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Note 3 - Loans and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2024

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

3. LOANS AND ALLOWANCE FOR CREDIT LOSSES

Commercial loans are divided among five segments based primarily on collateral type, risk characteristics, and primary and secondary sources of repayment. These segments are then further stratified based on the commercial loan grade that is assigned using our standard loan grading paradigm. Retail loans are divided into one of two groups based on risk characteristics and source of repayment. Our allowance for credit loss pools are consistent with those used for loan note disclosure purposes.

Our loan portfolio segments as of both September 30, 2024 and December 31, 2023 were as follows:

Commercial Loans

■

Commercial and Industrial: Risks to this loan category include industry concentration and the practical limitations associated with monitoring the condition of the collateral which often consists of inventory, accounts receivable, and other non-real estate assets. Equipment and inventory obsolescence can also pose a risk. Declines in general economic conditions and other events can cause cash flows to fall to levels insufficient to service debt.

■

Owner Occupied Commercial Real Estate: Risks to this loan category include industry concentration and the inability to monitor the condition of the collateral. Declines in general economic conditions and other events can cause cash flows to fall to levels insufficient to service debt. Also, declines in real estate values and lack of suitable alternative use for the properties are risks for loans in this category.

■

Non-Owner Occupied Commercial Real Estate: Loans in this category are susceptible to declines in occupancy rates, business failure, and general economic conditions. Also, declines in real estate values and lack of suitable alternative use for the properties are risks for loans in this category.

■

Multi-Family and Residential Rental: Risks to this loan category include industry concentration and the inability to monitor the condition of the collateral. Loans in this category are susceptible to weakening general economic conditions and increases in unemployment rates, as well as market demand and supply of similar property and the resulting impact on occupancy rates, market rents, cash flow, and income-based real estate values. Also, the lack of a suitable alternative use for the properties is a risk for loans in this category.

■

Vacant Land, Land Development and Residential Construction: Risks common to commercial construction loans are cost overruns, changes in market demand for property, inadequate long-term financing arrangements, and declines in real estate values. Residential construction loans are susceptible to those same risks as well as those associated with residential mortgage loans. Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values, and higher interest rates.

Retail Loans

■

1-4 Family Mortgages: Residential mortgage loans are susceptible to weakening general economic conditions and increases in unemployment rates and declining real estate values.

■

Other Consumer Loans: Risks common to these loans include regulatory risks, unemployment, and changes in local economic conditions as well as the inability to monitor collateral consisting of personal property.

During the year ended December 31, 2023, we changed the segmentation of credit cards to business customers from other consumer loans to commercial and industrial loans. This division of the credit card balances was done to better align the risk characteristics of the portfolio, which include the customer type and source of repayment. Credit cards to business customers totaled $17.8 million as of December 31, 2023. We also changed the segmentation of home equity lines of credit from 1-4 family mortgage loans to other consumer loans during the year ended December 31, 2023. Home equity lines of credit share many of the same risk characteristics of both segments, however, losses are primarily driven by a lack of underlying collateral value during distressed situations as many of the loans are in a second lien position, and thus, best segmented within the other consumer portfolio. Home equity lines of credit totaled $38.1 million as of December 31, 2023.

Our total loans at September 30, 2024 were $4.55 billion compared to $4.30 billion at December 31, 2023, an increase of $249 million, or 5.8%. The components of our loan portfolio disaggregated by class of loan within the loan portfolio segments at September 30, 2024 and December 31, 2023, and the percentage change in loans from the end of 2023 to the end of the third quarter of 2024, are as follows:

									Percent
	September 30, 2024				December 31, 2023				Increase
(Dollars in thousands)	Balance			%	Balance			%	(Decrease)

Commercial:
Commercial and industrial	$	1,312,774	28.8	%	$	1,254,586	29.2	%		4.6	%
Vacant land, land development, and residential construction		66,374	1.5			74,753	1.7			(11.2	)
Real estate – owner occupied		746,714	16.4			717,667	16.7			4.0
Real estate – non-owner occupied		1,095,988	24.1			1,035,684	24.1			5.8
Real estate – multi-family and residential rental		426,438	9.4			332,609	7.7			28.2
Total commercial		3,648,288	80.2			3,415,299	79.4			6.8

