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Allowance for Credit Losses

3 Months Ended

Mar. 31, 2025

NOTE 4: Allowance for Credit Losses

The Corporation conducts an analysis of the collectability of the loan portfolio on a regular basis and uses this analysis to assess the sufficiency of the allowance for credit losses on loans and to determine the necessary provision for credit losses. The Corporation segmented the loan portfolio into three loan portfolios based on common risk characteristics. The Commercial portfolio consists of commercial real estate loans, commercial business loans, commercial and consumer real estate construction loans, land acquisition and development loans, and builder lines. The Consumer portfolio consists of residential mortgage loans, equity lines, and other consumer loans. The Consumer Finance portfolio consists of automobile and marine and RV loans.

The following table shows the allowance for credit losses activity by loan portfolio for the three months ended March 31, 2025 and 2024:

Consumer

(Dollars in thousands)

Commercial

Consumer

Finance

Total

Balance at December 31, 2024

13,347

4,032

22,708

40,087

Provision charged to operations

2,900

3,050

Loans charged off

—

(61)

(4,073)

(4,134)

Recoveries of loans previously charged off

997

1,040

Balance at March 31, 2025

13,425

4,086

22,532

40,043


					Consumer
(Dollars in thousands)	Commercial		Consumer		Finance		Total
Balance at December 31, 2023	$	12,315	$	3,758	$	23,578	$	39,651
Provision charged to operations		535		65		3,000		3,600
Loans charged off		—		(101)		(4,103)		(4,204)
Recoveries of loans previously charged off		9		53		1,091		1,153
Balance at March 31, 2024	$	12,859	$	3,775	$	23,566	$	40,200

The following table presents a breakdown of the provision for credit losses for the periods indicated.


	Three Months Ended March 31,
(Dollars in thousands)	2025		2024
Provision for credit losses:
Provision for loans	$	3,050	$	3,600
Provision for unfunded commitments		(50)		(100)
Total	$	3,000	$	3,500

The table below details the recorded balance of the classes of loans within the commercial and consumer loan portfolios by loan rating, which is reviewed on a quarterly basis, and year of origination as of March 31, 2025:


													Revolving		Revolving
	Term Loans Recorded Balance by Origination Year												Loans		Loans
													Recorded		Converted
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Balance		to Term¹		Total
Commercial real estate:
Loan Rating
Pass	$	8,888	$	92,993	$	104,927	$	157,865	$	128,864	$	263,728	$	—	$	108	$	757,373
Special Mention		—		—		—		—		—		937		—		—		937
Total	$	8,888	$	92,993	$	104,927	$	157,865	$	128,864	$	264,665	$	—	$	108	$	758,310

Commercial business:
Loan Rating
Pass	$	4,272	$	8,185	$	12,143	$	14,374	$	13,565	$	30,153	$	24,088	$	64	$	106,844
Total	$	4,272	$	8,185	$	12,143	$	14,374	$	13,565	$	30,153	$	24,088	$	64	$	106,844

Construction - commercial real estate:
Loan Rating
Pass	$	1,494	$	52,162	$	35,566	$	25,693	$	—	$	6,225	$	—	$	—	$	121,140
Total	$	1,494	$	52,162	$	35,566	$	25,693	$	—	$	6,225	$	—	$	—	$	121,140

Land acquisition and development:
Loan Rating
Pass	$	—	$	36,537	$	—	$	352	$	1,321	$	7,832	$	—	$	—	$	46,042
Total	$	—	$	36,537	$	—	$	352	$	1,321	$	7,832	$	—	$	—	$	46,042

Builder lines:
Loan Rating
Pass	$	11,660	$	26,771	$	3,062	$	822	$	—	$	405	$	—	$	—	$	42,720
Total	$	11,660	$	26,771	$	3,062	$	822	$	—	$	405	$	—	$	—	$	42,720

