Note 7 - Loans and Allowance for Credit Losses on Loans

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 7.  LOANS AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

Loans are generally stated at the amount of unpaid principal, reduced by unearned discount and the ACLL. Interest on loans is accrued daily on the outstanding balances.  Loan origination fees and certain direct loan origination costs are deferred and amortized as adjustments of the related loan yield over its contractual life.

Loans

The following table presents the amortized cost of loans held for investment:

Dollars in thousands	2023		2022
Commercial	$	503,842	$	501,844
Commercial real estate - owner occupied
Professional & medical		156,941		120,872
Retail		170,391		188,196
Other		217,776		157,982
Commercial real estate - non-owner occupied
Hotels & motels		215,642		141,042
Mini-storage		68,517		51,109
Multifamily		302,298		272,705
Retail		254,246		192,270
Other		413,634		347,242
Construction and development
Land & land development		145,258		106,362
Construction		374,026		282,935
Residential 1-4 family real estate
Personal residence		362,733		265,326
Rental - small loan		142,665		121,548
Rental - large loan		116,614		92,103
Home equity		81,126		71,986
Mortgage warehouse lines		108,848		130,390
Consumer		43,756		35,372
Other
Credit cards		2,286		2,182
Overdrafts		1,013		1,352
Total loans, net of unearned fees		3,681,612		3,082,818
Less allowance for credit losses - loans		48,090		38,899
Loans, net	$	3,633,522	$	3,043,919

Accrued interest and fees receivable on loans totaled $14.1 million and $10.4 million at December 31, 2023 and 2022, respectively and is included in accrued interest and fees receivable in the consolidated balance sheets. Included in the totals above are net unamortized loan fees of $5.6 million and $4.6 million at December 31, 2023 and 2022, respectively.

Past Due Loans and Non-Accrual 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. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. In determining whether or not a borrower may be unable to meet payment obligations for each class of loans, we consider the borrower’s debt service capacity through the analysis of current financial information, if available, and/or current information with regards to our collateral position. Regulatory provisions would typically require the placement of a loan on non-accrual status if (i) principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection or (ii) full payment of principal and interest is not expected. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income on non-accrual loans is recognized only to the extent that cash payments are received in excess of principal due. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period (at least six months) of repayment performance by the borrower.

The following tables present the contractual aging of the amortized cost basis of past due loans by class.

	At December 31, 2023
	Past Due
Dollars in thousands	30-59 days		60-89 days		90 days or more		Total		Current		90 days or more and Accruing
Commercial	$	1,092	$	60	$	485	$	1,637	$	502,205	$	—
Commercial real estate - owner occupied
Professional & medical		327		—		357		684		156,257		—
Retail		195		165		119		479		169,912		—
Other		270		—		—		270		217,506		—
Commercial real estate - non-owner occupied
Hotels & motels		—		—		—		—		215,642		—
Mini-storage		130		—		—		130		68,387		—
Multifamily		211		—		—		211		302,087		—
Retail		777		18		—		795		253,451		—
Other		—		—		—		—		413,634		—
Construction and development
Land & land development		295		275		—		570		144,688		—
Construction		—		—		—		—		374,026		—
Residential 1-4 family real estate
Personal residence		3,511		489		1,071		5,071		357,662		—
Rental - small loan		331		78		75		484		142,181		—
Rental - large loan		—		—		411		411		116,203		—
Home equity		1,723		269		466		2,458		78,668		307
Mortgage warehouse lines		—		—		—		—		108,848		—
Consumer		228		181		106		515		43,241		5
Other
Credit cards		40		3		22		65		2,221		23
Overdrafts		—		—		—		—		1,013		—
Total	$	9,130	$	1,538	$	3,112	$	13,780	$	3,667,832	$	335

	At December 31, 2022
	Past Due
Dollars in thousands	30-59 days		60-89 days		90 days or more		Total		Current		90 days or more and Accruing
Commercial	$	2,982	$	201	$	34	$	3,217	$	498,627	$	—
Commercial real estate - owner occupied
Professional & medical		100		—		—		100		120,772		—
Retail		—		—		221		221		187,975		—
Other		376		135		37		548		157,434		—
Commercial real estate - non-owner occupied
Hotels & motels		—		—		—		—		141,042		—
Mini-storage		—		—		—		—		51,109		—
Multifamily		—		—		58		58		272,647		—
Retail		165		—		438		603		191,667		—
Other		—		—		—		—		347,242		—
Construction and development
Land & land development		317		852		—		1,169		105,193		—
Construction		—		—		—		—		282,935		—
Residential 1-4 family real estate
Personal residence		3,768		741		1,969		6,478		258,848		—
Rental - small loan		1,093		582		816		2,491		119,057		—
Rental - large loan		—		—		—		—		92,103		—
Home equity		1,401		105		52		1,558		70,428		—
Mortgage warehouse lines		—		—		—		—		130,390		—
Consumer		182		71		—		253		35,119		—
Other
Credit cards		9		13		12		34		2,148		12
Overdrafts		—		—		—		—		1,352		—
Total	$	10,393	$	2,700	$	3,637	$	16,730	$	3,066,088	$	12

The amount of interest recognized on nonaccrual loans during the periods presented is immaterial.

The following tables present the nonaccrual loans included in the net balance of loans.

