Loans and allowance for loan losses

9 Months Ended

Sep. 30, 2024

Loans and allowance for credit losses

Loans and allowance for credit losses

Note 5 – Loans and allowance for credit losses

Loans classified by type as of September 30, 2024 and December 31, 2023 are as follows (dollars in thousands):

	September 30, 2024				December 31, 2023
	Amount		%		Amount		%
Construction and land development
Residential	$	16,661	2.71	%	$	10,471	1.82	%
Commercial		36,247	5.90	%		37,024	6.44	%
		52,908	8.61	%		47,495	8.26	%
Commercial real estate
Owner occupied		129,747	21.10	%		122,666	21.33	%
Non-owner occupied		165,979	27.00	%		154,855	26.93	%
Multifamily		17,862	2.91	%		12,743	2.22	%
Farmland		318	0.05	%		326	0.06	%
		313,906	51.06	%		290,590	50.54	%
Consumer real estate
Home equity lines		22,384	3.64	%		21,557	3.75	%
Secured by 1-4 family residential,
First deed of trust		94,497	15.37	%		95,638	16.63	%
Second deed of trust		13,783	2.24	%		11,337	1.97	%
		130,664	21.25	%		128,532	22.35	%
Commercial and industrial loans
(except those secured by real estate)		98,878	16.08	%		86,203	14.99	%
Guaranteed student loans		13,645	2.22	%		17,923	3.12	%
Consumer and other		4,771	0.78	%		4,265	0.74	%
Total loans		614,772	100.0	%		575,008	100.0	%
Deferred and costs, net		612				803
Less: allowance for credit losses		(3,700)				(3,423)
	$	611,684			$	572,388

The Bank has a purchased portfolio of rehabilitated student loans guaranteed by the U.S. Department of Education (“DOE”). The guarantee covers approximately 98% of principal and accrued interest. The loans are serviced by a third-party servicer that specializes in handling the special needs of the DOE student loan programs.

Loans pledged as collateral with the FHLB as part of their lending arrangement with the Company totaled $55.9 million and $35.5 million as of September 30, 2024, and December 31, 2023, respectively.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The following table provides information on nonaccrual loans segregated by type at the dates indicated (in thousands):

	September 30,		December 31,
	2024		2023
Consumer real estate
Home equity lines	$	25	$	—
Secured by 1-4 family residential
First deed of trust		156	$	160
Second deed of trust		85		105
		266		265
Commercial and industrial loans
(except those secured by real estate)		103		26
Total loans	$	369	$	291

There was $79,000 in loans with an individual allowance of $15,000 that were collateral dependent associated with the total nonaccrual loans of $369,000 at September 30, 2024.  There were no individual allowances associated with the total nonaccrual loans of $291,000 at December 31, 2023, that were considered collateral dependent.

The Company recognized $27,000 of interest on nonaccrual loans outstanding as of September 30, 2024.

Management considers the guidance in Accounting Standards Codification (“ASC”) 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination.  Generally, current period renewals of credit are reunderwritten at the point of renewal and considered current period originations for purposes of the table below.

As of September 30, 2024 and december 31, 2023, based on the most recent analysis performed, the risk category of loans based on year of origination is as follows (in thousands):

