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Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2025

NOTE 4 – Loans and Allowance for Credit Losses

The following table summarizes the composition of our loan portfolio. Total gross loans are recorded net of deferred loan fees and costs, which totaled $5.8 million as of June 30, 2025 and $6.2 million as of December 31, 2024.



	June 30, 2025						December 31, 2024
(dollars in thousands)Commercial [Member]	Amount			% of Total			Amount			% of Total
Commercial
Owner occupied REOwner occupied RE [Member]	$	686,424			18.3	%	$	651,597			17.9	%
Non-owner occupied RE		939,163			25.1	%		924,367			25.5	%
ConstructionConstruction [Member]		68,421			1.8	%		103,204			2.8	%
BusinessConsumer [Member]		589,661			15.7	%		556,117			15.3	%
Total commercial loans		2,283,669			60.9	%		2,235,285			61.5	%
Consumer
Real estateReal estate [Member]		1,164,187			31.1	%		1,128,629			31.1	%
Home equityHome equity [Member]		234,608			6.3	%		204,897			5.6	%
ConstructionNon-owner occupied RE [Member]		25,210			0.6	%		20,874			0.6	%
OtherOther [Member]		39,167			1.1	%		42,082			1.2	%
Total consumer loans		1,463,172			39.1	%		1,396,482			38.5	%
Total gross loans, net of deferred fees		3,746,841			100.0	%		3,631,767			100.0	%
Less—allowance for credit losses		(41,285	)					(39,914	)
Total loans, net	$	3,705,556					$	3,591,853

Maturities and Sensitivity of Loans to Changes in Interest Rates

The information in the following tables summarizes the loan maturity distribution by type and related interest rate characteristics based on the contractual maturities of individual loans, including loans which may be subject to renewal at their contractual maturity. Renewal of such loans is subject to review and credit approval, as well as modification of terms upon maturity. Actual repayments of loans may differ from the maturities reflected below, because borrowers have the right to prepay obligations with or without prepayment penalties.



					June 30, 2025
(dollars in thousands)	One year or less		After one but within five years		After five but within fifteen years		After fifteen years		Total
Commercial
Owner occupied RE	$	29,789		246,900		378,099		31,636		686,424
Non-owner occupied RE		130,079		590,968		199,968		18,148		939,163
Construction		20,805		37,712		9,904		-		68,421
Business		125,294		324,197		136,484		3,686		589,661
Total commercial loans		305,967		1,199,777		724,455		53,470		2,283,669
Consumer
Real estate		30,212		115,579		232,412		785,984		1,164,187
Home equity		4,992		41,507		183,826		4,283		234,608
Construction		15,289		1,168		8,753		-		25,210
Other		6,128		31,119		1,194		726		39,167
Total consumer loans		56,621		189,373		426,185		790,993		1,463,172
Total gross loans, net of deferred fees	$	362,588		1,389,150		1,150,640		844,463		3,746,841

						December 31, 2024
(dollars in thousands)		One year or less		After one but within five years		After five but within fifteen years		After fifteen years		Total
Commercial
Owner occupied RE	$	21,235		220,648		369,748		39,966		651,597
Non-owner occupied RE		129,269		547,864		227,987		19,247		924,367
Construction		6,479		77,636		19,089		-		103,204
Business		129,978		277,830		144,056		4,253		556,117
Total commercial loans		286,961		1,123,978		760,880		63,466		2,235,285
Consumer
Real estate		20,982		82,896		281,091		743,660		1,128,629
Home equity		3,454		36,722		160,380		4,341		204,897
Construction		5,849		2,133		10,427		2,465		20,874
Other		7,660		30,633		3,040		749		42,082
Total consumer loans		37,945		152,384		454,938		751,215		1,396,482
Total gross loans, net of deferred fees	$	324,906		1,276,362		1,215,818		814,681		3,631,767

The following table summarizes the loans due after one year by category.



