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Loans and Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2025
Receivables [Abstract]  
Loans and Allowance for Credit Losses
Note 3 – Loans and Allowance for Credit Losses

The following table presents the components of loans as of the periods shown:
(Dollars in thousands)March 31, 2025December 31, 2024
Commercial:
   Business$646,311 $668,458 
   Real estate658,070 632,898 
   Acquisition, development and construction87,476 115,500 
          Total commercial1,391,857 1,416,856 
Residential real estate642,482 650,708 
Home equity lines of credit11,738 12,933 
Consumer16,704 18,620 
Total loans2,062,781 2,099,117 
   Deferred loan origination costs, net515 1,014 
Loans receivable$2,063,296 $2,100,131 

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 working capital. This segment includes both internally originated and purchased participation loans. Credit risk is dependent upon 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 U.S. Small Business Administration ("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 segment: 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. 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 an 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. 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. Substantially all of the outstanding loans in this segment are 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: Americas Leading Finance ("ALF") consumer automotive and consumer.

As of March 31, 2025, 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 2020 acquisition of another bank with a balance of $0.5 million. Other real estate is included in accrued interest receivable and other assets on the consolidated balance sheet. As of March 31, 2025, there were two residential mortgages in the process of foreclosure with loan balances totaling $0.7 million.

Bank management uses a nine-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first five 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 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 weaknesses inherent in those classified as 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)20252024202320222021PriorRevolving Loans Converted to TermTotal
March 31, 2025
Commercial business:
Risk rating:
Pass$15,657 $75,650 $126,701 $171,210 $48,468 $139,923 $6,375 $583,984 
Special Mention— 28 — 21,046 9,320 15,014 992 46,400 
Substandard— 1 1,205 5,857 3,776 2,788 — 13,627 
Doubtful— — — 966 45 1,289 — 2,300 
Total commercial business loans$15,657 $75,679 $127,906 $199,079 $61,609 $159,014 $7,367 $646,311 
Gross charge-offs$— $— $— $775 $21 $— $— $796 
Commercial real estate:
Risk rating:
Pass$40,000 $57,943 $111,934 $118,640 $167,320 $109,224 $401 $605,462 
Special Mention— — — — 7,731 9,596 — 17,327 
Substandard— — — — 17,984 17,297 — 35,281 
Doubtful— — — — — — — — 
Total commercial real estate loans$40,000 $57,943 $111,934 $118,640 $193,035 $136,117 $401 $658,070 
Gross charge-offs$— $— $— $— $— $— $— $— 
Commercial acquisition, development and construction:
Risk rating:
Pass$13,410 $15,506 $313 $31,064 $6,505 $4,857 $— $71,655 
Special Mention— — — — — 2,267 — 2,267 
Substandard— — — — 13,156 398 — 13,554 
Doubtful— — — — — — — — 
Total commercial acquisition, development and construction loans$13,410 $15,506 $313 $31,064 $19,661 $7,522 $— $87,476 
Gross charge-offs$— $— $— $— $— $— $— $— 
Residential Real Estate:
Risk rating:
Pass$8,813 $86,531 $35,312 $363,979 $87,661 $52,951 $2,653 $637,900 
Special Mention— — — 798 — 1,947 — 2,745 
Substandard— — — 1,377 — 255 113 1,745 
Doubtful— — — — — 92 — 92 
Total residential real estate loans$8,813 $86,531 $35,312 $366,154 $87,661 $55,245 $2,766 $642,482 
Gross charge-offs$— $— $— $— $— $— $— $— 
(Dollars in thousands)20252024202320222021PriorRevolving Loans Converted to TermTotal
March 31, 2025
Home equity lines of credit:
Risk rating:
Pass$— $— $57 $34 $— $11,632 $— $11,723 
Special Mention— — — — — 15 — 15 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total home equity lines of credit loans$— $— $57 $34 $— $11,647 $— $11,738 
Gross charge-offs$— 
Consumer:
Risk rating:
Pass$— $— $1,446 $11,572 $3,541 $42 $— $16,601 
Special Mention— — — — — — — — 
Substandard— — 20 77 6 — — 103 
Doubtful— — — — — — — — 
Total consumer loans$— $— $1,466 $11,649 $3,547 $42 $— $16,704 
Gross charge-offs$— $— $48 $458 $85 $— $— $591 
Total:
Risk rating:
Pass$77,880 $235,630 $275,763 $696,499 $313,495 $318,629 $9,429 $1,927,325 
Special Mention— 28 — 21,844 17,051 28,839 992 68,754 
Substandard— 1 1,225 7,311 34,922 20,738 113 64,310 
Doubtful— — — 966 45 1,381 — 2,392 
Total loans$77,880 $235,659 $276,988 $726,620 $365,513 $369,587 $10,534 $2,062,781 
Gross charge-offs$— $— $48 $1,233 $106 $— $— $1,387 
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 $— $115,500 
Gross charge-offs$— $— $— $— $— $— $— $— 
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 $— $— $— $11 
Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)2024202320222021`2020PriorRevolving Loans Converted to TermTotal
December 31, 2024
Home equity lines of credit:
Risk rating:
Pass$— $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 

