10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-K

☒

Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the fiscal year ended

December 31, 2024

OR

☐

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from __________ to __________

Commission File Number:

0-26486

Auburn National Bancorporation, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

63-0885779

(State or other jurisdiction

of incorporation)

(I.R.S. Employer

Identification No.)

100 N. Gay Street

,

Auburn,

Alabama

36830

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (

334

)

821-9200

Securities registered pursuant to Section 12 (b) of the Act:

Title of Each Class

Trading Symbol

Name of Exchange on which Registered

Common Stock

, par value $0.01

AUBN

NASDAQ

 Global Market

Securities registered to Section 12(g) of the Act: 

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes

☐

No

☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes

☐

No

☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the

preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past

90 days.

Yes

☒

 No

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-

T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

 No

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the

definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): 

Large Accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging Growth 

Company

☐

If an emerging growth company, indicate by check mark if the registrant has selected not to use the extended transition period for complying with any new or revised

financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over

financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit

report.

☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect

the correction of an error to previously issued financial statements.

☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of

the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

☐

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes

☐

 No

☒

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity

was last sold, or the average bid and asked price of such common equity as of the last business day of the registrant’s most recently completed second fiscal quarter:

$

40,992,280

 as of June 30, 2024. 

APPLICABLE ONLY TO CORPORATE REGISTRANTS 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

3,493,699

 shares of common stock as

of March 10 2025.

DOCUMENTS INCORPORATED BY REFERENCE 

Portions of the Proxy Statement for the Annual Meeting of Shareholders, scheduled to be held May 13, 2025, are incorporated by reference into Part II, Item 5 and

Part III of this Form 10-K. 

.

TABLE OF CONTENTS 

PAGE

ITEM 1.

4

ITEM 1A.

36

ITEM 1B.

53

ITEM 1C.

53

ITEM 2.

54

ITEM 3.

56

ITEM 4.

56

ITEM 5.

56

ITEM 7.

58

ITEM 7A.

83

ITEM 8.

83

ITEM 9.

122

ITEM 9A.

122

ITEM 9B.

123

ITEM 9C.

123

ITEM 10.

124

ITEM 11.

124

ITEM 12.

124

ITEM 13.

124

ITEM 14.

124

ITEM 15.

125

ITEM 16.

126

3

PART I 

SPECIAL CAUTIONARY NOTE REGARDING FORWARD -LOOKING STATEMENTS

Various of the statements made herein under the captions “Management’s Discussion and Analysis of Financial Condition

and Results of Operations”, “Quantitative and Qualitative Disclosures about Market Risk”, “Risk Factors” “Description of

Property” and elsewhere, are “forward-looking statements” within the meaning and protections of Section 27A of the

Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations,

anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks,

uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance,

achievements or financial condition of the Company to be materially different from future results, performance,

achievements or financial condition expressed or implied by such forward-looking statements. You should not expect us to

update any forward-looking statements.

All statements other than statements of historical fact are statements that could be forward-looking statements. You can

identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,”

“should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “designed”, “plan,” “point to,”

“project,” “could,” “intend,” “target,” “seek” and other similar words and expressions of the future. These forward-looking

statements may not be realized due to a variety of factors, including, without limitation:

●

the effects of future economic, business and market conditions and changes, foreign, domestic and locally,

including inflation, seasonality, natural disasters or climate change, such as rising sea and water levels, hurricanes

and tornados, epidemics or pandemics including supply chain disruptions, inventory volatility, and changes in

consumer behaviors;

●

the effects of war or other conflicts, acts of terrorism, trade restrictions, tariffs, sanctions, the value of the U.S.

dollar against other currencies, or other events that may affect general economic conditions, consumer and

business confidence;

●

governmental monetary and fiscal policies, including taxes, federal deficit spending and the debt required to fund

such spending, changes in monetary policies in response to inflation and changes in prices , including changes in

the Federal Reserve’s target federal funds rate and changes in the Federal Reserve’s holdings of securities through

quantitative tightening or easing; and the duration that the Federal Reserve will keep its targeted federal funds

rates at or above current target ranges to meet its long term inflation target of 2%;

●

legislative, executive branch and regulatory changes, including changes by executive orders, the possible

reorganization and/or consolidation of the bank regulatory agencies and/or the CFPB, changes in the leadership

and personnel, including reductions in the number and experience of personnel, at the bank and securities

regulators and the CFPB, freezes on changes in regulations and interpretations, the numerous new Executive

Orders, and the uncertain effects of all these, including the costs and benefits of such changes;

●

the effects of the potential privatization of Fannie Mae and Freddie Mac and its release from conservatorship on

the mortgage markets and us as seller and servicer of residential mortgage loans;

●

recent Supreme Court rulings that may lead to more court challenges to regulations and regulatory actions, which

may cause uncertainty, wasted implementation costs and time by the industry, and lengthy delays until ultimate

resolution;

●

changes in banking, securities and tax laws, regulations and rules and their application by the regulators, including

capital and liquidity requirements, and changes in the scope and cost of FDIC insurance;

4

●

changes in accounting pronouncements and interpretations, including the required use, beginning January 1, 2023,

of Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (ASU) 2016-13, “Financial

Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” as well as the

updates issued since June 2016 (collectively, FASB ASC Topic 326) on Current Expected Credit Losses

(“CECL”), and ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures, which eliminates troubled

debt restructurings (“TDRs”) and related guidance;

●

the failure of assumptions and estimates, including those used in the Company’s CECL models to establish our

allowance for credit losses and estimate asset impairments, as well as differences in, and changes to, economic,

market and credit conditions, including changes in borrowers’ credit risks and payment behaviors from those used

in our CECL models and loan portfolio reviews;

●

the risks of changes in market interest rates and the shape of the yield curve on customer behaviors; the levels,

composition and costs of deposits, loan demand and mortgage loan originations; the values and liquidity of loan

collateral, our securities portfolio and interest-sensitive assets and liabilities; and the risks and uncertainty of the

amounts realizable on collateral;

●

the risks of increases in market interest rates creating unrealized losses on our securities available for sale, which

adversely affect our stockholders’ equity for financial reporting purposes and our tangible equity;

●

changes in borrower liquidity and credit risks, and changes in savings, deposit and payment behaviors;

●

changes in the availability and cost of credit and capital in the financial markets, and the types of instruments that

may be included as capital for regulatory purposes;

●

changes in the prices, values and sales volumes of residential and commercial real estate;

●

the effects of competition from a wide variety of local, regional, national and other providers of financial,

investment and insurance services, including the disruptive effects of financial technology and other competitors

who are not subject to the same regulation, including capital and liquidity requirements, internal controls, and

supervision and examination, as the Company and the Bank, and competition from credit unions, which are not

subject to federal income taxation;

●

more permissive regulation and/or enforcement regarding digital assets, such as cyber currency and stable coins

that creates additional competition to banks, and greater risks to the payment systems that the banking industry,

including the Company, relies on, and greater risks of fraud and theft of digital assets and their effects on

customers, other financial institutions, including our counterparties, and confidence in the financial system,

generally;

●

the timing and amount of rental income from third parties from office space in our Auburn Center headquarters

and in former office locations;

●

the risks of mergers, acquisitions and divestitures, including, without limitation, the related time and costs of

implementing such transactions, integrating operations as part of these transactions and possible failures to achieve

expected gains, revenue growth and/or expense savings from such transactions;

●

changes in technology or products that may be more difficult, costly, or less effective than anticipated;

●

cyber-attacks and data breaches that may compromise our systems, our vendors’ systems or customers’

information;

●

the risks that our deferred tax assets (“DTAs”) included in “other assets” on our consolidated balance sheets, if

any, could be reduced if estimates of future taxable income from our operations and tax planning strategies are less

than currently estimated, and sales of our capital stock could trigger a reduction in the amount of net operating loss

carry-forwards that we may be able to utilize for income tax purposes; 

5

●

the risks that our dividends, share repurchases and discretionary bonuses are limited by regulation to the

maintenance of a capital conservation buffer of 2.5% and our future earnings and “eligible retained earnings” over

rolling four calendar quarter periods;

●

other factors and risks described under “Risk Factors” herein and in any of our subsequent reports that we make

with the Securities and Exchange Commission (the “Commission” or “SEC”) under the Exchange Act.

All written or oral forward-looking statements that we make or are attributable to us are expressly qualified in their entirety

by this cautionary notice. We have no obligation and do not undertake to update, revise or correct any of the forward-

looking statements after the date of this report, or after the respective dates on which such statements otherwise are made.

ITEM 1. BUSINESS

Auburn National Bancorporation, Inc. (the “Company”) is a bank holding company registered with the Board of Governors

of the Federal Reserve System (the “Federal Reserve”) under the Bank Holding Company Act of 1956, as amended (the

“BHC Act”). The Company was incorporated in Delaware in 1990, and in 1994 it succeeded its Alabama predecessor as

the bank holding company controlling AuburnBank, an Alabama state member bank with its principal office in Auburn,

Alabama (the “Bank”). The Company and its predecessor have controlled the Bank since 1984. As a bank holding

company, the Company may diversify into a broader range of financial services and other business activities than currently

are permitted to the Bank under applicable laws and regulations. The holding company structure also provides greater

financial and operating flexibility than is presently permitted to the Bank. 

The Bank has operated continuously since 1907 and currently conducts its business primarily in East Alabama, including

Lee County and surrounding areas. The Bank has been a member of the Federal Reserve Bank of Atlanta (the “Federal

Reserve Bank”) since April 1995. The Bank’s primary regulators are the Federal Reserve and the Alabama Superintendent

of Banks (the “Alabama Superintendent”). The Bank has been a member of the Federal Home Loan Bank of Atlanta (the

“FHLB-Atlanta”) since 1991.

General

The Company’s business is conducted primarily through the Bank and its subsidiaries. Although it has no immediate plans

to conduct any other business, the Company may engage directly or indirectly in a number of activities closely related to

banking permitted by the Federal Reserve.

The Company’s principal executive offices are located at 100 N. Gay Street, Auburn, Alabama 36830, and its telephone

number at such address is (334) 821-9200. The Company maintains an Internet website at

www.auburnbank.com

. The

Company’s website and the information appearing on the website are not included or incorporated in, and are not part of,

this report. The Company files annual, quarterly and current reports, proxy statements, and other information with the

SEC. You may read and copy any document we file with the SEC at the SEC’s public reference room at 100 F Street, N.E.,

Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for more information on the operation of the public

reference rooms. The SEC maintains an Internet site at

www.sec.gov

 that contains reports, proxy, and other information,

where SEC filings are available to the public free of charge. 

6

Services

The Bank operates its main office and 7 branches in Auburn, Opelika, Notasulga, and Valley, Alabama and a loan

production office in Phenix City, Alabama. 

We

evaluate the utilization of our existing facilities and customer preferences

for online and mobile banking. In addition to opening our new main office in 2022, we closed one branch office in Auburn

at the end of 2024, whose customers could be served conveniently and more efficiently by another existing Bank branch.

It offers checking, savings, transaction deposit accounts and certificates of deposit, and is an active residential mortgage

lender in its primary service area. The Bank’s primary service area includes the cities of Auburn and Opelika, Alabama and

nearby surrounding areas in East Alabama, primarily in Lee County. The Bank also offers commercial, financial,

agricultural, real estate construction and consumer loan products, and other financial services. The Bank operates ATM

machines in 10 locations in its primary service area. The Bank offers Visa

®

 Checkcards, which are debit cards with the

Visa logo that work like checks and can be used anywhere Visa is accepted, including ATMs. The Bank’s Visa Checkcards

can be used internationally through the Plus

®

 network. The Bank offers online banking, bill payment and other electronic

banking services through its Internet website,

www.auburnbank.com

. Our online banking services, bill payment and

electronic services are subject to certain cybersecurity risks. See “Risk Factors – Our information systems may experience

interruptions and security breaches.” 

The Bank has not offered any services related to any Bitcoin or other digital or crypto instruments, stablecoins or

businesses.

Competition

The Bank had the largest share of the Lee County, Alabama’s deposits (21.3%) at June 30, 2024. The banking business in

East Alabama, including Lee County, is highly competitive with respect to loans, deposits, and other financial services. 

Lee County is served by 19 banks, 10 of which are headquartered outside of Alabama. Other banks have 35 offices in Lee

County. National and regional competitors that have offices in our market include J.P. Morgan Chase, Wells Fargo, Truist,

PNC, Regions, Valley National, SouthState and Cadence. The national and regional banks we compete with have

substantially greater resources, and numerous offices and affiliates operating over wide geographic areas. The Bank

competes for deposits, loans and other business with these banks, as well as with credit unions, mortgage companies,

insurance companies, and other local and nonlocal financial institutions, including institutions offering services through the

mail, by telephone and over the Internet. As more and different kinds of businesses enter the market for financial services,

competition from nonbank financial institutions may be expected to intensify further. 

Among the advantages that larger financial institutions have over the Bank are their ability to finance extensive advertising

campaigns, to diversify their funding sources, and to allocate and diversify their assets among loans and securities of the

highest yield in locations with the greatest demand. Many of the major commercial banks or their affiliates operating in the

Bank’s service area offer services which are not presently offered directly by the Bank, and these other banks typically have

substantially higher lending limits than the Bank. 

Banks also have experienced significant competition for deposits from mutual funds, insurance companies and other

investment companies and from money center banks’ offerings of high-yield investments and deposits, including CDs and

savings accounts. Certain of these competitors are not subject to the same regulatory restrictions as the Bank. 

Selected Economic Data

Our market is Lee County, Alabama, including Auburn, Opelika and part of Phenix City, Alabama. Lee County and Macon

County form the Auburn-Opelika MSA. The U.S. Census Bureau estimates Lee County’s population was 174,241 in 2020

and an estimated 183,215 in July 2023. The largest employers in the area are Auburn University, East Alabama Medical

Center, Lee County School System, Auburn and Opelika City Schools, Auburn City Schools, Wal -Mart Distribution

Center, Aptar CSP Technologies, Pharmavite, LLC, HL Mando America Corporation (automobile brakes and steering),

SCA (automotive plastics), Borbet Alabama (automotive aluminum wheels), Golden State Foods and Briggs & Stratton. 

Auto manufacturing and related suppliers are increasingly important along Interstate Highway 85 to the east and west of

Auburn. Kia Motors has a large automobile factory in nearby West Point, Georgia, and Hyundai Motors has a large

automobile factory near Montgomery, Alabama. Various suppliers to the automotive industry have facilities in Lee

County. As of year-end 2024, the unemployment rate in Lee County was 2.8%, and 3.3% for the State of Alabama

according to the U.S. Bureau of Labor Statistics.

7

Between 2010 and 2022, the Auburn-Opelika MSA was the second fastest growing MSA in Alabama. The Auburn-

Opelika MSA population is estimated to grow 6.6% from 2023 to 2028. During the same time, household income is

estimated to increase 14.25%, to $69,213.

Loans and Loan Concentrations

The Bank makes loans for commercial, financial and agricultural purposes, as well as for real estate mortgages, real estate

acquisition, construction and development and consumer purposes. While there are certain risks unique to each type of

lending, management believes that there is more risk associated with commercial, real estate acquisition, construction and

development, agricultural and consumer lending than with residential real estate mortgage loans. To help manage these

risks, the Bank has established underwriting standards used in evaluating each extension of credit on an individual basis,

which are substantially similar for each type of loan. These standards include a review of the economic conditions

affecting the borrower, the borrower’s financial strength and capacity to repay the debt, the underlying collateral and the

borrower’s past credit performance. 

We

apply these standards at the time a loan is made and monitor them periodically

throughout the life of the loan. See “Lending Practices” for a discussion of regulatory guidance on commercial real estate

lending. 

Our commercial real estate (“CRE”) loans, including $55.4 million of loans on owner occupied property, as of December

31, 2024 totaled $290.2 million (51% of total loans). Our regulators’ CRE Guidance excludes loans on owner occupied

property from CRE. Excluding our owner-occupied loans, our CRE loans were $234.8 million (42% of total loans) at year

end 2023. See “Lending Practices –

CRE.

”

The Bank has loans outstanding to borrowers in all industries within our primary service area. Any adverse economic or

other conditions affecting these industries would also likely have an adverse effect on the local workforce, other local

businesses, and individuals in the community that have entered into loans with the Bank. For example, the auto

manufacturing business and its suppliers have positively affected our local economy, but automobile sales manufacturing is

cyclical and adversely affected by increases in interest rates. Decreases in automobile sales, including adverse changes due

to interest rate increases and inflation, tariffs, supply chain disruptions (including changes resulting from the effects of

tariffs and related changes in countries and producers in the supply chains) and a tight labor market, could adversely affect

nearby Kia and Hyundai automotive plants and their suppliers' local spending and employment, and could adversely affect

economic conditions in the markets we serve. However, management believes that due to the diversified mix of industries

located within our markets, adverse changes in one industry may not necessarily affect other area industries to the same

degree or within the same time frame. The Bank’s primary service area also is subject to both local and national economic

conditions and fluctuations. While most loans are made within our primary service area, some residential mort gage loans

are originated outside the primary service area, and the Bank from time to time has purchased loan participations from

outside its primary service area. 

We

also may make loans to other borrowers outside these areas, especially where we have

a relationship with the borrower, or its business or owners.

8

Human Capital

At December 31, 2024, the Company and its subsidiaries had 145 full-time equivalent employees, including 39 officers. 

Our employees have been with us an average of approximately 11 years. We successfully implemented plans to protect our

employees’ health consistent with CDC and State of Alabama guidelines during the COVID-19 pandemic, while

maintaining critical banking services to our communities and experiencing little employee turnover. In addition, we

developed our remote and electronic banking services, and established remote work access to help employees stay at home

where their job duties permitted. This promoted employee retention, and these efforts will provide us proven experience

and flexibility to meet other disruptive events and conditions, and still provide our customers and communities continuity

of service.

We have a talented group of employees, many of whom, have a college or associate degree. We believe the Auburn-

Opelika MSA is a desirable place to live and work with excellent schools and quality of life. Our MSA was the second

fastest growing MSA in Alabama from 2010 to 2022. Auburn University is a major employer that attracts talented students

and employee families. 

We had a successful management transition in 2022 where our CEO became Chairman, and was succeeded by our CFO,

whose role was then filled by our Chief Accounting Officer. At the time of transition, our Chairman had served the Bank

39 years, our President and CEO had been with us 16 years and our Chief Accounting Officer had been with us for 7 years. 

Our new President and CFO had careers with major national and regional accounting firms and focused on financial

services before joining the Bank.

We seek to offer competitive compensation and benefits. We provide employer matches for employee contributions to our

401(k) retirement plan. In 2024, our shareholders approved our 2024 Equity and Incentive Compensation Plan (the “2024

Incentive Plan”). The Plan provides for a variety of equity and equity-based awards, including stock options, performance

shares, performance units, stock appreciation rights (“SARs”), restricted stock and restricted stock units (“RSUs”) and cash

incentive awards. We believe that the 2024 Incentive Plan provides the flexibility to structure appropriate incentives to

attract and retain talented people in a competitive market where many of our competitors are public companies who offer

stock-based incentives. 

We encourage and support the growth and development of our employees and, wherever possible, seek to fill positions by

promotion and transfer from within the organization. Career development is advanced through ongoing performance and

development conversations with employees, internally developed training programs and other training and development

opportunities.

Our employees are encouraged to be active in our communities as part of our commitment to these communities and our

employees. 

Statistical Information

Certain statistical information is included in responses to Items 6, 7, 7A and 8 of this Annual Report on Form 10-K. 

SUPERVISION AND REGULATION

The Company and the Bank are extensively regulated under federal and state laws applicable to bank holding companies

and banks. The supervision, regulation and examination of the Company and the Bank and their respective subsidiaries by

the bank regulatory agencies are primarily intended to maintain the safety and soundness of depository institutions and the

federal deposit insurance system, as well as the protection of depositors, rather than holders of Company capital stock and

other securities. Any change in applicable law or regulation may have a material effect on the Company’s business, and

our results of operations and financial condition. The following discussion is qualified in its entirety by reference to the

particular laws and rules referred to below.

9

Bank Holding Company Regulation

The Company, as a bank holding company, is subject to supervision, regulation and examination by the Federal Reserve

under the BHC Act. Bank holding companies generally are limited to the business of banking, managing or controlling

banks, and certain related activities. The Company is required to file periodic reports and other information with the

Federal Reserve. The Federal Reserve examines the Company and its subsidiaries. The State of Alabama currently does

not regulate bank holding companies.

The BHC Act requires prior Federal Reserve approval for, among other things, the acquisition by a bank holding company

of direct or indirect ownership or control of more than 5% of the voting shares or substantially all the assets of any bank, or

for a merger or consolidation of a bank holding company with another bank holding company. The BHC Act generally

prohibits a bank holding company from acquiring direct or indirect ownership or control of voting shares of any company

that is not a bank or bank holding company and from engaging directly or indirectly in any activity other than banking or

managing or controlling banks or performing services for its authorized subsidiaries. A bank holding company may,

however, engage in or acquire an interest in a company that engages in activities that the Federal Reserve has determined

by regulation or order to be so closely related to banking or managing or controlling banks as to be a proper incident

thereto. The Federal Reserve adopted new rules, effective September 30, 2020, simplifying determinations of control of

banking organizations for BHC Act purposes.

Changes in control of bank holding companies are subject to prior notice to, and nonobjection by the Federal Reserve under

the federal Change in Bank Control Act (the “Control Act”) and by the Alabama Superintendent of Banks (the “Alabama

Superintendent”) under the Alabama Banking Code. In August 2024, the FDIC proposed changes to its Control Act

regulations that would result in persons seeking control of a bank holding company under the Control Act, to file a notice

with and obtain non-objection from the FDIC in addition to those filings and notices currently required from the Federal

Reserve and the Alabama Superintendent. 

Bank holding companies that are and remain “well-capitalized” and “well-managed,” as defined in Federal Reserve

Regulation

Y,

and whose insured depository institution subsidiaries maintain “satisfactory” or better ratings under the

Community Reinvestment Act of 1977 (the “CRA”), may elect to become “financial holding companies.” Financial

holding companies and their subsidiaries are permitted to acquire or engage in activities such as insurance underwriting,

securities underwriting, travel agency activities, broad insurance agency activities, merchant banking and other activities

that the Federal Reserve determines to be financial in nature or complementary thereto. In addition, under the BHC Act’s

merchant banking authority and Federal Reserve regulations, financial holding companies are authorized to invest in

companies that engage in activities that are not financial in nature, as long as the financial holding company makes its

investment, subject to limitations, including a limited investment term, no day-to-day management, and no cross-marketing

with any depositary institutions controlled by the financial holding company. The Federal Reserve recommended repeal of

the merchant banking powers in a September 16, 2016 study undertaken pursuant to Section 620 of the Dodd-Frank Wall

Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), but has taken no action. The Company has

not elected to become a financial holding company, but it may elect to do so in the future. Financial holding companies

continue to be subject to Federal Reserve supervision, regulation and examination.

The Gramm-Leach-Bliley Act of 1999 (the “GLB Act”) applies the concept of functional regulation to subsidiary activities. 

For example, insurance activities would be subject to supervision and regulation by state insurance authorities and

securities broker-dealer and investment advisory activities are regulated by the SEC.

The BHC Act permits acquisitions of banks by bank holding companies, subject to various restrictions, including that the

acquirer is “well capitalized” and “well managed”. Bank mergers are also subject to the approval of the resulting bank’s

primary federal regulator pursuant to the Bank Merger Act. The BHC Act and the Bank Merger Act provide various

generally similar statutory factors. Under the Alabama Banking Code, with the prior approval of the Alabama

Superintendent, an Alabama bank may acquire and operate one or more banks in other states pursuant to a transaction in

which the Alabama bank is the surviving bank. In addition, one or more Alabama banks may enter into a merger

transaction with one or more out-of-state banks, and an out-of-state bank resulting from such transaction may continue to

operate the acquired branches in Alabama. Banks, including Alabama banks, may branch anywhere in the United States. 

See “Bank Regulation”.

10

The Company is a legal entity separate and distinct from the Bank. Various legal limitations restrict the Bank from lending

or otherwise supplying funds to the Company. The Company and the Bank are subject to Sections 23A and 23B of the

Federal Reserve Act and Federal Reserve Regulation W thereunder. Section 23A defines “covered transactions,” which

include extensions of credit and other transactions with affiliates, and limits a bank’s covered transactions with any affiliate

to 10% of such bank’s capital and surplus. All covered and exempt transactions between a bank and its affiliates must be

on terms and conditions consistent with safe and sound banking practices, and banks and their subsidiaries are prohibited

from purchasing low-quality assets from the bank’s affiliates. Finally, Section 23A requires that all of a bank’s extensions

of credit to its affiliates be appropriately secured by permissible collateral, generally United States government or agency

securities. Section 23B of the Federal Reserve Act generally requires covered and other transactions among affiliates to be

on terms and under circumstances, including credit standards, that are substantially the same as or at least as favorable to

the bank or its subsidiary as those prevailing at the time for similar transactions with unaffiliated companies. 

Federal Reserve policy and the Federal Deposit Insurance Act require a bank holding company to act as a source of

financial and managerial strength to its FDIC-insured subsidiaries and to take measures to preserve and protect such bank

subsidiaries in situations where additional investments in a bank subsidiary may not otherwise be warranted. In the event

an FDIC-insured subsidiary becomes subject to a capital restoration plan with its regulators, the parent bank holding

company is required to guarantee performance of such plan up to 5% of the bank’s assets, and such guarantee is given

priority in a bankruptcy of the bank holding company. Where a bank holding company has more than one bank or thrift

subsidiary, each of the bank holding company’s subsidiary depository institutions may be responsible for any losses to the

FDIC’s Deposit Insurance Fund (“DIF”), if an affiliated depository institution fails. As a result, a bank holding company

may be required to loan money to a bank subsidiary in the form of subordinated capital notes or other instruments which

qualify as capital under bank regulatory rules. However, any loans from the holding company to such subsidiary banks

likely will be unsecured and subordinated to such bank’s depositors and to other creditors of the bank. See “Capital.”

The Federal Reserve’s Small Bank Holding Company Policy Statement (the “Small BHC Policy”) covers qualifying bank

and thrift holding companies with up to $3 billion of pro forma consolidated assets. Proposed legislation, entitled the

“Small Bank Holding Company Relief Act” would direct the Federal Reserve raise the permitted consolidated asset level to

$10 billion. Such legislation is among various bills highlighted in February 2025 by House Financial Services Committee

hearings.

The Federal Reserve treats the Company as a small banking holding company under the Small BHC Policy. As a result,

unless and until the Company fails to qualify under the Small BHC Policy, the Company’s capital adequacy will continue

to be evaluated on a bank only basis. See “Capital.”

Bank Regulation

The Bank is an Alabama state bank that is a member of the Federal Reserve. It is subject to supervision, regulation and

examination by the Alabama Superintendent and the Federal Reserve, which monitor all areas of the Bank’s operations,

including loans, reserves, mortgages, capital adequacy, liquidity, funding sources and concentrations, issuances and

redemption of capital securities, payment of dividends, establishment of branches, and compliance with laws. The Bank’s

deposits are insured by the FDIC to the maximum extent provided by law, and the Bank is subject to various FDIC

regulations applicable to FDIC-insured banks. See “FDIC Insurance Assessments.”

Alabama law permits statewide branching by banks. The Alabama Banking Code has provisions designed to ensure

Alabama banks have competitive equality with national banks.

11

The Federal Reserve has adopted the Federal Financial Institutions Examination Council’s (“FFIEC”) Uniform Financial

Institutions Rating System (“UFIRS”), which assigns each financial institution a confidential composite “CAMELS” rating

based on an evaluation and rating of six essential components of an institution’s financial condition and operations: 

C

apital

Adequacy,

A

sset Quality,

M

anagement,

E

arnings,

L

iquidity and

S

ensitivity to market risk, as well as the quality of risk

management practices. For most institutions, the FFIEC has indicated that market risk primarily reflects exposures to

changes in interest rates. When regulators evaluate this component, consideration is expected to be given to management’s

ability to identify, measure, monitor and control market risk; the institution’s size; the nature and complexity of its activities

and its risk profile; and the adequacy of its capital and earnings in relation to its level of market risk exposure. Market risk

is rated based upon, but not limited to, an assessment of the sensitivity of the financial institution’s earnings or the

economic value of its capital to adverse changes in interest rates, foreign exchange rates, commodity prices or equity prices;

management’s ability to identify, measure, monitor and control exposure to market risk; and the nature and complexity of

interest rate risk exposure arising from non-trading positions. Composite ratings are based on evaluations of an institution’s

managerial, operational, financial and compliance performance. The composite CAMELS rating is not an arithmetical

formula or rigid weighting of numerical component ratings. Elements of subjectivity and examiner judgment, especially as

these relate to qualitative assessments, are important elements in assigning ratings. The Federal Reserve is maintaining a

heightened focus on bank funding pressures based on risk profiles and management’s ability to manage their liquidity

positions.