Retail:
1-4 family mortgages		844,093	18.5			837,406	19.5			0.8
Other consumer loans		60,637	1.3			51,053	1.1			18.8
Total retail		904,730	19.8			888,459	20.6			1.8

Total loans	$	4,553,018	100.0	%	$	4,303,758	100.0	%		5.8	%

An age analysis of past due loans is as follows as of September 30, 2024:

													Recorded
					Greater								Balance
	30 – 59		60 – 89		Than 89								> 89
	Days		Days		Days		Total				Total		Days and
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing

Commercial:
Commercial and industrial	$	0	$	0	$	4,803	$	4,803	$	1,307,971	$	1,312,774	$	0
Vacant land, land development, and residential construction		0		0		0		0		66,374		66,374		0
Real estate – owner occupied		0		0		0		0		746,714		746,714		0
Real estate – non- owner occupied		0		0		0		0		1,095,988		1,095,988		0
Real estate – multi-family and residential rental		0		0		0		0		426,438		426,438		0
Total commercial		0		0		4,803		4,803		3,643,485		3,648,288		0

Retail:
1-4 family mortgages		420		735		21		1,176		842,917		844,093		0
Other consumer loans		6		14		0		20		60,617		60,637		0
Total retail		426		749		21		1,196		903,534		904,730		0

Total past due loans	$	426	$	749	$	4,824	$	5,999	$	4,547,019	$	4,553,018	$	0

An age analysis of past due loans is as follows as of December 31, 2023:

													Recorded
					Greater								Balance
	30 – 59		60 – 89		Than 89								> 89
	Days		Days		Days		Total				Total		Days and
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing

Commercial:
Commercial and industrial	$	4	$	0	$	249	$	253	$	1,254,333	$	1,254,586	$	0
Vacant land, land development, and residential construction		0		0		0		0		74,753		74,753		0
Real estate – owner occupied		0		0		70		70		717,597		717,667		0
Real estate – non-owner occupied		0		0		0		0		1,035,684		1,035,684		0
Real estate – multi-family and residential rental		0		0		0		0		332,609		332,609		0
Total commercial		4		0		319		323		3,414,976		3,415,299		0

Retail:
1-4 family mortgages		934		145		38		1,117		836,289		837,406		0
Other consumer loans		97		0		0		97		50,956		51,053		0
Total retail		1,031		145		38		1,214		887,245		888,459		0

Total past due loans	$	1,035	$	145	$	357	$	1,537	$	4,302,221	$	4,303,758	$	0

Nonaccrual loans as of September 30, 2024 were as follows:

	Recorded
	Principal		Related
(Dollars in thousands)	Balance		Allowance
With no allowance recorded:
Commercial:
Commercial and industrial	$	0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		0		0

Retail:
1-4 family mortgages		1,358		0
Other consumer loans		0		0
Total retail		1,358		0

Total with no allowance recorded	$	1,358	$	0

With an allowance recorded:
Commercial:
Commercial and industrial	$	6,769	$	5,775
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		6,769		5,775

Retail:
1-4 family mortgages		1,647		349
Other consumer loans		103		103
Total retail		1,750		452

Total with an allowance recorded	$	8,519	$	6,227

Total nonaccrual loans:
Commercial	$	6,769	$	5,775
Retail		3,108		452
Total nonaccrual loans	$	9,877	$	6,227

Nonaccrual loans represent the entire balance of collateral dependent loans. As of September 30, 2024 and December 31, 2023, all collateral dependent loans were secured by real estate, with the exception of those classified as commercial and industrial, which were secured by accounts receivable, inventory, and equipment. Interest income recognized on nonaccrual loans totaled $0.5 million and less than $0.1 million during the nine months ended September 30, 2024 and 2023, respectively, reflecting the collection of interest at the time of principal pay-off.