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
March 31, 2025
Commercial
Business$637,231 $5,065 $146 $3,869 $9,080 $646,311 $4,914 $— $3,459 $— 
Real estate640,086 — — 17,984 17,984 658,070 — 17,984 — — 
Acquisition, development and construction87,078 — 398 — 398 87,476 13,555 — 13,156 — 
          Total commercial1,364,395 5,065 544 21,853 27,462 1,391,857 18,469 17,984 16,615 — 
Residential real estate638,233 2,549 1,318 382 4,249 642,482 1,700 — — — 
Home equity lines of credit11,738 — — — — 11,738 — — — — 
Consumer15,122 1,207 272 103 1,582 16,704 103 — — — 
          Total loans$2,029,488 $8,821 $2,134 $22,338 $33,293 $2,062,781 $20,272 $17,984 $16,615 $— 
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 — 
Residential real estate645,430 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 $— 

As of March 31, 2025, there was one loan totaling $18.0 million that was over 90 days past due and still accruing. This loan was past due on its maturity payments; however, interest payments are still being received. The total amount outstanding is expected to be repaid following the sale of the underlying assets, which are in the process of being sold.

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.

The Bank’s methodology for determining the ACL is based on the requirements of Accounting Standards Codification Topic 326 Financial Instruments - Credit Losses. The ACL is calculated on a collective basis when similar risk characteristics exist. The ACL for the majority of loans was calculated using a discounted cash flow methodology applied at a loan level with a one-year reasonable and supportable forecast period and a one-year straight-line reversion period with loss rates, prepayment assumptions and curtailment assumptions driven by each loan’s collateral type. Expected credit loss rates were estimated using a regression model based on historical data from peer banks which incorporates a third-party vendor’s economic forecast to predict the change in credit losses. As of March 31, 2025, the Bank expects the markets in which it operates to experience potential economic
volatility over the next one to two years. The ACL for only one portfolio segment consisting entirely of automotive loans to consumers was calculated under the remaining life methodology using straight-line amortization over the remaining life of the portfolio.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When Bank management determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

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
March 31, 2025
Commercial
Business$1,742 $1,267 $— $— $4,384 $7,393 $1,771 
Real estate17,984 — — — — 17,984 — 
Acquisition, development and construction13,156 — — — — 13,156 — 
Total commercial$32,882 $1,267 $— $— $4,384 $38,533 $1,771 
Residential995 — — — — 995 36 
Home equity lines of credit— — — — — — — 
Consumer— 103 — — — 103 39 
Total$33,877 $1,370 $— $— $4,384 $39,631 $1,846 
Collateral value$96,015 $2,278 $— $— $4,250 $102,543 
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 commercial$33,990 $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 

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 March 31, 2025 and December 31, 2024.

Management has identified a number of additional qualitative factors that it uses to supplement the estimated losses derived from the loss rate methodologies employed within the current expected credit losses 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.
To estimate the liability for off-balance sheet credit exposures, Bank management analyzed the portfolios of unfunded commitments based on the same segmentation used for the ACL calculation. The estimated funding rate for each segment was derived from a funding rate study created by a third-party vendor which analyzed funding of various loan types over time to develop industry benchmarks at the call report code level. Once the estimated future advances were calculated, the allocation rate applicable to that portfolio segment was applied in the same manner as those used for the ACL calculation. The resulting estimated loss allocations were totaled to determine the liability for unfunded commitments related to these loans, which management considers necessary to anticipate potential losses on those commitments that have a reasonable probability of funding. As of March 31, 2025 and December 31, 2024, the liability for unfunded commitments related to loans held-for-investment was $1.4 million and $1.6 million, respectively.

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 that all or part of specific loans are uncollectible, these amounts are promptly charged off against the ACL.

