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Loans and Allowance for Credit Losses
 6 Months Ended
Jun. 30, 2025
Receivables [Abstract]  
Loans and Allowance for Credit Losses Loans and Allowance for Credit Losses
The Company’s loan portfolio is segmented to enable management to monitor risk and performance. Real estate loans are further segregated into three classes. Residential mortgages include those secured by residential properties and include home equity loans, while commercial mortgages consist of loans to commercial borrowers secured by commercial real estate. Construction loans typically consist of loans to build commercial buildings and acquire and develop residential real estate. The commercial and industrial segment consists of loans to finance the activities of commercial customers. The consumer segment consists primarily of indirect auto loans as well as personal installment loans and personal or overdraft lines of credit.
Residential mortgage loans are typically longer-term loans and, therefore, generally present greater interest rate risk than the consumer and commercial loans. Under certain economic conditions, housing values may decline, which may increase the risk that the collateral values are not sufficient.
Commercial real estate loans generally present a higher level of credit risk than loans secured by residences. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income-producing properties, and the increased difficulty in evaluating and monitoring these types of
loans. Furthermore, the repayment of commercial real estate loans is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced (for example, if leases are not obtained or renewed, a bankruptcy court modifies a lease term, or a major tenant is unable to fulfill its lease obligations), the borrower’s ability to repay the loan may be impaired.
Construction loans are originated to individuals to finance the construction of residential dwellings and are also originated for the construction of commercial properties, including hotels, apartment buildings, housing developments, and owner-occupied properties used for businesses. Construction loans generally provide for the payment of interest only during the construction phase, which is usually 12 to 18 months. At the end of the construction phase, the loan generally converts to a permanent residential or commercial mortgage loan. Construction loan risks include overfunding in comparison to the plans, untimely completion of work, and leasing and stabilization after project completion.
Commercial and industrial loans are generally secured by inventories, accounts receivable, and other business assets, which present collateral risk.
Consumer loans generally have higher interest rates and shorter terms than residential mortgage loans; however, they have additional credit risk due to the type of collateral securing the loan.
The following table presents the classifications of loans as of the dates indicated:
June 30, 2025December 31, 2024
(Dollars in thousands)
Real Estate:
Residential
$329,324 $337,990 
Commercial
513,197 485,513 
Construction
40,680 54,705 
Commercial and Industrial
138,221 112,047 
Consumer
57,376 70,508 
Other
32,026 31,863 
Total Loans
1,110,824 1,092,626 
Allowance for Credit Losses(9,722)(9,805)
Loans, Net
$1,101,102 $1,082,821 
Total unamortized net deferred loan fees were $962,000 and $846,000 at June 30, 2025 and December 31, 2024, respectively.
The Company uses a nine-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first five categories are not considered criticized and are aggregated as “pass” rated. The criticized rating categories used by management generally follow bank regulatory definitions. The special mention category includes assets that are currently protected but are below average quality, resulting in an undue 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. Loans classified as doubtful have all the weaknesses inherent in loans classified as substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as loss are considered uncollectible and of such little value that continuance as an asset is not warranted.
The following tables present the Company’s loans by year of origination, loan segmentation and risk indicator summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of the dates indicated. There were no loans in the criticized category of Loss.
Classified Loans by Origination Year (as of June 30, 2025)
(dollars in thousands)20252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
Real Estate:
Residential
Pass$7,549 $16,026 $30,975 $44,745 $39,933 $166,466 $18,949 $324,643 
Special Mention360 — — 1,564 — — — 1,924 
Substandard— — 2,177 — — 580 — 2,757 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total7,909 16,026 33,152 46,309 39,933 167,046 18,949 329,324 
Commercial
Pass37,424 67,424 62,539 68,464 81,053 177,880 1,840 496,624 
Special Mention— 5,875 524 — 3,417 1,678 — 11,494 
Substandard— — — — — 5,079 — 5,079 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total37,424 73,299 63,063 68,464 84,470 184,637 1,840 513,197 
