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LOANS AND THE ALLOWANCE FOR CREDIT LOSSES
 12 Months Ended
Dec. 31, 2024
Receivables [Abstract]  
LOANS AND THE ALLOWANCE FOR CREDIT LOSSES LOANS AND THE ALLOWANCE FOR CREDIT LOSSES
The following table presents a summary of the Company’s loans at amortized cost as of the dates noted:
December 31,
(dollars in thousands)20242023
Cash, Securities and Other$119,834 $139,947 
Consumer and Other17,482 27,028 
Construction and Development314,481 345,516 
1-4 Family Residential962,901 927,965 
Non-Owner Occupied CRE611,239 543,692 
Owner Occupied CRE172,019 195,861 
Commercial and Industrial220,326 337,180 
Total2,418,282 2,517,189 
Allowance for credit losses(18,330)(23,931)
Total, net2,399,952 2,493,258 
Loans accounted for under the fair value option(1)
7,283 13,726 
Loans, net$2,407,235 $2,506,984 
_____________________________
(1)Includes $7.5 million and $14.1 million of unpaid principal balance of loans held for investment measured at fair value as of December 31, 2024 and December 31, 2023 respectively. Includes fair value adjustments on loans held for investment accounted for under the fair value option. See Note 16 – Fair Value.
As of December 31, 2024 and 2023, total loans held for investment included $164.3 million and $208.2 million, respectively, of performing loans purchased through mergers or acquisitions.
As of December 31, 2024 the Cash, Securities, and Other portion of the loan portfolio included $2.0 million of SBA Paycheck Protection Program (“PPP”) loans, or 1.7% of the total category. As of December 31, 2023, the Cash, Securities, and Other portion of the loan portfolio included $4.2 million of PPP loans, or 3.0% of the total category.
As of December 31, 2024, the Company’s Commercial and Industrial loans included one Main Street Lending Program (“MSLP”) loan with a net carrying amount of $1.7 million, or 0.8% of the total category. This MSLP loan is risk rated pass. As of December 31, 2023, the Company’s Commercial and Industrial loans included three MSLP loans with the net carrying amount of $5.1 million, or 1.5% of the total category.
The following presents, by class, an aging analysis of the amortized cost basis in loans past due as of the date noted (dollars in thousands):
December 31, 202430-59
Days
Past Due		60-89
Days
Past Due		90 or
More Days
Past Due		Total
Loans
Past Due		CurrentTotal Amortized Cost
Loans Accounted for Under the Fair Value Option(1)
Total Loans
Cash, Securities and Other$— $— $1,704 $1,704 $118,130 $119,834 $— $119,834 
Consumer and Other— — — — 17,482 17,482 7,283 24,765 
Construction and Development— — — — 314,481 314,481 — 314,481 
1-4 Family Residential3,971 — — 3,971 958,930 962,901 — 962,901 
Non-Owner Occupied CRE— — — — 611,239 611,239 — 611,239 
Owner Occupied CRE350 — — 350 171,669 172,019 — 172,019 
Commercial and Industrial4,999 — 10,870 15,869 204,457 220,326 — 220,326 
Total$9,320 $— $12,574 $21,894 $2,396,388 $2,418,282 $7,283 $2,425,565 
December 31, 202330-59
Days
Past Due		60-89
Days
Past Due		90 or
More Days
Past Due		Total
Loans
Past Due		CurrentTotal Amortized Cost
Loans Accounted for Under the Fair Value Option(1)
Total Loans
Cash, Securities and Other$— $76 $1,704 $1,780 $138,167 $139,947 $— $139,947 
Consumer and Other676 11 7,504 8,191 18,837 27,028 13,726 40,754 
Construction and Development— 1,500 — 1,500 344,016 345,516 — 345,516 
1-4 Family Residential1,093 — 2,722 3,815 924,150 927,965 — 927,965 
Non-Owner Occupied CRE— — — — 543,692 543,692 — 543,692 
Owner Occupied CRE— — 3,980 3,980 191,881 195,861 — 195,861 
Commercial and Industrial19,305 1,085 29,180 49,570 287,610 337,180 — 337,180 
Total$21,074 $2,672 $45,090 $68,836 $2,448,353 $2,517,189 $13,726 $2,530,915 
_____________________________
(1)Refer to Note 16 – Fair Value for additional information on the measurement of loans accounted for under the fair value option.
As of December 31, 2024, the Company did not have any loans more than 90 days delinquent and accruing interest. As of December 31, 2023, the Company had one loan, totaling $0.3 million, in the 1-4 Family Residential portfolio that was more than 90 days delinquent and accruing interest.
