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Note 3 - Loans and Allowance for Credit Losses

12 Months Ended

Dec. 31, 2024

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

NOTE 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 December 31, 2024 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 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 $19.1 million and $17.8 million as of December 31, 2024 and 2023, respectively. 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 $52.0 million and $38.1 million as of December 31, 2024 and 2023, respectively.

Year-end loans disaggregated by class of loan within the loan portfolio segments were as follows:

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

Commercial:
Commercial and industrial	$	1,287,308		28.0	%	$	1,254,586		29.2	%		2.6	%
Vacant land, land development, and residential construction		66,936		1.5			74,753		1.7			(10.5	)
Real estate – owner occupied		748,837		16.3			717,667		16.7			4.3
Real estate – non-owner occupied		1,128,404		24.5			1,035,684		24.1			9.0
Real estate – multi-family and residential rental		475,819		10.3			332,609		7.7			43.1
Total commercial		3,707,304		80.6			3,415,299		79.4			8.5

Retail:
1-4 family mortgages		827,597		18.0			837,406		19.5			(1.2	)
Other consumer loans		65,880		1.4			51,053		1.1			29.0
Total retail		893,477		19.4			888,459		20.6			0.6

Total loans	$	4,600,781		100.0	%	$	4,303,758		100.0	%		6.9	%

Concentrations within the loan portfolio were as follows at year end:

2024

2023

Percentage

Loan

(Dollars in thousands)

Balance

Portfolio

Balance

Portfolio

Commercial real estate loans to lessors of non-residential buildings

822,402

17.9

754,611

17.5

An age analysis of past due loans is as follows as of December 31, 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	$	5	$	0	$	864	$	869	$	1,286,439	$	1,287,308	$	0
Vacant land, land development, and residential construction		12		0		0		12		66,924		66,936		0
Real estate – owner occupied		0		0		0		0		748,837		748,837		0
Real estate – non-owner occupied		0		0		0		0		1,128,404		1,128,404		0
Real estate – multi-family and residential rental		0		0		0		0		475,819		475,819		0
Total commercial		17		0		864		881		3,706,423		3,707,304		0

Retail:
1-4 family mortgages		2,365		713		182		3,260		824,337		827,597		0
Other consumer loans		112		0		0		112		65,768		65,880		0
Total retail		2,477		713		182		3,372		890,105		893,477		0

Total past due loans	$	2,494	$	713	$	1,046	$	4,253	$	4,596,528	$	4,600,781	$	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 December 31, 2024 were as follows:

	Recorded
	Principal		Related
(Dollars in thousands)	Balance		Allowance
With no allowance recorded:
Commercial:
Commercial and industrial	$	615	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		42		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		657		0

Retail:
1-4 family mortgages		1,167		0
Other consumer loans		0		0
Total retail		1,167		0

Total with no allowance recorded	$	1,824	$	0

With an allowance recorded:
Commercial:
Commercial and industrial	$	2,110	$	1,732
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		2,110		1,732

Retail:
1-4 family mortgages		1,808		402
Other consumer loans		0		0
Total retail		1,808		402

Total with an allowance recorded	$	3,918	$	2,134

Total nonaccrual loans:
Commercial	$	2,767	$	1,732
Retail		2,975		402
Total nonaccrual loans	$	5,742	$	2,134

Nonaccrual loans represent the entire balance of collateral dependent loans. As of December 31, 2024 and 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 $0.3 million in 2024, $0.2 million in 2023 and less than $0.1 million in 2022, 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

Nonaccrual loans as of December 31, 2022 were as follows:

	Recorded
	Principal		Related
(Dollars in thousands)	Balance		Allowance
With no allowance recorded:
Commercial:
Commercial and industrial	$	249	$	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		249		0

Retail:
1-4 family mortgages		1,064		0
Other consumer loans		0		0
Total retail		1,064		0

Total with no allowance recorded	$	1,313	$	0

With an allowance recorded:
Commercial:
Commercial and industrial	$	5,775	$	2,051
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		248		32
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		6,023		2,083

Retail:
1-4 family mortgages		392		200
Other consumer loans		0		0
Total retail		824		240

Total with an allowance recorded	$	9,415	$	2,283

Total nonaccrual loans:
Commercial	$	6,272	$	2,083
Retail		1,456		200
Total nonaccrual loans	$	7,728	$	2,283

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 reviewed and graded at inception and, if appropriate, re-graded at various intervals thereafter. The risk assessment for retail loans is primarily based on the type of collateral.

