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Allowance for Credit Losses on Loans and Off-Balance Sheet Credit Exposures
 9 Months Ended
Sep. 30, 2025
Credit Loss [Abstract]  
Allowance for Credit Losses on Loans and Off-Balance Sheet Credit Exposures Allowance for Credit Losses on Loans and Off-Balance Sheet Credit Exposures
The level of the ACL on loans represents management's estimate of expected credit losses over the expected life of the loans at the balance sheet date. For all loan segments, loan losses are charged against the ACL on loans when management believes the loan balance is uncollectible or in accordance with federal guidelines. Subsequent recoveries, if any, are credited to the ACL on loans.
The ACL on loans is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. The ACL on loans is comprised of reserves measured on a collective (pool) basis based
on a lifetime loss-rate model when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis, generally larger non-accruing commercial loans.
The Company uses the DCF method to estimate expected credit losses for all loan pools. For each of the loan segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, and loss rates. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical benchmark data.
The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime loss rates. This analysis also determines how expected loss rates will react to forecasted levels of the loss drivers. For all loan pools utilizing the DCF method, management utilizes and forecasts national unemployment as a loss driver.
For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over four quarters on a straight-line basis. Management leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period.
The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level that represents the sum of expected losses to determine the estimated ACL on loans.
The ACL on loans evaluation also considers various qualitative factors, including changes in policy and/or underwriting standards, actual or expected changes in economic trends and conditions, changes in the nature and volume of the portfolio, changes in credit and lending staff/administration, problem loan trends, credit risk concentrations, loan review results, changes in the value of underlying collateral for loans, and changes in the regulatory and business environment.
Certain loans are individually evaluated for estimated credit losses, including those greater than $500 thousand that are classified as substandard or doubtful and are on nonaccrual or that have other unique characteristics differing from the segment. Specific reserves are established when appropriate for such loans based on the present value of expected future cash flows of the loan or the estimated realizable value of the collateral, if any.
Risk characteristics relevant to each portfolio segment are as follows:
•Residential real estate - Loans in this segment are collateralized by owner-occupied 1-4 family residential real estate, second and vacation homes, 1-4 family investment properties, home equity and second mortgage loans. Repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, could have an effect on the credit quality of this segment.
•Construction real estate - Loans in this segment include residential and commercial construction properties, commercial real estate development loans (while in the construction phase of the projects), land and land development loans. Repayment is dependent on the credit quality of the individual borrower and/or the underlying cash flows generated by the properties being constructed. The overall health of the economy, including unemployment rates, housing prices, vacancy rates and material costs, could have an effect on the credit quality of this segment.
•Commercial real estate - Loans in this segment are primarily properties occupied by businesses or income-producing properties. The underlying cash flows generated by the properties may be adversely impacted by a downturn in the economy as evidenced by a general slowdown in business or increased vacancy rates which, in turn, could have an effect on the credit quality of this segment. Management requests business financial statements at least annually and monitors the cash flows of these loans.
•Commercial - Loans in this segment are made to businesses and are generally secured by non-real estate assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer or business spending, could have an effect on the credit quality of this segment.
•Consumer - Loans in this segment are made to individuals for personal expenditures, such as automobile purchases, and include unsecured loans. Repayment is primarily dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment, could have an effect on the credit quality of this segment.
•Municipal - Loans in this segment are made to municipalities located within the Company's service area. Repayment is primarily dependent on taxes or other funds collected by the municipalities. Management considers there to be minimal risk surrounding the credit quality of this segment.
Changes in the ACL on loans, by loan segment, for the three and nine months ended September 30, 2025 and 2024 were as follows:
For The Three Months
Ended September 30, 2025		Balance,
June 30, 2025		Charge-OffsRecoveriesCredit Loss Expense (Benefit)Balance,
September 30, 2025
(Dollars in thousands)
Non-revolving residential real estate$2,905 $— $3 $(11)$2,897 
Revolving residential real estate230 — — 21 251 
Residential real estate3,135 — 3 10 3,148 
Commercial construction real estate1,019 — — 103 1,122 
Residential construction real estate219 — — (17)202 
Construction real estate1,238 — — 86 1,324 
Non-residential commercial real estate3,200 — — 53 3,253 
Multi-family residential real estate258 — — (10)248 
Commercial real estate3,458 — — 43 3,501 
Commercial439 (41)2 (89)311 
Consumer6 (1)— — 5 
Municipal31 — — 77 108 
Total$8,307 $(42)$5 $127 $8,397 

