The Company has pledged certain commercial and residential mortgages as collateral for borrowings with the FHLB. Loans totaling $695.1 million and $797.9 million were pledged as of December 31, 2025 and 2024, respectively. The Company has pledged certain construction, and commercial and industrial loans totaling $72.8 million and $91.6 million as collateral for borrowings with the FRB Discount Window as of December 31, 2025 and 2024, respectively.

The following tables present the aging of the recorded investment of loans held for investment by loan category as of the dates stated.


	December 31, 2025
(Dollars in thousands)	Current Loans		30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due & Accruing		Nonaccrual		Total Loans
Commercial and industrial	$	261,132	$	1,099	$	780	$	1,508	$	6,639	$	271,158
Real estate – construction, commercial		51,397		62		43		—		236		51,738
Real estate – construction, residential		31,772		—		—		—		—		31,772
Real estate – commercial		830,608		49		—		—		5,651		836,308
Real estate – residential		616,943		9,840		1,006		1,575		7,379		636,743
Real estate – farmland		4,580		—		—		—		—		4,580
Consumer		30,122		1,026		290		75		700		32,213
Deferred costs, net of loan fees		1,205		—		—		—		—		1,205
Total	$	1,827,759	$	12,076	$	2,119	$	3,158	$	20,605	$	1,865,717


	December 31, 2024
(Dollars in thousands)	Current Loans		30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due & Accruing		Nonaccrual		Total Loans
Commercial and industrial	$	339,893	$	1,335	$	1,232	$	2,259	$	10,185	$	354,904
Real estate – construction, commercial		114,238		—		33		—		220		114,491
Real estate – construction, residential		51,807		—		—		—		—		51,807
Real estate – commercial		842,982		625		—		—		4,235		847,842
Real estate – residential		680,406		3,874		476		—		7,497		692,253
Real estate – farmland		5,520		—		—		—		—		5,520
Consumer		41,295		1,296		300		227		820		43,938
Deferred costs, net of loan fees		1,042		—		—		—		—		1,042
Total	$	2,077,183	$	7,130	$	2,041	$	2,486	$	22,957	$	2,111,797

For the year ended December 31, 2025 and 2024, the Company recognized $0.7 million and $0.5 million, respectively, of interest income from nonaccrual loans.

The Company segments loans held for investment into risk categories based on relevant information about the expected ability of borrowers to repay debt, such as current financial information, historical payment performance, experience, collateral adequacy, credit documentation, and current economic trends, among other factors. Management assigns loan risk grades by a numerical system as an indication of credit quality of its portfolio of loans held for investment. The Company uses the following definitions for loan risk ratings and periodically evaluates the appropriateness of these ratings across its loan portfolio. Independent third-party loan reviews are performed periodically on the Company's loan portfolio and such reviews validate management's determination of loan risk grades. Bank regulatory agencies also periodically review the Company's loan portfolio, including loan risk grades and may, on occasion, change a grade based on their judgment of the facts at the time of review.

Risk Grade 1 – Strong: This grade is for the strongest of loans. These loans are extended to individuals or businesses where the probability of default is extremely low to the Bank and secured with liquid collateral where the loss given default is unlikely because of the source of repayment such as a lien on a deposit account held at the Bank. Character, credit history, and ability of individuals or company principals are excellent. High liquidity, minimum risk, strong ratios, and low servicing cost are present.

Risk Grade 2 – Minimal: This grade is for loans deemed exceptionally strong. These loans are within established guidelines and where the borrowers have documented significant overall financial strength with consistent and predictable cash flows. These loans have excellent sources of repayment, significant balance sheet liquidity, no significant identifiable risk of collection, and conform in all respects to policy, underwriting standards, and federal and state regulations (no exceptions of any kind). In addition, guarantor support, when provided, is deemed as excellent.

