ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

12 Months Ended

Dec. 31, 2024

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

The following table presents the activity in the allowance for credit losses by portfolio segment for the year ended December 31, 2024, 2023 and 2022:

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multi-family  Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
2024
Beginning balance	$	30,338	$	31,335	$	4,150	$	1,129	$	3,474	$	1,174	$	372	$	71,972
Provision for credit losses	16,639		264		(609)		(386)		(75)		906		11		16,750
Loans charged-off	(1,615)		(840)		0		0		(94)		(919)		0		(3,468)
Recoveries	177		106		0		0		53		370		0		706
Net loans (charged-off) recovered	(1,438)		(734)		0		0		(41)		(549)		0		(2,762)
Ending balance	$	45,539	$	30,865	$	3,541	$	743	$	3,358	$	1,531	$	383	$	85,960

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multi-family  Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
2023
Beginning balance	$	35,290	$	27,394	$	4,429	$	917	$	3,001	$	1,021	$	554	$	72,606
Provision for credit losses	1,209		3,619		(279)		212		598		673		(182)		5,850
Loans charged-off	(6,341)		0		0		0		(163)		(828)		0		(7,332)
Recoveries	180		322		0		0		38		308		0		848
Net loans (charged-off) recovered	(6,161)		322		0		0		(125)		(520)		0		(6,484)
Ending balance	$	30,338	$	31,335	$	4,150	$	1,129	$	3,474	$	1,174	$	372	$	71,972

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multi-family  Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
2022
Beginning balance	$	30,595	$	26,535	$	5,034	$	1,146	$	2,866	$	1,147	$	450	$	67,773
Provision for credit losses	8,646		1,179		(605)		(229)		125		155		104		9,375
Loans charged-off	(4,022)		(597)		0		0		(42)		(473)		0		(5,134)
Recoveries	71		277		0		0		52		192		0		592
Net loans (charged-off) recovered	(3,951)		(320)		0		0		10		(281)		0		(4,542)
Ending balance	$	35,290	$	27,394	$	4,429	$	917	$	3,001	$	1,021	$	554	$	72,606

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of 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 commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $250,000.

The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized as the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans are considered to be "Pass" rated when they are reviewed as part of the previously described process and do not meet the criteria above with the exception of consumer troubled debt restructurings, which are evaluated and listed with Substandard commercial grade loans and consumer nonaccrual loans which are evaluated individually and listed with "Not Rated" loans. Loans listed as Not Rated are consumer loans or commercial loans with consumer characteristics included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status.

The following tables summarize the risk category of loans by loan segment and origination date as of December 31, 2024 and 2023. Balances presented are at the amortized cost basis by origination year.

(dollars in thousands)	2024		2023		2022		2021		2020		Prior		Term Total		Revolving		Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass	$	1,599	$	114	$	1,640	$	1,647	$	651	$	0	$	5,651	$	525,179	$	530,830
Special Mention	0		0		0		0		0		0		0		48,301		48,301
Substandard	0		0		933		0		195		219		1,347		25,878		27,225
Doubtful	0		3,090		39,994		0		0		0		43,084		0		43,084
Total	1,599		3,204		42,567		1,647		846		219		50,082		599,358		649,440
Working capital lines of credit loans:
Current period gross write offs	0		0		94		0		0		0		94		136		230
Non-working capital loans:
Pass	151,920		157,276		173,274		58,591		32,909		28,582		602,552		164,106		766,658
Special Mention	3,901		2,614		2,024		1,637		393		1,894		12,463		6,491		18,954
Substandard	0		2,986		1,598		107		4,142		584		9,417		406		9,823
Doubtful	0		0		0		21		386		0		407		0		407
Not Rated	1,297		1,657		1,149		395		395		23		4,916		0		4,916
Total	157,118		164,533		178,045		60,751		38,225		31,083		629,755		171,003		800,758
Non-working capital loans:
Current period gross write offs	0		383		0		542		179		44		1,148		237		1,385
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass	23,264		69,737		43,228		2,566		0		0		138,795		426,577		565,372
Special Mention	603		0		0		0		0		0		603		0		603
Total	23,867		69,737		43,228		2,566		0		0		139,398		426,577		565,975
Construction and land development loans:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Owner occupied loans:
Pass	98,847		138,299		120,191		143,642		109,451		129,051		739,481		35,003		774,484
Special Mention	6,295		2,728		14,777		0		619		2,488		26,907		0		26,907
Substandard	318		318		0		3,101		1,457		0		5,194		0		5,194
Total	105,460		141,345		134,968		146,743		111,527		131,539		771,582		35,003		806,585
Owner occupied loans
Current period gross write offs	0		0		0		0		0		840		840		0		840
Nonowner occupied loans:
Pass	152,963		118,517		168,387		101,064		119,612		77,497		738,040		110,441		848,481
Special Mention	0		15,650		108		5,868		0		0		21,626		1,895		23,521
Total	152,963		134,167		168,495		106,932		119,612		77,497		759,666		112,336		872,002

