v3.26.1
Loans
 6 Months Ended
Jun. 30, 2026
Loans [Abstract]  
Loans
3.
LOANS
The following table is a summary of the distribution of loans
held for investment by type (dollars in thousands):
At
June 30,
2026
and
December 31,
2025,
the
Company
had
$
660.1
million
and
$
561.4
million,
respectively,
of
commercial real estate and residential mortgage
loans pledged as collateral for lines
of credit with the Federal Home Loan
Bank (“FHLB”) of Atlanta and the Federal Reserve Bank
of Atlanta.
Allowance for Credit Losses
In
general,
the
Company
utilizes
the
Discounted
Cash
Flow
(“DCF”)
method
or
the
Weighted-Average
Remaining
Maturity (“WARM”) methodology to estimate the
quantitative portion of the ACL
for loan pools. The
DCF method uses a loss
driver analysis
(“LDA”) and
DCF analysis.
Management engaged
advisors and
consultants
with expertise
in CECL model
development to
assist in
development of
a LDA
based on
regression models
and supportable
forecast. Peer
group data
obtained
from
FFIEC
Call
Report
filings
is
used to
inform
regression
analyses
to
quantify
the
impact
of reasonable
and
supportable
forecasts
in
projective
models.
Economic
forecasts
applied
to
regression
models
to
estimate
probability
of
default for loan receivables use at least
one of the following economic indicators: civilian unemployment rate (national), real
gross domestic
product growth
(national GDP)
or the
House Price
Index (“HPI”).
For each
of the
segments
in which
the
WARM methodology is used,
the long-term average
loss rate is
calculated and applied
on a quarterly
basis for the
remaining
life of the pool. Adjustments for economic expectations are
made through qualitative factors.
Qualitative factors (“Q-Factors”) used in the ACL methodology
include:
•
Changes in lending policies, procedures, and strategies
•
Changes in international, national, regional, and local economic
conditions
•
Changes in nature and volume of the portfolio
•
Changes in the volume and severity of past due loans
and other similar conditions
•
Concentration risk
•
Changes in the value of underlying collateral
•
The effect of other external factors: e.g., competition,
legal, and regulatory requirements
•
Changes in lending management, among others
•
Changes in the loan review system
Changes in the ACL for the three and six months ended June
30, 2026 and 2025 were as follows (in thousands):
At June
30, 2026,
the
ACL
for loans
was
$
26.7
million,
compared
to $
25.5
million
at December
31,
2025.
The $
1.2
million
increase
was
primarily
driven
by
growth
in
the
loan
portfolio,
partially
offset
by
reductions
in
qualitative
factor
adjustments
resulting
from
improved
credit
quality
trends
identified
through
loan
quality
reviews,
particularly
within
the
commercial real estate ("CRE") and commercial and industrial
("C&I") portfolios.
Charge
offs
related to
loans
for the
three
months
ended June
30,
2026 were
$
297
thousand,
of which
$
1
thousand
related to loans originated
in 2026 and $
296
thousand related to
loans originated in
2025. Charge offs
related to loans
for
the six
months ended
June 30, 2026
were $
303
thousand, of
which $
7
thousand related
to loans
originated in
2026 and
$
296
thousand related to loans originated in 2025.
Charge offs for the three months ended June 30, 2025 totaled $
710
thousand, of which $
709
thousand related to loans
originated
in
2022
and
$
1
thousand
related
to
loans
originated
in
2025.
Charge
offs
related
to
loans
for the
six
months
ended June 30, 2025 totaled $
723
thousand, of which $
709
thousand related to loans originated in 2022 and $
14
thousand
related to loans originated in 2025.
The ACL
and the
outstanding balances
in the
specified loan
categories as
of June 30,
2026 and
December 31, 2025
are as follows (in thousands):
Credit Quality Indicators
The Company grades loans based on the estimated capability of the borrower to repay the contractual obligation of the
loan agreement based
on relevant information
which may
include: current financial
information on the
borrower,
historical
payment
experience,
credit
documentation
and
other
current
economic
trends.
Internal
credit
risk
grades
are
evaluated
periodically.
