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LOANS
 12 Months Ended
Dec. 31, 2024
Receivables [Abstract]  
LOANS LOANS
 
The following table presents the composition of loans segregated by class of loans, as of December 31, 2024 and 2023.
  
(dollars in thousands)December 31, 2024December 31, 2023
Construction, land & land development$205,046 $247,146 
Other commercial real estate990,648 974,375 
Total commercial real estate1,195,694 1,221,521 
Residential real estate344,167 356,234 
Commercial, financial & agricultural213,910 242,756 
Consumer and other89,209 62,959 
Total loans$1,842,980 $1,883,470 

Included in the above table are government guaranteed loans totaling $81.6 million at December 31, 2024 and $68.6 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)December 31, 2024December 31, 2023
Construction, land & land development$2,317 $2,344 
Other commercial real estate41,471 31,940 
Total commercial real estate43,788 34,284 
Residential real estate9,348 8,019 
Commercial, financial & agricultural28,500 26,334 
Total loans$81,636 $68,637 

The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this note. As of December 31, 2024 and 2023, respectively, accrued interest receivable for loans totaled $9.0 million and $8.8 million 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. These loans are generally smaller loan amounts spread across many individual borrowers to help minimize risk.

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 - Borrowers 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 includes “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.

•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 and 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 December 31, 2024 and 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 December 31, 2024 and 2023.


Term Loans Amortized Cost Basis by Origination Year
(dollars in thousands)20242023202220212020PriorRevolversRevolvers converted to term loansTotal
December 31, 2024
Construction, land & land development
Risk rating
Pass$98,269 $47,378 $25,930 $23,193 $1,979 $5,379 $53 $— $202,181 
Special Mention— 2,088 — — 411 — 281 — 2,780 
Substandard— — — — — 85 — — 85 
Total Construction, land & land development98,269 49,466 25,930 23,193 2,390 5,464 334 — 205,046 
  Current period gross write offs$— $— $— $— $— $— $— $— $— 
Other commercial real estate
Risk rating
Pass55,169 85,172 343,123 180,568 76,905 194,444 21,341 1,849 958,571 
Special Mention850 1,999 4,288 173 2,344 7,376 610 1,069 18,709 
Substandard4,114 2,586 2,875 459 352 2,419 563 — 13,368 
Total Other commercial real estate60,133 89,757 350,286 181,200 79,601 204,239 22,514 2,918 990,648 
Current period gross write offs— — — — — 20 — — 20 
Residential real estate
Risk rating
Pass16,675 76,074 112,784 45,111 18,978 44,892 23,222 926 338,662 
Special Mention— 1,672 374 — — 1,989 204 — 4,239 
Substandard— — 442 270 28 526 — — 1,266 
Total Residential real estate16,675 77,746 113,600 45,381 19,006 47,407 23,426 926 344,167 
Current period gross write offs— — 400 18 — 9 — — 427 
Commercial, financial & agricultural
Risk rating
Pass44,380 46,610 33,124 12,322 8,662 16,143 43,051 742 205,034 
Special Mention— 622 2,136 12 — — 700 — 3,470 
Substandard105 1,612 858 1,904 271 218 433 5 5,406 
Total Commercial, financial & agricultural44,485 48,844 36,118 14,238 8,933 16,361 44,184 747 213,910 
Current period gross write offs138 588 659 986 28 68 — — 2,467 
Consumer and other
Risk rating
Pass53,500 30,186 2,312 857 530 1,291 456 13 89,145 
Special Mention— — — — — — — — — 
Substandard49 — 12 1 2 — — — 64 
Total Consumer and other53,549 30,186 2,324 858 532 1,291 456 13 89,209 
Current period gross write offs84 392 81 1 5 41 — — 604 
Total Loans
Risk rating
Pass267,993 285,420 517,273 262,051 107,054 262,149 88,123 3,530 1,793,593 
Special Mention850 6,381 6,798 185 2,755 9,365 1,795 1,069 29,198 
Substandard4,268 4,198 4,187 2,634 653 3,248 996 5 20,189 
Total Loans$273,111 $295,999 $528,258 $264,870 $110,462 $274,762 $90,914 $4,604 $1,842,980 
Total current period gross write offs$222 $980 $1,140 $1,005 $33 $138 $— $— $3,518 



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 the inception of the loan and is based on the financial strength of the borrower and the type of collateral. Loan risk grades are subject to reassessment 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 considered past due if the required principal and interest payments have not been received as of the date such payments were due. Generally, 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 provision. Loans may be placed on nonaccrual status regardless of whether such loans are considered past due.