	December 31, 2023				December 31, 2022
Dollars in thousands	Nonaccrual		Nonaccrual with No Allowance for Credit Losses - Loans		Nonaccrual		Nonaccrual with No Allowance for Credit Losses - Loans
Commercial	$	1,088	$	2	$	93	$	48
Commercial real estate - owner occupied
Professional & medical		395		—		—		—
Retail		525		—		350		—
Other		236		—		423		—
Commercial real estate - non-owner occupied
Hotels & motels		—		—		—		—
Mini-storage		—		—		—		—
Multifamily		446		—		538		—
Retail		4,073		3,520		439		—
Other		—		—		—		—
Construction and development
Land & land development		708		—		852		—
Construction		—		—		—		—
Residential 1-4 family real estate
Personal residence		1,879		—		2,892		—
Rental - small loan		1,922		245		2,066		—
Rental - large loan		410		—		—		—
Home equity		313		—		158		—
Mortgage warehouse lines		—		—		—		—
Consumer		109		—		—		—
Other
Credit cards		—		—		—		—
Overdrafts		—		—		—		—
Total	$	12,104	$	3,767	$	7,811	$	48

Modifications to Borrowers Experiencing Financial Difficulty

We adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures effective January 1, 2023. The amendments in ASU 2022-02 eliminated the recognition and measurement of troubled debt restructurings and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty. 

Generally, the modifications we grant are extensions of terms, deferrals of payments for an extended period or interest rate reductions. Occasionally, we may modify a loan by providing principal forgiveness. In some cases, we will modify a loan by providing multiple types, or combinations, of concessions.

The following table presents the amortized cost basis of loans as December 31, 2023 made to borrowers experiencing financial difficulty that were modified during the year ended December 31, 2023 and the percentage of those such loans to total loans in their respective loan classes. There were no commitments to lend additional funds under these modifications as of December 31, 2023. 

	For the Year Ended
	December 31, 2023
					Combination
					Term Extension				% of Total
	Payment		Term		and				Class of
Dollars in thousands	Delay		Extension		Payment Delay		Total		Loans
Commercial	$	—	$	307	$	—	$	307		0.1	%
Commercial real estate - owner occupied
Other		—		35		—		35		0.0	%
Commercial real estate - non-owner occupied
Multifamily		—		9,760		—		9,760		3.2	%
Retail		—		387		—		387		0.2	%
Residential 1-4 family real estate
Personal residence		107		—		66		173		0.0	%
Rental - small loan		—		345		—		345		0.2	%
Total	$	107	$	10,834	$	66	$	11,007		0.3	%

The ACLL incorporates an estimate of lifetime extended credit losses and is recorded on each loan upon origination or acquisition. We use a loss-rate, or cohort, method to estimate expected credit losses. The starting point for the estimate of the ACLL is historical loss information, which includes losses from modifications to borrowers experiencing financial difficulty. The assessment of whether a borrower is experiencing financial difficulty is made at the time of the modification.

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the ACLL because of the measurement methodologies used to estimate the allowance, a change to the ACLL is generally not recorded upon modification. When principal forgiveness is granted, the amortized cost basis of the loan is written off against the ACLL.

The following table presents the financial effect of the modifications made to borrowers experiencing financial difficulty for the year ended December 31, 2023.

	For the Year Ended
	December 31, 2023
	Weighted-Average		Weighted-Average
	Payment Delay		Term Extension
Dollars in thousands	in Months		in Months
Commercial		—		12
Commercial real estate - owner occupied
Other		—		12
Commercial real estate - non-owner occupied
Multifamily		—		6
Retail		—		20
Residential 1-4 family real estate
Personal residence		8		5
Rental - small loan		—		16

The following table presents the amortized cost basis of loans that were modified during the year ended December 31, 2023 and subsequently defaulted. For purposes of this table, a default represents any loan that was more than 30 days past due at any time during the period or the loan was fully or partially charged off during the period. 

	December 31, 2023
			Combination
			Term Extension
			and
Dollars in thousands	Term Extension		Payment Delay
Commercial	$	278	$	—
Residential 1-4 family real estate
Personal residence		—		66
Rental - small loan		160		—
Total	$	438	$	66

Upon determination that a modified loan, or a portion of a loan, has subsequently been deemed uncollectible, the loan, or a portion of the loan, is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACLL is adjusted by the same amount.

The following table depicts an age analysis of loans that have been modified during the year ended December 31, 2023 on an amortized costs basis.

	December 31, 2023
			Past Due
							90 Days
Dollars in thousands	Current		30-59 Days		60-89 Days		or More		Total
Commercial	$	307	$	—	$	—	$	—	$	307
Commercial real estate - owner occupied
Other		35		—		—		—		35
Commercial real estate - non-owner occupied
Multifamily		9,760		—		—		—		9,760
Retail		387		—		—		—		387
Residential 1-4 family real estate
Personal residence		173		—		—		—		173
Rental - small loan		345		—		—		—		345
Total	$	11,007	$	—	$	—	$	—	$	11,007

Troubled Debt Restructurings Prior to the Adoption of ASU 2022-02

The following table presents by class the TDRs that were restructured during the years ended December 31, 2022 and 2021. Generally, the modifications were extensions of term, modifying the payment terms from principal and interest to interest only for an extended period, or reduction in interest rate.  TDRs are evaluated individually for allowance for credit loss purposes if the loan balance exceeds $500,000, otherwise, smaller balance TDR loans are included in the pools to determine ACLL.