Nonaccrual loans as of December 31, 2023 were as follows:

	Recorded
	Principal		Related
(Dollars in thousands)	Balance		Allowance
With no allowance recorded:
Commercial:
Commercial and industrial	$	0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		70		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		70		0

Retail:
1-4 family mortgages		2,272		0
Other consumer loans		0		0
Total retail		2,272		0

Total with no allowance recorded	$	2,342	$	0

With an allowance recorded:
Commercial:
Commercial and industrial	$	249	$	1
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		249		1

Retail:
1-4 family mortgages		824		240
Other consumer loans		0		0
Total retail		824		240

Total with an allowance recorded	$	1,073	$	241

Total nonaccrual loans:
Commercial	$	319	$	1
Retail		3,096		240
Total nonaccrual loans	$	3,415	$	241

Credit Quality Indicators. We utilize a comprehensive grading system for our commercial loans. All commercial loans are graded on a ten grade rating system. The rating system utilizes standardized grade paradigms that analyze several critical factors such as cash flow, operating performance, financial condition, collateral, industry condition and management. All commercial loans are graded at inception and reviewed and, if appropriate, re-graded at various intervals thereafter. The primary risk elements with respect to commercial loans are the financial condition of the borrower, sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers and employ a disciplined and formalized review of the existence of collateral and its value. All commercial loans are graded using the following criteria:

Grade 1.	“Exceptional” Loans with this rating contain very little, if any, risk.

Grade 2.	“Outstanding” Loans with this rating have excellent and stable sources of repayment and conform to bank policy and regulatory requirements.

Grade 3.	“Very Good” Loans with this rating have strong sources of repayment and conform to bank policy and regulatory requirements. These are loans for which repayment risks are acceptable.

Grade 4.	“Good” Loans with this rating have solid sources of repayment and conform to bank policy and regulatory requirements. These are loans for which repayment risks are modest.

Grade 5.	“Acceptable” Loans with this rating exhibit acceptable sources of repayment and conform with most bank policies and all regulatory requirements. These are for loans for which repayment risks are satisfactory.

Grade 6.	“Monitor” Loans with this rating are considered to have emerging weaknesses which may include negative current cash flow, high leverage, or operating losses. Generally, if further deterioration is observed, these credits will be downgraded to the criticized asset report.

Grade 7.	“Special Mention” Loans with this rating 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 loan at some future date.

Grade 8.	“Substandard” Loans with this rate are inadequately protected by current sound net worth, paying capacity of the obligor, or of the pledged collateral, if any. A Substandard loan normally has one or more well-defined weaknesses that jeopardize the repayment of the debt. They are characterized by the distinct possibility of loss if the deficiencies are not corrected.

Grade 9.	“Doubtful” Loans with this rating exhibit all the weaknesses inherent in the Substandard classification and where collection or liquidation in full is highly questionable and improbable.

Grade 10.	“Loss” Loans with this rating are considered uncollectable, and of such little value that continuance as an active asset is not warranted.

The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments. We have a reporting system that monitors past due loans and have adopted policies to pursue creditors’ rights in order to preserve our collateral position. Retail loans that reach 90 days or more past due are generally placed into nonaccrual status and are categorized as nonperforming.

The following table reflects amortized cost basis of loans and year-to-date loan charge-offs as of September 30, 2024 based on year of origination:

															Revolving		Grand
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Term Total		Loans		Total
Commercial:
Commercial and Industrial:
Grades 1 – 4	$	63,639	$	76,905	$	58,621	$	61,130	$	12,067	$	9,425	$	281,787	$	409,891	$	691,678
Grades 5 – 7		139,901		120,560		22,257		21,654		3,372		1,313		309,057		297,229		606,286
Grades 8 – 9		1,966		428		5,981		266		90		0		8,731		6,079		14,810
Total	$	205,506	$	197,893	$	86,859	$	83,050	$	15,529	$	10,738	$	599,575	$	713,199	$	1,312,774
Year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	9	$	9

