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Loans and ACL
 12 Months Ended
Dec. 31, 2025
Receivables [Abstract]  
Loans and ACL Loans and ACL
Loan Composition
The following table provides a detailed listing of our loan portfolio at December 31:
20252024
BalancePercent of TotalBalancePercent of Total
Commercial and industrial
Secured$189,071 12.31 %$177,239 12.45 %
Unsecured31,379 2.04 %23,384 1.64 %
Total commercial and industrial220,450 14.35 %200,623 14.09 %
Commercial real estate
Commercial mortgage owner occupied229,906 14.96 %213,086 14.97 %
Commercial mortgage non-owner occupied223,984 14.58 %217,679 15.29 %
Commercial mortgage 1-4 family investor101,400 6.60 %92,497 6.50 %
Commercial mortgage multifamily84,468 5.50 %68,456 4.81 %
Total commercial real estate639,758 41.64 %591,718 41.57 %
Advances to mortgage brokers76,676 4.99 %63,080 4.43 %
Agricultural
Agricultural mortgage69,769 4.54 %67,550 4.75 %
Agricultural other32,340 2.11 %32,144 2.26 %
Total agricultural102,109 6.65 %99,694 7.01 %
Residential real estate
Senior lien372,287 24.23 %332,743 23.37 %
Junior lien10,970 0.71 %8,655 0.61 %
Home equity lines of credit44,623 2.91 %39,474 2.77 %
Total residential real estate427,880 27.85 %380,872 26.75 %
Consumer
Secured - direct28,648 1.86 %35,050 2.46 %
Secured - indirect37,456 2.44 %49,136 3.45 %
Unsecured3,387 0.22 %3,398 0.24 %
Total consumer69,491 4.52 %87,584 6.15 %
Total$1,536,364 100.00 %$1,423,571 100.00 %
We grant commercial, agricultural, residential real estate, and consumer loans to customers primarily in Bay, Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties in Michigan. The ability of borrowers to honor their repayment obligations is often dependent upon the real estate, agricultural, manufacturing, retail, gaming, tourism, health care, higher education, and general economic conditions of this region. Substantially all of our consumer and residential real estate loans are secured by various items of property, while commercial loans are secured primarily by real estate, business assets, and personal guarantees. A portion of loans is unsecured.
Loans that we have the intent and ability to hold in our portfolio are reported at their outstanding principal balance adjusted for any charge-offs, the ACL, and deferred fees or costs. Unless a loan has a nonaccrual status, interest income is accrued over the term of the loan based on the principal amount outstanding. Loan origination fees and certain direct loan origination costs are capitalized and recognized as a component of interest income over the term of the loan using the interest method. Net unamortized deferred loan costs were $2,989 and $3,330 at December 31, 2025 and December 31, 2024, respectively.
Commercial and agricultural loans include loans for commercial real estate, commercial operating loans, advances to mortgage brokers, farmland and agricultural production, and loans to states and political subdivisions. Repayment of these loans is dependent upon the successful operation and management of a business. We minimize our risk by limiting the amount of direct credit exposure to any one borrower to $18,000. Borrowers with direct credit needs of more than $18,000 may be serviced through the use of loan participations with other commercial banks. Commercial and agricultural real estate loans commonly require loan-to-value limits of 80% or less. Depending upon the type of loan, past credit history, and current operating results, we may require the borrower to pledge accounts receivable, inventory, property, or equipment. Government agency guarantee may be required. Personal guarantees and/or life insurance beneficiary assignments are generally required from the owners of
closely held corporations, partnerships, and sole proprietorships. In addition, we may require annual financial statements, prepare cash flow analyses, and review credit reports.
We offer adjustable-rate mortgages, construction loans, and fixed rate residential real estate loans which have amortization periods up to a maximum of 30 years. We consider the anticipated direction of interest rates, balance sheet duration, the sensitivity of our balance sheet to changes in interest rates, our liquidity needs, and overall loan demand to determine whether or not to sell fixed rate loans to Freddie Mac.
Our lending policies generally limit the maximum loan-to-value ratio on residential real estate loans to 100% of the lower of the appraised value of the property or the purchase price. Private mortgage insurance is typically required on loans with loan-to-value ratios in excess of 80% unless the loan qualifies for government guarantees.
Underwriting criteria for residential real estate loans generally include:
•Evaluation of the borrower’s ability to make monthly payments.
•Evaluation of the value of the property securing the loan.
•Ensuring the payment of principal, interest, taxes, and hazard insurance does not exceed 28% of a borrower’s gross income.
•Ensuring all debt servicing does not exceed 40% of income.
•Verification of acceptable credit reports.
•Verification of employment, income, and financial information.
