XML 30 R15.htm IDEA: XBRL DOCUMENT

Loans and Allowance for Credit Losses

12 Months Ended

Dec. 31, 2024

NOTE 4 – Loans and Allowance for Credit Losses

The Company makes loans to individuals and small businesses for various personal and commercial purposes primarily in the Upstate, Midlands, and Lowcountry regions of South Carolina, the Triangle, Triad, and Charlotte regions of North Carolina as well as Atlanta, Georgia. The Company’s loan portfolio is not concentrated in loans to any single borrower or a relatively small number of borrowers. The Company focuses its lending activities on businesses and individuals that reside in the markets that we serve. The principal component of the loan portfolio is loans secured by real estate mortgages which account for 83.5% of total loans at December 31, 2024. Commercial loans comprise 55.4% of total real estate loans and consumer loans account for 44.6%. Commercial real estate loans are further categorized into owner occupied which represents 17.9% of total loans and non-owner occupied loans which represents 25.5%. Commercial construction loans represent only 2.8% of the total loan portfolio.

In addition to monitoring potential concentrations of loans to particular borrowers or groups of borrowers, industries and geographic regions, management monitors exposure to credit risk from concentrations of lending products and practices such as loans that subject borrowers to substantial payment increases (e.g. principal deferral periods, loans with initial interest-only periods, etc.), and loans with high loan-to-value ratios. Additionally, there are industry practices that could subject the Company to increased credit risk should economic conditions change over the course of a loan’s life. For example, the Company makes variable rate loans and fixed rate principal-amortizing loans with maturities prior to the loan being fully paid (i.e. balloon payment loans). The various types of loans are individually underwritten and monitored to manage the associated risks.

Loan Portfolio Composition

The following table summarizes the composition of our loan portfolio. Total gross loans are recorded net of deferred loan fees and costs, which totaled $6.2 million and $7.0 million as of December 31, 2024 and December 31, 2023, respectively.



				December 31
(dollars in thousands)Commercial [Member]	2024									2023
Commercial
Owner occupied REOwner occupied RE [Member]	$	651,597			17.9	%	$	631,657			17.5	%
Non-owner occupied RE		924,367			25.5	%		942,529			26.2	%
ConstructionConstruction [Member]		103,204			2.8	%		150,680			4.2	%
Business		556,117			15.3	%		500,161			13.9	%
Total commercial loansConsumer [Member]		2,235,285			61.5	%		2,225,027			61.8	%
Consumer
Real estateReal estate [Member]		1,128,629			31.1	%		1,082,429			30.0	%
Home equityHome equity [Member]		204,897			5.6	%		183,004			5.1	%
ConstructionNon-owner occupied RE [Member]		20,874			0.6	%		63,348			1.7	%
OtherOther [Member]		42,082			1.2	%		48,819			1.4	%
Total consumer loans		1,396,482			38.5	%		1,377,600			38.2	%
Total gross loans, net of deferred fees		3,631,767			100.0	%		3,602,627			100.0	%
Less – allowance for credit losses		(39,914	)					(40,682	)
Total loans, net	$	3,591,853					$	3,561,945

The composition of gross loans by rate type is as follows:


	December 31,
(dollars in thousands)	2024		2023
Floating rate loans	$	697,897	$	574,352
Fixed rate loans		2,933,870		3,028,275
Total loans	$	3,631,767	$	3,602,627

At December 31, 2024, approximately $1.29 billion of the Company’s mortgage loans were pledged as collateral for advances from the FHLB, as set forth in Note 8.

Credit Quality Indicators

The Company tracks credit quality based on its internal risk ratings. Upon origination, a loan is assigned an initial risk grade, which is generally based on several factors such as the borrower’s credit score, the loan-to-value ratio, the debt-to-income ratio, etc. After loans are initially graded, they are monitored regularly for credit quality based on many factors, such as payment history, the borrower’s financial status, and changes in collateral value. Loans can be downgraded or upgraded depending on management’s evaluation of these factors. Internal risk-grading policies are consistent throughout each loan type.

A description of the general characteristics of the risk grades is as follows:

●

Pass— A pass loan ranges from minimal to average credit risk; however, still has acceptable credit risk.

	●	Watch— A watch loan exhibits above average credit risk due to minor weaknesses and warrants closer scrutiny by management.

	●	Special mention—A special mention loan has 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 or the institution’s credit position at some future date.

	●	Substandard— A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, which may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

	●	Doubtful— A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.

