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LOANS HELD FOR INVESTMENT
 12 Months Ended
Dec. 31, 2024
LOANS HELD FOR INVESTMENT [Abstract]  
LOANS HELD FOR INVESTMENT
3.
LOANS HELD FOR INVESTMENT

Loans held for investment are summarized by category at year-end as follows (dollars in thousands):

   
December 31,
2024
    
December 31,
2023
  
Commercial real estate
  
$
1,119,063
    
$
1,081,056
  
Commercial - specialized
    
388,955
      
372,376
  
Commercial - general
    
557,371
      
517,361
  
Consumer:
                
1-4 family residential
    
566,400
      
534,731
  
Auto loans
    
254,474
      
305,271
  
Other consumer
    
64,936
      
74,168
  
Construction
    
103,855
      
129,190
  
     
3,055,054
      
3,014,153
  
Allowance for credit losses on loans
    
(43,237
)
    
(42,356
)
Loans, net
  
$
3,011,817
    
$
2,971,797
  

The Company has certain lending policies, underwriting standards, and procedures in place that are designed to maximize loan income with an acceptable level of risk. Management reviews and approves these policies, underwriting standards, and procedures on a regular basis and makes changes as appropriate. Management receives frequent reports related to loan originations, quality, concentrations, delinquencies, non-performing, and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions, both by type of loan and geography.

Commercial Real Estate – Underwriting standards have been designed to determine whether the borrower possesses sound business ethics and practices, evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed and ensure appropriate collateral is obtained to secure the loan. Commercial real estate loans are underwritten primarily based on projected cash flows for income-producing properties and collateral values for non-income-producing properties. The repayment of these loans is generally dependent on the successful operation of the property securing the loans or the sale or refinancing of the property. Real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s real estate portfolio are diversified by type and geographic location. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry.

Commercial – General and Specialized – Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably. Underwriting standards have been designed to determine whether the borrower possesses sound business ethics and practices, evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations, as agreed and ensure appropriate collateral is obtained to secure the loan. Commercial loans are primarily made based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. Most commercial loans are secured by the assets being financed or other business assets, such as real estate, accounts receivable, or inventory, and typically include personal guarantees. Owner-occupied real estate is included in commercial loans, as the repayment of these loans is generally dependent on the operations of the commercial borrower’s business rather than on income-producing properties or the sale of the properties. Commercial loans are grouped into two distinct sub-categories: specialized and general. Commercial related segments that are considered “specialized” include agricultural production and real estate loans, energy loans, and finance, investment, and insurance loans. Commercial related segments that contain a broader diversity of borrowers, sub-industries, or serviced industries are grouped into the “general category.” These include goods, services, restaurant & retail, construction, and other industries. Performance of these loans is subject to operating and cash flow results of the borrower, with risk in the volatility of operating results for particular industries.


Consumer – Loans to consumers include 1-4 family residential loans, auto loans, and other loans for recreational vehicles or other purposes. The Company utilizes a computer-based credit scoring analysis to supplement its policies and procedures in underwriting consumer loans. The Company’s loan policy addresses types of consumer loans that may be originated and the collateral, if secured, which must be perfected. The relatively smaller individual dollar amounts of consumer loans that are spread over numerous individual borrowers also minimizes the Company’s risk. The Company generally requires mortgage title insurance and hazard insurance on 1-4 family residential loans. All consumer loans are generally dependent on the risk characteristics of the borrower’s ability to repay the loan, a consideration of the debt to income ratio, employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral.

Construction – Loans for residential construction are for single-family properties to developers, builders, or end-users. These loans are underwritten based on estimates of costs and completed value of the project. Funds are advanced based on estimated percentage of completion for the project. Performance of these loans is affected by economic conditions as well as the ability to control costs of the projects.

The commercial real estate and construction categories comprise the Company’s nonowner-occupied real estate loans. Total nonowner-occupied real estate loans were $1.22 billion at December 31, 2024, and $1.21 billion at December 31, 2023.

The ACL for loans was $43.2 million at December 31, 2024, compared to $42.4 million at December 31, 2023. The ACL for loans to loans held for investment was 1.42% at December 31, 2024 and 1.41% at December 31, 2023.

