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Loans
 3 Months Ended
Mar. 31, 2024
Receivables [Abstract]  
Loans Loans
The following table presents the composition of loans segregated by class of loans, as of March 31, 2024 and December 31, 2023.
(dollars in thousands)March 31, 2024December 31, 2023
Construction, land & land development$234,000 $247,146 
Other commercial real estate971,205 974,375 
Total commercial real estate1,205,205 1,221,521 
Residential real estate347,277 356,234 
Commercial, financial & agricultural 239,837 242,756 
Consumer and other66,699 62,959 
Total Loans$1,859,018 $1,883,470 
Included in the above table are government guaranteed loans totaling $94.6 million at March 31, 2024 and $86.8 million at December 31, 2023. The following table presents the composition of government guaranteed loans segregated by class of loans for each respective period.

(dollars in thousands)March 31, 2024December 31, 2023
Construction, land & land development$6,658 $7,027 
Other commercial real estate48,396 40,852 
Total commercial real estate55,054 47,879 
Residential real estate9,272 12,170 
Commercial, financial & agricultural 30,272 26,716 
Consumer and other— — 
Total Loans$94,598 $86,765 

The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this note. As of March 31, 2024 and December 31, 2023, accrued interest receivable for loans totaled $8.8 million and $8.8 million, respectively, and is included in the "Other assets" line item on the Company’s consolidated balance sheet.

Commercial, financial & agricultural loans are extended to a diverse group of businesses within the Company’s market area. These loans are often underwritten based on the borrower’s ability to service the debt from income from the business. Real estate construction loans often require loan funds to be advanced prior to completion of the project. Due to uncertainties inherent in estimating construction costs, changes in interest rates and other economic conditions, these loans often pose a higher risk than other types of loans. Consumer and other loans are originated at the Bank level.
Credit Quality Indicators. As part of the ongoing monitoring of the credit quality of the loan portfolio, management tracks certain credit quality indicators including trends related to (1) the risk grade assigned to commercial and consumer loans, (2) the level of classified commercial loans, (3) net charge-offs, (4) nonperforming loans, and (5) the general economic conditions in the Company’s geographic markets.
The Company uses a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 10. A description of the general characteristics of the grades is as follows:
•Grades 1, 2 and 3 - Borrowers with these assigned risk grades range from virtual absence of risk to minimal risk. Such loans may be secured by Company-issued and controlled certificates of deposit or properly margined equity securities or bonds. Other loans comprising these grades are made to companies that have been in existence for a long period of time with many years of consecutive profits and strong equity, good liquidity, excellent debt service ability and unblemished past performance, or to exceptionally strong individuals with collateral of unquestioned value that fully secures the loans. Loans in this category fall into the “pass” classification.
•Grades 4 and 5 - Loans assigned these “pass” risk grades are made to borrowers with acceptable credit quality and risk. The risk ranges from loans with no significant weaknesses in repayment capacity and collateral protection to acceptable loans with one or more risk factors considered to be more than average. These loans are also included in into the “pass” classification.
•Grade 6 - This grade includes “special mention” loans on management’s watch list and is intended to be used on a temporary basis for pass grade loans where risk-modifying action is intended in the short-term.
•Grades 7 and 8 - These grades include “substandard” loans in accordance with regulatory guidelines. This category includes borrowers with well-defined weaknesses that jeopardize the payment of the debt in accordance with the agreed terms. Loans considered to be impaired are assigned grade 8, and these loans often have assigned loss allocations as part of the allowance for credit losses. Generally, loans on which interest accrual has been stopped would be included in this grade.
•Grades 9 and 10 - These grades correspond to regulatory classification definitions of “doubtful” and “loss,” respectively. In practice, any loan with these grades would be for a very short period of time, and generally the Company has no loans with these assigned grades. Management manages the Company’s problem loans in such a
way that uncollectible loans or uncollectible portions of loans are charged off immediately with any residual, collectible amounts assigned a risk grade of 7 or 8. 
The following tables present the loan portfolio segregated by class of loans and the risk category of term loans by vintage year, which is the year of origination or most recent renewal, as of March 31, 2024 and December 31, 2023. Those loans with a risk grade of 1, 2, 3, 4 and 5 have been combined in the pass column for presentation purposes. There were no loans with a risk rating of "doubtful" or "loss" at March 31, 2024 or December 31, 2023.