Appraisals are performed by independent appraisers and are reviewed for appropriateness. Generally, mortgage loan requests are reviewed by our mortgage loan committee or through a secondary market underwriting system; loans in excess of $1,000 require the approval of one or more of the following committees: Internal Loan Committee, the Executive Loan Committee, or the Board of Directors.
Consumer loans include secured and unsecured personal loans. Loans are amortized for a period of up to 15 years based on the age and value of the underlying collateral. The underwriting emphasis is on a borrower’s perceived intent and ability to pay rather than collateral value. No consumer loans are sold to the secondary market.
Nonaccrual and Past Due Loans
The following table summarizes nonaccrual loan data by class of loans as of December 31:
 20252024
 Total Nonaccrual LoansNonaccrual Loans with No ACLTotal Nonaccrual LoansNonaccrual Loans with No ACL
Commercial and industrial
Secured$442 $347 $— $— 
Commercial real estate
Commercial mortgage owner occupied766 602 — — 
Commercial mortgage 1-4 family investor3,000 3,000 — — 
Residential real estate
Senior lien370 370 282 282 
Total$4,578 $4,319 $282 $282 
The following tables summarize the past due and current loans for the entire loan portfolio as of December 31:
2025
 Past Due:  
30-59
Days		60-89
Days		90 Days
or More		CurrentTotalAccruing Loans 90 or More Days Past Due
Commercial and industrial
Secured$121 $443 $— $188,507 $189,071 $— 
Unsecured— — — 31,379 31,379 — 
Total commercial and industrial121 443 — 219,886 220,450 — 
Commercial real estate
Commercial mortgage owner occupied— 766 — 229,140 229,906 — 
Commercial mortgage non-owner occupied839 — — 223,145 223,984 — 
Commercial mortgage 1-4 family investor67 — 3,000 98,333 101,400 — 
Commercial mortgage multifamily— — — 84,468 84,468 — 
Total commercial real estate906 766 3,000 635,086 639,758 — 
Advances to mortgage brokers— — — 76,676 76,676 — 
Agricultural
Agricultural mortgage— — — 69,769 69,769 — 
Agricultural other60 — — 32,280 32,340 — 
Total agricultural60 — — 102,049 102,109 — 
Residential real estate
Senior lien5,012 385 — 366,890 372,287 — 
Junior lien12 — — 10,958 10,970 — 
Home equity lines of credit115 — — 44,508 44,623 — 
Total residential real estate5,139 385 — 422,356 427,880 — 
Consumer
Secured - direct21 — — 28,627 28,648 — 
Secured - indirect284 30 — 37,142 37,456 — 
Unsecured1 5 — 3,381 3,387 — 
Total consumer306 35 — 69,150 69,491 — 
Total$6,532 $1,629 $3,000 $1,525,203 $1,536,364 $— 
2024
 Past Due:  
30-59
Days		60-89
Days		90 Days
or More		CurrentTotalAccruing Loans 90 or More Days Past Due
Commercial and industrial
Secured$328 $— $— $176,911 $177,239 $— 
Unsecured— 50 — 23,334 23,384 — 
Total commercial and industrial328 50 — 200,245 200,623 — 
Commercial real estate
Commercial mortgage owner occupied25 304 — 212,757 213,086 — 
Commercial mortgage non-owner occupied792 — — 216,887 217,679 — 
Commercial mortgage 1-4 family investor— — — 92,497 92,497 — 
Commercial mortgage multifamily— — — 68,456 68,456 — 
Total commercial real estate817 304 — 590,597 591,718 — 
Advances to mortgage brokers— — — 63,080 63,080 — 
Agricultural
Agricultural mortgage— — — 67,550 67,550 — 
Agricultural other— — — 32,144 32,144 — 
Total agricultural— — — 99,694 99,694 — 
Residential real estate
Senior lien3,846 148 163 328,586 332,743 — 
Junior lien19 — — 8,636 8,655 — 
Home equity lines of credit10 — — 39,464 39,474 — 
Total residential real estate3,875 148 163 376,686 380,872 — 
Consumer
Secured - direct15 — 19 35,016 35,050 19 
Secured - indirect232 — — 48,904 49,136 — 
Unsecured4 — — 3,394 3,398 — 
Total consumer251 — 19 87,314 87,584 19 
Total$5,271 $502 $182 $1,417,616 $1,423,571 $19 
Credit Quality Indicators
The following tables display commercial and agricultural loans by credit risk ratings and year of origination as of December 31:
 2025
20252024202320222021PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Commercial and industrial: Secured
Risk ratings 1-3$257 $10,256 $8,605 $1,841 $3,660 $2,471 $36,713 $— $63,803 
Risk rating 420,722 19,606 13,553 5,939 5,653 1,278 30,804 — 97,555 
