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Loans and Related Allowance for Credit Losses

9 Months Ended

Sep. 30, 2024

Note 5 – Loans and Related Allowance for Credit Losses

The following table summarizes the primary segments of the loan portfolio at September 30, 2024 and December 31, 2023:



(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Total
September 30, 2024
Individually evaluated for impairment	$	599	$	—	$	4,849	$	1,993	$	—	$	7,441
Collectively evaluated for impairment		502,229		92,909		273,145		517,175		54,984		1,440,442
Total loans	$	502,828	$	92,909	$	277,994	$	519,168	$	54,984	$	1,447,883
December 31, 2023
Individually evaluated for impairment	$	826	$	—	$	—	$	2,137	$	—	$	2,963
Collectively evaluated for impairment		492,877		77,060		274,604		497,734		61,429		1,403,704
Total loans	$	493,703	$	77,060	$	274,604	$	499,871	$	61,429	$	1,406,667

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans at September 30, 2024 and December 31, 2023:


(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due and Accruing		Non- Accrual		Total Loans
September 30, 2024
Commercial real estate:
Non-owner-occupied	$	293,919	$	1,387	$	—	$	—	$	1,387	$	—	$	295,306
All other CRE		205,688		832		319		—		1,151		683		207,522
Acquisition and development:
1-4 family residential construction		15,091		—		—		—		—		—		15,091
All other A&D		77,676		—		54		—		54		88		77,818
Commercial and industrial		272,856		186		103		—		289		4,849		277,994
Residential mortgage:
Residential mortgage - term		451,358		70		825		414		1,309		2,308		454,975
Residential mortgage - home equity		63,568		267		260		13		540		85		64,193
Consumer		54,282		281		250		111		642		60		54,984
Total	$	1,434,438	$	3,023	$	1,811	$	538	$	5,372	$	8,073	$	1,447,883
December 31, 2023
Commercial real estate:
Non-owner-occupied	$	296,343	$	—	$	—	$	—	$	—	$	227	$	296,570
All other CRE		196,123		411		—		—		411		599		197,133
Acquisition and development:
1-4 family residential construction		18,224		—		—		—		—		—		18,224
All other A&D		58,723		—		—		—		—		113		58,836
Commercial and industrial		274,465		120		19		—		139		—		274,604
Residential mortgage:
Residential mortgage - term		433,878		130		717		384		1,231		2,720		437,829
Residential mortgage - home equity		61,021		520		158		75		753		268		62,042
Consumer		60,576		463		277		84		824		29		61,429
Total	$	1,399,353	$	1,644	$	1,171	$	543	$	3,358	$	3,956	$	1,406,667

Non-accrual loans that have been subject to partial charge-offs totaled $1.2 million at September 30, 2024 and $0.1 million at December 31, 2023. Loans secured by 1-4 family residential real estate properties in the process of foreclosure totaled $1.6 million at September 30, 2024 and $1.8 million at December 31, 2023. As a percentage of the loan portfolio, accruing loans past due 30 days or more was 0.37% at September 30, 2024 compared to 0.24% at December 31, 2023.

The Corporation maintains an ACL at a level that management believes will be adequate to absorb expected credit losses associated with the Corporation’s financial instruments over the life of those instruments as of the balance sheet date. The Corporation develops and documents a systematic ACL methodology based on the following portfolio segments: (i) commercial real estate; (ii) acquisition and development; (iii) commercial and industrial; (iv) residential mortgage; and (v) consumer. The Corporation’s loan portfolio is segmented by homogeneous loan types that behave similarly to economic cycles. The following is a discussion of the key risks by portfolio segment that management assesses in preparing the ACL.

Commercial real estate loans are secured by commercial purpose real estate, including both owner occupied properties and properties obtained for investment purposes, such as hotels, strip malls and apartments. Operations of the individual projects as well as global cash flows of the debtors are the primary source of repayment of these loans. The condition of the local economy is an important indicator of risk, but there are more specific risks depending on the collateral type as well as the business.

