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Note 4 - Loans Receivable and Credit Disclosures

12 Months Ended

Dec. 31, 2024

Note 4. Loans Receivable and Credit Disclosures

The composition of loans receivable is as follows (in thousands):

	*2024*			*2023*

Real estate - construction	$	59,281		$	63,050
Real estate - 1 to 4 family residential		309,704			289,404
Real estate - multi-family		200,209			195,536
Real estate - commercial		350,493			359,266
Real estate - agricultural		159,880			161,517
Commercial		90,023			89,729
Agricultural		134,157			119,136
Consumer and other		17,066			16,540
		1,320,813			1,294,178
Unallocated portfolio layer basis adjustments¹		162			410
Less allowance for credit losses		(17,058	)		(16,776	)
Total loans receivable, net	$	1,303,917		$	1,277,812

¹ This amount represents portfolio layer method basis adjustments related to loans hedged in a closed portfolio. Under the portfolio layer method basis adjustments are not allocated to individual loans, however, the amounts impact the net loan balance. These basis adjustments would be allocated to the amortized cost of specific loans within the pool if the hedge was de-designated. See Note 11 (“Derivative Financial Instruments”) for additional information.

Construction loans are underwritten utilizing independent appraisals, sensitivity analysis of absorption, vacancy and lease rates and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the completed project. These estimates may prove to be inaccurate primarily due to unforeseen circumstances beyond the control of the borrower or lender. Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions and the availability of long-term financing. The Company may require guarantees on these loans. The Company’s construction loans are secured primarily by properties located in its primary market area. National unemployment rate was a key economic forecast used in estimating expected credit losses for this segment as of December 31, 2023. National unemployment rate and national real gross domestic product (GDP) are key economic forecasts used in estimating expected credit losses for this segment as of December 31, 2024.

The Company originates 1-4 family real estate loans utilizing credit reports to supplement the underwriting process. The Company’s underwriting standards for 1-4 family loans are generally in accordance with FHLMC and FNMA manual underwriting guidelines. Properties securing 1-4 family real estate loans are appraised by either staff appraisers or fee appraisers, both of which are independent of the loan origination function and have been approved by the Board of Directors. The loan-to-value ratios normally do not exceed 90% without credit enhancements such as mortgage insurance. The Company will lend up to 100% of the lesser of the appraised value or purchase price for conventional 1-4 family real estate loans, provided private mortgage insurance is obtained. The Company’s 1-4 family real estate loans are secured primarily by properties located in its primary market area. The national unemployment rate is a key economic forecast used in estimating expected credit losses for this segment.

Multi-family, commercial and agricultural real estate loans are subject to underwriting standards and processes similar to commercial and agricultural operating loans, in addition to those unique to real estate loans. These loans are viewed primarily as cash flow loans and, secondarily, as loans secured by real estate. Multi-family, commercial and agricultural real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Loan-to-value generally does not exceed 80% of the cost or value of the assets. Loans are typically subject to interest rate adjustments between five and seven years from origination. Fully amortized monthly repayment terms normally do not exceed twenty-five years. Projections and cash flows that show ability to service debt within the amortization period are required. Property and casualty insurance is required to protect the Banks’ collateral interests. Appraisals on properties securing these loans are generally performed by fee appraisers approved by the Board of Directors. Because payments on multi-family, commercial and agricultural real estate loans are often dependent on the successful operation or management of the properties, repayment of such loans may be subject to adverse conditions in the real estate market or the economy. Management monitors and evaluates commercial and agricultural real estate loans based on collateral and risk rating criteria. The Company may require guarantees on these loans. The Company’s multi-family, commercial and agricultural real estate loans are secured primarily by properties located in its primary market areas. The national unemployment rate and the national real GDP were key economic forecasts used in estimating expected credit losses for the multi-family and commercial real estate segments as of December 31, 2023. The national unemployment rate is a key economic forecast used in estimate credit losses for the multi-family and commercial real estate segments as of December 31, 2024. The national real GDP was a key economic forecast used in estimating expected credit losses for the agricultural real estate segment as of December 31, 2023. The national unemployment rate and national real GDP are key economic forecasts used in estimating expected credit losses for the agricultural real estate segment as of December 31, 2024.