For The Nine Months
Ended September 30, 2025		Balance,
December 31, 2024		Charge-OffsRecoveriesCredit Loss Expense (Benefit)Balance,
September 30, 2025
(Dollars in thousands)
Non-revolving residential real estate$3,212 $— $12 $(327)$2,897 
Revolving residential real estate280 — — (29)251 
Residential real estate3,492 — 12 (356)3,148 
Commercial construction real estate651 — — 471 1,122 
Residential construction real estate102 — — 100 202 
Construction real estate753 — — 571 1,324 
Non-residential commercial real estate2,766 — — 487 3,253 
Multi-family residential real estate212 — — 36 248 
Commercial real estate2,978 — — 523 3,501 
Commercial377 (41)2 (27)311 
Consumer6 (5)1 3 5 
Municipal74 — — 34 108 
Total$7,680 $(46)$15 $748 $8,397 
For The Three Months
Ended September 30, 2024		Balance,
June 30, 2024		Charge-OffsRecoveriesCredit Loss Expense (Benefit)Balance,
September 30, 2024
(Dollars in thousands)
Non-revolving residential real estate$2,967 $— $6 $100 $3,073 
Revolving residential real estate273 — — — 273 
Residential real estate3,240 — 6 100 3,346 
Commercial construction real estate544 — — 140 684 
Residential construction real estate88 — — 11 99 
Construction real estate632 — — 151 783 
Non-residential commercial real estate2,469 — — 173 2,642 
Multi-family residential real estate207 — — 2 209 
Commercial real estate2,676 — — 175 2,851 
Commercial312 — — (14)298 
Consumer7 (1)— — 6 
Municipal26 — — 56 82 
Total$6,893 $(1)$6 $468 $7,366 

For The Nine Months
Ended September 30, 2024		Balance,
December 31, 2023		Charge-OffsRecoveriesCredit Loss Expense (Benefit)Balance,
September 30, 2024
(Dollars in thousands)
Non-revolving residential real estate$2,361 $— $17 $695 $3,073 
Revolving residential real estate159 — — 114 273 
Residential real estate2,520 — 17 809 3,346 
Commercial construction real estate1,035 — — (351)684 
Residential construction real estate163 — — (64)99 
Construction real estate1,198 — — (415)783 
Non-residential commercial real estate2,182 — — 460 2,642 
Multi-family residential real estate244 — — (35)209 
Commercial real estate2,426 — — 425 2,851 
Commercial352 — 1 (55)298 
Consumer5 (2)— 3 6 
Municipal65 — — 17 82 
Total$6,566 $(2)$18 $784 $7,366 
The Company's ACL on off-balance sheet credit exposures is recognized as a liability within Accrued interest and other liabilities on the consolidated balance sheets, with adjustments to the ACL recognized in Credit loss expense in the consolidated statements of income. The activity in the ACL on off-balance sheet credit exposures for the three and nine months ended September 30, 2025 and 2024 was as follows:
For The Three Months Ended September 30,For the Nine Months Ended September 30,
2025202420252024
ACL on Off-Balance Sheet Credit Exposures(Dollars in thousands)
Balance at beginning of period$906 $1,075 $1,071 $1,233 
Credit loss expense (benefit)186 (43)21 (201)
Balance at end of period$1,092 $1,032 $1,092 $1,032 

