Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2024

Loans and Allowance for Credit Losses

Loans in the accompanying consolidated balance sheets consisted of the following:


(Dollars in thousands)	June 30, 2024			December 31, 2023
Real estate loans:
Non-farm non-residential owner occupied	$	499,941		$	520,822
Non-farm non-residential non-owner occupied		612,268			586,626
Residential		349,461			342,589
Construction, development & other		756,646			693,553
Farmland		31,049			30,396
Commercial & industrial		1,361,401			1,263,077
Consumer		2,216			2,555
Municipal and other		145,177			199,170
		3,758,159			3,638,788
Allowance for credit losses		(38,211	)		(37,022	)
Loans, net	$	3,719,948		$	3,601,766

Total loans are presented net of unaccreted discounts and net deferred fees totaling $13.9 million and $11.8 million at June 30, 2024 and December 31, 2023, respectively.

Non-accrual and Past Due Loans

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. As mentioned in Note 1, the accrual of interest on loans is discontinued when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan is 90 days past due.

Non-accrual loans, non-accrual loans without a specific ACL, and accruing loans past due more than 90 days segregated by class of loans were as follows:


	June 30, 2024						December 31, 2023
(Dollars in thousands)	Non-accrual		Non-accrual loans without a specific ACL		Accruing loans past due more than 90 days		Non-accrual		Non-accrual loans without a specific ACL		Accruing loans past due more than 90 days
Real estate loans:
Non-farm non-residential owner occupied	$	10,051	$	8,416	$	—	$	1,211	$	305	$	—
Non-farm non-residential non-owner occupied		74		211		—		1,235		246		—
Residential		2,767		2,721		—		2,938		2,938		—
Construction, development & other		301		79		407		247		247		—
Commercial & industrial		10,717		805		100		11,018		5,097		670
	$	23,910	$	12,232	$	507	$	16,649	$	8,833	$	670

Based on management's evaluation of the value of the collateral securing the non-accrual loans, $12.2 million and $8.8 million of the non-accrual loans did not have an allowance for credit loss at June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024 and 2023, the amount of income that would have been accrued for loans on non-accrual was approximately $864,000 and $332,000, respectively.

An age analysis of past due loans, segregated by class of loans, was as follows:


(Dollars in thousands)	30-59 days		60-89 days		Over 90 days		Total past due		Total current		Total loans
June 30, 2024
Real estate loans:
Non-farm non-residential owner occupied	$	—	$	—	$	10,051	$	10,051	$	489,890	$	499,941
Non-farm non-residential non-owner occupied		1,314		—		74		1,388		610,880		612,268
Residential		826		—		2,767		3,593		345,868		349,461
Construction, development & other		500		200		708		1,408		755,238		756,646
Farmland		—		—		—		—		31,049		31,049
Commercial & industrial		1,458		578		10,817		12,853		1,348,548		1,361,401
Consumer		—		—		—		—		2,216		2,216
Municipal and other		67		—		—		67		145,110		145,177
	$	4,165	$	778	$	24,417	$	29,360	$	3,728,799	$	3,758,159


December 31, 2023
Real estate loans:
Non-farm non-residential owner occupied	$	—	$	—	$	1,211	$	1,211	$	519,611	$	520,822
Non-farm non-residential non-owner occupied		—		212		1,235		1,447		585,179		586,626
Residential		312		495		2,938		3,745		338,844		342,589
Construction, development & other		428		177		247		852		692,701		693,553
Farmland		—		—		—		—		30,396		30,396
Commercial & industrial		4,467		659		11,688		16,814		1,246,263		1,263,077
Consumer		2		—		—		2		2,553		2,555
Municipal and other		88		—		—		88		199,082		199,170
	$	5,297	$	1,543	$	17,319	$	24,159	$	3,614,629	$	3,638,788

Restructured Loans and Loan Modifications

Pursuant to the adoption of ASU 2022-02 effective January 1, 2023, the Company prospectively discontinued the recognition and measurement of TDRs. This guidance eliminated TDR accounting for loans in which the borrower was experiencing financial difficulty and the creditor was granted a concession. A loan is now considered modified under ASU 2022-02 if the borrower is experiencing financial difficulties and the loan has been modified. Modifications may include interest rate reductions or below market interest rates, restructuring amortization schedules and other actions intended to minimize potential losses.

For the six months ended June 30, 2024, no loans were modified for borrowers experiencing financial difficulty.