																Revolving-	Total
	2024		2023		2022		2021			2020		Prior		Revolving		Term	Loans
September 30, 2024
Construction and land development
Residential
Pass	$	8,364	$	2,793	$	1,358	$	339	$	—	$	—	$	3,807	$	—	$	16,661
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total Residential	$	8,364	$	2,793	$	1,358	$	339	$	—	$	—	$	3,807	$	—	$	16,661
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial
Pass		4,349		7,309		10,343		13,195		201		850		—		—		36,247
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total Commercial	$	4,349	$	7,309	$	10,343	$	13,195	$	201	$	850	$	—	$	—	$	36,247
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate
Owner occupied
Pass		12,033		13,238		23,203		18,798		9,497		48,221		1,650		—		126,640
Special Mention		—		—		—		—		—		3,107		—		—		3,107
Substandard		—		—		—		—		—		—		—		—		—
Total Owner occupied	$	12,033	$	13,238	$	23,203	$	18,798	$	9,497	$	51,328	$	1,650	$	—	$	129,747
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied
Pass		11,725		11,463		29,220		27,256		22,869		53,861		4,727		—		161,121
Special Mention		—		—		—		2,135		—		2,723		—		—		4,858
Substandard		—		—		—		—		—		—		—		—		—
Total Non-owner occupied	$	11,725	$	11,463	$	29,220	$	29,391	$	22,869	$	56,584	$	4,727	$	—	$	165,979
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Multifamily
Pass		5,249		1,300		—		2,293		257		6,654		2,109		—		17,862
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total Multifamily	$	5,249	$	1,300	$	—	$	2,293	$	257	$	6,654	$	2,109	$	—	$	17,862
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Farmland
Pass		—		—		—		—		—		18		300		—		318
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total Farmland	$	—	$	—	$	—	$	—	$	—	$	18	$	300	$	—	$	318
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer real estate
Home equity lines
Pass		—		—		—		—		—		—		22,239		—		22,239
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		145		—		145
Total Home equity lines	$	—	$	—	$	—	$	—	$	—	$	—	$	22,384	$	—	$	22,384
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential
First deed of trust
Pass		12,170		27,947		13,909		13,587		6,696		17,521		—		—		91,830
Special Mention		—		2,304		—		—		—		207		—		—		2,511
Substandard		—		—		—		—		—		156		—		—		156
Total First deed of trust	$	12,170	$	30,251	$	13,909	$	13,587	$	6,696	$	17,884	$	—	$	—	$	94,497
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Second deed of trust
Pass		3,673		4,140		2,906		879		362		1,256		289		—		13,505
Special Mention		87		—		—		—		—		106		—		—		193
Substandard		—		—		—		—		—		85		—		—		85
Total Second deed of trust	$	3,760	$	4,140	$	2,906	$	879	$	362	$	1,447	$	289	$		$	13,783
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial loans
(except those secured by real estate)
Pass		15,243		16,463		12,945		9,815		4,363		4,113		34,809		—		97,751
Special Mention		—		—		85		—		—		92		847		—		1,024
Substandard		—		—		—		79		—		24		—		—		103
Total Commercial and industrial	$	15,243	$	16,463	$	13,030	$	9,894	$	4,363	$	4,229	$	35,656	$	—	$	98,878
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Guaranteed student loans
Pass		—		—		—		—		—		13,645		—		—		13,645
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total Guaranteed student loans	$	—	$	—	$	—	$	—	$	—	$	13,645	$	—	$	—	$	13,645
Current period gross writeoff	$	16	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	16
Consumer and other
Pass		396		309		325		57		21		24		3,639		—		4,771
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total Consumer and other	$	396	$	309	$	325	$	57	$	21	$	24	$	3,639	$		$	4,771
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total Current period gross writeoff	$	16	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	16
Total loans	$	73,289	$	87,266	$	94,294	$	88,433	$	44,266	$	152,663	$	74,561	$	—	$	614,772