The Company's internally assigned credit risk grades are as follows:
Pass
– Loans indicate different levels of satisfactory
financial condition and performance.
Special Mention
– Loans classified as special mention have a potential weakness
that deserves management’s
close attention. If left uncorrected, these potential weaknesses
may result in deterioration of the repayment
prospects for the loan or of the institution’s
credit position at some future date.
Substandard
– Loans classified as substandard are inadequately protected
by the current net worth and paying
capacity of the obligator or of the collateral pledged, if
any. Loans so classified
have a well-defined weakness or
weaknesses that jeopardize the liquidation of the debt.
They are characterized by the distinct possibility that the
institution will sustain some loss if the deficiencies are
not corrected.
Doubtful
– Loans classified as doubtful have all the weaknesses inherent
in those classified at 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.
Loss
– Loans classified as loss are considered uncollectible.
Loan credit exposures by internally assigned grades are
presented below for the periods indicated (in thousands):
Loan Aging
The Company
also considers the
performance of loans
in grading
and in
evaluating the
credit quality
of the
loan portfolio.
The Company
analyzes credit
quality and
loan grades based
on payment
performance and
the aging status
of the loans.
The
following
tables
include
an
aging
analysis
of
accruing
loans
and
total
non-accruing
loans
as
of
June 30,
2026
and
December 31, 2025 (in thousands):
Non-accrual Status
The following
table
includes
the amortized
cost
basis
of loans
on
non-accrual
status
as of
June 30,
2026
and
as of
December 31, 2025 (in thousands):
Accrued interest
receivable is
excluded from
the estimate
of credit
losses. There
was
no
interest income
recognized
attributable
to
non-accrual
loans
outstanding
during
the
three
and
six
months
ended
June 30,
2026
and
2025.
Interest
income on these loans for the three months ended June 30, 2026 and 2025, would have been
approximately $
42
thousand
and $
29
thousand, respectively, had these loans performed
in accordance with
their original terms.
Interest income on
these
loans for the six months ended June 30, 2026 and 2025, would have been approximately $
77
thousand and $
80
thousand,
respectively, had
these loans performed in accordance with their original
terms.
Collateral-Dependent Loans
A
loan
is
collateral
dependent
when
the
borrower
is
experiencing
financial
difficulty
and
repayment
of
the
loan
is
expected to be provided substantially through the sale
or operation of the collateral.
The following
table includes
the amortized cost
basis of
collateral dependent
loans related
to borrowers
experiencing
financial difficulty by type of collateral as of June
30, 2026 and December 31, 2025 (in thousands):
Management evaluates
on an individual
basis collateral
dependent loans
using the fair
value of the
collateral method
to determine if an
allowance for credit
loss reserve is
necessary.
The ACL is measured
based on the difference
of the fair
value of
the collateral
and amortized
cost basis
of the
loan. If
the final
collateral valuation
is less
than the
amortized cost
basis of
the loan,
a reserve
amount is
calculated. If
the collateral
valuation is
equal to
or greater
than the
amortized cost
basis of the loan, no reserve is determined.
Loan Modifications to Borrowers Experiencing Financial
Difficulties
The
Company
had
no
new
modifications
to
borrowers
experiencing
financial
difficulties
for
the
three
months
ended
June 30, 2026 and
one
new modification to
borrowers experiencing financial
difficulties for the
six months ended June 30,
2026. The Company had
no
new modifications to borrowers
experiencing financial difficulties
for the three and
six months
ended June 30, 2025. The following table presents newly restructured loans, by
type of modification, which occurred during
the six months ended June 30, 2026 (in thousands):
The
loan
modification
for
the
borrower
experiencing
financial
difficulty
at
June 30,
2026
included
a
combination
of
principal and maturity modifications. There was
a principal reduction of $
68
thousand and a
two
-year extension of the loan
maturity. There was
no
commitment to lend additional funds to this customer.
There were
no
existing loan modifications that
subsequently defaulted during
either the three or the
six months ended
June 30, 2026 and 2025.
