NEW INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY Notes to the Consolidated Financial Statements
NOTE 4. LOANS( Continued)
Analysis of Credit Losses Disclosures
The following table summarizes the activity related to the allowance for credit losses on loans for the years ended December 31, 2024 and 2025:
Commercial |
Real Estate |
Non-Real |
|
|
Loans |
Estate Loans |
Consumer |
Total |
Balance, January 1, 2024 |
$ |
2,735,662 |
$ |
922,832 |
$ |
717,896 |
$ |
4,376,390 |
|
Charge-offs Recoveries Provision for Credit Loss
Balance, December 31, 2024
|
|
-
-
1,164,865
3,900,527
|
|
( 69,547)
-
( 577,772)
275,513
|
|
( 52,611)
7,964
( 365,093)
308,156
|
|
( 122,158)
7,964
222,000
4,484,196
|
Initial Allowance on Acquired Loans |
|
|
|
|
PCD Loans |
117,301 |
840,005 |
50,633 |
1,007,939 |
Non-PCD Loans |
315,094 |
8,023 |
71,298 |
394,415 |
Charge-offs Recoveries Provision for Credit Loss |
-
-
489,630
|
( 29,608)
-
326,420
|
( 212,089)
38,477
42,950
|
( 241,697)
38,477
859,000
|
Balance, December 31, 2025 |
$ |
4,822,552 |
$ |
1,420,353 |
$ |
299,425 $ |
6,542,330 |
Modifications Made to Borrowers Experiencing Financial Difficulty
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 probability of default / loss given default 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. For the real estate loans included in the“ combination” columns below, multiple types of
42 | 2025 NWSB Annual Report