The Company’s loan portfolio is grouped into segments, which are further broken down into classes to allow management to monitor the performance by the borrower and to monitor the yield on the portfolio. The risks associated with lending activities differ among the various loan classes and are subject to the impact of changes in interest rates, market conditions of collateral securing the loans, and general economic conditions. All of these factors may adversely impact both the borrower’s ability to repay its loans and the value of its associated collateral.

Non-owner occupied and multi-family commercial real estate loans and non-owner occupied residential loans present a different credit risk to the Company than owner-occupied commercial real estate loans, as the repayment of the loan is dependent upon the borrower’s ability to generate a sufficient level of occupancy to produce rental income that exceeds debt service requirements and operating expenses. Lower occupancy or lease rates may result in a reduction in cash flows, which hinders the ability of the borrower to meet debt service requirements and may result in lower collateral values. The Company generally recognizes that greater risk is inherent in these credit relationships compared to owner-occupied loans mentioned above.

Acquisition and development loans consist of 1-4 family residential construction and commercial and land development loans. The risk of loss on these loans is largely dependent on the Company’s ability to assess the property’s value at the completion of the project, which should exceed the property’s construction costs. During the construction phase, a number of factors could potentially negatively impact the collateral value, including cost overruns, delays in completing the project, competition, and real estate market conditions, which may change based on the supply of similar properties in the area. In the event the collateral value at the completion of the project is not sufficient to cover the outstanding loan balance, the Company must rely upon other repayment sources, if any, including the guarantors of the project or other collateral securing the loan.

loans. Although commercial and industrial loans may be unsecured to our highest-rated borrowers, the majority of these loans are secured by the borrower’s accounts receivable, inventory and machinery and equipment. In a significant number of these loans, the collateral also includes the business real estate or the business owner’s personal real estate or assets. Commercial and industrial loans present credit exposure to the Company, as they are more susceptible to risk of loss during a downturn in the economy as borrowers may have greater difficulty in meeting their debt service requirements and the value of the collateral may decline. The Company attempts to mitigate this risk through its underwriting standards, including evaluating the creditworthiness of the borrower and, to the extent available, credit ratings on the business. Additionally, monitoring of the loans through annual renewals and meetings with the borrowers is typical. However, these procedures cannot eliminate the risk of loss associated with commercial and industrial lending. At March 31, 2024 and December 31, 2023, commercial and industrial loans include $5.4 million and $5.7 million, respectively, net of deferred fees and costs, originated through the SBA PPP. At March 31, 2024, the Bank has $56 thousand of net deferred SBA PPP fees remaining to be recognized through net interest income over the remaining life of the loans. As these loans are 100% guaranteed by the SBA, there is no associated ACL at March 31, 2024 and December 31, 2023.

The Company originates loans to its retail clients, including fixed-rate and adjustable first lien mortgage loans, with the underlying 1-4 family owner occupied residential property securing the loan. The Company’s risk exposure is minimized in these types of loans through the evaluation of the creditworthiness of the borrower, including credit scores and debt-to-income ratios, and underwriting standards, which limit the loan-to-value ratio to generally no more than 80% upon loan origination, unless the borrower obtains private mortgage insurance.

The following table presents the loan portfolio by segment and class, excluding residential LHFS, at March 31, 2024 and December 31, 2023:


	March 31, 2024		December 31, 2023
Commercial real estate:
Owner occupied	$	364,280	$	373,757
Non-owner occupied	707,871		694,638
Multi-family	147,773		150,675
Non-owner occupied residential	91,858		95,040
Acquisition and development:
1-4 family residential construction	22,277		24,516
Commercial and land development	118,010		115,249
Commercial and industrial	365,524		367,085
Municipal	10,925		9,812
Residential mortgage:
First lien	270,748		266,239
Home equity - term	4,966		5,078
Home equity - lines of credit	189,966		186,450
Installment and other loans	8,875		9,774
Total loans	$	2,303,073	$	2,298,313

