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Loans and Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2024
Receivables [Abstract]  
Loans and Allowance for Credit Losses
Note 3 – Loans and Allowance for Credit Losses

The components of loans in the Consolidated Balance Sheet at December 31, were as follows:
(Dollars in thousands)20242023
Commercial:
Business$668,458 $797,100 
Real estate632,898 670,584 
Acquisition, development and construction115,500 134,004 
Total commercial$1,416,856 $1,601,688 
Residential real estate650,708 672,547 
Home equity lines of credit12,933 14,531 
Consumer18,620 27,408 
Total loans$2,099,117 $2,316,174 
Deferred loan origination costs, net of fees1,014 1,420 
Loans receivable$2,100,131 $2,317,594 

Loans serviced for others are not included in the accompanying consolidated balance sheet. The amortized cost basis of loans serviced for others requiring recognition of a servicing asset were $171.6 million and $184.3 million at December 31, 2024 and 2023, respectively.

We currently manage our loan portfolios and the respective exposure to credit losses (credit risk) by the specific portfolio segments shown below. Our loan portfolio segmentation is based primarily on call report codes, which are levels at which we develop and document our systematic methodology to determine the ACL attributable to each respective portfolio segment. The ACL portfolio segments are aggregated into broader segments in order to present informative yet concise disclosures within this document, as follows:

Commercial business loans – Commercial business loans are made to provide funds for equipment and general corporate needs, as well as to finance owner-occupied real estate, and to finance future cash flows of Federal government lease contracts. Repayment of these loans primarily uses the funds obtained from the operation of the borrower’s business. Commercial business loans also include lines of credit that are utilized to finance a borrower’s short-term credit needs and/or to finance a percentage of eligible receivables and inventory. This segment includes both internally originated and purchased participation loans. Credit risk arises from the successful operation of the business, which may be affected by competition, rising interest rates, regulatory changes and adverse conditions in the local and regional economy. Commercial business loans include the following ACL segments: commercial and industrial (including both healthcare and SBA subsegments), commercial real estate owner-occupied (including both healthcare and SBA subsegments), government leases and other loans.

Commercial real estate loans – Commercial real estate loans consist of non-owner occupied properties, such as investment properties for retail, office and multifamily with a history of occupancy and cash flow. This segment includes both internally originated and purchased participation loans. These loans carry the risk of adverse changes in the local economy and a tenant’s deteriorating credit strength, lease expirations in soft markets and sustained vacancies, which can adversely impact cash flow. Commercial real estate loans include the following ACL segments: commercial real estate non-owner occupied (including both healthcare and SBA subsegments).

Commercial acquisition, development and construction loans – Commercial acquisition, development and construction loans are intended to finance the construction of commercial and residential properties, and also includes loans for the acquisition and development of land. Construction loans represent a higher degree of risk than permanent real estate loans and may be affected by a variety of factors such as the borrower’s ability to control costs and adhere to time schedules and the risk that the market may not absorb constructed units within the anticipated time frame or at the anticipated price. The loan commitment on these loans often includes an interest reserve that allows the lender to periodically advance loan funds to pay interest charges on the outstanding balance of the loan. Commercial acquisition, development and construction loans include the following ACL segments: other construction (including an SBA subsegment).

Residential real estate – This residential real estate segment contains permanent and construction mortgage loans principally to consumers, but also includes loans to residential real estate developers, secured by residential real estate, which we previously presented under commercial acquisitions, development and construction loans under the incurred loss model. Residential real estate loans to consumers are evaluated for the adequacy of repayment sources at the time of approval, based upon measures
including credit scores, debt-to-income ratios and collateral values. Credit risk arises from the continuing financial stability of the borrower and, where applicable, the builder, which can be adversely impacted by job loss, divorce, illness or personal bankruptcy, among other factors. Residential real estate secured loans to developers represent a higher degree of risk than permanent real estate loans and may be affected by a variety of factors such as the borrower’s ability to control costs and adhere to time schedules and the risk that the market may not absorb constructed units within the anticipated time frame or at the anticipated price. Also impacting credit risk would be a shortfall in the value of the residential real estate in relation to the outstanding loan balance in the event of a default or subsequent liquidation of the real estate collateral. Residential real estate loans include the following ACL segments: residential and residential construction (including SBA subsegment).

