Loans and Related Allowance for Credit Losses

3 Months Ended

Mar. 31, 2025

Loans and Related Allowance for Credit Losses [Abstract]

Loans and Related Allowance for Credit Losses

Note 5 – Loans and Related Allowance for Credit Losses

The following table summarizes the primary segments of the loan portfolio at March 31, 2025 and December 31, 2024:

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Total
March 31, 2025
Individually evaluated for impairment	$	—	$	—	$	1,839	$	1,593	$	—	$	3,432
Collectively evaluated for impairment		532,764		94,063		280,531		518,479		50,600		1,476,437
Total loans	$	532,764	$	94,063	$	282,370	$	520,072	$	50,600	$	1,479,869
December 31, 2024
Individually evaluated for impairment	$	574	$	—	$	2,048	$	1,810	$	—	$	4,432
Collectively evaluated for impairment		525,790		95,314		285,486		517,005		52,766		1,476,361
Total loans	$	526,364	$	95,314	$	287,534	$	518,815	$	52,766	$	1,480,793

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans at March 31, 2025 and December 31, 2024:

(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due and Accruing		Non- Accrual		Total Loans
March 31, 2025
Commercial real estate:
Non-owner-occupied	$	304,568	$	—	$	—	$	—	$	—	$	—	$	304,568
All other CRE		224,979		721		2,417		—		3,138		79		228,196
Acquisition and development:
1-4 family residential construction		20,490		—		—		—		—		—		20,490
All other A&D		73,482		52		—		—		52		39		73,573
Commercial and industrial		280,461		20		50		—		70		1,839		282,370
Residential mortgage:
Residential mortgage - term		450,936		773		790		140		1,703		1,869		454,508
Residential mortgage - home equity		64,620		314		450		93		857		87		65,564
Consumer		50,045		355		87		—		442		113		50,600
Total	$	1,469,581	$	2,235	$	3,794	$	233	$	6,262	$	4,026	$	1,479,869
December 31, 2024
Commercial real estate:
Non-owner-occupied	$	296,259	$	—	$	—	$	—	$	—	$	—	$	296,259
All other CRE		228,875		257		—		317		574		656		230,105
Acquisition and development:
1-4 family residential construction		16,630		—		—		—		—		—		16,630
All other A&D		78,588		—		14		—		14		82		78,684
Commercial and industrial		285,675		—		21		—		21		1,838		287,534
Residential mortgage:
Residential mortgage - term		447,161		66		2,411		504		2,981		2,100		452,242
Residential mortgage - home equity		65,824		371		228		69		668		81		66,573
Consumer		52,117		364		83		28		475		174		52,766
Total	$	1,471,129	$	1,058	$	2,757	$	918	$	4,733	$	4,931	$	1,480,793

Non-accrual loans that have been subject to partial charge-offs totaled $0.7 million at March 31, 2025 and December 31, 2024.  There were no loans secured by 1-4 family residential real estate properties in the process of foreclosure at March 31, 2025.  Loans secured by 1-4 family residential real estate properties in the process of foreclosure totaled $1.6 million at December 31, 2024.  Accruing loans past due 30 days or more constituted 0.42% of the loan portfolio at March 31, 2025 compared to 0.32% at December 31, 2024. 

A loan that is considered a non-accrual or modified loan may be subject to the individually evaluated loan analysis if the commitment is $0.1 million or greater; otherwise, the modified loan remains in the appropriate segment in the ACL model and associated reserves are adjusted based on changes in the discounted cash flows resulting from the modification of the modified loan.  For a discussion with respect to reserve calculations regarding individually evaluated loans, refer to the “Nonrecurring Loans” section in Note 6, Fair Value of Financial Instruments.

The Corporation maintains an ACL at a level determined to be adequate to absorb expected credit losses associated with the Corporation’s financial instruments over the life of those instruments as of the balance sheet date.  The Corporation develops and documents a systematic ACL methodology based on the following portfolio segments: (i) commercial real estate; (ii) acquisition and development; (iii) commercial and industrial; (iv) residential mortgage; and (v) consumer.  The Corporation’s loan portfolio is

segmented by homogeneous loan types that behave similarly to economic cycles.  The following is a discussion of the key risks by portfolio segment that management assesses in preparing the ACL.