																Revolving-	Total
	2023		2022		2021		2020			2019		Prior		Revolving		Term	Loans
December 31, 2023
Construction and land development
Residential
Pass	$	6,320	$	3,812	$	339	$	—	$	—	$	—	$	—	$	—	$	10,471
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total Residential	$	6,320	$	3,812	$	339	$	—	$	—	$	—	$	—	$	—	$	10,471
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial
Pass		5,007		14,506		10,339		235		—		1,183		5,754		—		37,024
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total Commercial	$	5,007	$	14,506	$	10,339	$	235	$	—	$	1,183	$	5,754	$	—	$	37,024
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate
Owner occupied
Pass		11,945		21,846		20,044		9,855		12,145		41,067		788		—		117,690
Special Mention		—		202		73		—		—		4,701		—		—		4,976
Substandard		—		—		—		—		—		—		—		—		—
Total Owner occupied	$	11,945	$	22,048	$	20,117	$	9,855	$	12,145	$	45,768	$	788	$	—	$	122,666
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied
Pass		9,468		25,607		28,455		23,567		9,528		47,645		3,312		—		147,582
Special Mention		—		—		2,173		—		—		5,100		—		—		7,273
Substandard		—		—		—		—		—		—		—		—		—
Total Non-owner occupied	$	9,468	$	25,607	$	30,628	$	23,567	$	9,528	$	52,745	$	3,312	$	—	$	154,855
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Multifamily
Pass		1,300		—		2,503		548		885		6,113		1,394		—		12,743
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total Multifamily	$	1,300	$	—	$	2,503	$	548	$	885	$	6,113	$	1,394	$	—	$	12,743
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Farmland
Pass		—		—		—		—		—		26		300		—		326
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total Farmland	$	—	$	—	$	—	$	—	$	—	$	26	$	300	$	—	$	326
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer real estate
Home equity lines
Pass		—		446		—		—		—		—		21,036		—		21,482
Special Mention		—		—		—		—		—		—		75		—		75
Substandard		—		—		—		—		—		—		—		—		—
Total Home equity lines	$	—	$	446	$	—	$	—	$	—	$	—	$	21,111	$	—	$	21,557
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential
First deed of trust
Pass		34,067		14,288		15,613		8,107		2,957		17,427		2,125		—		94,584
Special Mention		—		—		—		170		—		724		—		—		894
Substandard		—		—		—		—		—		160		—		—		160
Total First deed of trust	$	34,067	$	14,288	$	15,613	$	8,277	$	2,957	$	18,311	$	2,125	$	—	$	95,638
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Second deed of trust
Pass		4,530		3,207		1,027		397		1,067		626		266		—		11,120
Special Mention		—		—		—		—		45		67		—		—		112
Substandard		—		—		—		—		—		105		—		—		105
Total Second deed of trust	$	4,530	$	3,207	$	1,027	$	397	$	1,112	$	798	$	266	$		$	11,337
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial loans
(except those secured by real estate)
Pass		15,022		15,900		15,321		5,634		2,852		3,698		27,068		—		85,495
Special Mention		37		—		—		—		318		22		306		—		683
Substandard		—		—		—		13		—		12		—		—		25
Total Commercial and industrial	$	15,059	$	15,900	$	15,321	$	5,647	$	3,170	$	3,732	$	27,374	$	—	$	86,203
Current period gross writeoff	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Guaranteed student loans
Pass		—		—		—		—		—		17,923		—		—		17,923
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total Guaranteed student loans	$	—	$	—	$	—	$	—	$	—	$	17,923	$	—	$	—	$	17,923
Current period gross writeoff	$	30	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	30
Consumer and other
Pass		455		483		123		50		17		11		3,126		—		4,265
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total Consumer and other	$	455	$	483	$	123	$	50	$	17	$	11	$	3,126	$		$	4,265
Current period gross writeoff	$	3	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	3
Total Current period gross writeoff	$	33	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	33
Total loans	$	88,151	$	100,297	$	96,010	$	48,576	$	29,814	$	146,610	$	65,550	$	—	$	575,008

The following table presents the aging of the recorded investment in past due loans and leases as of the dates indicated (in thousands):

					Greater								Investment >
	30‑59 Days		60‑89 Days		Than		Total Past				Total		90 Days and
	Past Due		Past Due		90 Days		Due		Current		Loans		Accruing
September 30, 2024
Construction and land development
Residential	$	—	$	—	$	—	$	—	$	16,661	$	16,661	$	—
Commercial		—		—		—		—		36,247		36,247		—
		—		—		—		—		52,908		52,908		—
Commercial real estate
Owner occupied		—		—		—		—		129,747		129,747		—
Non-owner occupied		16		—		—		16		165,963		165,979		—
Multifamily		—		—		—		—		17,862		17,862		—
Farmland		—		—		—		—		318		318		—
		16		—		—		16		313,890		313,906		—
Consumer real estate
Home equity lines		—		120		—		120		22,264		22,384		—
Secured by 1‑4 family residential
First deed of trust		—		—		—		—		94,497		94,497		—
Second deed of trust		—		—		—		—		13,783		13,783		—
		—		120		—		120		130,544		130,664		—
Commercial and industrial loans
(except those secured by real estate)		—		698		375		1,073		97,805		98,878		375
Guaranteed student loans		379		492		1,195		2,066		11,579		13,645		1,195
Consumer and other		—		—		22		22		4,749		4,771		—
Total loans	$	395	$	1,310	$	1,592	$	3,297	$	611,475	$	614,772	$	1,570