Home equity lines of credit – This segment includes subsegments for senior lien and subordinate lien lines of credit. Credit risk is similar to residential real estate loans described above as it is subject to the borrower’s continuing financial stability and the value of the collateral securing the loan.

Consumer loans – This segment of loans includes primarily installment loans and personal lines of credit. Consumer loans include installment loans used by clients to purchase automobiles, boats and recreational vehicles. Credit risk is similar to residential real estate loans described above as it is subject to the borrower’s continuing financial stability and the value of the collateral securing the loan. This segment primarily includes loans purchased from a third-party originator that originates loans in order to finance the purchase of personal automotive vehicles. Credit risk is unique as this segment includes only those loans provided to consumers who cannot typically obtain financing through traditional lenders. As such, these loans are subject to a higher risk of default than the typical consumer loan. Consumer loans include the following ACL segments: subprime consumer automotive and consumer.

As of December 31, 2024, the Bank’s other real estate owned balance totaled $2.8 million. The other real estate owned balance consists of two unrelated residential mortgages with a balance of $2.3 million and one commercial loan from our acquisition of The First State Bank ("First State") in 2020 with a balance of $0.5 million. As of December 31, 2024, there were seven residential mortgages in the process of foreclosure with a loan balance totaling $3.1 million.

As of December 31, 2023, the Bank's other real estate owned balance totaled $0.8 million, all of which was related to two unrelated commercial loans from our acquisition of First State in 2020. As of December 31, 2023, there were no residential mortgages in the process of foreclosure.

Bank management uses a nine-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized and are aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions.

Loans categorized as “Pass” rated have adequate sources of repayment, with little identifiable risk of collection and general conformity to the Bank's policy requirements, product guidelines and underwriting standards. Any exceptions that are identified during the underwriting and approval process have been adequately mitigated by other factors.

Loans categorized as “Special Mention” rated 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 asset or in the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose the institution to sufficient risk to warrant adverse classification.

Loans categorized as “Substandard” rated are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Loans categorized as “Doubtful” rated have all the weakness inherent in those classified Substandard with the added characteristic that the weakness makes collections or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. However, these loans are not yet rated as loss because certain events may occur which would salvage the debt.

Any portion of a loan that has been or is expected to be charged off is placed in the “Loss” category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight. Generally, consumer and
residential mortgage loans are included in the Pass categories, unless a specific action, such as past due status, bankruptcy, repossession or death, occurs to raise awareness of a possible credit event. The Bank’s Chief Credit Officer is responsible for the timely and accurate risk rating of the loans in the portfolio at origination and on an ongoing basis. The Bank's Credit Department ensures that a review of all commercial relationships of $1.0 million or more is performed annually.

Review of the appropriate risk grade is included in both the internal and external loan review process and on an ongoing basis. The Bank has an experienced credit department that continually reviews and assesses loans within the portfolio. The Bank engages an external consultant to conduct independent loan reviews on at least an annual basis. Generally, the external consultant reviews commercial relationships with the intent of reviewing 35% to 40% of the Bank's commercial outstanding loan balances on an annual basis. The Bank's credit department compiles detailed reviews, including plans for resolution, on loans classified as Substandard on a quarterly basis.

