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Note 7 - Loans and Related Allowance for Credit Losses

6 Months Ended

Jun. 30, 2025

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 7 – LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

The following table summarizes the loan portfolio by primary segment and class of financial receivable:

	June 30,			December 31,
(Dollar amounts in thousands)	2025 ⁽¹⁾⁽²⁾			2024 ⁽¹⁾⁽²⁾

Commercial real estate:
Owner occupied	$	196,645		$	181,447
Non-owner occupied		405,032			412,291
Multifamily		79,497			89,849
Residential real estate		357,217			353,442
Commercial and industrial		257,519			229,034
Home equity lines of credit		156,297			143,379
Construction and other		123,531			103,608
Consumer installment		6,187			6,564
Total loans		1,581,925			1,519,614
Less: Allowance for credit losses		(22,335	)		(22,447	)
Net loans	$	1,559,590		$	1,497,167

⁽¹⁾		Accrued interest of $5.5 million and $5.5 million at June 30, 2025 and December 31, 2024, respectively, is excluded from amortized cost and presented in "accrued interest receivable and other assets" on the Consolidated Balance Sheets.
⁽²⁾		Unearned income, including net deferred loan fees and costs and unamortized premiums and discounts, totaled $7.1 million and $8.2 million at June 30, 2025 and December 31, 2024, respectively.

Allowance for Credit Losses: Loans

The methodology for calculating the allowance for credit losses considers the possibility of expected loss over the life of the loan. It also considers historical loss rates and other qualitative adjustments, as well as a new forward-looking component that considers reasonable and supportable forecasts over the expected life of each loan. To develop the ACL estimate under the current expected loss model, the Company segments the loan portfolio into loan pools based on loan type and similar credit risk elements. An ACL is maintained to absorb losses from the loan portfolio. The ACL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of nonperforming loans. Refer to Note 1 – Summary of Significant Accounting Policies under the heading "Allowance for Credit Losses - Loans" of our 2024 Form 10-K for additional information on the Bank’s methodology for estimating the ACL.

Management reviews the loan portfolio quarterly using a defined, consistently applied process 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 following tables summarize the ACL within the primary segments of the loan portfolio and the activity within those segments:

	For the Three Months Ended June 30, 2025
	Allowance for Credit Losses
(Dollar amounts in thousands)	Balance										Balance
	March 31, 2025		Charge-offs			Recoveries		Provision			June 30, 2025
Loans:
Commercial real estate:
Owner occupied	$	2,288	$	-		$	-	$	250		$	2,538
Non-owner occupied		5,098		(18	)		-		(452	)		4,628
Multifamily		1,168		-			-		(111	)		1,057
Residential real estate		5,650		-			-		151			5,801
Commercial and industrial		2,971		-			1		42			3,014
Home equity lines of credit		920		-			-		68			988
Construction and other		4,233		-			-		1			4,234
Consumer installment		73		-			35		(33	)		75
Total	$	22,401	$	(18	)	$	36	$	(84	)	$	22,335

	For the Three Months Ended June 30, 2024
	Allowance for Credit Losses
(Dollar amounts in thousands)	Balance										Balance
	March 31, 2024		Charge-offs			Recoveries		Provision			June 30, 2024
Loans:
Commercial real estate:
Owner occupied	$	2,060	$	-		$	-	$	(2	)	$	2,058
Non-owner occupied		7,768		-			-		213			7,981
Multifamily		1,204		-			-		64			1,268
Residential real estate		4,774		-			-		117			4,891
Commercial and industrial		2,038		-			8		384			2,430
Home equity lines of credit		785		-			-		28			813
Construction and other		2,373		-			-		(83	)		2,290
Consumer installment		67		(6	)		27		(24	)		64
Total	$	21,069	$	(6	)	$	35	$	697		$	21,795

	For the Six Months Ended June 30, 2025
	Allowance for Credit Losses
(Dollar amounts in thousands)	Balance										Balance
	December 31, 2024		Charge-offs			Recoveries		Provision			June 30, 2025
Loans:
Commercial real estate:
Owner occupied	$	2,100	$	-		$	13	$	425		$	2,538
Non-owner occupied		8,364		(18	)		7		(3,725	)		4,628
Multifamily		1,310		-			-		(253	)		1,057
Residential real estate		5,236		(1	)		36		530			5,801
Commercial and industrial		2,427		(5	)		170		422			3,014
Home equity lines of credit		897		(4	)		8		87			988
Construction and other		2,052		-			-		2,182			4,234
Consumer installment		61		(44	)		65		(7	)		75
Total	$	22,447	$	(72	)	$	299	$	(339	)	$	22,335