In order to monitor ongoing risk associated with its loan portfolio and specific loans within the segments, management uses an internal grading system. The first several rating categories, representing the lowest risk to the Bank, are combined and given a “Pass” rating. Management generally follows regulatory definitions in assigning criticized ratings to loans, including "Special Mention," "Substandard," "Doubtful" or "Loss." The Special Mention category includes loans that have potential weaknesses that may, if not monitored or corrected, weaken the asset or inadequately protect the Bank's position at some future date. These assets pose elevated risk, but their weakness does not yet justify a more severe, or classified rating. Substandard loans are classified as they have a well-defined weakness, or weaknesses that jeopardize liquidation of the debt. These loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Substandard loans include loans that management may determine to be either individually evaluated, referred to as "Substandard - Individually Evaluated Loan," or collectively evaluated, referred to as "Substandard Non-Individually Evaluated Loan." A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as Loss is deferred. Loss loans are considered uncollectible, as the borrowers are often in bankruptcy, have suspended debt repayments, or have ceased business operations. Once a loan is classified as Loss, there is little prospect of collecting the loan’s principal or interest and it is charged off.

The Company has a loan review policy and program, which is designed to identify and monitor risk in the lending function. The Management ERM Committee, comprised of executive officers, senior officers and loan department personnel, is charged with the oversight of overall credit quality and risk exposure of the Company's loan portfolio. This includes the monitoring of the lending activities of all Company personnel with respect to underwriting and processing new loans and the timely follow-up and corrective action for loans showing signs of deterioration in quality. A loan review program provides the Company with an independent review of the commercial loan portfolio on an ongoing basis. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as extended delinquencies, bankruptcy, repossession or death of the borrower occurs, which heightens awareness as to a possible credit event.

Internal loan reviews are completed annually on all commercial relationships with a committed loan balance in excess of $1.0 million, which includes confirmation of risk rating by an independent credit officer. In addition, all commercial relationships greater than $500 thousand rated Substandard, Doubtful or Loss are reviewed quarterly and corresponding risk ratings are reaffirmed by the Company's Problem Loan Committee, with subsequent reporting to the Management ERM Committee and the Board of Directors.


	Term Loans Amortized Cost Basis by Origination Year
As of March 31, 2024	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Basis		Revolving Loans Converted to Term		Total
Commercial Real Estate:
Owner-occupied:
Risk rating
Pass	$	7,004	$	50,993	$	100,503	$	70,796	$	20,786	$	80,037	$	3,867	$	—	$	333,986
Special mention	—		—		—		3,741		1,165		1,287		—		—		6,193
Substandard - Non-IEL	—		708		10,092		481		6,034		2,526		335		—		20,176
Substandard - IEL	—		—		—		—		—		3,925		—		—		3,925
Total owner-occupied loans	$	7,004	$	51,701	$	110,595	$	75,018	$	27,985	$	87,775	$	4,202	$	—	$	364,280
Current period gross charge offs - owner-occupied	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied:
Risk rating
Pass	$	17,334	$	82,531	$	107,154	$	231,786	$	82,923	$	179,199	$	534	$	—	$	701,461
Special mention	—		—		—		—		520		2,079		—		—		2,599
Substandard - Non-IEL	—		—		—		—		—		2,718		—		865		3,583
Substandard - IEL	—		—		—		—		—		228		—		—		228
Total non-owner occupied loans	$	17,334	$	82,531	$	107,154	$	231,786	$	83,443	$	184,224	$	534	$	865	$	707,871
Current period gross charge offs - non-owner occupied	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Multi-family:
Risk rating
Pass	$	599	$	2,683	$	62,971	$	28,564	$	12,602	$	38,577	$	126	$	—	$	146,122
Special mention	—		—		—		—		—		418		—		—		418
Substandard - Non-IEL	—		—		—		—		—		—		—		—		—
Substandard - IEL	—		—		—		—		—		1,233		—		—		1,233
Total multi-family loans	$	599	$	2,683	$	62,971	$	28,564	$	12,602	$	40,228	$	126	$	—	$	147,773
Current period gross charge offs - multi-family	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied residential:
Risk rating
Pass	$	887	$	10,189	$	20,822	$	16,626	$	7,689	$	32,400	$	146	$	—	$	88,759
Special mention	—		—		—		—		—		698		—		—		698
Substandard - Non-IEL	—		—		—		—		—		365		20		—		385
Substandard - IEL	—		2		—		185		1,125		704		—		—		2,016
Total non-owner occupied residential loans	$	887	$	10,191	$	20,822	$	16,811	$	8,814	$	34,167	$	166	$	—	$	91,858
Current period gross charge offs - non-owner occupied residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
continued