	June 30, 2025			December 31, 2024
	Interest Rate					Interest Rate
(dollars in thousands)		Fixed	Floating or Adjustable		Fixed		Floating or Adjustable
Commercial
Owner occupied RE	$	609,739	46,896	$	599,179		31,183
Non-owner occupied RE		711,042	98,042		701,297		93,801
Construction		25,916	21,700		63,019		33,706
Business		293,806	170,561		281,316		144,823
Total commercial loans		1,640,503	337,199		1,644,811		303,513
Consumer
Real estate		1,133,975	-		1,107,647		-
Home equity		9,355	220,261		9,899		191,544
Construction		9,921	-		15,025		-
Other		7,264	25,775		8,038		26,384
Total consumer loans		1,160,515	246,036		1,140,609		217,928
Total gross loans, net of deferred fees	$	2,801,018	583,235	$	2,785,420		521,441

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 June 30, 2025.



														June 30, 2025
(dollars in thousands)	2025		2024		2023		2022		2021		Prior			Revolving			Revolving Converted to Term		Total
Commercial
Owner occupied RE
Pass	$	36,179		63,271		41,591		192,649		119,822		202,274			85			-		655,871
Watch		1,725		456		5,863		5,990		2,309		10,569			-			-		26,912
Special Mention		-		-		-		152		-		3,489			-			-		3,641
Total Owner occupied RE		37,904		63,727		47,454		198,791		122,131		216,332			85			-		686,424

Non-owner occupied RE
Pass		46,511		56,537		63,173		311,548		141,985		266,655			1,034			467		887,910
Watch		-		129		2,239		4,100		17,885		9,854			-			-		34,207
Special Mention		-		-		-		-		192		7,660			-			-		7,852
Substandard		-		-		-		2,253		-		6,941			-			-		9,194
Total Non-owner occupied RE		46,511		56,666		65,412		317,901		160,062		291,110			1,034			467		939,163

Construction
Pass		3,784		20,933		13,235		22,361		2,432		-			-			-		62,745
Watch		-		-		2,498		1,170		2,008		-			-			-		5,676
Total Construction		3,784		20,933		15,733		23,531		4,440		-			-			-		68,421

Business
Pass		66,768		50,566		51,579		110,431		32,082		58,200			193,411			1,518		564,555
Watch		476		833		900		4,063		2,330		5,356			6,579			406		20,943
Special Mention		83		1,027		-		639		-		603			643			-		2,995
Substandard		180		-		-		-		-		613			375			-		1,168
Total Business		67,507		52,426		52,479		115,133		34,412		64,772			201,008			1,924		589,661
Current period gross write-offs		-		-		-		-		-		(78	)		(63	)		-		(141	)

Total Commercial loans		155,706		193,752		181,078		655,356		321,045		572,214			202,127			2,391		2,283,669

Consumer
Real estate
Pass		87,205		69,031		135,777		267,699		255,257		297,284			-			-		1,112,253
Watch		100		667		4,259		6,802		8,555		8,134			-			-		28,517
Special Mention		151		818		1,728		5,143		2,636		7,066			-			-		17,542
Substandard		-		649		853		994		733		2,646			-			-		5,875
Total Real estate		87,456		71,165		142,617		280,638		267,181		315,130			-			-		1,164,187

Home equity
Pass		-		-		-		-		-		-			218,079			-		218,079
Watch		-		-		-		-		-		-			9,004			-		9,004
Special Mention		-		-		-		-		-		-			5,995			-		5,995
Substandard		-		-		-		-		-		-			1,530			-		1,530
Total Home equity		-		-		-		-		-		-			234,608			-		234,608

Construction
Pass		10,153		6,259		-		6,815		-		-			-			-		23,227
Watch		-		-		1,983		-		-		-			-			-		1,983
Total Construction		10,153		6,259		1,983		6,815		-		-			-			-		25,210

Other
Pass		969		1,041		678		1,233		469		2,961			30,469			-		37,820
Watch		-		165		42		33		354		119			107			-		820
Special Mention		5		32		6		320		58		44			32			-		497
Substandard		30		-		-		-		-		-			-			-		30
Total Other		1,004		1,238		726		1,586		881		3,124			30,608			-		39,167
Current period gross write-offs		-		-		-		-		-		-			(5	)		-		(5	)

Total Consumer loans		98,613		78,662		145,326		289,039		268,062		318,254			265,216			-		1,463,172
Total loans	$	254,319		272,414		326,404		944,395		589,107		890,468			467,343			2,391		3,746,841
Total Current period gross write-offs		-		-		-		-		-		(78	)		(68	)		-		(146	)

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 tables present loan balances by age and payment status.