The table below presents the amortized cost basis of loans at period end that were both experiencing financial difficulty and modified during the year ended December 31, 2023, by class and type of modification.


	Loan modifications
(Dollars in thousands)	Number of loans		Post- restructured recorded investment		Principal Forgiveness		Adjusted interest rate		Payment deferral		Combined rate and payment deferral
December 31, 2023
Commercial & industrial		3	$	6,970	$	—	$	—	$	63	$	63

On an ongoing basis, the performance of modified loans for borrowers experiencing financial difficulty is monitored for subsequent payment default. Payment default is recognized when the borrower is 90 days or more past due. As of June 30, 2024 and December 31, 2023, there were no modified loans in the previous twelve-month period that were in default.

Credit Quality Indicators

Credit Quality Indicators. From a credit risk standpoint, the Company classifies its loans in one of six categories: (i) pass, (ii) special mention, (iii) substandard, (iv) purchased credit impaired, (v) doubtful, or (vi) loss.

The classifications of loans reflect a judgment about the risks of default and loss associated with the loan. The Company reviews the ratings on credits monthly. Ratings are adjusted to reflect the degree of risk and loss that is felt to be inherent in each credit as of each monthly reporting period. The Company’s methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).

(i) The Company has several pass credit grades that are assigned to loans based on varying levels of credits, ranging from credits that are secured by cash or marketable securities, to watch credits that have all the characteristics of an acceptable credit risk but warrant more than the normal level of supervision.

(ii) Special mention loans are loans that still show sufficient cash flow to service their debt but show a declining financial trend with potential cash flow shortages if trends continue. This category should be treated as a temporary grade. If cash flow deteriorates further to become negative, then a substandard grade should be given. If cash flow trends begin to improve then an upgrade back to pass would be justified. Nonfinancial reasons for rating a credit special mention include management problems, pending litigation, an ineffective loan agreement or other material structure weakness.

(iii) A substandard loan has material weakness in the primary repayment source such as insufficient cash flow from operations to service the debt. However, other weaknesses such as limited paying capacity of the obligor or the collateral pledged could justify a substandard grade. Substandard loans must have a well-defined weakness, or weaknesses that jeopardize the liquidation of the debt.

(iv) Credits purchased from third parties are recorded at their estimated fair value at the acquisition date and are classified as PCI loans if the loans reflect credit deterioration since origination and it is probable at acquisition that the Company will be unable to collect all contractually required payments (see Note 1 – Nature of Operations and Summary of Significant Accounting Policies – Certain Acquired Loans).

(v) A loan classified as doubtful has all the weaknesses of a substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. A doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Because of high probability of loss, non-accrual status is required on doubtful loans.

(vi) Loans classified as loss are considered uncollectible and of such little value that their continuance as banking assets are not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. With loans classified as loss, the underlying borrowers are often in bankruptcy, have formally suspended debt repayments, or have otherwise ceased normal business operations. Once an asset is classified as loss, there is little prospect of collecting either its principal or interest. When access to collateral, rather than the value of the collateral, is a problem, a less severe classification may be appropriate. However, the Company does not maintain an asset on the balance sheet if realizing its value would require long-term litigation or other lengthy recovery efforts. Losses are to be recorded in the period an obligation becomes uncollectible.

The following tables summarize the Company’s internal ratings of its loans at June 30, 2024 and December 31, 2023:


(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
June 30, 2024
Real estate loans:
Non-farm non-residential owner occupied	$	477,019	$	5,698	$	17,224	$	—	$	499,941
Non-farm non-residential non-owner occupied		612,194		—		74		—		612,268
Residential		346,132		528		2,801		—		349,461
Construction, development & other		755,229		710		707		—		756,646
Farmland		31,049		—		—		—		31,049
Commercial & industrial		1,304,848		37,422		17,631		1,500		1,361,401
Consumer		2,216		—		—		—		2,216
Municipal and other		145,177		—		—		—		145,177
	$	3,673,864	$	44,358	$	38,437	$	1,500	$	3,758,159


December 31, 2023
Real estate loans:
Non-farm non-residential owner occupied	$	510,811	$	5,517	$	4,494	$	—	$	520,822
Non-farm non-residential non-owner occupied		580,981		4,409		1,236		—		586,626
Residential		338,619		538		3,432		—		342,589
Construction, development & other		692,098		1,208		247		—		693,553
Farmland		29,547		—		849		—		30,396
Commercial & industrial		1,213,303		35,672		13,780		322		1,263,077
Consumer		2,555		—		—		—		2,555
Municipal and other		199,170		—		—		—		199,170
	$	3,567,084	$	47,344	$	24,038	$	322	$	3,638,788