Risk rating 52,271 2,290 139 15,215 45 — 4,085 — 24,045 
Risk rating 681 75 19 — 30 6 3,015 — 3,226 
Risk rating 7— 442 — — — — — — 442 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$23,331 $32,669 $22,316 $22,995 $9,388 $3,755 $74,617 $— $189,071 
2025 year-to-date gross charge-offs$— $— $22 $11 $— $— $— $— $33 
Commercial and industrial: Unsecured
Risk ratings 1-3$867 $25 $2,165 $156 $10 $312 $3,302 $— $6,837 
Risk rating 411,882 955 813 1,240 188 274 7,080 — 22,432 
Risk rating 52 — 61 — 476 — 1,488 — 2,027 
Risk rating 6— 83 — — — — — — 83 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$12,751 $1,063 $3,039 $1,396 $674 $586 $11,870 $— $31,379 
2025 year-to-date gross charge-offs$— $50 $— $— $— $— $— $— $50 
Commercial real estate: Owner occupied
Risk ratings 1-3$5,021 $4,101 $8,467 $1,385 $17,482 $16,095 $1,419 $— $53,970 
Risk rating 433,004 33,403 20,559 27,541 26,605 23,021 2,380 — 166,513 
Risk rating 51,687 192 557 1,149 131 2,866 372 — 6,954 
Risk rating 6— 1,327 304 — 72 — — — 1,703 
Risk rating 7— 766 — — — — — — 766 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$39,712 $39,789 $29,887 $30,075 $44,290 $41,982 $4,171 $— $229,906 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate: Non-owner occupied
Risk ratings 1-3$3,346 $273 $4,996 $5,910 $9,132 $3,360 $102 $— $27,119 
Risk rating 426,715 7,300 21,512 44,632 31,180 26,464 1,595 — 159,398 
Risk rating 5249 9,938 7,641 10,192 1,612 6,343 466 — 36,441 
Risk rating 6— — 982 — — 44 — — 1,026 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$30,310 $17,511 $35,131 $60,734 $41,924 $36,211 $2,163 $— $223,984 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
2025
20252024202320222021PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Commercial real estate: 1-4 family investor
Risk ratings 1-3$615 $764 $225 $2,631 $1,445 $1,126 $3,068 $— $9,874 
Risk rating 415,675 9,486 7,180 7,873 26,081 13,609 6,983 — 86,887 
Risk rating 5269 — 137 216 — 122 338 — 1,082 
Risk rating 6— — 515 — — 42 — — 557 
Risk rating 7— — 3,000 — — — — — 3,000 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$16,559 $10,250 $11,057 $10,720 $27,526 $14,899 $10,389 $— $101,400 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate: Multifamily
Risk ratings 1-3$— $885 $363 $1,603 $852 $1,099 $288 $— $5,090 
Risk rating 420,842 5,030 957 18,892 10,087 19,158 220 — 75,186 
Risk rating 5— 480 914 — — 2,798 — — 4,192 
Risk rating 6— — — — — — — — — 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$20,842 $6,395 $2,234 $20,495 $10,939 $23,055 $508 $— $84,468 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Advances to mortgage brokers
Risk ratings 1-3$76,676 $— $— $— $— $— $— $— $76,676 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Agricultural mortgage
Risk ratings 1-3$2,647 $714 $419 $2,993 $1,990 $3,945 $338 $— $13,046 
Risk rating 44,426 4,098 3,449 11,231 5,864 11,802 1,642 — 42,512 
Risk rating 5852 269 1,083 418 5,829 622 952 — 10,025 
Risk rating 6535 — — 2,068 69 1,514 — — 4,186 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$8,460 $5,081 $4,951 $16,710 $13,752 $17,883 $2,932 $— $69,769 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Agricultural other
Risk ratings 1-3$860 $503 $434 $671 $221 $277 $4,054 $— $7,020 
Risk rating 42,055 801 738 610 483 62 11,202 — 15,951 
Risk rating 5881 55 133 17 889 391 2,308 — 4,674 
Risk rating 63,476 — 88 — 61 — 1,070 — 4,695 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$7,272 $1,359 $1,393 $1,298 $1,654 $730 $18,634 $— $32,340 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
2024
 20242023202220212020PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Commercial and industrial: Secured
Risk ratings 1-3$11,081 $10,173 $2,352 $4,483 $4,437 $368 $10,316 $— $43,210 
Risk rating 427,530 20,886 14,240 11,014 1,867 2,144 28,109 — 105,790 
Risk rating 53,627 559 11,644 164 137 53 6,626 — 22,810 
Risk rating 6126 288 1,841 71 — 10 3,093 — 5,429 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$42,364 $31,906 $30,077 $15,732 $6,441 $2,575 $48,144 $— $177,239 
2024 year-to-date gross charge-offs$— $277 $33 $— $38 $— $— $— $348 
Commercial and industrial: Unsecured
