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Note 4 - Loans, Allowance for Credit Losses and Other Real Estate Owned

9 Months Ended

Sep. 30, 2025

Notes to Financial Statements

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

Note 4: Loans, Allowance for Credit Losses and Other Real Estate Owned

A summary of the major categories of loans outstanding is shown in the following tables at the dates indicated:

		At September 30,				At December 31,
		2025				2024
		(In thousands)

Commercial		$	113,840			$	127,276
Commercial real estate			489,384				507,900
Construction			-				5,064
Residential real estate			7,517				8,274
Consumer installment & other			130,838				171,786
Total		$	741,579			$	820,300

The following summarizes activity in the allowance for credit losses:

		Allowance for Credit Losses
		For the Three Months Ended September 30, 2025
																		Consumer
						Commercial								Residential				Installment
		Commercial				Real Estate				Construction				Real Estate				and Other				Total
		(In thousands)
Allowance for credit losses:
Balance at beginning of period		$	5,549			$	6,174			$	-			$	24			$	2,040			$	13,787
Provision (reversal)			123				(295	)			-				(6	)			178				-
Chargeoffs			(1,559	)			-				-				-				(912	)			(2,471	)
Recoveries			36				13				-				-				494				543
Total allowance for credit losses		$	4,149			$	5,892			$	-			$	18			$	1,800			$	11,859

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		Allowance for Credit Losses
		For the Nine Months Ended September 30, 2025
																		Consumer
						Commercial								Residential				Installment
		Commercial				Real Estate				Construction				Real Estate				and Other				Total
		(In thousands)
Allowance for credit losses:
Balance at beginning of period		$	4,197			$	6,034			$	247			$	22			$	4,280			$	14,780
Provision (reversal)			1,239				9				(247	)			(4	)			(1,547	)			(550	)
Chargeoffs			(1,597	)			(191	)			-				-				(3,361	)			(5,149	)
Recoveries			310				40				-				-				2,428				2,778
Total allowance for credit losses		$	4,149			$	5,892			$	-			$	18			$	1,800			$	11,859

The allowance for credit losses for commercial real estate loans decreased in the nine months ended September 30, 2025 primarily due to lower commercial real loan balances resulting in a decrease in estimated credit losses over the remaining life of such loans. The allowance for credit losses for consumer installment and other loans decreased in the nine months ended September 30, 2025 primarily due to a decrease in estimated future credit losses based on improved delinquency and net charge-off trends and declining loan balances, primarily indirect auto loans. The chargeoffs for commercial loans increased in the three and nine months ended September 30, 2025 primarily due to a $1,559 thousand chargeoff on an individually evaluated loan.

		For the Three Months Ended September 30, 2024
																		Consumer
						Commercial								Residential				Installment
		Commercial				Real Estate				Construction				Real Estate				and Other				Total
		(In thousands)
Allowance for credit losses:
Balance at beginning of period		$	3,896			$	5,922			$	243			$	24			$	5,867			$	15,952
Provision (reversal)			182				100				3				(2	)			(283	)			-
Chargeoffs			(109	)			-				-				-				(1,549	)			(1,658	)
Recoveries			41				14				-				-				969				1,024
Total allowance for credit losses		$	4,010			$	6,036			$	246			$	22			$	5,004			$	15,318

		Allowance for Credit Losses
		For the Nine Months Ended September 30, 2024
																		Consumer
						Commercial								Residential				Installment
		Commercial				Real Estate				Construction				Real Estate				and Other				Total
		(In thousands)
Allowance for credit losses:
Balance at beginning of period		$	4,216			$	5,925			$	245			$	26			$	6,455			$	16,867
(Reversal) provision			(133	)			(80	)			1				(4	)			516				300
Chargeoffs			(137	)			-				-				-				(5,065	)			(5,202	)
Recoveries			64				191				-				-				3,098				3,353
Total allowance for credit losses		$	4,010			$	6,036			$	246			$	22			$	5,004			$	15,318

The Company’s customers are primarily small businesses, professionals and consumers. Given the scale of these borrowers, corporate credit rating agencies do not evaluate the borrowers’ financial condition. The Bank maintains a Loan Review Department which reports directly to the Audit Committee of the Board of Directors. The Loan Review Department performs independent evaluations of loans and validates management assigned credit risk grades on evaluated loans using grading standards employed by bank regulatory agencies. Loans judged to carry lower-risk attributes are assigned a “pass” grade, with a minimal likelihood of loss. Loans judged to carry higher-risk attributes are referred to as “classified loans,” and are further disaggregated, with increasing expectations for loss recognition, as “substandard,” “doubtful,” and “loss.” The Loan Review Department performs continuous evaluations throughout the year. If the Bank becomes aware of deterioration in a borrower’s performance or financial condition between Loan Review Department examinations, assigned risk grades are re-evaluated promptly. Credit risk grades assigned by management and validated by the Loan Review Department are subject to review by the Bank’s regulatory authorities during regulatory examinations.