The following tables summarize the Company's loans by risk grades, loan class and vintage, at June 30, 2024 and December 31, 2023:


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior Years		Cost Basis		Total
June 30, 2024
Real estate loans:
Non-farm non-residential owner occupied
Pass	$	20,614	$	39,944	$	171,889	$	119,417	$	61,364	$	59,620	$	4,171	$	477,019
Special Mention		697		95		2,317		2,589		—		—		—		5,698
Substandard		—		3,032		116		4,405		5,654		2,778		1,239		17,224
Total Non-Farm non-residential owner-occupied	$	21,311	$	43,071	$	174,322	$	126,411	$	67,018	$	62,398	$	5,410	$	499,941
Non-farm non-residential non-owner occupied
Pass	$	35,087	$	114,010	$	179,898	$	206,717	$	25,214	$	43,211	$	8,057	$	612,194
Substandard		—		—		74		—		—		—		—		74
Total Non-Farm non-residential non owner-occupied	$	35,087	$	114,010	$	179,972	$	206,717	$	25,214	$	43,211	$	8,057	$	612,268
Residential
Pass	$	31,734	$	92,260	$	110,295	$	73,993	$	17,938	$	13,570	$	6,342	$	346,132
Special Mention		—		91		—		—		437		—		—		528
Substandard		2,140		27		242		388		—		4		—		2,801
Total Residential	$	33,874	$	92,378	$	110,537	$	74,381	$	18,375	$	13,574	$	6,342	$	349,461
Construction, development & other
Pass	$	47,963	$	147,185	$	102,911	$	38,296	$	770	$	534	$	417,570	$	755,229
Special Mention		710		—		—		—		—		—		—		710
Substandard		—		633		73		—		—		1		—		707
Total Construction, development & other	$	48,673	$	147,818	$	102,984	$	38,296	$	770	$	535	$	417,570	$	756,646
Farmland
Pass	$	711	$	9,759	$	11,922	$	2,000	$	—	$	4,301	$	2,356	$	31,049
Total Farmland	$	711	$	9,759	$	11,922	$	2,000	$	—	$	4,301	$	2,356	$	31,049
Commercial & industrial
Pass	$	93,870	$	161,402	$	94,322	$	53,792	$	12,106	$	11,752	$	877,604	$	1,304,848
Special Mention		3,945		218		678		22,085		—		14		10,482		37,422
Substandard		2,726		3,412		1,965		2,091		—		1,277		6,160		17,631
Doubtful		—		—		1,500		—		—		—		—		1,500
Total Commercial & industrial	$	100,541	$	165,032	$	98,465	$	77,968	$	12,106	$	13,043	$	894,246	$	1,361,401
Consumer
Pass	$	71	$	938	$	533	$	100	$	110	$	127	$	337	$	2,216
Total Consumer	$	71	$	938	$	533	$	100	$	110	$	127	$	337	$	2,216
Municipal and other
Pass	$	1,761	$	61,103	$	10,146	$	31,517	$	2,523	$	459	$	37,668	$	145,177
Total Municipal and other	$	1,761	$	61,103	$	10,146	$	31,517	$	2,523	$	459	$	37,668	$	145,177
Total Loans	$	242,029	$	634,109	$	688,881	$	557,390	$	126,116	$	137,648	$	1,371,986	$	3,758,159