Loan Modifications
GAAP requires that certain types of modifications of loans in response to a borrower’s financial difficulty be reported and include the following; (i) principal forgiveness, (ii) interest rate reduction, (iii) other than insignificant payment delay, (iv) term extension, or (v) any combination of the foregoing. The following table presents the amortized cost basis as of December 31, 2024 of loans modified to borrowers experiencing financial difficulty disaggregated by class of financing receivable and type of concession granted during the year ended December 31, 2024:
(dollars in thousands)Principal forgivenessInterest rate reductionTerm extensionCombination: term extension and principal forgivenessCombination: term extension and interest rate reductionTotal class of financing receivable
Commercial and Industrial$— $— $967 $— $— 0.4 %
Total$— $— $967 $— $— 
The following table presents the amortized cost basis as of December 31, 2023 of loans modified to borrowers experiencing financial difficulty disaggregated by class of financing receivable and type of concession granted during the year ended December 31, 2023:
(dollars in thousands)Principal forgivenessInterest rate reductionTerm extensionCombination: term extension and principal forgivenessCombination: term extension and interest rate reductionTotal class of financing receivable
Commercial and Industrial$— $— $2,123 $183 $— 0.7 %
Total$— $— $2,123 $183 $— 
The following table present the financial effect by type of modification made to borrowers experiencing financial difficulty during the periods noted:
Year Ended December 31,
20242023
(dollars in thousands)Principal forgivenessWeighted average interest rate reductionWeighted average term extensionPrincipal forgivenessWeighted average interest rate reductionWeighted average term extension
Commercial and Industrial——5 months$185—9 months
There were no loans that experienced a default during the years ended December 31, 2024 and 2023, subsequent to being granted a modification in the preceding twelve months.
As a result of the COVID-19 pandemic, a loan modification program was designed and implemented to assist our clients experiencing financial stress resulting from the economic impacts caused by the global pandemic. The Company offered loan extensions, temporary payment moratoriums, and financial covenant waivers for commercial and consumer borrowers impacted by the pandemic who have a pass risk rating and have not been delinquent over 30 days on payments in the last 2 years prior to the loan modification. In 2021, the deferral period ended for all non-acquired loans previously modified and payments have resumed under the original terms. As of December 31, 2024 and 2023, the Company’s loan portfolio included 36 and 41 non-acquired loans, respectively, which were previously modified under the loan modification program, totaling $56.4 million and $71.3 million, respectively. Through the Teton Acquisition, the Company acquired loans which were previously modified. As of December 31, 2024 and 2023, there were 11 and 14 of these loans, respectively, totaling $2.5 million and $2.9 million, respectively. All loans modified in response to COVID-19 are classified as performing and pass rated as of December 31, 2024. These loans are included in the allowance for credit loss general reserve in accordance with ASU 2016-13.
Non-Accrual Loans
The accrual of interest on loans is discontinued at the time the loan becomes 90 days or more delinquent unless the loan is well secured and in the process of collection or renewal due to maturity. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on non-accrual status or charged off if collection of interest or principal is considered doubtful. The following presents the amortized cost basis of loans on non-accrual status and loans past due over 89 days still accruing by class as of the date noted:
December 31, 2024
(dollars in thousands)Non-accrual loans with no ACL
Total non-accrual loans(1)
Loans past due over 89 days still accruing
Cash, Securities, and Other$1,704 $1,704 $— 
Commercial and Industrial10,870 11,048 — 
Total$12,574 $12,752 $— 
_____________________________
(1)As of December 31, 2024, the Company had an allowance of $0.1 million on non-performing loans.
December 31, 2023
(dollars in thousands)Non-accrual loans with no ACL
Total non-accrual loans(1)
Loans past due over 89 days still accruing
Cash, Securities, and Other$1,704 $1,704 $— 
Consumer and Other4 7,504 — 
Construction and Development2,719 2,719 — 
1-4 Family Residential578 3,016 285 
Owner Occupied CRE— 3,980 — 
Commercial and Industrial2,355 31,893 — 
Total$7,360 $50,816 $285 
____________________________
(1)As of December 31, 2023, the Company had an allowance of $3.8 million on non-performing loans.
The Company recognized $0.0 million and $0.2 million of interest income on non-accrual loans during the years ended December 31, 2024 and 2023, respectively.