Vacant Land, Land Development and Residential Construction:
Grades 1 – 4	$	17,767	$	6,127	$	633	$	582	$	181	$	247	$	25,537	$	0	$	25,537
Grades 5 – 7		24,921		11,178		4,106		127		0		499		40,831		0		40,831
Grades 8 – 9		0		6		0		0		0		0		6		0		6
Total	$	42,688	$	17,311	$	4,739	$	709	$	181	$	746	$	66,374	$	0	$	66,374
Year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Real Estate – Owner Occupied:
Grades 1 – 4	$	81,625	$	182,509	$	92,008	$	76,843	$	38,009	$	9,954	$	480,948	$	0	$	480,948
Grades 5 – 7		63,444		78,766		58,796		23,374		13,954		6,504		244,838		17,567		262,405
Grades 8 – 9		0		0		3,327		0		34		0		3,361		0		3,361
Total	$	145,069	$	261,275	$	154,131	$	100,217	$	51,997	$	16,458	$	729,147	$	17,567	$	746,714
Year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Real Estate – Non-Owner Occupied:
Grades 1 – 4	$	68,535	$	96,238	$	80,564	$	101,176	$	81,723	$	18,585	$	446,821	$	0	$	446,821
Grades 5 – 7		157,802		198,594		87,866		86,993		92,925		16,917		641,097		0		641,097
Grades 8 – 9		8,070		0		0		0		0		0		8,070		0		8,070
Total	$	234,407	$	294,832	$	168,430	$	188,169	$	174,648	$	35,502	$	1,095,988	$	0	$	1,095,988
Year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Real Estate – Multi-Family and Residential Rental:
Grades 1 – 4	$	7,017	$	47,062	$	10,218	$	63,289	$	32,616	$	4,171	$	164,373	$	0	$	164,373
Grades 5 – 7		29,458		145,458		70,270		4,727		8,424		3,117		261,454		41		261,495
Grades 8 – 9		0		0		0		0		570		0		570		0		570
Total	$	36,475	$	192,520	$	80,488	$	68,016	$	41,610	$	7,288	$	426,397	$	41	$	426,438
Year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Total Commercial	$	664,145	$	963,831	$	494,647	$	440,161	$	283,965	$	70,732	$	2,917,481	$	730,807	$	3,648,288
Total Commercial year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	9	$	9

Retail:
1-4 Family Mortgages:
Performing	$	55,181	$	132,916	$	316,815	$	211,887	$	74,497	$	49,766	$	841,062	$	25	$	841,087
Nonperforming		0		91		1,737		262		0		916		3,006		0		3,006
Total	$	55,181	$	133,007	$	318,552	$	212,149	$	74,497	$	50,682	$	844,068	$	25	$	844,093
Year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Other Consumer Loans:
Performing	$	5,125	$	3,460	$	1,664	$	861	$	415	$	709	$	12,234	$	48,299	$	60,533
Nonperforming		104		0		0		0		0		0		104		0		104
Total	$	5,229	$	3,460	$	1,664	$	861	$	415	$	709	$	12,338	$	48,299	$	60,637
Year-to-date gross write offs	$	0	$	1	$	18	$	8	$	0	$	6	$	33	$	9	$	42
Total Retail	$	60,410	$	136,467	$	320,216	$	213,010	$	74,912	$	51,391	$	856,406	$	48,324	$	904,730
Total Retail year-to-date gross write offs	$	0	$	1	$	18	$	8	$	0	$	6	$	33	$	9	$	42

Total	$	724,555	$	1,100,298	$	814,863	$	653,171	$	358,877	$	122,123	$	3,773,887	$	779,131	$	4,553,018
Total year-to-date gross write offs	$	0	$	1	$	18	$	8	$	0	$	6	$	33	$	18	$	51

There were lines of credit with principal balances of $5.0 million that were converted to term loans during the first nine months of 2024.

The following table reflects amortized cost basis of loans as of December 31, 2023 and loan charge-offs during the nine months ended September 30, 2023 based on year of origination:

															Revolving		Grand
(Dollars in thousands)	2023		2022		2021		2020		2019		Prior		Term Total		Loans		Total
Commercial:
Commercial and Industrial:
Grades 1 – 4	$	103,531	$	79,883	$	90,107	$	20,577	$	5,978	$	9,160	$	309,236	$	414,920	$	724,156
Grades 5 – 7		174,668		57,979		20,075		18,361		7,450		119		278,652		227,155		505,807
Grades 8 – 9		3,671		2,122		277		0		0		0		6,070		18,553		24,623
Total	$	281,870	$	139,984	$	110,459	$	38,938	$	13,428	$	9,279	$	593,958	$	660,628	$	1,254,586
Year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	218	$	218