Loans are classified as collateral-dependent when the 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 $3.1 million and $1.4 million in collateral-dependent loans at December 31, 2024 and 2023, respectively. There were no significant changes in the extent to which collateral secures our collateral-dependent loans during the periods ended December 31, 2024 and 2023.
 
The following table represents an age analysis of past due loans and nonaccrual loans, segregated by class of loans, as of December 31, 2024 and 2023.

Accruing Loans   
(dollars in thousands)30-89 Days
Past Due		90 Days
or More
Past Due		Total Accruing
Loans Past Due		Nonaccrual
Loans		Current LoansTotal Loans
December 31, 2024      
Construction, land & land development$544 $— $544 $— $204,502 $205,046 
Other commercial real estate2,441 — 2,441 4,833 983,374 990,648 
Total commercial real estate2,985 — 2,985 4,833 1,187,876 1,195,694 
Residential real estate3,689 — 3,689 1,204 339,274 344,167 
Commercial, financial & agricultural1,348 — 1,348 4,559 208,003 213,910 
Consumer and other339 152 491 64 88,654 89,209 
Total loans$8,361 $152 $8,513 $10,660 $1,823,807 $1,842,980 

Accruing Loans   
(dollars in thousands)30-89 Days
Past Due		90 Days
or More
Past Due		Total Accruing
Loans Past Due		Nonaccrual
Loans		Current LoansTotal Loans
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 table is a summary of the Company's nonaccrual loans by major categories for the periods indicated.

(dollars in thousands)Nonaccrual Loans with No Related ACLNonaccrual Loans with a Related ACLTotal Nonaccrual Loans
December 31, 2024   
Construction, land & land development$— $— $— 
Other commercial real estate1,482 3,351 4,833 
Total commercial real estate1,482 3,351 4,833 
Residential real estate— 1,204 1,204 
Commercial, financial & agricultural— 4,559 4,559 
Consumer and other— 64 64 
Total loans$1,482 $9,178 $10,660 


(dollars in thousands)Nonaccrual Loans with No Related ACLNonaccrual Loans with a Related ACLTotal Nonaccrual Loans
December 31, 2023   
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 

As of December 31, 2024 and 2023, there were no loans in process of foreclosure.

Interest income recorded on nonaccrual loans during the year ended December 31, 2024 was $511,000, and reflects interest income recorded on nonaccrual loans prior to them being placed on nonaccrual status. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $3.8 million for the year ended December 31, 2024.

Interest income recorded on nonaccrual loans during the year ended December 31, 2023 was $430,000, and reflects interest income recorded on nonaccrual loans prior to them being placed on nonaccrual status. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $3.1 million for the year ended December 31, 2023.
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 twelve month periods ended December 31, 2024 and 2023.

December 31, 2024
(dollars in thousands)Term ExtensionPayment DelayTerm Extension and Payment DelayTotal*
Construction, land & land development$— $85 $— $85 
Commercial real estate355 — 145 500 
Commercial, financial & agricultural— 353 578 931 
Total Loans$355 $438 $723 $1,516 
*less than .01% of total class of receivable

There were a total of nine loans in the above categories for the year ended December 31, 2024. There was one construction, land & land development loan which had been given a payment delay. The commercial real estate loans consist of three loans, all three with a term extension of one year and one of these loans also given a payment delay. There were five commercial, financial & agricultural loans, one of which had been given a payment delay only and four with both a payment delay and term extensions, one loan for three years, one loan for five years and two loans for ten years.

December 31, 2023
(dollars in thousands)Term ExtensionTerm Extension and Payment DelayTotal*
Residential real estate$12 $— $12 
Commercial, financial & agricultural— 10 10 
Total Loans$12 $10 $22 
*less than .01% of total class of receivable
.

There was one loan in each of the above categories for the year ended December 31, 2023. The residential real estate loan had a term extension of two years. The commercial, financial & agricultural loan had a term extension of two years and was given a payment delay.
The Company had three loans that subsequently defaulted during the year ended December 31, 2024. These loans were commercial, financial & agricultural loans to one borrower that had been given a payment delay on each loan. The Company repossessed collateral of $300,000 and charged off the remaining balance on the loans of $810,000 in the fourth quarter of 2024. There were no loans that subsequently defaulted during the year ended December 31, 2023.