Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2026

Loans and Allowance for Credit Losses

Note 10 – Loans and Allowance for Credit Losses

The ACL on the loan portfolio is a valuation allowance deducted from the recorded balance in loans. Under CECL, the ACL represents principal which is not expected to be collected over the contractual life of the loans, adjusted for expected prepayments. The ACL is increased by a provision for credit losses charged to expense and by principal recovered on charged-off balances. It is reduced by principal charge-offs. The amount of the allowance is based on Management’s evaluation of the collectability of the loan portfolio, using information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Adjustments are also made for changes in risk profile, credit concentrations, historical trends, and other economic conditions.

The Company elected the practical expedient available under CECL to exclude accrued interest receivable from the amortized cost basis of all categorizations of loans and, as a result, did not estimate reserves on accrued interest receivable balances, as any past due interest income is reversed on a timely basis. Accrued interest receivable on loans of $7.1 million and $7.0 million at June 30, 2026, and December 31, 2025, respectively, is included in other assets on the Company’s consolidated balance sheet.

The majority of the disclosures in this footnote are prepared at the class level, which is equivalent to the call report or call code classification. The final table in this section separates a roll forward of the ACL at the portfolio segment level. Unless specifically noted otherwise, the disclosures in this footnote are prepared on an amortized cost basis.


Loan Distribution
(dollars in thousands, unaudited)
		June 30, 2026			December 31, 2025
Real estate:
Residential real estate		$	344,535		$	358,454
Commercial real estate			1,391,964			1,393,183
Other construction/land			15,932			14,497
Farmland			65,625			68,157
Total real estate			1,818,056			1,834,291
Other commercial			178,215			191,500
Mortgage warehouse facilities			457,457			518,333
Consumer			2,478			2,756
Subtotal			2,456,206			2,546,880
Net deferred loan (fees)			(146)			(35)
Loans, amortized cost basis			2,456,060			2,546,845
Allowance for credit losses			(23,600)			(21,480)
Net loans		$	2,432,460		$	2,525,365

The Company places a loan on nonaccrual status when Management has determined full repayment of principal and collection of contractually agreed upon interest is unlikely or the loan in question has become delinquent more than 90 days. The Company may decide it is appropriate to continue to accrue interest on certain loans more than 90 days delinquent if they are well-secured by collateral and collection is in process. When a loan is placed on nonaccrual status, any accrued but uncollected interest for the loan is reversed out of interest income in the period in which the loan’s status changed. For loans with an interest reserve (i.e., loan proceeds are advanced to the borrower to make interest payments) all interest recognized from the inception of the loan is reversed when the loan is placed on nonaccrual. Once a loan is on nonaccrual status, subsequent payments received from the customer are applied to principal, and no further interest income is recognized until the principal has been paid in full or until circumstances have changed such that payments are again consistently received as contractually required. Generally, loans are not restored to accrual status until the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.


Nonaccrual Loans
(dollars in thousands, unaudited)
		June 30, 2026
		Nonaccrual Loans
		With no allowance for credit loss			With an allowance for credit loss		Total		Loans Past Due 90+ Accruing
Real estate:
Residential real estate		$	358		$	—	$	358	$	—
Farmland			3,105			—		3,105		—
Total real estate			3,463			—		3,463		—
Other commercial			4,060			3,019		7,079		—
Consumer loans			—			2		2		—
Total		$	7,523		$	3,021	$	10,544	$	—


		December 31, 2025
		Nonaccrual Loans
		With no allowance for credit loss			With an allowance for credit loss		Total		Loans Past Due 90+ Accruing
Real estate:
Residential real estate		$	210		$	—	$	210	$	—
Farmland			—			1,717		1,717		—
Total real estate			210			1,717		1,927		—
Other commercial			11,304			—		11,304		—
Total		$	11,514		$	1,717	$	13,231	$	—

The Company did not recognize any interest on nonaccrual loans during the three and six months ended June 30, 2026 and 2025, and would have recognized an additional $0.9 million and $0.9 million in interest income on nonaccrual loans during the first six months of 2026 and 2025, respectively, had those loans not been designated as nonaccrual. During the three months ended June 30, 2026, and 2025, the Company reversed $0.2 million and $0.1 million, respectively, of accrued interest receivable associated with loans placed on nonaccrual status, which reduced interest income. For the six months ended June 30, 2026, and 2025, these reversals totaled $0.2 million and $0.3 million, respectively.