													Recorded
					Greater								Investment >
	30-59 Days		60-89 Days		Than		Total Past				Total		90 Days and
	Past Due		Past Due		90 Days		Due		Current		Loans		Accruing
December 31, 2023
Construction and land development
Residential	$	—	$	—	$	—	$	—	$	10,471	$	10,471	$	—
Commercial		—		—		—		—		37,024		37,024		—
		—		—		—		—		47,495		47,495		—
Commercial real estate
Owner occupied		—		—		—		—		122,666		122,666		—
Non-owner occupied		—		—		—		—		154,855		154,855		—
Multifamily		—		—		—		—		12,743		12,743		—
Farmland		—		—		—		—		326		326		—
		—		—		—		—		290,590		290,590		—
Consumer real estate
Home equity lines		83		25		—		108		21,449		21,557		—
Secured by 1-4 family residential
First deed of trust		—		—		—		—		95,638		95,638		—
Second deed of trust		33		—		—		33		11,304		11,337		—
		116		25		—		141		128,391		128,532		—
Commercial and industrial loans
(except those secured by real estate)		—		—		—		—		86,203		86,203		—
Guaranteed student loans		690		493		2,228		3,411		14,512		17,923		2,228
Consumer and other		734		—		—		734		3,531		4,265		—
Total loans	$	1,540	$	518	$	2,228	$	4,286	$	570,722	$	575,008	$	2,228

Loans greater than 90 days past due consist of United States Department of Agricultural loans that are guaranteed by the USDA which covers 100% of principal and interest and student loans that are guaranteed by the DOE which covers approximately 98% of the principal and interest. Accordingly, these loans will not be placed on nonaccrual status and are not considered to be impaired.

Loans that are individually evaluated for credit losses are limited to loans that have specific risk characteristics that are not shared by other loans and based on current information and events it is probable the Company will be unable to collect all amounts when due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. The

repayment of these loans is expected to be substantially through the operations or the sale of the collateral. The allowance for credit losses on loans that are individually evaluated will be measured based on the fair value of the collateral either through operations or the sale of the collateral. When repayment is expected through the sale of the collateral, the allowance will be based on the fair value of the collateral less estimated costs to sell. Collateral dependent loans, or portions thereof, are charged off when deemed uncollectible.

Collateral dependent loans are set forth in the following table as of the dates indicated (in thousands):

	September 30, 2024						December 31, 2023
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded
Consumer real estate
Home equity lines	$	25	$	25	$	—	$	—	$	—	$	—
Secured by 1‑4 family residential
First deed of trust		156		156		—		160		160		—
Second deed of trust		85		85		—		105		105		—
		266		266		—		265		265		—
Commercial and industrial loans
(except those secured by real estate)		24		24		—		26		26		—
		290		290		—		291		291		—
With an allowance recorded
Commercial and industrial loans
(except those secured by real estate)		79		79		15		—		—		—
		79		79		15		—		—		—
Total
Consumer real estate
Home equity lines		25		25		—		—		—		—
Secured by 1-4 family residential,
First deed of trust		156		156		—		160		160		—
Second deed of trust		85		85		—		105		105		—
		266		266		—		265		265		—
Commercial and industrial loans
(except those secured by real estate)		103		103		15		26		26		—
	$	369	$	369	$	15	$	291	$	291	$	—

The following is a summary of average recorded investment in collateral dependent loans with and without a valuation allowance and interest income recognized on those loans for the periods indicated (in thousands):

	For the Three Months Ended				Nine Months Ended
	September 30,				September 30,
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded
Consumer real estate
Home equity lines	$	12	$	—	$	8	$	—
Secured by 1-4 family residential
First deed of trust		157		2		158		7
Second deed of trust		91		2		97		8
		260		4		263		15
Commercial and industrial loans
(except those secured by real estate)		20		4		23		4
		280		8		286		19
With an allowance recorded
Commercial and industrial loans
(except those secured by real estate)		46		1		40		4
		46		1		40		4
Total
Consumer real estate
Secured by 1-4 family residential,
First deed of trust		157		2		158		7
Second deed of trust		91		2		97		8
		260		4		263		15
Commercial and industrial loans
(except those secured by real estate)		66		5		63		8
	$	326	$	9	$	326	$	23

Loan Modifications to Borrowers in Financial Difficulty

As part of its credit risk management, the Company may modify a loan agreement with a borrower experiencing financial difficulties through a refinancing or restructuring of the borrower’s loan agreement. There were no modified loans identified during the nine months ended September 30, 2024 and September 30, 2023.  