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The following summarizes the credit risk profile by internally assigned grade:

		Credit Risk Profile by Internally Assigned Grade
		At September 30, 2025
		Commercial				Commercial Real Estate				Construction				Residential Real Estate				Consumer Installment and Other				Total
		(In thousands)
Grade:
Pass		$	111,268			$	480,675			$	-			$	7,312			$	128,855			$	728,110
Substandard			1,144				8,709				-				205				1,539				11,597
Doubtful			1,428				-				-				-				64				1,492
Loss			-				-				-				-				380				380
Total		$	113,840			$	489,384			$	-			$	7,517			$	130,838			$	741,579

		Credit Risk Profile by Internally Assigned Grade
		At December 31, 2024
		Commercial				Commercial Real Estate				Construction				Residential Real Estate				Consumer Installment and Other				Total
		(In thousands)
Grade:
Pass		$	122,958			$	489,522			$	-			$	7,984			$	169,251			$	789,715
Substandard			4,318				18,378				5,064				290				1,817				29,867
Doubtful			-				-				-				-				192				192
Loss			-				-				-				-				526				526
Total		$	127,276			$	507,900			$	5,064			$	8,274			$	171,786			$	820,300

The following tables summarize loans by delinquency and nonaccrual status:

		Summary of Loans by Delinquency and Nonaccrual Status
		At September 30, 2025
		Current and Accruing				30-59 Days Past Due and Accruing				60-89 Days Past Due and Accruing				Past Due 90 Days or More and Accruing				Nonaccrual				Total Loans
		(In thousands)
Commercial		$	112,164			$	96			$	151			$	-			$	1,429			$	113,840
Commercial real estate			487,884				582				-				-				918				489,384
Construction			-				-				-				-				-				-
Residential real estate			7,517				-				-				-				-				7,517
Consumer installment and other			128,185				1,785				571				297				-				130,838
Total		$	735,750			$	2,463			$	722			$	297			$	2,347			$	741,579

		Summary of Loans by Delinquency and Nonaccrual Status
		At December 31, 2024
		Current and Accruing				30-59 Days Past Due and Accruing				60-89 Days Past Due and Accruing				Past Due 90 Days or More and Accruing				Nonaccrual				Total Loans
		(In thousands)
Commercial		$	126,538			$	700			$	28			$	-			$	10			$	127,276
Commercial real estate			506,588				1,121				-				-				191				507,900
Construction			5,064				-				-				-				-				5,064
Residential real estate			8,274				-				-				-				-				8,274
Consumer installment and other			166,875				3,493				884				534				-				171,786
Total		$	813,339			$	5,314			$	912			$	534			$	201			$	820,300

At September 30, 2025, $700 thousand was allocated as allowance for credit losses to one loan with a carrying balance of $700 thousand on nonaccrual status. There was no allowance for credit losses allocated to loans on nonaccrual status as of December 31, 2024.

There were no commitments to lend additional funds to borrowers whose loans were on nonaccrual status at September 30, 2025 or December 31, 2024.

There were no loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2025 and September 30, 2024.

A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. Loans considered collateral dependent are reassessed quarterly. Loans that were considered collateral dependent at September 30, 2025 included the following: six commercial real estate loans totaling $8.0 million secured by real property, one $199 thousand commercial loan secured by real property and $246 thousand of indirect consumer installment loans secured by personal property. There were no other collateral dependent loans at September 30, 2025. Loans that were considered collateral dependent at December 31, 2024 included the following: nine commercial real estate loans totaling $17.6 million secured by real property and $503 thousand of indirect consumer installment loans secured by personal property. There were no other collateral dependent loans at December 31, 2024.