Construction - consumer real estate:
Loan Rating
Pass	$	1,219	$	18,430	$	1,539	$	—	$	—	$	—	$	—	$	—	$	21,188
Total	$	1,219	$	18,430	$	1,539	$	—	$	—	$	—	$	—	$	—	$	21,188

Residential mortgage:
Loan Rating
Pass	$	7,950	$	48,261	$	56,758	$	78,656	$	37,674	$	77,426	$	—	$	—	$	306,725
Special Mention		—		—		23		—		215		227		—		—		465
Substandard		—		—		—		—		—		170		—		—		170
Substandard Nonaccrual		—		122		864		92		—		111		—		—		1,189
Total	$	7,950	$	48,383	$	57,645	$	78,748	$	37,889	$	77,934	$	—	$	—	$	308,549

Equity lines:
Loan Rating
Pass	$	—	$	—	$	—	$	—	$	—	$	679	$	65,308	$	370	$	66,357
Substandard		—		—		—		—		—		—		—		83		83
Total	$	—	$	—	$	—	$	—	$	—	$	679	$	65,308	$	453	$	66,440

Other consumer:
Loan Rating
Pass	$	1,115	$	4,646	$	1,877	$	1,427	$	187	$	659	$	46	$	—	$	9,957
Total	$	1,115	$	4,646	$	1,877	$	1,427	$	187	$	659	$	46	$	—	$	9,957

Total:
Loan Rating
Pass	$	36,598	$	287,985	$	215,872	$	279,189	$	181,611	$	387,107	$	89,442	$	542	$	1,478,346
Special Mention		—		—		23		—		215		1,164		—		—		1,402
Substandard		—		—		—		—		—		170		—		83		253
Substandard Nonaccrual		—		122		864		92		—		111		—		—		1,189
Total	$	36,598	$	288,107	$	216,759	$	279,281	$	181,826	$	388,552	$	89,442	$	625	$	1,481,190

Equity lines include $98,000 of revolving loans converted to term during the three months ended March 31, 2025.


													Revolving		Revolving
	Term Loans Recorded Balance by Origination Year												Loans		Loans
													Recorded		Converted
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Balance		to Term¹		Total
Commercial real estate:
Loan Rating
Pass	$	91,330	$	80,445	$	161,794	$	131,071	$	110,055	$	158,437	$	—	$	110	$	733,242
Special Mention		—		—		—		—		—		940		—		—		940
Total	$	91,330	$	80,445	$	161,794	$	131,071	$	110,055	$	159,377	$	—	$	110	$	734,182

Commercial business:
Loan Rating
Pass	$	9,425	$	13,097	$	14,663	$	13,954	$	8,843	$	22,690	$	22,206	$	69	$	104,947
Total	$	9,425	$	13,097	$	14,663	$	13,954	$	8,843	$	22,690	$	22,206	$	69	$	104,947

Construction - commercial real estate:
Loan Rating
Pass	$	47,294	$	55,159	$	24,320	$	—	$	5,944	$	—	$	—	$	—	$	132,717
Total	$	47,294	$	55,159	$	24,320	$	—	$	5,944	$	—	$	—	$	—	$	132,717

Land acquisition and development:
Loan Rating
Pass	$	33,129	$	2,653	$	366	$	1,323	$	8,601	$	—	$	—	$	—	$	46,072
Total	$	33,129	$	2,653	$	366	$	1,323	$	8,601	$	—	$	—	$	—	$	46,072

Builder lines:
Loan Rating
Pass	$	30,651	$	3,120	$	1,430	$	—	$	—	$	404	$	—	$	—	$	35,605
Total	$	30,651	$	3,120	$	1,430	$	—	$	—	$	404	$	—	$	—	$	35,605

Construction - consumer real estate:
Loan Rating
Pass	$	16,472	$	2,327	$	—	$	—	$	—	$	—	$	—	$	—	$	18,799
Total	$	16,472	$	2,327	$	—	$	—	$	—	$	—	$	—	$	—	$	18,799