The following table details the activity in the ACL for the years ended December 31, 2024, 2023, and 2022 (dollars in thousands). Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

   
Beginning
Balance
    
Provision for
Credit
Losses (1)
    
Charge-offs
     Recoveries
   
Ending
Balance
  
For the year ended December 31, 2024
                              
Commercial real estate
   $ 15,808     $ 207     $ (87 )   $ 45     $ 15,973  
Commercial - specialized
     4,020       540       —       80       4,640  
Commercial - general
     6,391       1,393       (1,082 )     172       6,874  
Consumer:
                                        
1-4 family residential
     9,177       669       (175 )     6       9,677  
Auto loans
     3,601       465       (1,186 )     135       3,015  
Other consumer
     968       1,204       (1,257 )     200       1,115  
Construction
     2,391       (138 )     (315 )     5       1,943  

  $ 42,356     $
4,340     $
(4,102 )   $
643     $
43,237  

(1) The $4.3 million provision for credit loss on the Consolidated Statement of Comprehensive Income (Loss) includes a $4.3 million provision for credit losses on loans and a $(40) thousand provision for off-balance sheet credit exposures for the year ended December 31, 2024.


 
Beginning
Balance
    
Impact of
CECL
Adoption
    
Provision for
Credit
Losses (1)
    
Charge-offs
    
Recoveries
    
Ending
Balance
  
For the year ended December 31, 2023
                                    
Commercial real estate
   $ 13,029     $ 827     $ 1,952     $ —     $ —     $ 15,808  
Commercial - specialized
     3,425       33       398       (11 )     175       4,020  
Commercial - general
     9,215       (2,574 )     42       (469 )     177       6,391  
Consumer:
                                                
1-4 family residential
     6,194       1,700       1,278       (1 )     6       9,177  
Auto loans
     3,926       (332 )     698       (888 )     197       3,601  
Other consumer
     1,376       (235 )     688       (1,140 )     279       968  
Construction
     2,123       683       (96 )     (319 )     —       2,391  
    $ 39,288     $
102     $
4,960     $
(2,828 )   $
834     $
42,356  

(1) The $4.6 million provision for credit loss on the Consolidated Statement of Comprehensive Income (Loss) includes a $5.0 million provision for credit losses on loans and a $(350) thousand provision for off-balance sheet credit exposures for the year ended December 31, 2024.

    
Beginning
Balance
   
Provision for
Credit Losses
     Charge-offs
    Recoveries
    Ending
Balance
 
For the year ended December 31, 2022
                              
Commercial real estate
  
$
17,245
    
$
(4,634
)
  
$
—
    
$
418
    
$
13,029
  
Commercial - specialized
    
4,363
      
(1,745
)
    
(199
)
    
1,006
      
3,425
  
Commercial - general
    
8,466
      
627
      
(328
)
    
450
      
9,215
  
Consumer:
                                        
1-4 family residential
    
5,268
      
1,026
      
(140
)
    
40
      
6,194
  
Auto loans
    
3,653
      
637
      
(508
)
    
144
      
3,926
  
Other consumer
    
1,357
      
932
      
(1,167
)
    
254
      
1,376
  
Construction
    
1,746
      
538
      
(166
)
    
5
      
2,123
  

 
$
42,098
    
$
(2,619
)
  
$
(2,508
)
  
$
2,317
    
$
39,288
  

During the year ended December 31, 2024, the provision for credit losses on loans of $4.3 million was driven primarily by organic loan growth experienced during 2024 and net charge-offs of $3.5 million during the year.

The following table shows the Company’s amortized cost in loans and related ACL for collateral dependent loans by class using the fair value of collateral loss estimation methodology of evaluating expected credit losses at the dates indicated (dollars in thousands).