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)
(dollars in thousands)	2024	2023	2022	2021	2020	Prior	Term Total	Revolving	Total
Nonowner occupied loans (continued):
Current period gross write offs	0	0	0	0	0	0	0	0	0
Multi-family loans:
Pass	70,497	61,679	11,708	52,995	29,177	9,794	235,850	108,486	344,336
Special Mention	0	0	307	0	0	0	307	0	307
Total	70,497	61,679	12,015	52,995	29,177	9,794	236,157	108,486	344,643
Multi-family loans:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland:
Pass	14,574	21,241	29,601	23,043	25,192	18,312	131,963	24,249	156,212
Special Mention	122	209	0	0	0	0	331	0	331
Substandard	0	0	0	0	0	71	71	0	71
Total	14,696	21,450	29,601	23,043	25,192	18,383	132,365	24,249	156,614
Loans secured by farmland:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Loans for agricultural production:
Pass	15,945	26,704	21,611	24,374	21,446	1,450	111,530	118,090	229,620
Special Mention	0	0	0	0	0	0	0	1,275	1,275
Total	15,945	26,704	21,611	24,374	21,446	1,450	111,530	119,365	230,895
Loans for agricultural production:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Other commercial loans:
Pass	6,639	17,137	29,985	3,397	11,310	5,544	74,012	19,609	93,621
Special Mention	0	0	0	0	0	1,872	1,872	0	1,872
Total	6,639	17,137	29,985	3,397	11,310	7,416	75,884	19,609	95,493
Other commercial loans:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans:
Pass	11,104	8,511	9,274	11,278	6,252	4,685	51,104	4,299	55,403
Special Mention	122	226	165	66	0	0	579	0	579
Substandard	0	83	319	90	0	629	1,121	0	1,121
Not Rated	28,706	55,641	47,355	34,173	13,543	22,396	201,814	0	201,814
Total	39,932	64,461	57,113	45,607	19,795	27,710	254,618	4,299	258,917
Closed end first mortgage loans:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Open end and junior lien loans:
Pass	574	738	0	438	0	5	1,755	10,090	11,845
Special Mention	0	0	0	0	309	0	309	0	309

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		Term Total		Revolving		Total
Open end and junior lien loans (continued):
Substandard	0		104		0		15		0		81		200		118		318
Not Rated	21,929		16,134		18,053		4,660		644		2,894		64,314		139,351		203,665
Total	22,503		16,976		18,053		5,113		953		2,980		66,578		149,559		216,137
Open end and junior lien loans:
Current period gross write offs	0		0		79		0		0		0		79		15		94
Residential construction loans:
Not Rated	10,030		1,154		2,045		1,386		759		1,348		16,722		0		16,722
Total	10,030		1,154		2,045		1,386		759		1,348		16,722		0		16,722
Residential construction loans:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Other consumer loans:
Pass	79		971		234		109		0		0		1,393		20,742		22,135
Special Mention	0		0		475		0		157		0		632		0		632
Substandard	0		128		54		76		17		0		275		0		275
Not Rated	23,508		22,250		11,824		6,688		3,743		1,782		69,795		10,930		80,725
Total	23,587		23,349		12,587		6,873		3,917		1,782		72,095		31,672		103,767
Other consumer loans:
Current period gross write offs	49		303		236		33		0		26		647		272		919
Total Loans	$	644,836	$	745,896	$	750,313	$	481,427	$	382,759	$	311,201	$	3,316,432	$	1,801,516	$	5,117,948
Total current period gross write offs	$	49	$	686	$	409	$	575	$	179	$	910	$	2,808	$	660	$	3,468