Acquisition and development loans include both commercial and consumer. Commercial loans are made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. The risk of these loans is generally confined to the construction period. If there are problems during such period, then the project might not be completed and, as such, might not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer. Consumer loans are made for the construction of residential homes for which a binding sales contract exists and generally are for a period of time sufficient to complete construction. Residential construction loans to individuals generally provide for the payment of interest only during the construction phase. Credit risk for residential real estate construction loans can arise from construction delays, cost overruns, failure of the contractor to complete the project to specifications and economic conditions that could impact demand for supply of the property being constructed.

Commercial and industrial loans are made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. Cash flow from the operations of the borrower is the primary source of repayment for these loans. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the industry of the borrower. Collateral for these types of loans often do not have sufficient value in a distressed or liquidation scenario to satisfy the outstanding debt. These loans are also made to local municipalities for various purposes including refinancing existing obligations, infrastructure up-fit and expansion, or to purchase new equipment. The primary repayment source for local municipalities include the tax base of the municipality, specific revenue streams related to the infrastructure financed, and other business operations of the municipal authority. The health and stability of state and local economies directly impacts each municipality’s tax basis and are important indicators of risk for this segment. The ability of each municipality to increase taxes and fees to offset service requirements give this type of loan a very low risk profile in the continuum of the Corporation’s loan portfolio.

Residential mortgage loans are secured by first and junior liens such as home equity lines of credit and 1-4 family residential mortgages. The primary source of repayment for these loans is the income of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the local housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy debt.

Consumer loans are made to individuals and may be either secured by assets other than 1-4 family residences or unsecured. This segment includes automobile loans and unsecured loans and lines of credit. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important

indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

The following table summarizes the primary segments of the ACL at September 30, 2024 and December 31, 2023, segregated by the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment:



(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Total
September 30, 2024
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		4,907		944		4,471		6,841		847		18,010
Total ACL	$	4,907	$	944	$	4,471	$	6,841	$	847	$	18,010
December 31, 2023
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		5,120		940		3,717		6,774		929		17,480
Total ACL	$	5,120	$	940	$	3,717	$	6,774	$	929	$	17,480

Changes in the fair value of the types of collateral for individually evaluated loans are reported as provision for credit loss in the period of change. The evaluation of the need and amount of a specific allocation of the ACL and whether a loan can be removed from impairment status is made on a quarterly basis.

The following tables present the amortized cost basis of collateral-dependent individually evaluated loans as of September 30, 2024 and December 31, 2023.


	September 30, 2024
(in thousands)	Real Estate			Other Collateral	Non-Accrual Loans with No Allowance
Commercial real estate	$	599	$	—	$	599
Commercial and industrial		—		4,849		4,849
Residential mortgage		1,993		—		1,993
Total Loans	$	2,592	$	4,849	$	7,441


	December 31, 2023
(in thousands)	Real Estate			Other Collateral	Non-Accrual Loans with No Allowance
Commercial real estate	$	826	$	—	$	826
Residential mortgage		2,137		—		2,137
Total Loans	$	2,963	$	—	$	2,963

The following tables present the activity in the ACL for the nine- and three-month periods ended September 30, 2024 and 2023:



Nine months ended (in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
Beginning balance at January 1, 2024	$	5,120	$	940	$	3,717	$	6,774	$	929	$	—	$	17,480
Loan charge-offs		—		—		(1,297)		(45)		(1,193)		—		(2,535)
Recoveries collected		37		48		203		68		302		—		658
Credit loss (credit)/expense		(250)		(44)		1,848		44		809		—		2,407
ACL balance at September 30, 2024	$	4,907	$	944	$	4,471	$	6,841	$	847	$	—	$	18,010
Beginning balance at January 1, 2023 prior to adoption of ASC 326	$	6,345	$	979	$	2,845	$	3,160	$	877	$	430	$	14,636
Impact of adopting ASC 326		(1,143)		(15)		1,334		2,112		208		(430)		2,066
Loan charge-offs		(87)		—		(301)		(55)		(681)		—		(1,124)
Recoveries collected		5		8		176		56		153		—		398
Credit loss (credit)/expense		(82)		93		(577)		1,369		367		—		1,170
ACL balance at September 30, 2023	$	5,038	$	1,065	$	3,477	$	6,642	$	924	$	—	$	17,146