	Term Loans Amortized Cost Basis by Origination Year
As of March 31, 2024	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Basis		Revolving Loans Converted to Term		Total
Acquisition and development:
1-4 family residential construction:
Risk rating
Pass	$	2,906	$	17,880	$	1,270	$	—	$	—	$	—	$	—	$	—	$	22,056
Special mention	—		221		—		—		—		—		—		—		221
Substandard - Non-IEL	—		—		—		—		—		—		—		—		—
Substandard - IEL	—		—		—		—		—		—		—		—		—
Total 1-4 family residential construction loans	$	2,906	$	18,101	$	1,270	$	—	$	—	$	—	$	—	$	—	$	22,277
Current period gross charge offs - 1-4 family residential construction	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and land development:
Risk rating
Pass	$	2,504	$	37,248	$	43,572	$	6,111	$	9,869	$	1,225	$	6,689	$	8,202	$	115,420
Special mention	—		—		—		—		854		430		—		—		1,284
Substandard - Non-IEL	—		—		—		—		—		—		—		—		—
Substandard - IEL	—		—		—		—		—		1,306		—		—		1,306
Total commercial and land development loans	$	2,504	$	37,248	$	43,572	$	6,111	$	10,723	$	2,961	$	6,689	$	8,202	$	118,010
Current period gross charge offs - commercial and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and Industrial:
Risk rating
Pass	$	13,291	$	64,946	$	65,981	$	62,595	$	23,083	$	29,681	$	88,673	$	1,250	$	349,500
Special mention	—		—		1,387		35		9		730		2,407		—		4,568
Substandard - Non-IEL	—		14		—		6,112		—		225		5,104		—		11,455
Substandard - IEL	—		—		1		—		—		—		—		—		1
Total commercial and industrial loans	$	13,291	$	64,960	$	67,369	$	68,742	$	23,092	$	30,636	$	96,184	$	1,250	$	365,524
Current period gross charge offs - commercial and industrial	$	—	$	—	$	46	$	—	$	—	$	—	$	—	$	—	$	46
Municipal:
Risk rating
Pass	$	1,580	$	—	$	—	$	3,160	$	—	$	—	$	6,185	$	—	$	10,925
Total municipal loans	$	1,580	$	—	$	—	$	3,160	$	—	$	—	$	6,185	$	—	$	10,925
Current period gross charge offs - municipal	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential mortgage:
First lien:
Payment performance
Performing	$	9,076	$	45,888	$	68,632	$	34,357	$	7,925	$	101,445	$	—	$	634	$	267,957
Nonperforming	—		—		—		—		—		2,791		—		—		2,791
Total first lien loans	$	9,076	$	45,888	$	68,632	$	34,357	$	7,925	$	104,236	$	—	$	634	$	270,748
Current period gross charge offs - first lien	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
continued