The following table presents loan balances classified by credit quality indicators by year of origination as of December 31, 2024.



																December 31, 2024
(dollars in thousands)	2024		2023		2022		2021			2020			Prior			Revolving			Revolving Converted to Term		Total
Commercial
Owner occupied RE
Pass	$	51,338		47,997		186,361		122,306			66,561			145,743			160			238		620,704
Watch		480		1,180		3,638		1,962			8,828			11,012			-			-		27,100
Special Mention		-		-		162		-			-			2,840			-			-		3,002
Substandard		-		-		-		-			-			791			-			-		791
Total Owner occupied RE		51,818		49,177		190,161		124,268			75,389			160,386			160			238		651,597

Non-owner occupied RE
Pass		50,685		70,517		321,726		145,658			95,994			183,723			360			220		868,883
Watch		-		954		6,081		10,238			4,705			8,435			-			-		30,413
Special Mention		-		-		-		7,579			-			8,882			-			-		16,461
Substandard		-		-		969		-			-			7,641			-			-		8,610
Total Non-owner occupied RE		50,685		71,471		328,776		163,475			100,699			208,681			360			220		924,367
Current period gross write-offs		-		-		-		-			-			(1,029	)		-			-		(1,029	)

Construction
Pass		24,076		26,501		34,067		15,000			-			-			-			-		99,644
Watch		-		2,420		1,140		-			-			-			-			-		3,560
Total Construction		24,076		28,921		35,207		15,000			-			-			-			-		103,204

Business
Pass		54,814		41,743		129,450		38,312			15,716			51,566			196,246			803		528,650
Watch		-		132		5,353		2,174			1,423			5,243			8,776			389		23,490
Special Mention		660		95		805		-			65			533			-			206		2,364
Substandard		28		-		-		-			385			630			570			-		1,613
Total Business		55,502		41,970		135,608		40,486			17,589			57,972			205,592			1,398		556,117
Current period gross write-offs		-		-		-		(143	)		(347	)		(18	)		(72	)		-		(580	)
Total Commercial loans		182,081		191,539		689,752		343,229			193,677			427,039			206,112			1,856		2,235,285

Consumer
Real estate
Pass		78,287		144,487		277,854		263,079			160,007			153,584			-			-		1,077,298
Watch		671		2,409		6,961		8,573			4,147			4,632			-			-		27,393
Special Mention		817		1,536		5,987		2,664			2,804			5,181			-			-		18,989
Substandard		212		508		967		746			821			1,695			-			-		4,949
Total Real estate		79,987		148,940		291,769		275,062			167,779			165,092			-			-		1,128,629

Home equity
Pass		-		-		-		-			-			-			188,451			-		188,451
Watch		-		-		-		-			-			-			9,114			-		9,114
Special Mention		-		-		-		-			-			-			6,173			-		6,173
Substandard		-		-		-		-			-			-			1,159			-		1,159
Total Home equity		-		-		-		-			-			-			204,897			-		204,897
Current period gross write-offs		-		-		-		-			-			-			(45	)		-		(45	)

Construction
Pass		7,700		3,636		9,222		316			-			-			-			-		20,874
Total Construction		7,700		3,636		9,222		316			-			-			-			-		20,874

Other
Pass		2,732		836		1,521		1,593			1,229			2,609			29,660			-		40,180
Watch		167		61		12		366			-			129			595			-		1,330
Special Mention		36		35		325		66			-			65			45			-		572
Total Other		2,935		932		1,858		2,025			1,229			2,803			30,300			-		42,082
Current period gross write-offs		-		-		-		-			-			(38	)		(42	)		-		(80	)
Total Consumer loans		90,622		153,508		302,849		277,403			169,008			167,895			235,197			-		1,396,482
Total loans	$	272,703		345,047		992,601		620,632			362,685			594,934			441,309			1,856		3,631,767
Total Current period gross write-offs		-		-		-		(143	)		(347	)		(1,085	)		(159	)		-		(1,734	)

The following table presents loan balances classified by credit quality indicators by year of origination as of December 31, 2023.