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Term Total		Revolving		Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass	$	193	$	1,876	$	2,214	$	1,132	$	0	$	50	$	5,465	$	532,086	$	537,551
Special Mention	0		0		0		0		0		0		0		46,498		46,498
Substandard	0		200		0		0		125		0		325		20,516		20,841
Total	193		2,076		2,214		1,132		125		50		5,790		599,100		604,890
Working capital lines of credit loans:
Current period gross write offs	0		0		75		0		139		0		214		327		541
Non-working capital loans:
Pass	199,071		224,333		85,273		49,999		28,773		10,501		597,950		171,264		769,214
Special Mention	4,038		9,577		1,051		2,498		2,306		4,298		23,768		5,477		29,245
Substandard	3,754		1,612		683		3,892		51		218		10,210		397		10,607
Not Rated	2,585		1,999		881		707		162		18		6,352		0		6,352
Total	209,448		237,521		87,888		57,096		31,292		15,035		638,280		177,138		815,418
Non-working capital loans:
Current period gross write offs	0		5,445		0		178		129		0		5,752		48		5,800
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass	50,693		15,558		17,655		0		177		0		84,083		547,570		631,653
Total	50,693		15,558		17,655		0		177		0		84,083		547,570		631,653
Construction and land development loans:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Owner occupied loans:
Pass	144,411		132,850		156,680		132,407		61,415		118,406		746,169		40,288		786,457
Special Mention	7,597		686		4,913		0		1,394		2,245		16,835		14,739		31,574
Substandard	362		250		3,325		1,474		345		1,161		6,917		0		6,917
Total	152,370		133,786		164,918		133,881		63,154		121,812		769,921		55,027		824,948
Owner occupied loans:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Nonowner occupied loans:
Pass	123,633		158,415		112,582		134,050		87,288		66,755		682,723		27,860		710,583
Special Mention	4,503		0		6,257		0		0		2,246		13,006		0		13,006
Total	128,136		158,415		118,839		134,050		87,288		69,001		695,729		27,860		723,589
Nonowner occupied loans:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Multi-family loans:
Pass	90,954		23,315		9,042		35,648		13,971		14,609		187,539		45,987		233,526
Special Mention	19,671		0		0		0		0		0		19,671		0		19,671
Total	110,625		23,315		9,042		35,648		13,971		14,609		207,210		45,987		253,197

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)
(dollars in thousands)	2023	2022	2021	2020	2019	Prior	Term Total	Revolving	Total
Multi-family loans (continued):
Current period gross write offs	0	0	0	0	0	0	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland:
Pass	24,503	32,060	25,308	27,924	9,104	19,160	138,059	24,724	162,783
Substandard	0	0	0	0	0	100	100	0	100
Total	24,503	32,060	25,308	27,924	9,104	19,260	138,159	24,724	162,883
Loans secured by farmland:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Loans for agricultural production:
Pass	28,657	13,589	27,175	25,504	3,533	10,429	108,887	116,406	225,293
Special Mention	0	0	187	0	0	0	187	500	687
Total	28,657	13,589	27,362	25,504	3,533	10,429	109,074	116,906	225,980
Loans for agricultural production:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Other commercial loans:
Pass	7,058	26,918	33,247	13,684	90	7,332	88,329	29,819	118,148
Special Mention	0	0	0	0	0	2,419	2,419	0	2,419
Total	7,058	26,918	33,247	13,684	90	9,751	90,748	29,819	120,567
Other commercial loans:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans:
Pass	9,910	10,541	12,486	8,614	3,924	4,625	50,100	8,330	58,430
Special Mention	0	0	0	519	0	0	519	0	519
Substandard	87	0	96	123	0	253	559	0	559
Not Rated	64,233	51,018	38,014	17,432	4,314	23,225	198,236	0	198,236
Total	74,230	61,559	50,596	26,688	8,238	28,103	249,414	8,330	257,744
Closed end first mortgage loans:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Open end and junior lien loans:
Pass	557	137	491	335	0	6	1,526	8,689	10,215
Substandard	108	0	23	0	26	48	205	68	273
Not Rated	24,792	29,648	8,471	1,554	2,286	1,962	68,713	112,371	181,084
Total	25,457	29,785	8,985	1,889	2,312	2,016	70,444	121,128	191,572
Open end and junior lien loans:
Current period gross write offs	0	50	14	0	0	0	64	99	163
Residential construction loans:
Not Rated	1,525	2,982	1,515	839	263	1,220	8,344	0	8,344
Total	1,525	2,982	1,515	839	263	1,220	8,344	0	8,344