	2022						2021
Dollars in thousands	Number of Modifications		Pre- modification Recorded Investment		Post- modification Recorded Investment		Number of Modifications		Pre- modification Recorded Investment		Post- modification Recorded Investment
Residential 1-4 family real estate
Personal residence		9	$	692	$	692		4	$	294	$	294
Rental - large loan		1		671		671		—		—		—
Home equity		2		158		158		—		—		—
Total		12	$	1,521	$	1,521		4	$	294	$	294

The following tables present defaults during the stated period of TDRs that were restructured during the prior 12 months. For purposes of these tables, a default is considered as either the loan was past due 30 days or more at any time during the period, or the loan was fully or partially charged off during the period.

	2022				2021
Dollars in thousands	Number of Defaults		Recorded Investment at Default Date		Number of Defaults		Recorded Investment at Default Date
Residential 1-4 family real estate
Personal residence		1	$	22		1	$	44
Home equity		1		107		—		—
Total		2	$	129		1	$	44

Credit Quality Indicators: We analyze loans individually by classifying the loans as to credit risk.  The appropriate risk grades are determined 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. We use the following definitions for our risk grades:

Pass: Loans graded as Pass are loans to borrowers of acceptable credit quality and risk. They are higher quality loans that do not fit any of the other categories described below.

Special Mention:  Loans categorized as Special Mention are potentially weak. The credit risk may be relatively minor yet represent a risk given certain specific circumstances. If the potential weaknesses are not monitored or mitigated, the asset may weaken or inadequately protect our position in the future.

Substandard:   Loans categorized as Substandard are inadequately protected by the borrower’s ability to repay and/or the collateral pledged to secure the loan. These loans have identified weaknesses that could hinder normal repayment or collection of the debt. These loans are characterized by the distinct possibility that we will sustain some loss if the identified weaknesses are not mitigated.

Doubtful:  Loans categorized as Doubtful have all the weaknesses inherent in those loans classified as Substandard, with the added elements that the full collection of the loan is improbable and the possibility of loss is high.

Loss:  Loans classified as loss are considered to be non-collectible and of such little value that their continuance as a bankable asset is not warranted. This does not mean that the loan has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan, even though partial recovery may be obtained in the future.

We internally grade all loans at the time of loan origination. We perform an annual loan review on all non-homogenous commercial loan relationships with an aggregate exposure of $5.0 million, at which time these loans are re-graded.  In addition, during the renewal process of any loan, as well as if a loan becomes past due or if other relevant information becomes available, we will re-evaluate the loan risk grade.

Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Generally, current period renewals of credit are reunderwritten at the point of renewal and considered current period originations for purposes of the table below. As of   December 31, 2023 and 2022, based on the most recent analysis performed, the risk category of loans based on year of origination is as follows:

	December 31, 2023
Dollars in thousands	Risk Rating	2023		2022		2021			2020		2019		Prior			Revolving			Revolving - Term		Total
Commercial	Pass	$	63,526	$	130,075	$	55,932		$	17,841	$	15,802	$	9,693		$	205,654		$	—	$	498,523
	Special Mention		369		402		299			251		218		1,897			966			—		4,402
	Substandard		78		124		447			—		40		—			228			—		917
Total Commercial			63,973		130,601		56,678			18,092		16,060		11,590			206,848			—		503,842
Current Period Charge-Offs			—		—		(1	)		—		—		(3	)		(58	)		—		(62	)
Commercial Real Estate - Owner Occupied
Professional & medical	Pass		20,453		18,882		53,241			9,522		7,668		42,993			1,723			—		154,482
	Special Mention		—		—		—			1,092		—		867			—			—		1,959
	Substandard		—		—		—			67		—		433			—			—		500
Total Professional & Medical			20,453		18,882		53,241			10,681		7,668		44,293			1,723			—		156,941
Current Period Charge-Offs			—		—		—			—		—		(3	)		—			—		(3	)
Retail	Pass		5,600		22,936		66,848			11,794		23,778		34,173			3,116			—		168,245
	Special Mention		—		—		—			—		—		1,756			—			—		1,756
	Substandard		—		—		—			—		—		390			—			—		390
Total Retail			5,600		22,936		66,848			11,794		23,778		36,319			3,116			—		170,391
Current Period Charge-Offs			—		—		—			—		—		—			—			—		—
Other	Pass		27,260		47,405		36,980			25,611		14,807		59,992			2,823			—		214,878
	Special Mention		—		—		53			—		128		1,670			—			—		1,851
	Substandard		—		—		—			—		367		644			36			—		1,047
Total Other			27,260		47,405		37,033			25,611		15,302		62,306			2,859			—		217,776
Current Period Charge-Offs			—		—		—			—		—		(28	)		—			—		(28	)
Total Commercial Real Estate - Owner Occupied			53,313		89,223		157,122			48,086		46,748		142,918			7,698			—		545,108
Commercial Real Estate - Non-Owner Occupied
Hotels & motels	Pass		55,770		37,994		11,995			9,161		53,781		28,209			1,650			—		198,560
	Substandard		—		—		—			2,647		14,238		197			—			—		17,082
Total Hotels & Motels			55,770		37,994		11,995			11,808		68,019		28,406			1,650			—		215,642
Current Period Charge-Offs			—		—		—			—		—		—			—			—		—
Mini-storage	Pass		1,488		22,994		12,460			5,047		4,288		22,184			16			—		68,477
	Special Mention		—		—		—			—		—		40			—			—		40
Total Mini-storage			1,488		22,994		12,460			5,047		4,288		22,224			16			—		68,517
Current Period Charge-Offs			—		—		—			—		—		—			—			—		—
Multifamily	Pass		15,406		69,803		72,257			52,648		21,966		68,610			1,163			—		301,853
	Substandard		—		—		—			400		—		45			—			—		445
Total Multifamily			15,406		69,803		72,257			53,048		21,966		68,655			1,163			—		302,298
Current Period Charge-Offs			—		—		—			—		—		(57	)		—			—		(57	)