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

		At September 30, 2025
																														Line of
																														Credit
		Term Loans Amortized Cost Basis by Origination Year																								Total				Amortized
		Prior				2021				2022				2023				2024				2025				Term Loans				Cost Basis				Total
		(In thousands)
Commercial loans by grade:
Pass		$	21,365			$	4,952			$	9,250			$	7,368			$	17,112			$	28,122			$	88,169			$	23,099			$	111,268
Substandard			215				-				-				-				-				515				730				414				1,144
Doubtful			-				-				-				-				-				728				728				700				1,428
Loss			-				-				-				-				-				-				-				-				-
Total		$	21,580			$	4,952			$	9,250			$	7,368			$	17,112			$	29,365			$	89,627			$	24,213			$	113,840

Current gross chargeoffs on commercial loans:
For the three months ended September 30, 2025
		$	-			$	1,559			$	-			$	-			$	-			$	-			$	1,559			$	-			$	1,559
For the nine months ended September 30, 2025
			-				1,559				-				5				-				-				1,564				33				1,597

		At December 31, 2024
																														Line of
																														Credit
		Term Loans Amortized Cost Basis by Origination Year																								Total				Amortized
		Prior				2020				2021				2022				2023				2024				Term Loans				Cost Basis				Total
		(In thousands)
Commercial loans by grade:
Pass		$	18,752			$	8,542			$	18,539			$	12,388			$	14,776			$	19,399			$	92,396			$	30,562			$	122,958
Substandard			266				-				2,835				-				-				-				3,101				1,217				4,318
Doubtful			-				-				-				-				-				-				-				-				-
Loss			-				-				-				-				-				-				-				-				-
Total		$	19,018			$	8,542			$	21,374			$	12,388			$	14,776			$	19,399			$	95,497			$	31,779			$	127,276

Current gross chargeoffs on commercial loans:
For the year ended December 31, 2024
		$	59			$	-			$	-			$	-			$	-			$	-			$	59			$	224			$	283

		At September 30, 2025
																														Line of
																														Credit
		Term Loans Amortized Cost Basis by Origination Year																								Total				Amortized
		Prior				2021				2022				2023				2024				2025				Term Loans				Cost Basis				Total
		(In thousands)
Commercial real estate loans by grade:
Pass		$	220,763			$	56,562			$	46,909			$	41,358			$	69,894			$	45,189			$	480,675			$	-			$	480,675
Substandard			7,620				-				919				-				-				170				8,709				-				8,709
Doubtful			-				-				-				-				-				-				-				-				-
Loss			-				-				-				-				-				-				-				-				-
Total		$	228,383			$	56,562			$	47,828			$	41,358			$	69,894			$	45,359			$	489,384			$	-			$	489,384

Current gross chargeoffs on commercial real estate loans:
For the three months ended September 30, 2025
		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-
For the nine months ended September 30, 2025
			191				-				-				-				-				-				191				-				191

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		At December 31, 2024
																														Line of
																														Credit
		Term Loans Amortized Cost Basis by Origination Year																								Total				Amortized
		Prior				2020				2021				2022				2023				2024				Term Loans				Cost Basis				Total
		(In thousands)
Commercial real estate loans by grade:
Pass		$	197,160			$	65,384			$	63,697			$	49,117			$	43,091			$	71,073			$	489,522			$	-			$	489,522
Substandard			17,409				969				-				-				-				-				18,378				-				18,378
Doubtful			-				-				-				-				-				-				-				-				-
Loss			-				-				-				-				-				-				-				-				-
Total		$	214,569			$	66,353			$	63,697			$	49,117			$	43,091			$	71,073			$	507,900			$	-			$	507,900

Current gross chargeoffs on commercial real estate loans:
For the year ended December 31, 2024
		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-

		At September 30, 2025
																														Line of
																														Credit
		Term Loans Amortized Cost Basis by Origination Year																								Total				Amortized
		Prior				2021				2022				2023				2024				2025				Term Loans				Cost Basis				Total
		(In thousands)
Residential real estate loans by grade:
Pass		$	7,312			$	-			$	-			$	-			$	-			$	-			$	7,312			$	-			$	7,312
Substandard			205				-				-				-				-				-				205				-				205
Doubtful			-				-				-				-				-				-				-				-				-
Loss			-				-				-				-				-				-				-				-				-
Total		$	7,517			$	-			$	-			$	-			$	-			$	-			$	7,517			$	-			$	7,517

Current gross chargeoffs on residential real estate loans:
For the three months ended September 30, 2025
		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-
For the nine months ended September 30, 2025
			-				-				-				-				-				-				-				-				-