	Term Loans Amortized Cost Basis by Origination Year
As of March 31, 2024	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Basis		Revolving Loans Converted to Term		Total
Home equity - term:
Payment performance
Performing	$	331	$	501	$	692	$	74	$	408	$	2,958	$	—	$	—	$	4,964
Nonperforming	—		—		—		—		—		2		—		—		2
Total home equity - term loans	$	331	$	501	$	692	$	74	$	408	$	2,960	$	—	$	—	$	4,966
Current period gross charge offs - home equity - term	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Home equity - lines of credit:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	111,751	$	76,689	$	188,440
Nonperforming	—		—		—		—		—		—		1,308		218		1,526
Total residential real estate - home equity - lines of credit loans	$	—	$	—	$	—	$	—	$	—	$	—	$	113,059	$	76,907	$	189,966
Current period gross charge offs - home equity - lines of credit	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Installment and other loans:
Payment performance
Performing	$	366	$	626	$	357	$	304	$	96	$	1,178	$	5,920	$	—	$	8,847
Nonperforming	—		3		—		—		—		21		4		—		28
Total Installment and other loans	$	366	$	629	$	357	$	304	$	96	$	1,199	$	5,924	$	—	$	8,875
Current period gross charge offs - installment and other	$	24	$	12	$	—	$	—	$	—	$	17	$	—	$	—	$	53


	Term Loans Amortized Cost Basis by Origination Year
As of December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Basis		Revolving Loans Converted to Term		Total
Commercial Real Estate:
Owner-occupied:
Risk rating
Pass	$	50,829	$	103,192	$	69,888	$	21,232	$	21,251	$	62,634	$	4,941	$	—	$	333,967
Special mention	—		—		2,517		1,176		—		1,314		—		—		5,007
Substandard - Non-IEL	—		9,923		—		6,075		—		2,687		312		—		18,997
Substandard - IEL	—		—		—		13,366		—		2,420		—		—		15,786
Total owner-occupied loans	$	50,829	$	113,115	$	72,405	$	41,849	$	21,251	$	69,055	$	5,253	$	—	$	373,757
Current period gross charge offs - owner-occupied	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied:
Risk rating
Pass	$	82,879	$	102,212	$	235,031	$	83,652	$	63,176	$	120,696	$	509	$	—	$	688,155
Special mention	—		—		—		524		—		2,112		—		—		2,636
Substandard - Non-IEL	—		—		—		—		—		2,739		—		868		3,607
Substandard - IEL	—		—		—		—		—		240		—		—		240
Total non-owner occupied loans	$	82,879	$	102,212	$	235,031	$	84,176	$	63,176	$	125,787	$	509	$	868	$	694,638
Current period gross charge offs - non-owner occupied	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
continued


	Term Loans Amortized Cost Basis by Origination Year
As of December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Basis		Revolving Loans Converted to Term		Total
Multi-family:
Risk rating
Pass	$	2,701	$	61,805	$	28,541	$	12,694	$	7,437	$	33,895	$	117	$	—	$	147,190
Special mention	—		—		—		—		244		2,008		—		—		2,252
Substandard - Non-IEL	—		—		—		—		—		—		—		—		—
Substandard - IEL	—		—		—		—		—		1,233		—		—		1,233
Total multi-family loans	$	2,701	$	61,805	$	28,541	$	12,694	$	7,681	$	37,136	$	117	$	—	$	150,675
Current period gross charge offs - multi-family	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied residential:
Risk rating
Pass	$	10,075	$	20,473	$	16,947	$	7,974	$	6,444	$	28,319	$	1,130	$	—	$	91,362
Special mention	—		—		—		—		—		731		—		—		731
Substandard - Non-IEL	—		—		—		—		—		375		—		—		375
Substandard - IEL	2		—		192		1,461		—		917		—		—		2,572
Total non-owner occupied residential loans	$	10,077	$	20,473	$	17,139	$	9,435	$	6,444	$	30,342	$	1,130	$	—	$	95,040
Current period gross charge offs - non-owner occupied residential	$	—	$	—	$	—	$	—	$	—	$	12	$	—	$	—	$	12
Acquisition and development:
1-4 family residential construction:
Risk rating
Pass	$	18,820	$	5,400	$	—	$	—	$	—	$	—	$	—	$	—	$	24,220
Special mention	222		—		74		—		—		—		—		—		296
Substandard - Non-IEL	—		—		—		—		—		—		—		—		—
Substandard - IEL	—		—		—		—		—		—		—		—		—
Total 1-4 family residential construction loans	$	19,042	$	5,400	$	74	$	—	$	—	$	—	$	—	$	—	$	24,516
Current period gross charge offs - 1-4 family residential construction	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and land development:
Risk rating
Pass	$	28,829	$	48,453	$	9,847	$	9,927	$	110	$	1,774	$	6,574	$	6,936	$	112,450
Special mention	—		—		—		1,001		—		437		—		—		1,438
Substandard - Non-IEL	—		—		—		—		—		—		—		—		—
Substandard - IEL	—		—		—		—		—		1,361		—		—		1,361
Total commercial and land development loans	$	28,829	$	48,453	$	9,847	$	10,928	$	110	$	3,572	$	6,574	$	6,936	$	115,249
Current period gross charge offs - commercial and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
continued