Construction
Pass1,808 10,400 10,391 10,792 269 7,020 — 40,680 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total1,808 10,400 10,391 10,792 269 7,020 — 40,680 
Commercial and Industrial
Pass25,273 25,592 21,926 7,571 5,107 9,855 42,662 137,986 
Special Mention— — — — — 235 — 235 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total25,273 25,592 21,926 7,571 5,107 10,090 42,662 138,221 
Consumer
Pass373 574 7,200 23,929 10,901 5,243 9,034 57,254 
Special Mention— — — — — — — — 
Substandard— — — — 32 90 — 122 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total373 574 7,200 23,929 10,933 5,333 9,034 57,376 
Other
Pass— 149 3,840 22,138 — 4,781 1,118 32,026 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total— 149 3,840 22,138 — 4,781 1,118 32,026 
Total Loans$72,787 $126,040 $139,572 $179,203 $140,712 $378,907 $73,603 $1,110,824 
Gross Charge Offs$— $— $19 $52 $1 $101 $34 $207 
Classified Loans by Origination Year (as of December 31, 2024)
(dollars in thousands)20242023202220212020PriorRevolving Loans Amortized Cost BasisTotal
Real Estate:
Residential
Pass$16,932 $34,311 $46,602 $41,652 $54,422 $122,083 $18,015 $334,017 
Special Mention— — 2,586 — — — — 2,586 
Substandard— — 50 — — 1,337 — 1,387 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total16,932 34,311 49,238 41,652 54,422 123,420 18,015 337,990 
Commercial
Pass64,438 52,178 67,336 82,578 45,959 147,557 2,839 462,885 
Special Mention5,919 1,683 2,214 4,496 280 2,782 — 17,374 
Substandard— — 175 — — 5,079 — 5,254 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total70,357 53,861 69,725 87,074 46,239 155,418 2,839 485,513 
Construction
Pass11,987 21,145 14,342 269 — — — 47,743 
Special Mention— — — — 6,962 — — 6,962 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total11,987 21,145 14,342 269 6,962 — — 54,705 
Commercial and Industrial
Pass33,295 25,063 12,280 5,546 4,374 4,530 20,338 105,426 
Special Mention— 200 — — — 3,221 3,200 6,621 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total33,295 25,263 12,280 5,546 4,374 7,751 23,538 112,047 
Consumer
Pass779 8,980 31,806 14,973 4,809 3,519 5,429 70,295 
Special Mention— — — — — — — — 
Substandard— — — 42 21 150 — 213 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total779 8,980 31,806 15,015 4,830 3,669 5,429 70,508 
Other
Pass178 4,039 21,877 27 571 4,553 618 31,863 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total178 4,039 21,877 27 571 4,553 618 31,863 
Total Loans$133,528 $147,599 $199,268 $149,583 $117,398 $294,811 $50,439 $1,092,626 
Gross Charge Offs$— $46 $329 $57 $54 $52 $114 $652 
The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of the dates indicated:
June 30, 2025
Loans
Current
30-59
Days
Past Due
60-89
Days
Past Due
90 Days
Or More
Past Due
Total
Past Due
Non-
Accrual
Total
Loans
(Dollars in Thousands)
Real Estate:
Residential
$324,568 $2,999 $125 $— $3,124 $1,632 $329,324 
Commercial
513,049 135 — — 135 13 513,197 
Construction
40,680 — — — — — 40,680 
Commercial and Industrial
138,221 — — — — — 138,221 
Consumer
56,841 411 2 — 413 122 57,376 
Other
32,026 — — — — — 32,026 
Total Loans
$1,105,385 $3,545 $127 $— $3,672 $1,767 $1,110,824 
December 31, 2024
Loans
Current
30-59
Days
Past Due
60-89
Days
Past Due
90 Days
Or More
Past Due
Total
Past Due
Non-
Accrual
Total
Loans
(Dollars in Thousands)
Real Estate:
Residential
$331,705 $2,926 $1,971 $— $4,897 $1,388 $337,990 
Commercial
484,959 366 — — 366 188 485,513 
Construction
54,705 — — — — — 54,705 
Commercial and Industrial
112,047 — — — — — 112,047 
Consumer
69,454 809 32 — 841 213 70,508 
Other
31,863 — — — — — 31,863 
Total Loans
$1,084,733 $4,101 $2,003 $— $6,104 $1,789 $1,092,626 
Additional interest income that would have been recorded if the loans that were nonaccrual at June 30, 2025 were current was $29,000 and $81,000 for the three and six months ended June 30, 2025, respectively, and $21,000 and $40,000 for the three and six months ended June 30, 2024, respectively.
The following table sets forth the amounts for amortized cost basis of loans on nonaccrual status, loans past due 90 days still accruing, and categories of nonperforming assets at the dates indicated.
June 30, 2025
Nonaccrual With No ACLNonaccrual With ACLLoans Past Due 90 Days Still AccruingTotal Nonperforming Assets
(Dollars in Thousands)
Nonaccrual Loans:
Real Estate:
Residential
$1,632 $— $— $1,632 
Commercial
13 — — 13 
Consumer
122 — — 122 
Total Nonaccrual Loans
$1,767 $— $— 1,767 
Total Other Real Estate Owned158 
Total Nonperforming Assets
$1,925 

December 31, 2024
Nonaccrual With No ACLNonaccrual With ACLLoans Past Due 90 Days Still AccruingTotal Nonperforming Assets
(Dollars in Thousands)
Nonaccrual Loans:
Real Estate:
Residential
$1,388 $— $— $1,388 
Commercial
188 — — 188 
Consumer
213 — — 213 
Total Nonaccrual Loans
$1,789 $— $— 1,789 
Total Other Real Estate Owned— 
Total Nonperforming Assets
$1,789 
No interest income on nonaccrual loans was recognized during the three and six months ended June 30, 2025 and June 30, 2024.