Risk and collateral ratings are assigned to loans and are subject to ongoing monitoring by lending and credit personnel, with such ratings updated annually or more frequently if warranted. The following is an overview of the Company's loan rating system:
1-3 Rating - Pass
Risk-rating grades "1" through "3" comprise those loans ranging from those with lower than average credit risk, defined as borrowers with high liquidity, excellent financial condition, strong management, favorable industry trends or loans secured by highly liquid assets, through those with marginal credit risk, defined as borrowers that, while creditworthy, exhibit some characteristics requiring special attention by the account officer.
4-4.5 Rating - Satisfactory/Monitor
Borrowers exhibit potential credit weaknesses or downward trends warranting management's attention. While potentially weak, these borrowers are currently marginally acceptable; no loss of principal or interest is envisioned. When warranted, these credits may be monitored on the watch list.
5-7 Rating - Substandard
Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. The loan may be inadequately protected by the net worth and paying capacity of the obligor and/or the underlying collateral is inadequate.
The following table summarizes the Company's loans by year of origination and by loan ratings applied by management to the Company's loans by segment as well as gross charge-offs by year of origination and loan segment as of and for the period ended September 30, 2025:
September 30, 202520252024202320222021PriorRevolvingTotal
(Dollars in thousands)
Non-revolving residential real estate
Pass$31,813 $74,706 $58,171 $92,942 $73,369 $72,128 $— $403,129 
Satisfactory/Monitor4,642 6,367 5,217 10,577 5,187 7,209 — 39,199 
Substandard— — — 653 — 171 — 824 
Total non-revolving residential real estate36,455 81,073 63,388 104,172 78,556 79,508 — 443,152 
Gross charge-offs for the nine months ended
— — — — — — — — 
Revolving residential real estate
Pass— — — — — — 26,028 26,028 
Satisfactory/Monitor— — — — — — 1,691 1,691 
Substandard— — — — — — 31 31 
Total revolving residential real estate— — — — — — 27,750 27,750 
Gross charge-offs for the nine months ended
— — — — — — — — 
Commercial construction real estate
Pass3,886 6,234 1,288 1,664 1,139 995 — 15,206 
Satisfactory/Monitor3,082 23,591 967 — 749 118 — 28,507 
Substandard— — 13,010 — — — — 13,010 
Total commercial construction real estate6,968 29,825 15,265 1,664 1,888 1,113 — 56,723 
Gross charge-offs for the nine months ended
— — — — — — — — 
Residential construction real estate
Pass24,244 21,892 2,394 997 — — — 49,527 
Satisfactory/Monitor2,320 1,756 — 200 2,016 985 — 7,277 
Substandard— — — — — — — — 
Total residential construction real estate26,564 23,648 2,394 1,197 2,016 985 — 56,804 
Gross charge-offs for the nine months ended
— — — — — — — — 
Non-residential commercial real estate
Pass6,216 4,818 11,028 45,562 28,299 69,821 4,502 170,246 
Satisfactory/Monitor3,752 60,857 14,786 19,153 15,902 27,562 15,909 157,921 
Substandard— — — — — 3,024 — 3,024 
Total non-residential commercial real estate9,968 65,675 25,814 64,715 44,201 100,407 20,411 331,191 
Gross charge-offs for the nine months ended
— — — — — — — — 
Multi-family residential real estate
Pass851 454 136 4,064 4,751 36,159 — 46,415 
Satisfactory/Monitor2,250 1,776 5,694 14,798 14,988 16,127 — 55,633 
Substandard— — — — — 243 — 243 
Total multi-family residential real estate3,101 2,230 5,830 18,862 19,739 52,529 — 102,291 
Gross charge-offs for the nine months ended
— — — — — — — — 
Commercial
Pass1,863 2,259 2,189 2,351 1,180 6,629 5,085 21,556 
Satisfactory/Monitor846 2,050 1,600 1,853 1,705 2,168 688 10,910 
Substandard— — — — — 253 — 253 
Total commercial2,709 4,309 3,789 4,204 2,885 9,050 5,773 32,719 
Gross charge-offs for the nine months ended
41 — — — — — — 41 
September 30, 202520252024202320222021PriorRevolvingTotal
(Dollars in thousands)
Consumer
Pass1,230 622 521 48 17 199 21 2,658 
Satisfactory/Monitor1 — — — — — — 1 
Substandard— — — — — — — — 
Total consumer1,231 622 521 48 17 199 21 2,659 
Gross charge-offs for the nine months ended
— 1 4 — — — — 5 
Municipal
Pass98,320 8,896 9,290 514 347 3,617 — 120,984 
Satisfactory/Monitor— — — — — — — — 
Substandard— — — — — — — — 
Total municipal98,320 8,896 9,290 514 347 3,617 — 120,984 
Gross charge-offs for the nine months ended
— — — — — — — — 
Total Loans$185,316 $216,278 $126,291 $195,376 $149,649 $247,408 $53,955 $1,174,273 
Gross charge-offs for the nine months ended
$41 $1 $4 $— $— $— $— $46 