Risk Grade 3 – Acceptable: This grade is for loans deemed strong. These loans have adequate sources of repayment, with a minimal identifiable risk of collection. Generally, loans assigned this risk grade will demonstrate the following characteristics: (1) conformity in all respects with policy, guidelines, underwriting standards, and federal and state regulations (no exceptions of any kind), (2) documented historical cash flow that meets or exceeds required minimum guidelines, or that can be supplemented with verifiable cash flow from other sources, and (3) adequate secondary sources to liquidate the debt. In addition, guarantor support, when provided, is deemed strong.

Risk Grade 4 – Satisfactory: This grade is for satisfactory loans containing more but deemed acceptable risk, and where the borrower is deemed as sound. These loans have adequate sources of repayment, with minimal identifiable risk of collection. Loans assigned with this risk grade will demonstrate the following characteristics: (1) general conformity to the Bank's underwriting requirements, with limited exceptions to policy, product, or underwriting guidelines, and all exceptions noted have documented mitigating factors that offset any additional risk associated with the exceptions noted, (2) documented historical cash flow that meets or exceeds required minimum guidelines, or that can be supplemented with verifiable cash flow from other sources, and (3) adequate secondary sources to liquidate the debt. In addition, guarantor support, when provided, is deemed as satisfactory.

Risk Grade 5 – Watch: This grade is for satisfactory loans containing acceptable but elevated risk. These loans are characterized by borrowers who exhibit signs of financial stress or are experiencing unstable or unfavorable change(s) adversely impacting the current or expected financial condition. The borrower's management is considered to be satisfactory; however, the collateral securing the loan may have decreased in value, the debt service coverage ratio is inconsistent or breakeven but mostly positive, and/or guarantor support, if any, is deemed limited or marginal. Loans classified as Watch warrant additional monitoring by management.

Risk Grade 6 – Special Mention: This grade is for loans that have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the Bank's credit position potentially at a future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Special Mention credits typically do not conform to established guidelines and/or exceptions without mitigating factors, or have emerging weaknesses that may or may not be remedied with the passage of time.

Risk Grade 7 – Substandard: This grade is for loans inadequately protected by the current sound net 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; characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loans in this category are characterized by deterioration in quality exhibited by any number of well-defined weaknesses requiring corrective action. The weaknesses may include, but are not limited to: (1) current or expected unprofitable operations, (2) inadequate debt service coverage, (3) declining or inadequate liquidity, (4) improper loan structure, (5) questionable or weak repayment sources, and (6) lack of well-defined secondary repayment source. There is a distinct possibility of loss and the Bank may sustain loss if the deficiencies remain uncorrected.

Risk Grade 8 – Doubtful: Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, 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. However, these loans are not yet rated as loss because certain events may occur which would salvage the Bank's position, which can include, but not limited to (1) an injection of capital, (2) alternative financing, and (3) liquidation of assets or the pledging of additional collateral. Doubtful is a temporary grade, where the Bank expects a loss but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is recorded and charged off against the ACL.

Risk Grade 9 – Loss: Loans classified Loss are deemed uncollectible and of such little value that continuance as assets held for investment is no longer warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer charging off the worthless loan, even though partial recovery may occur in the future. Probable loss amounts, either principal or interest, deemed uncollectible are charged off promptly against the ACL.

The following table presents the recorded investment of loans held for investment by internal loan risk grade by year of origination as of December 31, 2025. There were no loans classified as loss (risk grade 9) as of the same date. Also presented are gross charge-offs by loan type and origination year for the year ended December 31, 2025.


