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Note 3 - Loans and Allowance for Credit Losses

12 Months Ended

Dec. 31, 2023

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

Note 3: Loans and Allowance for Credit Losses

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

	At December 31,		At December 31,
	2023		2022
	(In thousands)

Commercial	$	136,550	$	169,617
Commercial real estate		487,523		491,107
Construction		5,063		3,088
Residential real estate		9,935		13,834
Consumer installment & other		227,531		280,842
Total	$	866,602	$	958,488

The following summarizes activity in the allowance for credit losses:

	Allowance for Credit Losses
	For the Year Ended December 31, 2023
												Consumer
				Commercial					Residential			Installment
	Commercial			Real Estate			Construction		Real Estate			and Other			Total
	(In thousands)
Allowance for credit losses:
Balance at beginning of period	$	6,138		$	5,888		$	150	$	32		$	8,076		$	20,284
(Reversal) provision		(3,871	)		11			95		(6	)		2,621			(1,150	)
Chargeoffs		(410	)		(45	)		-		-			(7,499	)		(7,954	)
Recoveries		2,359			71			-		-			3,257			5,687
Total allowance for credit losses	$	4,216		$	5,925		$	245	$	26		$	6,455		$	16,867

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	Allowance for Credit Losses
	For the Year Ended December 31, 2022
												Consumer
				Commercial					Residential			Installment
	Commercial			Real Estate			Construction		Real Estate			and Other			Total
	(In thousands)
Allowance for credit losses:
Balance at beginning of period	$	6,966		$	6,529		$	2	$	45		$	9,972		$	23,514
(Reversal) provision		(1,184	)		(703	)		148		(13	)		1,758			6
Chargeoffs		(20	)		-			-		-			(6,205	)		(6,225	)
Recoveries		376			62			-		-			2,551			2,989
Total allowance for credit losses	$	6,138		$	5,888		$	150	$	32		$	8,076		$	20,284

	Allowance for Credit Losses
	For the Year Ended December 31, 2021
												Consumer
				Commercial					Residential			Installment
	Commercial			Real Estate		Construction			Real Estate			and Other			Total
	(In thousands)
Allowance for credit losses:
Balance at beginning of period	$	9,205		$	5,660	$	6		$	47		$	8,936		$	23,854
(Reversal) provision		(2,411	)		126		(4	)		(2	)		2,293			2
Chargeoffs		(56	)		-		-			-			(3,192	)		(3,248	)
Recoveries		228			743		-			-			1,935			2,906
Total allowance for credit losses	$	6,966		$	6,529	$	2		$	45		$	9,972		$	23,514

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

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

	Credit Risk Profile by Internally Assigned Grade
	At December 31, 2023
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Total
	(In thousands)
Grade:
Pass	$	130,001	$	475,870	$	5,063	$	9,606	$	225,089	$	845,629
Substandard		6,549		11,653		-		329		377		18,908
Doubtful		-		-		-		-		1,479		1,479
Loss		-		-		-		-		586		586
Total	$	136,550	$	487,523	$	5,063	$	9,935	$	227,531	$	866,602

	Credit Risk Profile by Internally Assigned Grade
	At December 31, 2022
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Total
	(In thousands)
Grade:
Pass	$	169,040	$	477,842	$	3,088	$	13,457	$	278,223	$	941,650
Substandard		577		13,265		-		377		1,079		15,298
Doubtful		-		-		-		-		752		752
Loss		-		-		-		-		788		788
Total	$	169,617	$	491,107	$	3,088	$	13,834	$	280,842	$	958,488

The following tables summarize loans by delinquency and nonaccrual status:

	Summary of Loans by Delinquency and Nonaccrual Status
	At December 31, 2023
	Current and Accruing		30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Loans
	(In thousands)
Commercial	$	136,421	$	58	$	-	$	-	$	71	$	136,550
Commercial real estate		485,476		951		766		-		330		487,523
Construction		5,063		-		-		-		-		5,063
Residential real estate		9,933		-		-		-		2		9,935
Consumer installment and other		220,357		5,544		1,242		388		-		227,531
Total	$	857,250	$	6,553	$	2,008	$	388	$	403	$	866,602

	Summary of Loans by Delinquency and Nonaccrual Status
	At December 31, 2022
	Current and Accruing		30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Loans
	(In thousands)
Commercial	$	169,337	$	172	$	58	$	-	$	50	$	169,617
Commercial real estate		490,354		508		192		-		53		491,107
Construction		3,088		-		-		-		-		3,088
Residential real estate		13,430		377		-		-		27		13,834
Consumer installment and other		273,247		5,101		1,850		628		16		280,842
Total	$	949,456	$	6,158	$	2,100	$	628	$	146	$	958,488

There was no allowance for credit losses allocated to loans on nonaccrual status as of December 31, 2023 or December 31, 2022. There were no commitments to lend additional funds to borrowers whose loans were on nonaccrual status at December 31, 2023 or December 31, 2022.

There were no loan modifications made to borrowers experiencing financial difficulty during the year ended December 31, 2023 and December 31, 2022.

A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. Loans that were considered collateral dependent at December 31, 2023 included the following: nine commercial real estate loans totaling $10.9 million secured by real property and $377 thousand of indirect consumer installment loans secured by personal property. There were no other collateral dependent loans at December 31, 2023. Loans that were considered collateral dependent at December 31, 2022 included the following: five commercial real estate loans totaling $8.1 million secured by real property, and $625 thousand of indirect consumer installment loans secured by personal property. There were no other collateral dependent loans at December 31, 2022.

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

	At December 31, 2023
															Line of
															Credit
	Term Loans Amortized Cost Basis by Origination Year												Total		Amortized
	Prior		2019		2020		2021		2022		2023		Term Loans		Cost Basis		Total
	(In thousands)
Commercial loans by grade:
Pass	$	20,554	$	4,471	$	12,601	$	31,770	$	22,146	$	13,112	$	104,654	$	25,347	$	130,001
Substandard		12		2,492		-		2,835		-		-		5,339		1,210		6,549
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	20,566	$	6,963	$	12,601	$	34,605	$	22,146	$	13,112	$	109,993	$	26,557	$	136,550

Current gross chargeoffs on commercial loans:
For the year ended December 31, 2023
	$	-	$	-	$	3	$	135	$	-	$	-	$	138	$	272	$	410

	At December 31, 2022
															Line of
															Credit
	Term Loans Amortized Cost Basis by Origination Year												Total		Amortized
	Prior		2018		2019		2020		2021		2022		Term Loans		Cost Basis		Total
	(In thousands)
Commercial loans by grade:
Pass	$	23,891	$	5,549	$	12,557	$	17,293	$	53,928	$	23,966	$	137,184	$	31,856	$	169,040
Substandard		12		-		-		-		-		-		12		565		577
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	23,903	$	5,549	$	12,557	$	17,293	$	53,928	$	23,966	$	137,196	$	32,421	$	169,617

	At December 31, 2023
															Line of
															Credit
	Term Loans Amortized Cost Basis by Origination Year												Total		Amortized
	Prior		2019		2020		2021		2022		2023		Term Loans		Cost Basis		Total
	(In thousands)
Commercial real estate loans by grade:
Pass	$	172,925	$	68,156	$	69,324	$	68,891	$	50,899	$	45,675	$	475,870	$	-	$	475,870
Substandard		10,056		811		786		-		-		-		11,653		-		11,653
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	182,981	$	68,967	$	70,110	$	68,891	$	50,899	$	45,675	$	487,523	$	-	$	487,523

Current gross chargeoffs on commercial real estate loans:
For the year ended December 31, 2023
	$	45	$	-	$	-	$	-	$	-	$	-	$	45	$	-	$	45

	At December 31, 2022
															Line of
															Credit
	Term Loans Amortized Cost Basis by Origination Year												Total		Amortized
	Prior		2018		2019		2020		2021		2022		Term Loans		Cost Basis		Total
	(In thousands)
Commercial real estate loans by grade:
Pass	$	146,588	$	58,473	$	71,440	$	74,016	$	71,618	$	55,707	$	477,842	$	-	$	477,842
Substandard		8,083		-		2,112		806		-		2,264		13,265		-		13,265
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	154,671	$	58,473	$	73,552	$	74,822	$	71,618	$	57,971	$	491,107	$	-	$	491,107

	At December 31, 2023
															Line of
															Credit
	Term Loans Amortized Cost Basis by Origination Year												Total		Amortized
	Prior		2019		2020		2021		2022		2023		Term Loans		Cost Basis		Total
	(In thousands)
Residential real estate loans by grade:
Pass	$	9,606	$	-	$	-	$	-	$	-	$	-	$	9,606	$	-	$	9,606
Substandard		329		-		-		-		-		-		329		-		329
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	9,935	$	-	$	-	$	-	$	-	$	-	$	9,935	$	-	$	9,935

Current gross chargeoffs on residential real estate loans:
For the year ended December 31, 2023
	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

	At December 31, 2022
															Line of
															Credit
	Term Loans Amortized Cost Basis by Origination Year												Total		Amortized
	Prior		2018		2019		2020		2021		2022		Term Loans		Cost Basis		Total
	(In thousands)
Residential real estate loans by grade:
Pass	$	13,457	$	-	$	-	$	-	$	-	$	-	$	13,457	$	-	$	13,457
Substandard		377		-		-		-		-		-		377		-		377
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	13,834	$	-	$	-	$	-	$	-	$	-	$	13,834	$	-	$	13,834

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	At December 31, 2023
															Line of
															Credit
	Term Loans Amortized Cost Basis by Origination Year												Total		Amortized
	Prior		2019		2020		2021		2022		2023		Term Loans		Cost Basis		Total
	(In thousands)
Construction loans by grade:
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	5,063	$	5,063
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	5,063	$	5,063

Current gross chargeoffs on construction loans:
For the year ended December 31, 2023
	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

	At December 31, 2022
															Line of
															Credit
	Term Loans Amortized Cost Basis by Origination Year												Total		Amortized
	Prior		2018		2019		2020		2021		2022		Term Loans		Cost Basis		Total
	(In thousands)
Construction loans by grade:
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	3,088	$	3,088
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	3,088	$	3,088

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

	At December 31, 2023
															Line of
															Credit
	Term Loans Amortized Cost Basis by Origination Year												Total		Amortized
	Prior		2019		2020		2021		2022		2023		Term Loans		Cost Basis		Total
	(In thousands)
Consumer installment and other loans by delinquency and nonaccrual status:
Current	$	6,545	$	12,144	$	22,700	$	51,055	$	71,388	$	38,699	$	202,531	$	17,826	$	220,357
30-59 days past due		160		277		600		2,345		1,733		332		5,447		97		5,544
60-89 days past due		31		51		153		410		430		122		1,197		45		1,242
Past due 90 days or more		-		8		88		143		138		-		377		11		388
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	6,736	$	12,480	$	23,541	$	53,953	$	73,689	$	39,153	$	209,552	$	17,979	$	227,531

Current gross chargeoffs on consumer installment and other loans:
For the year ended December 31, 2023
	$	246	$	161	$	843	$	2,329	$	3,191	$	453	$	7,223	$	276	$	7,499

	At December 31, 2022
															Line of
															Credit
	Term Loans Amortized Cost Basis by Origination Year												Total		Amortized
	Prior		2018		2019		2020		2021		2022		Term Loans		Cost Basis		Total
	(In thousands)
Consumer installment and other loans by delinquency and nonaccrual status:
Current	$	6,017	$	13,147	$	22,330	$	35,783	$	76,126	$	99,414	$	252,817	$	20,430	$	273,247
30-59 days past due		117		268		572		1,014		1,709		1,359		5,039		62		5,101
60-89 days past due		42		65		67		275		635		750		1,834		16		1,850
Past due 90 days or more		3		20		16		61		284		241		625		3		628
Nonaccrual		-		-		-		-		-		-		-		16		16
Total	$	6,179	$	13,500	$	22,985	$	37,133	$	78,754	$	101,764	$	260,315	$	20,527	$	280,842

There were no loans held for sale at December 31, 2023 and December 31, 2022.

The Company held no other real estate owned (OREO) at December 31, 2023 and December 31, 2022. At December 31, 2023 and December 31, 2022, there were no consumer mortgage loans outstanding secured by residential real estate properties for which formal foreclosure proceedings were in process.

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