The following table presents the amortized cost basis of collateral-dependent loans by class as of June 30, 2026, and December 31, 2025:


Collateral Dependent Loans
(dollars in thousands, unaudited)
		June 30, 2026				December 31, 2025
		Amortized Cost		Individual Reserves		Amortized Cost		Individual Reserves
Real estate:
Residential real estate		$	358	$	—	$	210	$	—
Farmland			3,105		—		1,717		11
Total real estate			3,463		—		1,927		11
Other commercial ⁽¹⁾			6,508		2,548		11,297		—
Total Loans		$	9,971	$	2,548	$	13,224	$	11

(1)	The collateral type on this loan category is primarily agricultural assets.

During the first six months of 2026 the amortized cost balance of collateral-dependent loans decreased by $3.3 million due primarily to a $4.2 million paydown on one agricultural production loan during the first quarter of 2026. The weighted average loan-to-value ratio of collateral-dependent loans was 40.0% at June 30, 2026. There were no consumer mortgage

loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of June 30, 2026, and December 31, 2025.


Past Due Loans
(dollars in thousands, unaudited)
		June 30, 2026
		30-59 Days Past Due			60-89 Days Past Due		Loans Past Due 90+ Days		Total Past Due		Loans not Past Due		Total Loans
Real estate:
Residential real estate		$	20		$	41	$	358	$	419	$	345,156	$	345,575
Commercial real estate			4,834			—		—		4,834		1,384,896		1,389,730
Other construction/land			—			—		—		—		15,851		15,851
Farmland			—			743		2,678		3,421		62,338		65,759
Total real estate			4,854			784		3,036		8,674		1,808,241		1,816,915
Other commercial			212			2,548		4,532		7,292		171,872		179,164
Mortgage warehouse facilities			—			—		—		—		457,457		457,457
Consumer			1			—		1		2		2,522		2,524
Total Loans		$	5,067		$	3,332	$	7,569	$	15,968	$	2,440,092	$	2,456,060


		December 31, 2025
		30-59 Days Past Due			60-89 Days Past Due		Loans Past Due 90+ Days		Total Past Due		Loans not Past Due		Total Loans
Real estate:
Residential real estate		$	18		$	—	$	192	$	210	$	359,304	$	359,514
Commercial real estate			4,657			—		—		4,657		1,386,233		1,390,890
Other construction/land			—			—		—		—		14,414		14,414
Farmland			2,037			—		1,717		3,754		64,553		68,307
Total real estate			6,712			—		1,909		8,621		1,824,504		1,833,125
Other commercial			131			—		11,304		11,435		181,142		192,577
Mortgage warehouse facilities			—			—		—		—		518,333		518,333
Consumer			11			—		—		11		2,799		2,810
Total Loans		$	6,854		$	—	$	13,213	$	20,067	$	2,526,778	$	2,546,845

Loan Modifications

Occasionally, the Company modifies loans to borrowers experiencing financial difficulty by providing principal forgiveness, rate reduction, payment deferral, or term extension. When principal forgiveness is provided, the amount of forgiveness is charged off against the allowance for credit losses.

In certain cases, the Company provides multiple types of concessions on a single loan. 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. For the loans included in the “combination” columns below, multiple types of modifications have been made on the same loan within the current reporting period. The combination is at least two of the following: principal forgiveness, rate reduction, payment deferral, and/or term extension.