The following table presents the amortized cost of loans summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system by vintage year as of the period shown:
Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)20242023202220212020PriorRevolving Loans Converted to TermTotal
December 31, 2024
Commercial business:
Risk rating:
Pass$68,129 $124,736 $211,526 $51,202 $58,015 $98,747 $6,439 $618,794 
Special Mention35 — 21,053 9,259 1,816 4,863 813 37,839 
Substandard— 1,227 2,549 1,777 508 2,290 207 8,558 
Doubtful— — 1,681 292 278 1,016 — 3,267 
Total commercial business loans$68,164 $125,963 $236,809 $62,530 $60,617 $106,916 $7,459 $668,458 
Gross charge-offs$2 $— $3,125 $885 $— $367 $— $4,379 
Commercial real estate:
Risk rating:
Pass$63,058 $97,119 $121,694 $161,886 $9,222 $122,809 $431 $576,219 
Special Mention— — — 7,743 — — — 7,743 
Substandard— — — 17,984 — 30,952 — 48,936 
Doubtful— — — — — — — — 
Total commercial real estate loans$63,058 $97,119 $121,694 $187,613 $9,222 $153,761 $431 $632,898 
Gross charge-offs$— $— $— $— $— $— $— $— 
Commercial acquisition, development and construction:
Risk rating:
Pass$11,352 $13,675 $36,425 $29,885 $6,673 $1,287 $— $99,297 
Special Mention— — — — — 2,267 — 2,267 
Substandard— — — 13,506 — 430 — 13,936 
Doubtful— — — — — — — — 
Total commercial acquisition, development and construction loans$11,352 $13,675 $36,425 $43,391 $6,673 $3,984 $— $115,500 
Gross charge-offs$— $— $— $— $— $— $— $— 
Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)20242023202220212020PriorRevolving Loans Converted to TermTotal
December 31, 2024
Residential Real Estate:
Risk rating:
Pass$81,559 $37,914 $375,065 $90,440 $32,902 $22,759 $2,666 $643,305 
Special Mention— — 798 — — 1,567 — 2,365 
Substandard— — 2,798 — 360 1,672 115 4,945 
Doubtful— — — — — 93 — 93 
Total residential real estate loans$81,559 $37,914 $378,661 $90,440 $33,262 $26,091 $2,781 $650,708 
Gross charge-offs$— $— $— $11 $— $— $— $11 
Home equity lines of credit:
Risk rating:
Pass$— $57 $35 $— $1,056 $11,475 $— $12,623 
Special Mention— — — — — 142 — 142 
Substandard— — — — — 168 — 168 
Doubtful— — — — — — — — 
Total home equity lines of credit loans$— $57 $35 $— $1,056 $11,785 $— $12,933 
Gross charge-offs$— $— $— $— $— $— $— $— 
Consumer:
Risk rating:
Pass$— $1,597 $12,812 $3,949 $— $43 $— $18,401 
Special Mention— — — — — — — — 
Substandard— 21 147 51 — — — 219 
Doubtful— — — — — — — — 
Total consumer loans$— $1,618 $12,959 $4,000 $— $43 $— $18,620 
Gross charge-offs$— $384 $2,530 $452 $— $— $— $3,366 
Total:
Risk rating:
Pass$224,098 $275,098 $757,557 $337,362 $107,868 $257,120 $9,536 $1,968,639 
Special Mention35 — 21,851 17,002 1,816 8,839 813 50,356 
Substandard— 1,248 5,494 33,318 868 35,512 322 76,762 
Doubtful— — 1,681 292 278 1,109 — 3,360 
Total loans$224,133 $276,346 $786,583 $387,974 $110,830 $302,580 $10,671 $2,099,117 
Gross charge-offs$2 $384 $5,655 $1,348 $— $367 $— $7,756 
Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)20232022202120202019PriorRevolving Loans Converted to TermTotal
December 31, 2023
Commercial business:
Risk rating:
Pass$187,743 $249,718 $95,547 $66,195 $51,025 $91,435 $4,617 $746,280 
Special Mention990 30,695 72 830 339 3,767 1,647 38,340 
Substandard368 988 317 — 4,640 1,436 204 7,953 
Doubtful— 2,022 839 264 — 1,402 — 4,527 
Total commercial business loans$189,101 $283,423 $96,775 $67,289 $56,004 $98,040 $6,468 $797,100 
Gross charge-offs$— $228 $1,250 $141 $— $2,953 $— $4,572 
Commercial real estate:
Risk rating:
Pass$112,063 $149,189 $217,222 $11,952 $26,438 $108,934 $546 $626,344 
Special Mention— — 7,961 — 6,079 11,201 — 25,241 
Substandard— — — — — 18,999 — 18,999 
Doubtful— — — — — — — — 
Total commercial real estate loans$112,063 $149,189 $225,183 $11,952 $32,517 $139,134 $546 $670,584 
Gross charge-offs$— $— $— $— $— $— $— $— 
Commercial acquisition, development and construction:
Risk rating:
Pass$6,546 $54,468 $31,120 $22,041 $2,940 $1,483 $— $118,598 
Special Mention— — 14,652 — — — — 14,652 
Substandard— — — — — 754 — 754 
Doubtful— — — — — — — — 
Total commercial acquisition, development and construction loans$6,546 $54,468 $45,772 $22,041 $2,940 $2,237 $— $134,004 
Gross charge-offs$— $— $— $— $— $— $— $— 
Residential Real Estate:
Risk rating:
Pass$54,453 $429,326 $107,763 $40,202 $8,292 $21,313 $— $661,349 
Special Mention— — — 4,224 414 708 — 5,346 
Substandard— 988 3,764 82 146 777 — 5,757 
Doubtful— — — — — 95 — 95 
Total residential real estate loans$54,453 $430,314 $111,527 $44,508 $8,852 $22,893 $— $672,547 
Gross charge-offs$— $— $— $— $19 $381 $— $400 
Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)20242023202220212020PriorRevolving Loans Converted to TermTotal
December 31, 2024
Home equity lines of credit:
Risk rating:
Pass$58 $36 $— $1,338 $5,147 $7,568 $— $14,147 
Special Mention— — — — — 223 — 223 
Substandard— — — — — 161 — 161 
Doubtful— — — — — — — — 
Total home equity lines of credit loans$58 $36 $— $1,338 $5,147 $7,952 $— $14,531 
Gross charge-offs$— $— $— $— $— $— $— $— 
Consumer:
Risk rating:
Pass$2,295 $18,926 $5,753 $— $39 $51 $— $27,064 
Special Mention— — — — — — — — 
Substandard20 266 58 — — — — 344 
Doubtful— — — — — — — — 
Total consumer loans$2,315 $19,192 $5,811 $— $39 $51 $— $27,408 
Gross charge-offs$1,144 $10,608 $1,753 $— $— $2 $— $13,507 
Total:
Risk rating:
Pass$363,158 $901,663 $457,405 $141,728 $93,881 $230,784 $5,163 $2,193,782 
Special Mention990 30,695 22,685 5,054 6,832 15,899 1,647 83,802 
Substandard388 2,242 4,139 82 4,786 22,127 204 33,968 
Doubtful— 2,022 839 264 — 1,497 — 4,622 
Total loans$364,536 $936,622 $485,068 $147,128 $105,499 $270,307 $7,014 $2,316,174 
Gross charge-offs$1,144 $10,836 $3,003 $141 $19 $3,336 $— $18,479 

