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Loans
 6 Months Ended
Jun. 30, 2024
Receivables [Abstract]  
Loans Loans
The following table presents the composition of loans segregated by class of loans, as of June 30, 2024 and December 31, 2023.
(dollars in thousands)June 30, 2024December 31, 2023
Construction, land & land development$199,916 $247,146 
Other commercial real estate985,102 974,375 
Total commercial real estate1,185,018 1,221,521 
Residential real estate360,847 356,234 
Commercial, financial & agricultural 242,205 242,756 
Consumer and other77,504 62,959 
Total Loans$1,865,574 $1,883,470 
Included in the above table are government guaranteed loans totaling $96.3 million at June 30, 2024 and $86.8 million at December 31, 2023. The following table presents the composition of government guaranteed loans segregated by class of loans for each respective period.

(dollars in thousands)June 30, 2024December 31, 2023
Construction, land & land development$4,190 $7,027 
Other commercial real estate52,444 40,852 
Total commercial real estate56,634 47,879 
Residential real estate9,377 12,170 
Commercial, financial & agricultural 30,254 26,716 
Consumer and other— — 
Total Loans$96,265 $86,765 

The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this note. As of June 30, 2024 and December 31, 2023, accrued interest receivable for loans totaled $8.8 million and $8.8 million, respectively, and is included in the "Other assets" line item on the Company’s consolidated balance sheet.

Commercial, financial & agricultural loans are extended to a diverse group of businesses within the Company’s market area. These loans are often underwritten based on the borrower’s ability to service the debt from income from the business. Real estate construction loans often require loan funds to be advanced prior to completion of the project. Due to uncertainties inherent in estimating construction costs, changes in interest rates and other economic conditions, these loans often pose a higher risk than other types of loans. Consumer and other loans are originated at the Bank level.
Credit Quality Indicators. As part of the ongoing monitoring of the credit quality of the loan portfolio, management tracks certain credit quality indicators including trends related to (1) the risk grade assigned to commercial and consumer loans, (2) the level of classified commercial loans, (3) net charge-offs, (4) nonperforming loans, and (5) the general economic conditions in the Company’s geographic markets.
The Company uses a risk grading matrix to assign a risk grade to each of its loans. For commercial loans over $500,000, loans are graded on a scale of 1 to 10. A description of the general characteristics of the grades is as follows:
•Grades 1, 2 and 3 - Loans with these assigned risk grades range from virtual absence of risk to minimal risk. Such loans may be secured by Company-issued and controlled certificates of deposit or properly margined equity securities or bonds. Other loans comprising these grades are made to companies that have been in existence for a long period of time with many years of consecutive profits and strong equity, good liquidity, excellent debt service ability and unblemished past performance, or to exceptionally strong individuals with collateral of unquestioned value that fully secures the loans. Loans in this category fall into the “pass” classification.
•Grades 4 and 5 - Loans assigned these “pass” risk grades are made to borrowers with acceptable credit quality and risk. The risk ranges from loans with no significant weaknesses in repayment capacity and collateral protection to acceptable loans with one or more risk factors considered to be more than average. These loans are also included in into the “pass” classification.
•Grade 6 - This grade includes “special mention” loans on management’s watch list and is intended to be used on a temporary basis for pass grade loans where risk-modifying action is intended in the short-term.
•Grades 7 and 8 - These grades include “substandard” loans in accordance with regulatory guidelines. This category includes borrowers with well-defined weaknesses that jeopardize the payment of the debt in accordance with the agreed terms. Loans considered to be impaired are assigned grade 8, and these loans often have assigned loss allocations as part of the allowance for credit losses. Generally, loans on which interest accrual has been stopped would be included in this grade range.
•Grades 9 and 10 - These grades correspond to regulatory classification definitions of “doubtful” and “loss,” respectively. In practice, any loan with these grades would be for a very short period of time, and generally the Company has no loans with these assigned grades. Management manages the Company’s problem loans in such a
way that uncollectible loans or uncollectible portions of loans are charged off immediately with any residual, collectible amounts assigned a risk grade of 7 or 8. 