The following tables present the amortized cost basis of loans at June 30, 2026 and 2025, that were both experiencing financial difficulty by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below (dollars in thousands, unaudited):


		Three months ended June 30, 2026
	Principal Forgiveness			Payment Delay		Term Extension		Combination Term Extension Interest Rate Reduction		Total Class of Financing Receivable
Other commercial	$	—		$	—	$	673	$	235		0.51%
Total	$	—		$	—	$	673	$	235		0.04%


		Three months ended June 30, 2025
	Principal Forgiveness			Payment Delay		Term Extension		Combination Term Extension Interest Rate Reduction		Total Class of Financing Receivable
Other commercial		—			—		14		—		0.01%
Total	$	—		$	—	$	14	$	—		0.00%


		Six months ended June 30, 2026
	Principal Forgiveness			Payment Delay		Term Extension		Combination Term Extension Interest Rate Reduction		Total Class of Financing Receivable
Other commercial	$	—		$	—	$	1,228	$	235		0.82%
Total	$	—		$	—	$	1,228	$	235		0.06%


		Six months ended June 30, 2025
	Principal Forgiveness			Payment Delay		Term Extension		Combination Term Extension Interest Rate Reduction		Total Class of Financing Receivable
Other commercial		—			—		19		—		0.01%
Total	$	—		$	—	$	19	$	—		0.00%

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three and six months ended June 30, 2026 and 2025 (dollars in thousands, unaudited):


			Three months ended June 30, 2026
			Principal Forgiveness		Weighted-Average Interest Rate Reduction	Weighted-Average Term Extension (years)
Other commercial		$	—		0.50%	2.62


			Three months ended June 30, 2025
			Principal Forgiveness		Weighted-Average Interest Rate Reduction	Weighted-Average Term Extension (years)
Other commercial		$	—		—	5.00


			Six months ended June 30, 2026
			Principal Forgiveness		Weighted-Average Interest Rate Reduction	Weighted-Average Term Extension (years)
Other commercial		$	—		0.50%	2.19


			Six months ended June 30, 2025
			Principal Forgiveness		Weighted-Average Interest Rate Reduction	Weighted-Average Term Extension (years)
Other commercial		$	—		—	1.70

There were no payment defaults on loans previously modified in the preceding 12 months for either of the periods ending June 30, 2026 and 2025. For the purpose of this disclosure, the Company defines a payment default as 90 days past due. The Company had $0.1 million in additional funds committed on loans which have been modified to borrowers experiencing financial difficulty as of both June 30, 2026, and June 30, 2025.

The Company monitors the credit quality of loans on a continuous basis using the regulatory and accounting classifications of pass, special mention, and substandard to characterize and qualify the associated credit risk. Loans classified as “loss” are immediately charged off. The Company uses the following definitions of risk classifications:

●

Pass: Includes larger, non-homogeneous loans not meeting the risk rating definitions below and smaller, homogeneous loans not assessed on an individual basis.

●

Special Mention: Includes loans with a potential weakness that deserves Management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

●

Substandard: Includes loans with clear and well-defined weaknesses, such as a highly leveraged position, unfavorable financial operating results and/or trends, uncertain repayment sources, or poor financial condition, which may jeopardize ultimate recoverability of the debt.

Loan Credit Quality by Vintage

(dollars in thousands, unaudited)


	June 30, 2026
	Term Loans Amortized Cost Basis by Origination Year
	2026		2025		2024		2023		2022		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term Loans		Total Loans
Residential real estate
Pass	$	732	$	—	$	—	$	—	$	84,770	$	247,500	$	8,408	$	2,919	$	344,329
Special mention		—		—		—		—		—		104		20		367		491
Substandard		—		—		—		—		—		499		41		215		755
Subtotal		732		—		—		—		84,770		248,103		8,469		3,501		345,575
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Commercial real estate
Pass		49,906		140,774		133,813		91,363		205,584		693,953		16,921		6,132		1,338,446
Special mention		—		46		4,594		—		2,737		25,662		559		—		33,598
Substandard		—		—		—		—		—		17,686		—		—		17,686
Subtotal		49,906		140,820		138,407		91,363		208,321		737,301		17,480		6,132		1,389,730
Current period gross charge-offs		—		—		—		—		—		—		—		90		90