	Term Loans Amortized Cost Basis by Origination Year
As of December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Basis		Revolving Loans Converted to Term		Total
Commercial and Industrial:
Risk rating
Pass	$	67,735	$	69,670	$	67,117	$	24,580	$	10,753	$	20,775	$	86,475	$	1,522	$	348,627
Special mention	—		4,251		4,364		11		552		356		2,258		—		11,792
Substandard - Non-IEL	—		—		4,682		—		5		225		1,082		—		5,994
Substandard - IEL	—		69		—		7		—		455		141		—		672
Total commercial and industrial loans	$	67,735	$	73,990	$	76,163	$	24,598	$	11,310	$	21,811	$	89,956	$	1,522	$	367,085
Current period gross charge offs - commercial and industrial	$	—	$	161	$	106	$	—	$	—	$	8	$	473	$	—	$	748
Municipal:
Risk rating
Pass	$	—	$	—	$	3,403	$	—	$	—	$	6,409	$	—	$	—	$	9,812
Total municipal loans	$	—	$	—	$	3,403	$	—	$	—	$	6,409	$	—	$	—	$	9,812
Current period gross charge offs - municipal	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential mortgage:
First lien:
Payment performance
Performing	$	43,641	$	71,311	$	34,704	$	8,056	$	7,465	$	97,943	$	—	$	638	$	263,758
Nonperforming	—		—		—		—		120		2,361		—		—		2,481
Total first lien loans	$	43,641	$	71,311	$	34,704	$	8,056	$	7,585	$	100,304	$	—	$	638	$	266,239
Current period gross charge offs - first lien	$	—	$	—	$	—	$	—	$	—	$	58	$	—	$	—	$	58
Home equity - term:
Payment performance
Performing	$	607	$	732	$	90	$	426	$	115	$	3,105	$	—	$	—	$	5,075
Nonperforming	—		—		—		—		—		3		—		—		3
Total home equity - term loans	$	607	$	732	$	90	$	426	$	115	$	3,108	$	—	$	—	$	5,078
Current period gross charge offs - home equity - term	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Home equity - lines of credit:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	107,967	$	77,171	$	185,138
Nonperforming	—		—		—		—		—		—		1,296		16		1,312
Total residential real estate - home equity - lines of credit loans	$	—	$	—	$	—	$	—	$	—	$	—	$	109,263	$	77,187	$	186,450
Current period gross charge offs - home equity - lines of credit	$	—	$	—	$	—	$	—	$	—	$	—	$	40	$	—	$	40
Installment and other loans:
Payment performance
Performing	$	758	$	413	$	332	$	106	$	670	$	947	$	6,500	$	—	$	9,726
Nonperforming	3		—		—		—		33		12		—		—		48
Total Installment and other loans	$	761	$	413	$	332	$	106	$	703	$	959	$	6,500	$	—	$	9,774
Current period gross charge offs - installment and other	$	181	$	24	$	—	$	—	$	4	$	10	$	28	$	—	$	247

For commercial real estate, acquisition and development, commercial and industrial and municipal segments, a loan is evaluated individually when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining expected credit losses, and whether the loan will be individually evaluated, include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not individually evaluated. Generally, loans that are more than 90 days past due will be individually evaluated for a specific reserve. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed to determine if the loan should be placed on nonaccrual status. Nonaccrual loans are, by definition, deemed to be individually evaluated under CECL. A specific reserve allocation for individually evaluated loans is measured on a loan-by-loan basis for commercial and construction loans by either the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. A loan is collateral dependent if the repayment of the loan is expected to be provided solely by the underlying collateral. For loans that are experiencing financial difficulty for extended periods of time, periodic updates on fair values are obtained, which may include updated appraisals. Updated fair values are incorporated into the analysis in the next reporting period.