 

	December 31, 2023
Dollars in thousands	Risk Rating	2023			2022			2021			2020			2019			Prior			Revolving		Revolving - Term		Total
Retail	Pass		39,462			53,109			57,587			49,146			10,623			35,241			4,046		—		249,214
	Special Mention		—			—			66			—			—			893			—		—		959
	Substandard		—			—			—			—			3,520			553			—		—		4,073
Total Retail			39,462			53,109			57,653			49,146			14,143			36,687			4,046		—		254,246
Current Period Charge-Offs			—			—			—			—			(3,658	)		—			—		—		(3,658	)
Other	Pass		45,146			104,191			114,862			56,165			15,509			55,330			9,237		—		400,440
	Special Mention		—			5,466			—			—			—			176			—		—		5,642
	Substandard		—			—			—			—			2,237			5,315			—		—		7,552
Total Other			45,146			109,657			114,862			56,165			17,746			60,821			9,237		—		413,634
Current Period Charge-Offs			—			—			—			—			—			—			—		—		—
Total Commercial Real Estate - Non-Owner Occupied			157,272			293,557			269,227			175,214			126,162			216,793			16,112		—		1,254,337
Construction and Development
Land & land development	Pass		56,159			26,369			20,843			9,383			4,008			15,072			11,486		—		143,320
	Special Mention		—			—			—			144			155			419			—		—		718
	Substandard		—			95			—			—			—			1,125			—		—		1,220
Total Land & land development			56,159			26,464			20,843			9,527			4,163			16,616			11,486		—		145,258
Current Period Charge-Offs			—			—			—			—			—			—			—		—		—
Construction	Pass		53,929			98,497			178,043			41,800			—			1,302			455		—		374,026
Total Construction			53,929			98,497			178,043			41,800			—			1,302			455		—		374,026
Current Period Charge-Offs			—			—			—			—			—			—			—		—		—
Total Construction and Development			110,088			124,961			198,886			51,327			4,163			17,918			11,941		—		519,284
Residential 1-4 Family Real Estate
Personal residence	Pass		54,170			65,858			55,445			32,016			16,499			121,272			—		—		345,260
	Special Mention		217			73			51			—			176			8,889			—		—		9,406
	Substandard		—			—			66			—			533			7,468			—		—		8,067
Total Personal Residence			54,387			65,931			55,562			32,016			17,208			137,629			—		—		362,733
Current Period Charge-Offs			—			—			—			—			—			(89	)		—		—		(89	)
Rental - small loan	Pass		17,930			21,637			27,323			11,244			10,951			40,298			7,490		—		136,873
	Special Mention		—			280			219			99			182			2,283			—		—		3,063
	Substandard		534			153			—			—			—			1,942			100		—		2,729
Total Rental - Small Loan			18,464			22,070			27,542			11,343			11,133			44,523			7,590		—		142,665
Current Period Charge-Offs			—			—			—			—			—			—			—		—		—
Rental - large loan	Pass		7,490			43,818			35,605			10,185			2,379			9,554			3,028		—		112,059
	Special Mention		—			—			—			—			—			3,516			—		—		3,516
	Substandard		—			629			—			—			—			410			—		—		1,039
Total Rental - Large Loan			7,490			44,447			35,605			10,185			2,379			13,480			3,028		—		116,614
Current Period Charge-Offs			—			—			—			—			—			—			—		—		—
Home equity	Pass		—			100			326			97			82			1,756			76,234		—		78,595
	Special Mention		—			—			—			—			17			609			1,093		—		1,719
	Substandard		—			—			25			—			37			600			150		—		812
Total Home Equity			—			100			351			97			136			2,965			77,477		—		81,126
Current Period Charge-Offs			—			—			—			—			—			—			—		—		—
Total Residential 1-4 Family Real Estate			80,341			132,548			119,060			53,641			30,856			198,597			88,095		—		703,138
Mortgage warehouse lines	Pass		—			—			—			—			—			—			108,848		—		108,848
Total Mortgage Warehouse Lines			—			—			—			—			—			—			108,848		—		108,848
Current Period Charge-Offs			—			—			—			—			—			—			—		—		—
Consumer	Pass		21,206			11,580			3,953			1,720			695			1,011			912		—		41,077
	Special Mention		1,171			749			160			94			39			76			4		—		2,293
	Substandard		127			160			37			35			—			2			25		—		386
Total Consumer			22,504			12,489			4,150			1,849			734			1,089			941		—		43,756
Current Period Charge-Offs			(124	)		(170	)		(39	)		(10	)		(1	)		(7	)		—		—		(351	)