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.
The following table presents the amortized cost basis in loans by aging category and accrual status as of the periods shown:
(Dollars in thousands)Current30-59 Days Past Due60-89 Days Past Due90+ Days Past DueTotal Past DueTotal LoansNon-Accrual90+ Days Still AccruingNon Accrual with No Credit LossInterest Income Recognized
December 31, 2024
Commercial:
Business$662,163 $736 $2,252 $3,307 $6,295 $668,458 $6,174 $— $2,682 $— 
Real estate614,914 — — 17,984 17,984 632,898 — 17,984 — — 
Acquisition, development and construction101,564 430 — 13,506 13,936 115,500 13,935 — 13,936 — 
Total commercial1,378,641 1,166 2,252 34,797 38,215 1,416,856 20,109 17,984 16,618 — 
Residential645,430 3,364 45 1,869 5,278 650,708 4,110 — 1,871 — 
Home equity lines of credit12,799 40 46 48 134 12,933 168 — — — 
Consumer16,720 1,390 290 220 1,900 18,620 220 — — — 
Total loans$2,053,590 $5,960 $2,633 $36,934 $45,527 $2,099,117 $24,607 $17,984 $18,489 $— 
December 31, 2023
Commercial:
Business$788,430 $4,728 $448 $3,494 $8,670 $797,100 $6,926 $— $1,825 $— 
Real estate670,170 — 414 — 414 670,584 — — — — 
Acquisition, development and construction134,004 — — — — 134,004 754 — 754 — 
Total commercial1,592,604 4,728 862 3,494 9,084 1,601,688 7,680 — 2,579 — 
Residential670,539 1,671 337 — 2,008 672,547 82 — — — 
Home equity lines of credit14,522 9 — — 9 14,531 161 — — — 
Consumer24,494 1,792 778 344 2,914 27,408 344 — — — 
Total loans$2,302,159 $8,200 $1,977 $3,838 $14,015 $2,316,174 $8,267 $— $2,579 $— 