Three months ended (in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Unallocated		Total
ACL balance at July 1, 2024	$	4,852	$	992	$	3,964	$	7,162	$	953	$	—	$	17,923
Loan charge-offs		—		—		(67)		—		(369)		—		(436)
Recoveries collected		—		42		170		41		75		—		328
Credit loss expense/(credit)		55		(90)		404		(362)		188		—		195
ACL balance at September 30, 2024	$	4,907	$	944	$	4,471	$	6,841	$	847	$	—	$	18,010
ACL balance at July 1, 2023	$	4,946	$	1,134	$	3,549	$	6,417	$	859	$	—	$	16,905
Loan charge-offs		—		—		(135)		(31)		(163)		—		(329)
Recoveries collected		—		1		167		20		60		—		248
Credit loss expense/(credit)		92		(70)		(104)		236		168		—		322
ACL balance at September 30, 2023	$	5,038	$	1,065	$	3,477	$	6,642	$	924	$	—	$	17,146

The Corporation’s methodology for estimating the ACL includes:

Segmentation. The Corporation’s loan portfolio is segmented by homogeneous loan types that behave similarly to economic cycles.

Specific Analysis. A specific reserve analysis is applied to certain individually evaluated loans. These loans are evaluated quarterly generally based on collateral value, observable market value or the present value of expected future cash flows. A specific reserve is established if the fair value is less than the loan balance. A charge-off is recognized when the loss is quantifiable. Individually evaluated loans not specifically analyzed reside in the Quantitative Analysis.

Quantitative Analysis. The Corporation elected to use discounted cash flows. Economic forecasts include but are not limited to unemployment, the Consumer Price Index, the Housing Affordability Index, and Gross State Product. These forecasts are assumed to revert to the long term average and are utilized in the model to estimate the probability of default and the loss given default is the estimated loss rate, which varies over time. The estimated loss rate is applied within the appropriate periods in the cash flow model to determine the net present value. Net present value is also impacted by assumption related to the duration between default and recovery. The reserve is based on the difference between the summation of the principal balances taking amortized costs into consideration and the summation of the net present values.

Qualitative Analysis. Based on management’s review and analysis of internal, external and model risks, management may adjust the model output. Management reviews the peaks and troughs of the model’s calibrations, taking into account economic forecasts to develop guardrails that serve as the basis for determining the reasonableness of the model’s output and makes adjustments as necessary. This process challenges unexpected variability resulting from outputs beyond the model’s calibrations that appear to be unreasonable. Management also enhances the calculation through the use of Moody’s economic forecast data in its calculation. Additionally, management may adjust the economic forecast if it is incompatible with known market conditions based on management’s experience and perspective.

The ACL is based on estimates, and actual losses may vary from current estimates. Management believes that the granularity of the homogeneous pools and the related historical loss ratios 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.

Credit Quality Indicators:

The Corporation’s portfolio grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The Corporation’s internal credit risk grading system is based on debt service coverage, collateral values and other subjective factors. Mortgage and consumer loans are defaulted to pass grade until a loan migrates to past due status.

The Corporation has a loan review policy and annual scope report that details the level of loan review for loans in a given year. The annual loan review provides the Credit Risk Committee with an independent analysis of the following: (i) credit quality of the loan portfolio; (ii) compliance with loan policy; (iii) adequacy of documentation in credit files; and (iv) validity of risk ratings.

The Corporation’s internally assigned grades are as follows:

Pass- The Corporation uses six grades of pass, including its watch rating. Generally, a pass rating indicates that the loan is currently performing and is of high quality.

Special Mention- Assets with potential weaknesses that warrant management’s close attention and 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.