 
   Equipment     Real Estate    
Accounts
Receivable
    
Total Loans
Individually
Evaluated
    
Total ACL
for
Individually
Evaluated
Loans
  
December 31, 2024
                              
Commercial real estate
   $ —     $ 19,543     $ —    
$
19,543
    
$
552
  
Commercial - specialized
     —       —       —      
—
      
—
  
Commercial - general
     —       —       —      
—
      
—
  
Consumer:
                                        
1-4 family residential
     —       —       —      
—
      
—
  
Auto loans
     —       —       —      
—
      
—
  
Other consumer
     —       —       —      
—
      
—
  
Construction
     —       1,575       —      
1,575
      
—
  
 
   $ —     $ 21,118     $ —    
$
21,118
    
$
552
  
December 31, 2023
                                        
Commercial real estate
   $
—     $
—     $
—     $
—     $
—  
Commercial - specialized
     —       —       —       —       —  
Commercial - general
     353       691       —       1,044       142  
Consumer:
                                        
1-4 family residential
     —       362       —       362       —  
Auto loans
     —       —       —       —       —  
Other consumer
     —       —       —       —       —  
Construction
     —       218       —       218       —  
 
   $
353     $
1,271     $
—     $
1,624     $
142  

The table below provides an age analysis on accruing past-due loans and nonaccrual loans at the dates indicated (dollars in thousands):


  
30-89 Days
Past Due
    
90 Days or
More Past
Due
    
Total Nonaccrual
    
Nonaccrual
with no
ACL
  
December 31, 2024                        
Commercial real estate
  
$
594
    
$
96
    
$
19,543
     $ —  
Commercial - specialized
    
1,770
      
240
      
105
       —  
Commercial - general
    
1,374
      
244
      
180
       —  
Consumer:
                                
1-4 Family residential
    
1,966
      
1,042
      
676
       —  
Auto loans
    
1,004
      
114
      
—
       —  
Other consumer
    
1,125
      
185
      
23
       —  
Construction
    
95
      
—
      
1,575
       1,575  

 
$
7,928
    
$
1,921
    
$
22,102
     $ 1,575  
December 31, 2023
                                
Commercial real estate
   $
499     $
86     $
—     $
—  
Commercial - specialized
     521       —       213       —  
Commercial - general
     1,316       296       953       —  
Consumer:
                                
1-4 Family residential
     793       1,390       1,828       362  
Auto loans
     1,208       60       —       —  
Other consumer
     1,134       103       30       —  
Construction
     759       —       218       218  
 
   $
6,230     $
1,935     $
3,242     $
580  

Credit Quality Indicators
The Company grades its loans on a thirteen-point grading scale. These grades fit in one of the following categories: (i) pass, (ii) special mention, (iii) substandard, (iv) doubtful, or (v) loss. Loans categorized as loss are charged-off immediately. The grading of loans reflects a judgment by the Company about the risks of default associated with the loan. The Company reviews the grades on loans as part of the Company’s on-going monitoring of the credit quality of the loan portfolio. These risk ratings are assigned based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.

Pass loans have financial factors or nature of collateral that are considered reasonable credit risks in the normal course of lending and encompass several grades that are assigned based on varying levels of risk, ranging from credits that are secured by cash or marketable securities, to watch credits which have all the characteristics of an acceptable credit risk but warrant more than the normal level of monitoring.

Special mention loans have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of repayment prospects for the loans at some future date.

Substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or by the collateral pledged, if any. These loans have a well-defined weakness or weaknesses that jeopardize collection and present the distinct possibility that some loss will be sustained if the deficiencies are not corrected. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to strengthen the Company’s position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed. Substandard loans can be accruing or can be nonaccrual depending on the circumstances of the individual loans.

Doubtful loans have all the weaknesses inherent in substandard loans with the added characteristics that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. All doubtful loans are on nonaccrual.


In connection with the review of the Company’s loan portfolio, management considers risk elements attributable to particular loan type or categories in assessing the quality of individual loans. The list of loans to be analyzed for individual evaluation consists of non-accrual loans over $250 thousand with direct exposure. Interest income recognized using a cash-basis method on non-accrual loans for the year ended December 31, 2024 was not significant. In addition, the Company closely monitors substandard accruing loans over $1 million with direct exposure, and past due accruing loans over $100 thousand for possible individual evaluation. All other loans will be evaluated collectively in designated pools unless a loss exposure has been identified. Additional funds committed to be advanced on individually analyzed loans are not significant.