																December 31, 2023
(dollars in thousands)	2023		2022			2021		2020			2019		Prior			Revolving			Revolving Converted to Term			Total
Commercial
Owner occupied RE
Pass	$	42,846		180,654			138,549		64,818			59,880		110,502			85			166			597,500
Watch		-		3,460			460		15,997			3,525		6,616			-			-			30,058
Special Mention		-		181			-		-			-		3,057			-			-			3,238
Substandard		-		-			-		-			-		861			-			-			861
Total Owner occupied RE		42,846		184,295			139,009		80,815			63,405		121,036			85			166			631,657

Non-owner occupied RE
Pass		84,617		298,063			162,697		107,364			59,260		163,990			9,249			-			885,240
Watch		1,007		3,260			9,914		533			5,545		10,630			-			-			30,889
Special Mention		-		-			7,759		-			8,252		879			-			-			16,890
Substandard		-		-			313		-			8,088		1,109			-			-			9,510
Total Non-owner occupied RE		85,624		301,323			180,683		107,897			81,145		176,608			9,249			-			942,529
Current period gross write-offs		-		(200	)		-		-			-		(42	)		-			-			(242	)

Construction
Pass		27,262		86,161			24,399		11,459			-		-			-			-			149,281
Watch		-		1,399			-		-			-		-			-			-			1,399
Total Construction		27,262		87,560			24,399		11,459			-		-			-			-			150,680

Business
Pass		48,705		134,999			48,557		18,868			17,292		47,708			146,745			1,431			464,305
Watch		127		15,867			1,833		1,010			842		3,584			7,570			506			31,339
Special Mention		241		961			98		857			184		447			150			97			3,035
Substandard		-		-			155		-			132		1,195			-			-			1,482
Total Business		49,073		151,827			50,643		20,735			18,450		52,934			154,465			2,034			500,161
Current period gross write-offs		-		-			-		(28	)		-		-			(15	)		(22	)		(65	)
Total Commercial loans		204,805		725,005			394,734		220,906			163,000		350,578			163,799			2,200			2,225,027

Consumer
Real estate
Pass		144,179		273,585			278,138		176,395			66,087		105,383			-			-			1,043,767
Watch		490		5,658			8,230		3,917			2,051		3,890			-			-			24,236
Special Mention		143		2,499			1,657		1,291			2,220		3,360			-			-			11,170
Substandard		-		-			635		817			318		1,486			-			-			3,256
Total Real estate		144,812		281,742			288,660		182,420			70,676		114,119			-			-			1,082,429

Home equity
Pass		-		-			-		-			-		-			171,003			-			171,003
Watch		-		-			-		-			-		-			6,393			-			6,393
Special Mention		-		-			-		-			-		-			4,283			-			4,283
Substandard		-		-			-		-			-		-			1,325			-			1,325
Total Home equity		-		-			-		-			-		-			183,004			-			183,004
Current period gross write-offs		-		-			-		-			-		-			(438	)		-			(438	)

Construction
Pass		14,339		39,893			9,116		-			-		-			-			-			63,348
Total Construction		14,339		39,893			9,116		-			-		-			-			-			63,348

Other
Pass		1,278		2,551			2,361		1,457			803		2,604			36,549			-			47,603
Watch		9		29			348		-			15		163			58			-			622
Special Mention		33		333			-		-			23		82			41			-			512
Substandard		-		-			75		-			-		-			7			-			82
Total Other		1,320		2,913			2,784		1,457			841		2,849			36,655			-			48,819
Current period gross write-offs		-		-			-		-			-		-			(16	)		-			(16	)
Total Consumer loans		160,471		324,548			300,560		183,877			71,517		116,968			219,659			-			1,377,600
Total loans	$	365,276		1,049,553			695,294		404,783			234,517		467,546			383,458			2,200			3,602,627
Total Current period gross write-offs		-		(200	)		-		(28	)		-		(42	)		(469	)		(22	)		(761	)

The following tables present loan balances by age and payment status.



	December 31, 2024
(dollars in thousands)	Accruing 30-59 days past due		Accruing 60-89 days past due		Accruing 90 days or more past due		Nonaccrual loans		Accruing current		Total
Commercial
Owner occupied RE	$	292		-		-		-		651,305		651,597
Non-owner occupied RE		-		-		-		7,641		916,726		924,367
Construction		-		-		-		-		103,204		103,204
Business		1,319		-		-		1,016		553,782		556,117
Consumer
Real estate		3,839		938		-		1,908		1,121,944		1,128,629
Home equity		41		-		-		312		204,544		204,897
Construction		-		-		-		-		20,874		20,874
Other		-		-		-		-		42,082		42,082
Total loans	$	5,491		938		-		10,877		3,614,461		3,631,767