Risk ratings 1-3$378 $1,967 $203 $69 $48 $414 $1,966 $— $5,045 
Risk rating 43,073 2,049 2,388 268 370 — 8,896 — 17,044 
Risk rating 5100 — — 121 — — 1,074 — 1,295 
Risk rating 6— — — — — — — — — 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$3,551 $4,016 $2,591 $458 $418 $414 $11,936 $— $23,384 
2024 year-to-date gross charge-offs$— $— $— $— $— $8 $25 $— $33 
Commercial real estate: Owner occupied
Risk ratings 1-3$4,185 $8,933 $1,994 $11,617 $13,300 $4,421 $221 $— $44,671 
Risk rating 434,980 21,586 32,319 39,439 9,924 20,260 1,626 — 160,134 
Risk rating 5197 487 876 72 653 791 372 — 3,448 
Risk rating 61,354 1,123 — 636 1,117 504 99 — 4,833 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$40,716 $32,129 $35,189 $51,764 $24,994 $25,976 $2,318 $— $213,086 
2024 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate: Non-owner occupied
Risk ratings 1-3$644 $795 $5,994 $5,178 $348 $1,781 $— $— $14,740 
Risk rating 48,413 42,135 61,524 36,702 4,399 29,225 497 — 182,895 
Risk rating 59,726 — 218 1,681 6,154 709 500 — 18,988 
Risk rating 6— 1,006 — — 50 — — — 1,056 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$18,783 $43,936 $67,736 $43,561 $10,951 $31,715 $997 $— $217,679 
2024 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
 2024
20242023202220212020PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Commercial real estate: 1-4 family investor
Risk ratings 1-3$1,165 $— $2,632 $791 $846 $965 $3,076 $— $9,475 
Risk rating 49,399 12,535 8,911 28,666 13,930 3,640 4,750 — 81,831 
Risk rating 5— 145 339 72 — 52 — — 608 
Risk rating 6— 536 — — — 47 — — 583 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$10,564 $13,216 $11,882 $29,529 $14,776 $4,704 $7,826 $— $92,497 
2024 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate: Multifamily
Risk ratings 1-3$638 $3,383 $1,697 $936 $545 $746 $150 $— $8,095 
Risk rating 42,081 1,957 21,446 11,646 664 19,617 64 — 57,475 
Risk rating 5— — — — — — — — — 
Risk rating 6— — — — — 2,886 — — 2,886 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$2,719 $5,340 $23,143 $12,582 $1,209 $23,249 $214 $— $68,456 
2024 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Advances to mortgage brokers
Risk ratings 1-3$63,080 $— $— $— $— $— $— $— $63,080 
2024 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Agricultural mortgage
Risk ratings 1-3$792 $— $2,700 $2,144 $2,550 $1,250 $34 $— $9,470 
Risk rating 44,410 4,118 12,959 6,968 5,737 8,586 1,322 — 44,100 
Risk rating 5281 1,521 1,342 5,757 — 1,364 1,045 — 11,310 
Risk rating 660 — 1,550 — — 1,060 — — 2,670 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$5,543 $5,639 $18,551 $14,869 $8,287 $12,260 $2,401 $— $67,550 
2024 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Agricultural other
Risk ratings 1-3$634 $523 $106 $137 $2 $210 $3,635 $— $5,247 
Risk rating 41,940 1,328 1,863 1,893 463 550 13,531 — 21,568 
Risk rating 51,683 — — — 438 — 608 — 2,729 
Risk rating 6— 172 — 90 — — 2,338 — 2,600 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$4,257 $2,023 $1,969 $2,120 $903 $760 $20,112 $— $32,144 
2024 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
We have certain lending policies and procedures in place designed to maximize loan income within an acceptable level of risk. The Board of Directors reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the Board of Directors with frequent reports related to loan production, loan quality, and concentration of credit, loan delinquencies, nonperforming loans and potential problem loans. We seek to diversify the loan portfolio as a means of managing risk associated with fluctuations in economic conditions.
Internally assigned credit risk ratings are reviewed, at a minimum, when loans are renewed or when management has knowledge of improvements or deterioration of the credit quality of individual credits. Descriptions of the internally assigned credit risk ratings for commercial and agricultural loans are as follows:
1. EXCELLENT – Substantially Risk Free
Credit has strong financial condition and solid earnings history, characterized by:
•High liquidity, strong cash flow, low leverage.
•Unquestioned ability to meet all obligations when due.