Other construction/land
Pass		—		1,742		9,913		—		—		2,649		—		—		14,304
Special mention		—		—		—		—		—		1,547		—		—		1,547
Subtotal		—		1,742		9,913		—		—		4,196		—		—		15,851
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Farmland
Pass		—		3,294		4,705		4,888		8,326		20,596		4,603		585		46,997
Special mention		—		—		8,486		—		—		316		6,833		—		15,635
Substandard		—		—		976		1,417		—		734		—		—		3,127
Subtotal		—		3,294		14,167		6,305		8,326		21,646		11,436		585		65,759
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Other commercial
Pass		2,171		6,067		5,168		4,651		1,976		12,023		130,186		4,913		167,155
Special mention		—		135		9		7		—		—		1,300		2,923		4,374
Substandard		—		178		—		3,202		—		—		3,849		406		7,635
Subtotal		2,171		6,380		5,177		7,860		1,976		12,023		135,335		8,242		179,164
Current period gross charge-offs ⁽¹⁾		—		—		—		10		—		—		60		48		118

Mortgage warehouse facilities
Pass		—		—		—		—		—		—		457,457		—		457,457
Subtotal		—		—		—		—		—		—		457,457		—		457,457
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Consumer
Pass		—		—		31		149		38		78		2,225		—		2,521
Special mention		—		—		—		—		—		—		1		—		1
Substandard		—		—		—		—		—		—		2		—		2
Subtotal		—		—		31		149		38		78		2,228		—		2,524
Current period gross charge-offs ⁽¹⁾		—		—		—		—		—		—		292		55		347

Total	$	52,809	$	152,236	$	167,695	$	105,677	$	303,431	$	1,023,347	$	632,405	$	18,460	$	2,456,060

(1)	Consumer overdrafts are included in consumer loans and commercial overdrafts are included in other commercial and make up the majority of the gross charge-offs of loans originated in the revolving loans category for these loan classes.

Loan Credit Quality by Vintage

(dollars in thousands, unaudited)


			December 31, 2025
		Term Loans Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term Loans		Total Loans
Residential real estate
Pass	$	1,144	$	—	$	—	$	89,643	$	205,789	$	47,613	$	9,113	$	3,741	$	357,043
Special mention		—		—		—		—		1,384		522		—		—		1,906
Substandard		—		—		—		—		—		384		34		147		565
Subtotal		1,144		—		—		89,643		207,173		48,519		9,147		3,888		359,514
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Commercial real estate
Pass		145,537		140,079		98,341		191,505		43,829		676,260		21,803		7,517		1,324,871
Special mention		83		—		—		19,356		—		28,727		60		—		48,226
Substandard		—		—		—		—		—		17,793		—		—		17,793
Subtotal		145,620		140,079		98,341		210,861		43,829		722,780		21,863		7,517		1,390,890
Current period gross charge-offs		—		—		—		—		—		274		—		1,147		1,421

Other construction/land
Pass		482		9,616		—		—		—		3,262		—		—		13,360
Special mention		—		—		—		—		—		1,054		—		—		1,054
Subtotal		482		9,616		—		—		—		4,316		—		—		14,414
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Farmland
Pass		3,439		14,361		4,946		8,501		10,752		11,660		11,934		611		66,204
Special mention		—		—		—		—		—		355		—		—		355
Substandard		—		—		1,717		—		—		31		—		—		1,748
Subtotal		3,439		14,361		6,663		8,501		10,752		12,046		11,934		611		68,307
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Other commercial
Pass		7,162		5,995		5,863		2,658		429		13,229		137,208		2,150		174,694
Special mention		197		11		—		13		—		—		3,710		2,636		6,567
Substandard		—		12		7		—		—		—		10,116		1,181		11,316
Subtotal		7,359		6,018		5,870		2,671		429		13,229		151,034		5,967		192,577
Current period gross charge-offs ⁽¹⁾		121		25		2,292		—		7		1		276		5,300		8,022