Term Loans Amortized Cost Basis by Origination Year
(dollars in thousands)20242023202220212020PriorRevolversRevolvers converted to term loansTotal
March 31, 2024
Construction, land & land development
Risk rating
Pass$13,992 $97,191 $82,284 $28,121 $4,352 $6,398 $89 $31 $232,458 
Special Mention— 640 — 24 — 25 280 — 969 
Substandard— — 429 4 — 140 — — 573 
Total Construction, land & land development13,992 97,831 82,713 28,149 4,352 6,563 369 31 234,000 
  Current period gross write offs$— $— $— $— $— $— $— $— $— 
Other commercial real estate
Risk rating
Pass6,359 76,903 336,599 197,131 84,422 214,138 21,999 2,154 939,705 
Special Mention303 76 3,458 484 2,094 10,267 554 344 17,580 
Substandard— 2,807 5,602 565 356 4,381 209 — 13,920 
Total Other commercial real estate6,662 79,786 345,659 198,180 86,872 228,786 22,762 2,498 971,205 
Current period gross write offs— — — — — 20 — — 20 
Residential real estate
Risk rating
Pass6,967 73,145 113,983 49,805 20,828 47,464 21,938 98 334,228 
Special Mention16 850 517 43 92 5,310 326 — 7,154 
Substandard— — 1,271 375 281 3,938 30 — 5,895 
Total Residential real estate6,983 73,995 115,771 50,223 21,201 56,712 22,294 98 347,277 
Current period gross write offs— — 70 — — — — — 70 
Commercial, financial & agricultural
Risk rating
Pass18,071 55,857 46,732 17,713 11,469 17,594 63,259 534 231,229 
Special Mention— 364 579 277 719 180 1,004 — 3,123 
Substandard— 264 2,038 1,840 202 191 910 40 5,485 
Total Commercial, financial & agricultural18,071 56,485 49,349 19,830 12,390 17,965 65,173 574 239,837 
Current period gross write offs— 52 428 178 — — — — 658 
Consumer and other
Risk rating
Pass21,880 36,278 3,392 1,706 987 1,619 460 11 66,333 
Special Mention— 171 38 33 10 21 — — 273 
Substandard11 34 18 15 4 11 — — 93 
Total Consumer and other21,891 36,483 3,448 1,754 1,001 1,651 460 11 66,699 
Current period gross write offs— 116 4 — — — — — 120 
Total Loans
Risk rating
Pass67,269 339,374 582,990 294,476 122,058 287,213 107,745 2,828 1,803,953 
Special Mention319 2,101 4,592 861 2,915 15,803 2,164 344 29,099 
Substandard11 3,105 9,358 2,799 843 8,661 1,149 40 25,966 
Total Loans$67,599 $344,580 $596,940 $298,136 $125,816 $311,677 $111,058 $3,212 $1,859,018 
Total current period gross write offs$— $168 $502 $178 $— $20 $— $— $868 
Term Loans Amortized Cost Basis by Origination Year
(dollars in thousands)20232022202120202019PriorRevolversRevolvers converted to term loansTotal
December 31, 2023
Construction, land & land development
Risk rating
Pass$112,587 $91,981 $27,332 $5,654 $1,000 $5,765 $605 $31 $244,955 
Special Mention792 — 25 — — 29 282 — 1,128 
Substandard— 888 4 — 20 151 — — 1,063 
Total Construction, land & land development113,379 92,869 27,361 5,654 1,020 5,945 887 31 247,146 
  Current period gross write offs$— $— $— $— $— $— $— $— $— 
Other commercial real estate
Risk rating
Pass61,816 341,656 204,145 88,629 79,123 145,374 24,158 2,031 946,932 
Special Mention75 3,251 766 2,113 5,733 4,694 545 48 17,225 
Substandard2,303 2,615 211 — 486 4,395 208 — 10,218 
Total Other commercial real estate64,194 347,522 205,122 90,742 85,342 154,463 24,911 2,079 974,375 
Current period gross write offs— — 69 — — — — — 69 
Residential real estate
Risk rating
Pass78,088 116,704 50,986 21,892 8,510 43,038 22,642 100 341,960 
Special Mention856 466 10 50 679 4,687 424 — 7,172 
Substandard— 1,169 384 296 272 4,735 246 — 7,102 
Total Residential real estate78,944 118,339 51,380 22,238 9,461 52,460 23,312 100 356,234 
Current period gross write offs253 492 26 — — — — — 771 
Commercial, financial & agricultural
Risk rating
Pass66,820 51,439 21,673 12,489 4,734 14,002 58,607 306 230,070 
Special Mention4,186 894 376 745 188 40 974 — 7,403 
Substandard164 1,872 1,979 190 25 165 866 22 5,283 
Total Commercial, financial & agricultural71,170 54,205 24,028 13,424 4,947 14,207 60,447 328 242,756 
Current period gross write offs150 168 408 200 9 134 — — 1,069 
Consumer and other
Risk rating
Pass53,117 4,021 2,004 1,240 925 908 462 1 62,678 
Special Mention79 42 38 12 25 1 — — 197 
Substandard43 20 3 5 4 9 — — 84 
Total Consumer and other53,239 4,083 2,045 1,257 954 918 462 1 62,959 
Current period gross write offs9 12 10 2 — 2 — — 35 
Total Loans
Risk rating
Pass372,428 605,801 306,140 129,904 94,292 209,087 106,474 2,469 1,826,595 
Special Mention5,988 4,653 1,215 2,920 6,625 9,451 2,225 48 33,125 
Substandard2,510 6,564 2,581 491 807 9,455 1,320 22 23,750 
Total Loans$380,926 $617,018 $309,936 $133,315 $101,724 $227,993 $110,019 $2,539 $1,883,470 
Total current period gross write offs$412 $672 $513 $202 $9 $136 $— $— $1,944 
A loan’s risk grade is assigned at loan origination and is based on the financial strength of the borrower and the type of collateral. Loan risk grades are subject to review at various times throughout the year as part of the Company’s ongoing loan review process. Loans with an assigned risk grade of seven or worse and an outstanding balance of $500,000 or more are reassessed on a quarterly basis. During this reassessment process individual reserves may be identified and placed against certain loans which are not considered impaired.