June 30, 2026
December 31, 2025
Total
Percent of
Total
Total
Percent of
Total
Residential real estate
$
356,747
15.4
%
$
307,692
14.1
%
Commercial real estate
1,314,367
56.6
%
1,244,835
57.0
%
Commercial and industrial
300,265
13.0
%
295,548
13.5
%
Correspondent banks
137,912
6.0
%
127,968
5.9
%
Consumer and other
207,404
9.0
%
207,215
9.5
%
Total
gross loans
2,316,695
100.0
%
2,183,258
100.0
%
Plus: Deferred fees/costs
5,690
5,999
Total
loans net of deferred fees/costs
2,322,385
2,189,257
Less: Allowance for credit losses
26,701
25,500
Total
net loans
$
2,295,684
$
2,163,757
Residential
Real Estate
Commercial
Real Estate
Commercial
and
Industrial
Correspondent
Banks
Consumer
and Other
Total
Three Months Ended June 30, 2026
Beginning balance
$
5,270
$
9,932
$
5,330
$
1,018
$
4,552
$
26,102
Provision for credit losses
(1)
222
184
407
76
(2)
887
Recoveries
8
-
1
-
-
9
Charge-offs
(296)
-
-
-
(1)
(297)
Ending Balance
$
5,204
$
10,116
$
5,738
$
1,094
$
4,549
$
26,701
Six Months Ended June 30, 2026
Beginning balance
$
5,908
$
9,476
$
4,814
$
1,015
$
4,287
$
25,500
Provision for credit losses
(2)
(422)
640
919
79
269
1,485
Recoveries
14
-
5
-
-
19
Charge-offs
(296)
-
-
-
(7)
(303)
Ending Balance
$
5,204
$
10,116
$
5,738
$
1,094
$
4,549
$
26,701
(1) Provision for credit losses excludes a $
380
thousand provision due to unfunded commitments included in accrued interest and
other liabilities.
(2) Provision for credit losses excludes a $
585
thousand provision due to unfunded commitments included in accrued interest and
other liabilities and a $
2
thousand release related to investment securities held to maturity.
Residential
Real Estate
Commercial
Real Estate
Commercial
and
Industrial
Correspondent
Banks
Consumer
and Other
Total
Three Months Ended June 30, 2025
Beginning balance
$
5,115
$
9,197
$
4,434
$
817
$
5,177
$
24,740
Provision for credit losses
(1)
356
294
73
57
115
895
Recoveries
6
-
1
-
1
8
Charge-offs
-
-
-
-
(710)
(710)
Ending Balance
$
5,477
$
9,491
$
4,508
$
874
$
4,583
$
24,933
Six Months Ended June 30, 2025
Beginning balance
$
5,121
$
8,788
$
4,633
$
654
$
4,874
$
24,070
Provision for credit losses
(2)
344
703
(131)
220
431
1,567
Recoveries
12
-
6
-
1
19
Charge-offs
-
-
-
-
(723)
(723)
Ending Balance
$
5,477
$
9,491
$
4,508
$
874
$
4,583
$
24,933
(1) Provision for credit losses excludes a $
134
thousand provision due to unfunded commitments included in accrued interest and
other liabilities and a $
2
thousand provision related to investment securities held to maturity.
(2) Provision for credit losses excludes a $
144
thousand provision due to unfunded commitments included in accrued interest and
other liabilities a $
1
thousand provision related to investment securities held to maturity.