The following table summarizes the Company's loans by year of origination and by loan ratings applied by management to the Company's loans by segment as well as gross charge-offs by year of origination and loan segment as of and for the year ended December 31, 2024:
December 31, 202420242023202220212020PriorRevolvingTotal
(Dollars in thousands)
Non-revolving residential real estate
Pass$83,371 $70,515 $100,168 $79,234 $27,326 $51,661 $— $412,275 
Satisfactory/Monitor5,381 5,065 10,744 3,642 2,450 5,627 — 32,909 
Substandard— — — — 158 83 — 241 
Total non-revolving residential real estate88,752 75,580 110,912 82,876 29,934 57,371 — 445,425 
Gross charge-offs for the year ended— — — — — — — — 
Revolving residential real estate
Pass— — — — — — 20,516 20,516 
Satisfactory/Monitor— — — — — — 1,344 1,344 
Substandard— — — — — — 24 24 
Total revolving residential real estate— — — — — — 21,884 21,884 
Gross charge-offs for the year ended— — — — — — — — 
Commercial construction real estate
Pass8,968 2,216 4,514 1,460 559 714 — 18,431 
Satisfactory/Monitor13,524 15,276 1,760 5,800 53 141 — 36,554 
Substandard— — — — — — — — 
Total commercial construction real estate22,492 17,492 6,274 7,260 612 855 — 54,985 
Gross charge-offs for the year ended— — — — — — — — 
Residential construction real estate
Pass34,189 8,725 960 — — — — 43,874 
Satisfactory/Monitor2,199 1,547 136 2,307 1,139 — — 7,328 
Substandard— — — — — — — — 
Total residential construction real estate36,388 10,272 1,096 2,307 1,139 — — 51,202 
Gross charge-offs for the year ended— — — — — — — — 
December 31, 202420242023202220212020PriorRevolvingTotal
(Dollars in thousands)
Non-residential commercial real estate
Pass3,427 10,481 49,645 31,969 17,227 64,073 5,431 182,253 
Satisfactory/Monitor48,068 17,365 15,874 13,967 5,297 27,610 14,954 143,135 
Substandard— — — — 1,606 2,969 47 4,622 
Total non-residential commercial real estate51,495 27,846 65,519 45,936 24,130 94,652 20,432 330,010 
Gross charge-offs for the year ended— — — — — — — — 
Multi-family residential real estate
Pass1,720 283 4,329 10,115 1,853 31,787 — 50,087 
Satisfactory/Monitor563 2,484 14,980 10,291 5,535 20,132 — 53,985 
Substandard— — — — — 256 — 256 
Total multi-family residential real estate2,283 2,767 19,309 20,406 7,388 52,175 — 104,328 
Gross charge-offs for the year ended— — — — — — — — 
Commercial
Pass3,224 2,583 4,417 1,517 370 7,492 3,483 23,086 
Satisfactory/Monitor1,958 2,438 899 1,977 203 2,595 1,295 11,365 
Substandard— — — — — — 724 724 
Total commercial5,182 5,021 5,316 3,494 573 10,087 5,502 35,175 
Gross charge-offs for the year ended— — — — — — — — 
Consumer
Pass1,253 777 105 53 66 188 24 2,466 
Satisfactory/Monitor57 — — — — — — 57 
Substandard— — — — — — — — 
Total consumer1,310 777 105 53 66 188 24 2,523 
Gross charge-offs for the year ended2 — — 1 — — — 3 
Municipal
Pass93,280 10,482 1,363 606 1,272 3,201 — 110,204 
Satisfactory/Monitor— — — — — — — — 
Substandard— — — — — — — — 
Total municipal93,280 10,482 1,363 606 1,272 3,201 — 110,204 
Gross charge-offs for the year ended— — — — — — — — 
Total Loans$301,182 $150,237 $209,894 $162,938 $65,114 $218,529 $47,842 $1,155,736 
Gross charge-offs for the year ended$2 $— $— $1 $— $— $— $3 
A summary of current and past due loans as of September 30, 2025 and December 31, 2024 follows:
September 30, 202530-59 Days60-89 Days90 Days and OverTotal Past DueCurrentTotal
(Dollars in thousands)
Residential real estate
Non-revolving residential real estate$— $70 $815 $885 $442,267 $443,152 
Revolving residential real estate— 10 — 10 27,740 27,750 
Construction real estate
Commercial construction real estate— — — — 56,723 56,723 
Residential construction real estate— — — — 56,804 56,804 
Commercial real estate
Non-residential commercial real estate— — 255 255 330,936 331,191 
Multi-family residential real estate— — — — 102,291 102,291 
Commercial— — 44 44 32,675 32,719 
Consumer— — — — 2,659 2,659 
Municipal— — — — 120,984 120,984 
Total$— $80 $1,114 $1,194 $1,173,079 $1,174,273 