•Experienced management, with management succession in place.
•Secured by cash.
2. HIGH QUALITY – Limited Risk
Credit with sound financial condition and a positive trend in earnings supplemented by:
•Favorable liquidity and leverage ratios.
•Ability to meet all obligations when due.
•Management with successful track record.
•Steady and satisfactory earnings history.
•If loan is secured, collateral is of high quality and readily marketable.
•Access to alternative financing.
•Well defined primary and secondary source of repayment.
•If supported by guaranty, the financial strength and liquidity of the guarantor(s) are clearly evident.
3. HIGH SATISFACTORY – Reasonable Risk
Credit with satisfactory financial condition and further characterized by:
•Working capital adequate to support operations.
•Cash flow sufficient to pay debts as scheduled.
•Management experience and depth appear favorable.
•Loan performing according to terms.
•If loan is secured, collateral is acceptable and loan is fully protected.
4. SATISFACTORY – Acceptable Risk
Credit with bankable risks, although some signs of weaknesses are shown:
•Would include most start-up businesses.
•Occasional instances of trade slowness or repayment delinquency – may have been 10-30 days slow within the past year.
•Management’s abilities are apparent yet unproven.
•Weakness in primary source of repayment with adequate secondary source of repayment.
•Loan structure generally in accordance with policy.
•If secured, loan collateral coverage is marginal.
To be classified as less than satisfactory, only one of the following criteria must be met.
5. SPECIAL MENTION – Criticized
Credit constitutes an undue and unwarranted credit risk but not to the point of justifying a classification of substandard. The credit risk may be relatively minor yet constitutes an unwarranted risk in light of the circumstances surrounding a specific loan:
•Downward trend in sales, profit levels, and margins.
•Impaired working capital position.
•Cash flow is strained in order to meet debt repayment.
•Loan delinquency (30-60 days) and overdrafts may occur.
•Shrinking equity cushion.
•Diminishing primary source of repayment and questionable secondary source.
•Management abilities are questionable.
•Weak industry conditions.
•Litigation pending against the borrower.
•Loan may need to be restructured to improve collateral position or reduce payments.
•Collateral or guaranty offers limited protection.
•Negative debt service coverage; however, the credit is well collateralized and payments are current.
6. SUBSTANDARD – Classified
Credit is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged. There is a distinct possibility we will implement collection procedures if the loan deficiencies are not corrected. Any commercial loan placed in nonaccrual status will be rated “7” or worse. In addition, the following characteristics may apply:
•Sustained losses have severely eroded the equity and cash flow.
•Deteriorating liquidity.
•Serious management problems or internal fraud.
•Original repayment terms liberalized.
•Likelihood of bankruptcy.
•Inability to access other funding sources.
•Reliance on secondary source of repayment.
•Litigation filed against borrower.
•Interest non-accrual may be warranted.
•Collateral provides little or no value.
•Requires excessive attention of the loan officer.
•Borrower is uncooperative with the loan officer.
7. VULNERABLE – Classified
Credit is considered “Substandard” and warrants placing in nonaccrual status. Risk of loss is being evaluated and exit strategy options are under review. Other characteristics that may apply:
•Insufficient cash flow to service debt.
•Minimal or no payments being received.
•Limited options available to avoid the collection process.
•Transition status, expect action will take place to collect loan without immediate progress being made.
8. DOUBTFUL – Workout
Credit has all the weaknesses inherent in a “Substandard” loan with the added characteristic that collection and/or liquidation is pending. The possibility of a loss is extremely high, but its classification as a loss is deferred until liquidation procedures are completed, or reasonably estimable. Other characteristics that may apply:
•Normal operations are severely diminished or have ceased.
•Seriously impaired cash flow.
•Original repayment terms materially altered.
•Secondary source of repayment is inadequate.
•Survivability as a “going concern” is impossible.
•Collection process has begun.
•Bankruptcy petition has been filed.
•Judgments have been filed.
•Portion of the loan balance has been charged off.
9. LOSS – Charge-off
Credit is considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification is for charged-off loans but does not mean that the asset has absolutely no recovery or salvage value. These loans are further characterized by:
•Liquidation or reorganization under bankruptcy, with poor prospects of collection.
•Fraudulently overstated assets and/or earnings.
•Collateral has marginal or no value.
•Debtor cannot be located.
•Over 120 days delinquent.
Our primary credit quality indicator for residential real estate and consumer loans is the individual loan’s past due status.