Residential
Real Estate
Commercial
Real Estate
Commercial
and Industrial
Correspondent
Banks
Consumer
and Other
Total
June 30, 2026:
Allowance for credit losses:
Individually evaluated
$
87
$
-
$
13
$
-
$
-
$
100
Collectively evaluated
5,117
10,116
5,725
1,094
4,549
26,601
Balances, end of period
$
5,204
$
10,116
$
5,738
$
1,094
$
4,549
$
26,701
Loans:
Individually evaluated
$
4,550
$
-
$
1,218
$
-
$
-
$
5,768
Collectively evaluated
352,197
1,314,367
299,047
137,912
207,404
2,310,927
Balances, end of period
$
356,747
$
1,314,367
$
300,265
$
137,912
$
207,404
$
2,316,695
December 31, 2025:
Allowance for credit losses:
Individually evaluated
$
27
$
-
$
84
$
-
$
-
$
111
Collectively evaluated
5,881
9,476
4,730
1,015
4,287
25,389
Balances, end of period
$
5,908
$
9,476
$
4,814
$
1,015
$
4,287
$
25,500
Loans:
Individually evaluated
$
5,583
$
-
$
1,265
$
-
$
-
$
6,848
Collectively evaluated
302,109
1,244,835
294,283
127,968
207,215
2,176,410
Balances, end of period
$
307,692
$
1,244,835
$
295,548
$
127,968
$
207,215
$
2,183,258
As of June 30, 2026
Term Loans by Origination Year
Revolving
Loans
Total
2026
2025
2024
2023
2022
Prior
Residential real estate
Pass
$
77,731
$
63,118
$
78,207
$
30,802
$
21,915
$
66,205
$
15,891
$
353,869
Special Mention
-
518
452
-
-
400
-
1,370
Substandard
-
415
989
-
-
104
-
1,508
Total
77,731
64,051
79,648
30,802
21,915
66,709
15,891
356,747
Commercial real estate
Pass
209,748
226,699
161,919
97,731
257,817
341,269
5,961
1,301,144
Special Mention
-
-
-
8,405
-
3,115
-
11,520
Substandard
-
-
-
-
-
1,703
-
1,703
Total
209,748
226,699
161,919
106,136
257,817
346,087
5,961
1,314,367
Commercial and
industrial
Pass
23,226
72,197
60,469
52,128
30,676
38,088
21,297
298,081
Special Mention
-
-
-
-
-
773
-
773
Substandard
-
-
72
356
-
983
-
1,411
Total
23,226
72,197
60,541
52,484
30,676
39,844
21,297
300,265
Correspondent banks
Pass
130,852
7,060
-
-
-
-
-
137,912
Total
130,852
7,060
-
-
-
-
-
137,912
Consumer and other
Pass
9,177
55,213
33,778
35,453
50,070
20,337
3,376
207,404
Total
9,177
55,213
33,778
35,453
50,070
20,337
3,376
207,404
Total
Loans
Pass
450,734
424,287
334,373
216,114
360,478
465,899
46,525
2,298,410
Special Mention
-
518
452
8,405
-
4,288
-
13,663
Substandard
-
415
1,061
356
-
2,790
-
4,622
Doubtful
-
-
-
-
-
-
-
-
Total
$
450,734
$
425,220
$
335,886
$
224,875
$
360,478
$
472,977
$
46,525
$
2,316,695
As of December 31, 2025
Term Loans by Origination Year
Revolving
Loans
Total
2025
2024
2023
2022
2021
Prior
Residential real estate
Pass
$
65,582
$
83,426
$
32,139
$
23,685
$
21,056
$
58,220
$
20,168
$
304,276
Special Mention
128
-
-
587
-
201
-
916
Substandard
-
917
1,468
-
-
115
-
2,500
Total
65,710
84,343
33,607
24,272
21,056
58,536
20,168
307,692
Commercial real estate
Pass
241,028
184,323
109,465
281,985
134,663
273,483
5,876
1,230,823
Special Mention
-
-
8,451
-
-
3,162
-
11,613
Substandard
-
-
-
-
1,724
675
-
2,399
Total
241,028
184,323
117,916
281,985
136,387
277,320
5,876
1,244,835
Commercial and
industrial
Pass
75,867
63,178
58,060
32,118
28,090
12,314
23,542
293,169
Special Mention
-
72
-
-
835
-
-
907
Substandard
-
-
389
-
445
638
-
1,472
Total
75,867
63,250
58,449
32,118
29,370
12,952
23,542
295,548
Correspondent banks
Pass
127,968
-
-
-
-
-
-
127,968
Total
127,968
-
-
-
-
-
-
127,968
Consumer and other
Pass
59,276
34,309