Substandard- Assets that are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Assets so classified have a well-defined weakness, or weaknesses that jeopardize the liquidation of

the debt. Such assets are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful- Assets with all weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

Loss- Assets considered of such little value that its continuance on the books is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical to defer writing off this basically worthless asset even though partial recovery may be affected in the future.

The ability of borrowers to repay commercial loans is dependent upon the success of their business and general economic conditions. Due to the greater potential for loss within our commercial portfolio, we monitor the commercial loan portfolio through an internal risk rating system. Loan risk ratings are assigned based upon the creditworthiness of the borrower and are reviewed on an ongoing basis according to our internal policies. Loans rated special mention or substandard have potential or well-defined weaknesses not generally found in high quality, performing loans, and require attention from management to limit loss.

The following tables present loan balances by year of origination and internally assigned risk rating for our portfolio segments for the periods presented:


(in thousands)	2024		2023		2022		2021		2020		2019 and Prior		Revolving		Total Portfolio Loans
September 30, 2024
Commercial real estate:
Non-owner-occupied
Pass	$	22,535	$	23,649	$	66,797	$	29,249	$	52,446	$	95,151	$	2,053	$	291,880
Special Mention		—		—		—		—		719		—		—		719
Substandard		—		—		—		—		—		2,707		—		2,707
Total non-owner occupied		22,535		23,649		66,797		29,249		53,165		97,858		2,053		295,306
Current period gross charge-offs		—		—		—		—		—		—		—		—
All other CRE
Pass		18,646		31,208		30,295		23,605		17,114		74,405		5,999		201,272
Special Mention		997		—		—		1,431		200		—		—		2,628
Substandard		—		—		—		—		—		3,549		73		3,622
Total all other CRE		19,643		31,208		30,295		25,036		17,314		77,954		6,072		207,522
Current period gross charge-offs		—		—		—		—		—		—		—		—
Acquisition and development:
1-4 family residential construction
Pass		6,248		8,373		—		—		—		—		470		15,091
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total acquisition and development		6,248		8,373		—		—		—		—		470		15,091
Current period gross charge-offs		—		—		—		—		—		—		—		—
All other A&D
Pass		13,552		26,093		16,925		1,882		1,840		9,526		7,912		77,730
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		88		—		88
Total all other A&D		13,552		26,093		16,925		1,882		1,840		9,614		7,912		77,818
Current period gross charge-offs		—		—		—		—		—		—		—		—
Commercial and industrial:
Pass		22,943		43,695		71,895		19,146		7,354		15,291		72,952		253,276
Special Mention		—		—		—		—		1,911		—		9,152		11,063
Substandard		128		—		3,993		886		6,573		728		1,347		13,655
Total commercial and industrial		23,071		43,695		75,888		20,032		15,838		16,019		83,451		277,994
Current period gross charge-offs		465		—		124		651		41		16		—		1,297
Residential mortgage:
Residential mortgage - term
Pass		25,180		65,885		95,883		81,319		36,602		141,984		2,121		448,974
Special Mention		—		—		—		39		—		—		—		39
Substandard		—		—		61		1,062		15		4,770		54		5,962
Total residential mortgage - term		25,180		65,885		95,944		82,420		36,617		146,754		2,175		454,975
Current period gross charge-offs		—		—		—		—		—		30		—		30
Residential mortgage - home equity
Pass		174		849		4,067		1,288		374		644		56,172		63,568
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		34		13		578		625
Total residential mortgage - home equity		174		849		4,067		1,288		408		657		56,750		64,193
Current period gross charge-offs		—		—		15		—		—		—		—		15
Consumer:
Pass		9,307		12,389		7,324		4,146		1,287		17,495		2,790		54,738
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		158		6		44		25		3		10		246
Total consumer		9,307		12,547		7,330		4,190		1,312		17,498		2,800		54,984
Current period gross charge-offs		154		251		78		227		14		469		—		1,193
Total Portfolio Loans
Pass		118,585		212,141		293,186		160,635		117,017		354,496		150,469		1,406,529
Special Mention		997		—		—		1,470		2,830		—		9,152		14,449
Substandard		128		158		4,060		1,992		6,647		11,858		2,062		26,905
Total Portfolio Loans	$	119,710	$	212,299	$	297,246	$	164,097	$	126,494	$	366,354	$	161,683	$	1,447,883
Current YTD Period:
Current period gross charge-offs	$	619	$	251	$	217	$	878	$	55	$	515	$	—	$	2,535