In addition, and separate from the interagency UFIRS, the Federal Reserve assigns a risk-management rating to all state

member banks and bank holding companies. In February 2021 the Federal Reserve expanded its Guidance for Assessing

Risk Management to institutions with under $100 billion in assets. This guidance states that principles of sound

management should apply to all risk confronting a banking organization, including credit, market, liquidity, operational,

compliance, and legal risks. For a small community banking organization (“CBO”) engaged solely in traditional banking

activities and whose senior management is actively involved in the details of day-to-day operations, relatively basic risk

management systems may be adequate. In accordance with the Interagency Guidelines Establishing Standards for Safety

and Soundness, a CBO is expected, at a minimum, to have internal controls, information systems, and internal audit that are

appropriate for the size of the institution and the nature, scope, and risk of its activities. The summary, or composite,

rating, as well as each of the assessment areas, including risk management, is delineated on a numerical scale of 1 to 5, with

1 being the highest or best possible rating. Thus, a bank with a composite rating of 1 requires the lowest level of

supervisory attention while a 5-rated bank has the most critically deficient level of performance and therefore requires the

highest degree of supervisory attention. 

Bank mergers, which generally accompany holding company mergers, are also subject to the approval of the resulting

bank’s primary federal regulator. The Federal Reserve and the Alabama Superintendent must approve mergers and

acquisitions by the Bank. The FDIC and the Office of the Comptroller of the Currency (“OCC”) may comment on mergers

involving the Company or the Bank. 

Although the Federal Reserve has not issued any new rules or policies applicable to mergers of bank holding companies or

state member banks, the FDIC and the OCC changed their merger policies and rules in September 2024. The FDIC

adopted a Statement of Policy on Bank Merger Transactions (the “FDIC Merger Policy”). The new FDIC Merger Policy

recognizes Biden Administration Executive Order 14036 “Promoting Competition in the American Economy” (July 9,

2021) (“Executive Order 14036”), which, among other things, “instructs U.S. agencies to consider the impact that

consolidation may have on maintaining a fair, open, and competitive marketplace, and on the welfare of workers, farmers,

small businesses, startups, and consumers.” Executive Order 14036 apparently has not been rescinded as of February 17,

2025. The adopting release for the FDIC Merger Policy states that “the analytical methods the FDIC employs in

conducting its independent analysis will continue to be informed by the United States Department of Justice’s (“DoJ”)

approach to evaluating competitive effects.”

In September 2024, the OCC updated its regulations for business combinations involving national banks and federal

savings associations, deleted expedited and streamline applications for business combinations and adopted a policy

statement clarifying its review of applications under the Bank Merger Act’s statutory factors.

It is unclear whether these new FDIC and OCC policies and rules will affect their views of mergers where the Federal

Reserve is the responsible regulator, especially in light of change in the President and changing leadership at the FDIC and

the OCC.

12

The Bank Merger Act and the BHC Act require evaluation, among other factors, of the effects of the transaction on

competition. The primary federal bank regulator of a resulting bank, in a transaction subject to approval under the Bank

Merger Act and the Federal Reserve, in acquisitions and mergers subject to the BHC Act, must notify the DoJ, who has an

important advisory role in bank and BHC mergers, but the bank regulators are the primary decision makers. The bank

regulators may then consider the Antitrust Division’s competitive factors report as part of their respective review processes,

and use their own methods for screening and evaluating bank mergers. The DoJ and the Federal Trade Commission

adopted new non-binding Merger Guidelines in 2023. In September 2024, the DoJ revoked its 1995 Bank Merger

Guidelines and replaced these with a 2024 Banking Addendum to its 2023 Merger Guidelines. The 1995 Bank Merger

Guidelines had been adopted together with the federal banking agencies, and notwithstanding the FDIC Merger Policy,

none of the federal banking agencies have withdrawn from those Guidelines. The Federal Reserve continues to apply the

1995 Bank Merger Guidelines in evaluating bank and bank holding company mergers.

The GLB Act and related regulations require banks and their affiliated companies to adopt and disclose privacy policies,

including policies regarding the sharing of personal information with third parties. The GLB Act also permits bank

subsidiaries to engage in financial activities, which are similar to those permitted to financial holding companies. 

A variety of federal and state privacy laws govern the collection, safeguarding, sharing and use of customer information,

and require that financial institutions have policies regarding information privacy and security. Some state laws also protect

the privacy of information of state residents and require adequate security of such data, and certain state laws may, in some

circumstances, require us to notify affected individuals of security breaches of computer databases that contain their

personal information. These laws may also require us to notify law enforcement, regulators or consumer reporting agencies

in the event of a data breach, as well as businesses and governmental agencies that own data.

The Data Privacy Act of 2023 was introduced in Congress on February 24, 2023. It would amend various sections of the

GLB Act and preempt certain state privacy laws. The American Privacy Rights Act of 2024 sought to establish the first

federal standard for comprehensive data privacy and security regulation. Neither of these bills were adopted. Other

privacy legislation may be proposed.

Consumer Laws and the Community Reinvestment Act

The Consumer Financial Protection Bureau (the “CFPB”) has a broad mandate that requires it to regulate consumer

financial products and services, whether or not offered by banks or their affiliates. The CFPB has the authority to adopt

regulations and enforce various laws, including the fair lending laws, the Truth in Lending Act, the Electronic Funds

Transfer Act, mortgage lending rules, the Truth in Savings Act, the Fair Credit Reporting Act and Privacy of Consumer

Financial Information rules. Although the CFPB does not examine or supervise banks with less than $10 billion in assets,

banks of all sizes, including the Bank, are subject to the CFPB’s regulations, and the precedents set in CFPB enforcement

actions and interpretations.

The Bank is subject to the provisions of the CRA and the Federal Reserve’s CRA regulations. Under the CRA, all FDIC-

insured institutions have a continuing and affirmative obligation, consistent with their safe and sound operation, to help

meet the credit needs for their entire communities, including low- and moderate-income (“LMI”) neighborhoods. The CRA

requires a depository institution’s primary federal regulator to periodically assess the institution’s record of assessing and

meeting the credit needs of the communities served by that institution, includ ing low- and moderate-income neighborhoods. 

The bank regulatory agency’s CRA assessment is publicly available. Further, consideration of the CRA is required of any

FDIC-insured institution that has applied to: (i) charter a national bank; (ii) obtain deposit insurance coverage for all new-

banks; (iii) establish a new branch office that accepts deposits; (iv) relocate an office; or (v) merge or consolidate with, or

acquire the assets or assume the liabilities of, an FDIC-insured financial institution. A less than satisfactory CRA rating

will slow, if not preclude, acquisitions, and new branches and other expansion activities and may prevent a company from

becoming a financial holding company. The federal CRA regulations require that evidence of discriminatory, illegal or

abusive lending practices be considered in the CRA evaluation.

The federal CRA regulations require that evidence of discriminatory, illegal or abusive lending practices be considered in

the CRA evaluation. 

Financial holding company elections and the continuation of financial holding company activities are permitted, only if

each affiliated bank has received a “satisfactory” or better CRA rating.

13

CRA agreements with private parties must be disclosed and annual CRA reports must be made to a bank’s primary federal

regulator. Community benefit plans have become common in banking mergers, especially larger bank combinations. The

National Community Reinvestment Coalition reported that as of February 2025, it had executed 21 community benefit

plans with banking organizations for an aggregate of $580 billion for mortgage, small business and community

development lending, investments and philanthropy in LMI and under-resourced communities. The pending Capital One

Financial Acquisition of Discover Financial Services includes a community benefit plan with another community

organization valued at $265 billion, which is the largest ever.

The Bank had a “satisfactory” CRA rating in its latest CRA public evaluation dated February 28, 2022, with satisfactory

ratings on both its lending and community development tests.

The Federal Reserve considers the effects of a bank acquisition proposal on the convenience and needs of the markets

served by the combining organizations. Bank regulators consider CRA performance in evaluating merger and acquisition

applications under the Bank Merger Act and the BHC Act, as well as other expansion proposals, such as new branch

offices. In the case of bank holding company applications to acquire a bank, the Federal Reserve will assess and emphasize

CRA records of each subsidiary depository institution of the applicant bank holding company and the target bank in

meeting the needs of their entire communities, including LMI neighborhoods, and such records may be the basis for

denying the application.

The Bank is also subject to, among other things, the Equal Credit Opportunity Act (the “ECOA”) and the Fair Housing Act

and other fair lending laws, which prohibit discrimination based on race or color, religion, national origin, sex and familial

status in any aspect of a consumer or commercial credit or residential real estate transaction. The DoJ’s and the federal

bank regulatory agencies’ Interagency Policy Statement on Discrimination in Lending provides guidance to financial

institutions in determining whether discrimination exists, how the agencies will respond to lending discrimination, and what

steps lenders might take to prevent discriminatory lending practices. The DOJ has prosecuted what it regards as violations

of the ECOA, the Fair Housing Act and the fair lending laws, generally.

New CRA Regulations

The Federal Reserve, the OCC and the FDIC jointly adopted extensive changes in new CRA regulations, which were

published in a 649 page adopting release in the Federal Register on February 1, 2024 (the “New CRA Regulations”). Most

of the New CRA Regulation’s become effective January 1, 2026, and other requirements, including required data reporting,

are scheduled to become effective January 1, 2027. The New CRA Regulations confirm that the CRA and fair lending

responsibilities and compliance are mutually reinforcing and that these regimes recognize the importance of ensuring that

the credit markets are inclusive. The New CRA Regulations continue to allow downgrading a bank for discriminatory or

other illegal credit practices.

The New CRA Regulations’ objectives include:

●

Update CRA regulations to strengthen the achievement of the core purpose of the statute and to encourage

financial inclusion;

●

Adapt to changes in the banking industry, including the expanded role of mobile and online banking; 

●

Provide greater clarity and consistency in the application of the regulations; 

●

Tailor performance standards to account for differences in bank size and business models and local conditions;

●

Tailor data collection and reporting requirements and use existing data whenever possible;

●

Promote transparency and public engagement; 

●

Confirm that CRA and fair lending responsibilities are mutually reinforcing; and 

●

Create a consistent regulatory approach that applies to banks regulated by all three agencies.

Similar to the old rules, the New CRA Regulations are based on bank size and business model. These rules create a new

framework for evaluating CRA performance. Banks are classified as either “small”, “intermediate”, “large”, or “limited

purpose” banks. The asset size thresholds would be adjusted annually for inflation and have been increased relative to the

bank asset size thresholds in the old CRA rule. The Bank is currently an “intermediate small bank,” but will become an

“intermediate bank” under the New CRA Regulations because it has assets of $600 million to $2.0 billion in both of the two

prior years.

14

The new performance evaluation framework establishes two tests for intermediate banks:

•

the Retail Lending Test; and 

•

the Intermediate Bank Community Development Test, or if elected by the Bank, the Community Development

Financing Test.

The Bank presently intends to use the Intermediate Bank Community Development Test. The community development

evaluation of the prior CRA rules continues. The New CRA Regulations implement a new retail lending evaluation for

intermediate banks, and provide them the option of evaluation under a new test for community development financing.

Intermediate banks would be evaluated and assigned conclusions reflecting their performance under these tests in their

facility-based assessment area of “Outstanding”; “High Satisfactory”; “Low Satisfactory”; “Needs to Improve”; or

“Substantial Noncompliance.” These conclusions applied to each test would be weighted 50% each for intermediate banks

and combined in a resulting rating of “Outstanding,” “Satisfactory,” “Needs to Improve,” or “Substantial Noncompliance.”

A “facility-based assessment area” is an area that encompasses or is adjacent to deposit-taking facilities, including main

offices, branches, and deposit-taking ATMs and other remote service facilities. Intermediate banks may delineate facility-

based areas of part of a county. The banking agencies will evaluate retail lending in a bank’s “outside retail lending area”

for large banks, as well as for intermediate banks, if the majority of their retail lending is outside their facility-based

assessment areas.

A retail lending volume screen will be used to measure the volume of a bank’s lending relative to its deposit base in its

facility-based assessment area and would compare that ratio to the aggregate ratio for all reporting banks with at least one

branch in the same facility-based assessment area. Second, the agencies will evaluate the geographic distribution and

borrower distribution of a bank’s major product lines in the bank’s Retail Lending Test Areas (i.e., the bank’s facility-based

assessment areas, and, if applicable, retail lending assessment areas and outside retail lending area) using a series of metrics

and benchmarks. After the agency determines a recommended conclusion for the Retail Lending Test Area, the agency

would consider a list of additional factors that are intended to account for circumstances in which the retail lending

distribution metrics and benchmarks may not accurately or fully reflect a bank’s retail lending performance, or in which the

benchmarks may not appropriately represent the credit needs and opportunities in an area.

Banks will receive consideration for any qualified community development loans, investments, or services, regardless of

location. The extent of an agency's consideration of community development loans, community development investments,

and community development services outside of the bank's facility-based assessment areas will depend on the adequacy of

the bank's responsiveness to community development needs and opportunities within the bank's facility-based assessment

areas and applicable performance context information. The New CRA Regulations codify agency interpretations under the

former CRA regulations, and provide 11 community development categories. The agencies will evaluate the extent to

which a bank’s community development loans, investments, and services are impactful and responsive in meeting

community development needs. An intermediate bank's community development test performance is evaluated pursuant to

the following criteria: 

•

the number and dollar amount of community development loans;

•

the number and dollar amount of community development investments;

•

the extent to which the bank provides community development services; and

•

the bank's responsiveness through community development loans, community development investments, and

community development services to community development needs. 

The release proposing these New CRA rules stated that the agencies believe retail lending remains a core part of a bank's

affirmative obligation under the CRA to meet the credit needs of their entire communities. At the same time, the agencies

recognize that, compared to large banks, intermediate banks might not offer as wide a range of retail products and services,

have a more limited capacity to conduct community development activities, and may focus on the local communities where

their branches are located.” The proposal reflected the agencies’ views that banks of this size should have meaningful

capacity to conduct community development financing, as they do under the current approach.

The new rule exempts small and intermediate banks from certain new data requirements that apply to banks with assets of

at least $2 billion and limits certain new data requirements to large banks with assets greater than $10 billion.

15

Overdrafts

The federal bank regulators have updated their guidance several times on overdrafts, including overdrafts incurred at ATMs

and point of sale terminals. Overdrafts also have been a CFPB concern, which began refocusing on this issue in 2021 with

a view to “insure that banks continue to evolve their businesses to reduce reliance on overdraft and not sufficient funds

fees.” Among other things, the federal regulators require banks to monitor accounts and to limit the use of overdrafts by

customers as a form of short-term, high-cost credit, including, for example, giving customers who overdraw their accounts

on more than six occasions where a fee is charged in a rolling 12-month period, a reasonable opportunity to choose a less

costly alternative and decide whether to continue with fee-based overdraft coverage. It also encourages placing appropriate

daily limits on overdraft fees, and asks banks to consider eliminating overdraft fees for transactions that overdraw an

account by de minimis amounts. Overdraft policies, processes, fees and disclosures have been the subject of various

litigation against banks in various jurisdictions. The federal bank regulators continue to consider responsible small dollar

lending, including overdrafts and related fee issues and issued principles for offering small-dollar loans in a responsible

manner on May 20, 2020.

CFPB Consumer Financial Protection Circular 2022-06 (Oct. 26, 2022) concluded that overdraft fee practices must comply

with Regulation Z, Regulation E, and the prohibition against unfair, deceptive, and abusive acts or practices in Section 1036

of the Consumer Financial Protection Act. Further, overdraft fees assessed by financial institutions on transactions that a

consumer would not reasonably anticipate are likely unfair even if these comply with these other consumer laws and

regulations. Another CFPB rule applicable to banks with over $10 billion in assets scheduled to become effective October

1, 2025, has been challenged in Federal district court for the Southern District of Mississippi. Among other things, this rule

limits overdraft charges to $5 in most cases. 

Residential Mortgages

CFPB regulations require that lenders determine whether a consumer has the ability to repay a mortgage loan. These

regulations establish certain minimum requirements for creditors when making ability to repay determinations, and provide

certain safe harbors from liability for mortgages that are "qualified mortgages" and are not “higher-priced.” Generally,

these CFPB regulations apply to all consumer, closed-end loans secured by a dwelling including home-purchase loans,

refinancing and home equity loans—whether first or subordinate lien. Qualified mortgages must generally satisfy detailed

requirements related to product features, underwriting standards, and requirements where the total points and fees on a

mortgage loan cannot exceed specified amounts or percentages of the total loan amount. Qualified mortgages must have:

(1) a term not exceeding 30 years; (2) regular periodic payments that do not result in negative amortization, deferral of

principal repayment, or a balloon payment; (3) and be supported with documentation of the borrower and its credit. On

December 10, 2020, the CFPB issued final rules related to “qualified mortgage” loans. Lenders are required under the law

to determine that consumers have the ability to repay mortgage loans before lenders make those loans. Loans that meet

standards for QM loans are presumed to be loans for which consumers have the ability to repay.

The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (the “2018 Growth Act”) provides that

certain residential mortgages held in portfolio by banks with less than $10 billion in consolidated assets automatically are

deemed “qualified mortgages.” This relieves such institutions from many of the requirements to satisfy the criteria listed

above for “qualified mortgages.” Mortgages meeting the “qualified mortgage” safe harbor may not have negative

amortization, must follow prepayment penalty limitations included in the Truth in Lending Act, and may not have fees

greater than 3% of the total value of the loan.

The Bank generally services the loans it originates, including those it sells. The CFPB’s mortgage servicing standards

include requirements regarding force-placed insurance, certain notices prior to rate adjustments on adjustable-rate

mortgages, and periodic disclosures to borrowers. Servicers are prohibited from processing foreclosures when a loan

modification is pending, and must wait until a loan is more than 120 days delinquent before initiating a foreclosure action.

Servicers must provide borrowers with direct and ongoing access to its personnel, and provide prompt review of any loss

mitigation application. Servicers must maintain accurate and accessible mortgage records for the life of a loan and until one

year after the loan is paid off or transferred. These standards increase the cost and compliance risks of servicing mortgage

loans, and the mandatory delays in foreclosures could result in loss of value on collateral or the proceeds we may realize

from the sale of foreclosed property. 

We focus our residential mortgage origination on qualified mortgages and those that meet our investors’ requirements, but

we may make loans that do not meet the safe harbor requirements for “qualified mortgages.”

16

The Federal Housing Finance Authority (“FHFA”) regulates The Federal National Mortgage Association (“Fannie Mae’s”)

and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) (individually and collectively, “GSE”). Among these,

are repurchase rules applicable to sales of mortgages to the GSEs. These rules include the kinds of loan defects that could

lead the GSEs to request a mortgage loan repurchase or seek other remedies against the mortgage loan originator or seller. 

The FHFA also has updated these GSEs’ representations and warranties framework and provided an independent dispute

resolution (“IDR”) process to allow a neutral third party to resolve demands after the GSEs’ quality control and appeal

processes have been exhausted.

The Bank is subject to the CFPB’s integrated disclosure rules under the Truth in Lending Act and the Real Estate

Settlement Procedures Act, referred to as “TRID”, for credit transactions secured by real property. Our residential mortgage

strategy, product offerings, and profitability may change as these regulations are interpreted and applied in practice, and

may also change due to any restructuring of Fannie Mae and Freddie Mac as part of the resolution of their conservatorships.

The 2018 Growth Act reduced the scope of TRID rules by eliminating the wait time for a mortgage, if an additional creditor

offers a consumer a second offer with a lower annual percentage rate. Congress encouraged federal regulators to provide

better guidance on TRID in an effort to provide a clearer understanding for consumers and bankers alike. The law also

provides partial exemptions from the collection, recording and reporting requirements under Sections 304(b)(5) and (6) of

the Home Mortgage Disclosure Act (“HMDA”), for those banks with fewer than 500 closed-end mortgages or less than

500 open-end lines of credit in both of the preceding two years, provided the bank’s rating under the CRA for the previous

two years has been at least “satisfactory.” The CFPB issued a rule to implement and clarify these provisions of the 2018

Growth Act on August 31, 2018. 

The Bank sells mortgage loans to Fannie Mae and services these on an actual/actual basis. As a result, the Bank is not

obligated to make any advances to Fannie Mae on principal and interest on such mortgage loans where the borrower is

entitled to forbearance.

CARES Act Loan Modifications and Forbearance

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020. Section 4013

of that Act allowed banks to temporarily suspend certain GAAP requirements for restructured loans in light of the effects of

the COVID-19 pandemic. On April 7, 2020, the Federal Reserve and the other Federal bank regulators issued an

Interagency Statement and later guidance encouraging banks to work prudently with borrowers on covered modifications. 

Section 4021 of the CARES Act allows borrowers under 1-to-4 family residential mortgage loans sold to Fannie Mae to

request forbearance up to a year if the borrower experienced financial hardships during the pandemic. During forbearance,

no fees, penalties or interest shall be charged beyond those applicable if all contractual payments were fully and timely

paid, and Fannie Mae servicers could not initiate foreclosures or similar procedures or related evictions or sales until March

31, 2021, subject to up to a three-month extension. At December 31, 2024, the Bank had approximately $328 thousand of

deferred loan amounts and $165 thousand of forbearance on loans sold to Fannie Mae pursuant to the CARES Act and the

Interagency Statement.

Anti-Money Laundering, Countering the Financing of Terrorism and Sanctions

Under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct

Terrorism Act of 2001 (the “USA PATRIOT Act”), financial institutions are subject to prohibitions against specified

financial transactions and account relationships, as well as to enhanced due diligence and “know your customer” standards

in their dealings with foreign financial institutions and foreign customers. 

The USA PATRIOT Act requires financial institutions to establish anti-money laundering programs, and sets forth

minimum standards, or “pillars” for these programs, including: 

●

the development of internal policies, procedures, and controls;

●

the designation of a compliance officer; 

●

an ongoing employee training program; 

●

an independent audit function to test the programs; and

●

ongoing customer due diligence and monitoring.

17

The International Money Laundering Abatement and Anti-Terrorism Funding Act of 2001 specifies “know your customer”

requirements that obligate financial institutions to take actions to verify the identity of the account holders in connection

with opening an account at any U.S. financial institution. Bank regulators are required to consider compliance with anti-

money laundering laws in acting upon merger and acquisition and other expansion proposals under the BHC Act and the

Bank Merger Act, and sanctions for violations of this Act can be imposed in an amount equal to twice the sum involved in

the violating transaction, up to $1 million. 

Federal Financial Crimes Enforcement Network (“FinCEN”) rules require banks to know the beneficial owners of

customers that are not natural persons, update customer information in order to develop a customer risk profile, and

generally monitor such matters.

The Federal Reserve, the other bank regulators, the NCUA and FinCEN issued a Joint Statement on Risk-Focused Bank

Secrecy Act/Anti-Money Laundering Supervision (July 22, 2019). Banks that operate in compliance with applicable law,

properly manage customer relationships and effectively mitigate risks by implementing controls commensurate with the

type and level of their risks are neither prohibited nor discouraged from providing banking services. Examiners review risk

management practices to evaluate and assess whether a bank has developed and implemented effective processes to

identify, measure, monitor, and control risks.

On August 13, 2020, the federal bank regulators issued a joint statement on their AML/BSA enforcement guidance and

clarifying that isolated or technical violations or deficiencies are generally not considered the kinds of problems that would

result in an enforcement action. The statement addresses how the agencies evaluate violations of individual pillars of the

Bank Secrecy Act and anti-money laundering (“AML/BSA”) compliance program. It describes how the agencies

incorporate the customer due diligence regulations and recordkeeping requirements issued by the United States. Department

of the Treasury (“Treasury”) as part of the internal controls pillar of a financial institution's AML/BSA compliance

program.

On October 23, 2020, FinCEN and the Federal Reserve invited comment on a proposed rule that would amend the

recordkeeping and travel rules under the Bank Secrecy Act, which would lower the applicable threshold from $3,000 to

$250 for international transactions and apply these rules to transactions using convertible virtual currencies and digital

assets with legal tender status. This rule remained a proposal in FinCEN’s Semiannual Agenda published August 16, 2024.

On January 1, 2021, Congress enacted the Anti-Money Laundering Act of 2020 and the Corporate Transparency Act

(collectively, the “AML Act”), to strengthen anti-money laundering and countering terrorism financing programs. Among

other things, the AML Act:

●

specifies uniform disclosure of beneficial ownership information for all U.S. and foreign entities conducting

business in the U.S.;

●

increases potential fines and penalties for BSA violations and improves whistleblower incentives;

●

codifies the risk-based approach to AML compliance;

●

modernizes AML systems;

●

expands the duties and powers FinCEN; and

●

emphasizes coordination and information-sharing among financial institutions, U.S. financial regulators and

foreign financial regulators.

FinCEN regulation 31 C.F.R. 101.380 implements the Corporate Transparency Act (the “CTA”), and became effective on

January 1, 2024. These regulations require entities to report information about their beneficial owners and the individuals

who created the entity (together, “beneficial ownership information” or “BOI”). FinCEN explained that the rule would help

protect the U.S. financial system from illicit use by making it more difficult for bad actors to conceal their financial

activities through entities with opaque ownership structures. FinCEN also explained that the proposed reporting obligations

would provide essential information to law enforcement and others to help prevent corrupt actors, terrorists, and

proliferators from hiding money or other property in the United States.” The new rules expand financial institutions’

obligations under the Customer Due Diligence Rule (“CDD Rule”) to collect information and verify the beneficial

ownership of legal entities. Although the Company and the Bank are exempt from the CTA’s requirements to report their

own respective beneficial owners, the new laws may increase the Bank’s anti-money laundering diligence activities and

costs.

18

On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction on enforcement

of the CTA that was issued by the U.S. District Court of the Eastern District of Texas in

Texas Top Cop Shop, Inc. v.

Garland

. Earlier, on January 7, 2025, another judge in the Eastern District of Texas issued a separate nationwide injunction

of the CTA and the Beneficial Ownership Information Reporting Rule (BOI Reporting Rule) in

Smith v. U.S. Department

of the Treasury

, which remined in effect as of January 2025.

FinCEN issued an Alert on January 24, 2025, acknowledging the continuing nationwide injunction. This Alert confirmed

that reporting companies are not currently required to file beneficial ownership information and are not subject to liability if

they fail to do so while the order remains in force.

Bills have been introduced in Congress to repeal the CTA, and it is unknown whether these will pass or if the

Administration will continue to defend the litigation challenging the CTA. Most recently, the Protect Small Business from

Excessive Paperwork Act bill was introduced, which, if enacted, would extend the compliance deadline to December 31,

2025 for submitting BOI for entities existing before 2024.

FinCEN published a request for information and comment on December 15, 2021 seeking ways to streamline, modernize

the United States AML and countering the financing of terrorists.

The United States has imposed various sanctions upon foreign countries, including China, Iran, North Korea, Russia and

Venezuela, and certain of their government officials and persons. Banks are required to comply with these sanctions, which

require additional customer screening and transaction monitoring.

Russia’s February 2022 invasion of Ukraine has generated a significant number of new sanctions on Russia, Russian

persons and suppliers of military or dual-purpose products to Russia, The Federal bank regulators have issued alerts that

Russia and others may step up cyber-attacks and data intrusions following the invasion. FinCEN has issued four alerts on

potential Russian illicit financial activity since February 2022. On January 25, 2023, FinCEN issued an alert to financial

institutions on potential investments in the U.S. commercial real estate sector by sanctioned Russian elites, oligarchs, their

family members, and the entities through which they act. The alert listed potential red flags and typologies involving

attempted sanctions evasion in the commercial real estate sector, and reminds financial institutions of their Bank Secrecy

Act (BSA) reporting obligations. On February 6, 2025, the DoJ ended Task Force Klepto Capture, which was established

in March 2022 to enforce sanctions against Russian officials and oligarchs, restrictions taken against Russian financial

institutions, including the prosecution of those who try to evade know-your-customer and anti-money laundering measures

and efforts to use cryptocurrency to evade U.S. sanctions.

Other Laws and Regulations

The Company is also required to comply with various corporate governance and financial reporting requirements under the

Sarbanes-Oxley Act of 2002, as well as related rules and regulations adopted by the SEC, the Public Company Accounting

Oversight Board and Nasdaq. In particular, the Company is required to report annually on internal controls as part of its

annual report pursuant to Section 404 of the Sarbanes-Oxley Act. 

The Company has evaluated its controls, including compliance with the SEC and FDIC rules on internal controls, and

expects to continue to spend significant amounts of time and money on compliance with these rules. If the Company fails

to comply with these internal control rules in the future, it may adversely affect its reputation, its ability to obtain the

necessary certifications to its financial statements, its relations with its regulators and other financial institutions with which

it deals, and its ability to access the capital markets and offer and sell Company securities on terms and conditions

acceptable to the Company. The Company’s assessment of its financial reporting controls as of December 31, 2024 is

included in this report with no material weaknesses reported.