Collateral Dependent Loans
A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following presents the amortized cost basis of collateral-dependent loans, which are individually evaluated to determine expected credit losses, by class of loans as of the date noted:
As of December 31, 2024
Collateral Dependent Loans
(dollars in thousands)Secured by Real EstateSecured by Cash and SecuritiesSecured by OtherTotal
Cash, Securities, and Other$— $1,704 $— $1,704 
Commercial and Industrial— — 12,015 12,015 
Total$— $1,704 $12,015 $13,719 
As of December 31, 2023
Collateral Dependent Loans
(dollars in thousands)Secured by Real EstateSecured by Cash and SecuritiesSecured by OtherTotal
Cash, Securities, and Other$— $1,704 $— $1,704 
Consumer and Other— — 7,500 7,500 
Construction and Development2,719 — — 2,719 
1-4 Family Residential3,016 — — 3,016 
Owner Occupied CRE3,980 — — 3,980 
Commercial and Industrial— — 31,893 31,893 
Total$9,715 $1,704 $39,393 $50,812 
Other Real Estate Owned
Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. They are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than on an annual basis. Appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between comparable sales and income data available. In the year ended December 31, 2024, the Company recorded $37.0 million of OREO as a result of obtaining physical possession of foreclosed properties as partial consideration for amounts owed on non-performing loans related to an isolated loan relationship. During the quarter ended December 31, 2024, the Company recorded an OREO provision of $1.1 million. As of December 31, 2024, these OREO properties had a carrying amount of $35.9 million. As of December 31, 2023, the Company did not own any OREO properties. Operating expenses related to OREO were $0.2 million and $0.0 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, there were no loans secured by real estate in the process of foreclosure.
Allowance for Credit Losses on Loans
The Allowance for credit losses for loans is measured on the loan’s amortized cost basis, excluding interest receivable. Interest receivable excluded at December 31, 2024 and 2023 was $9.8 million and $10.8 million, respectively, presented in Accrued interest receivable on the Consolidated Balance Sheets. Refer to Note 1 – Organization and Summary of Significant Accounting Policies for additional information related to the Company’s methodology on estimated credit losses.
The Allowance for credit losses for loans represents Management’s best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans’ contractual terms, adjusted for expected prepayments when appropriate. Our quantitative discounted cash flow models use twelve-month economic forecasts including; housing price index (“HPI”), gross domestic product (“GDP”), and national unemployment. The $5.6 million decrease in Allowance for credit losses during the year ended December 31, 2024 was predominately due to net pay downs in the loan portfolio, modest HPI, GDP, and unemployment forecast improvements, and the migration of one loan relationship out of non-performing loans and into OREO, pay downs, and charge-offs.
Allocation of a portion of the allowance for credit losses to one category of loans does not preclude its availability to absorb losses in other categories. The following table presents the gross loan activity in the allowance for credit losses by portfolio segment during the periods presented:
(dollars in thousands)Cash, Securities and OtherConsumer and OtherConstruction and Development1-4 Family ResidentialNon-Owner Occupied CREOwner Occupied CRECommercial and IndustrialTotal
Changes in allowance for credit losses for the year ended December 31, 2024:
Beginning balance$961 $124 $7,945 $4,370 $2,325 $1,034 $7,172 $23,931 
(Release of) provision for credit losses(551)82 (2,761)824 2,015 (380)4,210 3,439 
Charge-offs— (50)— — — — (9,352)(9,402)
Recoveries— 29 — 6 — — 327 362 
Ending balance$410 $185 $5,184 $5,200 $4,340 $654 $2,357 $18,330 
(dollars in thousands)Cash,
Securities
and Other		Consumer and OtherConstruction
and
Development		1-4
Family
Residential		Non-Owner
Occupied
CRE		Owner
Occupied
CRE		Commercial
and
Industrial		Total
Changes in allowance for credit losses for the year ended December 31, 2023:
Beginning balance, prior to the adoption of ASU 2016-13$1,198 $191 $2,025 $6,309 $3,490 $1,510 $2,460 $17,183 
Impact of adopting ASU 2016-13193 106 4,681 (2,808)(689)(104)2,091 3,470 
(Release of) provision for credit losses(430)(94)1,239 856 (476)(372)11,354 12,077 
Charge-offs— (101)— — — — (8,737)(8,838)
Recoveries— 22 — 13 — — 4 39 
Ending balance$961 $124 $7,945 $4,370 $2,325 $1,034 $7,172 $23,931 
Credit Quality Indicators
The Company categorizes loans into risk categories 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. The Company analyzes loans individually by classifying the loans by credit risk on a quarterly basis. The Company uses the following definitions for risk ratings:
Special Mention—Loans classified as special mention have a potential weakness or borrowing relationships that require more than the usual amount of management attention. Adverse industry conditions, deteriorating financial conditions, declining trends, management problems, documentation deficiencies or other similar weaknesses may be evident. Ability to meet current payment schedules may be questionable, even though interest and principal are still being paid as agreed. The asset has potential weaknesses that may result in deteriorating repayment prospects if left uncorrected. Loans in this risk grade are not considered adversely classified.