(in thousands)	2023		2022		2021		2020		2019		2018 and Prior		Revolving		Total Portfolio Loans
December 31, 2023
Commercial real estate:
Non-owner-occupied
Pass	$	23,511	$	65,878	$	30,332	$	54,270	$	40,575	$	65,134	$	1,138	$	280,838
Special Mention		—		—		—		—		—		4,331		—		4,331
Substandard		—		—		—		—		—		11,401		—		11,401
Total non-owner occupied		23,511		65,878		30,332		54,270		40,575		80,866		1,138		296,570
Current period gross charge-offs		—		—		—		—		—		87		—		87
All other CRE
Pass		30,130		27,379		27,042		20,691		22,879		60,054		4,495		192,670
Special Mention		—		—		—		644		—		—		—		644
Substandard		—		—		—		—		1,847		1,372		600		3,819
Total all other CRE		30,130		27,379		27,042		21,335		24,726		61,426		5,095		197,133
Current period gross charge-offs		—		—		—		—		—		—		—		—
Acquisition and development:
1-4 family residential construction
Pass		13,745		3,446		—		—		—		—		1,033		18,224
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total acquisition and development		13,745		3,446		—		—		—		—		1,033		18,224
Current period gross charge-offs		—		—		—		—		—		—		—		—
All other A&D
Pass		12,184		25,099		2,966		3,046		1,301		9,946		4,181		58,723
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		113		—		113
Total all other A&D		12,184		25,099		2,966		3,046		1,301		10,059		4,181		58,836
Current period gross charge-offs		—		—		—		—		—		—		—		—
Commercial and industrial:
Pass		52,004		66,559		24,387		11,753		8,872		10,052		78,992		252,619
Special Mention		558		—		—		—		—		—		—		558
Substandard		—		9,352		1,854		6,806		98		837		2,480		21,427
Total commercial and industrial		52,562		75,911		26,241		18,559		8,970		10,889		81,472		274,604
Current period gross charge-offs		100		103		35		166		—		19		—		423
Residential mortgage:
Residential mortgage - term
Pass		51,625		94,723		88,835		38,228		25,375		130,402		1,577		430,765
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		138		929		17		98		5,825		57		7,064
Total residential mortgage - term		51,625		94,861		89,764		38,245		25,473		136,227		1,634		437,829
Current period gross charge-offs		—		—		—		—		—		13		—		13
Residential mortgage - home equity
Pass		1,127		4,657		864		475		286		489		53,467		61,365
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		38		—		16		623		677
Total residential mortgage - home equity		1,127		4,657		864		513		286		505		54,090		62,042
Current period gross charge-offs		—		—		—		—		—		42		—		42
Consumer:
Pass		18,299		10,616		6,361		2,206		510		20,365		2,873		61,230
Special Mention		—		—		—		—		—		—		—		—
Substandard		14		35		113		23		6		2		6		199
Total consumer		18,313		10,651		6,474		2,229		516		20,367		2,879		61,429
Current period gross charge-offs		236		223		74		8		4		329		—		874
Total Portfolio Loans
Pass		202,625		298,357		180,787		130,669		99,798		296,442		147,756		1,356,434
Special Mention		558		—		—		644		—		4,331		—		5,533
Substandard		14		9,525		2,896		6,884		2,049		19,566		3,766		44,700
Total Portfolio Loans	$	203,197	$	307,882	$	183,683	$	138,197	$	101,847	$	320,339	$	151,522	$	1,406,667
Current YTD Period:
Current period gross charge-offs	$	336	$	326	$	109	$	174	$	4	$	490	$	—	$	1,439

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.