	For the Six Months Ended June 30, 2024
	Allowance for Credit Losses
(Dollar amounts in thousands)	Balance										Balance
	December 31, 2023		Charge-offs			Recoveries		Provision			June 30, 2024
Loans:
Commercial real estate:
Owner occupied	$	2,668	$	-		$	11	$	(621	)	$	2,058
Non-owner occupied		4,480		-			-		3,501			7,981
Multifamily		1,796		-			-		(528	)		1,268
Residential real estate		5,450		-			-		(559	)		4,891
Commercial and industrial		4,377		-			16		(1,963	)		2,430
Home equity lines of credit		750		(7	)		-		70			813
Construction and other		1,990		-			-		300			2,290
Consumer installment		182		(6	)		83		(195	)		64
Total	$	21,693	$	(13	)	$	110	$	5		$	21,795

The total ACL decreased by $112,000, or 0.5%, from December 31, 2024 to June 30, 2025. The decrease was driven by portfolio activity, updated assumptions, and the economic outlook. For 2024 and 2025, the Bank utilized unemployment rate data from Federal Open Market Committee ("FOMC") within the model to forecast credit losses in the portfolio. The FOMC Summary of Economic Projections for the Civilian Unemployment Rate – Central Tendency – High used in the June, 2025 calculation projects a slight increase in the unemployment rate from the prior quarter. The prepayment rates, probability of default (“PD”), and loss given default (“LGD”) assumptions were updated with the March 31, 2025 calculation in accordance with our policy to refresh assumptions on an annual basis. Prepayment rate assumptions are based on Bank data, while PD and LGD assumptions are determined using peer benchmark data. To the extent that credit risk is not fully identified within the forecasts and calculated reserve, management has made qualitative adjustments to the ACL balance.

The fluctuation in the ACL during the six months ended June 30, 2025, can be attributed to the following along with general increases and decreases in outstanding loan balances:

	•	Decrease in ACL for non-owner occupied CRE loans is due to (1) a decrease in PDs and LGDs based on using Bank data for the first 12 months of the forecast and reverting to peer benchmark data for the remainder of the forecast and (2) a decrease in the maximum loss rate used in the qualitative adjustment, partially offset by (1) a decrease in prepayment rates and (2) an increase in the qualitative adjustment to adjust for a change in the Credit team. In addition, there was a decrease of $7.3 million in the non-owner occupied loan segment balance.
	•	Increase in ACL for construction and other loans is due to (1) the impact of a decrease in prepayment rates and an increase in PDs and LGDs causing an increase in the calculated reserve and (2) an increase in the qualitative adjustment to adjust for a change in the Credit team. In addition, there was an increase of $19.9 million in the construction and other loan segment balance.
	•	Increase in ACL for commercial and industrial loans is due to (1) the impact of a decrease in prepayment rates and (2) an increase in the qualitative adjustment to adjust for a change in the Credit team. Additionally, there was an increase of $28.5 million in the commercial and industrial loan segment balance.
	•	Increase in ACL for residential real estate loans is due to a decrease in prepayment rates, partially offset by a decrease in PDs and LGDs in the calculation reserve.

Credit Quality Indicators

Management evaluates individual loans in all of the commercial segments for possible impairment based on guidelines established by the Board of Directors. Loans are individually analyzed when, based on current information and events, the Company will probably be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in evaluating credit loss include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall concerning the principal and interest owed. The evaluation of the need and amount of a specific allocation of the allowance and whether a loan can be removed from impairment status is made quarterly.