19

Capital

The Federal Reserve has risk-based capital guidelines for bank holding companies and state member banks, respectively. 

These guidelines required, beginning December 31, 2019, a minimum ratio of capital to risk-weighted assets (including

certain off-balance sheet activities, such as standby letters of credit) and capital conservation buffer, totaling 10.5%. Tier 1

capital includes common equity and related retained earnings and a limited amount of qualifying preferred stock, less

goodwill and certain core deposit intangibles. Voting common equity must be the predominant form of capital. Tier 2

capital consists of non–qualifying preferred stock, qualifying subordinated, perpetual, and/or mandatory convertible debt,

term subordinated debt and intermediate term preferred stock, up to 45% of pretax unrealized holding gains on available for

sale equity securities with readily determinable market values that are prudently valued, and a limited amount of general

loan loss allowance. Tier 1 and Tier 2 capital equals total capital. 

In addition, the Federal Reserve has established minimum leverage ratio guidelines for bank holding companies not subject

to the Small BHC Policy, and state member banks, which provide for a minimum leverage ratio of Tier 1 capital to adjusted

average quarterly assets (“leverage ratio”) equal to 4%. However, bank regulators expect banks and bank holding

companies to operate with a higher leverage ratio. The guidelines also provide that institutions experiencing internal

growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum

supervisory levels without significant reliance on intangible assets. Higher capital may be required in individual cases and

depending upon a bank holding company’s risk profile. All bank holding companies and banks are expected to hold capital

commensurate with the level and nature of their risks including the volume and severity of their problem loans. 

Lastly, the Federal Reserve’s guidelines indicate that the Federal Reserve will continue to consider a “tangible Tier 1

leverage ratio” (deducting all intangibles) in evaluating proposals for expansion or new activities. The level of Tier 1

capital to risk-adjusted assets is becoming more widely used by the bank regulators to measure capital adequacy. The

Federal Reserve has not advised the Company or the Bank of any specific minimum leverage ratio or tangible Tier 1

leverage ratio applicable to them. Under Federal Reserve policies, bank holding companies are generally expected to

operate with capital positions well above the minimum ratios. The Federal Reserve believes the risk-based ratios do not

fully take into account the quality of capital and interest rate, liquidity, market and operational risks. Accordingly,

supervisory assessments of capital adequacy may differ significantly from conclusions based solely on the level of an

organization’s risk-based capital ratio.

The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), among other things, requires the federal

banking agencies to take “prompt corrective action” regarding depository institutions that do not meet minimum capital

requirements. FDICIA establishes five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,”

“significantly undercapitalized” and “critically undercapitalized.” A depository institution’s capital tier will depend upon

how its capital levels compare to various relevant capital measures and certain other factors, as established by regulation. 

See

 “Prompt Corrective Action Rules.”

Basel III Capital Rules

The Federal Reserve and the other federal bank regulators adopted in June 2013 final capital rules for bank holding

companies and banks implementing the Basel Committee on Banking Supervision’s “Basel III: A Global Regulatory

Framework for more Resilient Banks and Banking Systems.” These U.S. capital rules are called the “Basel III Capital

Rules,” and generally were fully phased-in on January 1, 2019. These are included in Federal Reserve Regulation Q.

The Basel III Capital Rules generally limit Tier 1 capital to common stock and noncumulative perpetual preferred stock. 

The Basel III Capital Rules also introduced a new capital measure, “Common Equity Tier I Capital” or “CET1.” CET1

includes common stock and related surplus, retained earnings, and subject to certain adjustments, minority common equity

interests in subsidiaries. CET1 is reduced by deductions for:

●

Goodwill and other intangibles, other than mortgage servicing assets (“MSRs”), which are treated separately, net

of associated deferred tax liabilities (“DTLs”); 

●

Deferred tax assets (“DTAs”) arising from operating losses and tax credit carryforwards net of allowances and

DTLs; 

●

Gains on sale from any securitization exposure; and 

●

Defined benefit pension fund net assets (i.e., excess plan assets), net of associated DTLs.

The Company made a one-time election in 2015 and, as a result, the Company’s CET1 is not adjusted for certain

accumulated other comprehensive income (“AOCI”).

20

Additional “threshold deductions” of the following that are individually greater than 10% of CET1 or collectively greater

than 15% of CET1 (after the above deductions are also made):

●

MSAs, net of associated DTLs;

●

DTAs arising from temporary differences that could not be realized through net operating loss carrybacks, net of

any valuation allowances and DTLs; and

●

Significant common stock investments in unconsolidated financial institutions, net of associated DTLs.

Noncumulative perpetual preferred stock and Tier 1 minority interest not included in CET1, subject to limits, will qualify as

additional Tier I capital. All other qualifying preferred stock, subordinated debt and qualifying minority interests will be

included in Tier 2 capital.

The various capital elements and total capital requirements under the Basel III Capital Rules are:

Fully Phased in

January 1, 2019

Minimum CET1 

4.50%

CET1 Conservation Buffer 

2.50%

Total CET1 

7.0%

Deductions from CET1

100%

Minimum Tier 1 Capital 

6.0%

Minimum Tier 1 Capital

plus

conservation buffer

8.5%

Minimum Total Capital 

8.0%

Minimum Total Capital

plus

conservation buffer

10.5%

21

Basel III Changes in Risk-Weightings

The Basel III Capital Rules significantly change the risk weightings used to determine risk weighted capital adequacy. 

Among various other changes, the Basel III Capital Rules apply a 250% risk-weighting to MSRs, DTAs that cannot be

realized through net operating loss carrybacks and significant (greater than 10%) investments in other financial institutions. 

A 150% risk-weighted category applies to “high volatility commercial real estate loans,” or “HVCRE,” which are credit

facilities for the acquisition, construction or development of real property, excluding one-to-four family residential

properties or commercial real estate projects where: (i) the loan-to-value ratio is not in excess of interagency real estate

lending standards; and (ii) the borrower has contributed capital equal to not less than 15% of the real estate’s “as

completed” value before the loan was made.

The Basel III Capital Rules also changed some of the risk weightings used to determine risk-weighted capital adequacy.

Among other things, the Basel III Capital Rules:

●

Assigned a 250% risk weight to MSRs;

●

Assigned up to a 1,250% risk weight to structured securities, including private label mortgage securities, trust

preferred CDOs and asset backed securities;

●

Retained existing risk weights for residential mortgages, but assign a 100% risk weight to most commercial real

estate loans and a 150% risk-weight for HVCRE;

●

Assigned a 150% risk weight to past due exposures (other than sovereign exposures and residential mortgages); 

●

Assigned a 250% risk weight to DTAs, to the extent not deducted from capital (subject to certain maximums);

●

Retained the existing 100% risk weight for corporate and retail loans; and

●

Increased the risk weight for exposures to qualifying securities firms from 20% to 100%.

HVCRE Risk Weight

In December 2019, the federal banking regulators published a final rule, effective April 1, 2020, to implement Section 214

of the 2018 Growth Act. This law restricted the bank regulators from assigning a heightened risk to a HVCRE loan that is

an acquisition construction or development loan. The rules define HVCRE loans as loans secured by land or improved real

property made after December 31, 2014 that:

●

primarily finance or refinance the acquisition, development, or construction of real property;

●

the purpose of such loans must be to acquire, develop, or improve such real property into income producing

property; and

●

the repayment of the loan must depend on the future income or sales proceeds from, or refinancing of, such real

property.

Various exclusions from HVCRE are specified. The full value of any borrower contributed land (net of any liens on the

land securing HVCRE exposure) count toward the 15% capital contribution to the appraised as completed value, which is

one of the criteria for exemption form the heightened risk weight. HVCRE loans are assigned a 150% risk weight.

22

Capital Conservation Buffer

Full compliance with the capital conservation buffer was required beginning January 1, 2019. Thereafter, permissible

dividends, stock repurchases and discretionary bonuses will be limited to the following percentages based on the capital

conservation buffer as calculated above, subject to any further regulatory limitations, including those based on risk

assessments and enforcement actions:

Capital Conservation

Buffer %

Buffer % Limit

More than 2.50%

None

> 1.875% - 2.50%

60.0%

> 1.250% - 1.875%

40.0%

> 0.625% - 1.250%

20.0%

≤ 0.625

- 0 -

On March 20, 2020, the Federal Reserve and the other federal banking regulators adopted an interim final rule that

amended the capital conservation buffer. This clarifying rule revises the definition of “eligible retained income” for

purposes of the maximum payout ratio to allow banking organizations to more freely use their capital buffers to promote

lending and other financial intermediation activities, by making the limitations on capital distributions more gradual. The

eligible retained income, as used in the Federal Reserve’s Regulation Q capital rule, as corrected on January 13, 2021, is the

greater of (i) net income for the four preceding quarters, net of distributions and associated tax effects not reflected in net

income; and (ii) the average of all net income over the preceding four quarters. Banking organizations were encouraged to

make prudent capital distribution decisions.

Regulatory Capital Changes

 Simplification

The federal bank regulators issued final rules on July 22, 2019 simplifying their capital rules. The last of these changes

become effective on April 1, 2020. The principal changes for standardized approaches institutions, such the Company and

the Bank are:

●

Deductions from capital for certain items, such as temporary difference DTAs, MSAs and investments in

unconsolidated subsidiaries were decreased to those amounts that individually exceed 25% of CET1;

●

Institutions can elect to deduct investments in unconsolidated subsidiaries or subject them to capital requirements;

and

●

Minority interests are included up to 10% of (i) CET1 capital, (ii) Tier 1 capital and (iii) total capital.

Effects of CECL Accounting Changes

The Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2016-13 “Financial

Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” on June 16, 2016, which

changed the loss model to take into account current expected credit losses (“CECL”) in place of the incurred loss method. 

On May 8, 2020, the agencies issued a statement describing the measurement of expected credit losses using the CECL

methodology, and updated concepts and practices in existing supervisory guidance that remain applicable. The Company

adopted CECL effective beginning January 1, 2023 and the Company recognized all effects on its regulatory capital in the

year of adoption.

23

Prompt Corrective Action Rules

All of the federal bank regulatory agencies’ regulations establish risk-adjusted measures and relevant capital levels that

implement the “prompt corrective action” standards. The relevant capital measures are the total risk-based capital ratio,

Tier 1 risk-based capital ratio, Common equity tier 1 capital ratio, as well as the leverage capital ratio. Under the

regulations, a state member bank will be:

●

well capitalized if it has a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 8% or

greater, a Common equity tier 1 capital ratio of 6.5% or greater, a leverage capital ratio of 5% or greater and is not

subject to any written agreement, order, capital directive or prompt corrective action directive by a federal bank

regulatory agency to maintain a specific capital level for any capital measure;

●

“adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio

of 6.0% or greater, a Common Equity Tier 1 capital ratio of 4.5% or greater, and generally has a leverage capital

ratio of 4.0% or greater;

●

“undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less

than 6.0%, a Common Equity Tier 1 capital ratio of less than 4.5% or generally has a leverage capital ratio of less

than 4.0%;

●

“significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based

capital ratio of less than 6.0%, a Common Equity Tier 1 capital ratio of less than 3%, or a leverage capital ratio of

less than 3.0%; or

●

“critically undercapitalized” if its tangible equity is equal to or less than 2.0% to total assets.

The federal bank regulatory agencies have authority to require additional capital where they determine it is necessary,

including where a bank is unsafe or unsound condition or where the bank is determined to have less than a satisfactory

rating on any of its CAMELS ratings. The regulators have confirmed that higher capital levels may be required in light of

market conditions and risk.

Depository institutions that are “adequately capitalized” for bank regulatory purposes must receive a waiver from the FDIC

prior to accepting or renewing brokered deposits, and cannot pay interest rates or brokered deposits that exceeds market

rates by more than 75 basis points. Banks that are less than “adequately capitalized” cannot accept or renew brokered

deposits. FDICIA generally prohibits a depository institution from making any capital distribution, including paying

dividends or any management fee to its holding company, if the depository institution thereafter would be

“undercapitalized”. Institutions that are “undercapitalized” are subject to growth limitations and are required to submit a

capital restoration plan for approval.

A depository institution’s parent holding company must guarantee that the institution will comply with such capital

restoration plan. The aggregate liability of the parent holding company is limited to the lesser of 5% of the depository

institution’s total assets at the time it became undercapitalized and the amount necessary to bring the institution into

compliance with applicable capital standards. If a depository institution fails to submit an acceptable plan, it is treated as if

it is “significantly undercapitalized”. If the controlling holding company fails to fulfill its obligations under FDICIA and

files (or has filed against it) a petition under the federal Bankruptcy Code, the claim against the holding company’s capital

restoration obligation would be entitled to a priority in such bankruptcy proceeding over third-party creditors of the bank

holding company.

Significantly undercapitalized depository institutions may be subject to a number of requirements and restrictions,

including orders to sell sufficient voting stock to become “adequately capitalized”, requirements to reduce total assets, and

cessation of receipt of deposits from correspondent banks. “Critically undercapitalized” institutions are subject to the

appointment of a receiver or conservator. Because the Company and the Bank exceed applicable capital requirements,

Company and Bank management do not believe that the prompt corrective action provisions of FDICIA have had or are

expected to have any material effect on the Company and the Bank or their respective operations. 

24

Dividends and Distributions

The Company is a legal entity separate and distinct from the Bank. Federal Reserve Regulation Q limits “distributions,”

including discretionary bonus payments from eligible retained income” by state member banks, such as the Bank, unless its

capital conservation buffer of common equity Tier 1 capital (“CET1”) exceeds 2.5%. “Distributions” include dividends

declared or paid on common stock, discretionary bonuses and stock repurchases, redemptions or repurchases of Tier 2

capital instruments (unless replaced by a capital instrument in the same quarter). “Eligible retained income” for the Bank

and other Federal Reserve regulated institutions is the greater of: 

●

net income for the four preceding calendar quarters, net of any distributions and associated tax effects not already

reflected in net income; or

●

the average net income over the preceding four quarters.

The Company’s primary source of cash is dividends from the Bank. The Bank’s Call Report are used for its calculation of

“eligible retained income.”

The Bank’s capital conservation buffer exceeded 2.5% at December 31, 2024.

As of December 31, 2024, the Bank is “well capitalized” under the regulatory framework for prompt corrective action. To

be categorized as “well capitalized,” the Bank must maintain minimum common equity Tier 1, total risk-based, Tier 1 risk-

based, and Tier 1 leverage ratios as set forth in the following table. Management has not received any notification from the

Bank's regulators, which changes the Bank’s regulatory capital status.

Prior regulatory approval also is required by statute if the total of all dividends declared by a state member bank (such as

the Bank) in any calendar year will exceed the sum of such bank’s net profits for the year and its retained net profits for the

preceding two calendar years, less any required transfers to surplus. During 2024, the Bank paid total cash dividends of

approximately $3.8 million to the Company. At December 31, 2024, the Bank had net profits for the year and retained net

profits for the preceding two calendar years, less any required transfers to surplus, of $9.7 million.

In addition, the Company and the Bank are subject to various general regulatory policies and requirements relating to the

payment of dividends, including requirements to maintain capital above regulatory minimums. The appropriate federal and

state regulatory authorities are authorized to determine when the payment of dividends would be an unsafe or unsound

practice, and may prohibit such dividends. The Federal Reserve has indicated that paying dividends that deplete a state

member bank’s capital base to an inadequate level would be an unsafe and unsound banking practice. The Federal Reserve

has indicated that depository institutions and their holding companies should generally pay dividends only out of current

year’s operating earnings. See “Regulatory Capital Changes” and Note 15 to the Company’s consolidated financial

statements.

Federal Reserve Supervisory Letter SR-09-4 (February 24, 2009), as revised December 21, 2015, applies to dividend

payments, stock redemptions and stock repurchases. Prior consultation with the Federal Reserve supervisory staff is

required before:

●

redemptions or repurchases of capital instruments when the bank holding company is experiencing financial

weakness; and

●

redemptions and purchases of common or perpetual preferred stock which would reduce such Tier 1 capital at end

of the period compared to the beginning of the period.

25

Bank holding company directors must consider different factors to ensure that its dividend level is prudent relative to

maintaining a strong financial position, and is not based on overly optimistic earnings scenarios, such as potential events

that could affect its ability to pay, while still maintaining a strong financial position. As a general matter, the Federal

Reserve has indicated that the board of directors of a bank holding company should consult with the Federal Reserve and

eliminate, defer or significantly reduce the bank holding company’s dividends if:

●

its net income available to shareholders for the past four quarters, net of dividends previously paid during that

period, is not sufficient to fully fund the dividends; 

●

its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective

financial condition; or 

●

It will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios. 

Community Bank Leverage Ratio Framework

Section 201 of the 2018 Growth Act provides that banks and bank holding companies with consolidated assets of less than

$10 billion that meet a “community bank leverage ratio,” established by the federal bank regulators as part of the

community bank leverage ratio framework (“CBLR”). The federal banking agencies have the discretion to determine that

an institution does not qualify for such treatment due to its risk profile. An institution’s risk profile may be assessed by

its off-balance sheet exposure, trading of assets and liabilities, notional derivatives’ exposure, and other methods.

The CBLR framework which became effective January 1, 2020, allows qualifying CBOs to adopt a simple leverage ratio to

measure capital adequacy. The CBLR may be elected by depository institutions and their holding companies and is

intended to reduce regulatory burdens for qualifying community banking organizations that do not use advanced

approaches capital measures, and otherwise qualify. Eligible institutions must have:

●

less than $10 billion of assets;

●

a leverage ratio greater than 9%;

●

off-balance sheet exposures of 25% or less of total consolidated assets; and

●

trading assets plus trading liabilities of less than 5% of total consolidated assets.

The CBLR leverage ratio is Tier 1 capital divided by average total consolidated asset for the latest quarter, taking into

account the capital simplification discussed above and the CECL related capital transitions.

A CBLR banking organization with a ratio above the requirement will not be subject to other capital and leverage

requirements. If elected by a banking organization, The CBLR leverage ratio will be the sole capital measure, and electing

institutions will not have to calculate or use any other capital measure for regulatory purposes. The Company has not

adopted the CBLR, although it believes it is eligible to elect to use the CBLR framework. Management believes that

current risk-based capital measures are useful and reflect the risks of the Company’s earning assets in a manner most

comparable to other banking organizations and which may be useful to investors. It may consider the CBLR in the future.

FDICIA

FDICIA directs that each federal bank regulatory agency prescribe standards for depository institutions and depository

institution holding companies relating to internal controls, information systems, internal audit systems, loan documentation,

credit underwriting, interest rate exposure, asset growth composition, a maximum ratio of classified assets to capital,

minimum earnings sufficient to absorb losses, a minimum ratio of market value to book value for publicly traded shares,

safety and soundness, and such other standards as the federal bank regulatory agencies deem appropriate.

26

Enforcement Policies and Actions

The Federal Reserve and the Alabama Superintendent examine and regulate our compliance with laws and regulations,

including the CFPB’s regulations. The CFPB issues regulations, interpretations and enforcement actions under the laws

applicable to consumer financial products and services. Violations of laws and regulations, including those administered by

the CFPB, or other unsafe and unsound practices, may result in the Federal Reserve and the Alabama Superintendent

imposing fines, penalties and/or restitution, cease and desist orders, or taking other formal or informal enforcement actions. 

Under certain circumstances, these agencies may enforce these remedies directly against officers, directors, employees and

others participating in the affairs of a bank or bank holding company, in the form of fines, penalties, or the recovery, or

claw-back, of compensation.

Fiscal and Monetary Policies

Banking is a business that depends on interest rate differentials. In general, the difference between the interest paid by a

bank on its deposits and its other borrowings, and the interest received by a bank on its loans and securities holdings,

constitutes the major portion of a bank’s earnings. Thus, the earnings and growth of the Company and the Bank, as well as

the values of, and earnings on, its assets and the costs of its deposits and other liabilities are subject to the influence of

economic conditions generally, both domestic and foreign, and also to the monetary and fiscal policies of the United States

and its agencies, particularly the Federal Reserve. The Federal Reserve regulates the supply of money through various

means, including open market dealings in United States government securities, the setting of discount rate at which banks

may borrow from the Federal Reserve, and the reserve requirements on deposits. 

The Federal Reserve has been paying interest on depository institutions required and excess reserve balances since October

2008. The payment of interest on excess reserve balances was expected to give the Federal Reserve greater scope to use its

lending programs to address conditions in credit markets while also maintaining the federal funds rate close to the target

rate established by the Federal Open Market Committee. The Federal Reserve has indicated that it may use this authority to

implement a mandatory policy to reduce excess liquidity, in the event of inflation or the threat of inflation. 

In April 2010, the Federal Reserve Board amended Regulation D (Reserve Requirements of Depository Institutions)

authorizing the Reserve Banks to offer term deposits to certain institutions. Term deposits, which are deposits with

specified maturity dates, will be offered through a Term Deposit Facility. Term deposits will be one of several tools that

the Federal Reserve could employ to drain reserves when policymakers judge that it is appropriate to begin moving to a less

accommodative stance of monetary policy. 

In 2011, the Federal Reserve repealed its historical Regulation Q to permit banks to pay interest on demand deposits.

In light of disruptions in economic conditions caused by the outbreak of COVID-19 and the stress in U.S. financial markets,

the Federal Reserve, Congress and the Department of the Treasury took a host of fiscal and monetary measures. In March

2020, the Federal Reserve reduced the federal funds rate target twice to 0-0.25%. The Federal Reserve established various

liquidity facilities pursuant to section 13(3) of the Federal Reserve Act to help stabilize the financial system and purchased

large amounts of government and government agency mortgaged backed securities.

During 2021 and at the beginning of 2022, the Federal Reserve described inflation as “transitory,” but as inflation

continued at increasing rates the Federal Reserve’s policy changed. The Federal Reserve announced a 25 basis point

increase in the target federal funds range on March 17, 2022, the first change since March 2020 when the target was set to

0-0.25%. Further increases were announced in 2022: 50 basis points on May 4, 75 basis points on each of June 15, July 27,

September 21, and November 2, and 50 basis points on December 14, 2022. During 2023, the Federal Reserve announced

additional target rate increases of 25 basis points on each of February 1, 2023, March 2022, May 3 and July 26, 2023. The

federal funds target rate range was 5.25-5.50% from May 4, 2023 until September 19, 2024, when it was reduced to 4.75%

-5.00%. Two other reductions in November and December resulted in a target range of 4.25%-4.50%. 

27

The Federal Reserve’s securities holdings in its System Open Market Account (“SOMA”) increased from $3.9 trillion in

early March 2020 to $9.0 trillion at April 11, 2021, largely as a result of securities purchases as the Federal Reserve

injected liquidity as a result of the COVID-19 pandemic.

On May 4, 2022, the Federal Reserve announced its plan to reduce its securities holdings in an effort to reduce inflation:

●

Reinvestments of principal of maturing Treasury securities would be reduced by $30 billion per month for three

months and thereafter would be $60 billion per month.

●

Reinvestments of principal of maturing agency debt and agency mortgage -backed securities would be reduced by

$17.5 billion per month for three months and thereafter would be $35 billion per month.

●

These declines would slow and then stop when the Federal Reserve’s balance sheet was somewhat above the

balance it deemed ample.

On May 4, 2024, the Federal Reserve’s Federal Open Market Committee (“FOMC”) announced that beginning in June

2024, it would slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury

securities from $60 billion to $25 billion. The Committee maintained the monthly redemption cap on agency debt and

agency mortgage-backed securities at $35 billion and will reinvest any remaining principal amounts of maturing securities

in Treasury securities. The Federal Reserve’s SOMA was $6.4 trillion on February 5, 2025 compared to $7.0 trillion on

February 28, 2024.

The Federal Reserve seeks to maintain maximum employment and targets longer term inflation of 2% based on annual

changes in the personal consumption expenditures. The FOMC stated on January 29, 2024 that the FOMC judges that the

risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the

Committee is attentive to the risks to both sides of its dual mandate. Inflation remained above that rate through February

2024. The Federal Reserve Chairman has indicated that the FOMC is not in a hurry to reduce its target federal funds rate

further at this time.

On March 12, 2023, as a result of unrealized securities losses resulting from increased market rates, liquidity issues at two

banks with over $100 billion of assets which failed, the Federal Reserve established a new Bank Term Funding Program

(“BTFP”). The BTFP offered loans of up to one year to banks, savings associations, credit unions, and other eligible

depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as

collateral. These assets were valued at par and the margin was 100% of par. The BTFP expires March 11, 2024, except for

loans outstanding prior to its expiration. The Company did not participate in the BTFP in 2023. 

The Federal Reserve on March 12, 2023 stated that depository institutions also may obtain liquidity against a wide range of

collateral through the Federal Reserve’s discount window, which was available with the same collateral margins as the

BTFP, but which offers loans of up to 90 days. Collateral is valued under the discount window is based on fair market

values, collateral margins subsequently have been reduced to less than 100% of collateral fair market value, with the

amount of discount depending on the type of collateral.

FDIC Insurance Assessments

The Bank’s deposits are insured by the FDIC’s DIF, and the Bank is subject to FDIC assessments for its deposit insurance. 

Since 2011, and as discussed above under “Recent Regulatory Developments”, the FDIC has been calculating assessments

based on an institution’s average consolidated total assets less its average tangible equity (the “FDIC Assessment Base”) in

accordance with changes mandated by the Dodd-Frank Act. The FDIC changed its assessment rates which shifted part of

the burden of deposit insurance premiums toward depository institutions relying on funding sources other than deposits.

In 2016, the FDIC again changed its deposit insurance pricing and eliminated all risk categories and now uses “financial

ratios method” based on CAMELS composite ratings to determine assessment rates for small established institutions with

less than $10 billion in assets (“Small Banks”). The financial ratios method sets (i) a maximum assessment for CAMELS 1

and 2 rated banks, and (ii) minimum assessments for lower rated institutions. All basis points are annual amounts. 

28

The following table shows the FDIC assessment schedule for Small Banks, such as the Bank, for the first assessment period

of 2023 to be billed in June 2023, which is the latest available:

Established Small Institution

CAMELS Composite

1 or 2

3

4 or 5

Initial Base Assessment Rule

5 to 18 basis points

8 to 32 basis points

18 to 32 basis points

Unsecured Debt Adjustment. 

Cannot exceed the lesser of 5

basis points or 50% of the

bank’s initial FDIC

assessment rate

-5 to 0 basis points

-5 to 0 basis points

-5 to 0 basis points

Brokered Deposit

Adjustment 

N/A

N/A

N/A

Total Base Assessment Rate

2.5 to 18 basis points

4 to 32 basis points

13 to 32 basis points

As shown above. these assessments are adjusted based on the bank’s CAMELS rating. For example, Small Banks, with

CAMELS ratings of 1 or 2, have a current total assessment rate of 2.5 to 18 basis points for the period to be billed in June

2023. 

The FDIC issued a special assessment of 3.36 basis points for a projected eight quarters on large banks with more than $5

billion of uninsured deposits as a result of the systemic risk determination to insure all depositors in connection with the

March 2023 failures of Silicon Valley Bank and Signature Bank. These special assessments do not apply to the Bank.

The minimum FDIC’s DIF reserve ratio is 1.35%, which was set by the Dodd-Frank Act. The FDIC Board of directors is

required by the Federal Deposit Insurance Act (the “FDI Act”) to designate a reserve ratio before the beginning of each

calendar year. There is no upper limit on the reserve ratio and thus, no statutory limit on the size of the fund. The FDI Act

provides for dividends from the fund when the reserve ratio exceeds 1.5 percent, but grants the Board sole discretion in

determining whether to suspend or limit the declaration or payment of dividends. The reserve ratio reached 1.36% on

September 30, 2018, exceeding the minimum requirement. As a result, deposit insurance surcharges on Large Banks

ceased, and smaller banks received credits against their deposit assessments from the FDIC for their portion of assessments

that contributed to the growth in the reserve ratio from 1.15% to 1.35%. The Bank’s credit was $0.2 million, and was

received and applied against the Bank’s deposit insurance assessments during 2019 and 2020.

 Because of the extraordinary growth in deposits in the first six months of 2020 due to the pandemic and government

stimulus, the DIF’s reserve ratio declined below 1.35% to 1.30%. The FDIC issued a restoration plan on September 15,

2020 designed to restore the reserve ratio to at least the statutory minimum of 1.35% within 8 years. Although the FDIC, at

that time, maintained its then current assessment rates, the FDIC may increase deposit assessment rates by up to two basis

points without notice, or more following notice and a comment period, to meet the required reserve ratio. The designated

reserve ratio has been 2% since 2010, and was set at this same level for 2025.

The Company recorded FDIC insurance premiums expenses of $0.5 million for both 2024 and 2023, respectively, which

reflects the FDIC’s amended restoration plan increases in the initial base deposit insurance assessment rate schedules

uniformly by 2 basis points, beginning with the first quarterly assessment period of 2023.

