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Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2024
Credit Loss [Abstract]  
Allowance for Credit Losses Allowance for Credit Losses
On January 1, 2023, the Company adopted the CECL methodology as required under ASC 326. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables. For further discussion on the Company’s accounting policies and policy elections related to the accounting standards update refer to Note 1 — Nature of Business Activities and Significant Accounting Policies in these Notes to Consolidated Financial Statements. All information presented as of December 31, 2024, and December 31, 2023, is in accordance with ASC 326. All other information presented prior to January 1, 2023, is in accordance with previous applicable GAAP.
The Company’s ACL is calculated quarterly, with any adjustment recorded to the provision for credit losses in the Consolidated Statements of Income. Management calculates the quantitative portion of collectively evaluated loans for all loan categories using the WARM method. For purposes of estimating the Company’s ACL, management generally evaluates collectively evaluated loans by federal call code in order to group loans with similar risk characteristics.
Loans that do not share similar risk characteristics are evaluated on an individual loan basis and are excluded from the collective evaluation for the ACL. Loans identified to be individually evaluated under CECL include loans on non-accrual status and may include accruing loans that do not share similar risk characteristics to other accruing loans that are collectively evaluated on a loan pool basis. A specific reserve analysis may be applied to the individually evaluated loans, which considers collateral value, an observable market price, or the present value of the expected future cash flows. A specific reserve is assigned if the measured value of the loan using one of the before mentioned methods is less than the carrying value of the loan.
Based on management’s analysis, adjustments may be applied for additional factors impacting the risk of loss in the loan portfolio beyond the information that is used to calculate a reasonable and supportable forecast and a reversion period forecast on collectively evaluated loans. Management may consider an additional or reduced reserve as warranted through qualitative risk factors based on the current and expected conditions, as measured in supplemental information relative to the macroeconomic variable loss drivers used to calculate a reasonable and supportable forecast and a reversion period forecast. These qualitative risk factors considered by management are largely comparable to legacy factors prior to the adoption of CECL.
The following tables present the activity in the ACL for the year ended December 31, 2024, including the impact of the allowance established for PCD loans, the activity in the ACL including the impact of the adoption of
CECL for the year ended December 31, 2023, and the activity in the ACL for the year ended December 31, 2022 (in thousands).
Commercial real estateOwner-occupied commercial real estateAcquisition, construction & developmentCommercial & industrialSingle family residential (1-4 units)Consumer non-real estate and otherUnallocatedTotal
December 31, 2024
Beginning balance, prior to adoption of CECL$20,633 $783 $368 $645 $2,797 $75 $— $25,301 
Allowance established for acquired PCD loans7,503 1,931 5,968 5,684 2,608 216 — 23,910 
Provision for (recapture of) credit losses2,675 547 11,050 566 4,465 1,172 — 20,475 
Charge-offs(382)— — (301)(190)(934)— (1,807)
Recoveries15 — — 39 83 24 — 161 
Balance, end of period$30,444 $3,261 $17,386 $6,633 $9,763 $553 $— $68,040 
Commercial real estateOwner-occupied commercial real estateAcquisition, construction & developmentCommercial & industrialSingle family residential (1-4 units)Consumer non-real estate and otherUnallocatedTotal
December 31, 2023
Balance, beginning of period$15,477 $635 $2,082 $438 $2,379 $28 $— $21,039 
Impact of adoption CECL2,686 (6)(640)237 1,661 187 — 4,125 
Provision for (recapture of) credit losses2,432 154 (1,074)(1)(1,295)19 — 235 
Charge-offs— — — (29)— (165)— (194)
Recoveries38 — — — 52 6 — 96 
Balance, end of period$20,633 $783 $368 $645 $2,797 $75 $— $25,301 
Commercial real estateOwner-occupied commercial real estateAcquisition, construction & developmentCommercial & industrialSingle family residential (1-4 units)Consumer non-real estate and otherUnallocatedTotal
December 31, 2022
Balance, beginning of period$25,112 $611 $2,189 $165 $2,434 $18 $1,180 $31,709 
Provision for (recapture of) loan losses(6,391)24 (107)293 (239)134 (1,180)(7,466)
Charge-offs(3,282)— — (20)— (148)— (3,450)
Recoveries38 — — — 184 24 — 246 
Balance, end of period$15,477 $635 $2,082 $438 $2,379 $28 $— $21,039 
The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents the aging of the recorded investment in past due loans as of December 31, 2024, and December 31, 2023, by portfolio segment (in thousands).