In accordance with ASC 326, the Company has segmented its loan portfolio based on similar risk characteristics by call report code. The Company’s forecast of estimated expected losses is based on a twelve-month forecast of the national rate of unemployment and external observations of historical loan losses. The Company uses the Federal Open Market Committee’s projection of unemployment for its reasonable and supportable forecasting of current expected credit losses. For the periods beyond the reasonable and supportable forecast period, projections of expected credit losses are based on a reversion to the long-run mean for the national unemployment rate. To further adjust the allowance for credit losses for expected losses not already included within the quantitative component of the calculation, the Company may consider the following qualitative adjustment factors: changes in lending policies and procedures including changes in underwriting standards, and collections, charge-offs, and recovery practices, changes in international, national, regional, and local conditions, changes in the nature and volume of the portfolio and terms of loans, changes in experience, depth, and ability of lending management, changes in the volume and severity of past due loans and other similar conditions, changes in the quality of the organization’s loan review system, changes in the value of underlying collateral for collateral dependent loans, the existence and effect of any concentrations of credit and changes in the levels of such concentrations, and the effect of other external factors (i.e. competition, legal and regulatory requirements) on the level of estimated credit losses.

Activity in the allowance for credit losses on loans is as follows for the periods indicated (in thousands):

			Provision for
	Beginning		(Recovery of)						Ending
	Balance		Credit Losses		Charge-offs		Recoveries		Balance
Three Months Ended September 30, 2024
Construction and land development
Residential	$	84	$	18	$	—	$	—	$	102
Commercial		206		6		—		—		212
		290		24		—		—		314
Commercial real estate
Owner occupied		461		5		—		—		466
Non-owner occupied		1,469		14		—		—		1,483
Multifamily		84		(10)		—		—		74
Farmland		1		—		—		—		1
		2,015		9		—		—		2,024
Consumer real estate
Home equity lines		32		1		—		—		33
Secured by 1-4 family residential				—
First deed of trust		292		(14)		—		1		279
Second deed of trust		103		9		—		1		113
		427		(4)		—		2		425
Commercial and industrial loans
(except those secured by real estate)		726		(24)		—		30		732
Student loans		45		1		(5)		—		41
Consumer and other		34		(1)		—		1		34
Unallocated		144		(14)		—		—		130
	$	3,681	$	(9)	$	(5)	$	33	$	3,700

			Impact of		Provision for
	Beginning		adopting		(Recovery of)						Ending
	Balance		ASC 326		Credit Losses		Charge-offs		Recoveries		Balance
Three Months Ended September 30, 2023
Construction and land development
Residential	$	61	$	—	$	12	$	—	$	—	$	73
Commercial		268		—		24		—		—		292
		329		—		36		—		—		365
Commercial real estate
Owner occupied		379		—		18		—		—		397
Non-owner occupied		1,376		—		59		—		—		1,435
Multifamily		44		—		—		—		—		44
Farmland		—		—		3		—		—		3
		1,799		—		80		—		—		1,879
Consumer real estate
Home equity lines		32		—		2		—		—		34
Secured by 1-4 family residential						—
First deed of trust		245		—		24		—		1		270
Second deed of trust		84		—		3		—		5		92
		361		—		29		—		6		396
Commercial and industrial loans
(except those secured by real estate)		673		—		(223)		—		160		610
Student loans		44		—		16		(14)		—		46
Consumer and other		34		—		3		(2)		—		35
Unallocated		16		—		6		—		—		22
	$	3,256	$	—	$	(53)	$	(16)	$	166	$	3,353