29

CRE and Leveraged Loans

CRE

The federal bank regulatory agencies released guidance in 2006 on “Concentrations in Commercial Real Estate Lending”

(the “CRE Guidance”). The CRE Guidance defines CRE loans as exposures secured by raw land, land development and

construction (including 1-4 family residential construction), multi-family property, and non-farm nonresidential property

where the primary or a significant source of repayment is derived from rental income associated with the property (that is,

loans for which 50% or more of the source of repayment comes from third party, non-affiliated, rental income) or the

proceeds of the sale, refinancing, or permanent financing of this property. Loans to REITs and unsecured loans to

developers that closely correlate to the inherent risks in CRE markets would also be considered CRE loans under the CRE

Guidance. Loans on owner occupied CRE are generally excluded. In December 2015, the Federal Reserve and other bank

regulators issued an interagency statement to highlight prudent risk management practices from existing guidance that

regulated financial institutions and made recommendations regarding maintaining capital levels commensurate with the

level and nature of their CRE concentration risk.

The CRE Guidance requires that banks have appropriate processes be in place to identify, monitor and control risks

associated with real estate lending concentrations. This could include enhanced strategic planning, CRE underwriting

policies, risk management, internal controls, portfolio stress testing and risk exposure limits as well as appropriately

designed compensation and incentive programs. Higher allowances for loan losses and capital levels may also be required. 

The CRE Guidance is triggered when either:

●

Total reported loans for construction, land development, and other land of 100% or more of a bank’s total capital;

or

●

Total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land

development, and other land are 300% or more of a bank’s total risk-based capital. 

This CRE Guidance was supplemented by the Interagency Statement on Prudent Risk Management for Commercial Real

Estate Lending (December 18, 2015). The CRE Guidance also applies when a bank has a sharp increase in CRE loans or

has significant concentrations of CRE secured by a particular property type. See “Management’s Discussion and Analysis

of Financial Condition and Results of Operations - Balance Sheet Analysis” for concentrations of the various types of CRE

loans.

At December 31, 2024, the Bank had outstanding $82.8 million in construction and land development loans and $324.0

million in total CRE loans (excluding owner occupied properties), which represent approximately 73% and 286%,

respectively, of the Bank’s total risk-based capital at December 31, 2024. The Company has always had significant

exposures to loans secured by commercial real estate due to the nature of its markets and the loan needs of both its retail

and commercial customers. The Company believes its long-term experience in CRE lending, underwriting policies,

internal controls, and other policies currently in place, as well as its loan and credit monitoring and administration

procedures, are generally appropriate to manage its concentrations as required under the Guidance. 

The Federal Reserve joined the other depository institution regulators in issuing a Policy Statement on Prudent Commercial

Real Estate Loan Accommodations and Workouts (June 30, 2023). This Policy Statement builds on and updates existing

guidance to enable financial institutions to work prudently and constructively with creditworthy borrowers during times of

financial stress. The Policy Statement provides a broad set of risk management principles relevant to CRE short term loan

accommodations and longer-term workouts in all business cycles, particularly in challenging economic environments. It

states that the regulatory agencies expect their examiners to take a balanced approach in assessing the adequacy of a

financial institution's risk management practices for loan accommodation and workout activities. Financial institutions that

implement prudent CRE loan accommodation and workout arrangements after performing a comprehensive review of a

borrower's financial condition will not be subject to criticism for engaging in these efforts, even if these arrangements result

in modified loans that have weaknesses that result in adverse classification. In addition, modified loans to borrowers who

have the ability to repay their debts according to reasonable terms will not be subject to adverse classification solely

because the value of the underlying collateral has declined to an amount that is less than the outstanding loan balance. The

Policy Statement also describes the classifications of CRE loan accommodations and workouts and addresses regulatory

accounting and reporting in such situations, including CECL.

30

Leveraged Loans 

In 2013, the Federal Reserve and other banking regulators issued their “Interagency Guidance on Leveraged Lending”

highlighting standards for originating leveraged transactions and managing leveraged portfolios, as well as requiring banks

to identify their highly leveraged transactions, or HLTs. The Government Accountability Office issued a statement on

October 23, 2017 that this guidance constituted a “rule” for purposes of the Congressional Review Act, which provides

Congress with the right to review the guidance and issue a joint resolution for signature by the President disapproving it. 

No such action was taken, and instead, the federal bank regulators issued a September 11, 2018 “Statement Reaffirming the

Role of Supervisory Guidance.” This Statement indicated that guidance does not have the force or effect of law or provide

the basis for enforcement actions, but this guidance can outline supervisory agencies’ views of supervisory expectations and

priorities, and appropriate practices. The federal bank regulators continue to identify elevated risks in leveraged loans and

shared national credits.

The Bank did not have any leveraged loans at year-end 2024 or 2023 subject to the Interagency Guidance on Leveraged

Lending or that were shared national credits.

Other Dodd-Frank Act Provisions

The Dodd-Frank Act provides shareholders of all public companies with a say on executive compensation. Under the

Dodd-Frank Act, each company must give its shareholders the opportunity to vote on the compensation of its executives, on

a non-binding advisory basis, at least once every three years. The Dodd-Frank Act also adds disclosure and voting

requirements for golden parachute compensation that is payable to named executive officers in connection with sale

transactions. 

The SEC is required under the Dodd-Frank Act to issue rules obligating companies to disclose in proxy materials for annual

shareholders meetings, information that shows the relationship between executive compensation actually paid to their

named executive officers and their financial performance, taking into account any change in the value of the shares of a

company’s stock and dividends or distributions. The Dodd-Frank Act also provides that a company’s compensation

committee may only select a consultant, legal counsel or other advisor on methods of compensation after taking into

consideration factors to be identified by the SEC that affect the independence of a compensation consultant, legal counsel

or other advisor.

Section 954 of the Dodd-Frank Act added section 10D to the Exchange Act. Section 10D directs the SEC to adopt rules

prohibiting a national securities exchange or association from listing a company unless it develops, implements, and

discloses a policy regarding the recovery or “claw-back” of executive compensation in certain circumstances. In the event

of an accounting restatement due to material noncompliance with a financial reporting requirement under the federal

securities laws, the policy must require that the company recover from any current or former executive officer, any

incentive-based compensation (including stock options) received during the three-year period preceding the date of the

restatement, which is in excess of what would have been paid based on the restated financial statements. There is no

requirement of wrongdoing by the executive, and the claw-back is mandatory and applies to all executive officers. Section

954 augments section 304 of the Sarbanes-Oxley Act, which requires the CEO and CFO to return any bonus or other

incentive- or equity-based compensation received during the 12 months following the date of similarly inaccurate financial

statements, as well as any profit received from the sale of employer securities during the period, if the restatement was due

to misconduct. Unlike section 304, under which only the SEC may seek recoupment, the Dodd-Frank Act requires the

Company to seek the return of compensation. 

The SEC adopted, effective January 27, 2023, Commission Rule 10D -1 under the Exchange Act, which requires each

national securities exchange to adopt listing standards for the recovery of erroneously awarded executive compensation. 

The Commission approved Nasdaq Listing Rule 5608 (“Rule 5608”) on June 9, 2023. Under Rule 10D-1, listed companies

must recover from current and former executive officers’ incentive-based compensation received during the three

completed fiscal years preceding the date on which the issuer is required to prepare an accounting restatement.

31

Under these SEC and Nasdaq rules, the recovery of erroneously awarded compensation is required on a “no fault” basis,

without regard to whether any misconduct occurred or an executive officer’s responsibility for the erroneous financial

statements. A restatement due to material noncompliance with any financial reporting requirement under the securities laws

triggers application of the recovery policy. The determination regarding materiality of an error should be based on facts and

circumstances and existing judicial and administrative interpretations. The proposed Nasdaq Rule requires recovery for

restatements that correct errors that are material to previously issued financial statements (commonly referred to as “Big R”

restatements), as well as for restatements that correct errors that are not material to previously issued financial statements

but would result in a material misstatement if the errors were left uncorrected in the current report or the error correction

was recognized in the current period (commonly referred to as “little r” restatement). 

Nasdaq-listed companies, such as the Company, are required to recover the amount of incentive-based compensation

received by an executive officer that exceeds the amount the executive officer would have received had the incentive-based

compensation been determined based on the accounting restatement, computed without regard to any taxes paid. Nasdaq

defines “incentive-based compensation” as any compensation that is granted, earned or vested based wholly or in part upon

the attainment of any “financial reporting measure.” Incentive-based compensation is deemed received on or after October

2, 2023 and in the fiscal period during which the financial reporting measure specified in the incentive-based compensation

award is attained, even if the grant or payment of the incentive-based compensation occurs after the end of that period.

The Company adopted an Erroneously Awarded Executive Incentive Based Compensation Policy effective December 1,

2023 to comply with these rules.

The SEC adopted a rule in August 2013 to implement pay ratios pursuant to Section 953 of the Dodd-Frank Act comparing

their CEO’s total compensation to the median compensation of all other employees. These rules applied beginning to fiscal

year 2017 annual reports and proxy statements. Smaller reporting companies, such as the Company, are exempted from

this rule.

The Dodd-Frank Act, Section 955, requires the SEC, by rule, to require that each company disclose in the proxy materials

for its annual meetings whether an employee or board member is permitted to purchase financial instruments designed to

hedge or offset decreases in the market value of equity securities granted as compensation or otherwise held by the

employee or board member. The SEC adopted changes to its Reg. S-K Item 407(i) implementing this Section.

The Company adopted its 2024 Incentive Plan in May 2024, but had not granted any awards under that Plan as of February

12, 2025. The Company’s insider trading policy, which applies to all Company and Bank directors, officers, employees

and certain independent contractors and specified related persons (collectively, “Covered Persons”). This Policy prohibits

Covered Persons, from short-selling Company securities or engaging in transactions involving Company “Derivative

Securities.” This prohibition includes, without limitation, trading in Company-based put option contracts, including

straddles, and the like. Derivative Securities include options, warrants, restricted stock units, stock appreciation rights or

similar rights whose value is derived from the value of an equity or other security, including Company Securities. The

Company’s Insider Trading Policy is included as an exhibit to its annual report on SEC Form 10-K.

Section 956 of the Dodd-Frank Act prohibits incentive-based compensation arrangements that encourage inappropriate risk

taking by covered financial institutions, are deemed to be excessive, or that may lead to material losses. In June 2010, the

federal bank regulators adopted Guidance on Sound Incentive Compensation Policies, which, although targeted to larger,

more complex organizations than the Company, includes principles that have been applied to smaller organizations similar

to the Company. This Guidance applies to incentive compensation to executives as well as employees, who, “individually

or a part of a group, have the ability to expose the relevant banking organization to material amounts of risk.” Incentive

compensation should:

●

Provide employees incentives that appropriately balance risk and reward;

●

Be compatible with effective controls and risk-management; and

●

Be supported by strong corporate governance, including active and effective oversight by the organization’s board

of directors.

The federal bank regulators stated that this Guidance is expected to generally have less effect on smaller banking

organizations, which typically are less complex and make less use of incentive compensation arrangements than larger

banking organizations.

32

The federal bank regulators, the SEC and other regulators proposed regulations implementing Section 956 in April 2011,

which would have been applicable to, among others, depository institutions and their holding companies with $1 billion or

more in assets. An advance notice of a revised proposed joint rulemaking under Section 956 was published by the financial

services regulators in May 2016, but these rules have not been adopted.

Following the failures of Silicon Valley Bank and Signature Bank in early March 2023, Senator Elizabeth Warren and co-

sponsors, filed S.1045 “Failed Bank Executives Clawback Act.” This bill provides that when a bank is placed into FDIC

receivership, all or part of the compensation paid the previous five years to an institution-affiliated party responsible for the

condition of the institution must be paid to FDIC to prevent unjust enrichment and to assure that the party bears losses

consistent with their responsibility. Compensation includes salary, bonuses, awards, and profits from buying or selling

securities. The bill also expands the FDIC’s authority to claw back compensation of parties responsible for financial losses

incurred by a financial company regardless of the process by which FDIC is appointed receiver. 

Debit Card Interchange Fees

The “Durbin Amendment” to the Dodd-Frank Act and implementing Federal Reserve regulations provide that interchanged

transaction fees for electronic debit transactions be “reasonable” and proportional to certain costs associated with

processing the transactions. The Durbin Amendment and the Federal Reserve rules thereunder are not applicable to banks

with assets less than $10 billion. Such smaller banks, however, compete with banks that are subject to the Durbin

Amendment, and therefore may have to limit their interchange fees, also.

Other Legislative and Regulatory Changes

Various legislative and regulatory proposals, including substantial changes in banking, and the regulation of banks, thrifts

and other financial institutions, compensation, and the regulation of financial markets and their participants, and financial

instruments and securities, and the regulators of all of these, as well as the taxation of these entities, are being considered by

the executive branch of the federal government, Congress and various state governments, including Alabama. 

The 2018 Growth Act, which was enacted on May 24, 2018, amended the Dodd-Frank Act, the BHC Act, the Federal

Deposit Insurance Act and other federal banking and securities laws to provide regulatory relief in these areas:

●

consumer credit and mortgage lending;

●

capital requirements;

●

Volcker Rule compliance;

●

stress testing and enhanced prudential standards;

●

increased the asset threshold under the Federal Reserve’s Small BHC Policy from $1 billion to $3 billion; and

●

capital formation.

The following provisions of the 2018 Growth Act are helpful to banks of our size, and we have benefitted from the Growth

Act’s changes to the deposit rules:

●

“qualifying community banks,” defined as institutions with total consolidated assets of less than $10 billion, which

meet a “community bank leverage ratio, which is currently 9.0%, may be deemed to have satisfied applicable risk-

based capital requirements as well as the capital ratio requirements;

●

section 13(h) of the BHC Act, or the “Volcker Rule,” is amended to exempt from the Volcker Rule, banks with

total consolidated assets valued at less than $10 billion (“community banking organizations”), and trading assets

and liabilities comprising not more than 5.00% of total assets; and

●

“reciprocal deposits” will not be considered “brokered deposits” for FDIC purposes, provided such deposits do not

exceed the lesser of $5 billion or 20% of the bank’s total liabilities.

On July 9, 2019, the federal banking agencies, together with the SEC and the Commodities Futures Trading Commission

(“CFTC”), issued a final rule excluding qualifying community banking organizations from the Volcker Rule pursuant to the

2018 Growth Act. The Volcker Rule change may enable us to invest in certain collateralized loan obligations that are

treated as “covered funds” and other investments prohibited to banking entities by the Volcker Rule.

The FDIC announced on December 19, 2018, a final rule allows reciprocal deposits to be excluded from “brokered

deposits” up to the lesser of $5 billion or 20% of their total liabilities. Institutions that are not both well capitalized and

well rated are permitted to exclude reciprocal deposits from brokered deposits in certain circumstances.

33

The FDIC issued comprehensive changes to its brokered deposit rules effective April 1, 2021. The revised rules establish

new standards for determining whether an entity meets the statutory definition of “deposit broker,” and identifies a number

of businesses that automatically meet the “primary purpose exception” from a “deposit broker.” The revisions also provide

an application process for entities that seek a “primary purpose exception,” but do not meet one of the designated

exceptions.” The new rules provide us greater flexibility, but we have limited our brokered deposits.

Reciprocal deposits have expanded our funding and liquidity sources without being subjected to FDIC limitations on

depositor FDIC insurance coverage and potential federal deposit insurance assessment increases for brokered deposits. 

The applicable agencies also issued final rules simplifying the Volcker Rule’s proprietary trading restrictions effective

January 1, 2020. On June 25, 2020, the agencies adopted a final rule simplifying the Volcker Rule’s covered fund

provisions effective October 1, 2020.

Certain of these new rules, and proposals, if adopted, could significantly change the regulation or operations of banks and

the financial services industry. New regulations and statutes are regularly proposed that contain wide-ranging proposals for

altering the structures, regulations and competitive relationships of the nation’s financial institutions.

Recent Developments – New Administration

Donald J. Trump became President on January 20, 2025. The President has issued numerous Executive Orders, and he and

his designees have taken a number of actions that affect financial institutions, and their regulation and regulators, including:

•

Issued an Executive Order “Regulatory Freeze Pending Review” (January 20, 2025);

•

Issued Executive Order 14192 “Unleashing Prosperity Through Deregulation” (January 31, 2025);

•

Issued a Presidential Memorandum dated January 20, 2025 freezing the hiring of Federal civilian employees in all

executive departments and agencies

•

Issued Executive Order Implementing the President’s “Department of Government Efficiency” (“DOGE”)

(January 20, 2025);

•

Issued Executive Order 14158 “Establishing and Implementing the President’s ‘Department of Government

Efficiency’ Workforce Optimization Initiative” (February 11, 2025);

•

Removed the CFPB Director and appointing acting directors, most recently the Director (the “OMB Director”) of

the Office of Management and Budget (the “OMB”), who will also serve as Acting CFPB Director;

•

Replaced the Acting Comptroller of the Currency with a new Acting Comptroller of the Currency, and nominated

a successor Comptroller of the Currency and a CFPB Director, each subject to Senate confirmation;

•

Issued Executive Order 14178 “Strengthening American Leadership in Digital Financial Technology” (January 23,

2025);

•

Ordered and withdrew (subject to restoration) various tariffs on China, Canada and Mexico, a 25% tariff on all

imported steel and aluminum, and is expected to order “reciprocal” tariffs, which would raise rates on imported

goods to equal foreign levies on U.S. goods and has threatened other tariffs;

•

Issued an Executive Order “Reforming the Federal Workforce to Better Serve Americans” (February 11, 2025);

•

Issued an Executive Order “Restoring Democracy and Accountability in Government” (February 11, 2025); and

•

Issued an Executive Order “Ensuring Lawful Governance and Implementing the President’s ‘Department of

Government Efficiency’ Deregulatory Initiative” (February 19, 2025). 

The regulatory freeze order directs all executive department agencies to not propose or issue any rule until

a department or

agency head appointed or designated by President Trump reviews and approves the rule. Any rule or proposed rule sent to

the Office of Federal Register shall be withdrawn until the above review is made. Any substantive action by an agency

(normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or

regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking. This

shall also apply to any agency statement of general applicability and future effect that sets forth a policy on a statutory,

regulatory, or technical issue or an interpretation of a statutory or regulatory issue. This order applies to any substantive

action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the

promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and

notices of proposed rulemaking. This shall also apply to any agency statement of general applicability and future effect that

sets forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statutory or regulatory issue.

34

Executive Order 14192 seeks to “significantly reduce the private expenditures required to comply with Federal

regulations.” For the current fiscal year 2025, for each new regulation, at least 10 existing regulations shall be identified for

repeal. Agencies are directed to ensure that the total incremental cost of all new regulations, including repealed regulations,

being finalized this year, shall be significantly less than zero, as determined by the OMB Director. The OMB Director shall

provide agencies with guidance on implementation, including measuring regulatory costs. No regulation shall be added to

or removed from the Unified Regulatory Agenda without the approval of the OMB Director. Regulations and rules are

broadly defined as:

…an agency statement of general or particular applicability and future effect designed to implement, interpret, or

prescribe law or policy or to describe the procedure or practice requirements of an agency, including, without

limitation, regulations, rules, memoranda, administrative orders, guidance documents, policy statements, and

interagency agreements, regardless of whether the same were enacted through the processes in the Administrative

Procedure Act

The hiring freeze provides that no Federal civilian position that is vacant at noon on January 20, 2025, may be filled, and no

new position may be created, subject to certain exceptions. The hiring freeze apparently has resulted in the rescission of

offers to 200 new FDIC examiners. In addition to the hiring freeze, the Office of Personnel Management started the

Voluntary Separation Incentive Payment Authority (the “buyout authority”), which allows agencies that are downsizing or

restructuring to offer employees lump-sum payments up to $25,000 as an incentive to voluntarily separate. It has been

reported that over 2 million federal workers may be eligible to accept such retirement buyouts. The program is subject to

litigation, and deadlines for acceptance by employees were temporarily stayed by a federal court.

DOGE or the “USDS” is in the Executive Office of the President and is headed by an Administrator. Its purpose is to

“implement the President’s DOGE Agenda, by modernizing Federal technology and software to maximize governmental

efficiency and productivity.” The Executive Order includes a U.S. DOGE Service Temporary Organization, which shall be

dedicated to advancing the President’s 18-month DOGE agenda. The U.S. DOGE Service Temporary Organization shall

terminate on July 4, 2026. The Executive Order also directs each agency head, in consultation with the USDS

administrator, to establish a “DOGE team” of at least four employees within each agency. These teams will “typically

include” a team lead, an engineer, a human resources specialist, and an attorney. According to the Executive Order, agency

team members may include current agency personnel or new hires designated as “special government employees.” Each

agency’s team is directed to coordinate with USDS and advise its agency head on implementing the DOGE agenda, with an

apparent focus on information technology and human resource management. Among other things, the USDS Administrator

shall work with Agency Heads to promote inter-operability between agency networks and systems, ensure data integrity,

and facilitate responsible data collection and synchronization. Agency Heads are directed to take all necessary steps, in

coordination with the USDS Administrator, and to the maximum extent consistent with law, provide USDS full and prompt

access to all unclassified agency records, software systems, and information technology systems. USDS must adhere to

rigorous data protection standards.

The Executive Order “Establishing and Implementing the President’s ‘Department of Government Efficiency’ Workforce

Optimization Initiative” requires the OMB Director to submit a plan to reduce the size of the Federal government's

workforce through efficiency improvements and attrition (Plan). The Plan shall require that each agency, subject to certain

exceptions, hire no more than one employee for every four employees that depart. Each Agency Head is required, in

consultation with its DOGE Team Lead, among other things, to (i) hire in the highest need areas, (ii) fill vacancies unless

the DOGE Team Lead determines such positions need to be filled. Agency Heads shall promptly prepare to initiate large-

scale reductions in force (RIFs) to separate from Federal service temporary employees and reemployed annuitants working

in areas that will likely be subject to the RIFs. All offices that perform functions not mandated by statute or other law shall

be prioritized in the RIFs, including all agency diversity, equity, and inclusion () initiatives. Within 30 days, each Agency

Head shall submit a report to the OMB Director that that identifies any statutes that establish the agency, or subcomponents

of the agency, as statutorily required entities. The report shall discuss whether the agency or any of its subcomponents

should be eliminated or consolidated.

The new Acting Comptroller of the Currency and Acting CFPB Director will serve on the five person FDIC Board of

Directors. The FDIC is currently headed by an Acting Chairman. No person has been nominated to serve as the FDIC

Chair. FDIC director Jonathan McKernan resigned on February 11, 2025, and was nominated to be CFPB Director. 

Jonathan Gould was nominated to be Comptroller of the Currency on the same day. These nominations are subject to

Senate confirmation.

35

The current Acting CFPB Director, on February 8, 2025, ordered all CFPB employees to suspend substantially all

activities, including all supervision, examination and stakeholder engagement activities, and closed the agency's

headquarters for the week of February 10, 2025. The Acting CFPB Director also said the CFPB had excessive funding on

hand and would not take the next scheduled drawdown of funds from the Federal Reserve.

Executive Order 14178 states the Administration’s policy “to support the responsible growth and use of digital assets,

blockchain technology, and related technologies across all sectors of the economy.” “Digital assets” include “any digital

representation of value that is recorded on a distributed ledger, including cryptocurrencies, digital tokens, and stablecoins.” 

This order revoked Executive Order 14067 “Ensuring Responsible Development of Digital Assets” (March 9, 2022) and

directed the Secretary of the Treasury is directed to immediately revoke the Department of the Treasury's “Framework for

International Engagement on Digital Assets,” (July 7, 2022).

These new policies include the following that are applicable to banks:

•

protecting and promoting fair and open access to banking services for all law-abiding individual citizens and

private-sector entities alike; and 

•

providing regulatory clarity and certainty built on technology-neutral regulations, frameworks that account for

emerging technologies, transparent decision making, and well-defined jurisdictional regulatory boundaries, all of

which are essential to supporting a vibrant and inclusive digital economy and innovation in digital assets,

permissionless blockchains, and distributed ledger technologies

The Executive Order Reforming the Federal Workforce to Better Serve Americans requires:

•

Agency Heads to coordinate and consult with DOGE to shrink the size of the federal workforce and limit hiring to

essential positions;

•

The Office of Personnel Management to initiate a rulemaking to ensure federal employees are held to the highest

standards of conduct;

•

Upon expiration of the Day 1 hiring freeze and implementation of the hiring plan, agencies to hire no more than

one employee for every four employees that depart from federal service (with appropriate immigration, law

enforcement, and public safety exceptions);

•

Agencies to plan for large-scale reductions in force and determine which agency components (or agencies

themselves) may be eliminated or combined because their functions aren’t required by law.

The Executive Order “Restoring Democracy and Accountability in Government” requires all agencies to submit draft

regulations for White House review with no carveout for so-called independent agencies, except for the monetary policy

functions of the Federal Reserve; and consult with the White House on their priorities and strategic plans. The White

House will set their performance standards. The Office of Management and Budget will adjust so-called independent

agencies’ apportionments of funds. The President and the Attorney General (subject to the President’s supervision and

control) will interpret the law for the executive branch, instead of having separate agencies adopt conflicting interpretations.

The Executive Order “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government

Efficiency’ Deregulatory Initiative” requires Agency Heads, in coordination with their DOGE Team Leads and the OMB

Director, to initiate a process to review, with priority on “significant regulatory actions,” as defined in Executive Order

12866 (Sept. 30, 1993) (“E.O. 19866”), all regulations subject to their sole or joint jurisdiction for consistency with law and

Administration policy and within 60 days:

1.

Identify the following classes of regulations:

•

unconstitutional regulations and regulations that raise serious constitutional difficulties, such as exceeding the

scope of the power vested in the Federal Government by the Constitution;

•

regulations that are based on unlawful delegations of legislative power; 

•

regulations that are based on anything other than the best reading of the underlying statutory authority or

prohibition;

•

regulations that implicate matters of social, political, or economic significance that are not authorized by clear

statutory authority 

•

regulations that impose significant costs upon private parties that are not outweighed by public benefits;

36

•

regulations that harm the national interest by significantly and unjustifiably impeding technological

innovation, infrastructure development, disaster response, inflation reduction, research and development,

economic development, energy production, land use, and foreign policy objectives; and

•

regulations that impose undue burdens on small business and impede private enterprise and entrepreneurship.

2.

Provide OMB a list of all regulations identified by the above classes and consult with the OMB to develop a

Unified Regulatory Agenda that seeks to rescind or modify these regulations.

Agency Heads shall determine whether ongoing enforcement of any regulations identified in their regulatory review is

compliant with law and Administration policy. Agency Heads shall de-prioritize (i) actions to enforce regulations that are

based on anything other than the best reading of a statute and (ii) enforcement of regulations that go beyond the powers

vested in the Federal Government by the Constitution. Agency heads, in consultation with the OMB Director, shall, on a

case-by-case basis, as appropriate, direct the termination of all such enforcement proceedings that do not comply with law

or Administration policy. Agency Heads shall consult with their DOGE Team Leads and OMB on potential new

regulations in accordance with E.O. 19866’s processes.

Tariffs generally make goods more expensive, and therefore may have inflationary effects that would be expected to slow

consumer spending. Changes in tariffs may also cause changes in supply chains to reduce the effects of the tariffs and such

changes may result in disruptions to the supply chains away from countries and producers to alternatives with higher costs

but more advantageous tariff rates. As of February 12, 2025, the 25% tariffs on all imported steel and aluminum may have

the most immediate effects, especially on the automobile industry and its suppliers. This industry and its suppliers are large

employers in Lee County and nearby areas served by the Bank.

ITEM 1A. RISK FACTORS

Any of the following risks could harm our business, results of operations and financial condition and an investment in our

stock. The risks discussed below also include forward-looking statements, and our actual results may differ substantially

from those discussed in these forward-looking statements. 

Risk Factor Summary

The following summarizes the risks provided after this summary and is qualified by the more detailed discussion of “Risk

Factors” that follows this Summary, and which should be read in their entirety. Our risks include operational risks,

financial risks and legal and regulatory risks, which are related and intertwined as discussed more fully in the Risk Factors

that follow this summary.