	Term Loans Recorded Investment Basis by Origination Year
(Dollars in thousands)	2025				2024				2023				2022				2021				Prior				Revolving Loans		Total
Commercial and industrial
Risk Grades 1 - 4	$	20,395			$	9,213			$	9,941			$	47,850			$	16,375			$	20,845			$	91,849	$	216,468
Risk Grades 5 - 6		762				408				1,257				20,110				2,817				3,944				2,465		31,763
Risk Grade 7		—				986				888				5,084				12,395				1,502				1,682		22,537
Risk Grade 8		—				—				—				—				—				390				—		390
Total		21,157				10,607				12,086				73,044				31,587				26,681				95,996		271,158
Current period gross charge-offs		—				346				369				730				32				199				7,709		9,385

Real estate – construction, commercial
Risk Grades 1 - 4		22,147				5,186				2,099				4,001				3,139				3,417				62		40,051
Risk Grades 5 - 6		657				—				—				43				677				10,094				—		11,471
Risk Grade 7		—				—				—				—				5				211				—		216
Total		22,804				5,186				2,099				4,044				3,821				13,722				62		51,738
Current period gross charge-offs		—				—				—				—				—				—				—		—

Real estate – construction, residential
Risk Grades 1 - 4		22,609	$	—		5,258	$	—		495	$	—		75	$	—		93	$	—		48	$	—		—		28,578
Risk Grades 5 - 6		338	$	—		—	$	—		—	$	—		2,544	$	—		—	$	—		—	$	—		—		2,882
Risk Grade 7		—	$	—		—	$	—		—	$	—		312	$	—		—	$	—		—	$	—		—		312
Total		22,947				5,258				495				2,931				93				48				—		31,772
Current period gross charge-offs		—				—				—				—				—				—				—		—

Real estate – commercial
Risk Grades 1 - 4		75,900				4,500				29,768				209,573				101,178				190,435				17,057		628,411
Risk Grades 5 - 6		830				—				5,032				79,834				31,472				47,824				3,777		168,769
Risk Grade 7		—				1,555				—				29,380				2,519				5,674				—		39,128
Total		76,730				6,055				34,800				318,787				135,169				243,933				20,834		836,308
Current period gross charge-offs		—				—				—				—				540				71				—		611

Real estate – residential
Risk Grades 1 - 4		4,382				2,705				65,443				204,911				104,375				181,362				51,559		614,737
Risk Grades 5 - 6		838				831				266				928				1,380				4,914				398		9,555
Risk Grade 7		561				—				1,099				3,676				1,207				5,354				554		12,451
Total		5,781				3,536				66,808				209,515				106,962				191,630				52,511		636,743
Current period gross charge-offs		—				—				64				20				—				43				107		234

Real estate – farmland
Risk Grades 1 - 4		—				142				—				987				1,186				1,821				166		4,302
Risk Grades 5 - 6		62				—				123				—				93				—				—		278
Total		62				142				123				987				1,279				1,821				166		4,580
Current period gross charge-offs		—				—				—				—				—				—				—		—

Consumer
Risk Grades 1 - 4		4,620				4,343				10,430				4,960				620				411				5,293		30,677
Risk Grades 5 - 6		—				138				190				326				48				18				—		720
Risk Grade 7		—				117				241				310				110				38				—		816
Total		4,620				4,598				10,861				5,596				778				467				5,293		32,213
Current period gross charge-offs		220				90				267				163				73				16				1,081		1,910

Total Loans
Risk Grades 1 - 4	$	150,053			$	31,347			$	118,176			$	472,357			$	226,966			$	398,339			$	165,986	$	1,563,224
Risk Grades 5 - 6		3,487				1,377				6,868				103,785				36,487				66,794				6,640		225,438
Risk Grade 7		561				2,658				2,228				38,762				16,236				12,779				2,236		75,460
Risk Grade 8		—				—				—				—				—				390				—		390
Total	$	154,101			$	35,382			$	127,272			$	614,904			$	279,689			$	478,302			$	174,862	$	1,864,512
Total current period gross charge-offs	$	220			$	436			$	700			$	913			$	645			$	329			$	8,897	$	12,140

The following table presents the recorded investment of loans held for investment by internal loan risk grade by year of origination as of December 31, 2024. There were no loans classified as loss (risk grade 9) as of the same date.