	June 30, 2025
(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	$	1,445		-		-		-		684,979		686,424
Non-owner occupied RE		-		-		204		6,941		932,018		939,163
Construction		-		-		-		-		68,421		68,421
Business		348		35		-		717		588,561		589,661
Consumer
Real estate		1,384		1,037		-		3,028		1,158,738		1,164,187
Home equity		545		-		-		708		233,355		234,608
Construction		-		-		-		-		25,210		25,210
Other		58		63		-		-		39,046		39,167
Total loans	$	3,780		1,135		204		11,394		3,730,328		3,746,841

		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

As of June 30, 2025 and December 31, 2024, accruing loans 30 days or more past due represented 0.14% and 0.18% of the Company’s total loan portfolio, respectively. Commercial loans accruing 30 days or more past due were 0.06% and 0.05% of the Company’s total loan portfolio as of June 30, 2025 and December 31, 2024, respectively. Consumer loans accruing 30 days or more past due were 0.08% and 0.13% of total loans as of June 30, 2025 and December 31, 2024, respectively.

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


	June 30, 2025								December 31, 2024
	Nonaccrual		Nonaccrual				Nonaccrual		Nonaccrual
	loans		loans		Total		loans		loans		Total
	with no		with an		nonaccrual		with no		with an		nonaccrual
(dollars in thousands)	allowance		allowance		loans		allowance		allowance		loans
Commercial
Non-owner occupied RE	$	5,156		1,785		6,941	$	5,844		1,797		7,641
Business		-		717		717		-		1,016		1,016
Total commercial		5,156		2,502		7,658		5,844		2,813		8,657
Consumer
Real estate		2,030		998		3,028		1,526		382		1,908
Home equity		708		-		708		312		-		312
Total consumer		2,738		998		3,736		1,838		382		2,220
Total nonaccrual loans	$	7,894		3,500		11,394	$	7,682		3,195		10,877

The Company did not recognize interest income on nonaccrual loans for the three months ended June 30, 2025 and June 30, 2024. The accrued interest reversed during the three months ended June 30, 2025 and June 30, 2024

was not material. Foregone interest income on the nonaccrual loans for the three month period ended June 30, 2025 was $126,000, while foregone interest income on the nonaccrual loans for the three month period ended June 30, 2024 was not material.0

We did not recognize interest income on nonaccrual loans for the six months ended June 30, 2025 and June 30, 2024. Accrued interest of $47,000 was reversed during the six months ended June 30, 2025 and $82,000 was reversed during the six months ended June 30, 2024. Foregone interest income on the nonaccrual loans for the six month period ended June 30, 2025 was $200,000, while foregone interest income on the nonaccrual loans for the six month period ended June 30, 2024 was not material.0

The table below summarizes information regarding nonperforming assets.

Schedule of nonperforming assets
(dollars in thousands)	June 30, 2025			December 31, 2024
Nonaccrual loans	$	11,394			10,877
Other real estate owned		275			-
Total nonperforming assets	$	11,669			10,877
Nonperforming assets as a percentage of:
Total assets		0.27	%		0.27	%
Gross loans		0.31	%		0.30	%
Total loans over 90 days past due	$	2,027			2,641
Loans over 90 days past due and still accruing		204			-

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 discounted cash flow 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 three and six months ended June 30, 2025 and June 30, 2024.