The following tables display residential real estate and consumer loans by payment status and year of origination as of December 31:
2025
 20252024202320222021PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Residential real estate: Senior lien
Current$72,854 $43,102 $35,251 $42,022 $65,769 $93,563 $— $14,223 $366,784 
Past due 30-89 days112 284 633 774 830 2,500 — — 5,133 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — 179 191 — — 370 
Total$72,966 $43,386 $35,884 $42,796 $66,778 $96,254 $— $14,223 $372,287 
2025 year-to-date gross charge-offs$— $— $— $— $— $1 $— $— $1 
Residential real estate: Junior lien
Current$4,786 $3,252 $2,075 $507 $67 $271 $— $— $10,958 
Past due 30-89 days— 12 — — — — — — 12 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$4,786 $3,264 $2,075 $507 $67 $271 $— $— $10,970 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Residential real estate: Home equity lines of credit
Current$— $— $— $— $— $— $44,467 $41 $44,508 
Past due 30-89 days— — — — — — 115 — 115 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$— $— $— $— $— $— $44,582 $41 $44,623 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Consumer: Secured - direct
Current$7,870 $6,374 $5,501 $4,088 $2,238 $2,556 $— $— $28,627 
Past due 30-89 days— — 11 9 — 1 — — 21 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$7,870 $6,374 $5,512 $4,097 $2,238 $2,557 $— $— $28,648 
2025 year-to-date gross charge-offs$19 $15 $93 $38 $9 $53 $— $— $227 
Consumer: Secured - indirect
Current$4,327 $4,457 $14,532 $5,133 $3,609 $5,084 $— $— $37,142 
Past due 30-89 days— 82 198 — — 34 — — 314 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$4,327 $4,539 $14,730 $5,133 $3,609 $5,118 $— $— $37,456 
2025 year-to-date gross charge-offs$— $8 $— $— $— $13 $— $— $21 
2025
20252024202320222021PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Consumer: Unsecured
Current$1,686 $689 $171 $34 $5 $— $796 $— $3,381 
Past due 30-89 days5 — — — — — 1 — 6 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$1,691 $689 $171 $34 $5 $— $797 $— $3,387 
2025 year-to-date gross charge-offs$540 $4 $14 $1 $1 $— $— $— $560 
2024
20242023202220212020PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Residential real estate: Senior lien
Current$55,991 $35,105 $45,916 $73,607 $47,057 $62,303 $— $8,579 $328,558 
Past due 30-89 days173 162 331 287 907 2,043 — — 3,903 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — 163 28 91 — — 282 
Total$56,164 $35,267 $46,247 $74,057 $47,992 $64,437 $— $8,579 $332,743 
2025 year-to-date gross charge-offs$— $— $— $— $— $10 $— $— $10 
Residential real estate: Junior lien
Current$4,229 $3,092 $800 $86 $71 $358 $— $— $8,636 
Past due 30-89 days— — — 19 — — — — 19 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$4,229 $3,092 $800 $105 $71 $358 $— $— $8,655 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Residential real estate: Home equity lines of credit
Current$— $— $— $— $— $— $39,464 $— $39,464 
Past due 30-89 days— — — — — — 10 — 10 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$— $— $— $— $— $— $39,474 $— $39,474 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Consumer: Secured - direct
Current$10,990 $9,498 $6,535 $3,947 $2,166 $1,880 $— $— $35,016 
Past due 30-89 days— — 15 — — — — — 15 
Past due 90 or more days— — — — 19 — — — 19 
Nonaccrual— — — — — — — — — 
Total$10,990 $9,498 $6,550 $3,947 $2,185 $1,880 $— $— $35,050 
2025 year-to-date gross charge-offs$16 $93 $9 $— $27 $8 $— $— $153 
 2024
20242023202220212020PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Consumer: Secured - indirect
Current$6,526 $22,624 $7,682 $4,990 $4,018 $3,064 $— $— $48,904 
Past due 30-89 days42 51 50 28 54 7 — — 232 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$6,568 $22,675 $7,732 $5,018 $4,072 $3,071 $— $— $49,136 
2025 year-to-date gross charge-offs$— $67 $64 $— $— $3 $— $— $134 
Consumer: Unsecured
Current$1,654 $656 $211 $22 $16 $— $835 $— $3,394 
Past due 30-89 days— — 2 — — — 2 — 4 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$1,654 $656 $213 $22 $16 $— $837 $— $3,398 
2025 year-to-date gross charge-offs$2,047 $15 $21 $— $— $2 $21 $— $2,106 
Loan Modifications
A loan modification includes terms outside of normal lending practices to a borrower experiencing financial difficulty.
Typical modifications granted include, but are not limited to:
•Agreeing to interest rates below prevailing market rates for debt with similar risk characteristics.
•Extending the maturity date or amortization period beyond typical lending guidelines for loans with similar risk characteristics.
•Agreeing to an interest-only payment structure, delaying principal payments, or delaying payments.