	Term Loans Recorded Investment Basis by Origination Year
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total
Commercial and industrial
Risk Grades 1 - 4	$	13,883	$	13,559	$	64,530	$	14,600	$	17,405	$	15,760	$	98,867	$	238,604
Risk Grades 5 - 6		672		24,430		37,503		10,201		5,183		979		15,092		94,060
Risk Grade 7		944		2,248		5,173		10,462		562		1,247		1,521		22,157
Risk Grade 8		—		—		—		82		—		1		—		83
Total		15,499		40,237		107,206		35,345		23,150		17,987		115,480		354,904

Real estate – construction, commercial
Risk Grades 1 - 4		6,219		6,277		65,560		7,776		5,405		4,792		399		96,428
Risk Grades 5 - 6		—		1,090		—		7,567		4,770		4,235		—		17,662
Risk Grade 7		—		116		—		24		—		261		—		401
Total		6,219		7,483		65,560		15,367		10,175		9,288		399		114,491

Real estate – construction, residential
Risk Grades 1 - 4		19,574		8,861		7,837		13,971		—		57		990		51,290
Risk Grades 5 - 6		193		—		—		—		—		—		—		193
Risk Grade 7		—		169		155		—		—		—		—		324
Total		19,767		9,030		7,992		13,971		—		57		990		51,807

Real estate – commercial
Risk Grades 1 - 4		4,747		34,698		245,563		118,435		142,211		133,856		21,323		700,833
Risk Grades 5 - 6		535		5,092		64,677		7,002		14,604		23,104		4,184		119,198
Risk Grade 7		1,565		—		9,970		10,380		2,945		1,355		25		26,240
Risk Grade 8		—		—		—		1,379		—		192		—		1,571
Total		6,847		39,790		320,210		137,196		159,760		158,507		25,532		847,842

Real estate – residential
Risk Grades 1 - 4		2,815		66,780		225,159		114,682		64,548		143,002		53,498		670,484
Risk Grades 5 - 6		853		—		2,303		1,295		318		2,378		95		7,242
Risk Grade 7		—		736		2,153		2,113		1,454		5,822		2,249		14,527
Total		3,668		67,516		229,615		118,090		66,320		151,202		55,842		692,253

Real estate – farmland
Risk Grades 1 - 4		147		—		997		1,239		—		2,753		149		5,285
Risk Grades 5 - 6		—		135		—		100		—		—		—		235
Total		147		135		997		1,339		—		2,753		149		5,520

Consumer
Risk Grades 1 - 4		5,944		17,211		8,716		1,650		1,034		486		7,283		42,324
Risk Grades 5 - 6		74		133		225		99		32		3		—		566
Risk Grade 7		87		330		332		184		63		24		28		1,048
Total		6,105		17,674		9,273		1,933		1,129		513		7,311		43,938

Total Loans
Risk Grades 1 - 4	$	53,329	$	147,386	$	618,362	$	272,353	$	230,603	$	300,706	$	182,509	$	1,805,248
Risk Grades 5 - 6		2,327		30,880		104,708		26,264		24,907		30,699		19,371		239,156
Risk Grade 7		2,596		3,599		17,783		23,163		5,024		8,709		3,823		64,697
Risk Grade 8		—		—		—		1,461		—		193		—		1,654
Total	$	58,252	$	181,865	$	740,853	$	323,241	$	260,534	$	340,307	$	205,703	$	2,110,755

The following table presents an analysis of the change in the ACL by loan segment for the periods stated.


	For the year ended December 31, 2025
(Dollars in thousands)	Commercial and industrial			Real estate – construction, commercial			Real estate – construction, residential			Real estate – commercial			Real estate – residential			Real estate – farmland			Consumer			Total
ACL, beginning of period	$	5,767		$	2,057		$	540		$	5,963		$	7,933		$	18		$	745		$	23,023
(Recovery of) provision for credit losses - loans		(1,683	)		(1,379	)		(276	)		(699	)		(396	)		(4	)		537			(3,900	)
Charge-offs		(9,385	)		—			—			(611	)		(234	)		—			(1,910	)		(12,140	)
Recoveries		9,638			—			—			1,306			352			—			1,165			12,461
Net recoveries (charge-offs)		253			—			—			695			118			—			(745	)		321
ACL, end of period	$	4,337		$	678		$	264		$	5,959		$	7,655		$	14		$	537		$	19,444