Substandard—Substandard loans are considered "classified" and are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected. Loans in this category may be placed on non-accrual status and may individually be evaluated.
Doubtful—Loans graded Doubtful are considered "classified" and have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. However, the amount of certainty of eventual loss is not known because of specific pending factors.
Loans accounted for under the fair value option are not rated.
The following tables present the amortized cost basis of loans by credit quality indicator, by class of financing receivable, and year of origination for term loans as of December 31, 2024 and 2023. For revolving lines of credit that converted to term loans, if the conversion involved a credit decision, such loans are included in the origination year in which the credit decision was made. If revolving lines of credit converted to term loans without a credit decision, such lines of credit are included in the “Revolving lines of credit converted to term” column in the following table (dollars in thousands).
Term Loans Amortized Cost by Origination Year
December 31, 202420242023202220212020PriorRevolving Loans Amortized Cost BasisTotal
Cash, Securities, and Other
Pass$11,564 $6,123 $3,649 $13,157 $5,143 $13,912 $64,582 $118,130 
Special mention— — — — — — — — 
Substandard— — — — — — 1,704 1,704 
Doubtful— — — — — — — — 
Total Cash, Securities, and Other$11,564 $6,123 $3,649 $13,157 $5,143 $13,912 $66,286 $119,834 
Current year-to-date gross write-offs$— $— $— $— $— $— $— $— 
Consumer and Other
Pass$3,587 $4 $1,518 $355 $380 $548 $11,090 $17,482 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Not rated(1)
1 — 6,215 940 71 56 — 7,283 
Total Consumer and Other$3,588 $4 $7,733 $1,295 $451 $604 $11,090 $24,765 
Current year-to-date gross write-offs$— $1 $— $— $10 $39 $— $50 
Construction and Development
Pass$48,872 $58,224 $191,874 $992 $9,395 $— $839 $310,196 
Special mention— — — — — — — — 
Substandard469 3,816 — — — — — 4,285 
Doubtful— — — — — — — — 
Total Construction and Development$49,341 $62,040 $191,874 $992 $9,395 $— $839 $314,481 
Current year-to-date gross write-offs$— $— $— $— $— $— $— $— 
1-4 Family Residential
Pass$98,612 $89,537 $351,026 $126,116 $104,427 $63,930 $129,253 $962,901 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total 1-4 Family Residential$98,612 $89,537 $351,026 $126,116 $104,427 $63,930 $129,253 $962,901 
Current year-to-date gross write-offs$— $— $— $— $— $— $— $— 
Term Loans Amortized Cost by Origination Year
December 31, 202420242023202220212020PriorRevolving Loans Amortized Cost BasisTotal
Non-Owner Occupied CRE
Pass$48,445 $42,527 $260,055 $101,067 $70,896 $57,676 $30,573 $611,239 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total Non-Owner Occupied CRE$48,445 $42,527 $260,055 $101,067 $70,896 $57,676 $30,573 $611,239 
Current year-to-date gross write-offs$— $— $— $— $— $— $— $— 
Owner Occupied CRE
Pass$4,177 $3,126 $44,034 $41,663 $29,402 $45,640 $1,531 $169,573 
Special mention— — — — — — — — 
Substandard— — 2,096 — — — 350 2,446 
Doubtful— — — — — — — — 
Total Owner Occupied CRE$4,177 $3,126 $46,130 $41,663 $29,402 $45,640 $1,881 $172,019 
Current year-to-date gross write-offs$— $— $— $— $— $— $— $— 
Commercial and Industrial
Pass$21,922 $9,741 $58,160 $11,324 $5,435 $27,237 $58,665 $192,484 
Special mention— 456 685 — — — 7,979 9,120 
Substandard967 178 1,988 — 4,422 10,871 296 18,722 
Doubtful— — — — — — — — 
Total Commercial and Industrial$22,889 $10,375 $60,833 $11,324 $9,857 $38,108 $66,940 $220,326 
Current year-to-date gross write-offs$— $1,202 $16 $6,935 $1,199 $— $— $9,352 
Total pass$237,179 $209,282 $910,316 $294,674 $225,078 $208,943 $296,533 $2,382,005 
Total special mention— 456 685 — — — 7,979 9,120 
Total substandard1,436 3,994 4,084 — 4,422 10,871 2,350 27,157 
Total doubtful— — — — — — — — 
Total not rated1 — 6,215 940 71 56 — 7,283 
Total$238,616 $213,732 $921,300 $295,614 $229,571 $219,870 $306,862 $2,425,565 
_____________________________
(1)Includes loans held for investment measured at fair value as of December 31, 2024. Includes fair value adjustments on loans held for investment accounted for under the fair value option.