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. The Special Mention category includes assets that are currently protected but have potential weaknesses, resulting in undue and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans greater than 90 days past due are considered Substandard. A loan categorized as Doubtful contains all of the weaknesses as a Substandard loan with the added characteristic that the weaknesses are so pronounced that the collection or liquidation in full of both principal and interest is highly questionable or improbable. Any portion of a loan that has been 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 Company 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 payment delinquency, bankruptcy, repossession, or death, occurs to raise awareness of a possible credit quality loss. The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis. The Credit Department performs an annual review of all commercial relationships with loan balances of $750,000 or greater. Detailed reviews, including plans for resolution, are performed on criticized loans of $150,000 or more on at least a quarterly basis. Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

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 represents outstanding loan balances by credit quality indicators and vintage year by class of financing receivable and current period gross charge-offs by year of origination as of and for the six months ended June 30, 2025:

June 30, 2025
Term Loans Amortized Cost Basis by Origination Year													Revolving Amortized
(Dollar amounts in thousands)	2025		2024		2023		2022		2021		Prior		Cost Basis		Total
Commercial real estate:
Owner occupied
Pass	$	9,080	$	17,793	$	26,257	$	32,260	$	40,601	$	57,931	$	4,911	$	188,833
Special Mention		-		-		-		-		377		-		-		377
Substandard		-		912		-		4,510		-		2,013		-		7,435
Total Owner occupied	$	9,080	$	18,705	$	26,257	$	36,770	$	40,978	$	59,944	$	4,911	$	196,645
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Non-owner occupied
Pass	$	11,139	$	7,466	$	61,411	$	95,508	$	47,451	$	149,271	$	883	$	373,129
Special Mention		-		-		-		2,507		-		-		-		2,507
Substandard		-		-		-		-		635		28,761		-		29,396
Total Non-owner occupied	$	11,139	$	7,466	$	61,411	$	98,015	$	48,086	$	178,032	$	883	$	405,032
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	18	$	-	$	18
Multifamily
Pass	$	-	$	2,900	$	35,007	$	18,936	$	6,790	$	15,854	$	10	$	79,497
Total Multifamily	$	-	$	2,900	$	35,007	$	18,936	$	6,790	$	15,854	$	10	$	79,497
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Residential real estate
Pass	$	21,153	$	44,401	$	49,132	$	58,330	$	67,281	$	113,876	$	201	$	354,374
Substandard		-		-		162		451		634		1,596		-		2,843
Total Residential real estate	$	21,153	$	44,401	$	49,294	$	58,781	$	67,915	$	115,472	$	201	$	357,217
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	1	$	-	$	1
Commercial and industrial
Pass	$	27,957	$	47,381	$	35,594	$	23,110	$	8,999	$	21,814	$	89,903	$	254,758
Special Mention		-		-		-		-		-		125		833		958
Substandard		-		-		1,438		-		-		286		79		1,803
Total Commercial and industrial	$	27,957	$	47,381	$	37,032	$	23,110	$	8,999	$	22,225	$	90,815	$	257,519
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	5	$	-	$	5
Home equity lines of credit
Pass	$	-	$	244	$	92	$	160	$	-	$	2,383	$	152,193	$	155,072
Substandard		-		-		163		192		-		456		414		1,225
Total Home equity lines of credit	$	-	$	244	$	255	$	352	$	-	$	2,839	$	152,607	$	156,297
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	4	$	-	$	4
Construction and other
Pass	$	3,739	$	48,252	$	47,020	$	1,973	$	1,058	$	1,827	$	16,954	$	120,823
Special Mention		-		-		-		-		-		199		-		199
Substandard		-		-		491		-		-		846		1,172		2,509
Total Construction and other	$	3,739	$	48,252	$	47,511	$	1,973	$	1,058	$	2,872	$	18,126	$	123,531
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Consumer installment
Pass	$	758	$	1,167	$	733	$	230	$	78	$	3,064	$	-	$	6,030
Substandard		-		-		-		-		-		157		-		157
Total Consumer installment	$	758	$	1,167	$	733	$	230	$	78	$	3,221	$	-	$	6,187
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	44	$	-	$	44
Total Loans	$	73,826	$	170,516	$	257,500	$	238,167	$	173,904	$	400,459	$	267,553	$	1,581,925

Total Loans Summary
Pass	$	73,826	$	169,604	$	255,246	$	230,507	$	172,258	$	366,020	$	265,055	$	1,532,516
Special Mention		-		-		-		2,507		377		324		833		4,041
Substandard		-		912		2,254		5,153		1,269		34,115		1,665		45,368
Total Loans	$	73,826	$	170,516	$	257,500	$	238,167	$	173,904	$	400,459	$	267,553	$	1,581,925