	December 31, 2023
Dollars in thousands	Risk Rating	2023			2022			2021			2020			2019			Prior			Revolving			Revolving - Term		Total
Other
Credit cards	Pass		2,286			—			—			—			—			—			—			—		2,286
Total Credit Cards			2,286			—			—			—			—			—			—			—		2,286
Current Period Charge-Offs			(93	)		—			—			—			—			—			—			—		(93	)
Overdrafts	Pass		1,013			—			—			—			—			—			—			—		1,013
Total Overdrafts			1,013			—			—			—			—			—			—			—		1,013
Current Period Charge-Offs			(503	)		—			—			—			—			—			—			—		(503	)
Total Other			3,299			—			—			—			—			—			—			—		3,299
Total		$	490,790		$	783,379		$	805,123		$	348,209		$	224,723		$	588,905		$	440,483		$	—		3,681,612
Total Charge-Offs		$	(720	)	$	(170	)	$	(40	)	$	(10	)	$	(3,659	)	$	(187	)	$	(58	)	$	—		(4,844	)

	December 31, 2022
Dollars in thousands	Risk Rating	2022		2021		2020		2019		2018		Prior		Revolving		Revolving - Term		Total
Commercial	Pass	$	145,996	$	73,702	$	27,247	$	20,300	$	3,056	$	10,429	$	194,641	$	—	$	475,371
	Special Mention		689		23,055		267		51		17		149		2,010		—		26,238
	Substandard		52		56		—		48		24		—		55		—		235
Total Commercial			146,737		96,813		27,514		20,399		3,097		10,578		196,706		—		501,844
Commercial Real Estate - Owner Occupied
Professional & medical	Pass		13,750		47,010		10,312		6,621		3,981		35,476		2,090		—		119,240
	Special Mention		—		—		1,119		—		—		233		—		—		1,352
	Substandard		—		—		72		—		—		208		—		—		280
Total Professional & Medical			13,750		47,010		11,503		6,621		3,981		35,917		2,090		—		120,872
Retail	Pass		23,604		70,257		28,128		28,327		8,163		26,538		2,226		—		187,243
	Special Mention		—		—		—		—		—		603		—		—		603
	Substandard		—		—		—		—		—		350		—		—		350
Total Retail			23,604		70,257		28,128		28,327		8,163		27,491		2,226		—		188,196
Other	Pass		43,811		27,174		24,870		7,778		15,346		34,720		3,412		—		157,111
	Special Mention		—		56		—		—		—		392		—		—		448
	Substandard		—		—		—		—		107		316		—		—		423
Total Other			43,811		27,230		24,870		7,778		15,453		35,428		3,412		—		157,982
Total Commercial Real Estate - Owner Occupied			81,165		144,497		64,501		42,726		27,597		98,836		7,728		—		467,050
Commercial Real Estate - Non-Owner Occupied
Hotels & motels	Pass		32,059		1,695		3,192		32,688		15,358		12,899		4,081		—		101,972
	Special Mention		—		—		—		36,131		—		—		—		—		36,131
	Substandard		—		—		2,716		—		—		223		—		—		2,939
Total Hotels & Motels			32,059		1,695		5,908		68,819		15,358		13,122		4,081		—		141,042
Mini-storage	Pass		2,868		13,191		7,679		3,776		13,017		10,419		115		—		51,065
	Special Mention		—		—		—		—		—		44		—		—		44
Total Mini-storage			2,868		13,191		7,679		3,776		13,017		10,463		115		—		51,109
Multifamily	Pass		57,727		56,073		53,558		29,479		21,359		53,244		646		—		272,086
	Special Mention		—		—		81		—		—		—		—		—		81
	Substandard		—		—		480		—		—		58		—		—		538
Total Multifamily			57,727		56,073		54,119		29,479		21,359		53,302		646		—		272,705
Retail	Pass		46,278		52,387		39,609		5,449		6,999		25,315		7,053		—		183,090
	Special Mention		—		—		—		—		—		964		—		—		964
	Substandard		—		—		—		7,778		—		438		—		—		8,216
Total Retail			46,278		52,387		39,609		13,227		6,999		26,717		7,053		—		192,270

	December 31, 2022
Dollars in thousands	Risk Rating	2022		2021		2020		2019		2018		Prior		Revolving		Revolving - Term		Total
Other	Pass		94,765		123,551		52,592		12,281		5,444		47,752		1,953		—		338,338
	Special Mention		5,465		—		—		—		538		—		—		—		6,003
	Doubtful		—		—		—		—		—		2,901		—		—		2,901
Total Other			100,230		123,551		52,592		12,281		5,982		50,653		1,953		—		347,242
Total Commercial Real Estate - Non-Owner Occupied			239,162		246,897		159,907		127,582		62,715		154,257		13,848		—		1,004,368
Construction and Development
Land & land development	Pass		27,857		23,490		10,670		13,395		5,142		15,859		7,484		—		103,897
	Special Mention		—		—		149		109		—		473		—		—		731
	Substandard		—		—		—		—		—		1,734		—		—		1,734
Total Land & land development			27,857		23,490		10,819		13,504		5,142		18,066		7,484		—		106,362
Construction	Pass		82,650		140,764		54,584		317		1,355		—		2,940		—		282,610
	Substandard		—		—		—		—		325		—		—		—		325
Total Construction			82,650		140,764		54,584		317		1,680		—		2,940		—		282,935
Total Construction and Development			110,507		164,254		65,403		13,821		6,822		18,066		10,424		—		389,297
Residential 1-4 Family Real Estate
Personal residence	Pass		38,783		39,416		30,297		16,003		16,581		105,822		—		—		246,902
	Special Mention		—		53		—		180		74		9,074		—		—		9,381
	Substandard		—		68		—		620		901		7,454		—		—		9,043
Total Personal Residence			38,783		39,537		30,297		16,803		17,556		122,350		—		—		265,326
Rental - small loan	Pass		22,692		26,654		11,609		10,995		8,103		30,508		5,784		—		116,345
	Special Mention		—		224		103		—		—		1,100		—		—		1,427
	Substandard		—		—		—		156		239		3,269		112		—		3,776
Total Rental - Small Loan			22,692		26,878		11,712		11,151		8,342		34,877		5,896		—		121,548
Rental - large loan	Pass		28,090		31,401		11,033		3,631		3,932		9,045		894		—		88,026
	Special Mention		—		—		—		—		—		26		—		—		26
	Substandard		670		—		—		—		—		3,381		—		—		4,051
Total Rental - Large Loan			28,760		31,401		11,033		3,631		3,932		12,452		894		—		92,103
Home equity	Pass		65		219		55		50		192		2,118		67,155		—		69,854
	Special Mention		—		—		—		—		125		626		757		—		1,508
	Substandard		51		—		—		—		58		461		54		—		624
Total Home Equity			116		219		55		50		375		3,205		67,966		—		71,986
Total Residential 1-4 Family Real Estate			90,351		98,035		53,097		31,635		30,205		172,884		74,756		—		550,963
Mortgage warehouse lines	Pass		—		—		—		—		—		—		130,390		—		130,390
Total Mortgage Warehouse Lines			—		—		—		—		—		—		130,390		—		130,390
Consumer	Pass		17,594		7,620		3,066		1,806		749		1,221		889		—		32,945
	Special Mention		1,332		362		179		83		18		102		6		—		2,082
	Substandard		207		75		31		—		3		1		28		—		345
Total Consumer			19,133		8,057		3,276		1,889		770		1,324		923		—		35,372
Other
Credit cards	Pass		2,182		—		—		—		—		—		—		—		2,182
Total Credit Cards			2,182		—		—		—		—		—		—		—		2,182