Loans by credit quality indicators were as follows as of December 31, 2024:

Commercial credit exposure – credit risk profiled by internal credit risk grades:

			Commercial
			Vacant Land,						Commercial
			Land		Commercial		Commercial		Real Estate -
	Commercial		Development,		Real Estate -		Real Estate -		Multi-Family
	and		and Residential		Owner		Non-Owner		and Residential
(Dollars in thousands)	Industrial		Construction		Occupied		Occupied		Rental

Internal credit risk grade groupings:
Grades 1 – 4	$	629,851	$	25,191	$	466,400	$	432,244	$	173,109
Grades 5 – 7		637,183		41,740		275,506		688,178		302,100
Grades 8 – 9		20,274		5		6,931		7,982		610
Total commercial	$	1,287,308	$	66,936	$	748,837	$	1,128,404	$	475,819

Retail credit exposure – credit risk profiled by collateral type:

	Retail		Retail
	1-4 Family		Other
(Dollars in thousands)	Mortgages		Consumer Loans

Performing	$	824,622	$	65,880
Nonperforming		2,975		0
Total retail	$	827,597	$	65,880

Loans by credit quality indicators were as follows as of December 31, 2023:

Commercial credit exposure – credit risk profiled by internal credit risk grades:

			Commercial
			Vacant Land,						Commercial
			Land		Commercial		Commercial		Real Estate -
	Commercial		Development,		Real Estate -		Real Estate -		Multi-Family
	and		and Residential		Owner		Non-Owner		and Residential
(Dollars in thousands)	Industrial		Construction		Occupied		Occupied		Rental

Internal credit risk grade groupings:
Grades 1 – 4	$	724,156	$	34,944	$	468,339	$	451,019	$	172,455
Grades 5 – 7		505,807		39,719		248,802		573,771		147,903
Grades 8 – 9		24,623		90		526		10,894		12,251
Total commercial	$	1,254,586	$	74,753	$	717,667	$	1,035,684	$	332,609

Retail credit exposure – credit risk profiled by collateral type:

	Retail		Retail
	1-4 Family		Other
(Dollars in thousands)	Mortgages		Consumer Loans

Performing	$	834,310	$	51,053
Nonperforming		3,096		0
Total retail	$	837,406	$	51,053

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 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 rating 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 elements with respect to commercial loans are the financial condition of the borrower, the 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. The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments; loans 90 days or more past due are considered nonperforming. 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.

The following table reflects loan balances as of December 31, 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	$	102,898	$	68,536	$	41,609	$	47,534	$	9,551	$	8,412	$	278,540	$	351,311	$	629,851
Grades 5 – 7		188,267		88,471		31,755		13,513		3,298		2,019		327,323		309,860		637,183
Grades 8 – 9		4,813		401		3,436		262		69		0		8,981		11,293		20,274
Total	$	295,978	$	157,408	$	76,800	$	61,309	$	12,918	$	10,431	$	614,844	$	672,464	$	1,287,308
Current-period gross write-offs	$	0	$	0	$	0	$	0	$	3,741	$	0	$	3,741	$	9	$	3,750

Vacant Land, Land Development and Residential Construction:
Grades 1 – 4	$	18,536	$	4,997	$	610	$	645	$	177	$	226	$	25,191	$	0	$	25,191
Grades 5 – 7		31,692		7,681		1,855		49		0		463		41,740		0		41,740
Grades 8 – 9		0		5		0		0		0		0		5		0		5
Total	$	50,228	$	12,683	$	2,465	$	694	$	177	$	689	$	66,936	$	0	$	66,936
Current-period gross write-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Real Estate – Owner Occupied:
Grades 1 – 4	$	179,763	$	84,641	$	88,794	$	75,702	$	34,031	$	3,469	$	466,400	$	0	$	466,400
Grades 5 – 7		108,316		61,998		52,072		21,833		12,386		5,611		262,216		13,290		275,506
Grades 8 – 9		714		0		6,184		0		33		0		6,931		0		6,931
Total	$	288,793	$	146,639	$	147,050	$	97,535	$	46,450	$	9,080	$	735,547	$	13,290	$	748,837
Current-period gross write-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Real Estate – Non-Owner Occupied:
Grades 1 – 4	$	84,773	$	79,911	$	76,468	$	93,034	$	84,355	$	13,703	$	432,244	$	0	$	432,244
Grades 5 – 7		194,634		220,681		84,897		91,569		85,828		10,569		688,178		0		688,178
Grades 8 – 9		7,982		0		0		0		0		0		7,982		0		7,982
Total	$	287,389	$	300,592	$	161,365	$	184,603	$	170,183	$	24,272	$	1,128,404	$	0	$	1,128,404
Current-period gross write-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Real Estate – Multi-Family and Residential Rental:
Grades 1 – 4	$	16,271	$	46,870	$	10,107	$	62,744	$	33,337	$	3,780	$	173,109	$	0	$	173,109
Grades 5 – 7		81,919		174,468		32,506		4,559		5,626		2,985		302,063		37		302,100
Grades 8 – 9		47		0		0		0		563		0		610		0		610
Total	$	98,237	$	221,338	$	42,613	$	67,303	$	39,526	$	6,765	$	475,782	$	37	$	475,819
Current-period gross write-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Total Commercial	$	1,020,625	$	838,660	$	430,293	$	411,444	$	269,254	$	51,237	$	3,021,513	$	685,791	$	3,707,304
Current-period gross write-offs	$	0	$	0	$	0	$	0	$	3,741	$	0	$	3,741	$	9	$	3,750