Operational risks are inherent in our business, and include:

●

The effects of local, national and regional market and economic conditions and cyclicality, including the levels

and rates of change in inflation and interest rates, and the effects on depositors, borrowers and markets, including

the real estate and securities markets;

●

Our allowance for credit losses is based on estimates and judgments and may prove to be inadequate to our credit

risks;

●

The risks and costs of nonperforming assets

●

The soundness of other financial institutions and perceptions regarding our industry, especially when other banks

experience difficulties or fail;

●

Our concentrations in commercial real estate loans in our market;

●

We operate in a highly competitive market and compete against a number of larger national and regional

competitors, as well as smaller institutions, nonbanks and credit unions;

●

Our ability to attract and retain key people;

●

Inflation and strong labor markets may affect our non-interest expenses;

●

Technological changes affect our business, and we may have fewer resources than our larger regulated and

unregulated competitors, both in and outside our market area, which may increase the competition we face;

●

Potential gaps in our risk management, including managing the risks related to maintaining our data security and

cybersecurity and those of our third-party service providers;

37

●

Continuity risks to us and our service providers due to power, information technology and telecommunication

disruptions and outages, could affect our customer service, reputation and our results of operations, financial

condition, customer relationship and reputation;

●

Risks of severe weather, natural disasters, climate changes, epidemics and severe health issues in the population,

wars and acts of terrorism and other events; and

●

Future acquisitions may disrupt our business, dilute shareholder value and adversely affect our operating results

and financial condition, among other risks.

Financial risks result in part from our operational risks and the risk of our business, and include:

●

Increases in costs of funds due to inflation, monetary and fiscal policies, changes in costumer behaviors and

competitive pressures;

●

Our results of operations and financial condition, including the values of our assets and liquidity, may be affected

by changes in interest rates and interest rate levels, the shape of the yield curve and economic conditions;

●

Liquidity risks, including the costs and availability of funding, and the liquidity of our assets, including our

investment securities portfolio, and institutional lending sources;

●

Changes in accounting and tax rules;

●

The adequacy of our capital and availability of capital, if needed;

●

Potentially excessive risk taking by our associates;

●

Our ability to pay dividends depends on our earnings, liquidity and regulatory requirements related to our capital

and our risks; and

●

Our common stock trades in limited volumes.

Legal and regulatory risks include:

●

The Company is a legal entity separate and distinct from the Bank, and transactions between the Bank and the

Company are limited by law;

●

The Company is required to be a source of financial and managerial strength to the Bank, even in circumstances

where further investment in the Bank may not be warranted;

●

Privatization of Fannie Mae and Freddie Mac incident to the ending of their conservatorships and the resulting

effects on the costs and availability of mortgage loans and the mortgage markets, generally, and the Company as a

mortgage originator, and seller and servicer of residential mortgage loans;

●

The scope, volume, complexity and clarity of regulations and regulatory and legal changes affect us, increase the

time and costs of compliance and may limit our business and adversely affect our financial condition and results of

operations;

●

The pace and volume of regulatory changes and interpretations, especially by the bank regulators, the CFPB and

the SEC, and well as numerous Executive Orders, and changes in government leadership, personnel and policies. 

Even where changes ultimately will benefit the Company, changes in regulation and policies require time and

attention, and involve costs to implement;

●

Litigation, investigations and other claims by government agencies and private parties and regulatory actions,

including those related to assertions of compliance failures;

●

The amounts and changes in the capital we are required to maintain in respect of our business and risks, and

regulatory perceptions of us and our industry; and

●

Liquidity requirements and changes in rules that affect brokered and reciprocal deposits and other sources and

measures of liquidity.

Additional Executive Orders and Administration and regulatory decisions, directives and actions, including modifications

or changes to those discussed in this report, may occur at any time with currently unpredictable effects.

Operational Risks

Market conditions and economic cyclicality may adversely affect our industry. 

We believe the following, among other things, may affect us in 2025:

38

●

Extraordinary monetary and fiscal stimulus in 2020 and in early 2021 offset certain of the COVID-19 pandemic’s

adverse economic effects, but together with supply chain disruptions, continued consumer demand, Russia’s war

in Ukraine and its effects on energy and food prices, and tight labor markets, resulted in inflation. Inflation began

running at levels unseen in decades and well above the Federal Reserve’s long term inflation goal of 2.0%

annually. Beginning in March 2022, the Federal Reserve raised its target federal funds interest rates and reduced

its securities holdings in an effort to reduce inflation. Inflation subsided in 2024. In February 2025 inflation

remains above the Federal Reserve’s target rate, the labor market remains strong and the Federal Reserve cut its

target federal funds rate in September through December 2024 100 basis points from 5.25-5.50% to 4.25%-4.50%,

and reduced the rate of decline in reinvestments of maturing securities proceeds.

●

The new presidential Administration that took office in January 2025 has established DOGE to increase

government efficiency and reduce fiscal expenditures, imposed and threatened tariffs, and proposed tax cuts and

tax cut extensions, the net effect of which is unknown. The nature and timing of any future changes in monetary

and fiscal policies, government policies and their administration and personnel, and their effects on us cannot be

predicted. 

●

Market developments, including unemployment, inflation and price levels, stock and bond market volatility, and

changes, including those resulting from Russia’s war in Ukraine and governmental fiscal, operational and

monetary policies affect consumer confidence levels, economic activity and interest rates. Increases in market

interest rates and inflation, and adverse changes in consumer and business confidence may change customers’

savings and payment behaviors, including potential increases in loan delinquencies and default rates. These could

affect our credit quality, and our results of operations and financial condition.

●

Our ability to assess the creditworthiness of our customers and those we do business with, and the values of our

assets and loan collateral may be adversely affected and less predictable as a result of inflation and fluctuating

market interest rates and changes in monetary and fiscal policies. We adopted CECL on January 1, 2023 as

required by generally accepted accounting principles (“GAAP”). CECL changed the loss model to take into

account current expected credit losses in place of the incurred loss method used historically under GAAP, and how

to estimate losses inherent in our credit exposures. The process for estimating expected losses requires difficult,

subjective, and complex judgments, including forecasts of economic conditions, unemployment levels in Alabama,

and how those economic predictions might affect the ability of our borrowers to repay their loans or the value of

assets. Changes in economic conditions and factors used in our CECL models may increase the variability of our

provisions for loan losses and our earnings.

●

Changes in market interest rates and the shape of the yield curve affect the value of our investment securities and

our other accumulated other comprehensive income or “AOCI.”

Our allowance for loan losses may prove inadequate or we may be negatively affected by credit risk exposures.

We periodically review the allowance for loan losses for adequacy considering economic conditions and trends, collateral

values and credit quality indicators, including past charge-off experience and levels of past due loans and nonperforming

assets. We cannot be certain that our allowance for loan losses will be adequate over time to cover credit losses in our

portfolio because of unanticipated adverse changes in the economy, including fiscal and monetary policy changes, inflation,

market conditions or events adversely affecting specific customers, industries or markets, including disruptions of supply

chains, the war in Ukraine, changes in taxes and regulations and changes in borrower behaviors. Certain borrowers and their

businesses and real estate and commercial projects and businesses may be adversely affected by inflation and higher interest

rates, and economic slowdowns arising from tighter monetary policies, and may request or need loan modifications and

deferrals. Various businesses will be unable to fully pass on increased costs due to inflation, supply chain disruptions and

changes and other factors, and their profits may shrink. If the credit quality of our customer base materially decreases, if the

risk profile of the market, industry or group of customers changes materially or weaknesses in the real estate markets

worsen, borrower payment behaviors change, or if our allowance for loan losses is not adequate, our business, financial

condition, including our liquidity and capital, and results of operations could be materially adversely affected. CECL, the

accounting standard for estimating expected future loan losses, became effective for the Company beginning January 1,

2023, and its effects upon the Company over a full business cycle are unknown. The CECL model incorporates various

economic condition factors, where changes in fiscal and monetary policy, as well as market interest rates and unemployment

rates in our markets, among other factors, could result in more volatility in our provisions for loan losses under CECL, which

could adversely affect our net income. See Note 1 to our Financial Statements –

“Allowance for Credit Losses – Loans.”

39

Nonperforming and similar assets take significant time to resolve and may adversely affect our results of operations and

financial condition.

Our nonperforming loans were 0.09% of total loans as of December 31, 2024, and we had no other real estate owned as

result of foreclosures or otherwise in full or partial payments in respect of loans (“OREO”). Non-performing assets may

adversely affect our net income in various ways. We do not record interest income on nonaccrual loans or OREO and these

assets require higher loan administration and other costs, thereby adversely affecting our income. Decreases in the value of

these assets, or the underlying collateral, or in the related borrowers’ performance or financial condition, whether or not due

to economic and market conditions beyond our control, could adversely affect our business, results of operations and

financial condition. In addition, the resolution of nonperforming assets requires commitments of time from management,

which can be detrimental to the performance of their other responsibilities. Loan deferrals and modifications made to help

resolve borrower issues and avoid foreclosures may not be successful. There can be no assurance that we will not

experience increases in nonperforming loans in the future, much of which is affected by the economy and the levels of

interest rates, generally.

Changes in the real estate markets, including the secondary market for residential mortgage loans, may continue to

adversely affect us. 

Beginning in March 2022, inflation and the Federal Reserve increases in interest rates to fight inflation have caused

mortgage rates to increase significantly. Higher interest rates and the increased level of housing costs since 2020 have

slowed housing sales. Although short term interest rates decreased in last half of 2024, longer term rates, including

mortgage rates, have remained elevated. Inventories of existing homes for sale have remained generally low, and many

believe that higher mortgage rates discourage potential sellers from selling their existing houses and incurring higher

mortgage costs on replacement homes. These conditions have adversely affected housing affordability and increased

monthly mortgage payments. These conditions adversely affect our mortgage loan production and may affect the value of

residential mortgage collateral. Commercial real estate projects’ economic assumptions may be adversely affected by

higher interest rates, and certain projects with short term and/or unhedged variable rate debt may be especially affected by

increased interest rates and/or a slower economy.

The CFPB’s mortgage and servicing rules, including TRID rules for closed end credit transactions, enforcement actions,

reviews and settlements, affect the mortgage markets and our mortgage operations.

The Tax Cuts and Jobs Act’s (the “2017 Tax Act”) limitations on the deductibility of residential mortgage interest and state

and local property and other taxes often called “SALT,” could adversely affect consumer behaviors and the volumes of

housing sales, mortgage and home equity loan originations, as well as the value and liquidity of residential property held as

collateral by lenders such as the Bank, and the secondary markets for single and multi-family loans. Acquisition,

construction and development loans for residential development may be similarly adversely affected. The new Trump

administration has indicated it is considering increasing the amount of SALT permitted to be deducted for federal income

taxes. Unless extended, many provisions of the 2017 Tax Act, including the cap on SALT deductions expire at the end of

2025, and the marginal individual tax brackets will increase.

Fannie Mae and Freddie Mac have been in conservatorship since September 2008. The newly appointed Secretary of

Housing and Urban Development has stated that coordinating the effort to privatize these GSEs would be his priority. 

Since these GSEs dominate the residential mortgage markets, any changes in their operations and requirements, as well as

their respective restructurings and capital and the costs of their borrowings as private institutions, could adversely affect the

primary and secondary mortgage markets, and our residential mortgage businesses, our results of operations and the returns

on capital deployed in these businesses. Resolution of these extremely large GSEs will be complex, and the timing and

effects of such resolution and the effects on mortgage originators and the mortgage markets and their participants, including

the Company, cannot be predicted.

We may be contractually obligated to repurchase mortgage loans we sold to third parties on terms unfavorable to us.

As part of its routine business, the Company originates mortgage loans that it subsequently sells in the secondary market,

generally to Fannie Mae. In connection with such loan sales, the Company makes customary representations and

warranties, the breach of which may result in the Company being required to repurchase the loan or loans. Furthermore, the

amount paid may be greater than the fair value of the loan or loans at the time of the repurchase. Although mortgage loan

repurchase requests made to us have been limited historically, if these increased, we may have to establish reserves for

possible repurchases and adversely affect our results of operation and financial condition.

40

Mortgage servicing rights requirements may change and require us to incur additional costs and risks.

The CFPB’s residential mortgage servicing standards may adversely affect our costs to service residential mortgage loans. 

Reduced mortgage activity due to higher market interest rates has decreased our generation of new mortgage loans and

related MSRs. This may be offset partially by decreases in mortgage prepayments and refinancings, and corresponding

increases in the duration of our existing MSRs and their values. This net effect could reduce our aggregate income from

servicing these types of loans and make it more difficult and costly to timely realize the value of collateral securing such

loans upon a borrower default. The Basel III Capital Rules relating to MSRs may also increase the potential capital

required as a result of MSRs, when considered with other capital rule adjustments and deductions.

The soundness of other financial institutions could adversely affect us.

We routinely execute transactions with counterparties in the financial services industry, including brokers and dealers,

central clearinghouses, banks, including our correspondent banks and other financial institutions. Our ability to engage in

routine investment and banking transactions, as well as the quality and values of our investments in holdings of obligations

of other financial institutions such as the FHLB-Atlanta, could be adversely affected by the actions, financial condition,

profitability and regulation of such other financial institutions, including the FHLB-Atlanta and our correspondent banks. 

Financial services institutions are interrelated as a result of shared credits, trading, clearing, counterparty and other

relationships.

The failures of Silicon Valley Bank, Signature Bank and First Republic Bank in March and May 2023 due to concentrations

of deposits and depositors holding large amounts of deposits in excess of FDIC insurance limits, as well as flawed business

models and management, adversely affected the financial system and public confidence. These resulted in increased

regulatory scrutiny of bank liquidity, funding and capital, depressed bank stock values generally, and higher FDIC deposit

insurance premiums on the largest banks.

The federal bank regulators have been advocating more use of the Federal Reserve discount window to improve bank

liquidity. At the same time, the 2023 bank failures have also led to calls to reduce Federal Home Loan Bank lending to

banks. Traditionally, the Federal Home Loan Banks have been stable sources of liquidity and funding for banks. The

Federal Housing Finance Agency (“FHFA) regulates the Federal Home Loan Banks. The FHFA’s

FHLBank System at

100: Focusing on the Future

(Nov. 2023) indicates less traditional Federal Home Loan Bank lending to banks, especially

banks experiencing financial stress. Sandra Thompson, the FHFA Director retired on January 19, 2025 and Bill Pulte has

been nominated to succeed her, subject to Senate confirmation. Mr. Pulte’s views on Federal Home Loan Bank lending to

banks are unknown.

These changes, together with any exposures that other institutions may have to crypto or digital assets, or cybersecurity and

data breaches, could cause disruption and unexpected changes in the industry. The Trump Administration has issued

Executive Order “Strengthening American Leadership in Digital Financial Technology” and Congressional hearings on

“debanking” may increase the use of digital assets and the volume of digital asset transactions with, and the risks to, banks. 

Any losses, defaults by, or failures of, the institutions we do business with could adversely affect our holdings of the equity

in such other institutions, our participation interests in loans originated by other institutions, and our business, including our

liquidity, financial condition and earnings.

Failures of several banks in 2023 resulted in increased market volatility for financial service companies’ securities and in

changes in regulatory views and emphases that may adversely affect us and may not be disclosable under law.

The failures of Silicon Valley Bank, Signature Bank, First Republic and Heartland Tri-State Bank in 2023 caused

significant market volatility for bank stocks, and uncertainty in the investor community and among bank customers,

generally, greater bank regulatory scrutiny of banking organizations, especially those experiencing rapid growth and

regional banks with $100 billion or more in assets. Similarly, concerns about credit quality and capital adequacy at New

York Community Bank following two acquisitions raised market concerns and led to replacement of management and a

dilutive equity capital raise.

41

These failures have resulted in bank regulators focusing supervisory activities, generally, on capital adequacy and liquidity

in light of growth; asset, liability and customer concentrations and risks; CRE; levels of uninsured deposits; crypto

businesses and customers; third-party vendors or “partners” providing digital, electronic and other services known as

banking as a service (“BaaS”) and fintech relationships; strategic, capital and liquidity plans and contingency plans; and

vendor diligence and risk management. Such enhanced scrutiny is often applied as part of the regulatory examination

processes, as well as through a variety of nonpublic supervisory actions such as “matters requiring attention,” board of

director resolutions, memoranda of understanding, and other regulatory criticism, and formal, public enforcement actions. 

The bank and bank holding examination processes, as well as any nonpublic supervisory actions, are “confidential

supervisory information” for regulatory purposes, whose existence and terms, if any, may not be disclosed by banking

organizations.

Changes in regulations have been proposed as part of the Basel III endgame to the capital, liquidity, long term debt and

resolution planning of banking organizations with over $100 billion in assets.

Our concentration of commercial real estate loans could result in further increased loan losses, and adversely affect our

business, earnings, and financial condition.

Commercial real estate, or CRE, is cyclical and poses risks of possible loss due to concentration levels and the risks of the

assets being financed, which include loans for the acquisition and development of land and residential construction. The

federal bank regulatory agencies’ issued guidance on “Concentrations in Commercial Real Estate Lending” in 2006 (the

“CRE Guidance”). The CRE Guidance defines CRE loans as exposures secured by raw land, land development and

construction loans (including 1-4 family residential construction loans), multi-family property, and non-farm non-

residential property, where the primary or a significant source of repayment is derived from rental income associated with

the property (that is, loans for which 50% or more of the source of repayment comes from third party, non-affiliated, rental

income) or the proceeds of the sale, refinancing, or permanent financing of the property. Loans to REITs and unsecured

loans to developers that closely correlate to the inherent risks in CRE markets are also CRE loans. Loans on owner

occupied commercial real estate are generally excluded from CRE for purposes of this guidance.

Excluding owner occupied commercial real estate, we had 42% of our loan portfolio in CRE loans at year-end 2024

compared to 40% at year-end 2023. The bank regulators continue to scrutinize CRE lending and require banks with

elevated CRE under the CRE Guidance, to implement improved underwriting, internal controls, risk management policies

and portfolio stress testing, as well as higher levels of allowances for possible losses and capital levels as a result of CRE

lending growth and exposures. Increases in interest rates beginning in March 2022 and reduced market transactions may

adversely affect the assumptions and performance of CRE, especially for projects financed with short term or unhedged

variable rate debt, and the ability of CRE borrowers to refinance on terms that their projects can support. Lower demand

for CRE and fewer CRE purchase and sale transactions, and reduced availability of, and higher interest rates and costs for,

CRE loans could adversely affect CRE values and liquidity, our CRE loans and sales of OREO, and therefore our earnings

and financial condition, including our capital and liquidity.

Our future success is dependent on our ability to compete effectively in highly competitive markets.

The East Alabama banking markets where we operate are highly competitive and our future growth and success will

depend on our ability to compete effectively in these markets. This MSA is served by 19 banks, 10 of which are

headquartered outside of Alabama. Other banks have 35 offices in our MSA. National and regional competitors that have

offices in our market include J.P. Morgan Chase, Wells Fargo, Truist, PNC, Regions, Valley National, SouthState and

Cadence. We compete for loans, deposits and other financial services and products with local, regional and national

commercial banks, thrifts, credit unions, mortgage lenders, and securities and insurance brokerage firms. Various non-local

competitors offer services through the mail, by telephone and over the Internet. The national and regional financial banks

and financial services companies we compete with have substantially greater resources, and numerous offices and affiliates

operating over wide geographic areas. Lenders operating nationwide over the internet are growing rapidly. Many of our

competitors offer products and services different from ours, and have substantially greater resources, name recognition and

advertising than we do, which helps them attract business. In addition, larger competitors may be able to price loans and

deposits more aggressively than we are able to and have broader and more diverse customer and geographic bases to draw

upon. Out of state banks may branch into our markets. Fintech and other non-bank competitors also compete for our

customers, and may partner with other banks and/or seek to enter the payments system. The failures or sales of other banks

with offices in our markets could also lead to the entrance of new, stronger competitors in our markets.

42

Our success depends on local economic conditions.

Our success depends on the general economic conditions in East Alabama, including Lee County, Alabama. Local

economic conditions in our markets have a significant effect on our commercial, real estate and construction loans, the

ability of borrowers to repay these loans and the value of the collateral securing these loans. Adverse changes in the

economic conditions of the Southeastern United States in general, or in one or more of our local markets, including the

effects of higher market interest rates and inflation, supply chain disruptions, changes in customer behaviors and in the

workforce and demand for space since the COVID-19 pandemic, and the timing and magnitude of future inflation and

interest rates, as well as federal healthcare and education funding, could negatively affect our results of operations and our

profitability. Our local economy is also affected by the growth of automobile manufacturing and related suppliers located

in our markets and nearby. Auto sales and housing sales are cyclical and generally are affected adversely by higher sticker

prices and interest rates, and may be adversely affected by tariffs, especially the 25% tariffs on imported steel and

aluminum and autos, as well as threatened (i) tariffs on automaker suppliers in Canada and Mexico and (ii) reciprocal tariffs

on countries that impose tariffs on U.S. goods. Major employers in our market include education and healthcare, which

may be adversely affected by changes in Federal government policies and funding.

Attractive acquisition opportunities may not be available to us in the future.

While we seek continued organic growth, including loan growth, we also may consider the acquisition of other businesses. 

We expect that other banking and financial companies, many of which have significantly greater resources, will compete

with us to acquire financial services businesses. This competition could increase prices for potential acquisitions that we

believe are attractive. Also, acquisitions are subject to various regulatory approvals. If we fail to receive the appropriate

regulatory approvals, we will not be able to consummate an acquisition that we believe is in our best interests, and

regulatory approvals could contain conditions or commitments that reduce the anticipated benefits of any transaction. 

Among other things, our regulators consider our capital, liquidity, profitability, regulatory compliance and levels of

goodwill and intangibles when considering acquisition and expansion proposals. Any acquisition could be dilutive to our

earnings and shareholders’ equity per share of our common stock. The regulatory agencies carefully review and analyze

financial institution mergers, and the merger application process has lengthened.

Future acquisitions and expansion activities may disrupt our business, dilute shareholder value and adversely affect our

operating results and financial condition.

We regularly evaluate potential acquisitions and expansion opportunities, including new branches and other offices. To the

extent that we grow through acquisitions, we cannot assure you that we will be able to adequately or profitably manage this

growth. Acquiring other banks, branches, or businesses, as well as other geographic and product expansion activities,

involve various risks including: 

●

risks of unknown or contingent liabilities, and potential asset quality issues;

●

unanticipated costs and delays, including the regulatory application process;

●

risks that acquired new businesses will not perform consistently with our growth and profitability expectations;

●

risks of entering new markets or product areas where we have limited experience;

●

risks that growth will strain our infrastructure, staff, internal controls and management, which may require

additional personnel, time and expenditures;

●

difficulties, expenses and delays of integrating the operations and personnel of acquired institutions, including the

desirability of closing duplicative or overlapping facilities; 

●

potential disruptions to our business; 

●

possible loss of key employees and customers of acquired institutions;

●

potential short-term decreases in profitability; and

●

diversion of our management’s time and attention from our existing operations and business.

43

Technological changes affect our business, and we may have fewer resources than many competitors to invest in

technological improvements.

The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-

driven products and services and growing demands for mobile and user-based banking applications. The effective use of

technology may help us better analyze our customers and their needs better, and the effective use of technology may

increase efficiency and reduce our operating costs. At the same time the initial costs of acquiring and implementing

technology may be material, and such technology may entail fraud, compliance with the AML/CFT anti-money laundering

laws and rules, among others, and various operational and other risks. Largely unregulated “fintech” businesses have

increased their participation in the lending and payments businesses, and have increased competition in these businesses. 

Our future success will depend, in part, upon our ability to use technology effectively to provide products and services that

meet our customers’ preferences and create additional efficiencies in operations, while avoiding cyber-attacks and

disruptions, data breaches, violations of AML/CFT laws, and other potential violations of law. Remote work has

accelerated electronic banking activity and the need for increased operational efficiencies and data security in our electronic

and mobile banking services. We may need to make significant additional capital investments in technology, including

artificial intelligence, cyber and data security, and we may not be able to effectively implement new technology-driven

products and services, or such technology may prove less effective and/or more costly than anticipated. Many larger

competitors have substantially greater resources to invest in technological improvements and, increasingly, non-banking

firms are using technology to compete for loans, payments, and other banking services. As a result, our competition from

service providers not located in our markets has increased.

Operational risks are inherent in our businesses.

Operational risks and losses can result from internal and external fraud; gaps or weaknesses in our risk management or

internal audit procedures; errors by employees or third parties, including our vendors, failures to document transactions

properly or obtain proper authorizations; failure to comply with applicable regulatory requirements in the various

jurisdictions where we do business or have customers; failures in our estimates or the models that we rely on; equipment

failures, including those caused by natural disasters, or by electrical, telecommunications or other essential utility outages;

business continuity and data security system failures, including those caused by computer viruses, cyberattacks, unforeseen

problems encountered while implementing major new computer systems or upgrades, failures to timely and properly

upgrade and patch existing systems or inadequate access to data or poor response capabilities in light of business continuity

plans in the event of data security system failures; or the inadequacy or failure of systems and controls, including those of

our vendors or counterparties. The COVID-19 pandemic presented operational challenges to maintaining continuity of

operations of customer services while protecting our employees’ and customers’ safety, and similar situations may occur in

the future. In addition, we face certain risks inherent in the ownership and operation of our bank premises and other real-

estate, including liability for accidents on our properties. Although we have implemented risk controls and loss mitigation

actions, and substantial resources are devoted to developing efficient procedures, identifying and rectifying weaknesses in

existing procedures and training staff, it is not possible to be certain that such actions have been or will be effective in

controlling these various operational risks that evolve continuously.

44

Potential gaps in our risk management policies and internal audit procedures may leave us exposed to unidentified or

unanticipated risk, which could negatively affect our business.

Our enterprise risk management and internal audit program are designed to mitigate material risks and losses to us. We

have developed and continue to develop risk management and internal audit policies and procedures to reflect the ongoing

review of our risks and expect to continue to do so in the future. Nonetheless, our policies and procedures may not be

comprehensive and may not anticipate and identify timely every risk to which we are exposed, and our internal audit

process may fail to detect such weaknesses or deficiencies timely in our risk management framework. Many of our risk

management models and estimates use observed historical market behavior to model or project potential future exposure. 

The models used by our business, including our CECL models, are based on assumptions and projections. These models

may not operate properly, or our inputs and assumptions may be inaccurate, or changes in economic and market conditions,

customer behaviors or regulations may adversely affect the accuracy or usefulness of the models. As a result, these

methods may not fully or timely predict future exposures, which can be significantly greater and/or faster than historically. 

Other risk management methods depend upon the evaluation of information regarding markets, clients, or other matters that

are publicly available or otherwise accessible to us. This information may not always be accurate, complete, up-to-date or

properly evaluated. Furthermore, there can be no assurance that we can effectively review and monitor all risks or that all

of our employees will closely follow our risk management policies and procedures, nor can there be any assurance that our

risk management policies and procedures will enable us to accurately identify all risks and limit our exposures based on our

assessments. 

In addition, we may have to implement more extensive and perhaps different risk management policies and procedures as

our regulation and technology uses changes. All of these could adversely affect our costs, and our financial condition and

results of operations.

Any failure to protect the confidentiality of customer information could adversely affect our reputation and have a material

adverse effect on our business, financial condition and results of operations

.

Various laws enforced by the bank regulators and other agencies protect the privacy and security of customers’ non-public

personal information. Many of our employees have access to, and routinely process personal information of clients through

a variety of media, including information technology systems. Our internal processes, policies and controls are designed to

protect the confidentiality of customer information we hold and that is accessible to us and our employees. It is possible

that an employee could, intentionally or unintentionally, disclose or misappropriate confidential client information or our

data could be the subject of a cybersecurity attack. Such personal data could also be compromised via intrusions into our

systems or those of our service providers or other persons we do business with such as credit bureaus, data processors and

merchants who accept credit or debit cards for payment. If we fail to maintain adequate internal controls, or if our

employees fail to comply with our policies and procedures, misappropriation or inappropriate disclosure or misuse of client

information could occur. Such internal control inadequacies or non-compliance could materially damage our reputation,

lead to remediation costs and civil or criminal penalties. These could have a material adverse effect on our business,

financial condition and results of operations. See Item 1C. of this report for more information about cybersecurity and our

management and strategies.

Our information systems may experience interruptions and security breaches.

We rely heavily on communications and information systems, including those of third-party service providers, to conduct

our business. Any failure, interruption, or security breach of these systems could result in failures or disruptions which

could affect our business, our customers’ privacy and our customer relationships, generally. Our business continuity plans,

including those of our service providers, for back-up and service restoration, may not be effective in the case of widespread

outages due to severe weather, natural disasters, pandemics, or power, communications and other failures. See Item 1C. of

this report for more information about cybersecurity and our management and strategies.

45

Our systems and networks, as well as those of our third-party service providers, are subject to security risks and could be

susceptible to disruption through cyber-attacks, such as denial of service attacks, hacking, terrorist activities, or identity

theft. Cybercrime risks have increased as electronic and mobile banking activities have increased, and may increase further

as a result of the Russia’s war in Ukraine, tensions with mainland China and other countries, and foreign government

sponsored cybercrime and theft. Other financial service institutions and their service providers have reported material

security breaches in their websites or other systems, some of which have involved sophisticated and targeted attacks,

including use of stolen access credentials, malware, ransomware, phishing and distributed denial-of-service attacks, among

other means. Such cyber-attacks may also seek to disrupt the operations of public companies or their business partners,

effect unauthorized fund transfers, obtain unauthorized access to confidential information, destroy data, disable or degrade

service, or sabotage systems. Any of these, including hacking and identity theft risks, could cause serious reputational

harm.