Commercial Real Estate- loans are secured by commercial purpose real estate, including both owner-occupied properties and properties obtained for investment purposes, such as hotels, strip malls and apartments.  Operations of the individual projects as well as global cash flows of the debtors are the primary source of repayment of these loans.  The condition of the local economy is an important indicator of risk, but there are more specific risks depending on the collateral type as well as the business.

Acquisition and Development- loans include both commercial and consumer.  Commercial loans are made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes.  While the risk of these loans is generally confined to the construction period, if there are problems, the project may not be completed, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal.  The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer.  Consumer loans are made for the construction of residential homes for which a binding sales contract exists and generally are for a period of time sufficient to complete construction.  Residential construction loans to individuals generally provide for the payment of interest only during the construction phase.  Credit risk for residential real estate construction loans can arise from construction delays, cost overruns, failure of the contractor to complete the project to specifications and economic conditions that could impact demand for supply of the property being constructed.

Commercial and Industrial- loans are made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing.  Cash flow from the operations of the borrower is the primary source of repayment for these loans.  The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the industry of the borrower.  Collateral for these types of loans often do not have sufficient value in a distressed or liquidation scenario to satisfy the outstanding debt.  These loans are also made to local municipalities for various purposes including refinancing existing obligations, infrastructure up-fit and expansion, or to purchase new equipment.  The primary repayment source for local municipalities includes the tax base of the municipality, specific revenue streams related to the infrastructure financed, and other business operations of the municipal authority.  The health and stability of state and local economies directly impacts each municipality’s tax basis and are important indicators of risk for this segment.  The ability of each municipality to increase taxes and fees to offset service requirements give this type of loan a very low risk profile in the continuum of the Corporation’s loan portfolio.

Residential Mortgage- loans are secured by first and second liens such as home equity lines of credit and 1-4 family residential mortgages.  The primary source of repayment for these loans is the income of the borrower.  The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment.  The state of the local housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy debt.

Consumer- loans are made to individuals and may be either secured by assets other than real estate or unsecured.  This segment includes automobile loans and unsecured loans and lines of credit.  The primary source of repayment for these loans is the income and assets of the borrower.  The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment.  The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

The following table summarizes the primary segments of the ACL at March 31, 2025 and December 31, 2024, segregated by the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment:

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Total
March 31, 2025
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		5,670		940		4,334		6,723		800		18,467
Total ACL	$	5,670	$	940	$	4,334	$	6,723	$	800	$	18,467
December 31, 2024
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		5,272		909		4,205		7,010		774		18,170
Total ACL	$	5,272	$	909	$	4,205	$	7,010	$	774	$	18,170

Changes in the fair value of the types of collateral for individually evaluated loans are reported as provision for credit loss in the period of change.  The evaluation of the need and amount of a specific allocation of the ACL and whether a loan can be removed from impairment status is made on a quarterly basis.

The following tables present the amortized cost basis of collateral-dependent individually evaluated loans as of March 31, 2025 and December 31, 2024.

	March 31, 2025
(in thousands)	Real Estate			Other Collateral	Non-Accrual Loans with No Allowance
Commercial and industrial		—		1,839		1,839
Residential mortgage		1,593		—		1,593
Total Loans	$	1,593	$	1,839	$	3,432

	December 31, 2024
(in thousands)	Real Estate			Other Collateral	Non-Accrual Loans with No Allowance
Commercial real estate	$	574	$	—	$	574
Residential mortgage		1,810		—		1,810
Total Loans	$	2,384	$	—	$	2,384

The following tables present the activity in the ACL for the three-month periods ended March 31, 2025 and 2024:

Nine months ended (in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Total
Beginning balance at January 1, 2025	$	5,272	$	909	$	4,205	$	7,010	$	774	$	18,170
Loan charge-offs		—		(3)		(355)		—		(184)		(542)
Recoveries collected		—		64		2		16		100		182
Credit loss (credit)/expense		398		(30)		482		(303)		110		657
ACL balance at March 31, 2025	$	5,670	$	940	$	4,334	$	6,723	$	800	$	18,467
Beginning balance at January 1, 2024	$	5,120	$	940	$	3,717	$	6,774	$	929	$	17,480
Loan charge-offs		—		—		(112)		—		(506)		(618)
Recoveries collected		37		3		31		18		70		159
Credit loss (credit)/expense		(195)		71		366		225		494		961
ACL balance at March 31, 2024	$	4,962	$	1,014	$	4,002	$	7,017	$	987	$	17,982

The Corporation’s methodology for estimating the ACL includes:

Segmentation.  The Corporation’s loan portfolio is segmented by homogeneous loan types that behave similarly to economic cycles.

Specific Analysis.  A specific reserve analysis is applied to certain individually evaluated loans.  These loans are evaluated quarterly generally based on collateral value, observable market value or the present value of expected future cash flows.  A specific reserve is established if the fair value is less than the loan balance.  A charge-off is recognized when the loss is quantifiable.  Individually evaluated loans not specifically analyzed reside in the Quantitative Analysis.

Quantitative Analysis.  The Corporation elected to use discounted cash flows.  Economic forecasts include but are not limited to unemployment, the Consumer Price Index, the Housing Affordability Index, and Gross State Product.  These forecasts are assumed to revert to the long-term average and are utilized in the model to estimate the probability of default and the loss given default is the estimated loss rate, which varies over time.  The estimated loss rate is applied within the appropriate periods in the cash flow model to determine the net present value.  Net present value is also impacted by assumption related to the duration between default and recovery.  The reserve is based on the difference between the summation of the principal balances taking amortized costs into consideration and the summation of the net present values.

Qualitative Analysis.  Based on management’s review and analysis of internal, external and model risks, management may adjust the model output.  Management reviews the peaks and troughs of the model’s calibrations, taking into account economic forecasts to develop guardrails that serve as the basis for determining the reasonableness of the model’s output and makes adjustments as necessary.  This process challenges unexpected variability resulting from outputs beyond the model’s calibrations that appear to be unreasonable.  Management also enhances the calculation through the use of Moody’s economic forecast data in its calculation. Additionally, management may adjust the economic forecast if it is incompatible with known market conditions based on management’s experience and perspective.

The Corporation has elected to forecast the first four quarters of the credit loss estimate and revert on a straight-line basis.  Based on the final values in the forecast and the uncertainty of a post-pandemic recovery, management has elected to revert over eight quarters.  By reverting these modeling inputs to their historical mean and considering loan/borrower specific attributes, our models are intended to yield a measurement of expected credit losses that reflects our average historical loss rates for periods subsequent to the reversion period.  

The ACL is based on estimates, and actual losses may vary from current estimates.  Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ACL that is representative of the risk found in the components of the portfolio at any given date.

Credit Quality Indicators:

The Corporation’s portfolio grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all.  The Corporation’s internal credit risk grading system is based on debt service coverage, collateral values and other subjective factors.  Mortgage and consumer loans are defaulted to pass grade until a loan migrates to past due status.  

The Corporation has a loan review policy and annual scope report that details the level of loan review for loans in a given year.  The annual loan review provides the Credit Risk Committee with an independent analysis of the following:  (i) credit quality of the loan portfolio; (ii) compliance with loan policy; (iii) adequacy of documentation in credit files; and (iv) validity of risk ratings.  

The Corporation’s internally assigned grades are as follows:

Pass- The Corporation uses six grades of pass, including its watch rating.  Generally, a pass rating indicates that the loan is currently performing and is of high quality.

Special Mention- Assets with potential weaknesses that warrant management’s close attention and if left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date.

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

Doubtful- Assets with all weaknesses inherent in one classified 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.