Commercial and agricultural operating loans are underwritten based on the Company’s examination of current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. This underwriting includes the evaluation of cash flows of the borrower, underlying collateral, if applicable, and the borrower’s ability to manage its business activities. The cash flows of borrowers and the collateral securing these loans may fluctuate in value after the initial evaluation. A first priority lien on the general assets of the business normally secures these types of loans. Loan-to-value limits vary and are dependent upon the nature and type of the underlying collateral and the financial strength of the borrower. Crop and hail insurance is required for most agricultural borrowers. Loans are generally guaranteed by the principal(s). The Company’s commercial and agricultural operating lending is primarily in its primary market area. The national unemployment rate and the national real GDP were key economic forecasts used in estimating expected credit losses for the commercial operating segment as of December 31, 2023. The national unemployment rate is a key economic forecast used in estimating expected credit losses for the commercial operating segment as of December 31, 2024. The national real GDP was a key economic forecast used in estimating expected credit losses for the agricultural operating segment as of December 31, 2023. The national unemployment rate and national real GDP are key economic forecasts used in estimating expected credit losses for the agricultural operating segment as of December 31, 2024.

Consumer and other loans utilize credit reports to supplement the underwriting process. The underwriting standards include a determination of the applicant’s payment history on other debts and an assessment of their ability to meet existing obligations and payments on the proposed loan. To monitor and manage loan risk, policies and procedures are developed and modified, as needed by management. This activity, coupled with smaller loan amounts that are spread across many individual borrowers, minimizes risk. Additionally, market conditions are reviewed by management on a regular basis. The Iowa real GDP and Iowa retail trade earnings were key economic forecasts used in estimating expected credit losses for this segment as of December 31, 2023. The national unemployment rate is a key economic forecast used in estimating expected credit losses for this segment as of December 31, 2024.

The Company reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management and the audit committee. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures. During 2024, The Company evaluated the key economic forecasts used in estimating credit losses for all segments with recent information not available in the prior year. The economic forecasts used as of December 31, 2024 showed a higher correlation to credit losses than the economic forecasts used as of December 31, 2023.

Summary changes in the allowance for credit losses for the years ended December 31, 2024 and 2023 are as follows (in thousands):

	*2024*			*2023*

Balance, beginning	$	16,776		$	15,697
Impact of adopting ASC 326		-			518
Credit loss expense (benefit) 1		735			774
Recoveries of loans charged-off		30			32
Loans charged-off		(483	)		(245	)
Balance, ending	$	17,058		$	16,776

¹ The difference in the credit loss expense reported herein as compared to the Consolidated Statements of Income is associated with the credit loss benefit of $143 thousand related to off-balance sheet credit exposures.

Activity in the allowance for credit losses, on a disaggregated basis, for the years ended December 31, 2024 and 2023 is as follows (in thousands):

2024:			1-4 Family
	Construction		Residential		Multi-family			Commercial			Agricultural							Consumer
	Real Estate		Real Estate		Real Estate			Real Estate			Real Estate		Commercial			Agricultural		and Other			Total

Balance, beginning	$	408	$	3,333	$	2,542		$	5,236		$	1,238	$	1,955		$	1,607	$	457		$	16,776
Credit loss expense (benefit)		74		544		(354	)		(304	)		346		268			198		(37	)		735
Recoveries of loans charged-off		-		13		-			-			-		10			-		7			30
Loans charged-off		-		-		-			-			-		(474	)		-		(9	)		(483	)
Balance, ending	$	482	$	3,890	$	2,188		$	4,932		$	1,584	$	1,759		$	1,805	$	418		$	17,058