			Provision for
	Beginning		(Recovery of)						Ending
	Balance		Credit Losses		Charge-offs		Recoveries		Balance
Nine Months Ended September 30, 2024
Construction and land development
Residential	$	86	$	16	$	—	$	—	$	102
Commercial		228		(16)		—		—		212
		314		—		—		—		314
Commercial real estate
Owner occupied		409		57		—		—		466
Non-owner occupied		1,467		16		—		—		1,483
Multifamily		44		30		—		—		74
Farmland		3		(2)		—		—		1
		1,923		101		—		—		2,024
Consumer real estate
Home equity lines		40		(17)		—		10		33
Secured by 1-4 family residential
First deed of trust		293		(17)		—		3		279
Second deed of trust		99		(100)		—		114		113
		432		(134)		—		127		425
Commercial and industrial loans
(except those secured by real estate)		640		55		—		37		732
Student loans		57		—		(16)		—		41
Consumer and other		36		(3)		—		1		34
Unallocated		21		109		—		—		130
	$	3,423	$	128	$	(16)	$	165	$	3,700

			Impact of		Provision for
	Beginning		adopting		(Recovery of)						Ending
	Balance		ASC 326		Loan Losses		Charge-offs		Recoveries		Balance
Nine Months Ended September 30, 2023
Construction and land development
Residential	$	79	$	3	$	(9)	$	—	$	—	$	73
Commercial		192		34		66		—		—		292
		271		37		57		—		—		365
Commercial real estate
Owner occupied		867		(475)		5		—		—		397
Non-owner occupied		1,289		192		(46)		—		—		1,435
Multifamily		33		7		4		—		—		44
Farmland		—		—		3		—		—		3
		2,189		(276)		(34)		—		—		1,879
Consumer real estate
Home equity lines		11		24		(1)		—		—		34
Secured by 1-4 family residential
First deed of trust		131		76		61		—		2		270
Second deed of trust		43		25		13		—		11		92
		185		125		73		—		13		396
Commercial and industrial loans
(except those secured by real estate)		576		1		(139)		—		172		610
Student loans		52		—		15		(21)		—		46
Consumer and other		37		(5)		5		(2)		—		35
Unallocated		60		(9)		(29)		—		—		22
	$	3,370	$	(127)	$	(52)	$	(23)	$	185	$	3,353

			Impact of		Provision for
	Beginning		adopting		(Recovery of)						Ending
	Balance		ASC 326		Loan Losses		Charge-offs		Recoveries		Balance
Year Ended December 31, 2023
Construction and land development
Residential	$	79	$	3	$	4	$	—	$	—	$	86
Commercial		192		34		2		—		—		228
		271		37		6		—		—		314
Commercial real estate
Owner occupied		867		(475)		17		—		—		409
Non-owner occupied		1,289		192		(14)		—		—		1,467
Multifamily		33		7		4		—		—		44
Farmland		—		—		3		—		—		3
		2,189		(276)		10		—		—		1,923
Consumer real estate
Home equity lines		11		24		5		—		—		40
Secured by 1-4 family residential
First deed of trust		131		76		83		—		3		293
Second deed of trust		43		25		15		—		16		99
		185		125		103		—		19		432
Commercial and industrial loans
(except those secured by real estate)		576		1		(110)		—		173		640
Student loans		52		—		35		(30)		—		57
Consumer and other		37		(5)		7		(3)		—		36
Unallocated		60		(9)		(30)		—		—		21
	$	3,370	$	(127)	$	21	$	(33)	$	192	$	3,423

Loans are required to be measured at amortized costs and to be presented at the net amount expected to be collected. Off balance sheet credit exposures, including loan commitments, are not recorded on balance sheet, but expected credit losses arising from off balance sheet credit exposures are recorded as a reserve for unfunded commitments and reported in Other Liabilities. Credit losses on available for sale debt securities are accounted for as an allowance for credit losses, which is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value and the amount expected to be collected on the financial assets. The allowance for credit losses on loans, available for sale debt securities and the reserve for unfunded commitments are established through a provision for credit losses charged against earnings.

The following table presents a breakdown of the provision for credit losses for the periods indicated (in thousands):

	Three Months Ended September 30,
		2024		2023
Provision for credit losses:
Recovery for loans		$	(9)	$	(53)
Provision for unfunded commitments			9		53
Total		$	—	$	—

	Nine Months Ended September 30,
		2024		2023
Provision for credit losses:
Provision (recovery) for loans		$	128	$	(52)
Provision for unfunded commitments			22		52
Total		$	150	$	—

As of September 30, 2024, the allowance for credit losses was $4.03 million and included an allowance for credit losses on loans of $3.70 million and a reserve for unfunded commitments of $328,000.