The following table reflects the amortized cost basis in loans by credit quality indicator and origination year at the dates indicated, and gross charge-offs for the years ended December 31, 2024 and 2023, excluding loans held for sale. Loans acquired are shown in the table by origination year, not merger date. The Company had an immaterial amount of revolving loans converted to term loans at December 31, 2024 and 2023.


 
                    
Term Loans
                    
 
              
Amortized Cost Basis by Origination Year
              

                    December 31, 2024
                    
(Dollars in thousands)                                                

 
2024
    
2023
    
2022
    
2021
    
2020
    
Prior
    
Revolving Loans
    
Total
  

                                               
Commercial real estate:
                                               
Pass
  
$
164,205
    
$
233,047
    
$
300,828
    
$
126,548
    
$
43,628
    
$
175,319
    
$
6,417
    
$
1,049,992
  
Special mention
    
—
      
—
      
—
      
32,243
      
441
      
5,464
      
483
      
38,631
  
Substandard
    
—
      
—
      
147
      
25,164
      
3,125
      
2,004
      
—
      
30,440
  
Total commercial real estate loans
  
$
164,205
    
$
233,047
    
$
300,975
    
$
183,955
    
$
47,194
    
$
182,787
    
$
6,900
    
$
1,119,063
  
Current period gross charge-offs
   $ —     $ —     $ 65    
$
—
     $ —     $ 22     $ —     $ 87  
 
                                                                
Commercial - specialized:
                                                                
Pass
  
$
103,288
    
$
60,881
    
$
37,940
    
$
41,721
    
$
15,678
    
$
28,488
    
$
98,092
    
$
386,088
  
Special mention
    
214
      
—
      
1,600
      
—
      
—
      
—
      
—
      
1,814
  
Substandard
    
510
      
—
      
85
      
84
      
297
      
77
      
—
      
1,053
  
Total commercial - specialized loans
  
$
104,012
    
$
60,881
    
$
39,625
    
$
41,805
    
$
15,975
    
$
28,565
    
$
98,092
    
$
388,955
  
Current period gross charge-offs
  
$
—
    
$
—
    
$
—
     $ —     $ —     $ —     $ —     $ —  
 
                                                                
Commercial - general:
                                                                
Pass
  
$
107,947
    
$
72,500
    
$
109,808
    
$
65,564
    
$
29,808
    
$
82,909
    
$
78,321
    
$
546,857
  
Special mention
    
—
      
—
      
960
      
554
      
—
      
499
      
200
      
2,213
  
Substandard
  

98    

463    

2,405    

4,427    

19    

805    

84    

8,301  
Total commercial - general loans
  
$
108,045
    
$
72,963
    
$
113,173
    
$
70,545
    
$
29,827
    
$
84,213
    
$
78,605
    
$
557,371
  
Current period gross charge-offs
   $ —     $ 199     $ 466     $ 17     $ —    
$
134
     $ 266     $ 1,082  
                                                                 
Consumer: 1-4 family residential:
                                                                
 
                                                                
Pass
  
$
87,266
    
$
101,022
    
$
150,358
    
$
91,929
    
$
49,057
    
$
73,730
    
$
5,800
    
$
559,162
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Substandard
    
—
      
810
      
284
      
1,057
      
225
      
4,812
      
50
      
7,238
  
Total consumer: 1-4 family residential loans
  
$
87,266
    
$
101,832
    
$
150,642
    
$
92,986
    
$
49,282
    
$
78,542
    
$
5,850
    
$
566,400
  
Current period gross charge-offs
   $ —     $ —     $ 121     $ 51     $ —     $ 3     $ —     $ 175  
 
                                                                
Consumer: auto loans:
                                                                
Pass
  
$
70,621
    
$
72,009
    
$
76,412
    
$
25,869
    
$
7,293
    
$
1,931
    
$
—
    
$
254,135
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Substandard
     21       28       82       179       4       25       —       339  
Total consumer: auto loans
  
$
70,642
    
$
72,037
    
$
76,494
    
$
26,048
    
$
7,297
    
$
1,956
    
$
—
    
$
254,474
  
Current period gross charge-offs
   $ 23     $ 386     $ 519     $ 198     $ 25     $ 35     $ —     $ 1,186  
 
                                                                
Consumer: other consumer:
                                                                