The ACL is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the ACL when management believes the loan balance is uncollectible. Accrued interest receivable is excluded from the estimate of credit losses. Management determines the ACL balance using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical credit behaviors along with model judgments provide the basis for the estimation of expected credit losses. Adjustments to modeled loss estimates may be made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level or term, as well as for changes in environmental conditions, such as changes in economic conditions, property values or other relevant factors.

At December 31, 2024 and 2023, individually analyzed loans totaled $43.2 million and $11.8 million, respectively. A portion of the ACL of $1.3 million and $1.9 million was allocated to cover any loss in these loans at December 31, 2024 and 2023, respectively.
The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of the periods shown:
(Dollars in thousands)Real EstateVehicles and EquipmentAssignment of Cash FlowAccounts ReceivableOtherTotalsAllowance for Credit Losses
December 31, 2024
Commercial
Business$2,500 $1,516 $— $— $240 $4,256 $827 
Real estate17,984 — — — — 17,984 — 
Acquisition, development and construction13,506 — — — — 13,506 — 
Total commercial33,990 1,516 — — 240 35,746 827 
Residential2,866 — — — — 2,866 36 
Home equity lines of credit— — — — — — — 
Consumer— 220 — — — 220 73 
Total$36,856 $1,736 $— $— $240 $38,832 $936 
Collateral value$66,247 $2,578 $— $— $— $68,825 
December 31, 2023
Commercial
Business$424 $2,277 $— $452 $1,037 $4,190 $1,583 
Real estate— — — — — — — 
Acquisition, development and construction— — — — — — — 
Total commercial$424 $2,277 $— $452 $1,037 $4,190 $1,583 
Residential— — — — — — — 
Home equity lines of credit— — — — — — — 
Consumer— 344 — — — 344 60 
Total$424 $2,621 $— $452 $1,037 $4,534 $1,643 
Collateral value$301 $2,040 $— $906 $320 $3,567 

The Bank evaluates certain loans in homogeneous pools, rather than on an individual basis, when those loans are below specific thresholds based on outstanding principal balance. More specifically, residential mortgage loans, home equity lines of credit and consumer loans are evaluated collectively for expected credit losses by applying allocation rates derived from the Bank’s historical losses specific to these loans. The reserve was immaterial at December 31, 2024 and December 31, 2023.

Management has identified a number of additional qualitative factors which it uses to supplement the estimated losses derived from the loss rate methodologies employed within the CECL model because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from the loss rate methodologies. The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory and governmental sources are: lending policies and procedures, nature and volume of the portfolio, experience and ability of lending management and staff, volume and severity of problem credits, quality of the loan review system, changes in the value of underlying collateral, effect of concentrations of credit from a loan type, industry and/or geographic standpoint, changes in economic and business conditions, consumer sentiment and other external factors.

Bank management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ACL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ACL.