Loss- Assets considered of such little value that its continuance on the books is not warranted.  This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical to defer writing off this basically worthless asset even though partial recovery may be affected in the future.

The ability of borrowers to repay commercial loans is dependent upon the success of their business and general economic conditions.  Due to the greater potential for loss within our commercial portfolio, we monitor the commercial loan portfolio through an internal risk rating system.  Loan risk ratings are assigned based upon the creditworthiness of the borrower and are reviewed on an ongoing basis according to our internal policies.  Loans rated special mention or substandard have potential or well-defined weaknesses not generally found in high quality, performing loans, and require attention from management to limit loss.

The following tables present loan balances by year of origination and internally assigned risk rating for our portfolio segments for the periods presented:

(in thousands)	2025		2024		2023		2022		2021		2020 and Prior		Revolving		Total Portfolio Loans
March 31, 2025
Commercial real estate:
Non-owner-occupied
Pass	$	71	$	22,723	$	36,103	$	73,044	$	28,629	$	138,309	$	2,334	$	301,213
Special Mention		—		—		—		—		—		693		—		693
Substandard		—		—		—		—		—		2,662		—		2,662
Total non-owner occupied		71		22,723		36,103		73,044		28,629		141,664		2,334		304,568
Current period gross charge-offs		—		—		—		—		—		—		—		—
All other CRE
Pass		2,976		43,041		32,269		28,660		23,655		86,188		4,531		221,320
Special Mention		—		—		—		—		—		913		—		913
Substandard		—		992		—		—		1,737		2,848		386		5,963
Total all other CRE		2,976		44,033		32,269		28,660		25,392		89,949		4,917		228,196
Current period gross charge-offs		—		—		—		—		—		—		—		—
Acquisition and development:
1-4 family residential construction
Pass		495		14,560		2,400		—		—		—		3,035		20,490
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total acquisition and development		495		14,560		2,400		—		—		—		3,035		20,490
Current period gross charge-offs		—		—		—		—		—		—		—		—
All other A&D
Pass		1,018		24,961		12,270		11,039		1,854		10,294		12,046		73,482
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		91		—		91
Total all other A&D		1,018		24,961		12,270		11,039		1,854		10,385		12,046		73,573
Current period gross charge-offs		—		—		—		—		—		3		—		3
Commercial and industrial:
Pass		3,782		35,325		28,084		62,622		15,291		18,512		76,160		239,776
Special Mention		—		4,251		13,000		3,500		49		1,773		9,325		31,898
Substandard		25		117		—		1,192		669		6,713		1,980		10,696
Total commercial and industrial		3,807		39,693		41,084		67,314		16,009		26,998		87,465		282,370
Current period gross charge-offs		—		—		—		—		—		355		—		355
Residential mortgage:
Residential mortgage - term
Pass		6,745		33,565		69,683		90,865		77,551		166,715		1,147		446,271
Special Mention		—		—		—		678		830		503		—		2,011
Substandard		—		—		—		211		1,339		4,652		24		6,226
Total residential mortgage - term		6,745		33,565		69,683		91,754		79,720		171,870		1,171		454,508
Current period gross charge-offs		—		—		—		—		—		—		—		—
Residential mortgage - home equity
Pass		44		79		755		3,679		679		946		58,591		64,773
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		43		748		791
Total residential mortgage - home equity		44		79		755		3,679		679		989		59,339		65,564
Current period gross charge-offs		—		—		—		—		—		—		—		—
Consumer:
Pass		2,681		9,960		9,588		5,405		2,934		16,958		2,727		50,253
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		54		202		45		18		22		6		347
Total consumer		2,681		10,014		9,790		5,450		2,952		16,980		2,733		50,600
Current period gross charge-offs		36		24		22		10		38		54		—		184
Total Portfolio Loans
Pass		17,812		184,214		191,152		275,314		150,593		437,922		160,571		1,417,578
Special Mention		—		4,251		13,000		4,178		879		3,882		9,325		35,515
Substandard		25		1,163		202		1,448		3,763		17,031		3,144		26,776
Total Portfolio Loans	$	17,837	$	189,628	$	204,354	$	280,940	$	155,235	$	458,835	$	173,040	$	1,479,869
Current YTD Period:
Current period gross charge-offs	$	36	$	24	$	22	$	10	$	38	$	412	$	—	$	542