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Term Total		Revolving		Total
Residential construction loans (continued):
Current gross period write offs	0		0		0		0		0		0		0		0		0
Other consumer loans:
Pass	1,082		789		1,391		301		0		0		3,563		11,894		15,457
Substandard	40		34		35		0		2		0		111		0		111
Not Rated	32,481		17,585		9,994		6,008		1,611		1,957		69,636		10,545		80,181
Total	33,603		18,408		11,420		6,309		1,613		1,957		73,310		22,439		95,749
Other consumer loans:
Current gross period write offs	16		258		90		8		212		1		585		243		828
TOTAL	$	846,498	$	755,972	$	558,989	$	464,644	$	221,160	$	293,243	$	3,140,506	$	1,776,028	$	4,916,534
Total current period gross write offs	$	16	$	5,753	$	179	$	186	$	480	$	1	$	6,615	$	717	$	7,332

As of December 31, 2024 and 2023, $1.2 million and $1.3 million, respectively, in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans. These loans were included in this risk rating category because they are fully guaranteed by the Small Business Administration ("SBA").

Nonaccrual and Past Due Loans:

For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in process of collection, or earlier when concern exists as to the ultimate collectability of principal or interest. Interest accrued but not received is reversed against earnings. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and the payments are reasonably assured.

The following table presents the aging of the amortized cost basis in past due loans as of December 31, 2024 and 2023 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands)	Loans Not Past Due		30-89 Days Past Due		Greater than 89 Days Past Due and Accruing		Total Accruing		Total Nonaccrual		Nonaccrual With No Allowance For Credit Loss		Total
2024
Commercial and industrial loans:
Working capital lines of credit loans	$	603,016	$	1,082	$	0	$	604,098	$	45,342	$	594	$	649,440
Non-working capital loans	792,577		663		3		793,243		7,515		37		800,758
Commercial real estate and multi-family residential loans:
Construction and land development loans	565,975		0		0		565,975		0		0		565,975
Owner occupied loans	804,810		0		0		804,810		1,775		318		806,585
Nonowner occupied loans	872,002		0		0		872,002		0		0		872,002
Multi-family loans	344,643		0		0		344,643		0		0		344,643
Agri-business and agricultural loans:
Loans secured by farmland	156,543		0		0		156,543		71		0		156,614
Loans for agricultural production	230,895		0		0		230,895		0		0		230,895
Other commercial loans	95,493		0		0		95,493		0		0		95,493
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	256,486		1,284		26		257,796		1,121		665		258,917
Open end and junior lien loans	215,505		314		0		215,819		318		318		216,137
Residential construction loans	16,722		0		0		16,722		0		0		16,722
Other consumer loans	102,565		927		0		103,492		275		17		103,767
Total	$	5,057,232	$	4,270	$	29	$	5,061,531	$	56,417	$	1,949	$	5,117,948

An insignificant amount of interest income was recognized on nonaccrual loans during the twelve months ended December 31, 2024.

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

(dollars in thousands)	Loans Not Past Due		30-89 Days Past Due		Greater than 89 Days Past Due and Accruing		Total Accruing		Total Nonaccrual		Nonaccrual With No Allowance For Credit Loss		Total
2023
Commercial and industrial loans:
Working capital lines of credit loans	$	602,236	$	0	$	0	$	602,236	$	2,654	$	0	$	604,890
Non-working capital loans	805,305		1,372		0		806,677		8,741		244		815,418
Commercial real estate and multi-family residential loans:
Construction and land development loans	631,653		0		0		631,653		0		0		631,653
Owner occupied loans	821,701		0		0		821,701		3,247		1,161		824,948
Nonowner occupied loans	723,589		0		0		723,589		0		0		723,589
Multi-family loans	253,197		0		0		253,197		0		0		253,197
Agri-business and agricultural loans:
Loans secured by farmland	162,783		0		0		162,783		100		0		162,883
Loans for agricultural production	225,980		0		0		225,980		0		0		225,980
Other commercial loans	120,567		0		0		120,567		0		0		120,567
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	256,016		1,142		27		257,185		559		329		257,744
Open end and junior lien loans	190,956		344		0		191,300		272		164		191,572
Residential construction loans	8,344		0		0		8,344		0		0		8,344
Other consumer loans	95,135		502		0		95,637		112		3		95,749
Total	$	4,897,462	$	3,360	$	27	$	4,900,849	$	15,685	$	1,901	$	4,916,534

An insignificant amount of interest income was recognized on nonaccrual loans during the twelve months ended December 31, 2023.

When management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty and the loan is expected to be repaid substantially through the operation or sale of the collateral. The class of loan represents the primary collateral type associated with the loan. Significant year over year changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value.