	December 31, 2022
Dollars in thousands	Risk Rating	2022		2021		2020		2019		2018		Prior		Revolving		Revolving - Term		Total
Overdrafts	Pass		1,352		—		—		—		—		—		—		—		1,352
Total Overdrafts			1,352		—		—		—		—		—		—		—		1,352
Total Other			3,534		—		—		—		—		—		—		—		3,534
Total		$	690,589	$	758,553	$	373,698	$	238,052	$	131,206	$	455,945	$	434,775	$	—	$	3,082,818

Industry concentrations: At December 31, 2023 and 2022, we had no concentrations of loans to any single industry in excess of 10% of total loans.

Loans to related parties:  We have had, and may be expected to have in the future, banking transactions in the ordinary course of business with our directors, principal officers, their immediate families and affiliated companies in which they are principal shareholders (commonly referred to as related parties).  These transactions have been, in our opinion, on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with others.

The following presents the activity with respect to related party loans aggregating $60,000 or more to any one related party (other changes represent additions to and changes in director and executive officer status):

Dollars in thousands	2023			2022
Balance, beginning	$	49,309		$	53,212
Additions		1,417			516
Amounts collected		(3,648	)		(4,419	)
Other changes, net		(7,882	)		—
Balance, ending	$	39,196		$	49,309

Allowance for Credit Losses - Loans

The ACLL is a valuation allowance, estimated at each balance sheet date 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 ACLL represents our 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 “life-of-loan” concept). The contractual term excludes expected extensions, renewals and modifications unless (i) management has a reasonable expectation that a troubled debt restructuring will be executed with an individual borrower 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. 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 ACLL losses is measured on a collective basis for portfolios of loans when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Expected credit losses for collateral dependent loans, including loans where the borrower is experiencing financial difficulty, but foreclosure is not probable, are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

Expected credit losses are reflected in the ACLL through a charge to provision for credit losses. When we deem all or a portion of a financial asset to be uncollectible the appropriate amount is written off and the ACLL is reduced by the same amount. The Company applies judgment to determine when a financial asset is deemed uncollectible; however, generally speaking, an asset will be considered uncollectible no later than when all efforts at collection have been exhausted. Subsequent recoveries, if any, are credited to the ACLL when received.

Loan Pools. In calculating the ACLL, 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. We have identified the pools of financial assets with similar risk characteristics for measuring expected credit losses as presented in the table of amortized cost of loans held for investment above.

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.

Residential 1-4 family rentals are classified as small loan if the original loan amount is less than $600,000 and classified as large loan if the original loan amount equals or exceeds $600,000.

The Company’s methodology for estimating the ACLL considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodology applies historical loss information, adjusted for asset-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions expected to exist through the contractual lives of the financial assets that are reasonable and supportable, to the identified pools of financial assets with similar risk characteristics for which the historical loss experience was observed. Our methodology reverts to historical loss information immediately when it can no longer develop reasonable and supportable forecasts.

Loss-Rate Method. We use a loss-rate (“cohort”) method to estimate expected credit losses for all loan pools. The cohort method identifies and captures the balances of pooled loans with similar risk characteristics, as of a point in time to form a cohort, then tracks the respective losses generated by that cohort of loans over their remaining lives, or until the loans are “exhausted” (reached an acceptable stage at which a significant majority of all losses are expected to have been recognized). This method encompasses loan balances for as long as the loans are outstanding, so while significant history is required to represent the life-of-loan concept, this method does not require as much history due to its inclusion of loan balances in multiple cohort periods.

Qualitative Factors. We qualitatively adjust our loan loss rates for risk factors that are not otherwise considered within our model but are nonetheless relevant in assessing the expected credit losses within our loan pools. These qualitative factor (“Q-Factor”) adjustments may increase or decrease our estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk.