		December 31, 2023
(dollars in thousands)	Accruing 30-59 days past due		Accruing 60-89 days past due		Accruing 90 days or more past due		Nonaccrual loans		Accruing current		Total
Commercial
Owner occupied RE	$	74		-		-		-		631,583		631,657
Non-owner occupied RE		8,102		-		-		1,423		933,004		942,529
Construction		-		-		-		-		150,680		150,680
Business		567		-		-		319		499,275		500,161
Consumer
Real estate		1,750		-		-		985		1,079,694		1,082,429
Home equity		601		30		-		1,236		181,137		183,004
Construction		-		-		-		-		63,348		63,348
Other		25		25		-		-		48,769		48,819
Total loans	$	11,119		55		-		3,963		3,587,490		3,602,627

As of December 31, 2024 and December 31, 2023, loans 30 days or more past due represented 0.25% and 0.37% of the Company’s total loan portfolio, respectively. Commercial loans 30 days or more past due were 0.07% and 0.27% of the Company’s total loan portfolio as of December 31, 2024 and December 31, 2023, respectively. Consumer loans 30 days or more past due were 0.18% and 0.09% of total loans as of December 31, 2024 and December 31, 2023, respectively.

Nonperforming assets

The following table shows the nonperforming assets and the related percentage of nonperforming assets to total assets and gross loans. Generally, a loan is placed on nonaccrual status when it becomes 90 days past due as to principal or interest, or when we believe, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that collection of the contractual principal or interest on the loan is doubtful. A payment of interest on a loan that is classified as nonaccrual is recognized as a reduction in principal when received.

Schedule of nonperforming assets
	December 31,
(dollars in thousands)	2024			2023
Nonaccrual loans	$	10,877			3,963
Other real estate owned		-			-
Total nonperforming assets	$	10,877			3,963
Nonperforming assets as a percentage of:
Total assets		0.27	%		0.10	%
Gross loans		0.30	%		0.11	%
Total loans over 90 days past due	$	2,641			1,300
Loans over 90 days past due and still accruing		-			-

The table below summarizes nonaccrual loans by major categories for the periods presented.


	December 31, 2024								December 31, 2023
	Nonaccrual		Nonaccrual				Nonaccrual		Nonaccrual
	loans		loans		Total		loans		loans		Total
	with no		with an		nonaccrual		with no		with an		nonaccral
(dollars in thousands)	allowance		allowance		loans		allowance		allowance		loans
Commercial
Non-owner occupied RE	$	5,844		1,797		7,641	$	653		770		1,423
Business		-		1,016		1,016		164		155		319
Total commercial		5,844		2,813		8,657		817		925		1,742
Consumer
Real estate		1,526		382		1,908		-		985		985
Home equity		312		-		312		343		893		1,236
Total consumer		1,838		382		2,220		343		1,878		2,221
Total nonaccrual loans	$	7,682		3,195		10,877	$	1,160		2,803		3,963

Foregone interest income on the nonaccrual loans for the year ended December 31, 2024 was approximately $200,000 and approximately $73,000 for the same period in 2023. We did not recognize interest income on nonaccrual loans for the twelve months ended December 31, 2024 and December 31, 2023. Accrued interest of approximately $113,000 was reversed during the twelve months ended December 31, 2024 and approximately $71,000 was reversed during the twelve months ended December 31, 2023.

Modifications to Borrowers Experiencing Financial Difficulty

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a probability of default/loss given default model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses due to the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Loan modifications to borrowers experiencing financial difficulty were not material for the twelve months ended December 31, 2024 and December 31, 2023.

Allowance for Credit Losses

The following table summarizes the activity related to the allowance for credit losses for the years ended December 31, 2024 and December 31, 2023 under the CECL methodology. The $500,000 provision for credit losses for the 12 months ended December 31, 2024 was driven primarily by $29.1 million in loan growth for the year, while the $2.2 million provision for credit losses for the 12 months ended December 31, 2023 was driven primarily by $329.3 million in loan growth for the year. In addition, expected loss rates declined during both years due to historically low charge-offs.