Vacant Land, Land Development and Residential Construction:
Grades 1 – 4	$	24,875	$	6,570	$	1,108	$	2,110	$	0	$	281	$	34,944	$	0	$	34,944
Grades 5 – 7		17,799		21,244		138		2		40		496		39,719		0		39,719
Grades 8 – 9		9		0		0		0		0		81		90		0		90
Total	$	42,683	$	27,814	$	1,246	$	2,112	$	40	$	858	$	74,753	$	0	$	74,753
Year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Real Estate – Owner Occupied:
Grades 1 – 4	$	205,379	$	110,130	$	85,982	$	47,630	$	14,362	$	2,908	$	466,391	$	1,948	$	468,339
Grades 5 – 7		111,197		63,271		27,729		27,029		9,419		439		239,084		9,718		248,802
Grades 8 – 9		0		417		0		38		0		71		526		0		526
Total	$	316,576	$	173,818	$	113,711	$	74,697	$	23,781	$	3,418	$	706,001	$	11,666	$	717,667
Year-to-date gross write offs	$	0	$	14	$	0	$	0	$	0	$	40	$	54	$	0	$	54

Real Estate – Non-Owner Occupied:
Grades 1 – 4	$	109,125	$	84,912	$	113,846	$	102,279	$	27,664	$	13,193	$	451,019	$	0	$	451,019
Grades 5 – 7		233,471		118,464		109,238		88,315		6,148		18,135		573,771		0		573,771
Grades 8 – 9		10,894		0		0		0		0		0		10,894		0		10,894
Total	$	353,490	$	203,376	$	223,084	$	190,594	$	33,812	$	31,328	$	1,035,684	$	0	$	1,035,684
Year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Real Estate – Multi-Family and Residential Rental:
Grades 1 – 4	$	36,038	$	28,512	$	64,244	$	35,129	$	4,883	$	3,649	$	172,455	$	0	$	172,455
Grades 5 – 7		72,916		55,964		4,816		9,372		2,699		2,136		147,903		0		147,903
Grades 8 – 9		11,250		0		0		1,001		0		0		12,251		0		12,251
Total	$	120,204	$	84,476	$	69,060	$	45,502	$	7,582	$	5,785	$	332,609	$	0	$	332,609
Year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Total Commercial	$	1,114,823	$	629,468	$	517,560	$	351,843	$	78,643	$	50,668	$	2,743,005	$	672,294	$	3,415,299
Total Commercial year-to-date gross write offs	$	0	$	14	$	0	$	0	$	0	$	40	$	54	$	218	$	272

Retail:
1-4 Family Mortgages:
Performing	$	133,823	$	332,098	$	231,842	$	82,002	$	10,515	$	44,003	$	834,283	$	27	$	834,310
Nonperforming		108		1,728		305		0		10		945		3,096		0		3,096
Total	$	133,931	$	333,826	$	232,147	$	82,002	$	10,525	$	44,948	$	837,379	$	27	$	837,406
Year-to-date gross write offs	$	0	$	136	$	0	$	0	$	0	$	239	$	375	$	138	$	513

Other Consumer Loans:
Performing	$	5,138	$	2,569	$	1,664	$	608	$	651	$	716	$	11,346	$	39,707	$	51,053
Nonperforming		0		0		0		0		0		0		0		0		0
Total	$	5,138	$	2,569	$	1,664	$	608	$	651	$	716	$	11,346	$	39,707	$	51,053
Year-to-date gross write offs	$	2	$	3	$	0	$	0	$	0	$	3	$	8	$	17	$	25
Total Retail	$	139,069	$	336,395	$	233,811	$	82,610	$	11,176	$	45,664	$	848,725	$	39,734	$	888,459
Total Retail year-to-date gross write offs	$	2	$	139	$	0	$	0	$	0	$	242	$	383	$	155	$	538

Total	$	1,253,892	$	965,863	$	751,371	$	434,453	$	89,819	$	96,332	$	3,591,730	$	712,028	$	4,303,758
Total year-to-date gross write offs	$	2	$	153	$	0	$	0	$	0	$	282	$	437	$	373	$	810

There were lines of credit with principal balances of $6.4 million as of December 31, 2022 that were converted to term loans during 2023.