December 31, 2024
30 - 59 Days Past Due60 - 89 Days Past Due90 Days or More Past DueTotal Past DueCurrent LoansTotal Loans90 Days Past Due & Still AccruingNon-accrual loans
Commercial real estate$10,974 $— $8,440 $19,414 $2,618,388 $2,637,802 $— $19,183 
Owner-occupied commercial real estate1,160 1,636 5,240 8,036 606,326 614,362 307 5,760 
Acquisition, construction & development5,210 38 1,243 6,491 459,046 465,537 812 1,098 
Commercial & industrial1,654 1,594 1,469 4,717 608,368 613,085 350 1,757 
Single family residential (1-4 units)20,724 4,379 3,420 28,523 1,145,226 1,173,749 1,012 7,857 
Consumer non-real estate and other637 300 195 1,132 166,569 167,701 16 216 
Total$40,359 $7,947 $20,007 $68,313 $5,603,923 $5,672,236 $2,497 $35,871 
December 31, 2023
30 - 59 Days Past Due60 - 89 Days Past Due90 Days or More Past DueTotal Past DueCurrent LoansTotal Loans90 Days Past Due & Still AccruingNon-accrual loans
Commercial real estate$10,496 $— $— $10,496 $1,298,588 $1,309,084 $— $— 
Owner-occupied commercial real estate— — 790 790 130,591 131,381 — 1,000 
Acquisition, construction & development— — — — 49,091 49,091 — — 
Commercial & industrial195 364 — 559 67,288 67,847 — — 
Single family residential (1-4 units)1,657 289 1,532 3,478 524,502 527,980 — 2,744 
Consumer non-real estate and other3 — — 3 2,370 2,373 — — 
Total$12,351 $653 $2,322 $15,326 $2,072,430 $2,087,756 $— $3,744 
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, current economic information, and other factors. The Company analyzes loans individually by classifying the loans by credit risk. The Company internally grades all commercial loans at the time of origination. In addition, the Company performs an annual review on the top twenty-five non-homogenous commercial loan relationships as measured by total Company exposure to each borrower. The Company uses the following definitions for credit risk classifications:
Pass: These include satisfactory loans that have acceptable levels of risk.
Special Mention: Loans classified as special mention have a potential credit 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 have a well-defined weakness or weaknesses that jeopardize the orderly liquidation of debt. Loans classified as substandard are inadequately protected by sound net worth, payment capacity of the borrower, or of the collateral pledged. If weaknesses go uncorrected, there is potential for partial loss of principal and/or interest.
Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as 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 unlikely.
Loss: Loans classified as a loss are considered to be uncollectible and cannot be justified to continue as viable assets. While there may be the possibility of some recovery in the future, it is not practical or desirable to defer writing off these loans at the present time.
The Company has a portfolio of smaller homogenous loans that are not individually risk rated that are included within the single family residential and consumer non-real estate and other loan classes. Generally, these loan classes are rated as “Pass,” unless these loans are on non-accrual, and are then classified as substandard.
The following table presents the amortized cost basis of the loan portfolio by year of origination, loan class, and credit quality, as of December 31, 2024 (in thousands).
