Loans

9 Months Ended

Sep. 30, 2025

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their unpaid principal balances, adjusted for any charge-offs, the ACL, and any deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

Loan interest income is accrued daily on outstanding balances. The following accounting policies, related to accrual and nonaccrual loans, apply to all portfolio segments and loan classes, which the Company considers to be the same. The accrual of

interest is normally discontinued when a loan is specifically determined to be impaired and/or management believes, after considering collection efforts and other factors, that the borrower's financial condition is such that collection of interest is doubtful. In general, loans that are 90 days or more past due are placed in nonaccrual, unless there are circumstances that cause management to believe the collection of interest is not doubtful. Generally, any unpaid interest previously accrued on those loans is reversed against current period interest income. A loan may be restored to accrual status when its financial status has significantly improved and there is no principal or interest past due. A loan may also be restored to accrual status if the borrower makes six consecutive monthly payments or the lump sum equivalent. Income on nonaccrual loans is generally not recognized unless a loan is returned to accrual status or after all principal has been collected. Interest payments received on such loans are generally applied as a reduction of the loan principal balance. Delinquency status is determined based on contractual terms for all portfolio segments and loan classes. Loans past due 30 days or more are considered delinquent. Loans are considered in process of foreclosure when a judgment of foreclosure has been issued by the court.

Loan origination fees and direct loan origination costs are deferred and amortized as an adjustment of the related loan's yield using methods that approximate the interest method. The Company generally amortizes these amounts over the estimated average life of the related loans.

The Company evaluates the risk characteristics of its loans based on regulatory call report code with segmentation based on the underlying collateral or purpose for certain loan types.

The composition of Net loans as of the balance sheet dates, by regulatory call report code segmentation based on underlying collateral or purpose for certain loan types, was as follows:


	September 30, 2025		December 31, 2024
Residential real estate	(Dollars in thousands)
Non-revolving residential real estate	$	443,152	$	445,425
Revolving residential real estate	27,750		21,884
Construction real estate
Commercial construction real estate	56,723		54,985
Residential construction real estate	56,804		51,202
Commercial real estate
Non-residential commercial real estate	331,191		330,010
Multi-family residential real estate	102,291		104,328
Commercial	32,719		35,175
Consumer	2,659		2,523
Municipal	120,984		110,204
Gross loans	1,174,273		1,155,736
ACL on loans	(8,397)		(7,680)
Net deferred loan costs	2,107		2,162
Net loans	$	1,167,983	$	1,150,218

Qualifying residential first mortgage loans and certain commercial real estate loans with an aggregate carrying value of $498.1 million and $394.5 million were pledged as collateral for borrowings from the FHLB under a blanket lien at September 30, 2025 and December 31, 2024, respectively.

Accrued interest receivable on loans totaled $4.7 million and $5.2 million at September 30, 2025 and December 31, 2024, respectively, and is excluded from the estimate of credit losses described in Note 7.