•Forgiving principal.
To determine if a borrower is experiencing financial difficulty, factors we consider include:
•The borrower is currently in default on any debt.
•The borrower would likely default on any debt if the concession is not granted.
•The borrower’s cash flow is insufficient to service all debt if the concession is not granted.
•The borrower has declared, or is in the process of declaring, bankruptcy.
•The borrower is unlikely to continue as a going concern (if the entity is a business).
The following is a summary of the amortized cost basis of loan modifications granted to borrowers experiencing financial difficulty for the years ended December 31:
2025
Interest Rate ReductionOther-Than-Insignificant Payment DelayTerm ExtensionOther-Than-Insignificant Payment Delay and Term Extension
 Amortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial Receivable
Commercial and industrial
Secured$18 0.01 %$— 0.00 %$3,144 1.66 %$975 0.52 %
Commercial real estate
Commercial mortgage owner occupied— 0.00 %— 0.00 %1,483 0.65 %— 0.00 %
Agricultural
Agricultural mortgage— 0.00 %1,389 1.99 %— 0.00 %— 0.00 %
Agricultural other— 0.00 %— 0.00 %776 2.40 %— 0.00 %
Residential real estate
Senior lien— 0.00 %85 0.02 %— 0.00 %— 0.00 %
Total$18 $1,474 $5,403 $975 
2024
Interest Rate ReductionOther-Than-Insignificant Payment DelayTerm ExtensionOther-Than-Insignificant Payment Delay and Term Extension
 Amortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial Receivable
Commercial and industrial
Secured$— 0.00 %$1,782 0.80 %$10 0.00 %$— 0.00 %
Commercial real estate
Commercial mortgage owner occupied— 0.00 %818 0.46 %1,353 0.76 %— 0.00 %
Agricultural
Agricultural mortgage— 0.00 %1,305 1.93 %281 0.42 %— 0.00 %
Agricultural other132 0.41 %— 0.00 %— 0.00 %1,107 3.44 %
Consumer
Secured - indirect— 0.00 %— 0.00 %1 0.00 %— 0.00 %
Total$132 $3,905 $1,645 $1,107 
We do not modify any loans by forgiving principal or accrued interest. We had committed to advance $221 and $43 in additional funds in connection with modified loans at December 31, 2025 and 2024, respectively, as displayed in the tables above.
The following tables summarize the financial effect of the modifications granted to borrowers experiencing financial difficulty for the years ended December 31:
2025
Payment Delay TermWeighted-Average Interest Rate ReductionWeighted-Average Term Extension (Years)
Commercial and industrial
Secured8 months10.00%1.03
Commercial real estate
Commercial mortgage owner occupiedN/AN/A15.00
Agricultural
Agricultural mortgage4 monthsN/AN/A
Agricultural otherN/AN/A0.50
Residential real estate
Senior lien6 monthsN/AN/A
2024
Payment Delay TermWeighted-Average Interest Rate ReductionWeighted-Average Term Extension (Years)
Commercial and industrial
Secured4 monthsN/A3.00
Commercial real estate
Commercial mortgage owner occupied7 monthsN/A3.00
Agricultural
Agricultural mortgage5 monthsN/A6.27
Agricultural other4 months0.50%0.33
Consumer
Secured - indirectN/AN/A1.33
We closely monitor the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts. The following tables summarize the performance of such loans that were modified within the past 12 months prior to December 31:
2025
Current30-59 Days
Past Due		60-89 Days
Past Due		90 Days or
More Past Due		Total
Commercial and industrial
Secured$3,252 $— $885 $— $4,137 
Commercial real estate
Commercial mortgage owner occupied1,483 — — — 1,483 
Agricultural
Agricultural mortgage1,389 — — — 1,389 
Agricultural other776 — — — 776 
Residential real estate
Senior lien— 85 — — 85 
Total$6,900 $85 $885 $— $7,870 
2024
Current30-59 Days
Past Due		60-89 Days
Past Due		90 Days or
More Past Due		Total
Commercial and industrial
Secured$1,782 $10 $— $— $1,792 
Commercial real estate
Commercial mortgage owner occupied2,171 — — — 2,171 
Agricultural
Agricultural mortgage1,586 — — — 1,586 
Agricultural other1,239 — — — 1,239 
Consumer
Secured - indirect1 — — — 1 
Total$6,779 $10 $— $— $6,789 
We had no loans that defaulted for the years ended December 31, 2025 and 2024 which were modified within 12 months prior to the default date.
ACL - Loans
The credit quality of our loan portfolio is continuously monitored and is reflected within the ACL for loans. The ACL is an estimate of expected losses over the contractual life of our loan portfolio. The ACL is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries.