The Company recorded a $8,500 recovery for credit losses on loans for the three months ended September 30, 2024. The recovery for credit losses on loans was driven primarily by stable local economic conditions, credit quality remaining strong, and the impact of net-recoveries recognized during the three months ended September 30, 2024.

The Company recorded a $8,500 provision for credit losses for unfunded commitments for the three months ended September 30, 2024, which was driven by a slight increase in balance in the total commitments outstanding at September 30, 2024.

The Company recorded a provision for credit losses for loans of $128,000 for the nine months ended September 30, 2024, which was the result of loan growth supported by stable macroeconomic conditions and credit quality remaining strong.  Non-performing loans as a percentage of loans were consistent, 0.06% at September 30, 2024 compared to 0.05% at December 31, 2023.

The Company recorded a provision for credit losses for unfunded commitments of $21,800 for the nine months ended September 30, 2024, which was driven by an increase in the total commitments outstanding at September 30, 2024.

As of September 30, 2023, the allowance for credit losses was $3.68 million and included an allowance for credit losses on loans of $3.35 million and a reserve for unfunded commitments of $329,000.

The Company recorded a recovery for credit losses for loans of $52,000 for the nine months ended September 30, 2023, which was the result of loan growth being offset by improved credit metrics as non-performing loans as a percentage of loans decreased from 0.13% at December 31, 2022 to 0.06% at September 30, 2023 and the impact of $162,000 in net-recoveries for the period. The Company recorded a provision for credit losses for unfunded commitments of $52,000 for the nine months ended September 30, 2023, which was driven by an increase in the total balance of commitments outstanding at September 30, 2023.

Loans were evaluated for credit losses as follows for the periods indicated (in thousands):

	Recorded Investment in Loans
	Allowance						Loans
	Ending						Ending
	Balance		Individually		Collectively		Balance		Individually		Collectively
Nine Months Ended September 30, 2024
Construction and land development
Residential	$	102	$	—	$	102	$	16,661	$	—	$	16,661
Commercial		212		—		212		36,247		—		36,247
		314		—		314		52,908		—		52,908
Commercial real estate
Owner occupied		466		—		466		129,747		—		129,747
Non-owner occupied		1,483		—		1,483		165,979		—		165,979
Multifamily		74		—		74		17,862		—		17,862
Farmland		1		—		1		318		—		318
		2,024		—		2,024		313,906		—		313,906
Consumer real estate
Home equity lines		33		—		33		22,384		25		22,359
Secured by 1-4 family residential
First deed of trust		279		—		279		94,497		156		94,341
Second deed of trust		113		—		113		13,783		85		13,698
		425		—		425		130,664		266		130,398
Commercial and industrial loans
(except those secured by real estate)		732		15		717		98,878		103		98,775
Student loans		41		—		41		13,645		—		13,645
Consumer and other		164		—		164		4,771		—		4,771
	$	3,700	$	15	$	3,685	$	614,772	$	369	$	614,403
Year Ended December 31, 2023
Construction and land development
Residential	$	86	$	—	$	86	$	10,471	$	—	$	10,471
Commercial		228		—		228		37,024		—		37,024
		314		—		314		47,495		—		47,495
Commercial real estate
Owner occupied		409		—		409		122,666		—		122,666
Non-owner occupied		1,467		—		1,467		154,855		—		154,855
Multifamily		44		—		44		12,743		—		12,743
Farmland		3		—		3		326		—		326
		1,923		—		1,923		290,590		—		290,590
Consumer real estate
Home equity lines		40		—		40		21,557		—		21,557
Secured by 1-4 family residential
First deed of trust		293		—		293		95,638		160		95,478
Second deed of trust		99		—		99		11,337		105		11,232
		432		—		432		128,532		265		128,267
Commercial and industrial loans
(except those secured by real estate)		640		—		640		86,203		26		86,177
Student loans		57		—		57		17,923		—		17,923
Consumer and other		57		—		57		4,265		—		4,265
	$	3,423	$	—	$	3,423	$	575,008	$	291	$	574,717