(in thousands)	2024		2023		2022		2021		2020		2019 and Prior		Revolving		Total Portfolio Loans
December 31, 2024
Commercial real estate:
Non-owner-occupied
Pass	$	22,807	$	23,454	$	73,649	$	28,941	$	52,080	$	89,977	$	1,960	$	292,868
Special Mention		—		—		—		—		706		—		—		706
Substandard		—		—		—		—		—		2,685		—		2,685
Total non-owner occupied		22,807		23,454		73,649		28,941		52,786		92,662		1,960		296,259
Current period gross charge-offs		—		—		—		—		—		—		—		—
All other CRE
Pass		42,855		32,599		29,951		24,073		16,842		72,630		4,535		223,485
Special Mention		—		—		—		—		199		—		—		199
Substandard		994		—		—		1,744		—		3,453		230		6,421
Total all other CRE		43,849		32,599		29,951		25,817		17,041		76,083		4,765		230,105
Current period gross charge-offs		—		—		—		—		—		—		—		—
Acquisition and development:
1-4 family residential construction
Pass		11,686		3,317		—		—		—		—		1,627		16,630
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total acquisition and development		11,686		3,317		—		—		—		—		1,627		16,630
Current period gross charge-offs		—		—		—		—		—		—		—		—
All other A&D
Pass		23,304		24,114		10,672		1,848		1,773		9,230		7,661		78,602
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		82		—		82
Total all other A&D		23,304		24,114		10,672		1,848		1,773		9,312		7,661		78,684
Current period gross charge-offs		—		—		—		—		—		—		—		—
Commercial and industrial:
Pass		35,898		29,786		65,663		17,558		6,777		13,758		75,440		244,880
Special Mention		4,250		13,000		3,500		—		1,842		—		9,084		31,676
Substandard		122		—		1,209		680		6,562		692		1,713		10,978
Total commercial and industrial		40,270		42,786		70,372		18,238		15,181		14,450		86,237		287,534
Current period gross charge-offs		465		—		125		892		41		87		—		1,610
Residential mortgage:
Residential mortgage - term
Pass		32,582		70,643		91,775		78,892		35,790		133,725		1,235		444,642
Special Mention		—		—		684		840		—		—		—		1,524
Substandard		—		—		60		1,054		—		4,923		39		6,076
Total residential mortgage - term		32,582		70,643		92,519		80,786		35,790		138,648		1,274		452,242
Current period gross charge-offs		—		—		—		—		—		30		—		30
Residential mortgage - home equity
Pass		171		803		3,948		696		361		622		59,307		65,908
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		33		12		620		665
Total residential mortgage - home equity		171		803		3,948		696		394		634		59,927		66,573
Current period gross charge-offs		—		—		15		—		—		—		—		15
Consumer:
Pass		11,132		10,945		6,312		3,525		1,091		16,593		2,833		52,431
Special Mention		—		—		—		—		—		—		—		—
Substandard		3		177		100		24		25		4		2		335
Total consumer		11,135		11,122		6,412		3,549		1,116		16,597		2,835		52,766
Current period gross charge-offs		204		314		109		64		23		655		—		1,369
Total Portfolio Loans
Pass		180,435		195,661		281,970		155,533		114,714		336,535		154,598		1,419,446
Special Mention		4,250		13,000		4,184		840		2,747		—		9,084		34,105
Substandard		1,119		177		1,369		3,502		6,620		11,851		2,604		27,242
Total Portfolio Loans	$	185,804	$	208,838	$	287,523	$	159,875	$	124,081	$	348,386	$	166,286	$	1,480,793
Current YTD Period:
Current period gross charge-offs	$	669	$	314	$	249	$	956	$	64	$	772	$	—	$	3,024

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past.