The provision for credit losses related to unfunded commitments was $0.6 million for the year ended December 31, 2024 and the release of allowance related to unfunded commitments was $0.6 million for the year ended December 31, 2023. The provision for credit losses related to unfunded commitments was immaterial for the year ended December 31, 2022.
The following table presents the balance and activity for the primary segments of the ACL as of the periods shown:
Commercial
(Dollars in thousands)BusinessReal EstateAcquisition, development and constructionTotal CommercialResidentialHome Equity Lines of CreditConsumerTotal
ACL balance at December 31, 2023$7,931 $2,931 $1,674 $12,536 $6,412 $97 $3,079 $22,124 
Provision (release of allowance) for credit losses2,091 (380)98 1,809 886 (6)(751)1,938 
Charge-offs(4,379)— — (4,379)(11)— (3,366)(7,756)
Recoveries852 20 — 872 35 4 2,446 3,357 
ACL balance at December 31, 2024$6,495 $2,571 $1,772 $10,838 $7,322 $95 $1,408 $19,663 
Commercial
(Dollars in thousands)BusinessReal EstateAcquisition, development and constructionTotal CommercialResidentialHome Equity Lines of CreditConsumerTotal
ALL, prior to adoption of ASC 326, at December 31, 2022$8,771 $5,704 $1,064 $15,539 $2,880 $131 $5,287 $23,837 
Impact of adopting ASC 326(126)(2,846)288 (2,684)3,889 (5)6,482 7,682 
Provision (release of allowance) for credit losses2,954 71 322 3,347 (541)(33)(4,091)(1,318)
Initial allowance on loans purchased with credit deterioration710 — — 710 507 — — 1,217 
Charge-offs(4,572)— — (4,572)(400)— (13,507)(18,479)
Recoveries194 2 — 196 77 4 8,908 9,185 
ACL balance at December 31, 2023$7,931 $2,931 $1,674 $12,536 $6,412 $97 $3,079 $22,124 
Commercial
(Dollars in thousands)BusinessReal EstateAcquisition, development and constructionTotal CommercialResidentialHome Equity Lines of CreditConsumerTotal
ALL, prior to adoption of ASC 326, at December 31, 2021$8,027 $5,091 $982 $14,100 $1,492 $128 $2,546 $18,266 
Provision (release of allowance) for credit losses3,546 486 82 4,114 1,472 (4)8,612 14,194 
Charge-offs(2,858)— — (2,858)(84)— (12,241)(15,183)
Recoveries56 127 — 183 — 7 6,370 6,560 
ALL, prior to adoption of ASC 326, at December 31, 2022$8,771 $5,704 $1,064 $15,539 $2,880 $131 $5,287 $23,837 
Individually evaluated for impairment$1,253 $222 $— $1,475 $— $— $268 $1,743 
Collectively evaluated for impairment$7,518 $5,482 $1,064 $14,064 $2,880 $131 $5,019 $22,094 

The ACL is based on estimates and actual losses will vary from current estimates. Management believes that the granularity of the portfolio segments, the related loss estimation methodologies and other qualitative factors, as well as the consistency in the application of assumptions, result in an ACL that is representative of the risk found in the components of the portfolio at any given date.

Loan Modifications for Borrowers Experiencing Financial Difficulty

Occasionally, the Bank modifies loans to borrowers in financial distress by providing concessions that allow for the borrower to lower their payment obligations for a defined period, these may include, but are not limited to: principal forgiveness, payment delays, term extensions, interest rate reductions and any combinations of the preceding.

