Loans and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2025

Loans and Allowance for Credit Losses

Loans and Allowance for Credit Losses

Note 3:      Loans and Allowance for Credit Losses

Categories of loans by purpose include:

	September 30,		December 31,
	2025		2024
	(In thousands)
Commercial and industrial	$	95,386	$	98,795
Commercial real estate		303,077		291,673
Residential real estate		90,660		91,737
Consumer loans		7,414		8,766
Total gross loans		496,537		490,971
Less allowance for credit losses		(4,303)		(4,026)
Total loans	$	492,234	$	486,945

The risk characteristics of each loan portfolio segment are as follows:

Commercial and Industrial, and Commercial Real Estate

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may include a personal guarantee. Short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial 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. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The characteristics of properties securing the Company’s commercial real estate portfolio are diverse, but with geographic location almost entirely in the Company’s market area. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In general, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate versus nonowner-occupied loans.

Residential Real Estate and Consumer

Residential real estate and consumer loans consist of two segments - residential mortgage loans and personal loans. For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer personal loans are secured by consumer personal assets, such as automobiles or recreational vehicles. Some consumer personal loans are unsecured, such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

The following tables present the balance in the allowance for credit losses by collateral type and the recorded investment in loans by purpose based on portfolio segment and credit loss method as of September 30, 2025 and December 31, 2024.

	September 30, 2025
	Commercial and		Commercial
	Industrial		Real Estate		Residential		Installment		Total
	(In thousands)
Allowance for credit losses:
Balance, July 1, 2025	$	633	$	1,473	$	1,938	$	112	$	4,156
Provision for credit loss exposure		121		65		(46)		46		186
Losses charged off		—		—		—		(55)		(55)
Recoveries		3		—		—		13		16
Balance, September 30, 2025	$	757	$	1,538	$	1,892	$	116	$	4,303
Balance, January 1, 2025	$	699	$	1,488	$	1,708	$	131	$	4,026
Provision for credit loss exposure		162		50		188		88		488
Losses charged off		(110)		—		(4)		(133)		(247)
Recoveries		6		—		—		30		36
Balance, September 30, 2025	$	757	$	1,538	$	1,892	$	116	$	4,303
Allocation:
Ending balance: individually evaluated for credit losses	$	119	$	—	$	—	$	—	$	119
Ending balance: collectively evaluated for credit losses	$	638	$	1,538	$	1,892	$	116	$	4,184
Loans:
Ending balance: individually evaluated for credit losses	$	477	$	1,359	$	589	$	12	$	2,437
Ending balance: collectively evaluated for credit losses	$	94,909	$	301,718	$	90,071	$	7,402	$	494,100

	September 30, 2024
	Commercial and		Commercial
	Industrial		Real Estate		Residential		Installment		Total
	(In thousands)
Allowance for credit losses:
Balance, July 1, 2024	$	628	$	1,413	$	1,813	$	135	$	3,989
Provision (credit) for credit loss exposure		50		(23)		(12)		54		69
Losses charged off		—		—		(10)		(49)		(59)
Recoveries		—		—		—		3		3
Balance, September 30, 2024	$	678	$	1,390	$	1,791	$	143	$	4,002
Balance, January 1, 2024	$	573	$	1,408	$	1,843	$	94	$	3,918
Provision (credit) for credit loss exposure		179		(18)		(35)		178		304
Losses charged off		(75)		—		(17)		(151)		(243)
Recoveries		1		—		—		22		23
Balance, September 30, 2024	$	678	$	1,390	$	1,791	$	143	$	4,002
Allocation:
Ending balance: individually evaluated for credit losses	$	50	$	—	$	—	$	—	$	50
Ending balance: collectively evaluated for credit losses	$	628	$	1,390	$	1,791	$	143	$	3,952
Loans:
Ending balance: individually evaluated for credit losses	$	57	$	16	$	212	$	—	$	285
Ending balance: collectively evaluated for credit losses	$	96,451	$	277,648	$	91,065	$	9,555	$	474,719

Allowance for Loan Losses and Recorded Investment in Loans

As of December 31, 2024

	December 31, 2024
	Commercial and		Commercial
	Industrial		Real Estate		Residential		Installment		Total
	(In thousands)
Allowance for credit losses:
Ending balance: individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Ending balance: collectively evaluated for impairment	$	699	$	1,488	$	1,708	$	131	$	4,026
Loans:
Ending balance: individually evaluated for impairment	$	—	$	—	$	220	$	—	$	220
Ending balance: collectively evaluated for impairment	$	98,795	$	291,673	$	91,517	$	8,766	$	490,751

The following tables show the portfolio quality indicators.

Based on the most recent analysis performed, the following table presents the recorded investment in non-homogeneous loans by internal risk rating system as of September 30, 2025 (in thousands):

													Revolving		Revolving
													Loans		Loans
													Amortized		Converted
September 30, 2025	2025		2024		2023		2022		2021		Prior		Cost Basis		to Term		Total
Commercial and Industrial
Risk Rating
Pass	$	12,682	$	18,153	$	13,881	$	9,276	$	5,024	$	15,216	$	19,630	$	—	$	93,862
Special Mention		—		—		—		—		—		—		1,047		—		1,047
Substandard		—		—		—		26		—		198		253		—		477
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	12,682	$	18,153	$	13,881	$	9,302	$	5,024	$	15,414	$	20,930	$	—	$	95,386
Commercial and Industrial
Current period gross charge-offs	$	—	$	—	$	39	$	—	$	—	$	—	$	71	$	—	$	110
Commercial real estate
Risk Rating
Pass	$	17,492	$	19,463	$	29,239	$	29,920	$	35,210	$	92,212	$	65,028	$	—	$	288,564
Special Mention		—		—		—		309		—		6,287		6,425		—		13,021
Substandard		—		—		—		—		374		1,118		—		—		1,492
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	17,492	$	19,463	$	29,239	$	30,229	$	35,584	$	99,617	$	71,453	$	—	$	303,077
Commercial real estate
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total
Pass	$	30,174	$	37,616	$	43,120	$	39,196	$	40,234	$	107,428	$	84,658	$	—	$	382,426
Special Mention		—		—		—		309		—		6,287		7,472		—		14,068
Substandard		—		—		—		26		374		1,316		253		—		1,969
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	30,174	$	37,616	$	43,120	$	39,531	$	40,608	$	115,031	$	92,383	$	—	$	398,463
Current period gross charge-offs	$	—	$	—	$	39	$	—	$	—	$	—	$	71	$	—	$	110

The Company monitors the credit risk profile by payment activity for residential and consumer loan classes. Loans past due 90 days or more and loans on nonaccrual status are considered nonperforming. Nonperforming loans are reviewed quarterly. The following table presents the amortized cost in residential and consumer loans based on payment activity:

													Revolving		Revolving
													Loans		Loans
													Amortized		Converted
September 30, 2025	2025		2024		2023		2022		2021		Prior		Cost Basis		to Term		Total
Residential Real Estate
Payment Performance
Performing	$	7,521	$	8,550	$	8,763	$	15,160	$	14,039	$	36,038	$	—	$	—	$	90,071
Nonperforming		265		22		—		—		18		284		—		—		589
Total	$	7,786	$	8,572	$	8,763	$	15,160	$	14,057	$	36,322	$	—	$	—	$	90,660
Residential real estate
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	4	$	—	$	—	$	4
Consumer
Payment Performance
Performing	$	1,264	$	3,376	$	920	$	495	$	240	$	745	$	362	$	—	$	7,402
Nonperforming		—		—		—		—		—		12		—		—		12
Total	$	1,264	$	3,376	$	920	$	495	$	240	$	757	$	362	$	—	$	7,414
Consumer
Current period gross charge-offs	$	98	$	7	$	27	$	1	$	—	$	—	$	—	$	—	$	133
Total
Payment Performance
Performing	$	8,785	$	11,926	$	9,683	$	15,655	$	14,279	$	36,783	$	362	$	—	$	97,473
Nonperforming		265		22		—		—		18		296		—		—		601
Total	$	9,050	$	11,948	$	9,683	$	15,655	$	14,297	$	37,079	$	362	$	—	$	98,074
Current period gross charge-offs	$	98	$	7	$	27	$	1	$	—	$	4	$	—	$	—	$	137

The following tables show the portfolio quality indicators.

Based on the most recent analysis performed, the following table presents the recorded investment in non-homogeneous loans by internal risk rating system as of December 31, 2024 (in thousands):

													Revolving		Revolving
													Loans		Loans
													Amortized		Converted
December 31, 2024	2024		2023		2022		2021		2020		Prior		Cost Basis		to Term		Total
Commercial and industrial
Risk Rating
Pass	$	22,474	$	17,993	$	11,487	$	8,082	$	10,099	$	8,295	$	19,068	$	—	$	97,498
Special Mention		—		—		26		—		—		185		1,086		—		1,297
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	22,474	$	17,993	$	11,513	$	8,082	$	10,099	$	8,480	$	20,154	$	—	$	98,795
Commercial and industrial
Current period gross charge-offs	$	—	$	127	$	—	$	—	$	—	$	—	$	—	$	—	$	127
Commercial real estate
Risk Rating
Pass	$	19,554	$	30,858	$	32,972	$	36,870	$	31,461	$	68,279	$	57,096	$	—	$	277,090
Special Mention		—		—		315		242		—		7,781		6,229		—		14,567
Substandard		—		—		—		—		—		16		—		—		16
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	19,554	$	30,858	$	33,287	$	37,112	$	31,461	$	76,076	$	63,325	$	—	$	291,673
Commercial real estate
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total
Pass	$	42,028	$	48,851	$	44,459	$	44,952	$	41,560	$	76,574	$	76,164	$	—	$	374,588
Special Mention		—		—		341		242		—		7,966		7,315		—		15,864
Substandard		—		—		—		—		—		16		—		—		16
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	42,028	$	48,851	$	44,800	$	45,194	$	41,560	$	84,556	$	83,479	$	—	$	390,468
Current period gross charge-offs	$	—	$	127	$	—	$	—	$	—	$	—	$	—	$	—	$	127

The Company monitors the credit risk profile by payment activity for residential and consumer loan classes. Loans past due 90 days or more and loans on nonaccrual status are considered nonperforming. Nonperforming loans are reviewed quarterly. The following table presents the amortized cost in residential and consumer loans based on payment activity (in thousands):

													Revolving		Revolving
													Loans		Loans
													Amortized		Converted
December 31, 2024	2024		2023		2022		2021		2020		Prior		Cost Basis		to Term		Total
Residential Real Estate
Payment Performance
Performing	$	9,480	$	10,469	$	16,912	$	15,174	$	17,401	$	21,993	$	—	$	—	$	91,429
Nonperforming		—		22		—		17		—		269		—		—		308
Total	$	9,480	$	10,491	$	16,912	$	15,191	$	17,401	$	22,262	$	—	$	—	$	91,737
Residential real estate
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	17	$	—	$	—	$	17
Consumer
Payment Performance
Performing	$	4,619	$	1,427	$	798	$	349	$	275	$	907	$	376	$	—	$	8,751
Nonperforming		—		—		—		—		15		—		—		—		15
Total	$	4,619	$	1,427	$	798	$	349	$	290	$	907	$	376	$	—	$	8,766
Consumer
Current period gross charge-offs	$	144	$	72	$	—	$	—	$	—	$	—	$	—	$	—	$	216
Total
Payment Performance
Performing	$	14,099	$	11,896	$	17,710	$	15,523	$	17,676	$	22,900	$	376	$	—	$	100,180
Nonperforming		—		22		—		17		15		269		—		—		323
Total	$	14,099	$	11,918	$	17,710	$	15,540	$	17,691	$	23,169	$	376	$	—	$	100,503
Current period gross charge-offs	$	144	$	72	$	—	$	—	$	—	$	17	$	—	$	—	$	233

To facilitate the monitoring of credit quality within the loan portfolio, and for purposes of analyzing historical loss rates used in the determination of the allowance for credit losses, the Company utilizes the following categories of credit grades: pass, special mention, substandard, and doubtful. The four categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. Pass ratings, which are assigned to those borrowers that do not have identified potential or well defined weaknesses and for which there is a high likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other categories are updated on at least a quarterly basis.

The Company assigns a special mention rating to loans that have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the loan or the Company’s credit position.

The Company assigns a substandard rating to loans that are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged. Substandard loans have well defined weaknesses or weaknesses that could jeopardize the orderly repayment of the debt. Loans and leases in this grade also are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies noted are not addressed and corrected.

The Company assigns a doubtful rating to loans that have all the attributes of a substandard rating 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 possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans.

The Company evaluates the loan risk grading system definitions and allowance for credit losses methodology on an ongoing basis. No significant changes were made to either during the past year to date period.

Loan Portfolio Aging Analysis

As of September 30, 2025

	30-59 Days		60‑89 Days		Greater
	Past Due		Past Due		Than 90 Days				Total Past
	and		and		and				Due and				Total Loans
	Accruing		Accruing		Accruing		Non Accrual		Non Accrual		Current		Receivable
	(In thousands)
Commercial and Industrial	$	—	$	—	$	14	$	477	$	491	$	94,895	$	95,386
Commercial real estate		199		—		—		1,359		1,558		301,519		303,077
Residential		438		32		—		589		1,059		89,601		90,660
Installment		24		2		—		12		38		7,376		7,414
Total	$	661	$	34	$	14	$	2,437	$	3,146	$	493,391	$	496,537

Loan Portfolio Aging Analysis

As of December 31, 2024

	30‑59 Days		60‑89 Days		Greater
	Past Due		Past Due		Than 90 Days				Total Past
	and		and		and				Due and				Total Loans
	Accruing		Accruing		Accruing		Non Accrual		Non Accrual		Current		Receivable
	(In thousands)
Commercial and Industrial	$	—	$	43	$	41	$	170	$	254	$	98,541	$	98,795
Commercial real estate		48		—		—		258		306		291,367		291,673
Residential		95		30		—		308		433		91,304		91,737
Installment		15		2		15		—		32		8,734		8,766
Total	$	158	$	75	$	56	$	736	$	1,025	$	489,946	$	490,971

Nonperforming Loans

The following table present the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of September 30, 2025:

							Loans Past
							Due Over 90 Days		Total
	Nonaccrual with no ACL		Nonaccrual with ACL		Total Nonaccrual		Still Accruing		Nonperforming
	(In thousands)
Commercial and Industrial	$	225	$	252	$	477	$	14	$	491
Commercial real estate		1,359		—		1,359		—		1,359
Residential		589		—		589		—		589
Installment		12		—		12		—		12
Total	$	2,185	$	252	$	2,437	$	14	$	2,451

The Company did not recognize interest income on nonaccrual loans during the period ended September 30, 2025.

The following table present the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of December 31, 2024:

							Loans Past
							Due Over 90 Days		Total
	Nonaccrual with no ACL		Nonaccrual with ACL		Total Nonaccrual		Still Accruing		Nonperforming
	(In thousands)
Commercial and Industrial	$	170	$	—	$	170	$	41	$	211
Commercial real estate		258		—		258		—		258
Residential		308		—		308		—		308
Consumer		—		—		—		15		15
Total	$	736	$	—	$	736	$	56	$	792

The Company recognized approximately $4,000 interest income on nonaccrual loans during the the period ended December 31, 2024.