For smaller commercial loans (under $500,000) and consumer loans, the Company began using behavioral based risk grades during the second quarter of 2024. These loans are assigned risk grades of 98 or 99 based on payment performance with the Company.
◦Grade 98 - Loans assigned this risk grade indicates a "pass" credit.
◦Grade 99 - Loans assigned this risk grade indicates a "substandard" credit and is moved to a nonaccrual status.
The following tables present the loan portfolio segregated by class of loans and the risk category of term loans by vintage year, which is the year of origination or most recent renewal, as of June 30, 2024 and December 31, 2023. Those loans with a risk grade of 1, 2, 3, 4, 5 and 98 have been combined in the pass line for presentation purposes. Loans with a risk grade of 7, 8 and 99 have been combined in the substandard line. There were no loans with a risk rating of "doubtful" or "loss" at June 30, 2024 or December 31, 2023.
Term Loans Amortized Cost Basis by Origination Year
(dollars in thousands)20242023202220212020PriorRevolversRevolvers converted to term loansTotal
June 30, 2024
Construction, land & land development
Risk rating
Pass$44,124 $70,360 $51,070 $24,673 $2,727 $6,273 $63 $— $199,290 
Special Mention— 291 — — — — 281 — 572 
Substandard— — — — — 54 — — 54 
Total Construction, land & land development44,124 70,651 51,070 24,673 2,727 6,327 344 — 199,916 
  Current period gross write offs$— $— $— $— $— $— $— $— $— 
Other commercial real estate
Risk rating
Pass13,935 83,226 348,545 192,294 81,713 208,832 22,835 2,177 953,557 
Special Mention812 1,400 4,654 457 1,470 7,612 610 539 17,554 
Substandard— 1,590 10,118 396 355 725 807 — 13,991 
Total Other commercial real estate14,747 86,216 363,317 193,147 83,538 217,169 24,252 2,716 985,102 
Current period gross write offs— — — — — 20 — — 20 
Residential real estate
Risk rating
Pass8,407 83,088 118,146 50,323 20,485 49,756 23,929 1,283 355,417 
Special Mention— 1,238 — — — 2,024 — — 3,262 
Substandard— — 552 357 69 1,190 — — 2,168 
Total Residential real estate8,407 84,326 118,698 50,680 20,554 52,970 23,929 1,283 360,847 
Current period gross write offs— — 340 — — — — — 340 
Commercial, financial & agricultural
Risk rating
Pass31,715 52,528 41,998 16,573 10,535 16,555 64,512 608 235,024 
Special Mention— 598 — 95 173 — 241 — 1,107 
Substandard71 712 2,076 1,804 361 272 771 7 6,074 
Total Commercial, financial & agricultural31,786 53,838 44,074 18,472 11,069 16,827 65,524 615 242,205 
Current period gross write offs23 350 432 179 20 10 — — 1,014 
Consumer and other
Risk rating
Pass36,250 34,034 3,065 1,397 832 1,422 425 11 77,436 
Special Mention— — — — — — — — — 
Substandard— 60 — 1 3 4 — — 68 
Total Consumer and other36,250 34,094 3,065 1,398 835 1,426 425 11 77,504 
Current period gross write offs— 186 23 — — 42 — — 251 
Total Loans
Risk rating
Pass134,431 323,236 562,824 285,260 116,292 282,838 111,764 4,079 1,820,724 
Special Mention812 3,527 4,654 552 1,643 9,636 1,132 539 22,495 
Substandard71 2,362 12,746 2,558 788 2,245 1,578 7 22,355 
Total Loans$135,314 $329,125 $580,224 $288,370 $118,723 $294,719 $114,474 $4,625 $1,865,574 
Total current period gross write offs$23 $536 $795 $179 $20 $72 $— $— $1,625 
Term Loans Amortized Cost Basis by Origination Year
(dollars in thousands)20232022202120202019PriorRevolversRevolvers converted to term loansTotal
December 31, 2023
Construction, land & land development
Risk rating
Pass$112,587 $91,981 $27,332 $5,654 $1,000 $5,765 $605 $31 $244,955 
Special Mention792 — 25 — — 29 282 — 1,128 
Substandard— 888 4 — 20 151 — — 1,063 