2023:				1-4 Family
	Construction			Residential		Multi-family			Commercial			Agricultural									Consumer
	Real Estate			Real Estate		Real Estate			Real Estate			Real Estate			Commercial			Agricultural			and Other			Total

Balance, beginning	$	730		$	3,028	$	2,493		$	4,742		$	1,625		$	1,153		$	1,705		$	221		$	15,697
Impact of adopting ASC 326		(395	)		242		(24	)		513			(398	)		449			(61	)		192			518
Credit loss expense (benefit)		73			58		73			(24	)		11			381			161			41			774
Recoveries of loans charged-off		-			5		-			5			-			9			5			8			32
Loans charged-off		-			-		-			-			-			(37	)		(203	)		(5	)		(245	)
Balance, ending	$	408		$	3,333	$	2,542		$	5,236		$	1,238		$	1,955		$	1,607		$	457		$	16,776

The following table presents the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans (in thousands):

		Primary Type of Collateral
December 31, 2024		Real Estate		Equipment		Other		Total		ACL Allocation

Real estate - construction	$	62	$	-	$	-	$	62	$	-
Real estate - 1 to 4 family residential		696		-		-		696		40
Real estate - multi-family		947		-		-		947		-
Real estate - commercial		10,785		-		-		10,785		-
Real estate - agricultural		420		-		-		420		-
Commercial		460		398		405		1,263		50
Agricultural		213		-		357		570		-
Consumer and other		-		-		3		3		-

	$	13,583	$	398	$	765	$	14,746	$	90

		Primary Type of Collateral
December 31, 2023		Real Estate		Equipment		Other		Total		ACL Allocation

Real estate - construction	$	66	$	-	$	-	$	66	$	-
Real estate - 1 to 4 family residential		678		-		-		678		10
Real estate - multi-family		2,034		-		-		2,034		-
Real estate - commercial		8,993		-		-		8,993		-
Real estate - agricultural		449		-		-		449		-
Commercial		118		-		101		219		96
Agricultural		239		669		402		1,310		-
Consumer and other		-		-		-		-		-

	$	12,577	$	669	$	503	$	13,749	$	106

Credit Quality Indicators. As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk ratings of loans, (ii) the level of classified loans, (iii) net charge-offs, (iv) non-performing loans and (v) the general economic conditions in our market areas.

The Company utilizes a risk rating matrix to assign risk ratings to each of its loans. Loans are rated on a scale of 1 to 7. A description of the general characteristics of the risk ratings is as follows:

Ratings 1, 2 and 3 - These ratings include “Pass” loans of average to excellent credit quality borrowers. These borrowers generally have significant capital strength, moderate leverage and stable earnings and growth commensurate to their relative risk rating. These ratings are reviewed at least annually. These ratings also include performing loans of less than $100,000.

Rating 4 - This rating includes loans on management’s “watch list” and is intended to be utilized for pass rated borrowers where credit quality has begun to show signs of financial weakness that now requires management’s heightened attention. This rating is reviewed at least quarterly.

Rating 5 - This rating is for “Special Mention” loans in accordance with regulatory guidelines. This rating is intended to be temporary and includes loans to borrowers whose credit quality has clearly deteriorated and are at risk of further decline unless active measures are taken to correct the situation. This rating is reviewed at least quarterly.

Rating 6 - This rating includes “Substandard” loans in accordance with regulatory guidelines, for which the accrual of interest has not been stopped. Under regulatory guideline definitions, a “Substandard” loan has defined weaknesses which make payment default or principal exposure likely, but not yet certain. Such loans are apt to be dependent upon collateral liquidation, a secondary source of repayment or an event outside of the normal course of business. This rating is reviewed at least quarterly.

Rating 7 - This rating includes “Substandard-Impaired” loans in accordance with regulatory guidelines, for which the accrual of interest has generally been stopped. This rating includes loans: (i) where interest is more than 90 days past due, (ii) not fully secured, (iii) where a specific valuation allowance may be necessary, or (iv) where the borrower is unable to make contractual principal and interest payments. This rating is reviewed at least quarterly.