Retail:
1-4 Family Mortgages:
Performing	$	72,349	$	122,718	$	307,161	$	203,052	$	73,052	$	46,290	$	824,622	$	0	$	824,622
Nonperforming		0		89		1,626		439		0		821		2,975		0		2,975
Total	$	72,349	$	122,807	$	308,787	$	203,491	$	73,052	$	47,111	$	827,597	$	0	$	827,597
Current-period gross write-offs	$	0	$	0	$	0	$	33	$	0	$	0	$	33	$	0	$	33
								0
Other Consumer Loans:
Performing	$	5,863	$	3,008	$	1,428	$	732	$	361	$	653	$	12,045	$	53,835	$	65,880
Nonperforming		0		0		0		0		0		0		0		0		0
Total	$	5,863	$	3,008	$	1,428	$	732	$	361	$	653	$	12,045	$	53,835	$	65,880
Current-period gross write-offs	$	10	$	1	$	19	$	8	$	0	$	5	$	43	$	11	$	54
Total Retail	$	78,212	$	125,815	$	310,215	$	204,223	$	73,413	$	47,764	$	839,642	$	53,835	$	893,477
Current-period gross write-offs	$	10	$	1	$	19	$	41	$	0	$	5	$	76	$	11	$	87

Grand Total	$	1,098,837	$	964,475	$	740,508	$	615,667	$	342,667	$	99,001	$	3,861,155	$	739,626	$	4,600,781
Current-period gross write-offs	$	10	$	1	$	19	$	41	$	3,741	$	5	$	3,817	$	20	$	3,837

There were lines of credit with principal balances of $9.1 million as of December 31, 2023 that were converted to term loans during 2024.

The following table reflects loan balances as of December 31, 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
Current-period 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
Current-period 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
Current-period 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
Current-period 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
Current-period 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
Current-period 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
Current-period gross write-offs	$	0	$	174	$	0	$	0	$	0	$	240	$	414	$	0	$	414

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
Current-period gross write-offs	$	3	$	16	$	0	$	0	$	0	$	3	$	22	$	155	$	177
Total Retail	$	139,069	$	336,395	$	233,811	$	82,610	$	11,176	$	45,664	$	848,725	$	39,734	$	888,459
Current-period gross write-offs	$	3	$	190	$	0	$	0	$	0	$	243	$	436	$	155	$	591

Grand Total	$	1,253,892	$	965,863	$	751,371	$	434,453	$	89,819	$	96,332	$	3,591,730	$	712,028	$	4,303,758
Current-period gross write-offs	$	3	$	204	$	0	$	0	$	0	$	283	$	490	$	373	$	863

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 reporting date was reasonable and appropriate for the calculation of historical loss rates for both December 31, 2024 and 2023.

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 in which we believe will impact anticipated customer behavior including changes in interest rates, economic conditions, and underlying property valuations. For the commercial loan portfolio segments, we assumed a 2% prepayment speed as of both December 31, 2024 and 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 decreased the prepayment speed from 9.0% as of December 31, 2023 to 7.8% as of December 31, 2024. This decrease extended the average lives of the portfolios in which the loss rates were applied, resulting in an increase to the allowance of $1.3 million. This change in assumption was driven by higher long-term interest rates and the composition of the underlying portfolios.

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 December 31, 2024 and 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 December 31, 2024 and 2023 allowance calculations reflected allowance balance reductions of $2.2 million and $2.0 million, respectively.

Individual loans exhibiting unique risk characteristics, which differentiate the loans from other loans within the loan segments and are evaluated for expected credit losses on an individual basis, totaled $7.4 million and $5.4 million as of December 31, 2024 and 2023, respectively. Individual allowance allocations totaled $2.2 million and $0.4 million as of December 31, 2024 and 2023, respectively.