The following tables present loan balances by year of origination segregated by performing and non-performing loans for the periods presented:


(in thousands)	2024		2023		2022		2021		2020		2019 and Prior		Revolving		Total Portfolio Loans
September 30, 2024
Commercial real estate:
Non-owner-occupied
Performing	$	22,535	$	23,649	$	66,797	$	29,249	$	53,165	$	97,858	$	2,053	$	295,306
Nonperforming		—		—		—		—		—		—		—		—
Total non-owner occupied		22,535		23,649		66,797		29,249		53,165		97,858		2,053		295,306
All other CRE
Performing		19,643		31,208		30,295		25,036		17,314		77,271		6,072		206,839
Nonperforming		—		—		—		—		—		683		—		683
Total all other CRE		19,643		31,208		30,295		25,036		17,314		77,954		6,072		207,522
Acquisition and development:
1-4 family residential construction
Performing		6,248		8,373		—		—		—		—		470		15,091
Nonperforming		—		—		—		—		—		—		—		—
Total acquisition and development		6,248		8,373		—		—		—		—		470		15,091
All other A&D
Performing		13,552		26,093		16,925		1,882		1,840		9,526		7,912		77,730
Nonperforming		—		—		—		—		—		88		—		88
Total all other A&D		13,552		26,093		16,925		1,882		1,840		9,614		7,912		77,818
Commercial and industrial:
Performing		23,071		43,695		71,895		19,176		15,838		16,019		83,451		273,145
Nonperforming		—		—		3,993		856		—		—		—		4,849
Total commercial and industrial		23,071		43,695		75,888		20,032		15,838		16,019		83,451		277,994
Residential mortgage:
Residential mortgage - term
Performing		25,180		65,885		95,944		82,140		36,464		144,494		2,146		452,253
Nonperforming		—		—		—		280		153		2,260		29		2,722
Total residential mortgage - term		25,180		65,885		95,944		82,420		36,617		146,754		2,175		454,975
Residential mortgage - home equity
Performing		174		849		4,067		1,288		374		644		56,699		64,095
Nonperforming		—		—		—		—		34		13		51		98
Total residential mortgage - home equity		174		849		4,067		1,288		408		657		56,750		64,193
Consumer:
Performing		9,307		12,464		7,324		4,190		1,310		17,418		2,800		54,813
Nonperforming		—		83		6		—		2		80		—		171
Total consumer		9,307		12,547		7,330		4,190		1,312		17,498		2,800		54,984
Total Portfolio Loans
Performing		119,710		212,216		293,247		162,961		126,305		363,230		161,603		1,439,272
Nonperforming		—		83		3,999		1,136		189		3,124		80		8,611
Total Portfolio Loans	$	119,710	$	212,299	$	297,246	$	164,097	$	126,494	$	366,354	$	161,683	$	1,447,883