The following tables show the risk category of loans by loan category and year of origination as of December 31, 2024 (in thousands):

December 31, 2024	Amortized Cost Basis of Term Loans by Year of Origination
	2024		2023		2022		2021		2020		Prior		Revolving		Total
Real estate - construction
Pass	$	37,743	$	16,689	$	1,640	$	228	$	11	$	161	$	1,991	$	58,463
Watch		756		-		-		-		-		-		-		756
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard-Impaired		62		-		-		-		-		-		-		62
Total	$	38,561	$	16,689	$	1,640	$	228	$	11	$	161	$	1,991	$	59,281

Current-period gross writeoffs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real estate - 1-4 family residential
Pass	$	46,850	$	44,736	$	66,864	$	52,746	$	41,574	$	18,767	$	21,325	$	292,862
Watch		1,233		1,212		91		9,535		1,003		303		95		13,472
Special Mention		-		-		639		-		289		-		-		928
Substandard		-		424		-		1,230		-		90		-		1,744
Substandard-Impaired		568		-		-		70		-		60		-		698
Total	$	48,651	$	46,372	$	67,594	$	63,581	$	42,866	$	19,220	$	21,420	$	309,704

Current-period gross writeoffs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real estate - multi-family
Pass	$	15,316	$	20,441	$	49,932	$	31,822	$	36,556	$	10,771	$	5,735	$	170,573
Watch		6,517		-		-		19,971		-		-		-		26,488
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		2,200		-		-		2,200
Substandard-Impaired		948		-		-		-		-		-		-		948
Total	$	22,781	$	20,441	$	49,932	$	51,793	$	38,756	$	10,771	$	5,735	$	200,209

Current-period gross writeoffs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real estate - commercial
Pass	$	37,014	$	30,228	$	71,779	$	51,164	$	53,722	$	26,685	$	3,995	$	274,587
Watch		4,749		5,429		14,982		5,484		6,005		548		241		37,438
Special Mention		-		-		-		-		2,893		-		-		2,893
Substandard		828		2,637		-		15,978		4,355		1,009		-		24,807
Substandard-Impaired		513		7,753		2,502		-		-		-		-		10,768
Total	$	43,104	$	46,047	$	89,263	$	72,626	$	66,975	$	28,242	$	4,236	$	350,493

Current-period gross writeoffs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real estate - agricultural
Pass	$	20,951	$	17,331	$	28,074	$	29,180	$	21,796	$	22,366	$	2,562	$	142,260
Watch		1,994		5,259		373		1,541		2,813		3,477		-		15,457
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		1,275		-		746		-		-		-		2,021
Substandard-Impaired		-		-		-		142		-		-		-		142
Total	$	22,945	$	23,865	$	28,447	$	31,609	$	24,609	$	25,843	$	2,562	$	159,880

Current-period gross writeoffs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

December 31, 2024	Amortized Cost Basis of Term Loans by Year of Origination
	2024		2023		2022		2021		2020		Prior		Revolving		Total
Commercial
Pass	$	14,729	$	10,589	$	10,677	$	7,405	$	1,475	$	3,298	$	28,192	$	76,365
Watch		726		6,926		215		-		244		136		2,138		10,385
Special Mention		-		-		-		-		-		-		-		-
Substandard		1,150		-		24		-		-		-		800		1,974
Substandard-Impaired		782		45		-		1		-		65		406		1,299
Total	$	17,387	$	17,560	$	10,916	$	7,406	$	1,719	$	3,499	$	31,536	$	90,023