December 31, 2024
Term Loans Amortized Cost Basis by Origination Year													Revolving Amortized
(Dollar amounts in thousands)	2024		2023		2022		2021		2020		Prior		Cost Basis		Total
Commercial real estate:
Owner occupied
Pass	$	12,424	$	20,265	$	33,389	$	39,025	$	25,532	$	39,393	$	4,394	$	174,422
Special Mention		-		-		-		389		-		772		-		1,161
Substandard		974		-		4,535		-		-		355		-		5,864
Total Owner occupied	$	13,398	$	20,265	$	37,924	$	39,414	$	25,532	$	40,520	$	4,394	$	181,447
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	45	$	-	$	45
Non-owner occupied
Pass	$	7,542	$	63,559	$	96,624	$	49,009	$	20,230	$	133,530	$	905	$	371,399
Special Mention		-		-		2,506		-		-		2,002		-		4,508
Substandard		-		-		3,719		635		-		32,030		-		36,384
Total Non-owner occupied	$	7,542	$	63,559	$	102,849	$	49,644	$	20,230	$	167,562	$	905	$	412,291
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	1,341	$	-	$	1,341
Multifamily
Pass	$	2,930	$	36,113	$	21,978	$	7,437	$	10,057	$	11,324	$	10	$	89,849
Total Multifamily	$	2,930	$	36,113	$	21,978	$	7,437	$	10,057	$	11,324	$	10	$	89,849
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Residential real estate
Pass	$	45,347	$	50,820	$	61,963	$	69,982	$	36,067	$	86,492	$	291	$	350,962
Substandard		34		169		115		635		-		1,527		-		2,480
Total Residential real estate	$	45,381	$	50,989	$	62,078	$	70,617	$	36,067	$	88,019	$	291	$	353,442
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial and industrial
Pass	$	48,654	$	33,860	$	31,305	$	13,512	$	18,864	$	4,888	$	74,169	$	225,252
Special Mention		2,263		-		-		-		-		-		832		3,095
Substandard		214		10		-		-		305		84		74		687
Total Commercial and industrial	$	51,131	$	33,870	$	31,305	$	13,512	$	19,169	$	4,972	$	75,075	$	229,034
Current-period gross charge-offs	$	-	$	180	$	23	$	12	$	-	$	-	$	-	$	215
Home equity lines of credit
Pass	$	244	$	-	$	166	$	183	$	133	$	2,041	$	139,214	$	141,981
Substandard		-		68		150		-		34		493		653		1,398
Total Home equity lines of credit	$	244	$	68	$	316	$	183	$	167	$	2,534	$	139,867	$	143,379
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	7	$	-	$	7
Construction and other
Pass	$	31,361	$	48,177	$	2,418	$	1,223	$	506	$	1,368	$	14,909	$	99,962
Special Mention		-		-		834		-		-		221		-		1,055
Substandard		-		493		-		-		-		1,171		927		2,591
Total Construction and other	$	31,361	$	48,670	$	3,252	$	1,223	$	506	$	2,760	$	15,836	$	103,608
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Consumer installment
Pass	$	1,539	$	1,047	$	381	$	112	$	36	$	3,284	$	-	$	6,399
Substandard		-		-		3		-		-		162		-		165
Total Consumer installment	$	1,539	$	1,047	$	384	$	112	$	36	$	3,446	$	-	$	6,564
Current-period gross charge-offs	$	-	$	-	$	2	$	6	$	-	$	30	$	-	$	38
Total Loans	$	153,526	$	254,581	$	260,086	$	182,142	$	111,764	$	321,137	$	236,378	$	1,519,614

Total Loans Summary
Pass	$	150,041	$	253,841	$	248,224	$	180,483	$	111,425	$	282,320	$	233,892	$	1,460,226
Special Mention		2,263		-		3,340		389		-		2,995		832		9,819
Substandard		1,222		740		8,522		1,270		339		35,822		1,654		49,569
Total Loans	$	153,526	$	254,581	$	260,086	$	182,142	$	111,764	$	321,137	$	236,378	$	1,519,614

Collateral-dependent Loans

The following table presents individually analyzed and collateral-dependent loans by classes of loan type as of June 30, 2025:

	June 30, 2025
	Type of Collateral
(Dollar amounts in thousands)	Real Estate		Blanket Lien		Investment/Cash		Other		Total
Commercial real estate:
Owner occupied	$	3,258	$	-	$	-	$	-	$	3,258
Non-owner occupied		20,012		-		-		-		20,012
Residential real estate		617		-		-		-		617
Construction and other		490		-		-		-		490
Total	$	24,377	$	-	$	-	$	-	$	24,377

The following table presents individually analyzed and collateral-dependent loans by classes of loan type as of December 31, 2024:

	December 31, 2024
	Type of Collateral
(Dollar amounts in thousands)	Real Estate		Blanket Lien		Investment/Cash		Other		Total
Commercial real estate:
Owner occupied	$	3,198	$	-	$	-	$	-	$	3,198
Non-owner occupied		24,881		-		-		-		24,881
Residential real estate		617		-		-		-		617
Commercial and industrial		214		-		-		-		214
Construction and other		493		-		-		-		493
Total	$	29,403	$	-	$	-	$	-	$	29,403

At June 30, 2025 and December 31, 2024, the Company reported $777,000 and $352,000, respectively, in residential real estate loans in the process of foreclosure.

Nonperforming and Past Due Loans

The following table presents the aging of the recorded investment in past-due loans by class of loans as of June 30, 2025:

			30-59 Days		60-89 Days		90 Days+		Total		Total
(Dollar amounts in thousands)	Current		Past Due		Past Due		Past Due		Past Due		Loans

Commercial real estate:
Owner occupied	$	196,243	$	280	$	-	$	122	$	402	$	196,645
Non-owner occupied		397,020		-		-		8,012		8,012		405,032
Multifamily		79,497		-		-		-		-		79,497
Residential real estate		353,880		1,539		848		950		3,337		357,217
Commercial and industrial		257,469		50		-		-		50		257,519
Home equity lines of credit		155,678		251		159		209		619		156,297
Construction and other		123,040		-		-		491		491		123,531
Consumer installment		6,139		8		40		-		48		6,187
Total	$	1,568,966	$	2,128	$	1,047	$	9,784	$	12,959	$	1,581,925

The following table presents the aging of the recorded investment in past-due loans by class of loans as of December 31, 2024:


			30-59 Days		60-89 Days		90 Days+		Total		Total
(Dollar amounts in thousands)	Current		Past Due		Past Due		Past Due		Past Due		Loans

Commercial real estate:
Owner occupied	$	180,752	$	513	$	122	$	60	$	695	$	181,447
Non-owner occupied		402,924		1,355		-		8,012		9,367		412,291
Multifamily		89,756		93		-		-		93		89,849
Residential real estate		349,645		2,216		562		1,019		3,797		353,442
Commercial and industrial		226,669		81		2,284		-		2,365		229,034
Home equity lines of credit		142,484		366		102		427		895		143,379
Construction and other		103,115		-		-		493		493		103,608
Consumer installment		6,479		41		44		-		85		6,564
Total	$	1,501,824	$	4,665	$	3,114	$	10,011	$	17,790	$	1,519,614

The following tables present the recorded investment in nonaccrual loans and loans 90 and greater days past due and still on accrual by class of loans:

	June 30, 2025
	Nonaccrual		Nonaccrual				Loans Past
(Dollar amounts in thousands)	with no		with		Total		Due Over 90 Days		Total
	ACL		ACL		Nonaccrual		Still Accruing		Nonperforming
Commercial real estate:
Owner occupied	$	1,034	$	-	$	1,034	$	-	$	1,034
Non-owner occupied		20,012		-		20,012		-		20,012
Residential real estate		617		1,813		2,430		-		2,430
Commercial and industrial		-		79		79		-		79
Home equity lines of credit		-		849		849		-		849
Construction and other		491		-		491		-		491
Consumer installment		157		-		157		-		157
Total	$	22,311	$	2,741	$	25,052	$	-	$	25,052