In assessing the overall economic condition of the markets in which it operates, the Company monitors the unemployment rates for its major service areas. The unemployment rates are reviewed on a quarterly basis as part of the allowance for credit loss determination.
Loans are placed on nonaccrual status if principal or interest payments become 90 days past due or 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 guidelines. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due.
Collateral-Dependent Loans
We classify a loan as collateral-dependent when our borrower is experiencing financial difficulty, and we expect repayment to be provided substantially through the operation or sale of collateral. Our commercial loans have collateral that is comprised of real estate and business assets. Our consumer loans have collateral that is substantially comprised of residential real estate.
There were no significant changes in the extent to which collateral secures our collateral-dependent loans during the three month period ended March 31, 2024.
The following table presents the aging of the amortized cost basis of loans by aging category and accrual status as of March 31, 2024 and December 31, 2023:
(dollars in thousands)30-89 Days
Past Due		90 Days
or More
Past Due		Total Accruing
Loans Past Due		Nonaccrual
Loans		Current LoansTotal Loans
March 31, 2024
Construction, land & land development$71 $— $71 $56 $233,873 $234,000 
Other commercial real estate2,641 — 2,641 2,005 966,559 971,205 
Total commercial real estate2,712 — 2,712 2,061 1,200,432 1,205,205 
Residential real estate2,310 — 2,310 2,148 342,819 347,277 
Commercial, financial & agricultural578 — 578 2,190 237,069 239,837 
Consumer and other129 — 129 32 66,538 66,699 
Total Loans$5,729 $— $5,729 $6,431 $1,846,858 $1,859,018 
December 31, 2023
Construction, land & land development$812 $— $812 $85 $246,249 $247,146 
Other commercial real estate1,796 — 1,796 4,219 968,360 974,375 
Total commercial real estate2,608 — 2,608 4,304 1,214,609 1,221,521 
Residential real estate2,503 350 2,853 3,561 349,820 356,234 
Commercial, financial & agricultural775 — 775 1,956 240,025 242,756 
Consumer and other183 20 203 18 62,738 62,959 
Total Loans$6,069 $370 $6,439 $9,839 $1,867,192 $1,883,470 

The following tables display a summary of the Company's nonaccrual loans by major categories for the periods indicated.
March 31, 2024
(dollars in thousands)Nonaccrual Loans with No Related ACLNonaccrual Loans with a Related ACLTotal Nonaccrual Loans
Construction, land & land development$— $56 $56 
Other commercial real estate29 1,976 2,005 
Total commercial real estate29 2,032 2,061 
Residential real estate— 2,148 2,148 
Commercial, financial & agricultural— 2,190 2,190 
Consumer and other— 32 32 
Total Loans$29 $6,402 $6,431 
December 31, 2023
(dollars in thousands)Nonaccrual Loans with No Related ACLNonaccrual Loans with a Related ACLTotal Nonaccrual Loans
Construction, land & land development$27 $58 $85 
Other commercial real estate2,806 1,413 4,219 
Total commercial real estate2,833 1,471 4,304 
Residential real estate725 2,836 3,561 
Commercial, financial & agricultural— 1,956 1,956 
Consumer and other— 18 18 
Total Loans$3,558 $6,281 $9,839 
Interest income recorded on nonaccrual loans during the three months ended March 31, 2024 and March 31, 2023 was $55,000 and $154,000, respectively.
The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a discounted cash flow model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.
Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.
In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. Upon the Company's determination that a modified loan, or portion of a loan, has subsequently been deemed uncollectible, the loan, or portion of the loan, is written off.
The following table presents loans modified due to a financial difficulty under the above terms during the three months ended March 31, 2024.
Loans modified due to financial difficulty
(dollars in thousands)Term ExtensionTerm Extension and Payment DelayTotal*
Commercial real estate$131 $144 $275 
Commercial, financial & agricultural— 42 42 
Total Loans$131 $186 $317 
*less than .05% of total class of receivable
There were a total of three loans in the above categories. The commercial real estate loans consist of two loans, each with a term extension of one year with one loan also given a payment delay. The commercial, financial & agricultural loan had a term extension of five years and was given a payment delay.
The Company had no loans that subsequently defaulted during the three month period ended March 31, 2024 and for the year ended December 31, 2023.