Current-period gross writeoffs	$	465	$	-	$	-	$	-	$	-	$	9	$	-	$	474

Agricultural
Pass	$	14,463	$	5,547	$	5,057	$	3,499	$	1,429	$	503	$	85,222	$	115,720
Watch		1,822		563		356		261		8		186		12,249		15,445
Special Mention		-		-		-		-		-		-		-		-
Substandard		1,159		-		-		72		380		-		1,113		2,724
Substandard-Impaired		-		54		-		214		-		-		-		268
Total	$	17,444	$	6,164	$	5,413	$	4,046	$	1,817	$	689	$	98,584	$	134,157

Current-period gross writeoffs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer and other
Pass	$	5,845	$	4,451	$	2,435	$	1,931	$	1,608	$	758	$	11	$	17,039
Watch		15		-		-		-		-		-		-		15
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard-Impaired		1		-		3		-		8		-		-		12
Total	$	5,861	$	4,451	$	2,438	$	1,931	$	1,616	$	758	$	11	$	17,066

Current-period gross writeoffs	$	9	$	-	$	-	$	-	$	-	$	-	$	-	$	9

Total loans
Pass	$	192,911	$	150,012	$	236,458	$	177,975	$	158,171	$	83,309	$	149,033	$	1,147,869
Watch		17,812		19,389		16,017		36,792		10,073		4,650		14,723		119,456
Special Mention		-		-		639		-		3,182		-		-		3,821
Substandard		3,137		4,336		24		18,026		6,935		1,099		1,913		35,470
Substandard-Impaired		2,874		7,852		2,505		427		8		125		406		14,197
Total	$	216,734	$	181,589	$	255,643	$	233,220	$	178,369	$	89,183	$	166,075	$	1,320,813

Current-period gross writeoffs	$	474	$	-	$	-	$	-	$	-	$	9	$	-	$	483

The following tables show the risk category of loans by loan category and year of origination as of December 31, 2023 (in thousands):

December 31, 2023		Amortized Cost Basis of Term Loans by Year of Origination
		2023		2022		2021		2020		2019		Prior		Revolving		Total
Real estate - construction
Pass	$	45,404	$	14,501	$	746	$	11	$	-	$	325	$	1,917	$	62,904
Watch		80		-		-		-		-		-		-		80
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard-Impaired		-		66		-		-		-		-		-		66
Total	$	45,484	$	14,567	$	746	$	11	$	-	$	325	$	1,917	$	63,050

Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real estate - 1-4 family residential
Pass	$	55,051	$	66,190	$	59,250	$	47,865	$	8,607	$	17,154	$	18,649	$	272,766
Watch		1,608		298		10,483		1,226		-		358		27		14,000
Special Mention		-		-		-		-		-		-		-		-
Substandard		448		18		1,350		47		33		64		-		1,960
Substandard-Impaired		115		-		140		-		199		144		80		678
Total	$	57,222	$	66,506	$	71,223	$	49,138	$	8,839	$	17,720	$	18,756	$	289,404

Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real estate - multi-family
Pass	$	18,436	$	51,928	$	47,161	$	40,201	$	13,542	$	694	$	5,020	$	176,982
Watch		4,603		1,427		8,192		-		-		-		-		14,222
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		2,298		-		-		-		2,298
Substandard-Impaired		983		-		-		-		1,051		-		-		2,034
Total	$	24,022	$	53,355	$	55,353	$	42,499	$	14,593	$	694	$	5,020	$	195,536

Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real estate - commercial
Pass	$	35,133	$	81,342	$	51,598	$	66,467	$	20,006	$	13,122	$	2,929	$	270,597
Watch		8,379		13,580		14,669		14,607		78		583		2,988		54,884
Special Mention		-		2,531		11,853		3,006		1,043		-		-		18,433
Substandard		897		-		4,822		551		-		106		-		6,376
Substandard-Impaired		8,517		-		99		-		360		-		-		8,976
Total	$	52,926	$	97,453	$	83,041	$	84,631	$	21,487	$	13,811	$	5,917	$	359,266

Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Real estate - agricultural
Pass	$	22,469	$	30,738	$	32,893	$	27,733	$	6,039	$	22,850	$	2,073	$	144,795
Watch		4,163		379		2,263		1,760		333		3,601		-		12,499
Special Mention		-		-		-		-		-		-		-		-
Substandard		2,302		1,439		114		-		-		214		-		4,069
Substandard-Impaired		-		-		154		-		-		-		-		154
Total	$	28,934	$	32,556	$	35,424	$	29,493	$	6,372	$	26,665	$	2,073	$	161,517

Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

December 31, 2023		Amortized Cost Basis of Term Loans by Year of Origination
		2023		2022		2021		2020		2019		Prior		Revolving		Total
Commercial
Pass	$	23,904	$	12,645	$	10,378	$	2,087	$	2,434	$	1,578	$	29,752	$	82,778
Watch		860		295		119		423		93		137		1,996		3,923
Special Mention		-		-		-		-		-		-		-		-
Substandard		600		256		-		421		-		-		1,484		2,761
Substandard-Impaired		94		-		5		96		-		72		-		267
Total	$	25,458	$	13,196	$	10,502	$	3,027	$	2,527	$	1,787	$	33,232	$	89,729

Current-period gross charge-offs	$	-	$	-	$	-	$	33	$	-	$	4	$	-	$	37

Agricultural
Pass	$	14,614	$	8,395	$	5,459	$	2,858	$	400	$	608	$	77,448	$	109,782
Watch		1,107		340		288		18		18		194		5,419		7,384
Special Mention		-		-		-		-		-		-		-		-
Substandard		866		14		25		58		-		-		-		963
Substandard-Impaired		95		140		383		-		-		-		389		1,007
Total	$	16,682	$	8,889	$	6,155	$	2,934	$	418	$	802	$	83,256	$	119,136

Current-period gross charge-offs	$	39	$	74	$	90	$	-	$	-	$	-	$	-	$	203

Consumer and other
Pass	$	6,801	$	3,719	$	2,701	$	2,071	$	352	$	731	$	15	$	16,390
Watch		127		-		-		-		-		-		-		127
Special Mention		-		-		-		-		-		-		-		-
Substandard		10		-		-		-		-		-		-		10
Substandard-Impaired		-		-		-		13		-		-		-		13
Total	$	6,938	$	3,719	$	2,701	$	2,084	$	352	$	731	$	15	$	16,540

Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	5	$	-	$	5

Total loans
Pass	$	221,812	$	269,458	$	210,186	$	189,293	$	51,380	$	57,062	$	137,803	$	1,136,994
Watch		20,927		16,319		36,014		18,034		522		4,873		10,430		107,119
Special Mention		-		2,531		11,853		3,006		1,043		-		-		18,433
Substandard		5,123		1,727		6,311		3,375		33		384		1,484		18,437
Substandard-Impaired		9,804		206		781		109		1,610		216		469		13,195
Total	$	257,666	$	290,241	$	265,145	$	213,817	$	54,588	$	62,535	$	150,186	$	1,294,178

Current-period gross charge-offs	$	39	$	74	$	90	$	33	$	-	$	9	$	-	$	245

The following table presents the amortized cost basis of loans on nonaccrual status and loans on nonaccrual status with no allowance for credit losses recorded by loan category (in thousands).

	Total Nonaccrual				Nonaccrual with no ACL
	*December 31, 2024*		*December 31, 2023*		*December 31, 2024*		*December 31, 2023*

Real estate - construction	$	62	$	66	$	62	$	66
Real estate - 1 to 4 family residential		696		678		626		563
Real estate - multi-family		947		2,034		947		2,034
Real estate - commercial		10,768		8,976		10,768		8,976
Real estate - agricultural		420		449		420		449
Commercial		1,298		268		893		172
Agricultural		570		1,310		570		1,310
Consumer and other		11		13		3		-

	$	14,772	$	13,794	$	14,289	$	13,570

The interest income recognized on nonaccrual loans for the years ended December 31, 2024 and 2023 was approximately $80 thousand and $131 thousand, respectively.