Mortgage warehouse facilities
Pass		—		—		—		—		—		—		518,333		—		518,333
Subtotal		—		—		—		—		—		—		518,333		—		518,333
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Consumer
Pass		768		38		212		49		27		80		1,614		—		2,788
Special mention		—		—		—		—		—		3		8		—		11
Substandard		—		—		11		—		—		—		—		—		11
Subtotal		768		38		223		49		27		83		1,622		—		2,810
Current period gross charge-offs ⁽¹⁾		826		6		1		1		—		31		42		—		907

Total	$	158,812	$	170,112	$	111,097	$	311,725	$	262,210	$	800,973	$	713,933	$	17,983	$	2,546,845

(1)	Consumer overdrafts are included in consumer loans and commercial overdrafts are included in other commercial and make up the majority of the gross charge-offs of loans originated in the revolving loans category for these loan classes.

CECL replaced the legacy accounting for loans designated as purchased credit impaired (“PCI”) with loans designated as purchased credit deteriorated (“PCD”). PCD loans are loans acquired or purchased, which as of acquisition, had evidence of more than insignificant credit deterioration since origination. Due to the immaterial balance in the Company’s PCI loans at the CECL implementation date, management elected not to transition these loans into the PCD designation. As of June 30, 2026, the Company had no loans categorized as PCD.

Management calculates the quantitative portion of collectively evaluated reserves for all loan categories, with the exception of Farmland, Agricultural Production and Consumer loans, using a discounted cash flow (“DCF”) methodology. For purposes of calculating the quantitative portion of collectively evaluated reserves on Farmland, Agricultural Production, and Consumer categories a Remaining Life methodology is utilized.

The model used for calculating the Company’s ACL is reviewed and revised periodically; most recently a full review with modifications in the third quarter of 2024, with a partial review and minimal modifications completed in the third quarter of 2025. In the most recent full review, the Company changed to a Multi-Factor Regression Model from a Single-Factor Regression Model used in previous periods. Additionally, legacy peer groups were expanded to include California banks with an asset size between $1.5 billion to $10 billion. The Company’s ACL is calculated quarterly, with any difference in the calculated ACL and the recorded ACL adjusted through an entry to the provision (benefit) for credit losses. For purposes of estimating the Company’s ACL, Management generally evaluates collectively evaluated loans by call code in order to group loans with similar risk characteristics together; however, Management has grouped loans in selected call codes together in determining portfolio segments, due to similar risk characteristics and reserve methodologies used for certain call code classifications.