Term Loans
20242023202220212020PriorRevolving LoansTotal
Commercial real estate
Pass$248,023 $378,322 $482,195 $337,136 $153,187 $588,490 $96,914 $2,284,267 
Special Mention— 7,148 30,018 52,885 7,154 57,255 28,211 182,671 
Substandard— 2,232 49,752 39,636 2,999 52,740 23,505 170,864 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total$248,023 $387,702 $561,965 $429,657 $163,340 $698,485 $148,630 $2,637,802 
Year to date gross charge-offs$— $— $— $— $— $382 $— $382.00 
Owner-occupied commercial real estate
Pass$61,433 $72,571 $93,941 $126,700 $36,197 $170,809 $32,452 $594,103 
Special Mention— — — 243 2,729 1,275 — 4,247 
Substandard— — 5,192 1,496 5,499 3,594 82 15,863 
Doubtful— — — — — 149 — 149 
Loss— — — — — — — — 
Total$61,433 $72,571 $99,133 $128,439 $44,425 $175,827 $32,534 $614,362 
Year to date gross charge-offs$— $— $— $— $— $— $— $— 
Acquisition, construction & development
Pass$25,461 $109,751 $90,652 $147,702 $3,564 $16,312 $15,107 $408,549 
Special Mention— — — 2,641 142 — — 2,783 
Substandard— 13,115 4,467 3,326 21,372 63 11,564 53,907 
Doubtful— — — — — — 298 298 
Loss— — — — — — — — 
Total$25,461 $122,866 $95,119 $153,669 $25,078 $16,375 $26,969 $465,537 
Year to date gross charge-offs$— $— $— $— $— $— $— $— 
Commercial & industrial
Pass$108,206 $57,280 $47,828 $35,189 $15,109 $28,019 $237,852 $529,483 
Special Mention365 — 35,237 10,898 1,505 — 16,856 64,861 
Substandard37 285 4,482 618 523 1,029 11,765 18,739 
Doubtful— — — — — — — — 
Loss— — — — — 2 — 2 
Total$108,608 $57,565 $87,547 $46,705 $17,137 $29,050 $266,473 $613,085 
Year to date gross charge-offs$— $10 $195 $87 $— $9 $— $301 
Single family residential (1-4 units)
Pass$88,857 $152,438 $201,410 $142,719 $77,783 $332,025 $170,077 $1,165,309 
Special Mention— — — — — 214 174 388 
Substandard— 1,494 800 586 605 3,935 437 7,857 
Doubtful— — — — — — — — 
Loss93 — — — — 1 101 195 
Total$88,950 $153,932 $202,210 $143,305 $78,388 $336,175 $170,789 $1,173,749 
Year to date gross charge-offs$— $39 $28 $— $— $123 $— $190 
Consumer non-real estate and other
Pass$21,095 $10,796 $6,122 $1,836 $1,096 $2,797 $123,148 $166,890 
Special Mention15 — — — — — — 15 
Substandard363 90 17 — — 17 — 487 
Doubtful— — — 5 3 — — 8 
Loss289 12 — — — — — 301 
Total$21,762 $10,898 $6,139 $1,841 $1,099 $2,814 $123,148 $167,701 
Year to date gross charge-offs$468 $71 $17 $1 $— $20 $357 $934 
Totals$554,237 $805,534 $1,052,113 $903,616 $329,467 $1,258,726 $768,543 $5,672,236 

The following table presents the amortized cost basis of the loan portfolio by year of origination, loan class, and credit quality, as of December 31, 2023 (in thousands).

Term Loans
20232022202120202019PriorRevolving LoansTotal
Commercial real estate
Pass$195,857 $261,817 $166,253 $22,791 $75,170 $416,774 $36,761 $1,175,423 
Special Mention— 12,235 35,449 — 4,876 — — 52,560 
Substandard— 15,420 12,847 — 2,209 50,625 — 81,101 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total$195,857 $289,472 $214,549 $22,791 $82,255 $467,399 $36,761 $1,309,084 
Year to date gross charge-offs$— $— $— $— $— $— $— $— 
Owner-occupied commercial real estate
Pass$9,309 $31,725 $11,229 $14,103 $10,279 $43,616 $6,184 $126,445 
Special Mention— — — — — — — — 
Substandard— 532 — — — 4,404 — 4,936 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total$9,309 $32,257 $11,229 $14,103 $10,279 $48,020 $6,184 $131,381 
Year to date gross charge-offs$— $— $— $— $— $— $— $— 
Acquisition, construction & development
Pass$8,535 $24,286 $13,698 $— $728 $241 $1,603 $49,091 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total$8,535 $24,286 $13,698 $— $728 $241 $1,603 $49,091 
Year to date gross charge-offs$— $— $— $— $— $— $— $— 
Commercial & industrial
Pass$29,111 $15,204 $4,344 $162 $15 $1,335 $16,854 $67,025 
Special Mention— — — — — — — — 
Substandard— — 822 — — — — 822 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total$29,111 $15,204 $5,166 $162 $15 $1,335 $16,854 $67,847 
Year to date gross charge-offs$— $— $— $29 $— $— $— $29 
Single family residential (1-4 units)
Pass$78,222 $122,067 $60,202 $32,158 $40,938 $137,376 $54,273 $525,236 
Special Mention— — — — — — — — 
Substandard— — 291 243 — 2,171 39 2,744 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total$78,222 $122,067 $60,493 $32,401 $40,938 $139,547 $54,312 $527,980 
Year to date gross charge-offs$— $— $— $— $— $— $— $— 
Consumer non-real estate and other
Pass$334 $150 $43 $151 $386 $325 $984 $2,373 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total$334 $150 $43 $151 $386 $325 $984 $2,373 
Year to date gross charge-offs$— $165 $— $— $— $— $— $165 
Totals$321,368 $483,436 $305,178 $69,608 $134,601 $656,867 $116,698 $2,087,756 

The following tables present information about collateral-dependent loans that were individually evaluated for purposes of determining the ACL as of December 31, 2024 and December 31, 2023 (in thousands).
