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Note 3 - Loans

12 Months Ended

Dec. 31, 2023

Loans, Notes, Trade and Other Receivables, Excluding Allowance for Credit Losses [Text Block]

Note 3. Loans

Loans at December 31, 2023 and 2022 are summarized as follows (in thousands):

	*2023*			*2022*
Real estate loans:
Construction and land development	$	52,680		$	51,840
Secured by 1-4 family residential		344,369			331,421
Other real estate		447,272			418,456
Commercial and industrial loans		113,074			111,225
Consumer and other loans		12,035			7,581
Total loans	$	969,430		$	920,523
Allowance for credit losses		(11,974	)		(7,446	)
Loans, net	$	957,456		$	913,077

Net deferred loan fees included in the above loan categories were $1.1 million and $838 thousand at December 31, 2023 and 2022, respectively. Net unamortized discounts on loans acquired through business combinations included in the above loan categories totaled $1.9 million at December 31, 2023 and $2.5 million at December 31, 2022. Unamortized premiums on loans purchased from a third-party loan originator are included in the commercial and industrial loan categories and totaled $7.9 million as of December 31, 2023 and $7.4 million as of December 31, 2022. Consumer and other loans included $222 thousand and $197 thousand of demand deposit overdrafts at December 31, 2023 and 2022, respectively.

The following tables provide a summary of loan classes and an aging of past due loans as of December 31, 2023 and 2022 (in thousands):

	December 31, 2023
	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Non-Accrual Loans		90 Days or More Past Due and Accruing
Real estate loans:
Construction and land development	$	183	$	4	$	38	$	225	$	52,455	$	52,680	$	38	$	—
1-4 family residential		1,364		350		392		2,106		342,263		344,369		495		245
Other real estate		—		—		82		82		447,190		447,272		—		82
Commercial and industrial		252		316		197		765		112,309		113,074		6,230		197
Consumer and other loans		33		—		—		33		12,002		12,035		—		—
Total	$	1,832	$	670	$	709	$	3,211	$	966,219	$	969,430	$	6,763	$	524

	December 31, 2022
	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Non-Accrual Loans		90 Days or More Past Due and Accruing
Real estate loans:
Construction and land development	$	115	$	20	$	1,045	$	1,180	$	50,660	$	51,840	$	1,045	$	—
1-4 family residential		1,033		60		207		1,300		330,121		331,421		530		—
Other real estate		109		—		—		109		418,347		418,456		13		—
Commercial and industrial		31		130		1,085		1,246		109,979		111,225		1,085		—
Consumer and other loans		26		25		—		51		7,530		7,581		—		—
Total	$	1,314	$	235	$	2,337	$	3,886	$	916,637	$	920,523	$	2,673	$	—

Loans acquired in business combinations are recorded in the Consolidated Balance Sheets at fair value at the acquisition date under the acquisition method of accounting. The outstanding principal balance and the carrying amount at December 31, 2023 and 2022 of loans acquired in business combinations were as follows:

	Acquired Loans - Purchased Performing
(Dollars in thousands)	2023		2022
Outstanding principal balance	$	164,028	$	187,017

Carrying amount
Real estate loans:
Construction and land development	$	7,851	$	9,823
Secured by 1-4 family residential		36,290		42,915
Other real estate loans		94,882		103,521
Commercial and industrial loans		19,611		24,661
Consumer and other loans		3,451		3,560
Total acquired loans	$	162,085	$	184,480

Credit Quality Indicators

As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to the risk grading of specified classes of loans. The Company utilizes a risk grading matrix to assign a rating to each of its loans. The loan ratings are summarized into the following categories: pass, special mention, substandard, doubtful, and loss. Pass rated loans include all risk rated credits other than those included in special mention, substandard, or doubtful. Loans classified as loss are charged-off. Loan officers assign risk grades to loans at origination and as renewals arise. The Bank’s Credit Administration department reviews risk grades for accuracy on a quarterly basis and as credit issues arise. In addition, a certain amount of loans are reviewed each year through the Company’s internal and external loan review process. A description of the general characteristics of the loan grading categories is as follows:

Pass – Loans classified as pass exhibit acceptable operating trends, balance sheet trends, and liquidity. Sufficient cash flow exists to service the loan. All obligations have been paid by the borrower as agreed.

Special Mention – Loans classified as special mention have 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 the Bank’s credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The Company considers all doubtful loans to be impaired and places the loan on non-accrual status.

Loss – Loans classified as loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted.

The following table presents the Company's recorded investment in loans by credit quality indicators by year of origination as of December 31, 2023 (in thousands).

	December 31, 2023
	Term Loans by Year of Origination
	2023		2022		2021		2020		2019		Prior		Revolving		Total
Construction and land development
Pass	$	2,477	$	2,925	$	4,350	$	3,450	$	2,085	$	2,859	$	34,496	$	52,642
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		38		—		38
Doubtful		—		—		—		—		—		—		—		—
Total Construction and land development	$	2,477	$	2,925	$	4,350	$	3,450	$	2,085	$	2,897	$	34,496	$	52,680

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Secured by 1-4 family residential
Pass	$	43,029	$	77,196	$	64,063	$	41,192	$	31,509	$	76,295	$	10,303	$	343,587
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		98		19		—		—		665		—		782
Doubtful		—		—		—		—		—		—		—		—
Total Secured by 1-4 family residential	$	43,029	$	77,294	$	64,082	$	41,192	$	31,509	$	76,960	$	10,303	$	344,369

Current period gross write-offs	$	—	$	59	$	—	$	—	$	—	$	—	$	—	$	59

Other real estate loans
Pass	$	51,560	$	94,666	$	90,089	$	41,186	$	36,747	$	122,755	$	10,269	$	447,272
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total Other real estate loans	$	51,560	$	94,666	$	90,089	$	41,186	$	36,747	$	122,755	$	10,269	$	447,272

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	34	$	—	$	34

Commercial and industrial
Pass	$	22,086	$	26,755	$	20,352	$	4,102	$	4,448	$	8,276	$	20,825	$	106,844
Special Mention		—		—		—		—		—		—		—		—
Substandard		58		3,757		1,453		—		167		795		—		6,230
Doubtful		—		—		—		—		—		—		—		—
Total Commercial and industrial	$	22,144	$	30,512	$	21,805	$	4,102	$	4,615	$	9,071	$	20,825	$	113,074

Current period gross write-offs	$	315	$	1,121	$	1,139	$	624	$	—	$	253	$	—	$	3,452

Consumer and other loans
Pass	$	3,021	$	1,203	$	311	$	1,471	$	2,172	$	14	$	3,843	$	12,035
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total Consumer and other loans	$	3,021	$	1,203	$	311	$	1,471	$	2,172	$	14	$	3,843	$	12,035

Current period gross write-offs	$	366	$	57	$	4	$	15	$	3	$	3	$	—	$	448

The following tables provide an analysis of the credit risk profile of each loan class as of December 31, 2022 (in thousands):

	December 31, 2022
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
Construction and land development	$	50,795	$	—	$	1,045	$	—	$	51,840
Secured by 1-4 family residential		330,590		—		831		—		331,421
Other real estate		416,559		1,884		13		—		418,456
Commercial and industrial		110,065		75		1,085		—		111,225
Consumer and other loans		7,581		—		—		—		7,581
Total	$	915,590	$	1,959	$	2,974	$	—	$	920,523