One Q-Factor adjustment to our loss rates is consideration of reasonable and supportable forecasts of economic conditions. In arriving at a reasonable and supportable economic forecast, we primarily consider the forecasted unemployment rates for the U.S., West Virginia and Virginia as loss drivers for each segmented loan pool. Secondarily, we consider the following forecasted economic data for one or more of our segmented loan pools depending on the nature of the underlying loan pool: housing price indices (U.S., West Virginia & Virginia), single-family housing starts (West Virginia & Virginia), multi-family housing starts (West Virginia & Virginia), personal income growth (U.S., West Virginia & Virginia), U.S. consumer confidence, rental vacancy rates (U.S.), and U.S. percentage change in gross domestic product.

Other risks that we may consider in making Q-Factor 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) changes in the nature and volume of the loan pools and in the terms of the underlying loans, (iii) changes in the experience, ability, and depth of our lending management and staff, (iv) 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, (v) changes in the quality of our credit review function, (vi) changes in the value of the underlying collateral for loans that are non-collateral dependent, (vii) the existence, growth, and effect of any concentrations of credit and (viii) other external factors such as the regulatory, legal and technological environments; competition; and events such as natural disasters or health pandemics.

Collateral Dependent Loans. We may determine that an individual loan exhibits unique risk characteristics which differentiate it 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 by appraisal services using a methodology that is consistent with the Uniform Standards of Professional Appraisal Practice.

The following table presents the activity in the ACLL by portfolio segment during 2023 and 2022:

	For the Year Ended December 31, 2023
	Allowance for Credit Losses - Loans
Dollars in thousands	Beginning Balance		Provision for Credit Losses - Loans			Adjustment for PCD Acquired Loans		Charge-offs			Recoveries		Ending Balance
Commercial	$	4,941	$	(570	)	$	—	$	(62	)	$	10	$	4,319
Commercial real estate - owner occupied
Professional & medical		966		216			28		(3	)		—		1,207
Retail		1,176		(716	)		82		—			1		543
Other		426		(181	)		384		(28	)		—		601
Commercial real estate - non-owner occupied
Hotels & motels		1,203		1,921			—		—			—		3,124
Mini-storage		82		(3	)		—		—			—		79
Multifamily		2,907		288			1		(57	)		5		3,144
Retail		1,362		4,601			99		(3,658	)		114		2,518
Other		2,452		(349	)		632		—			12		2,747
Construction and development
Land & land development		3,482		2,085			1		—			8		5,576
Construction		11,138		3,145			—		—			—		14,283
Residential 1-4 family real estate
Personal residence		2,939		57			69		(89	)		341		3,317
Rental - small loan		1,907		(135	)		68		—			31		1,871
Rental - large loan		2,668		(112	)		1		—			289		2,846
Home equity		705		543			130		—			52		1,430
Mortgage warehouse lines		—		—			—		—			—		—
Consumer		174		251			—		(351	)		131		205
Other
Credit cards		17		93			—		(93	)		9		26
Overdrafts		354		321			—		(503	)		82		254
Total	$	38,899	$	11,455		$	1,495	$	(4,844	)	$	1,085	$	48,090

	For the Year Ended December 31, 2022
	Allowance for Credit Losses - Loans
Dollars in thousands	Beginning Balance		Provision for Credit Losses - Loans			Charge-offs			Recoveries		Ending Balance
Commercial	$	3,218	$	1,774		$	(237	)	$	186	$	4,941
Commercial real estate - owner occupied
Professional & medical		1,092		(126	)		—			—		966
Retail		1,362		(79	)		(108	)		1		1,176
Other		575		(88	)		(61	)		—		426
Commercial real estate - non-owner occupied
Hotels & motels		2,532		(1,329	)		—			—		1,203
Mini-storage		133		(51	)		—			—		82
Multifamily		1,821		1,080			—			6		2,907
Retail		1,074		228			—			60		1,362
Other		1,820		593			—			39		2,452
Construction and development
Land & land development		3,468		76			(71	)		9		3,482
Construction		6,346		4,792			—			—		11,138
Residential 1-4 family real estate
Personal residence		2,765		230			(112	)		56		2,939
Rental - small loan		2,834		(848	)		(211	)		132		1,907
Rental - large loan		2,374		294			—			—		2,668
Home equity		497		179			(8	)		37		705
Mortgage warehouse lines		—		—			—			—		—
Consumer		163		70			(174	)		115		174
Other
Credit cards		17		7			(24	)		17		17
Overdrafts		207		476			(433	)		104		354
Total	$	32,298	$	7,278		$	(1,439	)	$	762	$	38,899

The following tables presents, as of December 31, 2023 and 2022 segregated by loan portfolio segment, details of the loan portfolio and the ACLL calculated in accordance with our credit loss accounting methodology for loans described above.

