 | | $ 2,808 | | $ - | | $ - | | $ 26,150 | | | | | | | | | | | | | | | | | | | Totals: | | | | | | | | | | | | | | | | | | Risk Rating | | | | | | | | | | | | | | | | | | Pass | $ 116,112 | | $ 61,166 | | $ 109,736 | | $ 94,601 | | $ 27,693 | | $ 139,911 | | $ 78,805 | | $ 1,604 | | $ 629,628 | Special Mention | - | | - | | 41 | | 79 | | - | | 524 | | - | | - | | 644 | Substandard | 37 | | 1,015 | | 1,348 | | 3,295 | | 1,320 | | 4,086 | | 1,654 | | 569 | | 13,324 | Total | $ 116,149 | | $ 62,181 | | $ 111,125 | | $ 97,975 | | $ 29,013 | | $ 144,521 | | $ 80,459 | | $ 2,173 | | $ 643,596 |
Note 8 – Loans and allowance for credit losses (continued) The following table details the gross charge-offs of loans by year of origination for the six months ended June 30, 2025 and the year ended December 31, 2024 (dollars in thousands). | | | | | | | | | | | Current Period Gross Charge-Offs by Origination Year (in thousands) | | | | | | | | | | | | | | | | | | | | | | | As of June 30, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving Loans Amortized Cost Basis | Revolving Loans Converted to Term | Total | | Commercial | $ - | $ - | $ - | $ - | $ - | $ - | $ - | $ - | $ - | | Commercial Real Estate: | - | - | - | | - | - | - | - | - | | Commercial Mortgages-Owner Occupied | - | - | - | | - | - | - | - | - | | Commercial Mortgages-Non-Owner Occupied | - | - | - | | - | - | - | - | - | | Commercial Construction/Land | - | - | - | | - | - | - | - | - | | Consumer: | | | | | | | | | | | Consumer Open-End | - | - | - | 48 | - | 5 | - | - | 53 | | Consumer Closed-End | - | - | 44 | 96 | 19 | - | - | - | 159 | | Residential: | - | - | - | - | - | - | - | - | - | | Residential Mortgages | - | - | - | - | - | 9 | - | - | 9 | | Residential Consumer Construction/Land | - | - | - | | - | - | - | - | - | | | | | | | | | | | | | Total | $ - | $ - | $ 44 | $ 144 | $ 19 | $ 14 | $ - | $ - | $ 221 | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2024 | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Revolving Loans Amortized Cost Basis | Revolving Loans Converted to Term | Total | | Commercial | $ - | $ 8 | $ - | $ - | $ - | $ - | $ - | $ - | $ 8 | | Commercial Real Estate: | | | | | | | | | | | Commercial Mortgages-Owner Occupied | - | - | - | - | - | - | - | - | - | | Commercial Mortgages-Non-Owner Occupied | - | - | - | - | - | - | - | - | - | | Commercial Construction/Land | - | - | - | - | - | - | - | - | - | | Consumer: | | | | | | | | | | | Consumer Open-End | - | - | - | - | - | 2 | - | - | 2 | | Consumer Closed-End | - | - | 74 | - | - | - | - | - | 74 | | Residential: | | | | | | | | | | | Residential Mortgages | - | - | - | - | - | - | - | - | - | | Residential Consumer Construction/Land | - | - | - | - | - | - | - | - | - | | | | | | | | | | | | | Total | $ - | $ 8 | $ 74 | $ - | $ - | $ 2 | $ - | $ - | $ 84 | |
Note 8 – Loans and allowance for credit losses (continued) The following tables present nonaccrual information by class of loans as of June 30, 2025 and December 31, 2024: Loans on Nonaccrual Status (dollars in thousands) | | | | | | | | | June 30, 2025 | | Nonaccrual Loans | | With No Allowance | With an Allowance | Total | Commercial | $ 390 | $ 72 | $ 462 | Commercial Real Estate: | | | | Commercial Mortgages-Owner Occupied | 33 | - | 33 | Commercial Mortgages-Non-Owner Occupied | 82 | - | 82 | Commercial Construction/Land | 335 | - | 335 | Consumer | | | | Consumer Open-End | - | - | - | Consumer Closed-End | 192 | - | 192 | Residential: | | | | Residential Mortgages | 741 | - | 741 | Residential Consumer Construction/Land | - | - | - | Total | $ 1,774 | $ 72 | $ 1,846 | | | | | | | | | | | | December 31, 2024 | | Nonaccrual Loans | | With No Allowance | With an Allowance | Total | Commercial | $ 279 | $ 193 | $ 472 | Commercial Real Estate: | | | | Commercial Mortgages-Owner Occupied | 43 | - | 43 | Commercial Mortgages-Non-Owner Occupied | - | - | - | Commercial Construction/Land | 354 | - | 354 | Consumer | | | | Consumer Open-End | - | - | - | Consumer Closed-End | 192 | - | 192 | Residential: | | | | Residential Mortgages | 579 | - | 579 | Residential Consumer Construction/Land | - | - | - | Total | $ 1,447 | $ 193 | $ 1,640 |
Interest income on nonaccrual loans is recognized only when received in cash. The Company did not record any interest income on nonaccrual loans during the three and six months ended June 30, 2025 or 2024. The Company also reversed all previously accrued but unpaid interest on nonaccrual loans during the three and six months ended June 30, 2025 and 2024.
Note 8 – Loans and allowance for credit losses (continued) The following tables present an aging analysis of the loan portfolio by class and past due as of June 30, 2025 and December 31, 2024 (dollars in thousands): | | | | | | | | | | | | | | | | | | | | | Age Analysis of Past Due Loans as of June 30, 2025 | | | | | | | | | | | | | | | | | | | | | Recorded | | | | | | | | | Greater | | | | | | | | | | | | Investment | 2025 | | 30-59 Days | | | 60-89 Days | | | than | | | Total Past | | | | | | Total | | | > 90 Days & | | | Past Due | | | Past Due | | | 90 Days | | | Due | | | Current | | | Loans | | | Accruing | Commercial | $ | 129 | | $ | - | | $ | 398 | | $ | 527 | | $ | 69,983 | | $ | 70,510 | | $ | - | Commercial Real Estate: | | | | | | | | | | | | | | | | | | | | | Commercial Mortgages-Owner Occupied | | - | | | - | | | - | | | - | | | 153,526 | | | 153,526 | | | - | Commercial Mortgages-Non-Owner Occupied | | - | | | - | | | 82 | | | 82 | | | 202,064 | | | 202,147 | | | - | Commercial Construction/Land | | - | | | - | | | - | | | - | | | 10,678 | | | 10,678 | | | - | Consumer: | | | | | | | | | | | | | | | | | | | | | Consumer Open-End | | 265 | | | 139 | | | - | | | 404 | | | 53,933 | | | 54,337 | | | - | Consumer Closed-End | | 147 | | | - | | | 80 | | | 227 | | | 26,053 | | | 26,280 | | | - | Residential: | | | | | | | | | | | | | | | | | | | | | Residential Mortgages | | 853 | | | 73 | | | 152 | | | 1,077 | | | 107,798 | | | 108,875 | | | - | Residential Consumer Construction/Land | | - | | | 143 | | | - | | | 143 | | | 28,901 | | | 29,044 | | | - | Total | $ | 1,394 | | $ | 354 | | $ | 713 | | $ | 2,461 | | $ | 652,936 | | $ | 655,397 | | $ | - |
| | | | | | | | | | | | | | | | | | | | | Age Analysis of Past Due Loans as of December 31, 2024 | | | | | | | | | | | | | | | | | | | | | | 2024 | | | | | | | | Greater | | | | | | | | | | | | Investment | | | 30-59 Days | | | 60-89 Days | | | than | | | Total Past | | | | | | Total | | | > 90 Days & | | | Past Due | | | Past Due | | | 90 Days | | | Due | | | Current | | | Loans | | | Accruing | Commercial | $ | - | | $ | 398 | | $ | 74 | | $ | 472 | | $ | 65,946 | | $ | 66,418 | | $ | - | Commercial Real Estate: | | | | | | | | | | | | | | | | | | | | | Commercial Mortgages-Owner Occupied | | - | | | - | | | 43 | | | 43 | | | 140,400 | | | 140,443 | | | - | Commercial Mortgages-Non-Owner Occupied | | - | | | - | | | - | | | - | | | 195,089 | | | 195,089 | | | - | Commercial Construction/Land | | - | | | - | | | - | | | - | | | 23,883 | | | 23,883 | | | - | Consumer: | | | | | | | | | | | | | | | | | | | | | Consumer Open-End | | 39 | | | 1 | | | - | | | 40 | | | 50,001 | | | 50,041 | | | - | Consumer Closed-End | | 112 | | | 73 | | | - | | | 185 | | | 28,084 | | | 28,269 | | | - | Residential: | | | | | | | | | | | | | | | | | | | | | Residential Mortgages | | 174 | | | 358 | | | 340 | | | 872 | | | 112,431 | | | 113,303 | | | - | Residential Consumer Construction/Land | | - | | | - | | | - | | | - | | | 26,150 | | | 26,150 | | | - | Total | $ | 325 | | $ | 830 | | $ | 457 | | $ | 1,612 | | $ | 641,984 | | $ | 643,596 | | $ | - |
Note 8 – Loans and allowance for credit losses (continued) Occasionally, the Bank modifies loans for borrowers experiencing financial difficulties by providing principal forgiveness, term extensions, interest rate reductions, or payment deferrals. Because the effect of most modifications is already included in the allowance for credit losses due to the measurement methodologies used in its estimate, the allowance is typically not adjusted upon modification. When principal forgiveness is provided, the amount forgiven is charged against the allowance for credit losses. There were no loan modifications for borrowers experiencing financial difficulty during the three and six months ended June 30, 2025 or June 30, 2024. As of June 30, 2025, no previously modified loans had defaulted within the past twelve months. ACL on 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, and both standby and commercial letters of credit, when there is a contractual obligation to extend credit and such extension is not unconditionally cancellable by the Company. The allowance for off-balance sheet credit exposures is adjusted through 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, as well as an estimate of expected credit losses on commitments expected to be funded over their estimated life, using the same loss rates that are applied in computing the allowance for loan credit losses. The allowance for credit losses for unfunded loan commitments was $678,000 at June 30, 2025, and is separately classified within Other Liabilities on the Consolidated Balance Sheets. The following table presents the balance and activity in the ACL for unfunded commitments for the three and six months ended June 30, 2025 and 2024 (dollars in thousands): | | Allowance for Credit Losses on Unfunded Commitments | | Balance, March 31, 2025 | $ 651 | Provision for credit losses | 27 | Balance June 30, 2025 | $ 678 | | | Balance, December 31, 2024 | $ 543 | Provision for credit losses | 135 | Balance June 30, 2025 | $ 678 | | | Allowance for Credit Losses on Unfunded Commitments | | Balance, March 31, 2024 | $ 613 | Recovery of credit losses | (24) | Balance June 30, 2024 | $ 589 | | | Balance, December 31, 2023 | $ 665 | Recovery of credit losses | (76) | Balance June 30, 2024 | $ 589 |
Other Real Estate Owned At June 30, 2025 and December 31, 2024, the Company had no consumer mortgage loans secured by residential real estate for which foreclosure was in process. The Company held no residential real estate properties in other real estate owned as of June 30, 2025 and December 31, 2024.
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