The following tables present loan balances by year of origination segregated by performing and non-performing loans for the periods presented:

(in thousands)	2025		2024		2023		2022		2021		2020 and Prior		Revolving		Total Portfolio Loans
March 31, 2025
Commercial real estate:
Non-owner-occupied
Performing	$	71	$	22,723	$	36,103	$	73,044	$	28,629	$	141,664	$	2,334	$	304,568
Nonperforming		—		—		—		—		—		—		—		—
Total non-owner occupied		71		22,723		36,103		73,044		28,629		141,664		2,334		304,568
All other CRE
Performing		2,976		44,033		32,269		28,660		25,392		89,870		4,917		228,117
Nonperforming		—		—		—		—		—		79		—		79
Total all other CRE		2,976		44,033		32,269		28,660		25,392		89,949		4,917		228,196
Acquisition and development:
1-4 family residential construction
Performing		495		14,560		2,400		—		—		—		3,035		20,490
Nonperforming		—		—		—		—		—		—		—		—
Total acquisition and development		495		14,560		2,400		—		—		—		3,035		20,490
All other A&D
Performing		1,018		24,961		12,270		11,039		1,854		10,346		12,046		73,534
Nonperforming		—		—		—		—		—		39		—		39
Total all other A&D		1,018		24,961		12,270		11,039		1,854		10,385		12,046		73,573
Commercial and industrial:
Performing		3,807		39,693		41,084		66,122		15,362		26,998		87,465		280,531
Nonperforming		—		—		—		1,192		647		—		—		1,839
Total commercial and industrial		3,807		39,693		41,084		67,314		16,009		26,998		87,465		282,370
Residential mortgage:
Residential mortgage - term
Performing		6,745		33,565		69,683		91,754		79,596		169,985		1,171		452,499
Nonperforming		—		—		—		—		124		1,885		—		2,009
Total residential mortgage - term		6,745		33,565		69,683		91,754		79,720		171,870		1,171		454,508
Residential mortgage - home equity
Performing		44		79		755		3,679		679		958		59,190		65,384
Nonperforming		—		—		—		—		—		31		149		180
Total residential mortgage - home equity		44		79		755		3,679		679		989		59,339		65,564
Consumer:
Performing		2,681		10,014		9,677		5,450		2,952		16,980		2,733		50,487
Nonperforming		—		—		113		—		—		—		—		113
Total consumer		2,681		10,014		9,790		5,450		2,952		16,980		2,733		50,600
Total Portfolio Loans
Performing		17,837		189,628		204,241		279,748		154,464		456,801		172,891		1,475,610
Nonperforming		—		—		113		1,192		771		2,034		149		4,259
Total Portfolio Loans	$	17,837	$	189,628	$	204,354	$	280,940	$	155,235	$	458,835	$	173,040	$	1,479,869