Loan charge-offs, which may include partial charge-offs, are taken on an individually evaluated loan that is collateral dependent if the carrying balance of the loan exceeds the appraised value of the collateral, the loan has been placed on nonaccrual status or identified as uncollectible, and it is deemed to be a confirmed loss. Typically, loans with a charge-off or partial charge-off will continue to be individually evaluated. Generally, an individually evaluated loan with a partial charge-off may continue to have a specific reserve on it after the partial charge-off, if factors warrant.

At March 31, 2024 and December 31, 2023, the Company’s individually evaluated loans were measured based on the estimated fair value of the collateral securing the loan, except for purchased auto loans on nonaccrual status and accruing loans accounted for as TDRs prior to the adoption of ASU 2022-02. For real estate loans, collateral generally consists of commercial or residential real estate, but in the case of commercial and industrial loans, it could also consist of accounts receivable, inventory, equipment or other business assets. Commercial and industrial loans may also have real estate collateral.

Generally, commercial loans secured by real estate that are evaluated individually are measured at fair value using certified real estate appraisals that had been completed within the last 18 months. Appraised values are discounted for estimated costs to sell the property and other selling considerations to arrive at the property’s fair value. In those situations in which it is determined an updated appraisal is not required for loans individually evaluated for credit expected losses, fair values are based on either an existing appraisal or a DCF analysis as determined by management. The approaches are discussed below:

Collateral on loans evaluated individually is not limited to real estate, and may consist of accounts receivable, inventory, equipment or other business assets. Estimated fair values are determined based on borrowers’ financial statements, inventory ledgers, accounts receivable aging or appraisals from individuals with knowledge in the business. Stated balances are generally discounted for the age of the financial information or the quality of the assets. In determining fair value, liquidation discounts are applied to this collateral based on existing loan evaluation policies.

The Company distinguishes substandard loans for both loans individually and collectively evaluated, as it places less emphasis on a loan’s classification, and increased reliance on whether the loan was performing in accordance with the contractual terms. A substandard classification does not automatically meet the definition of an individually evaluated loan. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual extensions of credit classified as substandard. As a result, the Company’s methodology includes an evaluation of certain accruing commercial


	March 31, 2024								December 31, 2023
	Nonaccrual loans with a related ACL		Nonaccrual loans with no related ACL		Total nonaccrual loans		Loans Past Due 90+ Accruing		Nonaccrual loans with a related ACL		Nonaccrual loans with no related ACL		Total nonaccrual loans		Loans Past Due 90+ Accruing
Commercial real estate:
Owner-occupied	$	—	$	3,925	$	3,925	$	—	$	—	$	15,786	$	15,786	$	—
Non-owner occupied	—		228		228		—		—		240		240		—
Multi-family	—		1,233		1,233		—		—		1,233		1,233		—
Non-owner occupied residential	—		2,016		2,016		—		—		2,572		2,572		—
Acquisition and development:

Commercial and land development	—		1,306		1,306		—		—		1,361		1,361		—
Commercial and industrial	—		1		1		—		68		604		672		—

Residential mortgage:
First lien	—		2,621		2,621		24		—		2,309		2,309		66
Home equity – term	—		2		2		—		—		3		3		—
Home equity – lines of credit	—		1,526		1,526		75		—		1,312		1,312		—
Installment and other loans	7		21		28		—		3		36		39		—
Total	$	7	$	12,879	$	12,886	$	99	$	71	$	25,456	$	25,527	$	66

A loan is considered to be collateral-dependent when the borrower is experiencing financial difficulty and the repayment is expected to be provided substantially through the operation or sale of collateral. At March 31, 2024 and December 31, 2023, substantially all individually evaluated loans were collateral-dependent and consisted primarily of commercial real estate, acquisition and development and residential mortgage loans, which were primarily secured by commercial or residential real estate. All of the Company’s collateral-dependent loans had appraised collateral values which exceeded the amortized cost basis of the related loan except for two consumer installment loans as of March 31, 2024 and one commercial and industrial loan and one consumer installment loan as of December 31, 2023.