Residential mortgage:
Loan Rating
Pass	$	47,653	$	58,590	$	80,991	$	38,833	$	34,979	$	45,831	$	—	$	—	$	306,877
Special Mention		—		890		—		223		103		211		—		—		1,427
Substandard		—		—		—		—		—		172		—		—		172
Substandard Nonaccrual		125		—		92		—		—		116		—		—		333
Total	$	47,778	$	59,480	$	81,083	$	39,056	$	35,082	$	46,330	$	—	$	—	$	308,809

Equity lines:
Loan Rating
Pass	$	—	$	—	$	—	$	—	$	60	$	628	$	61,077	$	277	$	62,042
Special Mention		—		—		—		—		—		—		—		76		76
Substandard		—		—		—		—		—		—		—		86		86
Total	$	—	$	—	$	—	$	—	$	60	$	628	$	61,077	$	439	$	62,204

Other consumer:
Loan Rating
Pass	$	5,274	$	2,384	$	1,547	$	257	$	132	$	630	$	46	$	—	$	10,270
Total	$	5,274	$	2,384	$	1,547	$	257	$	132	$	630	$	46	$	—	$	10,270

Total:
Loan Rating
Pass	$	281,228	$	217,775	$	285,111	$	185,438	$	168,614	$	228,620	$	83,329	$	456	$	1,450,571
Special Mention		—		890		—		223		103		1,151		—		76		2,443
Substandard		—		—		—		—		—		172		—		86		258
Substandard Nonaccrual		125		—		92		—		—		116		—		—		333
Total	$	281,353	$	218,665	$	285,203	$	185,661	$	168,717	$	230,059	$	83,329	$	618	$	1,453,605

Commercial business and equity lines include $69,000 and $179,000, respectively, of revolving loans converted to term during the year ended December 31, 2024.

The table below details the recorded balance of the classes of loans within the consumer finance loan portfolio by credit rating at the time of origination and year of origination as of March 31, 2025:

Revolving

Term Loans Recorded Balance by Origination Year

Loans

Revolving

Converted

(Dollars in thousands)

2025

2024

2023

2022

2021

Prior

Loans

to Term

Total

Consumer finance - automobiles:

Credit rating¹

Very good

5,000

20,311

9,061

7,018

1,991

371

—

43,752

Good

11,291

37,641

23,331

26,222

8,233

1,454

—

108,172

Fairly good

11,905

39,128

30,788

33,678

14,894

3,638

—

134,031

Fair

7,189

24,500

19,755

21,700

11,480

4,506

—

89,130

Marginal

1,280

4,790

3,972

4,865

4,214

2,384

—

21,505

Total

36,665

126,370

86,907

93,483

40,812

12,353

—

396,590

Consumer finance - marine and recreational vehicles:

Credit rating¹

Very good

267

7,656

6,020

12,196

7,660

10,900

—

44,699

Good

355

4,362

6,227

6,526

1,224

1,682

—

20,376

Fairly good

—

197

181

—

471

Total

622

12,018

12,444

18,903

8,918

12,641

—

65,546

Total:

Credit rating¹

Very good

5,267

27,967

15,081

19,214

9,651

11,271

—

88,451

Good

11,646

42,003

29,558

32,748

9,457

3,136

—

128,548

Fairly good

11,905

39,128

30,985

33,859

14,928

3,697

—

134,502

Fair

7,189

24,500

19,755

21,700

11,480

4,506

—

89,130

Marginal

1,280

4,790

3,972

4,865

4,214

2,384

—

21,505

Total

37,287

138,388

99,351

112,386

49,730

24,994

—

462,136

1	Credit ratings with a FICO score greater than 739 are considered Very Good, FICO scores ranging from 670-739 are considered Good, FICO scores ranging from 625-669 are considered Fairly Good, FICO scores ranging from 580-624 are considered Fair and FICO scores less than 580 are considered Marginal.