	December 31, 2024
	Nonaccrual		Nonaccrual				Loans Past
(Dollar amounts in thousands)	with no		with		Total		Due Over 90 Days		Total
	ACL		ACL		Nonaccrual		Still Accruing		Nonperforming
Commercial real estate:
Owner occupied	$	974	$	301	$	1,275	$	-	$	1,275
Non-owner occupied		21,265		3,616		24,881		-		24,881
Multifamily		-		-		-		-		-
Residential real estate		617		1,377		1,994		-		1,994
Commercial and industrial		-		159		159		-		159
Home equity lines of credit		-		1,017		1,017		-		1,017
Construction and other		-		493		493		-		493
Consumer installment		162		3		165		-		165
Total	$	23,018	$	6,966	$	29,984	$	-	$	29,984

Interest income that would have been recorded had these loans not been placed on nonaccrual status was $440,000 and $857,000 for the three and six months ended June 30, 2025, respectively, and $171,000 and $300,000 for the three and six months ended June 30, 2024, respectively.

Modifications to Borrowers Experiencing Financial Difficulty

The following disclosures are for loan modifications to borrowers experiencing financial difficulty. The Bank may modify the contractual terms of a loan to a borrower experiencing financial difficulty to mitigate the risk of loss. Such modifications may include a term extension, interest rate reduction, significant payment deferral, other modifications, or a combination of modification types. In general, any delay in payment of greater than 90 days in the last 12 months is considered to be a significant payment deferral.

The tables below details the amortized cost basis of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of loans and type of concessions granted, and the financial effect of the modifications during the three and six months ended June 30, 2025:

	Three Months Ended June 30, 2025
	Modifications
					Payment		Interest Rate		Interest Rate				Percentage of
					Deferral		Reduction		Reduction				Total Loans
	Payment		Term		and Term		and Term		and Principal				Held for
(Dollar amounts in thousands)	Deferral		Extension		Extension		Extension		Forgiveness		Total		Investment

Commercial real estate:
Owner occupied	$	-	$	300	$	-	$	-	$	-	$	300		0.0	%
Residential real estate		57		-		-		-		-		57		0.0	%
Construction and other		-		2,018		-		-		-		2,018		0.1	%
Total	$	-	$	2,318	$	-	$	-	$	-	$	2,375		0.2	%

	For the Six Months Ended June 30, 2025
	Modifications
					Payment		Interest Rate		Interest Rate				Percentage of
					Deferral		Reduction		Reduction				Total Loans
	Payment		Term		and Term		and Term		and Principal				Held for
(Dollar amounts in thousands)	Deferral		Extension		Extension		Extension		Forgiveness		Total		Investment

Commercial real estate:
Owner occupied	$	-	$	300	$	-	$	-	$	-	$	300		0.0	%
Residential real estate		57		-		-		-		-		57		0.0	%
Commercial and industrial		-		889		-		-		-		889		0.1	%
Home equity lines of credit		-		100		-		-		-		100		0.0	%
Construction and other		-		2,018		-		-		-		2,018		0.1	%
Total	$	57	$	3,307	$	-	$	-	$	-	$	3,364		0.2	%

There were no loans modified to borrowers experiencing financial difficulty during the three or six months ended June 30, 2024.

As of June 30, 2025, the Bank had a commitment to lend additional funds to a borrower experiencing financial difficulty whose loan was modified of $628,000. There were no such commitments as of June 30, 2024. During the three and six months ended June 30, 2025, and 2024, the Bank did not have any loans that were modified for borrowers experiencing financial difficulty and subsequently defaulted. Payment default is defined as movement to nonperforming status, foreclosure or charge-off, whichever occurs first. As of June 30, 2025, there were nonaccrual loans totaling $12.0 million that were modified for borrowers experiencing financial difficulty during the 12 months then ended. As of June 30, 2024, there were no nonaccrual loans that were modified for borrowers experiencing financial difficulty during the 12 months then ended.

Allowance for Credit Losses: Unfunded Commitments

The Company records a separate ACL for unfunded commitments using a methodology that is inherently similar to the methodology used for calculating the ACL for loans. The liability for credit losses on these exposures is $1.5 million and $1.6 million as of June 30, 2025 and December 31, 2024, respectively, and included in “accrued interest payable and other liabilities” on the Consolidated Balance Sheet. The provision for or recovery of credit loss associated with the liability for unfunded commitments amounted to a recovery of credit losses of $422,000 and $72,000 for the three and six months ended June 30, 2025, respectively, and a recovery of credit losses of $610,000 and $54,000 for the three and six months ended June 30, 2024, respectively.