Pass
  
$
23,665
    
$
12,969
    
$
14,790
    
$
5,477
    
$
1,232
    
$
5,382
    
$
1,324
    
$
64,839
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Substandard
    
—
      
—
      
8
      
47
      
—
      
42
      
—
      
97
  
Total consumer: other consumer loans
  
$
23,665
    
$
12,969
    
$
14,798
    
$
5,524
    
$
1,232
    
$
5,424
    
$
1,324
    
$
64,936
  
Current period gross charge-offs (1)
   $ 469     $ 308     $ 245     $ 43     $ 29     $ 145     $ 18     $ 1,257  

                                                               
Construction:                                                                
Pass   $ 65,920     $ 30,572     $ 2,172     $ 2,630     $ —     $
—     $ 891     $
102,185  
Special mention     —       —       —       —       —       —       —       —  
Substandard     —       1,190       480       —       —       —       —       1,670  
Total construction loans   $ 65,920     $ 31,762     $ 2,652     $ 2,630     $ —     $ —     $
891     $ 103,855  
Current period gross charge-offs   $ —     $ 315     $ —     $ —     $
—     $ —     $ —     $ 315  


(1) Includes $457 thousand in charged-off demand deposit overdrafts reported as 2024 originations.


 
                    
Term Loans
                    
 
              
Amortized Cost Basis by Origination Year
              

                    December 31, 2023                    
(Dollars in thousands)                                                

 
2023
    
2022
    
2021
    
2020
    
2019
    
Prior
    
Revolving Loans
    
Total
  

                                               
Commercial real estate:
                                               
Pass
  
$
254,766
    
$
324,601
    
$
189,211
    
$
50,660
    
$
47,988
    
$
174,859
    
$
3,842
    
$
1,045,927
  
Special mention
    
—
      
—
      
—
      
11,677
      
—
      
—
      
—
      
11,677
  
Substandard
    
—
      
82
      
21,152
      
1,699
      
149
      
370
      
—
      
23,452
  
Total commercial real estate loans
  
$
254,766
    
$
324,683
    
$
210,363
    
$
64,036
    
$
48,137
    
$
175,229
    
$
3,842
    
$
1,081,056
  
Current period gross charge-offs
   $ —     $ —     $ —    
$
—
     $ —     $ —     $ —     $ —  
 
                                                                
Commercial - specialized:
                                                                
Pass
  
$
117,912
    
$
56,152
    
$
57,839
    
$
19,883
    
$
10,376
    
$
22,758
    
$
83,368
    
$
368,288
  
Special mention
    
—
      
2,938
      
—
      
—
      
—
      
—
      
300
      
3,238
  
Substandard
    
—
      
105
      
196
      
393
      
19
      
137
      
—
      
850
  
Total commercial - specialized loans
  
$
117,912
    
$
59,195
    
$
58,035
    
$
20,276
    
$
10,395
    
$
22,895
    
$
83,668
    
$
372,376
  
Current period gross charge-offs
  
$
—
    
$
—
    
$
—
     $ 11     $ —     $ —     $ —     $ 11  
 
                                                                
Commercial - general:
                                                                
Pass
  
$
88,911
    
$
128,627
    
$
90,957
    
$
35,794
    
$
45,660
    
$
68,990
    
$
44,131
    
$
503,070
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
1,565
      
250
      
1,815
  
Substandard
  
201
    
2,930
    
4,676
    
227
    
2,749
    
1,442
    
251
    
12,476
  
Total commercial - general loans
  
$
89,112
    
$
131,557
    
$
95,633
    
$
36,021
    
$
48,409
    
$
71,997
    
$
44,632
    
$
517,361
  
Current period gross charge-offs
   $ —     $ 47     $ 50     $ 33     $ 18    
$
321
     $ —     $ 469  
                                                                 
Consumer: 1-4 family residential:
                                                                
 
                                                                
Pass
  
$
113,897
    
$
156,549
    
$
106,619
    
$
51,940
    
$
31,345
    
$
56,666
    
$
3,770
    
$
520,786
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Substandard
    
376
      
382
      
4,238
      
708
      
3,758
      
4,483
      
—
      
13,945
  
Total consumer: 1-4 family residential loans
  
$
114,273
    
$
156,931
    
$
110,857
    
$
52,648
    
$
35,103
    
$
61,149
    
$
3,770
    
$
534,731
  
Current period gross charge-offs
   $ —     $ —     $ 1     $ —     $ —     $ —     $ —     $ 1  
 