We use a migration to loss methodology to determine historical loss rates for commercial loans given the comprehensive loan grading process employed by our bank for over two decades, while an open pool approach is best suited for retail loans given the smaller dollar size of the segments. A baseline loss rate is produced at each reporting date for each loan portfolio segment using bank-specific loan charge-off and recovery data over a defined historical look-back period. The look-back period represents the number of data periods that will be used to calculate a baseline loss rate for each loan portfolio segment. We determined that the look-back period commencing on January 1, 2011 through the current reporting date was reasonable and appropriate, which was used in the calculation of both the September 30, 2024 and December 31, 2023 allowance for credit losses.

Our historical loss rate is then applied to future loan balances at the instrument level based on remaining contractual life adjusted for amortization, prepayment and default to develop a baseline lifetime loss. Our prepayment speed assumptions are developed at the loan segment level based upon the consideration of all relevant data which we believe could impact anticipated customer behavior, including changes in interest rates, economic conditions, and underlying property valuations. For the commercial portfolio segments, we assumed a 2.0% prepayment speed as of both September 30, 2024 and December 31, 2023 as we deemed there to be no considerable changes from historical experience. For the retail 1-4 family mortgage and retail other consumer portfolios, we used a prepayment speed of 9.0% as of September 30, 2024 and December 31, 2023.

During each reporting period, we also consider the need to adjust the historical loss rates as determined to reflect the extent to which we expect current conditions and reasonable and supportable economic forecasts to differ from the conditions that existed for the period over which the historical loss information was determined. These qualitative adjustments may increase or decrease our estimate of expected future credit losses. As of September 30, 2024 and December 31, 2023, we used a one-year reasonable and supportable economic forecast period, with a six-month straight-line reversion period for all loan segments. The economic forecasts used for our September 30, 2024 allowance calculation reflected a $2.1 million allowance balance reduction. The forecasts used for our December 31, 2023 allowance calculation reflected a $2.0 million allowance balance reduction.

Individual loans exhibiting unique risk characteristics, which differentiated the loans from other loans within the loan segments and were evaluated for expected credit losses on an individual basis, totaled $11.6 million and $5.4 million as of September 30, 2024 and December 31, 2023, respectively. Individual allowance allocations totaled $6.3 million and $0.4 million as of September 30, 2024 and December 31, 2023, respectively.

Activity in the allowance for credit losses during the three and nine months ended September 30, 2024 is as follows:

(Dollars in thousands)	Commercial and industrial			Commercial vacant land, land development and residential construction			Commercial real estate – owner occupied		Commercial real estate – non-owner occupied		Commercial real estate – multi-family and residential rental			1-4 family mortgages			Other consumer loans			Unallocated		Total

Balance at 6-30-24	$	13,215		$	393		$	7,190	$	10,249	$	3,589		$	18,513		$	2,250		$	9	$	55,408
Provision for credit losses		1,671			(40	)		336		351		(369	)		(354	)		(539	)		44		1,100
Charge-offs		(3	)		0			0		0		0			0			(7	)		0		(10	)
Recoveries		31			1			2		0		4			33			21			0		92
Ending balance	$	14,914		$	354		$	7,528	$	10,600	$	3,224		$	18,192		$	1,725		$	53	$	56,590

Balance at 12-31-23	$	7,441		$	384		$	7,186	$	9,852	$	3,184		$	18,986		$	2,881		$	0	$	49,914
Provision for credit losses		7,147			(34	)		181		748		28			(923	)		(1,300	)		53		5,900
Charge-offs		(9	)		0			0		0		0			0			(42	)		0		(51	)
Recoveries		335			4			161		0		12			129			186			0		827
Ending balance	$	14,914		$	354		$	7,528	$	10,600	$	3,224		$	18,192		$	1,725		$	53	$	56,590

Activity in the allowance for credit losses during the three and nine months ended September 30, 2023 is as follows:

(Dollars in thousands)	Commercial and industrial			Commercial vacant land, land development and residential construction			Commercial real estate – owner occupied			Commercial real estate – non-owner occupied		Commercial real estate – multi-family and residential rental			1-4 family mortgages			Other consumer loans			Unallocated			Total