	December 31, 2023
	Loan Balances						Allowance for Credit Losses - Loans
Dollars in thousands	Loans Individually Evaluated		Loans Collectively Evaluated (1)		Total		Loans Individually Evaluated		Loans Collectively Evaluated		Total
Commercial	$	92	$	503,750	$	503,842	$	—	$	4,319	$	4,319
Commercial real estate - owner occupied
Professional & medical		—		156,941		156,941		—		1,207		1,207
Retail		572		169,819		170,391		23		520		543
Other		—		217,776		217,776		—		601		601
Commercial real estate - non-owner occupied
Hotels & motels		17,083		198,559		215,642		1,456		1,668		3,124
Mini-storage		—		68,517		68,517		—		79		79
Multifamily		—		302,298		302,298		—		3,144		3,144
Retail		3,906		250,340		254,246		103		2,415		2,518
Other		7,823		405,811		413,634		214		2,533		2,747
Construction and development
Land & land development		708		144,550		145,258		460		5,116		5,576
Construction		—		374,026		374,026		—		14,283		14,283
Residential 1-4 family real estate
Personal residence		—		362,733		362,733		—		3,317		3,317
Rental - small loan		1,247		141,418		142,665		104		1,767		1,871
Rental - large loan		1,256		115,358		116,614		—		2,846		2,846
Home equity		—		81,126		81,126		—		1,430		1,430
Mortgage warehouse lines		—		108,848		108,848		—		—		—
Consumer		—		43,756		43,756		—		205		205
Other
Credit cards		—		2,286		2,286		—		26		26
Overdrafts		—		1,013		1,013		—		254		254
Total	$	32,687	$	3,648,925	$	3,681,612	$	2,360	$	45,730	$	48,090

1) Included in the loans collectively evaluated are$9.2 million in fully guaranteed or cash secured loans, which are excluded from the pools collectively evaluated and carry no allowance.

	December 31, 2022
	Loan Balances						Allowance for Credit Losses - Loans
Dollars in thousands	Loans Individually Evaluated		Loans Collectively Evaluated (1)		Total		Loans Individually Evaluated		Loans Collectively Evaluated		Total
Commercial	$	104	$	501,740	$	501,844	$	—	$	4,941	$	4,941
Commercial real estate - owner occupied
Professional & medical		1,969		118,903		120,872		212		754		966
Retail		4,544		183,652		188,196		—		1,176		1,176
Other		—		157,982		157,982		—		426		426
Commercial real estate - non-owner occupied
Hotels & motels		2,939		138,103		141,042		—		1,203		1,203
Mini-storage		—		51,109		51,109		—		82		82
Multifamily		—		272,705		272,705		—		2,907		2,907
Retail		9,906		182,364		192,270		95		1,267		1,362
Other		5,551		341,691		347,242		287		2,165		2,452
Construction and development
Land & land development		1,398		104,964		106,362		502		2,980		3,482
Construction		—		282,935		282,935		—		11,138		11,138
Residential 1-4 family real estate
Personal residence		—		265,326		265,326		—		2,939		2,939
Rental - small loan		1,159		120,389		121,548		282		1,625		1,907
Rental - large loan		3,675		88,428		92,103		—		2,668		2,668
Home equity		—		71,986		71,986		—		705		705
Mortgage warehouse lines		—		130,390		130,390		—		—		—
Consumer		—		35,372		35,372		—		174		174
Other
Credit cards		—		2,182		2,182		—		17		17
Overdrafts		—		1,352		1,352		—		354		354
Total	$	31,245	$	3,051,573	$	3,082,818	$	1,378	$	37,521	$	38,899

1) Included in the loans collectively evaluated are $8.5 million in fully guaranteed or cash secured loans, which are excluded from the pools collectively evaluated and carry no allowance.

The following table presents the amortized cost basis of collateral dependent loans by loan pool, which are individually evaluated to determine expected credit losses, and the related ACLL allocated to those loans:

	December 31, 2023
Dollars in thousands	Real Estate Secured Loans		Non-Real Estate Secured Loans		Total Loans		Allowance for Credit Losses - Loans
Commercial	$	—	$	92	$	92	$	—
Commercial real estate - owner occupied
Professional & medical		—		—		—		—
Retail		572		—		572		23
Other		—		—		—		—
Commercial real estate - non-owner occupied
Hotels & motels		17,083		—		17,083		1,456
Mini-storage		—		—		—		—
Multifamily		—		—		—		—
Retail		3,906		—		3,906		103
Other		7,823		—		7,823		214
Construction and development
Land & land development		708		—		708		460
Construction		—		—		—		—
Residential 1-4 family real estate
Personal residence		—		—		—		—
Rental - small loan		1,247		—		1,247		104
Rental - large loan		1,256		—		1,256		—
Home equity		—		—		—		—
Consumer		—		—		—		—
Other
Credit cards		—		—		—		—
Overdrafts		—		—		—		—
Total	$	32,595	$	92	$	32,687	$	2,360

	December 31, 2022
Dollars in thousands	Real Estate Secured Loans		Non-Real Estate Secured Loans		Total Loans		Allowance for Credit Losses - Loans
Commercial	$	—	$	104	$	104	$	—
Commercial real estate - owner occupied
Professional & medical		1,969		—		1,969		212
Retail		4,544		—		4,544		—
Other		—		—		—		—
Commercial real estate - non-owner occupied
Hotels & motels		2,939		—		2,939		—
Mini-storage		—		—		—		—
Multifamily		—		—		—		—
Retail		9,906		—		9,906		95
Other		5,551		—		5,551		287
Construction and development
Land & land development		1,398		—		1,398		502
Construction		—		—		—		—
Residential 1-4 family real estate
Personal residence		—		—		—		—
Rental - small loan		1,159		—		1,159		282
Rental - large loan		3,675		—		3,675		—
Home equity		—		—		—		—
Consumer		—		—		—		—
Other
Credit cards		—		—		—		—
Overdrafts		—		—		—		—
Total	$	31,141	$	104	$	31,245	$	1,378