Term Loans Amortized Cost by Origination Year
December 31, 202320232022202120202019PriorRevolving Loans Amortized Cost BasisTotal
Cash, Securities, and Other
Pass$8,091 $17,878 $17,181 $5,966 $6,337 $13,188 $69,602 $138,243 
Special mention— — — — — — — — 
Substandard— — — — — — 1,704 1,704 
Doubtful— — — — — — — — 
Total Cash, Securities, and Other$8,091 $17,878 $17,181 $5,966 $6,337 $13,188 $71,306 $139,947 
Current year-to-date gross write-offs$— $— $— $— $— $— $— $— 
Consumer and Other
Pass$614 $2,013 $647 $633 $797 $24 $14,800 $19,528 
Special mention— — — — — — — — 
Substandard— — — — — — 7,500 7,500 
Doubtful— — — — — — — — 
Not rated(1)
— 10,469 2,544 614 99 — — 13,726 
Total Consumer and Other$614 $12,482 $3,191 $1,247 $896 $24 $22,300 $40,754 
Current year-to-date gross write-offs$— $— $— $8 $91 $2 $— $101 
Term Loans Amortized Cost by Origination Year
December 31, 202320232022202120202019PriorRevolving Loans Amortized Cost BasisTotal
Construction and Development
Pass$32,509 $231,103 $42,796 $21,615 $— $— $431 $328,454 
Special mention— 14,343 — — — — — 14,343 
Substandard2,719 — — — — — — 2,719 
Doubtful— — — — — — — — 
Total Construction and Development$35,228 $245,446 $42,796 $21,615 $— $— $431 $345,516 
Current year-to-date gross write-offs$— $— $— $— $— $— $— $— 
1-4 Family Residential
Pass$97,901 $373,525 $143,694 $108,815 $37,756 $31,452 $131,806 $924,949 
Special mention— — — — — — — — 
Substandard578 2,438 — — — — — 3,016 
Doubtful— — — — — — — — 
Total 1-4 Family Residential$98,479 $375,963 $143,694 $108,815 $37,756 $31,452 $131,806 $927,965 
Current year-to-date gross write-offs$— $— $— $— $— $— $— $— 
Non-Owner Occupied CRE
Pass$42,799 $197,122 $125,726 $75,026 $24,411 $53,056 $20,553 $538,693 
Special mention— — — 4,999 — — — 4,999 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total Non-Owner Occupied CRE$42,799 $197,122 $125,726 $80,025 $24,411 $53,056 $20,553 $543,692 
Current year-to-date gross write-offs$— $— $— $— $— $— $— $— 
Owner Occupied CRE
Pass$3,229 $46,751 $44,805 $37,957 $5,555 $51,259 $2,325 $191,881 
Special mention— — — — — — — — 
Substandard— — 3,980 — — — — 3,980 
Doubtful— — — — — — — — 
Total Owner Occupied CRE$3,229 $46,751 $48,785 $37,957 $5,555 $51,259 $2,325 $195,861 
Current year-to-date gross write-offs$— $— $— $— $— $— $— $— 
Commercial and Industrial
Pass$38,497 $59,612 $15,430 $13,457 $6,430 $16,068 $152,782 $302,276 
Special mention— — — — — — 649 649 
Substandard1,618 — 29,355 1,674 — 920 688 34,255 
Doubtful— — — — — — — — 
Total Commercial and Industrial$40,115 $59,612 $44,785 $15,131 $6,430 $16,988 $154,119 $337,180 
Current year-to-date gross write-offs$— $8,737 $— $— $— $— $— $8,737 
Total pass$223,640 $928,004 $390,279 $263,469 $81,286 $165,047 $392,299 $2,444,024 
Total special mention— 14,343 — 4,999 — — 649 19,991 
Total substandard4,915 2,438 33,335 1,674 — 920 9,892 53,174 
Total doubtful— — — — — — — — 
Total not rated— 10,469 2,544 614 99 — — 13,726 
Total$228,555 $955,254 $426,158 $270,756 $81,385 $165,967 $402,840 $2,530,915 
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(1)Includes loans held for investment measured at fair value as of December 31, 2023. Includes fair value adjustments on loans held for investment accounted for under the fair value option.