The interest foregone on nonaccrual loans for the years ended December 31, 2024 and 2023 was approximately $963 thousand and $768 thousand, respectively.

Loan Modifications to Borrowers Experiencing Financial Difficulty. Loan modifications may include interest rate reductions or below market interest rates, extension of payments terms beyond the original maturity date, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses.

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 loss rate 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, a change to the allowance for credit losses is generally not recorded upon modification.

The Company made no loan modifications and three loan modifications to borrowers experiencing financial difficulty for the years ended December 31, 2024 and 2023, respectively.

The following table shows the amortized cost basis at the end of the reporting period of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of concession granted as of December 31, 2023 (in thousands):

*Loan Modifications Made to Borrowers Experiencing Financial Difficulty*

	*Term Extension*
	Amortized Cost Basis at		% of Total Class of
	December 31, 2023		Financing Receivable
Loan Type
Agricultural	$	336		0.3	%

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty as of December 31, 2023:

*Term Extension*
Loan Type		*Financial Effect*

Agricultural		Added a weighted-average 8 years to the life of loans, which reduced monthly payment amounts for the borrowers

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged-off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. The Company had no net charge-offs for the year ended December 31, 2024 related to loan modifications to borrowers experiencing financial difficulties. The Company had $34 thousand of net charge-offs for the year ended December 31, 2023, related to loan modifications to borrowers experiencing financial difficulties.

There were no loan modifications that had a payment default and were modified in the twelve months before default as of December 31, 2024. A loan is considered to be in payment default once it is 60 days contractually past due under the modified terms.

An aging analysis of the recorded investment in loans, on a disaggregated basis, as of December 31, 2024 and 2023, are as follows (in thousands):

2024:	30-89		90 Days								90 Days
	Days		or Greater		Total						or Greater
	Past Due		Past Due		Past Due		Current		Total		Accruing

Real estate - construction	$	-	$	63	$	63	$	59,218	$	59,281	$	-
Real estate - 1 to 4 family residential		1,744		204		1,948		307,756		309,704		23
Real estate - multi-family		-		-		-		200,209		200,209		-
Real estate - commercial		332		2,501		2,833		347,660		350,493		-
Real estate - agricultural		651		660		1,311		158,569		159,880		660
Commercial		288		356		644		89,379		90,023		-
Agricultural		68		53		121		134,036		134,157		53
Consumer and other		5		-		5		17,061		17,066		-

Total	$	3,088	$	3,837	$	6,925	$	1,313,888	$	1,320,813	$	736

2023:	30-89		90 Days								90 Days
	Days		or Greater		Total						or Greater
	Past Due		Past Due		Past Due		Current		Total		Accruing

Real estate - construction	$	359	$	66	$	425	$	62,625	$	63,050	$	-
Real estate - 1 to 4 family residential		1,020		302		1,322		288,082		289,404		3
Real estate - multi-family		-		983		983		194,553		195,536		-
Real estate - commercial		119		106		225		359,041		359,266		106
Real estate - agricultural		-		-		-		161,517		161,517		-
Commercial		559		98		657		89,072		89,729		-
Agricultural		169		529		698		118,438		119,136		-
Consumer and other		16		-		16		16,524		16,540		-

Total	$	2,242	$	2,084	$	4,326	$	1,289,852	$	1,294,178	$	109

There are no other known problem loans that cause management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms.

As of December 31, 2024, there were no material commitments to lend additional funds to customers whose loans were classified as substandard-impaired.

Loans are made in the normal course of business to certain directors and executive officers of the Company and to their affiliates. Loan transactions with related parties as of December 31, 2024 and 2023 were as follows (in thousands):

	*2024*			*2023*

Balance, beginning of year	$	15,960		$	16,680
New loans		10,566			9,480
Repayments		(10,875	)		(10,269	)
Change in status		-			69
Balance, end of year	$	15,651		$	15,960