36,808
51,091
23,214
747
1,770
207,215
Total
59,276
34,309
36,808
51,091
23,214
747
1,770
207,215
Total
Loans
Pass
569,721
365,236
236,472
388,879
207,023
344,764
51,356
2,163,451
Special Mention
128
72
8,451
587
835
3,363
-
13,436
Substandard
-
917
1,857
-
2,169
1,428
-
6,371
Doubtful
-
-
-
-
-
-
-
-
Total
$
569,849
$
366,225
$
246,780
$
389,466
$
210,027
$
349,555
$
51,356
$
2,183,258
Accruing
As of June 30, 2026
Current
Past Due 30-
89 Days
Past Due 90
Days or >
and Still
Accruing
Total
Accruing
Non-Accrual
Total Loans
Residential real estate:
Home equity lines of credit and other
$
2,876
$
-
$
-
$
2,876
$
-
$
2,876
1-4 family residential
271,352
1,228
-
272,580
1,284
273,864
Condo residential
79,783
-
-
79,783
224
80,007
354,011
1,228
-
355,239
1,508
356,747
Commercial real estate:
Land and construction
53,073
-
-
53,073
-
53,073
Multi-family residential
324,711
-
-
324,711
-
324,711
Condo commercial
68,666
-
-
68,666
-
68,666
Commercial property
867,917
-
-
867,917
-
867,917
1,314,367
-
-
1,314,367
-
1,314,367
Commercial and industrial:
Secured
280,212
-
-
280,212
640
280,852
Unsecured
19,413
-
-
19,413
-
19,413
299,625
-
-
299,625
640
300,265
Correspondent banks
137,912
-
-
137,912
-
137,912
Consumer and other
207,404
-
-
207,404
-
207,404
Total
$
2,313,319
$
1,228
$
-
$
2,314,547
$
2,148
$
2,316,695
Accruing
As of December 31, 2025:
Current
Past Due
30-89 Days
Past Due 90
Days or >
and Still
Accruing
Total
Accruing
Non-Accrual
Total Loans
Residential real estate:
Home equity lines of credit and other
$
1,538
$
-
$
-
$
1,538
$
-
$
1,538
1-4 family residential
238,852
1,150
-
240,002
2,385
242,387
Condo residential
62,364
1,288
-
63,652
115
63,767
302,754
2,438
-
305,192
2,500
307,692
Commercial real estate:
Land and construction
83,305
-
-
83,305
-
83,305
Multi-family residential
254,562
-
-
254,562
-
254,562
Condo commercial
61,525
-
-
61,525
-
61,525
Commercial property
845,003
440
-
845,443
-
845,443
1,244,395
440
-
1,244,835
-
1,244,835
Commercial and industrial:
Secured
272,900
71
-
272,971
638
273,609
Unsecured
21,939
-
-
21,939
-
21,939
294,839
71
-
294,910
638
295,548
Correspondent banks
127,968
-
-
127,968
-
127,968
Consumer and other
207,215
-
-
207,215
-
207,215
Total
$
2,177,171
$
2,949
$
-
$
2,180,120
$
3,138
$
2,183,258
June 30, 2026
Non-accrual
Loans With No
Related Allowance
Non-accrual
Loans With
Related Allowance
Total Non-
accruals
Residential real estate
$
1,444
$
64
$
1,508
Commercial and industrial
640
-
640
Total
$
2,084
$
64
$
2,148
December 31, 2025
Non-accrual
Loans With No
Related Allowance
Non-accrual
Loans With
Related Allowance
Total Non-
accruals
Residential real estate
$
2,500
$
-
$
2,500
Commercial and industrial
563
75
638
Total
$
3,063
$
75
$
3,138
June 30, 2026
Collateral Type
Residential Real Estate
Specific Reserve
Residential real estate
$
1,565
$
64
Commercial and industrial
72
-
Total
$
1,637
$
64
December 31, 2025
Collateral Type
Residential Real Estate
Specific Reserve
Residential real estate
$
2,583
$
-
Total
$
2,583
$
-
Amortized Cost Basis Prior to Modification
Amortized Cost Basis After Modification
Number of
Loans
Combination
Modifications
Total
Modifications
Number of
Loans
Combination
Modifications
Total
Modifications
Commercial and industrial
1
$
418
$
418
1
$
350
$
350
Total
1
$
418
$
418
1
$
350
$
350