The ACL is evaluated on a regular basis for appropriateness. Our periodic review of the collectability of a loan considers historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
The primary factors behind the determination of the level of the ACL are specific allocations for loans individually evaluated, historical loss percentages, delinquency status, and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods.
The methodology for estimating the amount of expected credit losses reported in the ACL has two basic components: a component of individual loans that do not share risk characteristics with other loans; and a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics.
For a loan that does not share risk characteristics with other loans, an individual analysis is performed to measure an allowance. Loans in nonaccrual status over established dollar thresholds are individually evaluated for specific allocation of the allowance using the fair value of collateral, less costs to sell if foreclosure is probable, or the discounted cash flow method. We do not recognize interest income on loans in nonaccrual status. For loans not classified as nonaccrual, interest income is recognized daily, as earned, according to the terms of the loan agreement and the principal amount outstanding.
In determining the allowance for credit losses, we derive an estimated credit loss assumption from a model that categorizes loan pools based on loan type and credit risk ratings or delinquency bucket. This model calculates an expected loss percentage for each loan class by considering the probability of default, based on the migration of loans from performing to loss by credit risk ratings or delinquency buckets using life-of-loan analysis, and the historical severity of loss, based on the aggregate net lifetime losses incurred per loan class.
The default and severity factors used to calculate the allowance for credit losses for loans that share similar risk characteristics with other loans are adjusted for differences between the historical period used to calculate historical default and loss severity rates and expected conditions over the remaining lives of the loans in the portfolio. These qualitative factors are used to adjust the historical probabilities of default and severity of loss so that they reflect management’s expectation of future conditions based on a reasonable and supportable forecast. To the extent the lives of the loans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made, the model reverts back to the historical rates of default and severity of loss. Qualitative factors include:
•Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, recovery practices not considered elsewhere in estimating credit losses;
•Changes in the experience, ability, and depth of lending management and other relevant staff;
•Changes in interest rates;
•Changes in international, national, regional, and local economic factors;
•Changes in the nature and volume of the portfolio and in the terms of loans;
•Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans;
•Lack of current financial information;
•Competition, legal, and regulatory; and
•Changes in the value of underlying collateral.
A summary of changes in the ACL and the recorded investment in loans by segments are as follows for the years ended December 31:
2025
Commercial and IndustrialCommercial Real EstateAgriculturalResidential Real EstateConsumerTotal
December 31, 2024$1,316 $5,171 $287 $4,521 $1,600 $12,895 
Charge-offs(83)— — (1)(808)(892)
Recoveries93 60 4 99 2,012 2,268 
Provision (reversal) for credit losses(190)718 36 440 (1,548)(544)
December 31, 2025$1,136 $5,949 $327 $5,059 $1,256 $13,727 
2024
Commercial and IndustrialCommercial Real EstateAgriculturalResidential Real EstateConsumerTotal
December 31, 2023$968 $5,878 $270 $4,336 $1,656 $13,108 
Charge-offs(381)— — (10)(2,393)(2,784)
Recoveries42 355 6 128 353 884 
Provision (reversal) for credit losses687 (1,062)11 67 1,984 1,687 
December 31, 2024$1,316 $5,171 $287 $4,521 $1,600 $12,895 
The following table illustrates the two main components of the ACL as of December 31:
20252024
ACL
Individually evaluated$259 $— 
Collectively evaluated13,468 12,895 
Total$13,727 $12,895 
ACL to loans
Individually evaluated0.02 %0.00 %
Collectively evaluated0.87 %0.91 %
Total0.89 %0.91 %
The following table presents loans that were evaluated for expected credit losses on an individual basis and the related specific allocations, by loan segment as of December 31:
 20252024
Loan BalanceSpecific AllocationLoan BalanceSpecific Allocation
Commercial and industrial$442 $95 $— $— 
Commercial real estate3,766 164 — — 
Agricultural— — — — 
Residential real estate370 — 254 — 
Consumer— — — — 
Total$4,578 $259 $254 $— 
We have designated loans classified as collateral dependent for which we apply the practical expedient to measure the ACL based on the fair value of the collateral less cost to sell, when the repayment is expected to be provided substantially by the sale or operation of the collateral and the borrower is experiencing financial difficulty. The fair value of the collateral is based on appraisals, which may be adjusted due to their age, and the type, location, and condition of the property or area or general market conditions to reflect the expected change in value between the effective date of the appraisal and the measurement date. Appraisals are updated every one to two years depending on the type of loan and the total exposure of the borrower. Loans evaluated for expected credit losses on an individual basis include $4,578 in collateral dependent loans secured by commercial equipment, commercial real estate, and residential real estate of $442, $3,766, and $370, respectively.