All modifications and refinancing, including those with borrowers that are experiencing financial difficulty are subject to the modification guidance in ASC 310-20. Loan modifications could meet the definition of a new loan if certain terms of the loan are modified to the benefit of the lender and the modification to the terms of the loan are more than minor. Both of these criteria have to be met to define the modification as a new loan. If a loan modification meets the criteria of new loan, then the new loan should include the remaining net investment in the original loan, additional funds advanced, fees received, and direct loan origination costs with the refinancing or restructuring. Additionally, the effective interest rate should be recalculated based on the amortized cost basis of the new loan and a reassessment of contractual cash flow. For the three and six months ended June 30, 2025 and June 30, 2024, there were no new loan modifications to borrowers experiencing financial difficulty.
The recorded investment of residential real estate loans for which formal foreclosure proceedings were in process according to applicable requirements of the local jurisdiction was $530,000 and $1.2 million at June 30, 2025 and December 31, 2024, respectively.
The activity in the ACL - Loans is summarized below by primary segments for the periods indicated:
Real
Estate
Residential
Real
Estate
Commercial
Real
Estate
Construction
Commercial
and
Industrial
Consumer
Other
Total
(Dollars in thousands)
March 31, 2025$2,896 $3,128 $1,227 $1,748 $586 $234 $9,819 
Charge-offs
— (19)— (5)(47)— (71)
Recoveries
— — — 43 67 — 110 
(Recovery) Provision for Credit Losses - Loans(351)295 (335)160 99 (4)(136)
June 30, 2025$2,545 $3,404 $892 $1,946 $705 $230 $9,722 

Real
Estate
Residential		Real
Estate
Commercial		Real
Estate
Construction		Commercial
and
Industrial		ConsumerOtherTotal
(Dollars in thousands)
March 31, 2024$2,832 $2,948 $870 $1,587 $1,084 $261 $9,582 
Charge-offs— — — — (156)— (156)
Recoveries2 — — 46 41 — 89 
Provision (Recovery) for Credit Losses - Loans10 134 (126)(148)162 (20)12 
June 30, 2024$2,844 $3,082 $744 $1,485 $1,131 $241 $9,527 
Real
Estate
Residential
Real
Estate
Commercial
Real
Estate
Construction
Commercial
and
Industrial
Consumer
Other
Total
(Dollars in thousands)
December 31, 2024$2,926 $3,103 $1,264 $1,584 $687 $241 $9,805 
Charge-offs
— (19)— (5)(183)— (207)
Recoveries
1 — — 87 104 — 192 
(Recovery) Provision for Credit Losses - Loans(382)320 (372)280 97 (11)(68)
June 30, 2025$2,545 $3,404 $892 $1,946 $705 $230 $9,722 
Real
Estate
Residential
Real
Estate
Commercial
Real
Estate
Construction
Commercial
and
Industrial
Consumer
Other
Total
(Dollars in thousands)
December 31, 2023$3,129 $2,630 $639 $1,693 $1,367 $249 $9,707 
Charge-offs
— — — (12)(206)— (218)
Recoveries
11 — — 89 68 — 168 
(Recovery) Provision for Credit Losses - Loans(296)452 105 (285)(98)(8)(130)
June 30, 2024$2,844 $3,082 $744 $1,485 $1,131 $241 $9,527 
Loans that do not share risk characteristics are evaluated on an individual basis. For loans that are individually evaluated and collateral dependent, financial loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL - Loans is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. During the three and six months ended June 30, 2025, there were $5.6 million of loans that required specific valuation allowances of $70,000. During the three and six months ended June 30, 2024, there were no loans that required a credit loss to be individually assigned.
The Company’s allowance for credit losses on unfunded commitments is recognized as a liability (accrued interest payable and other liabilities on the Consolidated Statement of Financial Condition), with adjustments to the reserve recognized in provision for credit losses - unfunded commitments on the Consolidated Statement of Income. The Company’s activity in the allowance for credit losses on unfunded commitments for the periods indicated was as follows:
(in thousands)Allowance for Credit Losses
Balance at March 31, 2025
$583 
Provision for Credit Losses - Unfunded Commitments144 
Balance at June 30, 2025$727 
(in thousands)Allowance for Credit Losses
Balance at March 31, 2024$605 
Recovery for Credit Losses - Unfunded Commitments(48)
Balance at June 30, 2024$557 
(in thousands)Allowance for Credit Losses
Balance at December 31, 2024$691 
Provision for Credit Losses - Unfunded Commitments36 
Balance at June 30, 2025$727 
(in thousands)Allowance for Credit Losses
Balance at December 31, 2023$500 
Provision for Credit Losses - Unfunded Commitments57 
Balance at June 30, 2024$557