Allowance for Credit Losses

The Company maintains an allowance for credit losses to provide for expected credit losses. Losses are charged against the allowance when management believes that the principal is uncollectable. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance are made for specific loans and for pools of similar types of loans, although the entire allowance is available for any loan that, in management’s judgment, should be charged against the allowance. A provision for credit losses is taken based on management’s ongoing evaluation of the appropriate allowance balance.

A formal evaluation of the adequacy of the ACL is conducted quarterly. This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance. The level of the allowance is based upon management's evaluation of historical default and loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay a loan, the estimated value of any underlying collateral, composition of the loan portfolio, industry and peer bank loan quality indications and other pertinent factors, including regulatory recommendations. Management believes the level of the ACL is adequate to absorb all expected future losses inherent in the loan portfolio at the balance sheet date. The allowance is increased through provision for credit losses and decreased by charge-offs, net of recoveries of amounts previously charged-off.

On January 1, 2025, the Company transitioned to the DCF modeling approach to estimate the ACL on loans as it allows for a better estimation of credit losses through customization among the various inputs by loan segmentation. The DCF methodology is applied on a segment-by-segment basis at the loan level with a one-year reasonable and supportable forecast period, followed by a one-year reversion to the long-term average. The Company considers economic forecasts of national gross domestic product (“GDP”) and unemployment rates as reported by Fannie Mae to inform the model for loss estimation. Historical loss rates used in the quantitative model were derived using both the Bank's and peer bank data obtained from publicly-available sources (i.e., federal call reports) encompassing an economic cycle. The peer group utilized by the Bank is comprised of financial institutions of relatively similar size (i.e., $1-$15 billion of total assets) and in similar markets. In addition, the DCF methodology considers the weighted average life of the portfolio, impacting the reaction time and the exposure to potential loss based on changes in the interest rate environment. Management also considers qualitative adjustments when estimating loan losses to take into account the model's quantitative limitations. Qualitative adjustments to quantitative loss factors, either negative or positive, may include changes in lending policies; international, national, regional, and local conditions; volume and terms of loans; experience and depth of management; volume and severity of past due loans; effects of changes in lending policy; concentrations of credit; and loan review results. The Company enhanced its qualitative factor framework to better address risks that are not reflected in the quantitative loss factors.

Prior to January 1, 2025, the Company used a lifetime probability of default and loss given default modeling approach to estimate the allowance for credit losses on loans. This method used historical correlations between default experience and the age of loans to forecast defaults and losses, assuming that a loan in a pool shares similar risk characteristics such as loan product type, risk rating and loan age, and demonstrates similar default characteristics as other loans in that pool, as the loan progresses through its lifecycle. The Company calculated lifetime probability of default and loss given default rates based on historical loss experience, which is used to calculate expected losses based on the pool’s loss rate and the age of loans in the pool. The Company used its own internal data to measure historical credit loss experience within the pools with similar risk characteristics over an economic cycle. The probability of default and loss given default method also includes assumptions of observed migration over the lifetime of the underlying loan data. Loans that do not share risk characteristics were evaluated for expected credit losses on an individual basis and excluded from the collective evaluation.

The following tables summarize the activity related to the allowance for credit losses for the three and six months ended June 30, 2025 and June 30, 2024.



								Three months June 30, 2025
	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	$	3,934		7,333		582			11,131			15,193		1,549		487			478			40,687
Provision for credit losses for loans		69		84		(120	)		213			340		96		(32	)		-			650
Loan charge-offs		-		-		-			(63	)		-		-		-			(5	)		(68	)
Loan recoveries		-		-		-			12			-		4		-			-			16
Net loan recoveries (charge-offs)		-		-		-			(51	)		-		4		-			(5	)		(52	)
Balance, end of period	$	4,003		7,417		462			11,293			15,533		1,649		455			473			41,285
Net charge-offs to average loans (annualized)																						0.01	%
Allowance for credit losses to gross loans																						1.10	%
Allowance for credit losses to nonperforming loans																						362.35	%