		At December 31, 2024
																														Line of
																														Credit
		Term Loans Amortized Cost Basis by Origination Year																								Total				Amortized
		Prior				2020				2021				2022				2023				2024				Term Loans				Cost Basis				Total
		(In thousands)
Residential real estate loans by grade:
Pass		$	7,984			$	-			$	-			$	-			$	-			$	-			$	7,984			$	-			$	7,984
Substandard			290				-				-				-				-				-				290				-				290
Doubtful			-				-				-				-				-				-				-				-				-
Loss			-				-				-				-				-				-				-				-				-
Total		$	8,274			$	-			$	-			$	-			$	-			$	-			$	8,274			$	-			$	8,274

Current gross chargeoffs on residential real estate loans:
For the year ended December 31, 2024
		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-

		At September 30, 2025
																														Line of
																														Credit
		Term Loans Amortized Cost Basis by Origination Year																								Total				Amortized
		Prior				2021				2022				2023				2024				2025				Term Loans				Cost Basis				Total
		(In thousands)
Construction loans by grade:
Pass		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-
Substandard			-				-				-				-				-				-				-				-				-
Doubtful			-				-				-				-				-				-				-				-				-
Loss			-				-				-				-				-				-				-				-				-
Total		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-

Current gross chargeoffs on construction loans:
For the three months ended September 30, 2025
		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-
For the nine months ended September 30, 2025
			-				-				-				-				-				-				-				-				-

		At December 31, 2024
																														Line of
																														Credit
		Term Loans Amortized Cost Basis by Origination Year																								Total				Amortized
		Prior				2020				2021				2022				2023				2024				Term Loans				Cost Basis				Total
		(In thousands)
Construction loans by grade:
Pass		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-
Substandard			-				-				-				-				-				-				-				5,064				5,064
Doubtful			-				-				-				-				-				-				-				-				-
Loss			-				-				-				-				-				-				-				-				-
Total		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	5,064			$	5,064

Current gross chargeoffs on construction loans:
For the year ended December 31, 2024
		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-

The Company considers the delinquency and nonaccrual status of the consumer loan portfolio and its impact on the allowance for credit losses. The following table presents the amortized cost in consumer installment and other loans based on delinquency and nonaccrual status:

		At September 30, 2025
																														Line of
																														Credit
		Term Loans Amortized Cost Basis by Origination Year																								Total				Amortized
		Prior				2021				2022				2023				2024				2025				Term Loans				Cost Basis				Total
		(In thousands)
Consumer installment and other loans by delinquency and nonaccrual status:
Current		$	8,266			$	21,397			$	34,756			$	19,757			$	18,764			$	11,198			$	114,138			$	14,047			$	128,185
30-59 days past due			202				534				553				247				105				100				1,741				44				1,785
60-89 days past due			29				90				181				100				156				-				556				15				571
Past due 90 days or more			33				75				102				-				36				-				246				51				297
Nonaccrual			-				-				-				-				-				-				-				-				-
Total		$	8,530			$	22,096			$	35,592			$	20,104			$	19,061			$	11,298			$	116,681			$	14,157			$	130,838

Current gross chargeoffs on consumer installment and other loans:
For the three months ended September 30, 2025
		$	86			$	68			$	334			$	199			$	161			$	5			$	853			$	59			$	912
For the nine months ended September 30, 2025
			216				595				1,228				565				612				5				3,221				140				3,361

		At December 31, 2024
																														Line of
																														Credit
		Term Loans Amortized Cost Basis by Origination Year																								Total				Amortized
		Prior				2020				2021				2022				2023				2024				Term Loans				Cost Basis				Total
		(In thousands)
Consumer installment and other loans by delinquency and nonaccrual status:
Current		$	6,068			$	12,464			$	32,608			$	48,694			$	26,805			$	24,522			$	151,161			$	15,714			$	166,875
30-59 days past due			173				201				949				1,392				385				263				3,363				130				3,493
60-89 days past due			33				36				184				256				91				120				720				164				884
Past due 90 days or more			-				38				129				200				149				-				516				18				534
Nonaccrual			-				-				-				-				-				-				-				-				-
Total		$	6,274			$	12,739			$	33,870			$	50,542			$	27,430			$	24,905			$	155,760			$	16,026			$	171,786

Current gross chargeoffs on consumer installment and other loans:
For the year ended December 31, 2024
		$	246			$	388			$	2,376			$	1,843			$	913			$	162			$	5,928			$	463			$	6,391

There were no loans held for sale at September 30, 2025 and December 31, 2024.

The Company held no other real estate owned (OREO) at September 30, 2025 and December 31, 2024. At September 30, 2025 and December 31, 2024, there were no consumer mortgage loans outstanding secured by residential real estate properties for which formal foreclosure proceedings were in process.