The DCF quantitative reserve methodology incorporates the consideration of probability of default (“PD”) and loss given default (“LGD”) estimates to estimate periodic losses. The PD estimates are derived through the application of reasonable and supportable economic forecasts to call code specific regression models, derived from the consideration of historical bank-specific and peer loss-rate data. The loss-rate data has been regressed against benchmark economic indicators, for which reasonable and supportable forecasts exist, in the development of the call-code specific regression models. Regression models are updated periodically, in order to pull in more recent loss-rate data. Reasonable and supportable forecasts of the selected economic metric are then input into the regression model to calculate an expected default rate. The expected default rates are then applied to expected monthly loan balances estimated through the consideration of contractual repayment terms and expected prepayments. The Company utilizes a four-quarter forecast period, after which the expected default rates revert to the historical average for each call code, over a four-quarter reversion period, on a straight-line basis. The prepayment assumptions applied to expected cash flow over the contractual life of the loans are estimated based on historical, bank-specific experience, peer data, and the consideration of current and expected conditions and circumstances including the level of interest rates. Management may update prepayment assumptions when changing conditions impact Management’s estimate or additional historical data indicates a reevaluation is warranted. LGD utilized in the DCF is derived from the application of the Frye-Jacobs theory, which relates LGD to PD based on historical peer data, as calculated by a third-party. Economic forecasts are considered over a four-quarter forecast period, with reversion to mean occurring on a straight-line basis over four quarters. The call code multiple factor regression models utilized as of June 30, 2026, for Residential Real Estate loans relied upon reasonable and supportable forecasts of the National Unemployment Rate and House Price Index (HPI). The call code multiple factor regression models utilized as of June 30, 2026, for Commercial Real Estate and Other Construction loans relied upon reasonable and supportable forecasts of the National Unemployment Rate and Gross Domestic Product (GDP). Management selected the National Unemployment Rate, HPI, and GDP as the drivers of quantitative portion of collectively evaluated reserves on loan classes reliant upon the DCF methodology, primarily as a result of high correlation coefficients identified in regression modeling, the availability of forecasts including the quarterly Federal Open Market Committee (FOMC) forecast and given the widespread familiarity of stakeholders with these economic metrics.

The quantitative reserves for Farmland, Agricultural Production, and Consumer loans are calculated using a Remaining Life methodology where the Company’s average historical loss-rates are applied to expected loan balances over an estimated remaining life of loans in calculation of the quantitative portion of collectively evaluated loans in these classes. The estimated remaining life is calculated using historical peer data. For the Farmland,

Agricultural Production and Consumer classes of loans, reasonable and supportable forecasts of the National Unemployment Rate, real GDP and the housing price index are considered through estimation of qualitative reserves.

Management recognizes there are additional factors impacting risk of loss in the loan portfolio beyond what is captured in the quantitative portion of reserves on collectively evaluated loans. As current and expected conditions may vary compared with conditions over the historical lookback period, which is utilized in the calculation of quantitative reserves, Management considers whether additional or reduced reserve levels on collectively evaluated loans may be warranted given the consideration of a variety of qualitative factors. Several of the following qualitative factors (“Q-factors”) considered by Management reflect the legacy regulatory guidance on Q-factors, whereas several others represent factors unique to the Company or unique to the current time period.

●

Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices

●

Changes in international, regional, and local economic and business conditions, and developments that affect the collectability of the portfolio, as reflected in forecasts of the Housing Price Index, Real GDP, and the National Unemployment Rate (Farmland & Agricultural Production and Consumer segments only)

●

Changes in the nature and volume of the loan portfolio

●

Changes in the experience, ability, and depth of lending Management and other relevant staff

●

Changes in the volume and severity of past due, nonaccruals loans, and adversely classified loans, as reflected in changes of the relative level of loans classified as substandard and special mention

●

Changes in the quality of the Company’s loan review processes

●

Changes in the value of underlying collateral for loans not identified as collateral-dependent

●

Changes in loan categorization concentrations

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Other external factors, which include the influence of peer data on estimated quantitative reserves, residual COVID-19 related risk, expected impact of current and expected inflationary environment, reliance on the National Unemployment rate as opposed to the California unemployment rate in the calculation of quantitative reserves, the expected impact of current and expected geo-political conditions

The qualitative portion of the Company’s reserves on collectively evaluated loans are calculated using a combination of numeric frameworks and Management judgment to determine risk categorizations in each of the Q-factors presented above. The amount of qualitative reserves is also contingent upon the historical peer, life-of-loan-equivalent, loss-rate ranges, and the relative weighting of Q-factors according to Management’s judgment.