Total Construction, land & land development113,379 92,869 27,361 5,654 1,020 5,945 887 31 247,146 
  Current period gross write offs$— $— $— $— $— $— $— $— $— 
Other commercial real estate
Risk rating
Pass61,816 341,656 204,145 88,629 79,123 145,374 24,158 2,031 946,932 
Special Mention75 3,251 766 2,113 5,733 4,694 545 48 17,225 
Substandard2,303 2,615 211 — 486 4,395 208 — 10,218 
Total Other commercial real estate64,194 347,522 205,122 90,742 85,342 154,463 24,911 2,079 974,375 
Current period gross write offs— — 69 — — — — — 69 
Residential real estate
Risk rating
Pass78,088 116,704 50,986 21,892 8,510 43,038 22,642 100 341,960 
Special Mention856 466 10 50 679 4,687 424 — 7,172 
Substandard— 1,169 384 296 272 4,735 246 — 7,102 
Total Residential real estate78,944 118,339 51,380 22,238 9,461 52,460 23,312 100 356,234 
Current period gross write offs253 492 26 — — — — — 771 
Commercial, financial & agricultural
Risk rating
Pass66,820 51,439 21,673 12,489 4,734 14,002 58,607 306 230,070 
Special Mention4,186 894 376 745 188 40 974 — 7,403 
Substandard164 1,872 1,979 190 25 165 866 22 5,283 
Total Commercial, financial & agricultural71,170 54,205 24,028 13,424 4,947 14,207 60,447 328 242,756 
Current period gross write offs150 168 408 200 9 134 — — 1,069 
Consumer and other
Risk rating
Pass53,117 4,021 2,004 1,240 925 908 462 1 62,678 
Special Mention79 42 38 12 25 1 — — 197 
Substandard43 20 3 5 4 9 — — 84 
Total Consumer and other53,239 4,083 2,045 1,257 954 918 462 1 62,959 
Current period gross write offs9 12 10 2 — 2 — — 35 
Total Loans
Risk rating
Pass372,428 605,801 306,140 129,904 94,292 209,087 106,474 2,469 1,826,595 
Special Mention5,988 4,653 1,215 2,920 6,625 9,451 2,225 48 33,125 
Substandard2,510 6,564 2,581 491 807 9,455 1,320 22 23,750 
Total Loans$380,926 $617,018 $309,936 $133,315 $101,724 $227,993 $110,019 $2,539 $1,883,470 
Total current period gross write offs$412 $672 $513 $202 $9 $136 $— $— $1,944 
A loan’s risk grade is assigned at loan origination and is based on the financial strength of the borrower and the type of collateral. Loan risk grades are subject to review at various times throughout the year as part of the Company’s ongoing loan review process. Loans with an assigned risk grade of 7, 8, 9, 10 or 99 and an outstanding balance of $500,000 or more are reassessed on a quarterly basis. During this reassessment process individual reserves may be identified and placed against certain loans which are not considered impaired.
In assessing the overall economic condition of the markets in which it operates, the Company monitors the unemployment rates for its major service areas. The unemployment rates are reviewed on a quarterly basis as part of the allowance for credit loss determination.
Loans are placed on nonaccrual status if principal or interest payments become 90 days past due or when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory guidelines. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due.
Collateral-Dependent Loans
We classify a loan as collateral-dependent when our borrower is experiencing financial difficulty, and we expect repayment to be provided substantially through the operation or sale of collateral. Our commercial loans have collateral that is comprised of real estate and business assets. Our consumer loans have collateral that is substantially comprised of residential real estate. The Company had $1.4 million in collateral-dependent loans at June 30, 2024 and December 31, 2023.
There were no significant changes in the extent to which collateral secures our collateral-dependent loans during the three and six month periods ended June 30, 2024.