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized
(Dollars in thousands)	2023		2022		2021		2020		2019		Prior Years		Cost Basis		Total
December 31, 2023
Real estate loans:
Non-farm non-residential owner occupied
Pass	$	55,172	$	179,776	$	127,020	$	70,984	$	33,439	$	37,433	$	6,987	$	510,811
Special Mention		535		2,350		2,632		—		—		—		—		5,517
Substandard		157		41		984		—		2,190		659		463		4,494
Total Non-Farm non-residential owner-occupied	$	55,864	$	182,167	$	130,636	$	70,984	$	35,629	$	38,092	$	7,450	$	520,822
Non-farm non-residential non-owner occupied
Pass	$	105,084	$	180,054	$	212,484	$	26,559	$	23,112	$	25,486	$	8,202	$	580,981
Special Mention		4,197		—		—		212		—		—		—		4,409
Substandard		—		88		—		—		—		1,148		—		1,236
Total Non-Farm non-residential non owner-occupied	$	109,281	$	180,142	$	212,484	$	26,771	$	23,112	$	26,634	$	8,202	$	586,626
Residential
Pass	$	97,867	$	112,138	$	86,117	$	19,178	$	10,027	$	7,275	$	6,017	$	338,619
Special Mention		94		—		—		444		—		—		—		538
Substandard		2,734		253		437		—		—		8		—		3,432
Total Residential	$	100,695	$	112,391	$	86,554	$	19,622	$	10,027	$	7,283	$	6,017	$	342,589
Construction, development & other
Pass	$	136,888	$	110,486	$	55,938	$	785	$	86	$	529	$	387,386	$	692,098
Special Mention		—		—		1,208		—		—		—		—		1,208
Substandard		244		—		—		—		—		3		—		247
Total Construction, development & other	$	137,132	$	110,486	$	57,146	$	785	$	86	$	532	$	387,386	$	693,553
Farmland
Pass	$	11,030	$	11,328	$	2,070	$	96	$	3,619	$	818	$	586	$	29,547
Substandard		—		849		—		—		—		—		—		849
Total Farmland	$	11,030	$	12,177	$	2,070	$	96	$	3,619	$	818	$	586	$	30,396
Commercial & industrial
Pass	$	221,392	$	49,536	$	79,690	$	16,843	$	14,576	$	1,321	$	829,945	$	1,213,303
Special Mention		4,284		4,068		23,916		467		21		55		2,861		35,672
Substandard		483		3,783		4,461		1,276		1,377		82		2,318		13,780
Doubtful		—		—		—		—		322		—		—		322
Total Commercial & industrial	$	226,159	$	57,387	$	108,067	$	18,586	$	16,296	$	1,458	$	835,124	$	1,263,077
Consumer
Pass	$	1,061	$	670	$	147	$	183	$	121	$	33	$	340	$	2,555
Total Consumer	$	1,061	$	670	$	147	$	183	$	121	$	33	$	340	$	2,555
Municipal and other
Pass	$	86,998	$	15,406	$	33,060	$	3,812	$	1,011	$	14	$	58,869	$	199,170
Total Municipal and other	$	86,998	$	15,406	$	33,060	$	3,812	$	1,011	$	14	$	58,869	$	199,170
Total Loans	$	728,220	$	670,826	$	630,164	$	140,839	$	89,901	$	74,864	$	1,303,974	$	3,638,788

The following tables summarize the Company's gross charge-offs by origination year and loan class for the six months ended June 30, 2024 and the year ended December 31, 2023.


	Gross Charge-offs by Origination Year																	Revolving Loans Amortized
(Dollars in thousands)	2024		2023			2022			2021			2020			Prior Years			Cost Basis		Total
June 30, 2024:
Real estate loans:
Non-farm non-residential non-owner occupied	$	—	$	—		$	—		$	—		$	—		$	(598	)	$	—	$	(598	)
Commercial & industrial		—		—			(233	)		(104	)		(1,198	)		(944	)		—		(2,479	)
Municipal and other		—		(12	)		(17	)		(15	)		—			—			—		(44	)
Total Charge-Offs	$	—	$	(12	)	$	(250	)	$	(119	)	$	(1,198	)	$	(1,542	)	$	—	$	(3,121	)


December 31, 2023:
Commercial & industrial	$	—		$	—		$	—		$	(181	)	$	(1,523	)	$	(120	)	$	—	$	(1,824	)
Consumer		—			—			—			—			—			(19	)		—		(19	)
Municipal and other		(10	)		(6	)		(2	)		(2	)		—			—			—		(20	)
Total Charge-Offs	$	(10	)	$	(6	)	$	(2	)	$	(183	)	$	(1,523	)	$	(139	)	$	—	$	(1,863	)

Allowance for Credit Losses

The allowance for credit losses on loans is a contra-asset valuation account, calculated in accordance with ASC 326, that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. The amount of the allowance 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. The contractual term excludes expected extensions, renewals and modifications unless (i) management has a reasonable expectation that a loan to an individual borrower that is experiencing financial difficulty will be modified or (ii) such extension or renewal options are not unconditionally cancellable by us and, in such cases, the borrower is likely to meet applicable conditions and likely to request extension or renewal. Relevant available information includes historical credit loss experience, current conditions and reasonable and supportable forecasts, including U.S. Unemployment, GDP and Case-Shiller U.S National Home Price Index. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions or other relevant factors. The allowance for credit losses is measured on a collective basis for portfolios of loans when similar risk characteristics exist.