(in thousands)	2023		2022		2021		2020		2019		2018 and Prior		Revolving		Total Portfolio Loans
December 31, 2023
Commercial real estate:
Non-owner-occupied
Performing	$	23,511	$	65,878	$	30,332	$	54,270	$	40,575	$	80,639	$	1,138	$	296,343
Nonperforming		—		—		—		—		—		227		—		227
Total non-owner occupied		23,511		65,878		30,332		54,270		40,575		80,866		1,138		296,570
All other CRE
Performing		30,130		27,379		27,042		21,335		24,726		60,827		5,095		196,534
Nonperforming		—		—		—		—		—		599		—		599
Total all other CRE		30,130		27,379		27,042		21,335		24,726		61,426		5,095		197,133
Acquisition and development:
1-4 family residential construction
Performing		13,745		3,446		—		—		—		—		1,033		18,224
Nonperforming		—		—		—		—		—		—		—		—
Total acquisition and development		13,745		3,446		—		—		—		—		1,033		18,224
All other A&D
Performing		12,184		25,099		2,966		3,046		1,301		9,946		4,181		58,723
Nonperforming		—		—		—		—		—		113		—		113
Total all other A&D		12,184		25,099		2,966		3,046		1,301		10,059		4,181		58,836
Commercial and industrial:
Performing		52,562		75,911		26,241		18,559		8,970		10,889		81,472		274,604
Nonperforming		—		—		—		—		—		—		—		—
Total commercial and industrial		52,562		75,911		26,241		18,559		8,970		10,889		81,472		274,604
Residential mortgage:
Residential mortgage - term
Performing		51,625		94,722		89,629		38,245		25,375		133,526		1,603		434,725
Nonperforming		—		139		135		—		98		2,701		31		3,104
Total residential mortgage - term		51,625		94,861		89,764		38,245		25,473		136,227		1,634		437,829
Residential mortgage - home equity
Performing		1,127		4,657		864		475		286		488		53,802		61,699
Nonperforming		—		—		—		38		—		17		288		343
Total residential mortgage - home equity		1,127		4,657		864		513		286		505		54,090		62,042
Consumer:
Performing		18,304		10,616		6,405		2,229		516		20,367		2,879		61,316
Nonperforming		9		35		69		—		—		—		—		113
Total consumer		18,313		10,651		6,474		2,229		516		20,367		2,879		61,429
Total Portfolio Loans
Performing		203,188		307,708		183,479		138,159		101,749		316,682		151,203		1,402,168
Nonperforming		9		174		204		38		98		3,657		319		4,499
Total Portfolio Loans	$	203,197	$	307,882	$	183,683	$	138,197	$	101,847	$	320,339	$	151,522	$	1,406,667

Loan Modifications for Borrowers Experiencing Financial Difficulty

The Corporation evaluates all loan modifications according to the accounting guidance in ASU 2022-02 to determine if the modification results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, or combinations of the listed

modifications. Therefore, the disclosures related to loan restructurings are for modifications which have a direct impact on cash flows.

The Corporation may offer various types of modifications when restructuring a loan. Commercial and industrial loans modified in a loan restructuring often involve temporary interest-only payments, term extensions, and converting credit lines to term loans. Additional collateral, a co-borrower, or a guarantor is often requested.

Commercial mortgage and construction loans modified in a loan restructuring often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Construction loans modified in a loan restructuring may also involve extending the interest-only payment period.

Loans modified in a loan restructuring for the Corporation may have the financial effect of increasing the specific allowance associated with the loan. An allowance for loans that have been modified in a loan restructuring is measured based on the present value of expected cash flows discounted at the loan’s effective interest rate or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates.

Commercial and consumer loans modified in a loan restructuring are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a loan restructuring subsequently default, the Corporation evaluates the loan for possible further loss. The allowance may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.

The following tables present the amortized cost basis as of September 30, 2024 and the financial effect of loans modified to borrowers experiencing financial difficulty during the nine- and three-month periods ended September 30, 2024:



(in thousands)	Term Extension		Percentage of Total Loan Type	Weighted Average Term and Principal Payment Extension
Nine months ended September 30, 2024
Owner-occupied commercial real estate	$	888	0.43%	12 months
Commercial and industrial		127	0.05%	60 months
Total	$	1,015



(in thousands)	Term Extension		Percentage of Total Loan Type	Weighted Average Term and Principal Payment Extension
Three months ended September 30, 2024
Commercial and industrial	$	127	0.05%	60 months
Total	$	127

There were no loan modifications made to borrowers experiencing financial difficulty during the nine- or three-month periods ended September 30, 2023.

The Corporation monitors loan payments on performing and non-performing loans on an ongoing basis to determine if a loan is considered to have a payment default. The loans that were modified in the nine- and three-month periods ended September 30, 2024 have made all contractual payments.

If a modified loan with an outstanding balance of $0.1 million or greater subsequently defaults and goes on non-accrual status, then the Corporation individually evaluates the loan when performing its CECL estimate to calculate the ACL. Upon determination that a modified loan (or a portion of a modified loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is charged off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.