															Revolving
	Term Loans Recorded Balance by Origination Year														Loans
													Revolving		Converted
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Loans		to Term		Total
Consumer finance - automobiles:
Credit rating¹
Very good	$	22,161	$	10,039	$	7,971	$	2,359	$	426	$	77	$	—	$	—	$	43,033
Good		40,296		25,730		29,455		9,402		1,574		334		—		—		106,791
Fairly good		41,881		34,058		37,486		16,935		3,213		1,602		—		—		135,175
Fair		25,796		21,278		24,379		13,260		3,674		2,194		—		—		90,581
Marginal		5,049		4,383		5,621		4,856		1,681		1,481		—		—		23,071
Total	$	135,183	$	95,488	$	104,912	$	46,812	$	10,568	$	5,688	$	—	$	—	$	398,651

Consumer finance - marine and recreational vehicles:
Credit rating¹
Very good	$	8,124	$	6,283	$	12,670	$	8,003	$	7,927	$	3,754	$	—	$	—	$	46,761
Good		4,515		6,426		6,832		1,326		1,178		625		—		—		20,902
Fairly good		—		200		183		35		27		34		—		—		479
Total	$	12,639	$	12,909	$	19,685	$	9,364	$	9,132	$	4,413	$	—	$	—	$	68,142

Total:
Credit rating¹
Very good	$	30,285	$	16,322	$	20,641	$	10,362	$	8,353	$	3,831	$	—	$	—	$	89,794
Good		44,811		32,156		36,287		10,728		2,752		959		—		—		127,693
Fairly good		41,881		34,258		37,669		16,970		3,240		1,636		—		—		135,654
Fair		25,796		21,278		24,379		13,260		3,674		2,194		—		—		90,581
Marginal		5,049		4,383		5,621		4,856		1,681		1,481		—		—		23,071
Total	$	147,822	$	108,397	$	124,597	$	56,176	$	19,700	$	10,101	$	—	$	—	$	466,793

1	Credit ratings with a FICO score greater than 739 are considered Very Good, FICO scores ranging from 670-739 are considered Good, FICO scores ranging from 625-669 are considered Fairly Good, FICO scores ranging from 580-624 are considered Fair and FICO scores less than 580 are considered Marginal.

The following table details the current period gross charge-offs of loans by year of origination for the three months ended March 31, 2025:


															Revolving
	Current Period Gross Charge-offs by Origination Year														Loans
													Revolving		Converted
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Loans		to Term		Total
Residential mortgage	$	6	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	6
Other consumer¹		45		10		—		—		—		—		—		—		55
Consumer finance - automobiles		—		593		1,004		1,616		587		196		—		—		3,996
Consumer finance - marine and recreational vehicles		—		—		13		52		10		2		—		—		77
Total	$	51	$	603	$	1,017	$	1,668	$	597	$	198	$	—	$	—	$	4,134

1	Gross charge-offs of other consumer loans for the three months ended March 31, 2025 included $45,000 of demand deposit overdrafts that originated in 2025.

The following table details the current period gross charge-offs of loans by year of origination for the three months ended March 31, 2024:


															Revolving
	Current Period Gross Charge-offs by Origination Year														Loans
													Revolving		Converted
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Loans		to Term		Total
Residential mortgage	$	3	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	3
Other consumer¹		90		3		5		—		—		—		—		—		98
Consumer finance - automobiles		—		724		1,869		1,059		213		190		—		—		4,055
Consumer finance - marine and recreational vehicles		—		17		23		—		8		—		—		—		48
Total	$	93	$	744	$	1,897	$	1,059	$	221	$	190	$	—	$	—	$	4,204

1	Gross charge-offs of other consumer loans for the three months ended March 31, 2024 included $90,000 of demand deposit overdrafts that originated in 2024.

As of March 31, 2025 and December 31, 2024, the Corporation had no collateral dependent loans for which repayment was expected to be derived substantially through the operation or sale of the collateral and where the borrower is experiencing financial difficulty.