                                                                
Consumer: auto loans:
                                                                
Pass
  
$
106,149
    
$
124,588
    
$
48,686
    
$
16,524
    
$
6,812
    
$
1,935
    
$
—
    
$
304,694
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Substandard
     16
      189
      199
      60
       81       32
      —
      577
 
Total consumer: auto loans
  
$
106,165
    
$
124,777
    
$
48,885
    
$
16,584
    
$
6,893
    
$
1,967
    
$
—
    
$
305,271
  
Current period gross charge-offs
   $ 113     $ 377     $ 254     $ 14     $ 49     $ 81     $ —     $ 888  
 
                                                                
Consumer: other consumer:
                                                                
Pass
  
$
23,719
    
$
26,899
    
$
10,198
    
$
3,190
    
$
2,539
    
$
6,107
    
$
1,364
    
$
74,016
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Substandard
    
—
      
13
      
44
      
10
      
—
      
84
      
1
      
152
  
Total consumer: other consumer loans
  
$
23,719
    
$
26,912
    
$
10,242
    
$
3,200
    
$
2,539
    
$
6,191
    
$
1,365
    
$
74,168
  
Current period gross charge-offs (1)
   $ 624     $ 244     $ 88     $ 32     $ 72     $ 80     $ —     $ 1,140  
                                                                 
Construction:
                                                                
Pass
  
$
61,903
    
$
53,930
    
$
5,511
    
$
331
    
$
—
    
$
—
    
$
6,250
    
$
127,925
  
Special mention
    
131
      
—
      
820
      
—
      
—
      
—
      
—
      
951
  
Substandard
    
—
      
314
      
—
      
—
      
—
      
—
      
—
      
314
  
Total construction loans
  
$
62,034
    
$
54,244
    
$
6,331
    
$
331
    
$
—
    
$
—
    
$
6,250
    
$
129,190
  
Current period gross charge-offs
   $ 48     $ —     $ 271     $ —     $ —     $ —     $ —     $ 319  


(1) Includes $574 thousand in charged-off demand deposit overdrafts reported as 2023 originations.

Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extensions, an other than insignificant payment delay, or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. Typically, one type of concession, such as term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. In some cases, the Company provides multiple types of concessions on one loan. For the loans included in the “combination” columns below, multiple types of modifications have been made on the same loan within the current reporting period.

The following table presents the amortized cost basis of loans at December 31, 2024 and 2023 that were both experiencing financial difficulty and modified during the years ended December 31, 2024 and 2023, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below (dollars in thousands):

 
  
Payment
Delay
    
Term
Extension
    
Rate
Reduction
    
Term
Extension
and
Payment
Delay
    
Term
Extension and
Interest Rate
Reduction
    
Payment
Delay and
Interest Rate
Reduction
    
Payment
Delay, Term
Extension,
and Interest
Rate
Reduction
   
Total Class
of Financing
Receivable
  
December 31, 2024
                                                
Commercial real estate
  
$
74
    
$
65
    
$
—
     $ —    
$
—
     $ —     $ —      
0.01
%
Commercial - specialized
    
13
      
—
      
—
       —      
—
       —       —      
—
  
Commercial - general
    
—
      
428
      
—
       11      
29
       —       47      
0.09
%
Consumer:
                                                                
1-4 family
    
322
      
—
      
—
       187      
—
       —       —      
0.09
%
Auto loans
    
—
      
—
      
—
       —      
—
       —       —      
—
  
Other consumer
    
—
      
—
      
—
       —      
—
       —       —      
—
  
Construction
    
—
      
—
      
818
       1,670      
—
       —       —      
2.40
%
 
  
$
409
    
$
493
    
$
818
     $ 1,868    
$
29
     $ —     $ 47      
0.12
%
December 31, 2023
                                                                 
Commercial real estate
  
$
—
    
$
2,118
    
$
—
     $ 127    
$
—
     $ —     $ —      
0.21
%
Commercial - specialized
    
103
      
—
      
—
       81      
686
       —       —      
0.23
%
Commercial - general
    
266
      
6,995
      
—
       598      
109
       —       28      
1.55
%
Consumer:
                                                                