Credit loss expense related to loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate appropriateness of the allowance is dependent upon a variety of factors beyond our control, including the performance of our loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

In calculating the allowance for credit losses, most loans are segmented into pools based upon similar characteristics and risk profiles. Common characteristics and risk profiles include the type/purpose of loan, underlying collateral, geographical similarity and historical/expected credit loss patterns. In developing these loan pools for the purposes of modeling expected credit losses, we also analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors. For modeling purposes, we use loan call report codes to identify the pools of loans with similar risk characteristics. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. We periodically reassess each pool to ensure the loans within the pool continue to share similar characteristics and risk profiles and to determine whether further segmentation is necessary.

We have elected to use the discounted cash flow (“DCF”) method for estimating accumulated credit losses for all loans except for consumer loans and leases. The DCF method allows for an effective incorporation of reasonable and supportable forecasts that can be applied in a consistent and objective manner. The method also aligns well with other calculations outside the accumulated credit loss estimations which mitigate model risk in other areas such as fair value or exit price notion calculations, interest rate risk calculations, profitability analysis, asset-liability management, and other forms of cash flow analysis. We have elected to use the weighted-average remaining maturity (“WARM”) method for consumer loans and leases. The long-term average loss rate is calculated and applied on a quarterly basis for the remaining life of the pool. Adjustments for economic expectations are made in the qualitative portion of the calculation. The long-term average loss rate is derived using peer data derived from the call report.

There may be certain financial assets for which the expectation of credit loss is zero after evaluating historical loss information, making necessary adjustments for current conditions and reasonable and supportable forecasts, and considering any collateral or guarantee arrangements that are not free-standing contracts. A loan that is fully secured by cash or cash equivalents, such as certificates of deposit issued by the lending institution, would likely have zero credit loss expectations. Similarly, the guaranteed portion of a SBA loan or security purchased on the secondary market through the SBA’s fiscal and transfer agent would likely have zero credit loss expectations because these financial assets are unconditionally guaranteed by the U.S. government. Currently, the Company deducts the SBA guaranteed portion of financial assets from the individual asset balance.

Management qualitatively adjusts model results for risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. These qualitative factors (“Q-Factor”) and other qualitative adjustments may increase or decrease management's estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. The various risks that may be considered in making Q-Factor and other qualitative adjustments include, among other things, the impact of (i) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (ii) actual and expected changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the loan pools, (iii) changes in the nature and volume of the loan pools and in the terms of the underlying loans, (iv) changes in the experience, ability, and depth of our lending management and staff, (v) changes in volume and severity of past due financial assets, the volume of non-accrual assets, and the volume and severity of adversely classified or graded assets, (vi) changes in the quality of our credit review function, (vii) changes in the value of the underlying collateral for loans that are non-collateral dependent, (viii) the existence, growth, and effect of any concentrations of credit and (ix) other factors such as the regulatory, legal and technological environments; competition; and events such as natural disasters or health pandemics.

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. We reevaluate the fair value of collateral supporting collateral dependent loans on a quarterly basis. The fair value of real estate collateral supporting collateral dependent loans is evaluated using a methodology that is consistent with the Uniform Standards of Professional Appraisal Practice. The fair value of collateral supporting collateral dependent construction loans is based on an “as is” valuation.

The following table presents details of the allowance for credit losses on loans by portfolio segment as of June 30, 2024 and December 31, 2023:


(Dollars in thousands)	Non-Farm Non-Residential Owner Occupied		Non-Farm Non-Residential Non-Owner Occupied		Residential		Construction, Development & Other		Farmland		Commercial & Industrial		Consumer		Municipal and Other		Total
June 30, 2024:
Modeled expected credit losses	$	2,125	$	2,481	$	1,478	$	3,421	$	151	$	6,263	$	8	$	365	$	16,292
Q-Factor and other qualitative adjustments		2,199		2,776		1,012		3,013		86		9,945		6		414		19,451
Specific allocations		388		—		—		2		—		2,078		—		—		2,468
	$	4,712	$	5,257	$	2,490	$	6,436	$	237	$	18,286	$	14	$	779	$	38,211
December 31, 2023:
Modeled expected credit losses	$	2,324	$	2,569	$	1,474	$	3,557	$	166	$	6,400	$	8	$	596	$	17,094
Q-Factor and other qualitative adjustments		1,952		2,321		867		2,296		78		7,507		6		505		15,532
Specific allocations		35		651		—		—		—		3,710		—		—		4,396
	$	4,311	$	5,541	$	2,341	$	5,853	$	244	$	17,617	$	14	$	1,101	$	37,022

Management believes the allowance for credit losses is adequate to cover expected credit losses on loans at June 30, 2024 and December 31, 2023.

