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LOANS AND THE ALLOWANCE FOR CREDIT LOSSES
 3 Months Ended
Mar. 31, 2025
Receivables [Abstract]  
LOANS AND THE ALLOWANCE FOR CREDIT LOSSES LOANS AND THE ALLOWANCE FOR CREDIT LOSSES
The following presents a summary of the Company’s loans at amortized cost as of the dates noted:
(dollars in thousands)
March 31,
2025		December 31,
2024
Cash, Securities, and Other$100,994 $119,834 
Consumer and Other16,829 17,482 
Construction and Development290,110 314,481 
1-4 Family Residential973,718 962,901 
Non-Owner Occupied CRE633,641 611,239 
Owner Occupied CRE181,207 172,019 
Commercial and Industrial222,756 220,326 
Total2,419,255 2,418,282 
Allowance for credit losses(17,956)(18,330)
Total, net$2,401,299 $2,399,952 
Loans accounted for under the fair value option(1)
6,112 7,283 
Loans, net$2,407,411 $2,407,235 
______________________________________
(1)Includes $6.3 million and $7.5 million of unpaid principal balance of loans held for investment measured at fair value as of March 31, 2025 and December 31, 2024, respectively. Includes fair value adjustments on loans held for investment accounted for under the fair value option. See Note 12 – Fair Value.
As of March 31, 2025 and December 31, 2024, total loans held for investment included $154.2 million and $164.3 million, respectively, of performing loans purchased through mergers or acquisitions.
As of March 31, 2025, the Company did not hold any Main Street Lending Program (“MSLP”) loans. As of December 31, 2024, the Company’s Commercial and Industrial loans included one MSLP loans with the net carrying amount of $1.7 million, or 0.8% 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):
March 31, 202530-59
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$770 $— $1,703 $2,473 $98,521 $100,994 $— $100,994 
Consumer and Other30 — — 30 16,799 16,829 6,112 22,941 
Construction and Development— 1,622 — 1,622 288,488 290,110 — 290,110 
1-4 Family Residential2,105 1,364 — 3,469 970,249 973,718 — 973,718 
Non-Owner Occupied CRE— — — — 633,641 633,641 — 633,641 
Owner Occupied CRE— — — — 181,207 181,207 — 181,207 
Commercial and Industrial— 806 10,870 11,676 211,080 222,756 — 222,756 
Total$2,905 $3,792 $12,573 $19,270 $2,399,985 $2,419,255 $6,112 $2,425,367 
December 31, 202430-59
Days
Past Due		60-89
Days
Past Due		90 or
More Days
Past Due		Total
Loans
Past Due		CurrentTotal Amortized Cost
Loans Accounted for Under the Fair Value Option(1)
Total Loans
Cash, Securities, and Other$— $— $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 $2,425,565 
(1)Refer to Note 12 – Fair Value for additional information on the measurement of loans accounted for under the fair value option.
As of March 31, 2025 and December 31, 2024, the Company did not have any loans more than 90 days delinquent and accruing interest.
Loan Modifications
GAAP requires that certain types of modifications of loans in response to a borrower’s financial difficulty be reported and include the following; (i) principal forgiveness, (ii) interest rate reduction, (iii) other than insignificant payment delay, (iv) term extension, or (v) any combination of the foregoing. For the three months ended March 31, 2025, there were no loan modifications.
The following presents the amortized cost basis as of March 31, 2024 of the loans modified to borrowers experiencing financial difficulty disaggregated by class of financing receivable and type of concession granted during the three months ended March 31, 2024.
(dollars in thousands)Principal forgivenessInterest rate reductionTerm extensionCombination: term extension and principal forgivenessCombination: term extension and interest rate reductionTotal class of financing receivable
Commercial and Industrial$— $— $1,037 $— $— 0.3 %
Total$— $— $1,037 $— $— 
The following presents the financial effect by type of modification made to borrowers experiencing financial difficulty during the periods noted:
Three Months Ended March 31, 2024
(dollars in thousands)Principal forgivenessWeighted average interest rate reductionWeighted average term extension
Commercial and Industrial$——%5 months
There were no loans that experienced a default during the three months ended March 31, 2025 or 2024, subsequent to being granted a modification in the preceding twelve months.
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 dates noted:
As of March 31, 2025
(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 11,047 — 
Total$12,574 $12,751 $— 
(1)As of March 31, 2025, the Company had an allowance of $45 thousand on non-accrual loans.
As of 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 $0.1 million on non-accrual loans.
The Company recognized no interest income on non-accrual loans during the three month periods ended March 31, 2025 and 2024.
Collateral Dependent Loans
A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following presents the amortized cost basis of collateral-dependent loans, which are individually evaluated to determine expected credit losses, by class of loans as of the date noted:
As of March 31, 2025
Collateral Dependent Loans
(dollars in thousands)Secured by Real EstateSecured by Cash and
Securities		Secured by OtherTotal
Cash, Securities, and Other$— $1,704 $— $1,704 
Owner Occupied CRE1,049 — — 1,049 
Commercial and Industrial— — 12,004 12,004 
Total$1,049 $1,704 $12,004 $14,757 
As of December 31, 2024
Collateral Dependent Loans
(dollars in thousands)Secured by Real EstateSecured by Cash and
Securities		Secured by OtherTotal
Cash, Securities, and Other$— $1,704 $— $1,704 
Commercial and Industrial— — 12,015 12,015 
Total$— $1,704 $12,015 $13,719 
Other Real Estate Owned (“OREO”)
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. During the three months ended March 31, 2025, the Company sold two OREO properties resulting in a net gain on sale of $0.5 million. As of March 31, 2025 and December 31, 2024, OREO properties had carrying amounts of $4.4 million and $35.9 million, respectively.