	Type of Collateral
March 31, 2024	Business Assets		Commercial Real Estate		Equipment		Land		Residential Real Estate		Other		Total
Commercial real estate:
Owner occupied	$	—	$	3,925	$	—	$	—	$	—	$	—	$	3,925
Non-owner occupied	—		228		—		—		—		—		228
Multi-family	—		1,233		—		—		—		—		1,233
Non-owner occupied residential	—		2,016		—		—		—		—		2,016
Acquisition and development:

Commercial and land development	—		—		—		1,306		—		—		1,306
Commercial and industrial	2		—		1		—		—		—		3

Residential mortgage:
First lien	—		—		—		—		2,545		—		2,545
Home equity - term	—		—		—		—		2		—		2
Home equity - lines of credit	—		—		—		—		1,526		—		1,526
Installment and other loans	—		—		3		—		—		—		3
Total	$	2	$	7,402	$	4	$	1,306	$	4,073	$	—	$	12,787
December 31, 2023
Commercial real estate:
Owner occupied	$	—	$	15,786	$	—	$	—	$	—	$	—	$	15,786
Non-owner occupied	—		240		—		—		—		—		240
Multi-family	—		1,233		—		—		—		—		1,233
Non-owner occupied residential	—		2,572		—		—		—		—		2,572
Acquisition and development:

Commercial and land development	—		—		—		1,361		—		—		1,361
Commercial and industrial	2		76		594		—		—		—		672

Residential mortgage:
First lien	—		—		—		—		2,231		—		2,231
Home equity - term	—		—		—		—		3		—		3
Home equity - lines of credit	—		—		—		—		1,312		—		1,312
Installment and other loans	—		—		18		—		—		—		18
Total	$	2	$	19,907	$	612	$	1,361	$	3,546	$	—	$	25,428

ASU 2022-02 requires that the Company evaluate, based on the accounting for loan modifications, whether the borrower is experiencing financial difficulty and the modification results in a more-than-insignificant direct change in the contractual cash flows and represents a new loan or a continuation of an existing loan. This change requires all loan modifications to be accounted for under the general loan modification guidance in ASC 310-20, Receivables – Nonrefundable Fees and Other Costs, and subjects entities to new disclosure requirements on loan modifications to borrowers experiencing financial difficulty.

The Company may modify loans to borrowers experiencing financial difficulty by providing principal forgiveness, term extension, interest rate reduction or an other-than-insignificant payment delay. When principal forgiveness is provided, the amount of forgiveness is charged off against the ACL. The Company may also provide multiple types of modifications on an individual loan. For the three months ended March 31, 2024 and 2023, the Company did not extend any modifications to borrowers experiencing financial difficulty that had a more-than-insignificant direct change in the contractual cash flows of the loan. For loans modified to borrowers experiencing financial difficulty, there were no payment defaults in the subsequent twelve months, and the Company has not committed to lend additional amounts to those borrowers.