Despite our cybersecurity policies and procedures and our Board of Directors and management’s efforts to monitor and

ensure the integrity of the systems we and our third-party service providers use, we may not be able to anticipate the rapidly

evolving security threats, nor may we be able to implement preventive measures effective against all such threats. The

techniques used by cyber criminals change frequently, may not be recognized until launched and can originate from a wide

variety of sources, including external service providers, organized crime affiliates, terrorist organizations or hostile foreign

governments. These risks may increase in the future as the use of mobile banking, other internet electronic banking. While

artificial intelligence may be useful generally, it may be used by cyber criminals and may require us to seek additional

defenses.

Security breaches or failures may have serious adverse financial and other consequences, including significant legal and

remediation costs, disruptions to operations, misappropriation of confidential information, damage to systems operated by

us or our third-party service providers, as well as damages to our customers and our counterparties. In addition, these

events could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or

expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our

financial condition and results of operations.

The SEC adopted rules, effective June 15, 2024 for smaller reporting companies, such as the Company, which require

reporting companies to disclose material cybersecurity incidents they experience on SEC Form 8-K within four business

days, including the nature, scope, and timing of the incident, and the material impact or reasonably likely material impact

on the registrant, including its financial condition and results of operations. Annually, reporting companies are required to

disclose material information regarding their cybersecurity risk management, strategy, and governance.

We may be unable to attract and retain key people to support our business.

Our success depends, in large part, on our ability to attract and retain key people. We compete with other financial services

companies for people primarily on the basis of compensation and benefits, support services and financial position. Intense

competition exists for key employees with demonstrated ability, and we may be unable to hire or retain such employees.

Effective succession planning is also important to our long-term success. The unexpected loss of services of one or more of

our key persons and failure to ensure effective transfer of knowledge and smooth transitions involving such persons could

have a material adverse effect on our business due to loss of their skills, knowledge of our business, their years of industry

experience and the potential difficulty of promptly finding qualified replacement employees.

Proposed rules implementing the executive compensation provisions of the Dodd-Frank Act may limit the type and

structure of compensation arrangements and prohibit the payment of “excessive compensation” to our executives. These

restrictions could negatively affect our ability to compete with other companies in recruiting and retaining key personnel.

Severe weather and natural disasters, including as a result of climate change, pandemics, epidemics, acts of war or

terrorism or other external events could have significant effects on our business.

Severe weather and natural disasters, including hurricanes, tornados, drought and floods, epidemics and pandemics, acts of

war or terrorism or other external events could have a significant effect on our ability to conduct business. Such events

could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of

collateral securing loans, cause significant property damage, result in loss of revenue and/or cause us to incur additional

expenses. Although management has established disaster recovery and business continuity policies and procedures, the

occurrence of any such event could have a material adverse effect on our business, which, in turn, could have a material

adverse effect on our financial condition and results of operations. 

46

The COVID-19 pandemic, trade wars, tariffs, supply chain disruptions and changes, wars, sanctions and similar events and

disputes, domestic and international, have adversely affected, and may continue to adversely affect economic activity

globally, nationally and locally. Market interest rates have changed significantly and suddenly. The Federal Reserve’s

target federal funds rates declined to 0-0.25% in March 2020, where these remained until March 17 2022. The Federal

Reserve increased the target federal funds rates 11 from March 17, 2022 through July 27, 2023 to 5.25-5.50% due to

inflation. After three rate cuts during the last four months of 2024, this range was 4.25-4.50% at December 31, 2024, but

such target rates and inflation remain above the Federal Reserve’s target rate of 2%. Such events also may adversely affect

business and consumer confidence, generally. We and our customers, and our respective suppliers, vendors and processors

may be adversely affected by shortages of needed equipment and supplies, rising prices and tight labor markets. The

continuation or worsening of these conditions may adversely affect our profitability, growth asset quality and financial

condition.

Financial Risks

Our cost of funds may increase as a result of general economic conditions, interest rates, inflation and changes in customer

behaviors and competitive pressures.

Our costs of funds have increased as a result of general economic conditions, increased market interest rates and

competitive pressures, and inflation, and anticipated future changes in target short-term interest rates by the Federal

Reserve to reduce inflation. Traditionally, we have obtained funds principally through local deposits and borrowings from

other institutional lenders such as the FHLB-Atlanta. We believe deposits are a cheaper and more stable source of funds

than other borrowings, generally. Increases in interest rates have caused consumers to shift their funds to more interest-

bearing instruments and to increase the competition for and costs of deposits. If customers move money out of bank

deposits and into other investment assets or from transaction deposits to higher cost, interest-bearing time deposits, we

could lose relatively low-cost sources of funds, increasing our funding costs and potentially reducing our net interest

income and net income. Additionally, any such loss of funds could result in lower loan originations and growth, which

could materially and adversely affect our results of operations and financial condition. See “Supervision and Regulation –

Fiscal and Monetary Policy.”

Our profitability and liquidity may be affected by changes in interest rates and interest rate levels, the shape of the yield

curve and economic conditions. 

Our profitability depends upon net interest income, which is the difference between interest earned on interest-earning

assets, such as loans and investments, and interest expense on interest-bearing liabilities, such as deposits and borrowings. 

Our income is primarily driven by the spread between these rates. Net interest income will be adversely affected if market

interest rates and the interest we pay on our deposits and borrowings increase faster than the interest earned on loans and

investments. Interest rates, and consequently our results of operations, are affected by general economic conditions

(national, international and local) and fiscal and monetary policies, as well as expectations regarding interest rate changes,

fiscal and monetary policies and the shape of the yield curve. As a result, a steeper yield curve, meaning long-term interest

rates are significantly higher than short-term interest rates, would provide the Bank with a better opportunity to increase net

interest income. Conversely, a flattening yield curve could further pressure our net interest margin as our cost of funds

increases relative to the spread we can earn on our assets. In addition, net interest income could be affected by

asymmetrical changes in the different interest rate indexes, given that not all of our assets or liabilities are priced with the

same index. Higher market interest rates and continuing run-off of maturing securities held by the Federal Reserve in its

SOMA in furtherance of its quantitative tightening policy to fight inflation, generally reduce economic activity and may

reduce loan demand and growth. Conversely, the slowing of the run-off of maturing Treasury securities held in SOMA

from $60 billion per month to $25 billion that commenced in June 2024, may reduce the tightening effect of such decreases

in SOMA.

The production of mortgages and other loans and the value of collateral securing our loans are dependent on demand within

the markets we serve, as well as interest rates. Lower interest rates typically increase mortgage originations, decrease MSR

values and promote economic growth. Increases in market interest rates tend to decrease mortgage originations, increase

MSR values, decrease the value and liquidity of collateral securing loans, result in unrealized losses on our investment

securities and accumulated other comprehensive losses, and potentially increase net interest spread depending upon the

yield curve and the magnitude and duration of interest rate increase, and constrain economic growth, generally. Reductions

in short term target interest rates by the Federal Reserve in the second half of 2024 did not have much effect on reducing

longer term mortgage rates.

47

Increases in market interest rates also have caused unrealized losses in our investment securities, all of which are held as

available for sale and carried at fair market values. Market prices of our investment securities holdings decline as market

interest rates increase for comparable securities and maturities. Although these unrealized losses do not adversely affect

our regulatory capital, these do reduce our reported income and GAAP tangible stockholders’ equity. Sales of securities

with unrealized losses would result in realized losses for GAAP, regulatory capital and tax purposes. Increases in interest

rates may also change depositor behaviors as customers seek higher yielding deposits. This may adversely affect our costs

of funds, growth, net interest income and net income, and may also adversely affect our liquidity, results of operations and

financial condition.

Liquidity risks could affect operations and jeopardize our financial condition.

The COVID-19 pandemic and related monetary and fiscal stimuli generally increased our bank deposits, including at the

Bank, while reducing the interest rates earned on loans and securities. Such excess liquidity and the resulting balance sheet

growth reduced returns on assets and equity. The growth in deposits exceeded our loan growth, and the difference was

invested in high-quality, marketable U.S. government and government agency securities, including agency mortgage-

backed securities. Inflation and tightening monetary policies beginning in early 2022 have partially reversed these trends.

Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, proceeds from loan

repayments or sales proceeds from maturing loans and securities, and other sources could have a negative effect on our

liquidity. Our funding sources include deposits (primarily core deposits), federal funds purchased, securities sold under

repurchase agreements, and short- and long-term debt. We maintain a portfolio of marketable high-quality securities that

are all held as available for sale, and can be used as a source of liquidity. As market interest rates rose prior to Fall 2024,

however, we have experienced unrealized losses on such securities, which would become realized losses upon the sale of

such securities, and such sales at a loss would reduce our net income and our regulatory capital.

We are also members of the FHLB-Atlanta and the Federal Reserve Bank of Atlanta, and we can obtain advances from

them collateralized with eligible assets, and maintain uncommitted federal funds lines of credit with other banks.

Other sources of liquidity available to the Company or the Bank, if needed, include our ability to acquire additional non-

core deposits. We may be able, depending upon market conditions, to borrow money or issue and sell debt and preferred or

common securities in public or private transactions. Our access to funding sources in amounts adequate to finance or

capitalize our activities on terms which are acceptable to us could be impaired by factors that affect us specifically, or the

financial services industry, the economy, market interest rates and fiscal and monetary policies. General conditions that are

not specific to us, such as disruptions in the financial markets, failures of other bank, such as Silicon Valley Bank,

Signature Bank and First Republic Bank in 2023, or negative views and expectations about the prospects for the financial

services industry could adversely affect us and our liquidity.

Our ability to realize our deferred tax assets may be reduced in the future if our estimates of future taxable income from

our operations and tax planning strategies do not support this amount, and the amount of net operating loss carry-forwards

realizable for income tax purposes may be reduced under Section 382 of the Internal Revenue Code by sales of our capital

securities. 

We are allowed to carry-back losses for two years for Federal income tax purposes. As of December 31, 2024, we had a

net deferred tax asset of $10.2 compared to $10.3 million one year earlier. These and future deferred tax assets may be

further reduced in the future if our estimates of future taxable income from our operations and tax planning strategies do not

support the amount of the deferred tax asset. The amount of net operating loss carry-forwards realizable for income tax

purposes potentially could be further reduced under Section 382 of the Internal Revenue Code by a significant offering

and/or other sales of our capital securities. Current bank capital rules also reduce the regulatory capital benefits of deferred

tax assets.

Changes in accounting and tax rules applicable to banks could adversely affect our financial conditions and results of

operations. 

From time to time, the FASB and the SEC change the financial accounting and reporting standards that govern the

preparation of our financial statements. These changes can be difficult to predict and can materially impact how we record

and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised

standard retroactively, resulting in us restating prior period financial statements

.

48

We may need to raise additional capital in the future, but that capital may not be available when it is needed or on

favorable terms.

We anticipate that our current capital resources will satisfy our capital requirements for the foreseeable future under

currently effective rules. We may, however, need to raise additional capital to support our growth or currently

unanticipated losses, or to meet the needs of our communities, resulting from failures or cutbacks by our competitors. Our

ability to raise additional capital, if needed, will depend, among other things, on conditions in the capital markets at that

time, which are limited by events outside our control, and on our financial performance. If we cannot raise additional

capital on acceptable terms when needed, our ability to further expand our operations through internal growth and

acquisitions could be limited. 

Our associates may take excessive risks which could negatively affect our financial condition and business.

Banks are in the business of accepting certain risks. Our executive officers and other members of management, sales

intermediaries, investment professionals, product managers, and other associates, make decisions and choices that may

expose us to risk. We endeavor, in the design and implementation of our compensation programs and practices, to avoid

giving our associates incentives to take excessive risks; however, associates may nonetheless take such risks. Similarly,

although we employ controls and procedures designed to prevent misconduct, to monitor associates’ business decisions and

prevent them from taking excessive risks, these controls and procedures may not be effective. If our associates take

excessive risks, risks to our reputation, financial condition and results of operations could be materially and adversely

affected.

Our ability to continue to pay dividends to shareholders, repurchase stock and pay discretionary bonuses in the future is

subject to our profitability, capital, liquidity and regulatory requirements and these limitations may prevent or limit future

dividends.

Cash available to pay dividends to our shareholders is derived primarily from dividends paid to the Company by the Bank. 

The ability of the Bank to pay dividends, as well as our ability to pay dividends to our shareholders, will continue to be

subject to and limited by laws limiting dividend payments by the Bank, the results of operations of our subsidiaries and our

need to maintain appropriate liquidity and capital at all levels of our business consistent with regulatory requirements and

the needs of our businesses. We can only pay dividends, repurchase stock and pay discretionary bonuses, if our capital

conservation buffer exceeds 2.5% and from our eligible retained income over the last four calendar quarters. See

“Supervision and Regulation - Dividends and Distributions.”

The Federal Reserve expects bank holding companies to inform and consult with Federal Reserve supervisory staff

sufficiently in advance of (i) declaring and paying a dividend that could raise safety and soundness concerns, such as

declaring and paying a dividend that exceeds earnings for the period for which the dividend is being paid); (ii) redeeming or

repurchasing regulatory capital instruments when the bank holding company is experiencing financial weaknesses; or (iii)

redeeming or repurchasing common stock or perpetual preferred stock that would result in a net reduction as of the end of a

quarter in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the

redemption or repurchase occurred. 

Further, the Company is also required to maintain sufficient capital, liquidity and resources to serve as a source of

managerial and financial strength to the Bank, which may limit its capacity to pay dividends on Company common stock. 

The Federal Reserve may require the Company to commit resources to the Bank, even where it is not otherwise in the

interests of the Company or its shareholders or creditors.

Our common stock trades in limited volumes, which could result in price volatility.

Your ability to sell or purchase common shares depends upon the existence of an active trading market for our common

stock. Although our common stock is quoted on the Nasdaq Global Market under the trading symbol “AUBN,” our trading

volume has been limited historically. The limited trading volume of our common stock may cause fluctuations in the

market value of our common stock to be exaggerated, leading to price volatility in excess of that which would occur in a

more active trading market. As a result, you may be unable to sell or purchase shares of our common stock at the volume,

price and time that you desire. Additionally, whether the market prices of our common stock reflect a reasonable valuation

of our common stock also is affected by the limited market volumes, and thus the price you receive may not reflect its true

or intrinsic value.

49

Legal and Regulatory Risks

The Company is an entity separate and distinct from the Bank.

The Company is an entity separate and distinct from the Bank. Company transactions with the Bank are limited by

Sections 23A and 23B of the Federal Reserve Act and Federal Reserve Regulation W. We depend upon the Bank’s

earnings and dividends from the Bank paid to the Company, which are limited by law and regulatory policies and actions,

for cash to pay the Company’s corporate obligations, and to pay dividends to our shareholders. If the Bank’s ability to pay

dividends to the Company was terminated or limited, the Company’s liquidity and financial condition could be materially

and adversely affected. 

Legislative and regulatory changes generally

The Biden Administration and its heads of various government agencies, including the bank regulators, CFPB and SEC,

implemented numerous changes to bank and other regulation, SEC rules and corporate tax changes that could have an

adverse effect on our results of operations and financial condition.

The new Trump Administration has taken a number of actions to freeze and reduce new regulations, and may take action in

the future to reverse or ameliorate the effects of various Biden Administration and other policies and regulations. See

“Supervision and Regulation - Recent Developments -New Administration.” New Executive Orders may be issued at any

time and from time to time, which make additional changes, or modify prior action by the current Administration. Such

changes in regulations, potential consolidation or reorganization of regulators, hiring freezes and reductions in force at the

government agencies, including the bank regulators, the CFPB and SEC that directly affect us, and changes in tariffs and

trade rules, are unpredictable. Such changes, and their administration and potential litigation challenging, modifying or

rescinding such changes, create uncertainty and may adversely affect us, our customers and markets, and the economy,

generally.

The bank regulators, the CFPB and the SEC have actively developed a broad range of new and changed rules over the last

several years, many of which are complex and lengthy, such as the new CRA regulations and various SEC rules, including

the cybersecurity rule adopted in September 2023 and climate change rules adopted on March 6, 2024. Some rules, such as

the SEC share repurchase modernization rules, have been struck down by the courts and have been withdrawn, creating

more compliance uncertainty during the pendency of the litigation. Ten states’ attorney generals immediately challenged

the Enhancement and Standardization of Climate-Related Disclosures for Investors rule adopted by the SEC on March 6,

2024, and the SEC stayed that rule’s effectiveness. On February 11, 2025, Acting SEC Chairman Uyeda announced that in

light of the change in Administrations and the Regulatory Freeze Executive Order, the SEC was notifying the United States

Court of Appeals for the Eighth Circuit and requesting that Court

not to schedule the case for argument to provide time for

the SEC to deliberate and determine the appropriate next steps.

Compliance with the volume and complexity of these rule changes, and the potential reversal of various Biden-era rules is

costly and imposes material time and personnel burdens on financial services companies, especially on smaller companies,

such as the Company. Increasing litigation on regulatory rules and whether these exceed the agencies’ statutory authority

or have been improperly adopted, which result from recent court decisions, also creates further uncertainty and risks as to

the final timing, content and scope of new rules, and the business changes needed to be made to comply with the effective

dates of the new or changed rules.

Regulatory actions and policies can affect the markets’ outlook, and the valuations and volatility of bank securities

generally, including our common stock.

Changes in taxes and federal budgets

Major tax and budget legislation is pending at the beginning of 2025, which have unpredictable effects on the economy and

on us and our customers.

If the 2017 Tax Act is extended, it would result in an estimated $4.5 trillion of continued and new tax cuts over the next 10

years. Tax and budget legislation contemplates an estimated increase of approximately $2.8 trillion over the next 10 years

and seeks a $4 trillion increase in the debt limit. Such tax cuts and increased federal government spending may adversely

effect the federal government’s credit ratings and interest rates on and costs of the national debt, to the extent not offset by

tariffs. The additional debt could crowd the debt markets and increase interest rates, generally.

50

Unless extended or amended, many provisions of the 2017 Tax Act, including the cap on SALT deductions, expire at the

end of 2025, and the marginal individual tax brackets will increase. The 2017 Tax Act’s reduction in corporate tax rates to

21% do not expire at the end of 2025, absent new legislation. Except to the extent offset by a restoration of uncapped

SALT deductions, increases in marginal individual tax rates may adversely affect consumer confidence, and may reduce the

cash available for deposits and debt service.

We are subject to extensive regulation that could limit or restrict our activities and adversely affect our earnings and the

market value of our common stock.

We and our subsidiaries are regulated by several regulators, including the Federal Reserve, the Alabama Superintendent,

the SEC and the FDIC. Although not regulated or supervised by the CFPB, we are subject to the CFPB’s regulations and

interpretations regarding the offering and provision of consumer financial products or services under the Federal consumer

financial law; and the Federal Reserve’s supervision and examination of our compliance with such CFPB regulations and

pronouncements. Our success is affected by state and federal laws and regulations affecting banks and bank holding

companies, and the securities markets, and our costs of compliance could adversely affect our earnings. Banking

regulations are primarily intended to protect depositors, and the FDIC’s DIF, not shareholders. The financial services

industry also is subject to frequent legislative and regulatory changes and proposed changes, especially following changes

of presidential administrations which most recently occurred on January 20, 2025. In addition, the interpretations of

regulations by regulators may change and statutes may be enacted with retroactive impact. From time to time, regulators

raise issues during examinations of us which, if not determined satisfactorily, could have a material adverse effect on us. 

Compliance with applicable laws and regulations is time consuming and costly and may affect our profitability. Changes in

regulations applicable to us and in our regulators could have a material adverse effect on financial services regulation,

generally, and on our financial condition and results of operations. See “Supervision and Regulation - Recent

Developments- New Administration.”

Litigation and regulatory actions could harm our reputation and adversely affect our results of operations and financial

condition.

A substantial legal liability or a significant regulatory action against us, as well as regulatory inquiries, investigations or

enforcement actions, could harm our reputation, result in material fines or penalties, result in significant legal and other

costs, divert management resources away from our business, and otherwise have a material adverse effect on our financial

condition and results of operations and our ability to expand on our existing business. Even if we ultimately prevail in such

proceedings, our ability to attract new customers, retain our current customers and recruit and retain employees could be

materially and adversely affected. Regulatory inquiries and proceedings may also adversely affect the prices, volatility or

outlook for our common stock or other securities specifically, or bank securities, generally.

As a participating lender in the PPP, the Bank is subject to additional risks of litigation from the Bank’s customers or other

parties regarding the Bank’s processing of loans for the PPP and risks of potential SBA or bank regulatory claims.

The Bank participated as a lender in the PPP and made a total of $56.7 million of PPP loans in 2020 and 2021, generally to

support existing customers in the Bank’s markets. All PPP loans made by the Bank have been forgiven by the SBA, except

for one credit where the borrower is voluntarily repaying the loan. Since the beginning of the PPP, various banks have

been subject to litigation regarding the processes and procedures used in processing applications for the PPP, and greater

governmental attention is directed at preventing fraud. We may be exposed to similar litigation risks, from both customers

and non-customers that approached the Bank regarding PPP loans that we extended. 

The SBA, the Department of Justice and the bank regulators are investigating various PPP lenders and borrowers with

respect to potential fraud or improper activities under the PPP loan programs. Although the SBA has not indicated any

issues with the Bank’s participation in the PPP program and honored all PPP forgiveness requests, the Bank could have

potential liability if the SBA later determines deficiencies in the manner in which PPP loans were originated, funded or

serviced by the Bank, such as an issue with the eligibility of a borrower to receive a PPP loan, or its forgiveness of a PPP

properly, including those related to the ambiguities in the laws, rules and guidance regarding the PPP’s operation.

The Bank is unaware of any such investigation or claims. If any such claims are made against the Bank and are not resolved

favorably to the Bank, it may result in financial liability or adversely affect our reputation. Any financial liability, litigation

costs or reputational damage caused by PPP related litigation could have a material adverse effect on our business, financial

condition and results of operations.

51

We are required to maintain capital to meet regulatory requirements, and if we fail to maintain sufficient capital, our

financial condition, liquidity and results of operations would be adversely affected.

We and the Bank must meet regulatory capital requirements and maintain sufficient liquidity, including liquidity at the

Company, as well as the Bank. If we fail to meet these capital and other regulatory requirements, our financial condition,

liquidity and results of operations would be materially and adversely affected. Our failure to remain “well capitalized” and

“well managed”, including meeting the Basel III capital conservation buffers, for bank regulatory purposes, could adversely

affect us. 

See

“Supervision and Regulation—Basel III Capital Rules.” 

Although we currently have capital ratios that exceed all these minimum levels and a strategic plan to maintain these levels,

we or the Bank may be unable to continue to satisfy the capital adequacy requirements and/or maintain our liquidity for

various reasons, which may include:

●

losses and/or increases in the Bank’s credit risk assets and expected losses resulting from the deterioration in the

creditworthiness of borrowers and the issuers of investment securities we hold;

●

difficulty in refinancing or issuing instruments upon redemption or at maturity of such instruments to raise capital

under acceptable terms and conditions;

●

declines in the value of our securities portfolios or sales of securities for losses;

●

revisions to the regulations or their application by our regulators that increase our capital or liquidity requirements;

●

reduced total earnings on our assets will reduce our internal generation of capital available to support our balance

sheet growth;

●

reductions in the value of our MSRs and DTAs; and other adverse developments; and

●

unexpected growth and an inability to increase capital timely.

A failure to remain “well capitalized,” for bank regulatory purposes, including meeting the Basel III Capital Rule’s

conservation buffer, could adversely affect customer confidence, and our:

●

ability to grow;

●

the costs of and availability of funds;

●

FDIC deposit insurance premiums;

●

ability to raise or replace brokered deposits;

●

ability to pay or increase dividends on our capital stock.

●

Ability to repurchase our common stock

●

ability to make discretionary bonuses to attract and retain quality personnel;

●

ability to make acquisitions or engage in new activities;

●

flexibility if we become subject to prompt corrective action restrictions; and

●

ability to make payments of principal and interest on any of our capital instruments that may be then outstanding.

The Federal Reserve may require us to commit capital resources to support the Bank.

As a matter of policy, the Federal Reserve expects a bank holding company to act as a source of financial and managerial

strength to a subsidiary bank and to commit resources to support such subsidiary bank. The Federal Reserve may require a

bank holding company to make capital injections into a troubled subsidiary bank. In addition, the Dodd-Frank Act amended

the FDI Act to require that all companies that control a FDIC-insured depository institution serve as a source of financial

strength to their depository institution subsidiaries. Under these requirements, we could be required to provide financial

assistance to the Bank should it experience financial distress, even if further investment was not otherwise warranted. See

“Supervision and Regulation.”

52

Our operations are subject to risk of loss from unfavorable fiscal, monetary, regulatory and political developments in the

U.S.

Our businesses and earnings are affected by the fiscal, monetary and other policies and actions of various U.S.

governmental and regulatory authorities. Changes in these are beyond our control and are difficult to predict and,

consequently, changes in these policies could have negative effects on our activities and results of operations. Failures of

the executive and legislative branches to agree on spending plans and budgets previously have led to Federal government

shutdowns, which may adversely affect the U.S. economy. Additionally, any prolonged government shutdown or

reductions in force at various governmental and regulatory authorities may inhibit our ability to evaluate the economy,

generally, and affect government workers who are not paid during such events, and where the absence of government

services and data could adversely affect consumer and business sentiment, our local economy, and business our customers

and our business. The numerous Executive Orders and other actions taken by the Trump Administration in its first month

and future changes, and their uncertain effects on the economy, the markets, our regulators and regulation, our local

markets, customers and others are unpredictable, and may adversely affect our business, results of operations and financial

condition.

Litigation and regulatory investigations are increasingly common in our businesses and may result in significant financial

losses and/or harm to our reputation.

We face risks of litigation and regulatory investigations and actions in the ordinary course of operating our businesses,

including the risk of class action lawsuits. Plaintiffs in class action and other lawsuits against us may seek very large and/or

indeterminate amounts, including punitive and treble damages. Due to the vagaries of litigation, the ultimate outcome of

litigation and the amount or range of potential loss at particular points in time may be difficult to ascertain. We do not have

any material pending litigation or regulatory matters affecting us at December 31, 2024.

Failures to comply with the fair lending laws, CFPB regulations or the Community Reinvestment Act, or CRA, could

adversely affect us.

The Bank is subject to, among other things, the provisions of the Equal Credit Opportunity Act, or ECOA and the Fair

Housing Act, which prohibit discrimination based on race or color, religion, national origin, sex and familial status in any

aspect of a consumer, commercial credit or residential real estate transaction. The DOJ’s and the federal bank regulators’

Interagency Policy Statement on Discrimination in Lending provides guidance to financial institutions to evaluate whether

discrimination exists, ways to prevent discriminatory lending practices and how the government agencies will respond to

lending discrimination. Failures to comply with ECOA, the Fair Housing Act and other fair lending laws and regulations,

including CFPB regulations or interpretations, could subject us to enforcement actions or litigation, and could have a

material adverse effect on our business financial condition and results of operations.

Our Bank is also subject to the CRA and periodic CRA examinations. The CRA requires us to serve our entire

communities, including low- and moderate-income (“LMI”) neighborhoods. Our CRA ratings could be adversely affected

by actual or alleged violations of the fair lending or consumer financial protection laws. The CRA and fair lending

responsibilities are related and mutually reinforcing. Even though we have maintained a “satisfactory” CRA rating since

2000, we cannot predict our future CRA ratings. Violations of fair lending laws or if our CRA rating falls to less than

“satisfactory” could adversely affect our business, including expansion through branching or acquisitions.

The Federal Reserve and the other federal bank regulators adopted comprehensive revisions to its CRA regulations

published in the Federal Register on February 1, 2024. We are evaluating and working on implementing the new rules,

which could significantly affect our compliance costs and activities. See “Supervision and Regulation -

Community

Reinvestment Act and Consumer Laws.”

53

COVID-19 and Similar Risks

The Company’s assessment of risks related to COVID-19 and its effects on the Company applicable during the pandemic

are discussed in the Company‘s Annual Report on Form 10-K filed with the SEC on March 8, 2022 under the caption “Risk

Factors-COVID 19 Risks” and in our Annual and Quarterly Reports on Forms 10-K and 10-Q through September 30, 2024. 

The President terminated the COVID-19 national emergencies effective May 11, 2023. Remaining effects of the COVID-

19 pandemic and other epidemics and pandemics are discussed herein, including under “Supervision and Regulation --

Bank Regulation --

Residential Mortgages

 and -- Fiscal and Monetary Policies; Risk Factors -- Operational Risks --

Market

conditions and economic cyclicality may adversely affect our industry

; --

Our success depends on local economic

conditions

; --

Severe weather and natural disasters, including as a result of climate change, pandemics, epidemics, acts of

war or terrorism or other external events could have significant effects on our business

; and Risk Factors --

"

Financial

Risks

 -Liquidity risks could affect operations and jeopardize our financial condition."