The following tables detail the activity in the allowance for credit losses by portfolio segment for the six months ended June 30, 2024 and 2023:


(Dollars in thousands)	Beginning balance		Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending balance
Six Months Ended June 30, 2024
Real estate loans:
Non-farm non-residential owner occupied	$	4,311	$	401		$	—		$	—	$	4,712
Non-farm non-residential non-owner occupied		5,541		314			(598	)		—		5,257
Residential		2,341		149			—			—		2,490
Construction, development & other		5,853		583			—			—		6,436
Farmland		244		(7	)		—			—		237
Commercial & industrial		17,617		2,610			(2,479	)		538		18,286
Consumer		14		(1	)		—			1		14
Municipal and other		1,101		(289	)		(44	)		11		779
	$	37,022	$	3,760		$	(3,121	)	$	550	$	38,211


(Dollars in thousands)	Beginning balance		CECL Adoption Adjustment			Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending balance
Six Months Ended June 30, 2023
Real estate loans:
Non-farm non-residential owner occupied	$	3,773	$	1,324		$	126		$	—		$	—	$	5,223
Non-farm non-residential non-owner occupied		5,741		2,610			424			—			—		8,775
Residential		1,064		996			82			—			—		2,142
Construction, development & other		3,053		1,608			(349	)		—			—		4,312
Farmland		82		12			3			—			—		97
Commercial & industrial		16,269		(2,903	)		2,043			(301	)		614		15,722
Consumer		6		4			19			(19	)		—		10
Municipal and other		363		349			252			(2	)		—		962
	$	30,351	$	4,000		$	2,600		$	(322	)	$	614	$	37,243

The following tables detail the activity in the allowance for credit losses by portfolio segment for the three months ended June 30, 2024 and 2023:


(Dollars in thousands)	Beginning balance		Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending balance
Three Months Ended June 30, 2024
Real estate loans:
Non-farm non-residential owner occupied	$	4,295	$	417		$	—		$	—	$	4,712
Non-farm non-residential non-owner occupied		5,211		644			(598	)		—		5,257
Residential		2,142		348			—			—		2,490
Construction, development & other		5,676		760			—			—		6,436
Farmland		211		26			—			—		237
Commercial & industrial		19,633		(132	)		(1,667	)		452		18,286
Consumer		12		2			—			—		14
Municipal and other		960		(165	)		(17	)		1		779
	$	38,140	$	1,900		$	(2,282	)	$	453	$	38,211


Three Months Ended June 30, 2023
Real estate loans:
Non-farm non-residential owner occupied	$	5,276	$	(53	)	$	—		$	—	$	5,223
Non-farm non-residential non-owner occupied		8,388		387			—			—		8,775
Residential		2,071		71			—			—		2,142
Construction, development & other		5,297		(985	)		—			—		4,312
Farmland		93		4			—			—		97
Commercial & industrial		14,490		1,304			(181	)		109		15,722
Consumer		9		(1	)		2			—		10
Municipal and other		291		673			(2	)		—		962
	$	35,915	$	1,400		$	(181	)	$	109	$	37,243

A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral.

The following tables present the amortized cost basis of collateral dependent loans which have been assessed individually for credit losses:


(Dollars in thousands)	Real Estate		Business Assets		Other		Total
June 30, 2024
Real estate loans:
Non-farm non-residential owner occupied	$	9,913	$	—	$	—	$	9,913
Non-farm non-residential non-owner occupied		211		—		—		211
Residential		2,721		—		—		2,721
Construction, development & other		301		—		—		301
Commercial & industrial		213		12,979		87		13,279
	$	13,359	$	12,979	$	87	$	26,425


(Dollars in thousands)	Real Estate		Business Assets		Other		Total
December 31, 2023
Real estate loans:
Non-farm non-residential owner occupied	$	1,054	$	—	$	—	$	1,054
Non-farm non-residential non-owner occupied		1,393		—		—		1,393
Residential		2,940		—		—		2,940
Construction, development & other		247		—		—		247
Commercial & industrial		212		12,439		689		13,340
	$	5,846	$	12,439	$	689	$	18,974