	Three months ended June 30, 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			7,054			10,647		2,719			677			465			40,441
Provision for credit losses for loans		(651	)		424			(263	)		190			1,750		(244	)		(399	)		(57	)		750
Loan charge-offs		-			(1,029	)		-			(19	)		-		-			-			(1	)		(1,049	)
Loan recoveries		-			-			-			11			-		4			-			-			15
Net loan recoveries (charge-offs)		-			(1,029	)		-			(8	)		-		4			-			(1	)		(1,034	)
Balance, end of period	$	5,467			10,562			1,331			7,236			12,397		2,479			278			407			40,157
Net charge-offs to average loans (annualized)																									0.11	%
Allowance for credit losses to gross loans																									1.11	%
Allowance for credit losses to nonperforming loans																									357.95	%


	Six months ended June 30, 2025
	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	$	5,482			10,219			940			7,745			12,359		2,655			115		399			39,914
Provision for credit losses		(1,479	)		(2,802	)		(478	)		3,615			3,174		(1,014	)		340		44			1,400
Loan charge-offs		-			-			-			(141	)		-		-			-		(5	)		(146	)
Loan recoveries		-			-			-			74			-		8			-		35			117
Net loan recoveries (charge-offs)		-			-			-			(67	)		-		8			-		30			(29	)
Balance, end of period	$	4,003			7,417			462			11,293			15,533		1,649			455		473			41,285
Net charge-offs to average loans (annualized)																								0.00	%
Allowance for credit losses to gross loans																								1.10	%
Allowance for credit losses to nonperforming loans																								362.35	%


	Six months ended June 30, 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		(651	)		424			(263	)		190			1,750		(244	)		(399	)		(57	)		750
Loan charge-offs		-			(1,029	)		-			(365	)		-		-			-			(79	)		(1,473	)
Loan recoveries		-			-			-			26			-		123			-			49			198
Net loan recoveries (charge-offs)		-			(1,029	)		-			(339	)		-		123			-			(30	)		(1,275	)
Balance, end of period	$	5,467			10,562			1,331			7,236			12,397		2,479			278			407			40,157
Net charge-offs to average loans (annualized)																									0.07	%
Allowance for credit losses to gross loans																									1.11	%
Allowance for credit losses to nonperforming loans																									357.95	%

There was a provision for credit losses of $650,000 and $750,000 for the three months ended June 30, 2025 and June 30, 2024, respectively. In addition, the provision for credit losses was $1.4 million and $750,000 for the six months ended June 30, 2025 and June 30, 2024, respectively.

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 tables present an analysis of collateral-dependent loans of the Company as of June 30, 2025 and December 31, 2024.


					June 30, 2025
	Real		Business
(dollars in thousands)	estate		assets		Other		Total
Commercial
Non-owner occupied RE	$	6,941		-		-		6,941
Business		178		539		-		717
Total commercial		7,119		539		-		7,658
Consumer
Real estate		3,028		-		-		3,028
Home equity		708		-		-		708
Total consumer		3,736		-		-		3,736
Total	$	10,855		539		-		11,394

						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	$	10,321		556		-		10,877

Allowance for Credit Losses - Unfunded Loan Commitments

The allowance for credit losses for unfunded loan commitments was $1.5 million at June 30, 2025 and December 31, 2024, and is separately classified on the balance sheet within other liabilities. The following table presents the balance and activity in the ACL for unfunded loan commitments for the three and six months ended June 30, 2025 and June 30, 2024.


	Three months ended			Three months ended
(dollars in thousands)	June 30, 2025			June 30, 2024
Balance, beginning of period	$	1,456			1,656
Provision for (reversal of) credit losses		50			(250	)
Balance, end of period	$	1,506			1,406
Unfunded Loan Commitments	$	791,253			694,524
Reserve for Unfunded Commitments		0.19	%		0.20	%

		Six months ended			Six months ended
(dollars in thousands)		June 30, 2025			June 30, 2024
Balance, beginning of period	$	1,456			1,831
Provision for (reversal of) credit losses		50			(425	)
Balance, end of period	$	1,506			1,406
Unfunded Loan Commitments	$	791,253			694,524
Reserve for Unfunded Commitments		0.19	%		0.20	%