The allowance for credit losses for the year ended December 31, 2024 is as follows:

				Commercial
				vacant land,							Commercial
				land							real estate –
				development			Commercial		Commercial		multi-family
	Commercial			and			real estate –		real estate –		and		1-4			Other
	and			residential			owner		non-owner		residential		family			consumer
(Dollars in thousands)	industrial			construction			occupied		occupied		rental		mortgages			loans			Unallocated		Total
Allowance for credit losses:
Beginning balance	$	7,441		$	384		$	7,186	$	9,852	$	3,184	$	18,986		$	2,881		$	0	$	49,914
Provision for credit losses		7,109			(22	)		314		1,067		468		(474	)		(1,089	)		27		7,400
Charge-offs		(3,750	)		0			0		0		0		(33	)		(54	)		0		(3,837	)
Recoveries		365			5			171		0		15		223			198			0		977
Ending balance	$	11,165		$	367		$	7,671	$	10,919	$	3,667	$	18,702		$	1,936		$	27	$	54,454

The allowance for credit losses for the year ended December 31, 2023 is as follows:

				Commercial
				vacant land,								Commercial
				land								real estate –
				development			Commercial			Commercial		multi-family
	Commercial			and			real estate –			real estate –		and		1-4			Other
	and			residential			owner			non-owner		residential		family			consumer
(Dollars in thousands)	industrial			construction			occupied			occupied		rental		mortgages			loans			Unallocated			Total
Allowance for credit losses:
Beginning balance	$	10,203		$	490		$	5,914		$	9,242	$	2,191	$	14,027		$	160		$	19		$	42,246
Credit risk reclassifications		90			0			0			0		0		(697	)		607			0			0
Balances, December 31, 2022 after reclassifications		10,293			490			5,914			9,242		2,191		13,330			767			19			42,246
Provision for credit losses		(2,822	)		(141	)		1,255			610		967		5,638			2,212			(19	)		7,700
Charge-offs		(218	)		0			(54	)		0		0		(414	)		(177	)		0			(863	)
Recoveries		188			35			71			0		26		432			79			0			831
Ending balance	$	7,441		$	384		$	7,186		$	9,852	$	3,184	$	18,986		$	2,881		$	0		$	49,914

The allowance for credit losses for the year ended December 31, 2022 is as follows:

				Commercial
				vacant land,									Commercial
				land									real estate –
				development			Commercial			Commercial			multi-family
	Commercial			and			real estate –			real estate –			and						Home
	and			residential			owner			non-owner			residential			1-4 family			equity
(Dollars in thousands)	industrial			construction			occupied			occupied			rental			mortgages			and other			Unallocated			Total
Allowance for credit losses:
Beginning balance	$	10,782		$	420		$	6,045		$	12,990		$	2,006		$	2,449		$	626		$	45		$	35,363
Adoption of ASU 2016-13		(1,571	)		(43	)		(560	)		(2,534	)		(621	)		5,395			(411	)		(55	)		(400	)
Provision for credit losses		946			138			378			(1,214	)		763			5,621			(111	)		29			6,550
Charge-offs		(171	)		(29	)		(38	)		0			0			(33	)		(21	)		0			(292	)
Recoveries		217			4			89			0			43			595			77			0			1,025
Ending balance	$	10,203		$	490		$	5,914		$	9,242		$	2,191		$	14,027		$	160		$	19		$	42,246

The following table presents the period-end amortized cost basis of modifications to borrowers experiencing financial difficulty by type of modification made during the year ended:

	December 31, 2024						December 31, 2023
	Interest Rate				Principal		Interest Rate				Principal
(Dollars in thousands)	Reduction		Term Extension		Forgiveness		Reduction		Term Extension		Forgiveness
Commercial:
Commercial and industrial	$	0	$	6,574	$	0	$	0	$	17,919	$	0
Vacant land, land development and residential construction		0		0		0		0		0		0
Real estate – owner occupied		0		42		0		0		0		0
Real estate – non-owner occupied		0		0		0		0		10,894		0
Real estate – multi-family and residential rental		0		0		0		0		0		0
Total commercial	$	0	$	6,616	$	0	$	0	$	28,813	$	0

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

Total loans	$	0	$	6,616	$	0	$	0	$	28,813	$	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 agreement.

The following table presents the period-end 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:

			30 – 89 Days		90 + Days
(Dollars in thousands)	Current		Past Due		Past Due		Total
Commercial:
Commercial and industrial	$	6,574	$	0	$	0	$	6,574
Vacant land, land development and residential construction		0		0		0		0
Real estate – owner occupied		42		0		0		42
Real estate – non-owner occupied		0		0		0		0
Real estate – multi-family and residential rental		0		0		0		0
Total commercial	$	6,616	$	0	$	0	$	6,616

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

Total loans	$	6,616	$	0	$	0	$	6,616