Collateral Dependent Loans
With AllowanceWith No Related AllowanceTotal
Amortized CostRelated AllowanceAmortized CostAmortized CostRelated Allowance
December 31, 2024
Commercial real estate$7,459 $4,791 $12,439 $19,898 $4,791 
Owner-occupied commercial real estate— — 1,833 1,833 — 
Acquisition, construction & development535 303 369 904 303 
Commercial & industrial983 734 348 1,331 734 
Single family residential (1-4 units)898 26 3,408 4,306 26 
Consumer non-real estate and other— — — — — 
Total$9,875 $5,854 $18,397 $28,272 $5,854 
Collateral Dependent Loans
With AllowanceWith No Related AllowanceTotal
Amortized CostRelated AllowanceAmortized CostAmortized CostRelated Allowance
December 31, 2023
Commercial real estate$— $— $— $— $— 
Owner-occupied commercial real estate— — 1,000 1,000 — 
Acquisition, construction & development— — — — — 
Commercial & industrial— — — — — 
Single family residential (1-4 units)— — 2,744 2,744 — 
Consumer non-real estate and other— — — — — 
Total$— $— $3,744 $3,744 $— 

Purchased Credit Deteriorated Loans
The Company has purchased loans for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of those loans, at acquisition, is as follows (in thousands):
Amounts
Purchase price of loans at acquisition$380,795 
Allowance for credit losses at acquisition23,910 
Non-credit discount/(premium) at acquisition37,640 
Par value of acquired loans at acquisition$442,345 

Loan Modifications
On January 1, 2023, the Company adopted ASU 2022-02 on a modified retrospective basis. ASU 2022-02 eliminates the TDR accounting model and requires that the Company evaluate, based on the accounting for loan modifications, whether the borrower is experiencing financial difficulty, and the modification results in a more-than-insignificant direct change in the contractual cash flows and represents a new loan or a continuation of an existing loan. This change required all loan modifications to be accounted for under the general loan modification guidance in ASC 310-20 - Receivables — Nonrefundable Fees and Other Costs, and subjects entities to new disclosure requirements on loan modifications to borrowers experiencing financial difficulty. Upon adoption of CECL, the Company loans classified as TDRs were individually evaluated for the ACL, and the measurement was done either using the collateral-dependent or the discounted cash flow method.
The Company may modify loans to borrowers experiencing financial difficulty by providing principal forgiveness, term extension, interest rate reduction, or an other-than-insignificant payment delay. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL. The Company may also provide multiple types of modifications on an individual loan. For the years ended December 31, 2024 and December 31, 2023 the Company did not extend any modifications to borrowers experiencing financial difficulty that had a more-than-insignificant direct change in the contractual cash flows of the loan.
The Company did not extend any modifications that were defined as TDRs during the years ended December 31, 2022.
Other Real Estate Owned
Real estate owned activity was as follows for the year ended December 31, 2024 (in thousands):
December 31, 2024
Beginning balance$— 
Loans acquired/transferred to real estate owned3,541 
Capital expenditures— 
Direct write-downs— 
Sales of real estate owned(758)
End of period balance$2,783