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

We rely extensively on various information systems and other electronic resources to operate our business. In addition,

nearly all of our customers, service providers and other business partners on whom we depend, including the providers of

our online banking, mobile banking and accounting systems, use their own electronic information systems. Any of these

systems can be compromised by employees, customers and other authorized individuals, and bad actors using sophisticated

and constantly evolving sets of software, tools and strategies, which may include artificial intelligence, to do so. The

threats are domestic and international and range from small to large, including state sponsored, terrorist and criminal

organizations with substantial funds, and technical and other resources 

As a bank, we and our vendors, service providers and customers may be attractive targets, and we confront continuous

cybersecurity threats. Insurance to fully cover these risks is unavailable in sufficient amounts at reasonable costs. We

believe the more effective approach is taking active measures to detect, deter and reduce cybersecurity threats, and be

prepared to address and remediate any breaches and prevent similar breaches in the future. See “Risks Related to

Information Security and Business Interruption” section of the Risk Factors included in Item 1A of this Form 10-K for

additional information.

Accordingly, we have devoted significant resources to assessing, identifying and managing risks associated with

cybersecurity threats, including:

•

Implementing an Information Security Program that establishes policies and procedures for security

operations and governance;

•

Establishing an IT Steering Committee that includes participation by directors that is responsible for security

administration, including reviewing assessments of our information systems, existing controls, vulnerabilities

and potential improvements;

•

Implementing layers of controls and not allowing excessive reliance on any single control;

•

Employing a variety of preventative and detective tools designed to monitor, block and provide alerts

regarding suspicious activity;

•

Continuously evaluating tools that can detect and help respond to cybersecurity threats in real-time;

•

Leveraging people, processes and technology to manage and maintain cybersecurity controls;

•

Maintaining a vendor management program with pre-engagement and periodic review processes thereafter,

and a third-party risk management program designed to identify, assess and manage risks associated with

external service providers;

54

•

Monitoring our systems and related software and programming periodically to update software and

programing, including updating data protection elements, and requiring that our service providers also engage

in similar programs that are reasonably designed to deter cybersecurity breaches;

•

Performing initial and ongoing due diligence with respect to our third-party service providers, including their

cybersecurity practices and safeguards, and service level standards based on the risk they pose to the Bank;

•

Engaging third-party cybersecurity consultants, who conduct periodic penetration testing, vulnerability

assessments and other procedures to identify potential weaknesses in our systems and processes; and

•

Conducting periodic cybersecurity training for our employees and the Company’s board of directors.

Our Information Security Program is a key part of our overall risk management system, which is administered by our IT

Steering Committee and evaluated by our IT Steering Committee and chief risk officer. The program includes

administrative, technical and physical safeguards to help protect the security and confidentiality and availability of

customer records and information.

From time-to-time, we have identified cybersecurity threats that require us to make changes to our processes and equipment

and to implement additional safeguards. While none of these identified threats or incidents have materially affected us, it is

possible that threats and incidents we identify in the future could have a material adverse effect on our business strategy,

customer service, data privacy and security, continuity of service and reputation, and our results of operations and financial

condition.

The Company’s Chief Technology Officer is responsible for the day-to-day management of cybersecurity risks we face and

oversees the IT Steering Committee, which is chaired by a director of the Company’s board. The IT Steering Committee

oversees the information security assessment, development of policies, standards and procedures, testing, training and

security report processes. The IT Steering Committee is comprised of officers with the appropriate expertise and authority

to oversee the Information Security Program, and includes the participation of certain directors.

Our Chief Technology Officer, along with the information technology department, is accountable for managing our

enterprise information security and delivering our information security program. The department, as a whole, consists of

information security professionals with varying degrees of education and experience. The Chief Technology Officer is

subject to professional education and certification requirements. In particular, our Chief Technology Officer, who is also

designated as our Information Security Officer, has relevant expertise in the areas of information security and cybersecurity

risk management.

In addition, the Company’s Board, both as a whole and through directors participating in the IT Steering Committee, is

responsible for the oversight of risk management, including cybersecurity risks. In that role, the Company’s Board and the

IT Steering Committee, with support from the Company’s management and third-party cybersecurity advisors, are

responsible for implementing and maintaining risk management processes designed and implemented by management that

are adequate and functioning as designed. The Board reviews and approves an information security program, vendor

management policy (including third-party service providers), acceptable use policy, incident response procedures and

business continuity planning policy on at least an annual basis. All the aforementioned policies are developed and

implemented by Company management. To carry out their duties, the Board receives updates at least quarterly from the

Chief Technology Officer regarding cybersecurity risks and the Company’s efforts to prevent, detect, mitigate and

remediate any cybersecurity incidents.

ITEM 2. DESCRIPTION OF PROPERTY

The Bank conducts its business from its main office, seven full-service branches, and a loan production office.

55

The Bank owns its main campus in downtown Auburn, Alabama, which comprises over 4 acres and includes the newly

constructed AuburnBank Center, which was completed in May 2022 and had its grand opening in June 2022. The

AuburnBank Center has approximately 90,000 square feet of space. The AuburnBank Center includes the Bank’s main

office, Auburn loan production office, and all of its back-office operations. The main office branch offers the full line of

the Bank’s services and has one ATM. The Bank’s drive-through facility located on the main office campus was

constructed in October 2012. This drive-through facility has five drive-through lanes, including an ATM, and a walk-up

teller window. The Bank has approximately 46,000 square feet of Class A office space and approximately 5,000 square

feet of retail space in the new AuburnBank Center building available for lease to third party tenants, of which

approximately 21,000 square feet is currently leased and occupied.

The Opelika branch is located in Opelika, Alabama. This branch, built in 1991, is owned by the Bank and has

approximately 4,000 square feet of space. This branch offers the full line of the Bank’s services and has drive-through

windows and an ATM. This branch offers parking for approximately 36 vehicles.

The Notasulga branch was opened in August 2001. This branch is located in Notasulga, Alabama, about 15 miles west of

Auburn, Alabama. This branch is owned by the Bank and has approximately 1,344 square feet of space. The Bank leased

the land for this branch from a third party. In May 2024, the Bank’s land lease renewe d for another one-year term. This

branch offers the full line of the Bank’s services including safe deposit boxes and a drive-through window and parking for

approximately 11 vehicles, including a handicapped ramp.

In November 2002, the Bank opened a loan production office in a leased space in Phenix City, Alabama, about 35 miles

south of Auburn, Alabama. In November 2023, the Bank renewed its lease for another 2 years.

In February 2009, the Bank opened a branch located on Bent Creek Road in Auburn, Alabama. This branch is owned by the

Bank and has approximately 4,000 square feet of space. This branch offers the full line of the Bank’s services and has

drive-through windows and a drive-up ATM. This branch offers parking for approximately 29 vehicles.

In December 2011, the Bank opened a branch located on Fob James Drive in Valley, Alabama, about 30 miles northeast of

Auburn, Alabama. This branch is owned by the Bank and has approximately 5,000 square feet of space. This branch offers

the full line of the Bank’s services and has drive-through windows and a drive-up ATM. This branch offers parking for

approximately 35 vehicles. Prior to December 2011, the Bank had operated a loan production office in Valley, which was

originally opened in September 2004.

In February 2015, the Bank relocated its branch in the Auburn Kroger store to a new leased location within the Corner

Village Shopping Center in Auburn. After careful consideration of the Bank’s customers, branch usage, parking issues, the

lack of a drive through window and the close proximity to our other locations in Auburn, the Bank closed the Corner

Village branch on December 31, 2024, and its lease expired January 31, 2025.

In September 2015, the Bank relocated its Auburn Wal -Mart Supercenter branch in south Auburn, which had been opened

in 2004 to a new building, which the Bank built in 2015 at the intersection of S. Donahue Avenue and E. University Drive

in Auburn, Alabama. The South Donahue branch has approximately 3,600 square feet of space. The South Donahue

branch offers the full line of the Bank’s services and has drive-through windows and an ATM. This branch offers parking

for approximately 28 vehicles.

In May 2017, the Bank relocated its Opelika Kroger branch to a new location the Bank purchased in August 2016 near the

Tiger Town Retail Shopping Center and the intersection of U.S. Highway 280 and Frederick Road in Opelika, Alabama. 

The Tiger Town branch, built in 2017, has approximately 5,500 square feet of space. Prior to relocation, the Bank’s

Opelika Kroger branch was located inside the Kroger supermarket in the Tiger Town retail center in Opelika, Alabama. The

Opelika Kroger branch was originally opened in July 2007. The Tiger Town branch offers the full line of the Bank’s

services and has drive-through windows and an ATM. This branch offers parking for approximately 36 vehicles.

In addition to the seven ATMs at various branch locations, the Bank also has three ATMs located at various locations

within our primary service area.

The Bank had a 2,500 square feet loan production office on East Samford Avenue in Auburn, Alabama. When this loan

production office was relocated to the AuburnBank Center in June 2022, the Company entered into a three-year sublease

agreement during 2022. The sublessee has an option exercisable by September 2025 to renew the sublease for the

remaining term of the Bank’s lease ending in 2028.

56

ITEM 3. LEGAL PROCEEDINGS

In the normal course of its business, the Company and the Bank from time to time are involved in legal proceedings. The

Company’s management believe there are no pending or threatened legal proceedings that, upon resolution, are expected to

have a material adverse effect upon the Company’s or the Bank’s financial condition or results of operations.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND

ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s Common Stock is listed on the Nasdaq Global Market, under the symbol “AUBN”. As of March 10, 2025,

there were approximately 3,493,699 shares of the Company’s Common Stock issued and outstanding, which were held by

approximately 330 shareholders of record. The following table sets forth, for the indicated periods, the high and low closing

sale prices for the Company’s Common Stock as reported on the Nasdaq Global Market, and the cash dividends declared to

shareholders during the indicated periods.

Closing 

Cash 

Price 

Dividends 

Per Share (1)

Declared 

High

Low

2024

First Quarter

$

 21.55 

$

 18.82 

$

 0.27 

Second Quarter

 19.25 

 16.63 

 0.27 

Third Quarter

 24.35 

 17.50 

 0.27 

Fourth Quarter

 24.57 

 20.06 

 0.27 

2023

First Quarter

$

 24.50 

$

 22.55 

$

 0.27 

Second Quarter

 24.32 

 18.80 

 0.27 

Third Quarter

 22.80 

 20.85 

 0.27 

Fourth Quarter

 21.99 

 19.72 

 0.27 

(1) The price information represents actual transactions.

The Company has paid cash dividends on its capital stock since 1985. Prior to this time, the Bank paid cash dividends since

its organization in 1907, except during the Depression years of 1932 and 1933. Holders of Common Stock are entitled to

receive such dividends when, as and if may be declared by the Company’s Board of Directors. The amount and frequency

of cash dividends is determined in the judgment of the Board based upon a number of factors, including the Company’s

earnings, financial condition, liquidity, capital and regulatory requirements and other relevant factors and the availability of

dividends payable by the Bank consistent with amounts available therefore, including the Bank’s earnings, financial

condition, liquidity, regula tory and capital requirements and other relevant factors. The Board currently intends to continue

its present dividend policies.

57

The amount of dividends payable by the Bank is limited by law and regulation. The Company relies upon dividends from

the Bank to pay Company expenses and to pay dividends on Company common stock. The need to maintain adequate

capital and liquidity in the Bank also limits the dividends that may be paid to the Company. The Bank and the Company

can only pay dividends, repurchase stock and pay discretionary bonuses, if our capital conservation buffer of CET1 capital

exceeds 2.5% and from our eligible retained income over the last four calendar quarters. Eligible retained income equals

the greater of:

●

net income for the four preceding calendar quarters, net of any distributions and associated tax effects not already

reflected in net income; or

●

the average net income over the preceding four quarters.

Federal Reserve policy could restrict future dividends from the Bank or on Company Common Stock, depending on our

earnings and capital position, risks and likely needs. The Alabama Banking Code also limits dividends payable by the

Bank. See “Supervision and Regulation –Dividends and Distributions” and “Management’s Discussion and Analysis of

Financial Condition and Results of Operations – Capital Adequacy” and “Risk Factors -

Our ability to continue to pay

dividends to shareholders and repurchase stock in the future is subject to our profitability, capital, liquidity and regulatory

requirements and these limitations may prevent or limit future dividends.”

Issuer Purchases of Equity Securities 

Not applicable.

58

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

The following is a discussion of our financial condition at December 31, 2024 and 2023 and our results of operations for

the years ended December 31, 2024 and 2023. The purpose of this discussion is to provide information about our financial

condition and results of operations which is not otherwise apparent from the consolidated financial statements. The

following discussion and analysis should be read along with our consolidated financial statements and the related notes

included elsewhere herein. In addition, this discussion and analysis contains forward-looking statements, so you should

refer to Item 1A, “Risk Factors” and “Special Cautionary Notice Regarding Forward-Looking Statements”. This includes

Table 2 “Selected Financial Data.” 

OVERVIEW

The Company was incorporated in 1990 under the laws of the State of Delaware and became a bank holding company after

it acquired its Alabama predecessor, which was a bank holding company established in 1984. The Bank, the Company's

principal subsidiary, is an Alabama state-chartered bank that is a member of the Federal Reserve System and has operated

continuously since 1907. Both the Company and the Bank are headquartered in Auburn, Alabama. The Bank conducts its

business primarily in East Alabama, including Lee County and surrounding areas. The Bank operates full-service branches

in Auburn, Opelika, Notasulga and Valley, Alabama. The Bank also operates a loan production office in Phenix City,

Alabama.

Summary of Results of Operations

Year ended December 31

(Dollars in thousands, except per share data)

2024

2023

Net interest income (a)

$

27,204

$

26,745

Less: tax-equivalent adjustment

79

417

Net interest income (GAAP)

27,125

26,328

Noninterest income

3,474

(2,981)

Total revenue

30,599

23,347

Provision for credit losses

36

135

Noninterest expense

22,166

22,594

Income tax expense (benefit) 

2,000

(777)

Net earnings

$

6,397

$

1,395

Basic and diluted net earnings per share

$

1.83

$

0.40

(a) Tax-equivalent. See "Table 1 - Explanation of Non-GAAP Financial Measures".

Financial Summary

The Company’s net earnings were $6.4 million for the full year 2024, compared to $1.4 million for the full year 2023. 

Basic and diluted net earnings per share were $1.83 per share for the full year 2024, compared to $0.40 per share for the full

year 2023. Net earnings for 2023 reflected the sale of $117.6 million of available-for-sale securities for an after-tax loss of

$(4.7) million, or $(1.35) per share related to the Company’s balance sheet repositioning strategy in December 2023. 

Excluding this non-routine item, net earnings for the full year 2023 would have been $6.1 million, or $1.75 per share.

Net interest income (tax-equivalent) was $27.2 million in 2024, a 2% increase compared to $26.7 million in 2023. This

increase was primarily due to improved net interest margin. The Company’s net interest margin (tax-equivalent) was

3.06% in 2024, compared to 2.89% in 2023. The increase in net interest margin (tax-equivalent) was primarily due to loan

growth and the December 2023 balance sheet repositioning, which resulted in a more favorable asset mix and higher yields

on interest-earning assets in 2024. Average loans for 2024 were $568.7 million, a 9% increase from 2023. 

At December 31, 2024, the Company’s allowance for credit losses was $6.9 million, or 1.22% of total loans, compared to

$6.9 million, or 1.23% of total loans, at December 31, 2023. Although the balance of the allowance for credit losses was

largely unchanged, the decrease in the allowance for credit losses as a percentage of total loans was primarily due to

improved economic forecasts.

59

The Company recorded a provision for credit losses of $36 thousand in 2024 compared to $135 thousand during 2023. The

provision for credit losses under CECL is reflective of the Company’s credit risk profile and the future economic outlook

and forecasts. Our CECL model is largely influenced by economic factors including, most notably, the anticipated

unemployment rate. 

Noninterest income was $3.5 million in 2024 compared to a loss of $3.0 million in 2023. Excluding the pre-tax securities

loss of $6.3 million related to the balance sheet repositioning strategy in 2023, noninterest income would have been $3.3

million for 2023. 

Noninterest expense was $22.2 million in 2024 compared to $22.6 million in 2023. This decrease in noninterest expense

reflects decreases in net occupancy and equipment expenses of $0.4 million, professional fees expense of $0.1 million,

other noninterest expense of $0.2 million. These decreases were partially offset by increases in salaries and benefits

expense of $0.4 million.

The provision for income taxes expense was $2.0 million for an effective tax rate of 23.82% for 2024, compared to a tax

benefit of $0.8 million for a negative effective tax rate of (125.73)% for 2023. The Company’s effective income tax rate is

affected principally by tax-exempt earnings from the Company’s investments in municipal securities, bank-owned life

insurance, and New Markets Tax Credits. The effective tax rate increased primarily due to a decrease in the Company’s

investment in municipal securities following the balance sheet restructuring in the fourth quarter of 2023, and the adoption

of FASB ASU 2023-02 Investments – Equity Method and Joint Ventures (Topic323) which allows the proportional

amortization method for our NMTC investments, on January 1, 2024. With the adoption of this ASU, amortization of

NMTCs are now included in income tax expense rather than noninterest expense. Additionally, the provision for income

tax expense and the effective tax rates for 2024 included discrete tax items associated with provision to return adjustments

in conjunction with the final 2023 tax return filing and the resolution of state examination activities, which resulted in

additional tax expense.

The Company paid cash dividends of $1.08 per share in 2024, unchanged from 2023. At December 31, 2024, the Bank’s

regulatory capital ratios were well above the minimum amounts required to be “well capitalized” under current regulatory

standards with a total risk-based capital ratio of 15.81%, a tier 1 leverage ratio of 10.49% and common equity tier 1 or

(CET1) of 14.80% at December 31, 2024. 

CRITICAL ACCOUNTING POLICIES

The accounting and financial reporting policies of the Company conform with U.S. generally accepted accounting

principles and with general practices within the banking industry. In connection with the application of those principles, we

have made judgments and estimates which, in the case of the determination of our allowance for credit losses, recurring and

non-recurring fair value measurements, and the valuation of deferred tax assets, were critical to the determination of our

financial position and results of operations.

Allowance for Credit Losses – Loans

The allowance for credit losses is estimated under the CECL methodology set forth in FASB ASC 326. The allowance for

credit losses reflects management’s estimate of the amount of credit losses expected to be recognized over the remaining

life of the loans in our portfolio. This evaluation requires significant management judgment and is based upon relevant

available information related to historical default and loss experience, current and projected economic conditions, and other

portfolio-specific and environmental risk factors. Losses are predicted over a reasonable and supportable forecast period,

and at the end of the reasonable and supportable period losses revert to long term historical averages. The allowance for

credit losses is measured on a collective basis for pools of loans with similar risk characteristics, and on an individual basis

for loans that do not share similar risk characteristics with the collectively evaluated pools. There are factors beyond our

control, such as changes in projected economic conditions, real estate markets or particular industry conditions which may

materially impact asset quality and the adequacy of the allowance for credit losses and thus the resulting provision for credit

losses. The allowance is adjusted through provision for credit losses and decreased by charge-offs, net of recoveries of

amounts previously charged-off. See Note 1 - Summary of Significant Accounting Policies and Note 5 - Loans and

Allowance for Credit Losses in the notes to our consolidated financial statements in this report.

60

Fair Value Determination

U.S. GAAP requires management to value and disclose certain of the Company’s assets and liabilities at fair value,

including investments classified as available-for-sale and derivatives. ASC 820,

Fair Value Measurements and Disclosures

,

which defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP and expands

disclosures about fair value measurements. For more information regarding fair value measurements and disclosures,

please refer to Note 1 - Summary of Significant Accounting Policies and Note 13, Fair Value in the notes to the

consolidated financial statements that accompany this report.

Fair values are based on active market prices of identical assets or liabilities when available. Comparable assets or

liabilities or a composite of comparable assets in active markets are used when identical assets or liabilities do not have

readily available active market pricing. However, some of the Company’s assets or liabilities lack an available or

comparable trading market characterized by frequent transactions between willing buyers and sellers. In these cases, fair

value is estimated using pricing models that use discounted cash flows and other pricing techniques. Pricing models and

their underlying assumptions are based upon management’s best estimates for appropriate discount rates, default rates,

prepayments, market volatility and other factors, taking into account current observable market data and experience.

These assumptions may have a significant effect on the reported fair values of assets and liabilities and the related income

and expense. As such, the use of different models and assumptions, as well as changes in market conditions, could result in

materially different net earnings and retained earnings results. 

Deferred Tax Asset Valuation

A valuation allowance is recognized for a deferred tax asset if, based on the weight of available evidence, it is more-likely-

than-not that some portion or the entire deferred tax asset will not be realized. The ultimate realization of deferred tax assets

is dependent upon the generation of future taxable income during the periods in which those temporary differences become

deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax

planning strategies in making this assessment. At December 31, 2024 we had total deferred tax assets of $10.2 million

included as “other assets”, including $9.9 million resulting from unrealized losses in our securities portfolio. Based upon

the level of taxable income over the last three years and projections for future taxable income over the periods in which the

deferred tax assets are deductible, management believes it is more likely than not that we will realize the benefits of these

deductible differences at December 31, 2024. The amount of the deferred tax assets considered realizable, however, could

be reduced if estimates of future taxable income are reduced. See Note 1 - Summary of Significant Accounting Policies

and Note 10 – Income Taxes in the notes to the consolidated financial statements that accompany this report.

61

Average Balance Sheet and Interest Rates

Year ended December 31

2024

2023

Average

Yield/

Average

Yield/

(Dollars in thousands)

Balance

Rate

Balance

Rate

Loans and loans held for sale 

$

568,733

5.23%

$

523,838

4.76%

Securities - taxable

248,072

2.19%

335,366

2.15%

Securities - tax-exempt (a)

10,084

3.70%

52,122

3.81%

Total securities

258,156

2.25%

387,488

2.37%

Federal funds sold

17,907

5.24%

5,221

4.79%

Interest bearing bank deposits

44,634

5.23%

8,593

4.92%

Total interest-earning assets

889,430

4.36%

925,140

3.76%

Deposits:

NOW

192,702

1.39%

193,451

0.99%

Savings and money market

251,778

0.86%

289,235

0.74%

Certificates of deposit

195,097

3.46%

175,085

2.25%

Total interest-bearing deposits

639,577

1.81%

657,771

1.21%

Short-term borrowings

628

0.48%

3,255

2.21%

Total interest-bearing liabilities

640,205

1.81%

661,026

1.22%

Net interest income and margin (a)

$

27,204

3.06%

$

26,745

2.89%

(a) Tax-equivalent. See "Table 1 - Explanation of Non-GAAP Financial Measures".

RESULTS OF OPERATIONS

Net Interest Income and Margin

Net interest income (tax-equivalent) was $27.2 million in 2024, a 2% increase compared to $26.7 million in 2023. This

increase was primarily due to improved net interest margin. The Company’s net interest margin (tax-equivalent) was

3.06% in 2024, compared to 2.89% in 2023. The increase in net interest margin (tax-equivalent) was primarily due to loan

growth and the balance sheet repositioning strategy the Company completed in the fourth quarter of 2023, which resulted in

a more favorable asset mix and higher yields on interest-earning assets in 2024. This was partially offset by higher market

interest rates, which increased our cost of funds, generally, and changes in our deposit mix to higher cost interest-bearing

deposits. 

The tax-equivalent yield on total interest-earning assets increased by 60 basis points to 4.36% in 2024 compared to 3.76%

in 2023. Average loans for 2024 were $568.7 million, a 9% increase from 2023. 

The cost of total interest-bearing liabilities increased by 59 basis points to 1.81% in 2024 compared to 1.22% in 2023. 

Average interest-bearing deposits were $639.6 million during 2024, a 3% decrease compared to $657.8 million during

2023. As of December 31, 2024, average interest-bearing deposits were 71% of average total deposits compared to 69% on

December 31, 2023. Since March 2022, the Federal Reserve increased the target federal funds rate by 525 basis points

before announcing a 50-basis points rate reduction on September 18, 2024, its first decrease in rates since its March 2020

COVID rate reduction, followed by two 25 basis points reduction in October and December 2024. At year end the target

federal funds rate ranged from 4.25% - 4.50%.

The Company continues to deploy various asset liability management strategies to manage its risk from interest rate

fluctuations. Deposit and loan pricing remains competitive in our markets. We believe that interest rates, inflation and

monetary policy may continue to fluctuate in 2025 and may be challenging as a result. Our ability to compete and manage

our deposits costs until our interest-earning assets reprice and we generate new fixed rate loans with current market interest

rates will be important to our net interest margin during 2025.

62

Provision for Credit Losses

The provision for credit losses represents a charge to earnings necessary to establish an allowance for credit losses that, in

management’s evaluation, is adequate to provide coverage for all expected credit losses. The Company recorded a

provision for credit losses of $36 thousand during 2024, compared to $135 thousand for 2023. Provision for credit losses

expense is affected by growth in our loan portfolio, our internal assessment of the credit quality of the loan portfolio, our

expectations about future economic conditions and net charge-offs. Our CECL model is largely influenced by economic

factors including, most notably, the anticipated unemployment rate, which may be affected by monetary policy. 

Our allowance for credit losses reflects an amount we believe appropriate, based on our allowance assessment

methodology, to adequately cover all expected credit losses as of the date the allowance is determined. At December 31,

2024, the Company’s allowance for credit losses was $6.9 million, or 1.22% of total loans, compared to $6.9 million, or

1.23% of total loans, at December 31, 2023. Although the balance of the allowance for credit losses was largely

unchanged, the decrease in the allowance for credit losses as a percentage of total loans was primarily due to improved

economic forecasts. 

Noninterest Income 

Year ended December 31

(Dollars in thousands)

2024

2023

Service charges on deposit accounts

$

614

$

603

Mortgage lending

608

430

Bank-owned life insurance

403

411

Securities losses, net

—

(6,295)

Other

1,849

1,870

Total noninterest income

$

3,474

$

(2,981)

The Company’s noninterest income from mortgage lending is primarily attributable to the (1) origination and sale of new

mortgage loans and (2) servicing of mortgage loans. Origination income, net, is comprised of gains or losses from the sale

of the mortgage loans originated, origination fees, underwriting fees and other fees associated with the origination of

mortgage loans, which are netted against the commission expense associated with these originations. The Company’s

normal practice is to originate mortgage loans for sale in the secondary market and to either sell or retain the MSRs when

the loan is sold. 

MSRs are recognized based on the fair value of the servicing right on the date the corresponding mortgage loan is sold. 

Subsequent to the date of transfer, the Company has elected to measure its MSRs under the amortization method. Servicing

fee income is reported net of any related amortization expense. 

The Company evaluates MSRs for impairment quarterly. Impairment is determined by grouping MSRs by common

predominant characteristics, such as interest rate and loan type. If the aggregate carrying amount of a particular group of

MSRs exceeds the group’s aggregate fair value, a valuation allowance for that group is established. The valuation

allowance is adjusted as the fair value changes. An increase in mortgage interest rates typically results in an increase in the

fair value of the MSRs while a decrease in mortgage interest rates typically results in a decrease in the fair value of MSRs. 

The following table presents a breakdown of the Company’s mortgage lending income for 2024 and 2023.

Year ended December 31

(Dollars in thousands)

2024

2023

Origination income

$

261

$

71

Servicing fees, net

347

359

Total mortgage lending income

$

608

$

430

The Company’s income from mortgage lending typically fluctuates as mortgage interest rates change and is primarily

attributable to the origination and sale of new mortgage loans. The increase in mortgage lending income was primarily

related to the Company increasing the number of mortgage loans originated for sale during 2024 relative to the number of

mortgage loans originated and held for investment during 2023.

63

Income from bank-owned life insurance was $403 thousand and $411 thousand for 2024 and 2023 respectively. Excluding

a $52 thousand non-taxable death benefit received during the first quarter of 2023, income from bank-owned life insurance

would have been $359 thousand for 2023.

Securities losses, net for 2023 were related to the Company selling approximately $117.6 million of its available-for-sale

securities, resulting in a net loss of approximately $6.3 million as part of its balance sheet repositioning strategy.

Noninterest Expense

Year ended December 31

(Dollars in thousands)

2024

2023

Salaries and benefits

$

12,534

$

12,101

Net occupancy and equipment

2,508

2,954

Professional fees

1,188

1,299

FDIC and other regulatory assessments

564

631

Other

5,372

5,609

Total noninterest expense

$

22,166

$

22,594

Salaries and benefits increased during 2024 compared to 2023 primarily due to routine annual increases in salaries and

wages. 

The decrease in net occupancy and equipment expense was primarily due to an increase in leasing income.