The following table presents the balance and activity for the primary segments of the ACL as of the periods shown:
CommercialResidentialHome EquityConsumerTotal
(Dollars in thousands)BusinessReal EstateAcquisition, development and constructionTotal Commercial
ACL balance at December 31, 2024$6,495 $2,571 $1,772 $10,838 $7,322 $95 $1,408 $19,663 
Provision (release of allowance) for credit losses1
1,285 (135)(389)761 (281)(7)(114)359 
Charge-offs(796)— — (796)— — (591)(1,387)
Recoveries49 3 — 52 — 1 477 530 
ACL balance at March 31, 2025$7,033 $2,439 $1,383 $10,855 $7,041 $89 $1,180 $19,165 
1 Excludes the provision (release of allowance) for unfunded commitments and the provision for credit losses related to available-for-sale debt securities, as applicable.

CommercialResidentialHome EquityConsumerTotal
(Dollars in thousands)BusinessReal EstateAcquisition, development and constructionTotal Commercial
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 losses1
1,297 365 447 2,109 (145)(8)39 1,995 
Charge-offs(981)— — (981)— — (1,169)(2,150)
Recoveries42 8 — 50 35 1 749 835 
ACL balance at March 31, 2024$8,289 $3,304 $2,121 $13,714 $6,302 $90 $2,698 $22,804 
1 Excludes the provision (release of allowance) for unfunded commitments and the provision for credit losses related to available-for-sale debt securities, as applicable.

During the three months ended March 31, 2025, there were charge offs totaling $1.4 million. For the three months ended March 31, 2025, $0.8 million, or 57%, was related to five commercial notes secured by business assets and $0.6 million, or 43%, of charge offs were related to the subprime consumer automotive segment. During the three months ended March 31, 2025, the release of allowance related to unfunded commitments was $0.2 million. During the three months ended March 31, 2024, there was an inconsequential release of allowance related to unfunded commitments.

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 table summarize the period-end amortized cost basis of loans that were modified during the period shown:

(Dollars in thousands)Principal ForgivenessPayment DelayTerm ExtensionInterest Rate ReductionTotalTotal Class of Financing Receivable
Three Months Ended March 31, 2025
Commercial
Business$— $6,447 $— $— $6,447 1 %
Real estate— — — — — — %
Acquisition, development and construction— — — — — — %
Total commercial— 6,447 — — 6,447 — %
Residential— — — — — — %
Home equity lines of credit— — — — — — %
Consumer— — — — — — %
Total$— $6,447 $— $— $6,447 — %
Three Months Ended March 31, 2024
Commercial
Business$— $1,377 $— $— $1,377 — %
Real estate— — — — — — %
Acquisition, development and construction— — — — — — %
Total commercial— 1,377 — — 1,377 — %
Residential— — — — — — %
Home equity lines of credit— — — — — — %
Consumer— — — — — — %
Total$— $1,377 $— $— $1,377 — %

The above table presents the amortized cost basis of loans at March 31, 2025 that were experiencing financial difficulty and modified during the three months ended March 31, 2025, by class and by type of modification. Also presented above is the percentage of the amortized cost basis of loans that were modified for borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable. There are five loans to five borrowers that received payment delay modifications in the three months ended March 31, 2025. These five total loans include four commercial loans with government guarantees totaling $3.9 million and one note secured by a business valuation totaling $2.5 million.
The Bank closely monitors the performance of loans that are modified for 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 periods shown:
(Dollars in thousands)30-59 Days
Past Due		60-89 Days
Past Due		Greater Than
89 Days
Past Due		Total Past Due
Three Months Ended March 31, 2025
Commercial
Business$243 $— $967 $1,210 
Real estate— — — — 
Acquisition, development and construction— — — — 
Total commercial243 — 967 1,210 
Residential— — — — 
Home equity lines of credit— — — — 
Consumer— — — — 
Total$243 $— $967 $1,210 

As of March 31, 2025, there are two modified loans past due, with an amortized cost basis of $1.2 million. Both loans are commercial notes with government guarantees secured by business assets. Both loans are considered non-accrual as of March 31, 2025. As of March 31, 2024, there were no modified loans past due.

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
Three Months Ended March 31, 2025
Commercial
Business$— $203 $— $— $203 
Real estate— — — — — 
Acquisition, development and construction— — — — — 
Total commercial— 203 — — 203 
Residential— — — — — 
Home equity lines of credit— — — — — 
Consumer— — — — — 
Total$— $203 $— $— $203 
As of March 31, 2025, there is one modified loan that has defaulted, with an amortized cost basis of $0.2 million. The loan is a commercial note that has a government guarantee and is considered non-accrual as of March 31, 2025. As of March 31, 2024, there were no modified loans that had defaulted. 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.