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 March 31, 2025 and December 31, 2024 was $9.9 million and $9.8 million, respectively, presented in Accrued interest receivable on the Condensed 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 on loans (“ACL”) 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 economic forecasts including; housing price index (“HPI”), gross domestic product (“GDP”), and national unemployment. The $0.4 million decrease in Allowance for credit losses during the three months ended March 31, 2025 was predominately due to mix shifts within the loan portfolio and charge-offs. This activity was partially offset by modest HPI, GDP, and unemployment forecast deterioration and increases in individually analyzed reserves.
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 presents the activity in the allowance for credit losses by portfolio segment during the periods presented:
(dollars in thousands)Cash,
Securities
and Other		Consumer
and
Other		Construction
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 three months ended March 31, 2025:
Beginning balance$410 $185 $5,184 $5,200 $4,340 $654 $2,357 $18,330 
(Release) provision for credit losses(19)(54)(885)117 (30)261 802 192 
Charge-offs— — — — — — (594)(594)
Recoveries— 20 — 4 — — 4 28 
Ending balance$391 $151 $4,299 $5,321 $4,310 $915 $2,569 $17,956 
(dollars in thousands)Cash,
Securities
and Other		Consumer
and
Other		Construction
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 three months ended March 31, 2024:
Beginning balance$961 $124 $7,945 $4,370 $2,325 $1,034 $7,172 $23,931 
(Release) provision for credit losses(184)(31)(557)(87)(129)(59)1,746 699 
Charge-offs— (11)— — — — — (11)
Recoveries— 5 — 5 — — 1 11 
Ending balance$777 $87 $7,388 $4,288 $2,196 $975 $8,919 $24,630 
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 March 31, 2025 and December 31, 2024. 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 (dollars in thousands):
Term Loans Amortized Cost by Origination Year
March 31, 202520252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
Cash, Securities, and Other
Pass$82 $1,351 $6,085 $3,606 $12,580 $17,640 $57,946 $99,290 
Special mention— — — — — — — — 
Substandard— — — — — — 1,704 1,704 
Doubtful— — — — — — — — 
Total Cash, Securities, and Other$82 $1,351 $6,085 $3,606 $12,580 $17,640 $59,650 $100,994 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Consumer and Other
Pass502 3,587 — 1,417 343 774 10,156 16,779 
Special mention— — — — — — — — 
Substandard— — — — — — 50 50 
Doubtful— — — — — — — — 
Not rated(1)
— 1 — 5,276 745 90 — 6,112 
Total Consumer and Other$502 $3,588 $— $6,693 $1,088 $864 $10,206 $22,941 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Construction and Development
Pass$2,496 $53,484 $51,359 $156,937 $967 $9,407 $1,150 $275,800 
Special mention— — — — — — — — 
Substandard— 1,828 3,817 8,665 — — — 14,310 
Doubtful— — — — — — — — 
Total Construction and Development$2,496 $55,312 $55,176 $165,602 $967 $9,407 $1,150 $290,110 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
1-4 Family Residential
Pass$54,009 $72,101 $96,669 $344,362 $123,292 $165,064 $116,856 $972,353 
Special mention— — — — — — — — 
Substandard— — — 1,365 — — — 1,365 
Doubtful— — — — — — — — 
Total 1-4 Family Residential$54,009 $72,101 $96,669 $345,727 $123,292 $165,064 $116,856 $973,718 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Non-Owner Occupied CRE
Pass$5,273 $47,684 $52,837 $280,271 $94,813 $122,292 $30,471 $633,641 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total Non-Owner Occupied CRE$5,273 $47,684 $52,837 $280,271 $94,813 $122,292 $30,471 $633,641 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Owner Occupied CRE
Pass$12,883 $4,156 $3,103 $43,531 $41,274 $72,010 $1,820 $178,777 
Special mention— — — — — — — — 
Substandard— — — 2,083 — — 347 2,430 
Doubtful— — — — — — — — 
Total Owner Occupied CRE$12,883 $4,156 $3,103 $45,614 $41,274 $72,010 $2,167 $181,207 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Term Loans Amortized Cost by Origination Year
March 31, 202520252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
Commercial and Industrial
Pass$17,361 $21,899 $9,213 $53,584 $12,101 $29,206 $52,351 $195,715 
Special mention— — — 481 — — 1,873 2,354 
Substandard— — 434 4,708 — 14,243 5,302 24,687 
Doubtful— — — — — — — — 
Total Commercial and Industrial$17,361 $21,899 $9,647 $58,773 $12,101 $43,449 $59,526 $222,756 
Current year-to-date gross charge-offs$— $— $— $— $— $594 $— $594 
Total pass$92,606 $204,262 $219,266 $883,708 $285,370 $416,393 $270,750 $2,372,355 
Total special mention— — — 481 — — 1,873 2,354 
Total substandard— 1,828 4,251 16,821 — 14,243 7,403 44,546 
Total doubtful— — — — — — — — 
Total not rated— 1 — 5,276 745 90 — 6,112 
Total$92,606 $206,091 $223,517 $906,286 $286,115 $430,726 $280,026 $2,425,367 
(1)Includes loans held for investment measured at fair value as of March 31, 2025. 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, 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 $119,834 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
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 $24,765 
Current year-to-date gross charge-offs$— $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 $314,481 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
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 $962,901 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
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 $611,239 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
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 $172,019 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
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 $220,326 
Current year-to-date gross charge-offs$— $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.