The following table presents the aging of the amortized cost basis of loans by aging category and accrual status as of June 30, 2024 and December 31, 2023:
(dollars in thousands)30-89 Days
Past Due		90 Days
or More
Past Due		Total Accruing
Loans Past Due		Nonaccrual
Loans		Current LoansTotal Loans
June 30, 2024
Construction, land & land development$4 $— $4 $54 $199,858 $199,916 
Other commercial real estate1,071 — 1,071 1,894 982,137 985,102 
Total commercial real estate1,075 — 1,075 1,948 1,181,995 1,185,018 
Residential real estate4,999 — 4,999 2,131 353,717 360,847 
Commercial, financial & agricultural488 — 488 2,520 239,197 242,205 
Consumer and other251 41 292 70 77,142 77,504 
Total Loans$6,813 $41 $6,854 $6,669 $1,852,051 $1,865,574 
December 31, 2023
Construction, land & land development$812 $— $812 $85 $246,249 $247,146 
Other commercial real estate1,796 — 1,796 4,219 968,360 974,375 
Total commercial real estate2,608 — 2,608 4,304 1,214,609 1,221,521 
Residential real estate2,503 350 2,853 3,561 349,820 356,234 
Commercial, financial & agricultural775 — 775 1,956 240,025 242,756 
Consumer and other183 20 203 18 62,738 62,959 
Total Loans$6,069 $370 $6,439 $9,839 $1,867,192 $1,883,470 

The following tables display a summary of the Company's nonaccrual loans by major categories for the periods indicated.
June 30, 2024
(dollars in thousands)Nonaccrual Loans with No Related ACLNonaccrual Loans with a Related ACLTotal Nonaccrual Loans
Construction, land & land development$— $54 $54 
Other commercial real estate— 1,894 1,894 
Total commercial real estate— 1,948 1,948 
Residential real estate— 2,131 2,131 
Commercial, financial & agricultural— 2,520 2,520 
Consumer and other— 70 70 
Total Loans$— $6,669 $6,669 
December 31, 2023
(dollars in thousands)Nonaccrual Loans with No Related ACLNonaccrual Loans with a Related ACLTotal Nonaccrual Loans
Construction, land & land development$27 $58 $85 
Other commercial real estate2,806 1,413 4,219 
Total commercial real estate2,833 1,471 4,304 
Residential real estate725 2,836 3,561 
Commercial, financial & agricultural— 1,956 1,956 
Consumer and other— 18 18 
Total Loans$3,558 $6,281 $9,839 
Interest income recorded on nonaccrual loans during the three months ended June 30, 2024 and 2023 was $135,000 and $206,000, respectively. Interest income recorded on nonaccrual loans during the six months ended June 30, 2024 and 2023 was $217,000 and $360,000, respectively.
The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset 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 because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.
In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. Upon the Company's determination that a modified loan, or portion of a loan, has subsequently been deemed uncollectible, the loan, or portion of the loan, is written off.
The following tables present loans modified due to a financial difficulty under the above terms during the three and six month periods ended June 30, 2024.
Three months ended June 30, 2024
(dollars in thousands)Term ExtensionPayment DelayTerm Extension and Payment DelayTotal*
Commercial, financial & agricultural— 377 — 377 
Total Loans$— $377 $— $377 
*less than .05% of total class of receivable
There was one loan in the above category for the three months ended June 30, 2024. The commercial, financial & agricultural loan had been given a payment delay.
Six months ended June 30, 2024
(dollars in thousands)Term ExtensionPayment DelayTerm Extension and Payment DelayTotal*
Commercial real estate$131 $— $145 $276 
Commercial, financial & agricultural— 377 40 417 
Total Loans$131 $377 $185 $693 
*less than .05% of total class of receivable
There were a total of four loans in the above categories for the six months ended June 30, 2024. The commercial real estate loans consist of two loans, each with a term extension of one year with one loan also given a payment delay. There were two commercial, financial & agricultural loans, each of which had been given a payment delay and one with a term extension of five years.
The Company had no loans that subsequently defaulted during the three and six month periods ended June 30, 2024 and for the year ended December 31, 2023.