The following tables present the amortized cost basis of collateral dependent loans by class of loan as of December 31, 2024 and 2023:

(dollars in thousands)	Real Estate		General Business  Assets		Other		Total
2024
Commercial and industrial loans:
Working capital lines of credit loans	$	50	$	64,023	$	447	$	64,520
Non-working capital loans	1,891		6,585		19		8,495
Commercial real estate and multi-family residential loans:
Owner occupied loans	318		3,512		0		3,830
Nonowner occupied loans	0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland	0		71		0		71
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	1,121		0		0		1,121
Open end and junior lien loans	318		0		0		318
Other consumer loans	0		0		272		272
Total	$	3,698	$	74,191	$	738	$	78,627

(dollars in thousands)	Real Estate		General Business  Assets		Other		Total
2023
Commercial and industrial loans:
Working capital lines of credit loans	$	50	$	2,454	$	0	$	2,504
Non-working capital loans	40		8,202		400		8,642
Commercial real estate and multi-family residential loans:
Owner occupied loans	595		1,474		1,161		3,230
Nonowner occupied loans	0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland	0		100		0		100
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	559		0		0		559
Open end and junior lien loans	164		0		0		164
Other consumer loans	0		0		112		112
Total	$	1,408	$	12,230	$	1,673	$	15,311

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

Modifications Made to Borrowers Experiencing Financial Difficulty

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon origination. The starting point to estimate such credit losses is historical loss information. The Company uses a probability of default/loss given default model to determine the allowance for credit losses recorded at origination. Occasionally, the Company subsequently modifies loans for borrowers experiencing financial distress by providing the following forms of relief: forgiveness of loan principal, extension of repayment terms, reduction of interest rate or an other than insignificant payment delay. In some instances, the Company provides multiple types of concessions for such modifications. Because the effect of most modifications to borrowers experiencing financial difficulty is already included in the allowance for credit losses, no change to the allowance for credit losses is generally recorded for these modifications.

During the twelve months ended December 31, 2024, there were an insignificant amount of modifications to borrowers experiencing financial difficulty.

The following table presents the amortized cost basis at the end of the reporting period of loans that were experiencing financial difficulty and received a modification of terms during the twelve months ended December 31, 2023, by class and type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivables at the end of the reporting period is also presented below:

(dollars in thousands)	Interest Rate Reduction		Combination Interest Rate Reduction, Term Extension and Payment Delay		Combination Principal Forgiveness, Interest Rate Reduction, Term Extension and Payment Delay		Total Modifications		Total Class of Financing Receivable
Twelve Months Ended December 31, 2023
Commercial and industrial loans:
Working capital lines of credit loans	$	944	$	0	$	0	$	944	0.16	%
Non-working capital loans	0		1,912		1,572		3,484		0.43
Total commercial and industrial loans	944		1,912		1,572		4,428		0.31
Total loan modifications made to borrowers experiencing financial difficulty	$	944	$	1,912	$	1,572	$	4,428	0.09	%

The Company had no material commitments to lend additional funds to borrowers included in the previous table at December 31, 2023.

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

The following table presents the financial effect of the loan modifications presented above for material modifications to borrowers experiencing financial difficulty for the twelve months ended December 31, 2023:

(dollars in thousands)	Principal Forgiveness		Weighted Average Interest Rate Reduction		Weighted Average Term Extension	Payment Delay
Twelve Months Ended December 31, 2023
Commercial and industrial loans:
Working capital lines of credit loans	$	0	7.50	%	None	None
Non-working capital loans (1)	9,380		7.87	%	58 months	Extension of payment terms from fully amortizing variable rate 40 month term to 60 month fixed rate term with 480 month amortization schedule, monthly interest and semiannual principal payments, and excess cash flow recapture provisions Extension of payment terms from monthly variable rate interest only payments with balloon payment at end of term to fully amortizing ten year fixed rate principal and interest payment schedule
Total commercial and industrial loans	9,380		7.84	%	44 months
Total modifications	$	9,380	7.84	%	44 months

(1) Principal forgiveness of $9.4 million represents one $11.0 million non-working capital loan, of which $3.7 million and $5.6 million was charged off during the twelve months ended December 31, 2023 and 2022, respectively.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. At December 31, 2024, no loans receiving such a modification within the last twelve months were 30 days or greater past due.

At December 31, 2024, no loans receiving a modification due to borrower financial difficulty within the last twelve months has experienced a payment default.

Upon the Company's determination that a modified loan (or portion thereof) has subsequently been deemed uncollectible, the loan (or a portion thereof) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.