	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Loans Not Past Due		Total Loans
March 31, 2024
Commercial real estate:
Owner occupied	$	3,178	$	81	$	103	$	3,362	$	360,918	$	364,280
Non-owner occupied	151		—		—		151		707,720		707,871
Multi-family	—		1,233		—		1,233		146,540		147,773
Non-owner occupied residential	52		946		863		1,861		89,997		91,858
Acquisition and development:
1-4 family residential construction	—		—		—		—		22,277		22,277
Commercial and land development	23		—		—		23		117,987		118,010
Commercial and industrial	127		41		31		199		365,325		365,524
Municipal	—		—		—		—		10,925		10,925
Residential mortgage:
First lien	4,690		464		661		5,815		264,933		270,748
Home equity - term	2		—		—		2		4,964		4,966
Home equity - lines of credit	1,374		424		888		2,686		187,280		189,966
Installment and other loans	47		31		4		82		8,793		8,875
	$	9,644	$	3,220	$	2,550	$	15,414	$	2,287,659	$	2,303,073

	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Loans Not Past Due		Total Loans
December 31, 2023
Commercial real estate:
Owner occupied	$	13,852	$	—	$	117	$	13,969	$	359,788	$	373,757
Non-owner occupied	152		—		—		152		694,486		694,638
Multi-family	—		—		—		—		150,675		150,675
Non-owner occupied residential	—		—		192		192		94,848		95,040
Acquisition and development:
1-4 family residential construction	—		—		—		—		24,516		24,516
Commercial and land development	16		—		—		16		115,233		115,249
Commercial and industrial	27		69		625		721		366,364		367,085
Municipal	—		—		—		—		9,812		9,812
Residential mortgage:
First lien	5,433		1,058		721		7,212		259,027		266,239
Home equity - term	20		2		—		22		5,056		5,078
Home equity - lines of credit	1,801		100		839		2,740		183,710		186,450
Installment and other loans	84		28		19		131		9,643		9,774
	$	21,385	$	1,257	$	2,513	$	25,155	$	2,273,158	$	2,298,313

Loans that do not share similar risk characteristics are evaluated on an individual loan basis, and are excluded from the collective evaluation for the ACL. Loans identified to be individually evaluated under CECL include loans on nonaccrual status and may include accruing loans that do not share similar risk characteristics to other accruing loans that are collectively evaluated on a loan pool basis. A specific reserve analysis may be applied to the individually evaluated loans, which considers collateral value, an observable market price or the present value of expected future cash flows. A specific reserve is assigned if the measured value of the loan using one of the before mentioned methods is less than the current carrying value of the loan.

Based on management's analysis, adjustments may be applied for additional factors impacting the risk of loss in the loan portfolio beyond the quantitatively calculated reserve calculated on collectively evaluated loans. As the quantitative reserve calculation incorporates historical conditions, management may consider an additional or reduced reserve is warranted through qualitative risk factors based on current and expected conditions. These qualitative risk factors considered by management are comparable to legacy factors prior to the adoption of CECL and include significant or unexpected changes in:

The following table presents the activity in the ACL for the three months ended March 31, 2024 and :


	Commercial										Consumer
	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Municipal		Total		Residential Mortgage		Installment and Other		Total		Unallocated		Total
















Three Months Ended
March 31, 2024
Balance, beginning of period	$	17,873	$	2,241	$	5,806	$	157	$	26,077	$	2,424	$	201	$	2,625	$	—	$	28,702

Provision for credit losses	78		(9)		(461)		7		(385)		763		43		806		—		421
Charge-offs	—		—		(46)		—		(46)		—		(53)		(53)		—		(99)
Recoveries	24		1		90		—		115		6		20		26		—		141
Balance, end of period	$	17,975	$	2,233	$	5,389	$	164	$	25,761	$	3,193	$	211	$	3,404	$	—	$	29,165
March 31, 2023
Balance, beginning of period	$	13,558	$	3,214	$	4,505	$	24	$	21,301	$	3,444	$	188	$	3,632	$	245	$	25,178
Impact of adopting ASC 326	2,857		(214)		928		169		3,740		(1,121)		49		(1,072)		(245)		2,423
Provision for loan losses	262		215		412		(16)		873		(140)		(4)		(144)		—		729
Charge-offs	—		—		(86)		—		(86)		—		(56)		(56)		—		(142)
Recoveries	20		2		28		—		50		95		31		126		—		176
Balance, end of period	$	16,697	$	3,217	$	5,787	$	177	$	25,878	$	2,278	$	208	$	2,486	$	—	$	28,364