Although collectively evaluated reserves are generally calculated separately at the call code or loan class level, Management has grouped loan classes with similar risk characteristics into the following portfolio segments:

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1-4 Family Real Estate

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Commercial Real Estate

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Farmland & Agricultural Production

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Commercial & Industrial

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Mortgage Warehouse

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Consumer

Loans secured by Residential Real Estate have a different profile from those secured by Commercial Real Estate. Generally, the borrowers for Residential Real Estate loans are consumers, whereas borrowers for Commercial Real Estate are often businesses. The COVID-19 pandemic illustrated how these different categories of real estate loans were subject to different risks, which was exacerbated by the widespread work-from-home model adopted by many companies during and since the pandemic. Farmland and Agricultural Production loans are included in a single segment as these loans are oftentimes to the same borrowers, facing the same risks relating to commodity prices, water supply and drought conditions, in addition to other environmental concerns. Commercial & Industrial loans are separated into a separate segment given the uniqueness of these loans, which are often revolving and secured by business assets other than real estate. Mortgage Warehouse balances warrant presentation as an individual portfolio segment given the specific nature of these constantly revolving lines to mortgage originators and due to a very limited loss history, even after consideration of peer data. Finally, Consumer loans are split out as a result of the small balance, homogeneous terms that characterize these loans.

Management individually evaluates loans that do not share risk characteristics with other loans when estimating reserves. As of June 30, 2026 and 2025, the only loans Management considered to have different risk characteristics from other loans sharing the same call report code included loans designated as nonaccrual.

The following tables present the activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2026 and 2025:

Allowance for Credit Losses

(dollars in thousands, unaudited)


		Residential Real Estate		Commercial Real Estate			Farmland & Agricultural Production			Commercial & Industrial		Mortgage Warehouse Facilities			Consumer			Total
Allowance for credit losses:
Balance March 31, 2026		$	1,368	$	16,277		$	1,627		$	1,265	$	604		$	109		$	21,250
Charge-offs			—		—			—			(30)		—			(131)			(161)
Recoveries			—		—			—			184		—			44			228
(Benefit) provision for credit losses			(48)		(57)			2,578			(197)		(79)			86			2,283
Balance June 30, 2026		$	1,320	$	16,220		$	4,205		$	1,222	$	525		$	108		$	23,600


		Residential Real Estate		Commercial Real Estate			Farmland & Agricultural Production			Commercial & Industrial		Mortgage Warehouse Facilities			Consumer			Total
Allowance for credit losses:
Balance March 31, 2025		$	1,746	$	17,287		$	6,032		$	1,506	$	339		$	140		$	27,050
Charge-offs			—		(1,147)			(5,300)			(118)		—			(166)			(6,731)
Recoveries			—		—			—			10		—			141			151
(Benefit) provision for credit losses			(52)		1,195			(211)			173		112			(7)			1,210
Balance June 30, 2025		$	1,694	$	17,335		$	521		$	1,571	$	451		$	108		$	21,680


		Residential Real Estate		Commercial Real Estate			Farmland & Agricultural Production			Commercial & Industrial		Mortgage Warehouse Facilities			Consumer			Total
Allowance for credit losses:
Balance, December 31, 2025		$	1,411	$	16,650		$	1,146		$	1,496	$	665		$	112		$	21,480
Charge-offs			—		(90)			—			(118)		—			(347)			(555)
Recoveries			—		—			21			205		—			89			315
(Benefit) provision for credit losses			(91)		(340)			3,038			(362)		(140)			255			2,360
Balance June 30, 2026		$	1,320	$	16,220		$	4,205		$	1,221	$	525		$	109		$	23,600


		Residential Real Estate		Commercial Real Estate			Farmland & Agricultural Production			Commercial & Industrial		Mortgage Warehouse Facilities			Consumer			Total
Allowance for credit losses:
Balance, December 31, 2024		$	1,808	$	17,143		$	3,827		$	1,282	$	398		$	372		$	24,830
Charge-offs			—		(1,147)			(5,300)			(176)		—			(495)			(7,118)
Recoveries			—		—			410			24		—			363			797
(Benefit) provision for credit losses			(114)		1,339			1,584			441		53			(132)			3,171
Balance June 30, 2025		$	1,694	$	17,335		$	521		$	1,571	$	451		$	108		$	21,680