The following tables summarize the amortized cost basis of loans that were modified during the twelve months ended December 31, 2024:
(Dollars in thousands)Principal ForgivenessPayment DelayTerm ExtensionInterest Rate ReductionTotalTotal Class of Financing Receivable
December 31, 2024
Commercial
Business$— $4,541 $466 $— $5,007 1 %
Real estate— — — — — — %
Acquisition, development and construction— — — — — — %
Total commercial— 4,541 466 — 5,007 — %
Residential— — — — — — %
Home equity lines of credit— — — — — — %
Consumer— — — — — — %
Total$— $4,541 $466 $— $5,007 — %
December 31, 2023
Commercial
Business$— $8,535 $— $— $8,535 1 %
Real estate— 11,201 1,702 — 12,903 2 %
Acquisition, development and construction— — 754 — 754 1 %
Total commercial— 19,736 2,456 — 22,192 1 %
Residential— — — — — — %
Home equity lines of credit— — — — — — %
Consumer— — — — — — %
Total$— $19,736 $2,456 $— $22,192 1 %

The above table presents the amortized cost basis of loans that were experiencing financial difficulty and modified during the twelve months ended December 31, 2024 and 2023, by class and by type of modification. Also presented above is the percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable.

As of December 31, 2024, there were 21 loans to 20 borrowers that received payment delay modifications and one loan to a borrower receiving a term extension. These 22 total loans include 21 commercial loans with government guarantees totaling $4.8 million and one commercial loan secured by accounts receivable totaling $0.2 million.

As of December 31, 2023, there were 18 loans to 17 borrowers that received payment delay modifications, including one secured by commercial office real estate totaling $11.2 million, one commercial loan secured by accounts receivable totaling $0.2 million, and 16 commercial loans with government guarantees totaling $8.3 million.
The Bank closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of such loans that have been modified as of the period shown:
(Dollars in thousands)30-59 Days
Past Due		60-89 Days
Past Due		Greater Than
89 Days
Past Due		Total Past Due
December 31, 2024
Commercial
Business$114 $964 $1,693 $2,771 
Real estate— — — — 
Acquisition, development and construction— — — — 
Total commercial114 964 1,693 2,771 
Residential— — — — 
Home equity lines of credit— — — — 
Consumer— — — — 
Total$114 $964 $1,693 $2,771 
December 31, 2023
Commercial
Business$1,702 $418 $3,370 $5,490 
Real estate— — — — 
Acquisition, development and construction— — — — 
Total commercial1,702 418 3,370 5,490 
Residential— — — — 
Home equity lines of credit— — — — 
Consumer— — — — 
Total$1,702 $418 $3,370 $5,490 

As of December 31, 2024, there are nine modified loans past due, with an amortized costs basis of $2.8 million. All nine modified loans past due are commercial notes with government guarantees secured by business assets. Six of these notes are considered non-accrual as of December 31, 2024.

As of December 31, 2023, there are eight modified loans past due, with an amortized costs basis of $5.5 million. Of the eight modified loans past due, three are commercial notes to a single borrower totaling $1.7 million secured by equipment and five commercial notes with government guarantees totaling $3.8 million. All eight of these notes are considered non-accrual as of December 31, 2023.
The following table presents the amortized cost basis of loans that had a payment default and were modified prior to that default to borrowers experiencing financial difficulty as of the period shown:
(Dollars in thousands)Principal ForgivenessPayment DelayTerm ExtensionInterest Rate ReductionTotal
December 31, 2024
Commercial
Business$— $988 $— $— $988 
Real estate— — — — — 
Acquisition, development and construction— — — — — 
Total commercial— 988 — — 988 
Residential— — — — — 
Home equity lines of credit— — — — — 
Consumer— — — — — 
Total$— $988 $— $— $988 
December 31, 2023
Commercial
Business$— $2,634 $— $— $2,634 
Real estate— — — — — 
Acquisition, development and construction— — — — — 
Total commercial— 2,634 — — 2,634 
Residential— — — — — 
Home equity lines of credit— — — — — 
Consumer— — — — — 
Total$— $2,634 $— $— $2,634 

As of December 31, 2024, there are four modified loans that have defaulted, with an amortized costs basis of $1.0 million. These loans are commercial notes with government guarantees and are considered non-accrual as of December 31, 2024.

As of December 31, 2023, there are two modified loans that have defaulted, with an amortized costs basis of $2.6 million. These loans are commercial notes with government guarantees and both are considered non-accrual as of December 31, 2023.

Upon the Bank’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written-off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.