	For the year ended December 31, 2024
(Dollars in thousands)	Commercial and industrial			Real estate – construction, commercial			Real estate – construction, residential			Real estate – commercial			Real estate – residential			Real estate – farmland			Consumer			Total
ACL, beginning of period	$	13,787		$	4,024		$	1,094		$	9,929		$	6,286		$	15		$	758		$	35,893
(Recovery of) provision for credit losses - loans		(613	)		(1,982	)		(515	)		(2,798	)		1,734			3			1,271			(2,900	)
Charge-offs		(24,005	)		—			(39	)		(1,238	)		(216	)		—			(2,939	)		(28,437	)
Recoveries		16,598			15			—			70			129			—			1,655			18,467
Net (charge-offs) recoveries		(7,407	)		15			(39	)		(1,168	)		(87	)		—			(1,284	)		(9,970	)
ACL, end of period	$	5,767		$	2,057		$	540		$	5,963		$	7,933		$	18		$	745		$	23,023

There were no material changes to the assumptions, loss factors (both quantitative and qualitative), or reasonable and supportable forecasts used in the estimation of the ACL for loans held for investment as of and for the year ended December 31, 2025.

Excluded from the ACL as of December 31, 2025 and 2024 were $9.1 million and $10.7 million, respectively, of accrued interest attributable to loans held for investment, which is included in accrued interest receivable on the consolidated balance sheets.

As of December 31, 2025 and 2024, the amortized cost of PCD loans totaled $29.8 million and $43.8 million, respectively, with an estimated ACL of $0.2 million and $0.3 million, respectively. The remaining non-credit discount on PCD loans was $2.0 million and $3.0 million as of December 31, 2025 and 2024, respectively.

The Company closely monitors the performance of borrowers experiencing financial difficulty and grants certain loan modifications it would otherwise not consider. The Company refers to such loan modifications as TLMs.

The following table presents the amortized cost of loans designated as TLMs, categorized by loan type and type of concession granted as of the dates and for the periods stated.


	As of and for the years ended December 31,
	2025							2024
(Dollars in thousands)	Number of Loans		Amortized Cost		% of Amortized Cost to Gross Loans by Category			Number of Loans		Amortized Cost		% of Amortized Cost to Gross Loans by Category
Combined - term extension and payment deferral
Commercial and industrial		—	$	—		—			1	$	82		0.02	%
Total combined - term extension and payment deferral		—	$	—					1	$	82

Combined - term extension, payment deferral, interest rate reduction
Commercial and industrial		—	$	—		—			2	$	407		0.11	%
Total combined - term extension, payment deferral, interest rate reduction		—	$	—					2	$	407

Interest forgiven
Real estate – residential		1	$	136		0.02	%		—	$	—		—
Total interest forgiven		1	$	136					—	$	—

Term extension
Commercial and industrial		1	$	1,774		0.65	%		2	$	521		0.15	%
Real estate – commercial		3		468		0.06	%		1		37		—
Real estate – residential		1		50		—			1		71		0.01	%
Total term extension		5	$	2,292					4	$	629

Payment deferral
Commercial and industrial		—	$	—		—			1	$	156		0.04	%
Real estate – residential		—		—		—			1		500		0.07	%
Consumer		—		—		—			1		10		0.02	%
Total payment deferral		—	$	—					2	$	666

Total		6	$	2,428					9	$	1,784

As of December 31, 2025 and 2024, there were no unfunded commitments to borrowers with TLMs.

Seven residential mortgage loans with a total recorded investment of $2.9 million were in the process of foreclosure as of December 31, 2025, and four residential mortgage loans with a total recorded investment of $0.2 million were in the process of foreclosure as of December 31, 2024.