1-4 family
    
187
      
390
      
—
       87      
—
       —       7      
0.13
%
Auto loans
    
34
      
35
      
—
       17      
—
       42       —      
0.04
%
Other consumer
    
—
      
—
      
—
       —      
—
       7       —      
0.01
%
Construction
    
—
      
2,315
      
—
       302      
—
       —       —      
2.03
%
 
  
$
590
    
$
11,853
    
$
—
     $ 1,212    
$
795
     $ 49     $ 35      
0.48
%

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.  The following presents the performance of such loans that have been modified in the years ended December 31, 2024 and 2023 (dollars in thousands):


 
  
30-89 Days
Past Due
    
90 Days or
More Past Due
and Still
Accruing
    
Nonaccrual
  
December 31, 2024
                  
Commercial real estate
  
$
74
    
$
—
    
$
—
  
Commercial - specialized
    
—
      
—
      
13
  
Commercial - general
    
59
      
82
      
—
  
Consumer:
                        
1-4 Family residential
    
—
      
60
      
—
  
Auto loans
    
—
      
—
      
—
  
Other consumer
    
—
      
—
      
—
  
Construction
    
95
      
—
      
1,575
  
 
  
$
228
    
$
142
    
$
1,588
  
December 31, 2023
                        
Commercial real estate
  
$
—
    
$
—
    
$
—
  
Commercial - specialized
    
—
      
—
      
265
  
Commercial - general
    
69
      
33
      
63
  
Consumer:
                        
1-4 Family residential
    
—
      
—
      
—
  
Auto loans
    
69
      
—
      
—
  
Other consumer
    
—
      
—
      
—
  
Construction
    
—
      
—
      
272
  
 
  
$
138
    
$
33
    
$
600
  

The following table presents the financial effects of the loan modifications presented above to borrowers experiencing financial difficulty for the years ended December 31, 2024 and 2023 (dollars in thousands):

 
  
Principal
Forgiveness
    
Weighted-
Average
Interest Rate
Reduction
    
Weighted-
Average
Term
Extension
(Months)
  
December 31, 2024                  
Commercial real estate
  
$
—
      
—
      
12
  
Commercial - specialized
    
—
      
—
      
—
  
Commercial - general
    
—
      
0.82
%
    
14
  
Consumer:
                        
1-4 Family residential
    
—
      
—
      
10
  
Auto loans
    
—
      
—
      
—
  
Other consumer
    
—
      
—
      
—
  
Construction
    
—
      
4.25
%
    
5
  
 
  
$
—
      
3.96
%
    
8
  
December 31, 2023                  
Commercial real estate
  
$
—
      
—
   
5
  
Commercial - specialized
    
—
      
0.86
%
    
56
  
Commercial - general
    
—
      
1.97
%
    
16
  
Consumer:
                        
1-4 Family residential
    
—
      
1.75
%
    
16
  
Auto loans
    
—
      
0.86
%
    
11
  
Other consumer
    
—
      
4.75
%
    
—
  
Construction
    
—
      
—
   
6
  
 
  
$
—
      
1.07
%
    
15
  




As of December 31, 2024, the Company had no loans that were modified during the year ended December 31, 2024 that subsequently defaulted. As of December 31, 2023, the Company had one loan relationship made to borrowers experiencing financial difficulty that was modified during the year ended December 31, 2023 that subsequently defaulted, totaling $297 thousand. Payment default is defined as movement to nonperforming status, foreclosure, or charge-off.
Upon the Company’s determination that a modified loan has subsequently been deemed to not be fully collectible, the uncollectible amount is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.


Prior-period troubled debt restructuring (“TDR”) disclosures


Prior to adopting the new accounting standard on loan modifications, the Company accounted for modifications of loans to borrowers experiencing financial difficulty as TDRs, when the modification resulted in a concession and specific reserves were charged to the ACL, if necessary, for the amount of estimated credit loss. The Company had  no loans modified as a TDR during the year ended December 31, 2022.