(in thousands)	2024		2023		2022		2021		2020		2019 and Prior		Revolving		Total Portfolio Loans
December 31, 2024
Commercial real estate:
Non-owner-occupied
Performing	$	22,807	$	23,454	$	73,649	$	28,941	$	52,786	$	92,662	$	1,960	$	296,259
Nonperforming		—		—		—		—		—		—		—		—
Total non-owner occupied		22,807		23,454		73,649		28,941		52,786		92,662		1,960		296,259
All other CRE
Performing		43,849		32,599		29,951		25,500		17,041		75,427		4,765		229,132
Nonperforming		—		—		—		317		—		656		—		973
Total all other CRE		43,849		32,599		29,951		25,817		17,041		76,083		4,765		230,105
Acquisition and development:
1-4 family residential construction
Performing		11,686		3,317		—		—		—		—		1,627		16,630
Nonperforming		—		—		—		—		—		—		—		—
Total acquisition and development		11,686		3,317		—		—		—		—		1,627		16,630
All other A&D
Performing		23,304		24,114		10,672		1,848		1,773		9,230		7,661		78,602
Nonperforming		—		—		—		—		—		82		—		82
Total all other A&D		23,304		24,114		10,672		1,848		1,773		9,312		7,661		78,684
Commercial and industrial:
Performing		40,270		42,786		69,180		17,592		15,181		14,450		86,237		285,696
Nonperforming		—		—		1,192		646		—		—		—		1,838
Total commercial and industrial		40,270		42,786		70,372		18,238		15,181		14,450		86,237		287,534
Residential mortgage:
Residential mortgage - term
Performing		32,582		70,643		92,519		80,661		35,790		136,184		1,259		449,638
Nonperforming		—		—		—		125		—		2,464		15		2,604
Total residential mortgage - term		32,582		70,643		92,519		80,786		35,790		138,648		1,274		452,242
Residential mortgage - home equity
Performing		171		803		3,948		696		361		634		59,810		66,423
Nonperforming		—		—		—		—		33		—		117		150
Total residential mortgage - home equity		171		803		3,948		696		394		634		59,927		66,573
Consumer:
Performing		11,135		11,008		6,378		3,549		1,116		16,543		2,835		52,564
Nonperforming		—		114		34		—		—		54		—		202
Total consumer		11,135		11,122		6,412		3,549		1,116		16,597		2,835		52,766
Total Portfolio Loans
Performing		185,804		208,724		286,297		158,787		124,048		345,130		166,154		1,474,944
Nonperforming		—		114		1,226		1,088		33		3,256		132		5,849
Total Portfolio Loans	$	185,804	$	208,838	$	287,523	$	159,875	$	124,081	$	348,386	$	166,286	$	1,480,793

Loan Modifications for Borrowers Experiencing Financial Difficulty

The Corporation evaluates all loan modifications according to the accounting guidance in ASU No. 2022-02 to determine if the modification results in a new loan or a continuation of the existing loan.  Loan modifications to borrowers experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, or combinations of the listed

modifications.  Therefore, the disclosures related to loan restructurings are for modifications which have a direct impact on cash flows.

The Corporation may offer various types of modifications when restructuring a loan.  Commercial and industrial loans modified in a loan restructuring often involve temporary interest-only payments, term extensions, and converting credit lines to term loans.  Additional collateral, a co-borrower, or a guarantor is often requested.

Commercial mortgage and construction loans modified in a loan restructuring often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor.  Construction loans modified in a loan restructuring may also involve extending the interest-only payment period.

Loans modified in a loan restructuring for the Corporation may have the financial effect of increasing the specific allowance associated with the loan.  An allowance for loans that have been modified in a loan restructuring is measured based on the present value of expected cash flows discounted at the loan’s effective interest rate or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent.  Management exercises significant judgment in developing these estimates.

Commercial and consumer loans modified in a loan restructuring are closely monitored for delinquency as an early indicator of possible future default.  If loans modified in a loan restructuring subsequently default, the Corporation evaluates the loan for possible further loss.  The allowance may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.

The following table present the amortized cost basis as of March 31, 2025 and the financial effect of loans modified to borrowers experiencing financial difficulty during the three-month period ended March 31, 2025:

(in thousands)	Term Extension		Percentage of Total Loan Type	Weighted Average Term and Principal Payment Extension
Three months ended March 31, 2025
Commercial and industrial		24	0.01%	60 months
Total	$	24

There were no loan modifications made to borrowers experiencing financial difficulty during the three-month period ended March 31, 2024.

The Corporation monitors loan payments on performing and non-performing loans on an ongoing basis to determine if a loan is considered to have a payment default.  The borrowers for whom loan modifications were made in the three-month period ended March 31, 2025 have made all contractual payments.

If a modified loan with an outstanding balance of  $0.1 million or greater subsequently defaults and goes on non-accrual status, then the Corporation individually evaluates the loan when performing its CECL estimate to calculate the ACL.  Upon determination that a modified loan (or a portion of a modified loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is charged off.  Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.