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Loans
 9 Months Ended
Sep. 30, 2024
Receivables [Abstract]  
Loans Loans
The following table presents the composition of loans segregated by class of loans, as of September 30, 2024 and December 31, 2023.
(dollars in thousands)September 30, 2024December 31, 2023
Construction, land & land development$196,390 $247,146 
Other commercial real estate1,012,466 974,375 
Total commercial real estate1,208,856 1,221,521 
Residential real estate349,777 356,234 
Commercial, financial & agricultural 242,389 242,756 
Consumer and other85,015 62,959 
Total Loans$1,886,037 $1,883,470 
Included in the above table are government guaranteed loans totaling $98.4 million at September 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)September 30, 2024December 31, 2023
Construction, land & land development$2,489 $7,027 
Other commercial real estate54,183 40,852 
Total commercial real estate56,672 47,879 
Residential real estate10,125 12,170 
Commercial, financial & agricultural 31,612 26,716 
Consumer and other— — 
Total Loans$98,409 $86,765 

The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this note. As of September 30, 2024 and December 31, 2023, accrued interest receivable for loans totaled $8.8 million for both periods 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 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 September 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 September 30, 2024 or December 31, 2023.
Term Loans Amortized Cost Basis by Origination Year
(dollars in thousands)20242023202220212020PriorRevolversRevolvers converted to term loansTotal
September 30, 2024
Construction, land & land development
Risk rating
Pass$74,340 $53,024 $33,062 $23,203 $2,164 $5,804 $53 $323 $191,973 
Special Mention— 3,717 — — 419 — 281 — 4,417 
Substandard— — — — — — — — — 
Total Construction, land & land development74,340 56,741 33,062 23,203 2,583 5,804 334 323 196,390 
  Current period gross write offs$— $— $— $— $— $— $— $— $— 
Other commercial real estate
Risk rating
Pass40,156 86,804 359,674 188,879 79,073 202,660 20,811 1,618 979,675 
Special Mention1,051 2,023 4,626 173 2,365 7,533 610 1,072 19,453 
Substandard4,187 3,098 3,878 390 355 857 573 — 13,338 
Total Other commercial real estate45,394 91,925 368,178 189,442 81,793 211,050 21,994 2,690 1,012,466 
Current period gross write offs— — — — — 20 — — 20 
Residential real estate
Risk rating
Pass12,225 79,966 114,744 46,641 19,249 47,081 23,550 932 344,388 
Special Mention— 1,624 — — — 2,007 204 — 3,835 
Substandard— — 548 273 67 666 — — 1,554 
Total Residential real estate12,225 81,590 115,292 46,914 19,316 49,754 23,754 932 349,777 
Current period gross write offs— — 340 — — 9 — — 349 
Commercial, financial & agricultural
Risk rating
Pass39,811 50,615 37,949 14,315 9,686 16,854 62,998 718 232,946 
Special Mention— — 2,207 93 168 — 971 — 3,439 
Substandard82 1,538 701 2,895 321 245 126 96 6,004 
Total Commercial, financial & agricultural39,893 52,153 40,857 17,303 10,175 17,099 64,095 814 242,389 
Current period gross write offs45 398 437 188 20 11 — — 1,099 
Consumer and other
Risk rating
Pass46,650 31,980 2,652 1,209 691 1,357 445 10 84,994 
Special Mention— — — — — — — — — 
Substandard8 — 10 1 2 — — — 21 
Total Consumer and other46,658 31,980 2,662 1,210 693 1,357 445 10 85,015 
Current period gross write offs67 323 30 — 5 41 — — 466 
Total Loans
Risk rating
Pass213,182 302,389 548,081 274,247 110,863 273,756 107,857 3,601 1,833,976 
Special Mention1,051 7,364 6,833 266 2,952 9,540 2,066 1,072 31,144 
Substandard4,277 4,636 5,137 3,559 745 1,768 699 96 20,917 
Total Loans$218,510 $314,389 $560,051 $278,072 $114,560 $285,064 $110,622 $4,769 $1,886,037 
Total current period gross write offs$112 $721 $807 $188 $25 $81 $— $— $1,934 
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 $2.2 million and $1.4 million in collateral-dependent loans at September 30, 2024 and December 31, 2023, respectively.
There were no significant changes in the extent to which collateral secures our collateral-dependent loans during the three and nine month periods ended September 30, 2024.
The following table presents the aging of the amortized cost basis of loans by aging category and accrual status as of September 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
September 30, 2024
Construction, land & land development$208 $— $208 $— $196,182 $196,390 
Other commercial real estate692 — 692 5,380 1,006,394 1,012,466 
Total commercial real estate900 — 900 5,380 1,202,576 1,208,856 
Residential real estate2,003 — 2,003 1,486 346,288 349,777 
Commercial, financial & agricultural660 — 660 5,327 236,402 242,389 
Consumer and other227 44 271 22 84,722 85,015 
Total Loans$3,790 $44 $3,834 $12,215 $1,869,988 $1,886,037 
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.
September 30, 2024
(dollars in thousands)Nonaccrual Loans with No Related ACLNonaccrual Loans with a Related ACLTotal Nonaccrual Loans
Construction, land & land development$— $— $— 
Other commercial real estate— 5,380 5,380 
Total commercial real estate— 5,380 5,380 
Residential real estate3 1,483 1,486 
Commercial, financial & agricultural752 4,575 5,327 
Consumer and other— 22 22 
Total Loans$755 $11,460 $12,215 
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 September 30, 2024 and 2023 was $173,000 and $55,000, respectively. Interest income recorded on nonaccrual loans during the nine months ended September 30, 2024 and 2023 was $390,000 and $265,000, 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 nine month periods ended September 30, 2024.
Three months ended September 30, 2024
(dollars in thousands)Term ExtensionPayment DelayTerm Extension and Payment DelayTotal*
Commercial real estate$224 $— $— $224 
Commercial, financial & agricultural— 1,114 558 1,672 
Total Loans$224 $1,114 $558 $1,896 
*less than .05% of total class of receivable
There were a total of six loans in the above categories for the three months ended September 30, 2024. The commercial real estate category consists of one loan which was given a term extension for 20 years. The commercial, financial & agricultural category consists of five loans, three of which were given payment delays and two SBSL loans which were each given payment delays and term extensions of ten years.
Nine months ended September 30, 2024
(dollars in thousands)Term ExtensionPayment DelayTerm Extension and Payment DelayTotal*
Commercial real estate$355 $— $144 $499 
Commercial, financial & agricultural— 1,482 597 2,079 
Total Loans$355 $1,482 $741 $2,578 
*less than .05% of total class of receivable
There were a total of ten loans in the above categories for the nine months ended September 30, 2024. The commercial real estate loans consist of three loans, two with a term extension of one year with one of these loans also given a payment delay, and one loan with a term extension of 20 years. There were seven commercial, financial & agricultural loans, four of which had been given a payment delay only and three with both a payment delay and term extensions, one loan for five years and two loans for ten years.
The Company had no loans that subsequently defaulted during the three and nine month periods ended September 30, 2024 and for the year ended December 31, 2023.