December 31, 202430-59 Days60-89 Days90 Days and OverTotal Past DueCurrentTotal
(Dollars in thousands)
Residential real estate
Non-revolving residential real estate$1,560 $1,158 $241 $2,959 $442,466 $445,425 
Revolving residential real estate— — — — 21,884 21,884 
Construction real estate
Commercial construction real estate— — — — 54,985 54,985 
Residential construction real estate— — — — 51,202 51,202 
Commercial real estate
Non-residential commercial real estate355 46 — 401 329,609 330,010 
Multi-family residential real estate— — — — 104,328 104,328 
Commercial45 — — 45 35,130 35,175 
Consumer— 4 — 4 2,519 2,523 
Municipal— — — — 110,204 110,204 
Total$1,960 $1,208 $241 $3,409 $1,152,327 $1,155,736 
A summary of nonaccrual loans as of September 30, 2025 and December 31, 2024 follows:
September 30, 2025NonaccrualNonaccrual With No Allowance for Credit Losses90 Days and Over and Accruing
Residential real estate(Dollars in thousands)
Non-revolving residential real estate$644 $— $171 
Construction real estate
Commercial construction real estate12,343 — — 
Commercial real estate
Non-residential commercial real estate— — 255 
Commercial— — 44 
Total$12,987 $— $470 
December 31, 2024NonaccrualNonaccrual With No Allowance for Credit Losses90 Days and Over and Accruing
Residential real estate(Dollars in thousands)
Non-revolving residential real estate$— $— $241 
Commercial real estate
Non-residential commercial real estate1,652 1,652 — 
Total$1,652 $1,652 $241 
There were no loans in process of foreclosure at September 30, 2025 and one residential real estate loan totaling $8 thousand in process of foreclosure at December 31, 2024. Aggregate interest on nonaccrual loans not recognized was $568 thousand as of September 30, 2025 and $235 thousand as of December 31, 2024.
Loans that do not share risk characteristics are evaluated on an individual basis. Loans that are individually evaluated and collateral dependent represent loans that the Company has determined foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the sale of the collateral. For these loans, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan at the measurement date.
The following table presents collateral dependent loans to borrowers experiencing financial difficulty by loan class and collateral type as of the balance sheet dates:
September 30, 2025December 31, 2024
Real EstateReal Estate
(Dollars in thousands)
Residential real estate$9 $— 
Commercial construction real estate13,010 — 
Non-residential commercial real estate3,202 4,246 
Multi-family residential real estate420 — 
Commercial44 500 
Total$16,685 $4,746 

Collateral dependent loans are loans for which the repayment is expected to be provided substantially by the underlying collateral and there are no other available and reliable sources of repayment.

Occasionally, the Company modifies loans to borrowers experiencing financial difficulty by providing interest rate reductions, term extensions, payment deferrals or principal forgiveness. When principal forgiveness is provided, the amount of forgiveness is charged off against the ACL on loans. There were no new loan modifications to borrowers experiencing financial difficulty during the three months ended September 30, 2025 or 2024. The following tables summarize loan modifications to borrowers experiencing financial difficulty by loan class, type of modification and the financial effect of the modifications as of and for the nine months ended September 30, 2025 and 2024.
Payment Delay
Nine Months Ended
September 30, 2025
Amortized Cost Basis% of Loan ClassFinancial Effect
(Dollars in thousands)
Commercial construction real estate$13,010 22.94 %
Modification extended loan draw period 6 months, extended interest only payments by 12 months and extended maturity date by 18 months.
Payment Delay
Nine Months Ended
September 30, 2024
Amortized Cost Basis% of Loan ClassFinancial Effect
(Dollars in thousands)
Non-revolving residential real estate$15 — %
Modification deferred 3 months of principal and interest payments.
Non-residential commercial real estate260 0.08 %
Modification deferred 3 months of principal and interest payments.
Commercial46 0.12 %
Modification deferred 3 months of principal and interest payments.

The following tables present the performance of loans as of September 30, 2025 and December 31, 2024 that had been modified in the previous twelve months:
September 30, 2025CurrentPast Due
30-89 Days		Past Due 90 Days and Over
(Dollars in thousands)
Commercial construction real estate$13,010 $— $— 
Non-residential commercial real estate2,594 — — 
Total$15,604 $— $— 

December 31, 2024CurrentPast Due
30-89 Days		Past Due 90 Days and Over
(Dollars in thousands)
Non-revolving residential real estate$14 $— $— 
Non-residential commercial real estate2,851 — — 
Commercial— 45 — 
Total$2,865 $45 $— 

There were no loans to borrowers experiencing financial difficulty that were modified within the previous twelve months that had subsequently defaulted during the three and nine months ended September 30, 2025 and 2024. Loans are considered defaulted at 90 days past due.

At September 30, 2025 and December 31, 2024, the Company was not committed to lend any additional funds to borrowers experiencing financial difficulty for which the Company modified the terms of the loans in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension.