LOANS AND ALLOWANCE FOR CREDIT LOSSES

12 Months Ended

Dec. 31, 2024

LOANS AND ALLOWANCE FOR CREDIT LOSSES

LOANS AND ALLOWANCE FOR CREDIT LOSSES

NOTE 3 — LOANS AND ALLOWANCE FOR CREDIT LOSSES

The following table presents the classes of the loan portfolio summarized by risk rating and year of origination and year-to-date gross charge offs by loan portfolio summarized by year of origination as of December 31, 2024 and 2023.

As of December 31, 2024:
(Dollars in thousands)
Real Estate:		2024		2023		2022		2021		2020		Prior		Total
1-6 Pass	$	103,734		114,854		167,390		119,406		101,748		216,890	$	824,022
7    Special Mention		—		—		76		225		—		1,239		1,540
8    Substandard		—		—		4,529		568		4,093		16,641		25,831
9    Doubtful		—		—		—		—		—		—		—
Unearned discount		—		—		—		—		—		—		—
Net deferred loan fees and costs		76		(30)		133		123		93		13		408
Total Real Estate Loans	$	103,810	$	114,824	$	172,128	$	120,322	$	105,934	$	234,783	$	851,801
Agricultural:		2024		2023		2022		2021		2020		Prior		Total
1-6 Pass	$	59		223		43		—		—		611	$	936
7    Special Mention		—		—		—		—		—		—		—
8    Substandard		—		—		—		—		—		—		—
9    Doubtful		—		—		—		—		—		—		—
Unearned discount		—		—		—		—		—		—		—
Net deferred loan fees and costs		2		1		—		—		—		—		3
Total Agricultural Loans	$	61	$	224	$	43	$	—	$	—	$	611	$	939

Commercial and Industrial:		2024		2023		2022		2021		2020		Prior		Total
1-6 Pass	$	8,481		16,252		8,888		4,544		3,086		24,998	$	66,249
7    Special Mention		—		—		—		—		—		—		—
8    Substandard		—		420		—		—		12		25		457
9    Doubtful		—		—		—		—		—		—		—
Unearned discount		—		—		—		—		—		—		—
Net deferred loan fees and costs		86		49		59		5		8		192		399
Total Commercial and Industrial Loans	$	8,567	$	16,721	$	8,947	$	4,549	$	3,106	$	25,215	$	67,105
Consumer:		2024		2023		2022		2021		2020		Prior		Total
1-6 Pass	$	2,962		1,292		718		577		71		764	$	6,384
7    Special Mention		—		—		—		—		—		—		—
8    Substandard		—		—		—		—		—		6		6
9    Doubtful		—		—		—		—		—		—		—
Unearned discount		—		—		—		—		—		—		—
Net deferred loan fees and costs		38		18		10		3		—		—		69
Total Consumer Loans	$	3,000	$	1,310	$	728	$	580	$	71	$	770	$	6,459
State and Political Subdivisions:		2024		2023		2022		2021		2020		Prior		Total
1-6 Pass	$	—		1,232		2,739		13,338		—		4,829	$	22,138
7    Special Mention		—		—		—		—		—		—		—
8    Substandard		—		—		—		—		—		—		—
9    Doubtful		—		—		—		—		—		—		—
Unearned discount		—		—		—		—		—		—		—
Net deferred loan fees and costs		—		2		1		3		—		3		9
Total State and Political Subdivision Loans	$	—	$	1,234	$	2,740	$	13,341	$	—	$	4,832	$	22,147
Total Loans:		2024		2023		2022		2021		2020		Prior		Total
1-6 Pass	$	115,236	$	133,853	$	179,778	$	137,865	$	104,905	$	248,092	$	919,729
7    Special Mention		—		—		76		225		—		1,239		1,540
8    Substandard		—		420		4,529		568		4,105		16,672		26,294
9    Doubtful		—		—		—		—		—		—		—
Unearned discount		—		—		—		—		—		—		—
Net deferred loan fees and costs		202		40		203		134		101		208		888
Total Loans	$	115,438	$	134,313	$	184,586	$	138,792	$	109,111	$	266,211	$	948,451
		2024		2023		2022		2021		2020		Prior		Total
Gross Charge Offs:
Real Estate	$	—		—		—		—		—		345	$	345
Agricultural		—		—		—		—		—		—		—
Commercial and Industrial		—		—		—		20		—		504		524
Consumer		—		15		29		11		8		6		69
State and Political Subdivisions		—		—		—		—		—		—		—
Total Gross Charge Offs	$	—	$	15	$	29	$	31	$	8	$	855	$	938

As of December 31, 2023:
(Dollars in thousands)
Real Estate:		2023		2022		2021		2020		2019		Prior		Total
1-6 Pass	$	110,819	$	186,729	$	132,724	$	110,038	$	54,543	$	192,686	$	787,539
7    Special Mention		—		—		—		—		—		—		—
8    Substandard		—		86		587		3,661		9,452		9,598		23,384
9    Doubtful		—		—		—		—		—		—		—
Unearned discount		—		—		—		—		—		—		—
Net deferred loan fees and costs		130		176		153		116		(13)		8		570
Total Real Estate Loans	$	110,949	$	186,991	$	133,464	$	113,815	$	63,982	$	202,292	$	811,493
Agricultural:		2023		2022		2021		2020		2019		Prior		Total
1-6 Pass	$	—	$	59	$	—	$	—	$	—	$	611	$	670
7    Special Mention		—		—		—		—		—		—		—
8    Substandard		—		—		—		—		—		—		—
9    Doubtful		—		—		—		—		—		—		—
Unearned discount		—		—		—		—		—		—		—
Net deferred loan fees and costs		—		1		—		—		—		—		1
Total Agricultural Loans	$	—	$	60	$	—	$	—	$	—	$	611	$	671
Commercial and Industrial:		2023		2022		2021		2020		2019		Prior		Total
1-6 Pass	$	12,672	$	10,186	$	5,776	$	7,439	$	6,833	$	22,927	$	65,833
7    Special Mention		—		—		—		—		—		—		—
8    Substandard		—		—		—		—		—		650		650
9    Doubtful		—		—		—		—		—		—		—
Unearned discount		—		—		—		—		—		—		—
Net deferred loan fees and costs		95		83		24		17		208		(1)		426
Total Commercial and Industrial Loans	$	12,767	$	10,269	$	5,800	$	7,456	$	7,041	$	23,576	$	66,909
Consumer:		2023		2022		2021		2020		2019		Prior		Total
1-6 Pass	$	2,415	$	1,238	$	926	$	206	$	110	$	802	$	5,697
7    Special Mention		58		—		—		—		—		—		58
8    Substandard		—		—		—		—		—		—		—
9    Doubtful		—		—		—		—		—		—		—
Unearned discount		—		—		—		—		—		—		—
Net deferred loan fees and costs		38		20		8		2		1		—		69
Total Consumer Loans	$	2,511	$	1,258	$	934	$	208	$	111	$	802	$	5,824
State and Political Subdivisions:		2023		2022		2021		2020		2019		Prior		Total
1-6 Pass	$	731	$	4,095	$	14,139	$	1,905	$	—	$	5,303	$	26,173
7    Special Mention		—		—		—		—		—		—		—
8    Substandard		—		—		—		—		—		—		—
9    Doubtful		—		—		—		—		—		—		—
Unearned discount		—		—		—		—		—		—		—
Net deferred loan fees and costs		2		1		4		1		—		—		8
Total State and Political Subdivision Loans	$	733	$	4,096	$	14,143	$	1,906	$	—	$	5,303	$	26,181

Total Loans:		2023		2022		2021		2020		2019		Prior		Total
1-6 Pass	$	126,637	$	202,307	$	153,565	$	119,588	$	61,486	$	222,329	$	885,912
7    Special Mention		58		—		—		—		—		—		58
8    Substandard		—		86		587		3,661		9,452		10,248		24,034
9    Doubtful		—		—		—		—		—		—		—
Unearned discount		—		—		—		—		—		—		—
Net deferred loan fees and costs		265		281		189		136		196		7		1,074
Total Loans	$	126,960	$	202,674	$	154,341	$	123,385	$	71,134	$	232,584	$	911,078
		2023		2022		2021		2020		2019		Prior		Total
Gross Charge Offs:
Real Estate	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Agricultural		—		—		—		—		—		—		—
Commercial and Industrial		—		—		—		—		—		—		—
Consumer		2		23		13		2		4		13		57
State and Political Subdivisions		—		—		—		—		—		—		—
Total Gross Charge Offs	$	2	$	23	$	13	$	2	$	4	$	13	$	57

State and Political Subdivision loans include loans categorized as tax-free in the amount of $22,147,000 as of December 31, 2024 and $$26,181,000 as of December 31, 2023. Commercial and Industrial loans include $4,306,000 of GGLs as of December 31, 2024 and $4,470,000 of GGLs as of December 31, 2023. Loans held for sale are included in the Real Estate loans category and amounted to$737,000 at December 31, 2024 and $214,000 as of December 31, 2023.

The activity in the allowance for credit losses by loan class is summarized below for the years ended December 31, 2024 and 2023.

(Dollars in thousands)									State and
	Real				Commercial				Political
	Estate		Agricultural		and Industrial		Consumer		Subdivisions		Total
As of and for the year ended December 31, 2024:
Beginning balance January 1, 2024	$	6,539	$	1	$	265	$	78	$	42	$	6,925
Charge-offs		(345)		—		(524)		(69)		—		(938)
Recoveries		21		—		19		5		—		45
Provision		1,000		1		553		84		2		1,640
Ending Balance	$	7,215	$	2	$	313	$	98	$	44	$	7,672
Ending balance: individually
evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Ending balance: collectively
evaluated for impairment	$	7,215	$	2	$	313	$	98	$	44	$	7,672
Reserve for Unfunded Lending Commitments	$	85	$	—	$	17	$	—	$	—	$	102
Loans Receivable:
Ending Balance	$	851,801	$	939	$	67,105	$	6,459	$	22,147	$	948,451
Ending balance: individually
evaluated for impairment	$	4,214	$	309	$	—	$	—	$	—	$	4,523
Ending balance: collectively
evaluated for impairment	$	847,587	$	630	$	67,105	$	6,459	$	22,147	$	943,928

(Dollars in thousands)									State and
	Real				Commercial				Political
	Estate		Agricultural		and Industrial		Consumer		Subdivisions		Total
As of and for the year ended December 31, 2023:
Allowance for Credit Losses:
Balance at December 31, 2022	$	7,483	$	6	$	504	$	84	$	197	$	8,274
CECL adoption adjustment		(717)		(4)		(261)		11		(148)		(1,119)
Beginning balance January 1, 2023		6,766		2		243		95		49		7,155
Charge-offs		—		—		—		(57)		—		(57)
Recoveries		37		—		2		5		—		44
(Credit) Provision		(264)		(1)		20		35		(7)		(217)
Ending Balance	$	6,539	$	1	$	265	$	78	$	42	$	6,925
Ending balance: individually
evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Ending balance: collectively
evaluated for impairment	$	6,539	$	1	$	265	$	78	$	42	$	6,925
Reserve for Unfunded Lending Commitments	$	140	$	—	$	25	$	—	$	1	$	166
Loans Receivable:
Ending Balance	$	811,493	$	671	$	66,909	$	5,824	$	26,181	$	911,078
Ending balance: individually
evaluated for impairment	$	4,005	$	309	$	611	$	—	$	—	$	4,925
Ending balance: collectively
evaluated for impairment	$	807,488	$	362	$	66,298	$	5,824	$	26,181	$	906,153

Gross charge-offs amounted to $938,000 at December 31, 2024, as compared to $57,000 at December 31, 2023. The increased level of charge-offs for the year ended December 31, 2024 was mainly due to aggregate charge-offs of $741,000 that were completed during the third quarter of 2024 on four loans to a plastic processing company focused on non-post-consumer recycling, as the business ceased operations as a result of financial difficulties. During the fourth quarter of 2024, a charge-off of $67,000 was also completed on an owner-occupied, non-farm, non-residential loan to a non-profit civic organization, as the non-profit no longer uses the property, along with a charge-off of $41,000 on a loan to an individual borrower secured by 1-4 family residential real estate. The charge-offs contributed to the increased balance of net charge-offs in 2024 compared to 2023 but was not indicative of a significant change in asset quality in the overall loan portfolio. See Table 11 – Analysis of Allowance for Credit Losses for further details.

The Corporation’s activity in the allowance for credit losses on unfunded commitments for the years ended December 31, 2024 and 2023 was as follows:

(Dollars in thousands)
	2024		2023
Balance at January 1	$	166	$	68
CECL adoption adjustment		—		147
Reserve for credit losses on unfunded commitments		(64)		(49)
Balance at December 31	$	102	$	166

The following table presents outstanding balances by loan class prior to allocation of net deferred fees and costs, as well as the balance of net loans after allocation of net deferred fees and costs and the allowance for credit losses as of December 31, 2024 and 2023.

(Dollars in thousands)	December 31,		December 31,
	2024		2023
Real Estate	$	851,393	$	810,923
Agricultural		936		670
Commercial and Industrial		66,706		66,483
Consumer		6,390		5,755
State and Political Subdivisions		22,138		26,173
Subtotal		947,563		910,004
Net Deferred Fees and Costs		888		1,074
Allowance for Credit Losses		(7,672)		(6,925)
Loans, Net	$	940,779	$	904,153

During the year ended December 31, 2024, four modifications were granted on loans to borrowers experiencing financial difficulty which carried a combined post modification recorded investment of $10,183,000. Two modifications of loans to borrowers experiencing financial difficulty were completed during the fourth quarter of 2024, one on a loan carrying a post modification recorded investment of $174,000 to extend the maturity date of the loan by six months and one on a loan carrying a post modification recorded investment of $434,000 to release a portion of the real estate collateral securing the loan. One modification of a loan to a borrower experiencing financial difficulty was completed during the third quarter of 2024 to extend the maturity date of the loan by ten months. The loan carried a post modification recorded investment of $120,000. One modification of a loan to a borrower experiencing financial difficulty was completed during the first quarter of 2024 and consisted of a payment modification which allowed a period of interest-only payments of six months. The loan carried a post modification recorded investment of $9,455,000. There were no modifications granted on loans to borrowers experiencing financial difficulty during the year ended December 31, 2023.

The outstanding recorded investment of loans to borrowers experiencing financial difficulty was $10,193,000 at December 31, 2024. There were no unfunded commitments on modified loans to borrowers experiencing financial difficulty as of December 31, 2024.

The following table presents the outstanding recorded investment of loans to borrowers experiencing financial difficulty as of December 31, 2024. There were no loan modifications granted on loans to borrowers experiencing financial difficulty as of December 31, 2023.

(Dollars in thousands)	December 31,
	2024
Modifications of Loans to Borrowers Experiencing Financial Difficulty:
Non-Accrual	$	—
Accruing		10,193
Total	$	10,193

At December 31, 2024, were no modifications of loans to borrowers experiencing financial difficulty that were not in compliance with the terms of their restructure.

Of the modifications of loans to borrowers experiencing financial difficulty that were completed during the twelve months preceding December 31, 2024, two loans experienced payment defaults during the year ended December 31, 2024. The loan carrying a post modification recorded investment of $9,455,000 experienced a payment default during the first quarter of 2024 and the loan carrying a post modification outstanding recorded investment of $120,000 experienced a payment default during the fourth quarter of 2024. Both loans were paid current as of December 31, 2024.

The following table presents information regarding modifications of loans to borrowers experiencing financial difficulty that were completed during the year ended December 31, 2024. There were no modifications of loans to borrowers experiencing financial difficulty completed during the year ended December 31, 2023.

(Dollars in thousands)	For the Year Ended December 31, 2024
		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded		Recorded
	Contracts	Investment		Investment		Investment
Real Estate	3	$	10,009	$	10,009	$	10,019
Commercial and Industrial	1		174		174		174
Total	4	$	10,183	$	10,183	$	10,193

The following table provides detail regarding the types of loan modifications made for borrowers experiencing financial difficulty during the year ended December 31, 2024. There were no modifications of loans to borrowers experiencing financial difficulty completed during the year ended December 31, 2023.

	For the Year Ended December 31, 2024
	Rate	Term	Payment	Release of	Number
	Modification	Modification	Modification	Collateral	Modified
Real Estate	—	1	1	1	3
Commercial and Industrial	—	1	—	—	1
Total	—	2	1	1	4

The recorded investment, unpaid principal balance, and the related allowance of the Corporation’s non-accrual loans are summarized below at December 31, 2024 and 2023.

(Dollars in thousands)	December 31, 2024
	Recorded		Recorded				Unpaid		Unpaid
	Investment		Investment				Principal		Principal		Total
	With		With No		Total		Balance With		Balance With		Unpaid
	Related		Related		Recorded		Related		No Related		Principal		Related
	Allowance		Allowance		Investment		Allowance		Allowance		Balance		Allowance
Real Estate	$	—	$	4,214	$	4,214	$	—	$	6,203	$	6,203	$	—
Commercial and Industrial		—		—		—		—		—		—		—
Total	$	—	$	4,214	$	4,214	$	—	$	6,203	$	6,203	$	—

(Dollars in thousands)		December 31, 2023
	Recorded		Recorded				Unpaid		Unpaid
	Investment		Investment				Principal		Principal		Total
	With		With No		Total		Balance With		Balance With		Unpaid
	Related		Related		Recorded		Related		No Related		Principal		Related
	Allowance		Allowance		Investment		Allowance		Allowance		Balance		Allowance
Real Estate	$	—	$	4,005	$	4,005	$	—	$	5,994	$	5,994	$	—
Commercial and Industrial		—		611		611		—		611		611		—
Total	$	—	$	4,616	$	4,616	$	—	$	6,605	$	6,605	$	—

The recorded investment represents the loan balance reflected on the consolidated balance sheets net of any charge-offs. The unpaid balance is equal to the gross amount due on the loan.

The average recorded investment and interest income recognized for the Corporation’s non-accrual loans are summarized below for the years ended December 31, 2024 and 2023.

(Dollars in thousands)	Year Ended December 31, 2024
	Average		Average				Interest		Interest
	Recorded		Recorded				Income		Income
	Investment		Investment		Total		Recognized		Recognized		Total
	With		With No		Average		With		With No		Interest
	Related		Related		Recorded		Related		Related		Income
	Allowance		Allowance		Investment		Allowance		Allowance		Recognized
Real Estate	$	—	$	3,698	$	3,698	$	—	$	55	$	55
Commercial and Industrial		—		467		467		—		—		—
Total	$	—	$	4,165	$	4,165	$	—	$	55	$	55

(Dollars in thousands)	Year Ended December 31, 2023
	Average		Average				Interest		Interest
	Recorded		Recorded				Income		Income
	Investment		Investment		Total		Recognized		Recognized		Total
	With		With No		Average		With		With No		Interest
	Related		Related		Recorded		Related		Related		Income
	Allowance		Allowance		Investment		Allowance		Allowance		Recognized
Real Estate	$	—	$	4,380	$	4,380	$	—	$	—	$	—
Commercial and Industrial		—		643		643		—		—		—
Total	$	—	$	5,023	$	5,023	$	—	$	—	$	—

The following table presents the collateral-dependent loans by segment for the year ended December 31, 2024 and 2023.

(Dollars in thousands)	December 31, 2024
	Real Estate		Other
Real Estate	$	4,214	$	—
Agricultural		—		309
Commercial and Industrial		—		—
Total	$	4,214	$	309
(Dollars in thousands)	December 31, 2023
	Real Estate		Other
Real Estate	$	4,005	$	—
Agricultural		—		309
Commercial and Industrial		—		611
Total	$	4,005	$	920

At December 31, 2024 and 2023, there were no commitments to lend additional funds with respect to individually evaluated loans.

Total non-performing assets (which includes loans receivable on non-accrual status, foreclosed assets held for resale and loans past-due 90 days or more and still accruing interest) as of December 31, 2024 and 2023 were as follows:

(Dollars in thousands)	December 31,		December 31,
	2024		2023
Real Estate	$	4,214	$	4,005
Agricultural		—		—
Commercial and Industrial		—		611
Consumer		—		—
State and Political Subdivisions		—		—
Total non-accrual loans		4,214		4,616
Foreclosed assets held for resale		—		—
Loans past-due 90 days or more and still accruing interest		756		1,065
Total non-performing assets	$	4,970	$	5,681

If interest on non-accrual loans had been accrued at original contract rates, interest income would have increased by $2,371,000 in 2024 and $2,488,000 in 2023.

There were no foreclosed assets held for resale at December 31, 2024 or December 31, 2023. Consumer mortgage loans secured by residential real estate for which the Corporation entered into formal foreclosure proceedings but for which physical possession of the property has yet to be obtained amounted to $138,000 at December 31, 2023. These balances were not included in foreclosed assets held for resale at December 31, 2023. There were no consumer mortgage loans secured by residential real estate for which the Corporation entered into formal foreclosure proceedings but for which physical possession of the property has yet to be obtained as of December 31, 2024.

The following tables present the classes of the loan portfolio summarized by the past-due status at December 31, 2024 and 2023:

(Dollars in thousands)													90 Days
													Or Greater
													Past Due
					90 Days					Current-			and Still
	30-59 Days		60-89 Days		or Greater		Total			29 Days	Total		Accruing
	Past Due		Past Due		Past Due		Past Due		Past Due		Loans		Interest
December 31, 2024:
Real Estate	$	4,247	$	221	$	4,970	$	9,438	$	842,363	$	851,801	$	756
Agricultural		—		—		—		—		939		939		—
Commercial and Industrial		378		—		—		378		66,727		67,105		—
Consumer		11		2		—		13		6,446		6,459		—
State and Political Subdivisions		—		—		—		—		22,147		22,147		—
Total	$	4,636	$	223	$	4,970	$	9,829	$	938,622	$	948,451	$	756

(Dollars in thousands)													90 Days
													Or Greater
													Past Due
					90 Days					Current-			and Still
	30-59 Days		60-89 Days		or Greater		Total			29 Days	Total		Accruing
	Past Due		Past Due		Past Due		Past Due		Past Due		Loans		Interest
December 31, 2023:
Real Estate	$	2,155	$	379	$	5,069	$	7,603	$	803,890	$	811,493	$	1,065
Agricultural		—		—		—		—		671		671		—
Commercial and Industrial		6		—		591		597		66,312		66,909		—
Consumer		21		4		—		25		5,799		5,824		—
State and Political Subdivisions		—		—		—		—		26,181		26,181		—
Total	$	2,182	$	383	$	5,660	$	8,225	$	902,853	$	911,078	$	1,065

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