										For the years ended December 31, 2024
	Commercial																							Consumer
(dollars in thousands)	Owner occupied RE			Non- owner occupied RE			Construction			Business			Real Estate		Home Equity			Construction			Other			Total
Balance, beginning of period	$	6,118			11,167			1,594			7,385			10,647		2,600			677			494			40,682
Provision for credit losses		(636	)		81			(654	)		828			1,712		(155	)		(562	)		(114	)		500
Loan charge-offs		-			(1,029	)		-			(580	)		-		(45	)		-			(80	)		(1,734	)
Loan recoveries		-			-			-			112			-		255			-			99			466
Net loan recoveries (charge-offs)		-			(1,029	)		-			(468	)		-		210			-			19			(1,268	)
Balance, end of period	$	5,482			10,219			940			7,745			12,359		2,655			115			399			39,914
Net charge-offs to average loans (annualized)																									0.04	%
Allowance for credit losses to gross loans																									1.10	%
Allowance for credit losses to nonperforming loans																									366.94	%



								For the years ended December 31, 2023
	Commercial										Consumer
(dollars in thousands)	Owner occupied RE		Non-owner occupied RE			Construction		Business			Real Estate		Home Equity			Construction			Other			Total
Balance, beginning of period	$	5,867		10,376			1,292		7,861			9,487		2,551			893			312			38,639
Provision for credit losses		251		848			302		(755	)		1,160		422			(216	)		197			2,209
Loan charge-offs		-		(242	)		-		(65	)		-		(438	)		-			(16	)		(761	)
Loan recoveries		-		185			-		344			-		65			-			1			595
Net loan recoveries (charge-offs)		-		(57	)		-		279			-		(373	)		-			(15	)		(166	)
Balance, end of period	$	6,118		11,167			1,594		7,385			10,647		2,600			677			494			40,682
Net recoveries to average loans (annualized)																							0.00	%
Allowance for credit losses to gross loans																							1.13	%
Allowance for credit losses to nonperforming loans																							1026.55	%


									For the years ended December 31, 2022
	Commercial											Consumer
(dollars in thousands)	Owner occupied RE			Non-owner occupied RE			Construction		Business			Real Estate			Home Equity			Construction		Other			Total
Balance, beginning of period	$	4,700			10,518			625		4,887			7,083			1,697			578		320			30,408
Adjustment for CECL		(313	)		333			154		1,057			(294	)		438			130		(5	)		1,500
Provision for credit losses		1,480			(2,015	)		513		1,764			2,698			663			185		87			5,375
Loan charge-offs		-			-			-		(55	)		-			(339	)		-		(91	)		(485	)
Loan recoveries		-			1,540			-		208			-			92			-		1			1,841
Net loan recoveries (charge-offs)		-			1,540			-		153			-			(247	)		-		(90	)		1,356
Balance, end of period	$	5,867			10,376			1,292		7,861			9,487			2,551			893		312			38,639
Net recoveries to average loans (annualized)																								(0.05	%)
Allowance for credit losses to gross loans																								1.18	%
Allowance for credit losses to nonperforming loans																								1470.84	%

Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. The Company reviews individually evaluated loans for designation as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses.

Under CECL, for collateral dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

The following table presents an analysis of collateral-dependent loans of the Company as of December 31, 2024 and December 31, 2023.



					December 31, 2024
	Real		Business
(dollars in thousands)	estate		assets		Other		Total
Commercial
Non-owner occupied RE	$	7,641		-		-		7,641
Business		460		556		-		1,016
Total commercial		8,101		556		-		8,657
Consumer
Real estate		1,908		-		-		1,908
Home equity		312		-		-		312
Total consumer		2,220		-		-		2,220
Total collateral dependent loans	$	10,321		556		-		10,877


					December 31, 2023
	Real		Business
(dollars in thousands)	estate		assets		Other		Total
Commercial
Non-owner occupied RE	$	720		-		-		720
Business		164		-		-		164
Total commercial		884		-		-		884
Consumer
Real estate		166		-		-		166
Home equity		343		-		-		343
Total consumer		509		-		-		509
Total collateral dependent loans	$	1,393		-		-		1,393

Allowance for Credit Losses - Unfunded Loan Commitments

The allowance for credit losses for unfunded loan commitments was $1.5 million and $1.8 million at December 31, 2024 and 2023, respectively, and is separately classified on the balance sheet within other liabilities. The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the twelve months ended December 31, 2024 and December 31, 2023.



	For the years ended December 31,
(dollars in thousands)	2024			2023			2022
Balance, beginning of period	$	1,831			2,780			-
Adjustment for adoption of CECL		-			-			2,000
Provision for (reversal of) credit losses		(375	)		(949	)		780
Balance, end of period	$	1,456			1,831			2,780
Unfunded Loan Commitments		719,084			724,606			878,324
Reserve for Unfunded Commitments to Unfunded Loan Commitments		0.20	%		0.25	%		0.32	%