Balance at 6-30-23	$	6,472		$	304		$	5,838		$	8,689	$	3,700		$	19,498		$	199		$	21		$	44,721
Provision for credit losses		2,500			31			627			564		(1,071	)		726			(56	)		(21	)		3,300
Charge-offs		0			0			(40	)		0		0			(201	)		(2	)		0			(243	)
Recoveries		26			22			9			0		6			161			6			0			230
Ending balance	$	8,998		$	357		$	6,434		$	9,253	$	2,635		$	20,184		$	147		$	0		$	48,008

Balance at 12-31-22	$	10,203		$	490		$	5,914		$	9,242	$	2,191		$	14,027		$	160		$	19		$	42,246
Provision for credit losses		(1,123	)		(167	)		495			11		426			6,317			(40	)		(19	)		5,900
Charge-offs		(218	)		0			(54	)		0		0			(513	)		(25	)		0			(810	)
Recoveries		136			34			79			0		18			353			52			0			672
Ending balance	$	8,998		$	357		$	6,434		$	9,253	$	2,635		$	20,184		$	147		$	0		$	48,008

The following table presents the period-end amortized cost basis of modifications to borrowers experiencing financial difficulty by type of modification made during the three months ended September 30, 2024:

	Interest Rate				Principal
(Dollars in thousands)	Reduction		Term Extension		Forgiveness
Commercial:
Commercial and industrial	$	0	$	5,670	$	0
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		0		0		0
Real estate – non-owner occupied		0		0		0
Real estate – multi-family and residential rental		0		0		0
Total commercial	$	0	$	5,670	$	0

Retail:
1-4 family mortgages		0		0		0
Other consumer loans		0		0		0
Total retail	$	0	$	0	$	0

Total loans	$	0	$	5,670	$	0

The following table presents the period-end amortized cost basis of modifications to borrowers experiencing financial difficulty by type of modification made during the nine months ended September 30, 2024:

	Interest Rate				Principal
(Dollars in thousands)	Reduction		Term Extension		Forgiveness
Commercial:
Commercial and industrial	$	0	$	7,454	$	0
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		0		0		0
Real estate – non-owner occupied		0		0		0
Real estate – multi-family and residential rental		0		0		0
Total commercial	$	0	$	7,454	$	0

Retail:
1-4 family mortgages		0		0		0
Other consumer loans		0		0		0
Total retail	$	0	$	0	$	0

Total loans	$	0	$	7,454	$	0

Loans listed under Term Extension were generally granted a series of short-term maturity extensions as part of the workout process and associated forbearance agreements.

There were no loans modified to borrowers experiencing financial difficulty during the three months ended September 30, 2023. The following table presents the period-end amortized cost basis of modifications to borrowers experiencing financial difficulty by type of modification made during the nine months ended September 30, 2023:

	Interest Rate				Principal
(Dollars in thousands)	Reduction		Term Extension		Forgiveness
Commercial:
Commercial and industrial	$	0	$	8,184	$	0
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		0		0		0
Real estate – non-owner occupied		0		0		0
Real estate – multi-family and residential rental		0		0		0
Total commercial	$	0	$	8,184	$	0

Retail:
1-4 family mortgages		0		0		0
Other consumer loans		0		0		0
Total retail	$	0	$	0	$	0

Total loans	$	0	$	8,184	$	0

The following table presents the amortized cost basis of loans that have been modified in the past twelve months to borrowers experiencing financial difficulty by payment status and loan segment as of September 30, 2024:

			30 – 89 Days		90 + Days
(Dollars in thousands)	Current		Past Due		Past Due		Total
Commercial:
Commercial and industrial	$	9,842	$	0	$	0	$	9,842
Vacant land, land development and residential construction		0		0		0		0
Real estate – owner occupied		0		0		0		0
Real estate – non-owner occupied		8,070		0		0		8,070
Real estate – multi-family and residential rental		0		0		0		0
Total commercial	$	17,912	$	0	$	0	$	17,912

Retail:
1-4 family mortgages		0		0		0		0
Other consumer loans		0		0		0		0
Total retail	$	0	$	0	$	0	$	0

Total loans	$	17,912	$	0	$	0	$	17,912