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Loans and Allowance for Credit Losses
 6 Months Ended
Jun. 30, 2025
Receivables [Abstract]  
Loans and Allowance for Credit Losses

 

3.Loans and Allowance for Credit Losses

 

Loans consisted of the following as of the dates indicated below:

   

   June 30,   December 31, 
(Dollars in thousands)  2025   2024 
         
One-to-four family residential real estate loans  $377,133   $352,209 
Construction and land loans   26,373    25,328 
Commercial real estate loans   370,455    345,159 
Commercial loans   204,303    192,325 
Agriculture loans   100,348    100,562 
Municipal loans   6,938    7,091 
Consumer loans   32,234    29,679 
Total gross loans   1,117,784    1,052,353 
Net deferred loan fees and loans in process   (615)   (307)
Allowance for credit losses   (13,762)   (12,825)
Loans, net  $1,103,407   $1,039,221 

 

The following tables provide information on the Company’s allowance for credit losses by loan class and allowance methodology for the three and six months ended June 30, 2025 and 2024:

   

                         
   Three months and six months ended June 30, 2025 
(Dollars in thousands)  One-to-
four family
residential
real estate
loans		   Construction
and land loans		   Commercial
real estate
loans		   Commercial
loans		   Agriculture
loans		   Municipal
loans		   Consumer
loans		   Total 
                                 
Allowance for credit losses:                                        
Balance at April 1, 2025  $1,780   $149   $4,694   $4,689   $1,248   $47   $195   $12,802 
Charge-offs   -    -    -    -    -    -    (103)   (103)
Recoveries   -    -    -    5    -    -    58    63 
Provision for credit losses   8    (18)   382    589    19    (2)   22    1,000 
Balance at June 30, 2025  $1,788   $131   $5,076   $5,283   $1,267   $45   $172   $13,762 
                                         
Allowance for credit losses:                                        
Balance at January 1, 2025  $1,765   $143   $4,506   $4,964   $1,227   $51   $169   $12,825 
Charge-offs   -    -    -    (19)   -    -    (192)   (211)
Recoveries   -    5    -    14    -    6    123    148 
Provision for credit losses   23    (17)   570    324    40    (12)   72    1,000 
Balance at June 30, 2025  $1,788   $131   $5,076   $5,283   $1,267   $45   $172   $13,762 

 

 

                         
   Three months and six months ended June 30, 2024 
(Dollars in thousands)  One-to-
four family
residential
real estate
loans		   Construction
and land loans		   Commercial
real estate
loans		   Commercial
loans		   Agriculture
loans		   Municipal
loans		   Consumer
loans		   Total 
                                 
Allowance for credit losses:                                         
Balance at April 1, 2024  $2,086   $174   $4,530   $2,651   $1,144   $50   $216   $10,851 
Charge-offs   -    -    -    (13)   -    -    (106)   (119)
Recoveries   -    120    -    9    -    5    37    171 
Provision for credit losses   (66)   (74)   (15)   131    (26)   -    50    - 
Balance at June 30, 2024  $2,020   $220   $4,515   $2,778   $1,118   $55   $197   $10,903 

 

(Dollars in thousands)  One-to-
four family
residential
real estate
loans		   Construction
and land loans		   Commercial
real estate
loans		   Commercial
loans		   Agriculture
loans		   Municipal
loans		   Consumer
loans		   Total 
                                 
Allowance for credit losses:                                        
Balance at January 1, 2024  $2,035   $150   $4,518   $2,486   $1,190   $15   $214   $10,608 
Charge-offs   -    -    -    (83)   -    -    (177)   (260)
Recoveries   -    200    -    20    -    12    73    305 
Provision for credit losses   (15)   (130)   (3)   355    (72)   28    87    250 
Balance at June 30, 2024  $2,020   $220   $4,515   $2,778   $1,118   $55   $197   $10,903 

 

The Company recorded net loan charge-offs of $40,000 during the second quarter of 2025, compared to net loan recoveries of $52,000 during the second quarter of 2024. The Company recorded net loan charge-offs of $63,000 during the six months ended June 30, 2025, compared to net loan recoveries of $45,000 during the six months ended June 30, 2024.

 

 

The following table presents information regarding non-accrual and loans past due over 89 days and still accruing as of the dates indicated:

   

  

Non-accrual with no allowance for credit loss

  

Non-accrual with allowance for credit losses

  

Loans past due over 89 days still accruing

 
   As of June 30, 2025 
(Dollars in thousands)  Non-accrual with
no allowance for
credit loss		   Non-accrual with
allowance for
credit losses		   Loans past due
over 89 days still
accruing		 
                
One-to-four family residential real estate loans  $82   $-   $            - 
Commercial real estate loans   4,690    -    - 
Commercial loans   412    10,789    - 
Agriculture loans   961    50    - 
Total loans  $6,145   $10,839   $- 

 

  

Non-accrual with no allowance for credit loss

  

Non-accrual with allowance for credit losses

  

Loans past due over 89 days still accruing

 
   As of December 31, 2024 
(Dollars in thousands)  Non-accrual with
no allowance for
credit loss		   Non-accrual with
allowance for
credit losses		   Loans past due
over 89 days still
accruing		 
                
One-to-four family residential real estate loans  $34   $-   $         - 
Commercial real estate loans   782    -    - 
Commercial loans   314    10,939    - 
Agriculture loans   1,046    -    - 
Total loans  $2,176   $10,939   $- 

 

The Company has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following table presents information regarding the amortized cost basis and collateral type of collateral-dependent loans as of the dates indicated:

   

   As of June 30, 2025
(Dollars in thousands)   Loan balance   Collateral Type
         
One-to-four family residential real estate loans  $82   First mortgage on residential real estate
Commercial real estate loans   4,690   First mortgage on commercial real estate
Commercial loans   11,201   Various business asset including real estate
Agriculture loans   1,011   Crops, livestock, machinery and real estate
Total loans  $16,984    

 

 

   As of December 31, 2024
(Dollars in thousands)   Loan balance   Collateral Type
         
One-to-four family residential real estate loans  $34   First mortgage on residential real estate
Commercial real estate loans   782   First mortgage on commercial real estate
Commercial loans   3,150   Various business asset including real estate
Agriculture loans   1,456   Crops, livestock, machinery and real estate
Total loans  $5,422    

 

The Company’s key credit quality indicator is a loan’s performance status, defined as accruing or non-accruing. Performing loans are considered to have a lower risk of loss. Non-accrual loans are those which the Company believes have a higher risk of loss. The accrual of interest on non-performing loans is discontinued at the time the loan is 90 days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of principal or interest is considered doubtful. There were no loans 90 days or more delinquent and accruing interest at either June 30, 2025 or December 31, 2024.

 

The following tables present information regarding the Company’s past due and non-accrual loans by loan class, as of the dates indicated:

   

   30-59 days delinquent and accruing   60-89 days delinquent and accruing   90 days or more delinquent and accruing   Total past due loans accruing   Non-accrual loans   Total past due and non-accrual loans   Total loans not past due 
   As of June 30, 2025 
(Dollars in thousands)  30-59 days
delinquent
and
accruing		   60-89 days
delinquent
and
accruing		   90 days or
more
delinquent and
accruing		   Total past
due loans
accruing		   Non-accrual
loans		   Total past
due and non-
accrual loans		   Total loans
not past due		 
                                    
One-to-four family residential real estate loans  $110   $382   $  -   $492   $82   $574   $376,559 
Construction and land loans   -    -    -    -    -    -    26,373 
Commercial real estate loans   33    702    -    735    4,690    5,425    365,030 
Commercial loans   2,156    693    -    2,849    11,201    14,050    190,253 
Agriculture loans   146    -    -    146    1,011    1,157    99,191 
Municipal loans   -    -    -    -    -    -    6,938 
Consumer loans   29    70    -    99    -    99    32,135 
Total  $2,474   $1,847   $-   $4,321   $16,984   $21,305   $1,096,479 
Percent of gross loans   0.22%   0.17%   0.00%   0.39%   1.52%   1.91%   98.09%

 

 

   As of December 31, 2024 
(Dollars in thousands)  30-59 days
delinquent
and
accruing		   60-89 days
delinquent
and
accruing		   90 days or
more
delinquent and
accruing		   Total past
due loans
accruing		   Non-accrual
loans		   Total past
due and non
-accrual loans		   Total loans
not past due		 
                             
One-to-four family residential real estate loans  $115   $323   $-   $438   $34   $472   $351,737 
Construction and land loans   -    118    -    118    -   $118    25,210 
Commercial real estate loans   1,083    3,081    -    4,164    782   $4,946    340,213 
Commercial loans   500    59    -    559    11,253   $11,812    180,513 
Agriculture loans   864    -    -    864    1,046   $1,910    98,652 
Municipal loans   -    -    -    -    -   $-    7,091 
Consumer loans   33    25    -    58    -   $58    29,621 
Total  $2,595   $3,606   $-   $6,201   $13,115   $19,316   $1,033,037 
Percent of gross loans   0.25%   0.34%   0.00%   0.59%   1.25%   1.84%   98.16%

 

Under the original terms of the Company’s non-accrual loans, interest earned on such loans for the six months ended June 30, 2025 and 2024 would have increased interest income by $529,000 and $138,000, respectively. No interest income related to non-accrual loans was included in interest income for the three or six months ended June 30, 2025 and 2024.

 

The Company also categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. Nonclassified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those that are assigned a special mention, substandard or doubtful risk rating using the following definitions:

 

Special Mention: Loans are currently protected by the current net worth and paying capacity of the obligor or of the collateral pledged but such protection is potentially weak. These loans constitute 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 asset.

 

Substandard: Loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged. Loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

 

Doubtful: Loans classified doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

 

 

The following table presents information regarding the Company’s risk category of loans by type and year of origination, as of the dates indicated:

   

                            
   As of June 30, 2025 
(Dollars in thousands)  2025   2024   2023   2022   2021   Prior   Revolving loans amortized cost   Revolving loans converted to term   Total 
                                     
One-to-four family residential real estate loans                                             
Nonclassified  $48,832   $82,317   $81,050   $70,145   $34,933   $53,197   $6,480   $97   $377,051 
Classified   -    -    -    -    -    82    -    -    82 
Total  $48,832   $82,317   $81,050   $70,145   $34,933   $53,279   $6,480   $97   $377,133 
Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Construction and land loans                                             
Nonclassified  $4,242   $3,562   $11,194   $1,789   $1,644   $3,842   $100   $-   $26,373 
Classified   -    -    -    -    -    -    -    -    - 
Total  $4,242   $3,562   $11,194   $1,789   $1,644   $3,842   $100   $-   $26,373 
Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Commercial real estate loans                                             
Nonclassified  $36,975   $56,064   $50,279   $63,439   $52,515   $101,013   $3,409   $80    363,774 
Classified   -    1,350    -    226    447    4,658    -    -    6,681 
Total  $36,975   $57,414   $50,279   $63,665   $52,962   $105,671   $3,409   $80   $370,455 
Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Commercial loans                                             
Nonclassified  $23,368   $36,988   $19,623   $19,415   $8,625   $7,179   $66,299   $133   $181,630 
Classified   2,086    2691    9398    1,951    30    3,841    1,988    688    22,673 
Total  $25,454   $47,545   $21,155   $21,366   $8,655   $11,020   $68,287   $821   $204,303 
Gross charge-offs  $-   $8   $-   $-   $11   $-   $-   $-   $19 
Agriculture loans                                             
Nonclassified  $7,409   $14,447   $2,788   $6,114   $3,347   $13,386   $47,088   $216   $94,795 
Classified   -    2,088    61    1,578    485    68    1,273    -    5,553 
Total  $7,409   $16,535   $2,849   $7,692   $3,832   $13,454   $48,361   $216   $100,348 
Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Municipal loans                                             
Nonclassified  $-   $-   $-   $5,552   $71   $-   $1,315   $-   $6,938 
Classified   -    -    -    -    -    -    -    -    - 
Total  $-   $-   $-   $5,552   $71   $-   $1,315   $-   $6,938 
Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Consumer loans                                             
Nonclassified  $4,777   $1,856   $2,895   $516   $901   $2,769   $18,418   $102   $32,234 
Classified   -    -    -    -    -    -    -    -    - 
Total  $4,777   $1,856   $2,895   $516   $901   $2,769   $18,418   $102   $32,234 
Gross charge-offs  $192   $-   $-   $-   $-   $-   $-   $-   $192 
Total loans                                             
Nonclassified  $125,603   $195,234   $167,829   $166,970   $102,036   $181,386   $143,109   $628   $1,082,795 
Classified   2,086    13,995    1,593    3,755    962    8,649    3,261    688    34,989 
Total  $127,689   $209,229   $169,422   $170,725   $102,998   $190,035   $146,370   $1,316   $1,117,784 
Gross charge-offs for the three months ended June 30, 2025  $192   $8   $-   $-   $11   $-   $-   $-   $211 

 

 

   2024   2023   2022   2021   2020   Prior   Revolving loans amortized cost   Revolving loans converted to term   Total 
   As of December 31, 2024 
(Dollars in thousands)  2024   2023   2022   2021   2020   Prior   Revolving loans amortized cost   Revolving loans converted to term   Total 
                                     
One-to-four family residential real estate loans                                             
Nonclassified  $86,701   $84,467   $75,517   $37,411   $27,293   $35,112   $5,552   $122   $352,175 
Classified  $-   $-   $-   $-   $-   $34   $-   $-   $34 
Total  $86,701   $84,467   $75,517   $37,411   $27,293   $35,146   $5,552   $122   $352,209 
Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Construction and land loans                                             
Nonclassified  $6,481   $11,202   $1,937   $1,697   $2,569   $1,340   $102   $-   $25,328 
Classified  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Total  $6,481   $11,202   $1,937   $1,697   $2,569   $1,340   $102   $-   $25,328 
Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Commercial real estate loans                                             
Nonclassified  $59,717   $47,624   $68,854   $53,868   $41,862   $67,351   $3,217   $85   $342,578 
Classified  $360   $-   $-   $476   $151   $1,594   $-   $-   $2,581 
Total  $60,077   $47,624   $68,854   $54,344   $42,013   $68,945   $3,217   $85   $345,159 
Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Commercial loans                                             
Nonclassified  $31,083   $27,158   $23,574   $9,813   $7,930   $2,203   $68,282   $135   $170,178 
Classified  $3104   $10111   $1,897   $39   $3,637   $13   $1,969   $1,377   $22,147 
Total  $42,447   $29,009   $25,471   $9,852   $11,567   $2,216   $70,251   $1,512   $192,325 
Gross charge-offs  $-   $-   $16   $114   $56   $-   $-   $-   $186 
Agriculture loans                                             
Nonclassified  $21,379   $3,659   $8,404   $3,616   $3,297   $14,215   $44,458   $217   $99,245 
Classified  $29   $178   $257   $419   $9   $73   $352   $-   $1,317 
Total  $21,408   $3,837   $8,661   $4,035   $3,306   $14,288   $44,810   $217   $100,562 
Gross charge-offs  $-   $-   $-   $-   $-   $64   $-   $-   $64 
Municipal loans                                             
Nonclassified  $5,565   $-   $90   $-   $-   $1,436   $-   $-   $7,091 
Classified  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Total  $5,565   $-   $90   $-   $-   $1,436   $-   $-   $7,091 
Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Consumer loans                                             
Nonclassified  $2,850   $3,229   $645   $1,072   $682   $3,167   $17,896   $138   $29,679 
Classified  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Total  $2,850   $3,229   $645   $1,072   $682   $3,167   $17,896   $138   $29,679 
Gross charge-offs  $376   $7   $1   $-   $-   $24   $-   $1   $409 
Total loans                                             
Nonclassified  $213,776   $177,339   $179,021   $107,477   $83,633   $124,824   $139,507   $697   $1,026,274 
Classified  $11,753   $2,029   $2,154   $934   $3,797   $1,714   $2,321   $1,377   $26,079 
Total  $225,529   $179,368   $181,175   $108,411   $87,430   $126,538   $141,828   $2,074   $1,052,353 
Gross charge-offs for the year ended December 31, 2024  $376   $7   $17   $114   $56   $88   $-   $1   $659 

 

 

The following table provides information regarding the Company’s allowance for credit losses related to unfunded loan commitments for the periods indicated:

   

(dollars in thousands)            
   Three months ended   Six months ended 
   June 30,   June 30, 
(dollars in thousands)  2025   2024   2025   2024 
Balance at beginning of period  $150    300   $150    250 
Provision for credit losses   -    -    -    50 
Balance at end of period  $150   $300   $150   $300 

 

The Company did not make any loan modifications to borrowers experiencing financial difficulty during the three months ended June 30, 2025. The Company made two loan modifications to a single borrower experiencing financial difficulty during the six months ended June 30, 2025. The Company did not make any loan modifications to borrowers experiencing financial difficulty during the three or six months ended June 30, 2024. The following table presents the amortized cost basis of loans at June 30, 2025 that were both experiencing financial difficulty and modified during the six months ended June 30, 2025 by class, type of modification and includes the financial effect of the modification.

   

   As of June 30, 2025
(Dollars in thousands)  Amortized cost
basis		   % of loan class
total		   Financial effect
            
Term extension:             
Commercial  $277    0.1%   Renewal of existing loan

 

As of June 30, 2025, all loans both experiencing financial difficulty and modified during the six months ended June 30,2025 were current under the terms of the agreements.