The decrease in other noninterest expense was primarily due to the Company’s adoption of ASU 2023-02 which allows the

proportional amortization method for our NMTC investments, on January 1, 2024. With the adoption of this ASU,

amortization of NMTCs are now included in income tax expense. During 2023 other noninterest expense included $0.4

million related to our equity method investment in NMTCs. This decrease was partially offset by various increases in other

noninterest expense accounts during 2024.

Income Tax Expense

The provision for income taxes expense was $2.0 million for an effective tax rate of 23.82% for 2024, compared to a tax

benefit of $0.8 million for a negative effective tax rate of (125.73)% for 2023. The Company’s effective income tax rate is

affected principally by tax-exempt earnings from the Company’s investments in municipal securities, bank-owned life

insurance, and New Markets Tax Credits. The effective tax rate increased primarily due to a decrease in the Company’s

investment in municipal securities following the balance sheet restructuring in the fourth quarter of 2023, and the adoption

of FASB ASU 2023-02 Investments – Equity Method and Joint Ventures (Topic323) which allows the proportional

amortization method for our NMTC investments, on January 1, 2024. With the adoption of this ASU, amortization of

NMTCs are now included in income tax expense rather than noninterest expense. Additionally, the provision for income

tax expense and the effective tax rates for 2024 included discrete tax items associated with provision to return adjustments

in conjunction with the final 2023 tax return filing and the resolution of state examination activities, which resulted in

additional tax expense.

BALANCE SHEET ANALYSIS

Securities 

Securities available-for-sale were $243.0 million at December 31, 2024, compared to $270.9 million at December 31, 2023. 

This decrease reflects a decrease in the amortized cost basis of securities available -for-sale of $27.1 million, and a decrease

of $0.8 million in the fair value of securities available-for-sale. The decrease in the amortized cost basis of securities

available-for-sale was primarily attributable to normal paydowns and maturities. The average annualized tax-equivalent

yields earned on total securities were 2.25% in 2024 and 2.37% in 2023.

The following table shows the carrying value and weighted average yield of securities available-for-sale as of December

31, 2024 according to contractual maturity. Actual maturities may differ from contractual maturities of mortgage-backed

securities (“MBS”) because the mortgages underlying the securities may be called or prepaid in whole or in part, with or

without penalty. 

64

December 31, 2024

1 year 

1 to 5

5 to 10 

After 10

Total 

(Dollars in thousands)

or less

years

years

years

Fair Value

Agency obligations

$

—

26,655

25,756

—

52,411

Agency MBS

10

19,863

14,904

138,899

173,676

State and political subdivisions

—

966

8,244

7,715

16,925

Total available-for-sale

$

10

47,484

48,904

146,614

243,012

Weighted average yield (1):

Agency obligations

—

1.35%

1.70%

—

1.53%

Agency MBS

3.14%

1.20%

1.95%

2.20%

2.07%

State and political subdivisions

—

2.37%

1.96%

2.38%

2.17%

Total available-for-sale

3.14%

1.31%

1.82%

2.21%

1.96%

(1) Yields are calculated based on amortized cost.

Loans

December 31

(In thousands)

2024

2023

Commercial and industrial

$

63,274

73,374

Construction and land development

82,493

68,329

Commercial real estate 

289,992

287,307

Residential real estate

118,627

117,457

Consumer installment

9,631

10,827

Total loans

564,017

557,294

Total loans, net of unearned income, were $564.0 million at December 31, 2024, and $557.3 million at December 31, 2023,

an increase of $6.7 million, or 1%. Four loan categories represented the majority of the loan portfolio at December 31,

2024: commercial real estate (51%), residential real estate (21%), construction and land development (15%), and

commercial and industrial (11%). Approximately 19% of the Company’s commercial real estate loans were classified as

owner-occupied at December 31, 2024.

Within the residential real estate portfolio segment, the Company had junior lien mortgages of approximately $11.2 million,

or 2%, and $8.7 million, or 2%, of total loans at December 31, 2024 and 2023, respectively. For residential real estate

mortgage loans with a consumer purpose, the Company had no loans that required interest only payments at December 31,

2024 and 2023. The Company’s residential real estate mortgage portfolio does not include any option ARM loans,

subprime loans, or any material amount of other consumer mortgage products which are generally viewed as high risk. 

The average yield earned on loans and loans held for sale was 5.23% in 2024 and 4.76% in 2023. 

The specific economic and credit risks associated with our loan portfolio include, but are not limited to, the effects of

current economic conditions, including the levels of market interest rates, supply chain disruptions, commercial office

occupancy levels, housing supply shortages, and effects of inflation on our borrowers’ cash flows, real estate market sales

volumes and liquidity, valuations used in making loans and evaluating collateral, availability and cost of financing

properties, real estate industry concentrations, competitive pressures from a wide range of other lenders, deterioration in

certain credits, interest rate fluctuations, reduced collateral values or non-existent collateral, title defects, inaccurate

appraisals, financial deterioration of borrowers, fraud, and any violation of applicable laws and regulations. Various

projects financed earlier that were based on lower interest rate assumptions than currently in effect may not be as profitable

or successful at the higher interest rates currently in effect and which may exist in the future. See “Risk Factors.” 

65

The Company attempts to reduce these economic and credit risks through its loan-to-value guidelines for collateralized

loans, investigating the creditworthiness of borrowers and monitoring borrowers’ financial position. Also, we have

established and periodically review, our lending policies and procedures. Banking regulations limit a bank’s credit exposure

by prohibiting unsecured loan relationships that exceed 10% of its capital; or 20% of capital, if loans in excess of 10% of

capital are fully secured. Under these regulations, we are prohibited from having secured loan relationships in excess of

approximately $22.7 million. Furthermore, we have an internal limit for aggregate credit exposure (loans outstanding plus

unfunded commitments) to a single borrower of $20.4 million. Our loan policy requires that the Loan Committee of the

Board of Directors approve any loan relationships that exceed this internal limit. At December 31, 2024, the Bank had one

loan relationship exceeding our internal limit.

We periodically analyze our commercial loan portfolio to determine if a concentration of credit risk exists in any one or

more industries. We use classification systems broadly accepted by the financial services industry in order to categorize our

commercial borrowers. Loan concentrations to borrowers in the following classes exceeded 25% of the Bank’s total risk-

based capital at December 31, 2024 (and related balances at December 31, 2023). 

December 31

(In thousands)

2024

2023

Lessors of 1-4 family residential properties

$

58,228

$

56,912

Multi-family residential properties

43,556

45,841

Shopping centers/strip malls

37,349

27,128

Hotel/motel

35,210

39,131

Office buildings

29,780

30,871

On January 1, 2023, the Company adopted ASC 326 and its CECL methodology, which required us to estimate all expected

credit losses over the remaining life of our loan portfolio. The Company maintains the allowance for credit losses at a level

that management believes appropriate to adequately cover the Company’s estimate of expected losses in the loan portfolio.

The allowance for credit losses was $6.9 million at December 31, 2024 and 2023, respectively, which management believed

to be adequate at each of the respective dates. Our allowance for credit losses as a percentage of total loans was 1.22% at

December 31, 2024, compared to 1.23% at December 31, 2023.

Our CECL models rely largely on projections of macroeconomic conditions to estimate future credit losses.

Macroeconomic factors used in the model include the Alabama unemployment rate, the Alabama home price index, the

national commercial real estate price index and the Alabama gross state product. Projections of these macroeconomic

factors, obtained from an independent third party, are utilized to predict quarterly rates of default. 

Under the CECL methodology the allowance for credit losses is measured on a collective basis for pools of loans with

similar risk characteristics, and on an individual basis for loans that do not share similar risk characteristics with the

collectively evaluated pools. Losses are predicted over a period of time determined to be reasonable and supportable, and

at the end of the reasonable and supportable period losses are reverted to long term historical averages. At December 31,

2024 and 2023, reasonable and supportable periods of 4 quarters were utilized followed by an 8 quarter straight line

reversion period to long term averages. See Note 5 to our Financial Statements.

66

A summary of the changes in the allowance for credit losses on loans and certain asset quality ratios for the years ended

December 31, 2024 and 2023 are presented below.

Year ended December 31

(Dollars in thousands)

2024

2023

Allowance for credit losses:

Balance at beginning of period

$

6,863

5,765

Impact of adopting ASC 326

—

1,019

Charge-offs:

Commercial and industrial

(9)

(164)

Residential real estate 

(61)

—

Consumer installment

(114)

(105)

Total charge -offs

(184)

(269)

Recoveries:

Commercial and industrial

144

204

Residential real estate 

9

14

Consumer installment

45

5

Total recoveries

198

223

Net recoveries (charge-offs)

14

(46)

(Reversal of) provision for credit losses

(6)

125

Ending balance

$

6,871

6,863

as a % of loans

1.22

%

1.23

as a % of nonperforming loans

1,366

%

753

Net charge-offs as a % of average loans

—

%

0.01

Nonperforming Assets 

At December 31, 2024 the Company had $0.5 million in nonperforming assets compared to $0.9 million at December 31,

2023.

The table below provides information concerning total nonperforming assets and certain asset quality ratios.

December 31

(Dollars in thousands)

2024

2023

Nonperforming assets:

Nonperforming (nonaccrual) loans

$

503

911

Total nonperforming assets

$

503

911

as a % of loans and other real estate owned

0.09

%

0.16

as a % of total assets

0.05

%

0.09

Nonperforming loans as a % of total loans

0.09

%

0.16

Accruing loans 90 days or more past due

$

—

—

67

The table below provides information concerning the composition of nonaccrual loans at December 31, 2024 and 2023,

respectively.

December 31

(In thousands)

2024

2023

Nonaccrual loans:

Commercial and industrial

$

99

—

Construction and land development

404

—

Commercial real estate

—

783

Residential real estate

—

128

Total nonaccrual loans

$

503

911

The Company discontinues the accrual of interest income when (1) there is a significant deterioration in the financial

condition of the borrower and full repayment of principal and interest is not expected or (2) the principal or interest is more

than 90 days past due, unless the loan is both well-secured and in the process of collection. 

There were no loans 90 days past due and still accruing interest at December 31, 2024 and 2023, respectively.

The Company had no OREO at December 31, 2024 and 2023, respectively.

Deposits

December 31

(In thousands)

2024

2023

Noninterest bearing demand

$

260,874

270,723

NOW

199,883

190,724

Money market

153,916

148,040

Savings

89,904

88,541

Certificates of deposit under $250,000

103,594

100,572

Certificates of deposit and other time deposits of $250,000 or more

87,653

97,643

Total deposits

$

895,824

896,243

Total deposits were stable and decreased only $0.4 million to $895.8 million at December 31, 2024, compared to $896.2

million at December 31, 2023. Noninterest-bearing deposits were $260.9 million, or 29% of total deposits, at December

31, 2024, compared to $270.7 million, or 30% of total deposits at December 31, 2023. At December 31, 2024, the

Company had $74.1 million reciprocal deposits sold, compared to $59.0 million at December 31, 2023. The Company had

no brokered deposits at December 31, 2024 and 2023. The Company had no FHLB-Atlanta advances or other wholesale

borrowings outstanding at December 31, 2024 and 2023. 

The average rates paid on total interest-bearing deposits were 1.81 % in 2024 and 1.21% in 2023. 

At December 31, 2024, estimated uninsured deposits totaled $359.7 million, or 40% of total deposits, compared to $356.3

million, or 40% of total deposits at December 31, 2023. During 2023, the Bank began participating in the Certificates of

Deposit Account Registry Service (the “CDARS”) and the Insured Cash Sweep product (“ICS”), which provide for

reciprocal (“two-way”) transactions among banks facilitated by IntraFi for the purpose of maximizing FDIC insurance. The

Company had reciprocal deposits on balance sheet of $6.9 million at December 31, 2024, compared to none at December

31, 2023. Uninsured amounts are estimated based on the portion of account balances that exceed FDIC insurance limits. 

The Bank’s uninsured deposits at December 31, 2024 and 2023 include approximately $223.1 million and $206.2 million,

respectively, of deposits of state, county and local governments that are collateralized by securities having a fair value equal

to such deposits. Deposits of state, county and local governments were 62% and 53% of our estimated uninsured deposits

at December 31, 2024 and 2023, respectively.

68

The estimated uninsured time deposits by maturity as of December 31, 2024 is presented below.

(Dollars in thousands)

December 31, 2024

Maturity of:

3 months or less

$

8,353

Over 3 months through 6 months

23,669

Over 6 months through 12 months

23,939

Over 12 months

2,442

Total estimated uninsured time deposits

$

58,403

Other Borrowings

The Company had no long-term debt at December 31, 2024 and 2023. The Bank utilizes short and long-term non-deposit

borrowings from time to time. Short-term borrowings generally consist of federal funds purchased and securities sold under

agreements to repurchase with an original maturity of one year or less. The Bank had available federal funds lines totaling

$65.2 million and $61.0 million, respectively, at December 31, 2024 and 2023 with no federal funds borrowed. The

Company had no securities sold under agreements to repurchase, which are entered into on behalf of certain customers, at

December 31, 2024, compared to $1.5 million at December 31, 2023. The Bank is eligible to borrow from the FRB’s

discount window, but had no such borrowings at December 31, 2024 and 2023. The Bank never borrowed from the Federal

Reserve’s Bank Term Facility Program (“BTFP”) which ceased making new loans on March 11, 2024.

The Bank is a member of the FHLB-Atlanta and has borrowed from the FHLB-Atlanta, and in the future may borrow from

time to time under the FHLB-Atlanta’s advance program. FHLB-Atlanta advances include both fixed and variable terms,

and provide various maturities, and generally are secured by eligible assets. The Bank had no borrowings under FHLB-

Atlanta’s advance program at December 31, 2024 and 2023, respectively. At those dates, the Bank had $296.9 million and

$309.1 million, respectively, of available lines of credit at the FHLB-Atlanta. 

The average rates paid on short-term borrowings were 0.48% and 2.21% in 2024 and 2023, respectively. 

CAPITAL ADEQUACY

At December 31, 2024, the Company’s consolidated stockholders’ equity (book value) was $78.3 million, or $22.41 per

share, compared to $76.5 million, or $21.9 per share, at December 31, 2023. The increase from December 31, 2023 was

primarily driven by net earnings of $6.4 million. The increase were partially offset by cash dividends paid of $3.8 million,

other comprehensive loss of $0.6 million related to unrealized gains/losses on securities available-for-sale, net of tax and

a one-time charge of $0.3 million, net of tax, for the cumulative effect to adopt the NMTC accounting standard on

January 1, 2024. Unrealized securities losses do not affect the Bank’s capital for regulatory capital purposes.

The Company paid cash dividends of $1.08 per share in 2024, unchanged from the same period in 2023.

On January 1, 2015, the Company and Bank became subject to the Basel III regulatory capital framework. The rules

included the implementation of a capital conservation buffer of CET1 capital of 2.5% that is added to the minimum

requirements for capital adequacy purposes. A banking organization with a capital conservation buffer of 2.5% or less is

subject to limitations on “distributions” from “eligible retained earnings”, including dividend payments, share repurchases

and certain discretionary bonus payments. At December 31, 2024 and 2023, the Bank had a capital conservation buffer of

7.81% and 7.52%, respectively.

On August 26, 2020, the Federal Reserve and the other federal banking regulators adopted a final rule that amended the

capital conservation buffer. The new rule revises the definition of “eligible retained income” for purposes of the maximum

payout ratio to allow banking organizations to more freely use their capital buffers to promote lending and other financial

intermediation activities, by making the limitations on capital distributions more gradual. The eligible retained income is

now the greater of (i) net income for the four preceding quarters, net of distributions and associated tax effects not reflected

in net income; and (ii) the average of all net income over the preceding four quarters. Banking organizations were

encouraged to make prudent capital distribution decisions.

69

The Federal Reserve has treated us as a “small bank holding company’ under the Federal Reserve’s Small Bank Holding

Company Policy. Accordingly, our capital adequacy is evaluated at the Bank level, and not for the Company and its

consolidated subsidiaries. The Bank’s tier 1 leverage ratio was 10.49%, CET1 risk-based capital ratio was 14.80%, tier 1

risk-based capital ratio was 14.80%, and total risk-based capital ratio was 15.81 % at December 31, 2024. These ratios

exceed the minimum regulatory capital percentages of 5.0% for tier 1 leverage ratio, 6.5% for CET1 risk-based capital

ratio, 8.0% for tier 1 risk-based capital ratio, and 10.0% for total risk-based capital ratio to be considered “well capitalized.”

The Bank’s capital conservation buffer was 7.81% at December 31, 2024.

MARKET AND LIQUIDITY RISK MANAGEMENT

Management’s objective is to manage assets and liabilities to provide a satisfactory, consistent level of profitability within

the framework of established liquidity, loan, investment, borrowing, and capital policies. The Bank’s Asset Liability

Management Committee (“ALCO”) is charged with the responsibility of monitoring these policies, which are designed to

ensure an acceptable asset/liability composition. Two critical areas of focus for ALCO are interest rate risk and liquidity

risk management.

Interest Rate Risk Management

In the normal course of business, the Company is exposed to market risk arising from fluctuations in interest rates because

assets and liabilities may mature or reprice at different times and at different rates of change. For example, if liabilities

reprice faster than assets, and interest rates are generally rising, earnings will initially decline. In addition, assets and

liabilities may reprice at the same time but by different amounts. For example, when the general level of interest rates is

rising, the Company may increase rates paid on interest bearing demand deposit accounts and savings deposit accounts by

an amount that is less than the general increase in market interest rates. Also, short -term and long-term market interest rates

may change by different amounts and at different levels of interest rates and rates of change. For example, a flattening

yield curve may reduce the interest spread between new loan yields and funding costs. The yield curve was inverted until it

began to normalize in September 2024. An inverted yield curve reduces the net interest margin expansion that may be

expected otherwise as interest rates rise. Further, the remaining maturity of various assets and liabilities may shorten or

lengthen as interest rates change. For example, if long-term mortgage interest rates decline sharply, mortgage -backed

securities in the securities portfolio may prepay earlier than anticipated, which could reduce earnings. Interest rates may

also have a direct or indirect effect on loan demand, loan losses, mortgage origination volume, the fair value of MSRs and

other items affecting earnings.

ALCO measures and evaluates the interest rate risk so that we can meet customer demands for various types of loans and

deposits. ALCO determines the most appropriate amounts of on-balance sheet and off-balance sheet items. Measurements

used to help manage interest rate sensitivity include an earnings simulation and an economic value of equity model.

Earnings simulation

Management believes that interest rate risk is best estimated by our earnings simulation modeling. On at least a quarterly

basis, we simulate the following 12-month time period to determine a baseline net interest income forecast and the

sensitivity of this forecast to changes in interest rates. The baseline forecast assumes an unchanged or flat interest rate

environment. Forecasted levels of earning assets, interest-bearing liabilities, and off-balance sheet financial instruments are

combined with ALCO forecasts of market interest rates for the next 12 months and other factors in order to produce various

earnings simulations and estimates.

To help limit interest rate risk, we have guidelines for earnings at risk which seek to limit the variance of net interest

income from gradual changes in interest rates. For changes up or down in rates from management’s flat interest rate

forecast over the next 12 months, policy limits for net interest income variances are as follows:

+/- 20% for a gradual change of 400 basis points

+/- 15% for a gradual change of 300 basis points

+/- 10% for a gradual change of 200 basis points

+/- 5% for a gradual change of 100 basis points

70

The following table reports the variance of net interest income over the next 12 months assuming a gradual change in

interest rates up or down when compared to the baseline net interest income forecast at December 31, 2024.

Changes in Interest Rates

Net Interest Income % Variance

 400 basis points

0.47

%

 300 basis points

0.74

 200 basis points

0.67

 100 basis points

0.35

 (100) basis points

(0.92)

 (200) basis points

(1.49)

 (300) basis points

(1.75)

 (400) basis points

(2.20)

At December 31, 2024, our earnings simulation model indicated that we were in compliance with the policy guidelines

noted above.

Economic Value of Equity

Economic value of equity (“EVE”) measures the extent that estimated economic values of our assets, liabilities and off-

balance sheet items will change as a result of interest rate changes. Economic values are estimated by discounting expected

cash flows from assets, liabilities and off-balance sheet items, to which establish a base case EVE. In contrast with our

earnings simulation model which evaluates interest rate risk over a 12-month timeframe, EVE uses a terminal horizon

which allows for the re-pricing of all assets, liabilities, and off-balance sheet items. Further, EVE is measured using values

as of a point in time and does not reflect any actions that ALCO might take in responding to or anticipating changes in

interest rates, or market and competitive conditions.

To help limit interest rate risk, we have stated policy guidelines for an instantaneous basis point change in interest rates,

such that our EVE should not decrease from our base case by more than the following:

35% for an instantaneous change of +/- 400 basis points

30% for an instantaneous change of +/- 300 basis points

25% for an instantaneous change of +/- 200 basis points

15% for an instantaneous change of +/- 100 basis points

The following table reports the variance of EVE assuming an immediate change in interest rates up or down when

compared to the baseline EVE at December 31, 2024.

Changes in Interest Rates

EVE % Variance

 400 basis points

0.43

%

 300 basis points

1.69

 200 basis points

2.05

 100 basis points

1.41

 (100) basis points

(2.61)

 (200) basis points

(8.19)

 (300) basis points

(17.50)

 (400) basis points

(30.86)

At December 31, 2024, our EVE model indicated that we were in compliance with the policy guidelines noted above.

71

Each of the above analyses may not, on its own, be an accurate indicator of how our net interest income will be affected by

changes in interest rates. Income associated with interest-earning assets and costs associated with interest-bearing liabilities

may not be affected uniformly by changes in interest rates. In addition, the magnitude and duration of changes in interest

rates may have a significant impact on net interest income. For example, although certain assets and liabilities may have

similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates, and other

economic and market factors, including market perceptions. Interest rates on certain types of assets and liabilities fluctuate

in advance of changes in general market rates, while interest rates on other types of assets and liabilities may lag behind

changes in general market rates. In addition, certain assets, such as adjustable-rate mortgage loans, have features (generally

referred to as “interest rate caps and floors”) which limit changes in interest rates. Prepayment and early withdrawal levels

also could deviate significantly from those assumed in calculating the maturity of certain instruments. The ability of many

borrowers to service their debts also may decrease during periods of rising interest rates or economic stress, which may

differ across industries and economic sectors. ALCO reviews each of the above interest rate sensitivity analyses along with

several different interest rate scenarios in seeking satisfactory, consistent levels of profitability within the framework of the

Company’s established liquidity, loan, investment, borrowing, and capital policies.

The Company may also use derivative financial instruments to improve the balance between interest-sensitive assets and

interest-sensitive liabilities and as one tool to manage interest rate sensitivity while continuing to meet the credit and

deposit needs of our customers. From time to time, the Company may enter into interest rate swaps (“swaps”) to facilitate

customer transactions and meet their financing needs. These swaps qualify as derivatives, but are not designated as hedging

instruments. At December 31, 2024 and 2023, the Company had no derivative contracts to assist in managing interest rate

sensitivity.

Liquidity Risk Management

Liquidity is the Company’s ability to convert assets into cash equivalents in order to meet daily cash flow requirements,

primarily for deposit withdrawals, loan demand and maturing obligations. Without proper management of its liquidity, the

Company could experience higher costs of obtaining funds due to insufficient liquidity, while excessive liquidity can lead

to a decline in earnings due to the cost of foregoing alternative higher-yielding investment opportunities.

Liquidity is managed at two levels. The first is the liquidity of the Company. The second is the liquidity of the Bank. The

management of liquidity at both levels is essential, because the Company and the Bank are separate and distinct legal

entities with different funding needs and sources, and each are subject to regulatory guidelines and requirements. The

Company depends upon dividends from the Bank for liquidity to pay its operating expenses, debt obligations and

dividends. The Bank’s payment of dividends depends on its earnings, liquidity, capital and the absence of any regulatory

restrictions.

The primary source of funding and liquidity for the Company has been dividends received from the Bank. The Company

depends upon dividends from the Bank for liquidity to pay its operating expenses, debt obligations, if any, and cash

dividends on, and repurchases of, Company common stock. The Bank’s payment of dividends depends on its earnings,

liquidity, capital and the absence of any regulatory restrictions. If needed, the Company could also issue common stock or

other securities. 

Primary sources of funding for the Bank include customer deposits, other borrowings, interest payments on earning assets,

repayment and maturity of securities and loans, sales of securities, and the sale of loans, particularly residential mortgage

loans. Primary uses of funds include repayment of maturing obligations and growing the loan portfolio.

The Bank has access to federal funds lines from various banks and borrowings from the Federal Reserve discount window,

although it was not used by the Bank. In addition to these sources, the Bank is eligible to participate in the FHLB-Atlanta’s

advance program to obtain funding for growth and liquidity. Advances include both fixed and variable terms and may be

taken out with varying maturities. At December 31, 2024, the Bank had no FHLB-Atlanta advances outstanding and

available credit from the FHLB-Atlanta of $296.9 million. At December 31, 2024, the Bank also had $65.2 million of

available federal funds lines with no borrowings outstanding. 

72

The following table presents additional information about our contractual obligations as of December 31, 2024, which by

their terms had contractual maturity and termination dates subsequent to December 31, 2024:

Payments due by period

1 year 

1 to 3

3 to 5

More than

(Dollars in thousands)

Total

or less

years

years

5 years

Contractual obligations:

Deposit maturities (1)

$

895,824

879,185

14,239

2,400

—

Operating lease obligations

246

81

120

45

—

Total

$

896,070

879,266

14,359

2,445

—

(1) Deposits with no stated maturity (demand, NOW, money market, and savings deposits) are presented in the "1 year or less" column

Management believes that the Company and the Bank have adequate sources of liquidity to meet all known contractual

obligations and unfunded commitments, including loan commitments and reasonable borrower, depositor, and creditor

requirements over the next 12 months.

Off-Balance Sheet Arrangements

At December 31, 2024, the Bank had outstanding standby letters of credit of $0.7 million and unfunded loan commitments

outstanding of $84.7 million. Because these commitments generally have fixed expiration dates and may expire without

being drawn upon, the total commitment level does not necessarily represent future cash requirements. If needed to fund

these outstanding commitments, the Bank could use its cash and cash equivalents, deposits with other banks, liquidate

federal funds sold or a portion of its securities available-for-sale, or draw on its available credit facilities or raise deposits.

Residential mortgage lending and servicing activities

We primarily sell conforming residential mortgage loans in the secondary market to Fannie Mae while retaining the

servicing of these loans (MSRs). The sale agreements for these residential mortgage loans with Fannie Mae and other

investors include various representations and warranties regarding the origination and characteristics of the residential

mortgage loans. Although the representations and warranties vary among investors, they typically cover ownership of the

loan, validity of the lien securing the loan, the absence of delinquent taxes or liens against the property securing the loan,

compliance with loan criteria set forth in the applicable agreement, compliance with applicable federal, state, and local

laws, among other matters. 

The Bank sells mortgage loans to Fannie Mae and services these on an actual/actual basis. As a result, the Bank is not

obligated to make any advances to Fannie Mae on principal and interest on such mortgage loans where the borrower is

entitled to forbearance.

As of December 31, 2024, the unpaid principal balance of residential mortgage loans, which we have originated and sold,

but retained the servicing rights (MSRs) totaled $204.4 million. Although these loans are generally sold on a non-recourse

basis, except for breaches of customary seller representations and warranties, we may have to repurchase residential

mortgage loans in cases where we breach such representations or warranties or the other terms of the sale, such as where we

fail to deliver required documents or the documents we deliver are defective. Investors also may require the repurchase of a

mortgage loan when an early payment default underwriting review reveals significant underwriting deficiencies, even if the

mortgage loan has subsequently been brought current. Repurchase demands are typically reviewed on an individual loan by

loan basis to validate the claims made by the investor and to determine if a contractually required repurchase event has

occurred. We seek to reduce and manage the risks of potential repurchases or other claims by mortgage loan investors

through our underwriting, quality assurance and servicing practices, including good communications with our residential

mortgage investors.

We service all residential mortgage loans originated and sold by us to Fannie Mae. As servicer, our primary duties are to:

(1) collect payments due from borrowers; (2) advance certain delinquent payments of principal and interest; (3) maintain

and administer any hazard, title, or primary mortgage insurance policies relating to the mortgage loans; (4) maintain any

required escrow accounts for payment of taxes and insurance and administer escrow payments; and (5) foreclose on

defaulted mortgage loans or take other actions to mitigate the potential losses to investors consistent with the agreements

governing our rights and duties as servicer.

73

The agreement under which we act as servicer generally specifies our standards of responsibility for actions taken by us in

such capacity and provides protection against expenses and liabilities incurred by us when acting in compliance with the

respective servicing agreements. However, if we commit a material breach of our obligations as servicer, we may be subject

to termination if the breach is not cured within a specified period following notice. The standards governing servicing and

the possible remedies for violations of such standards are determined by servicing guides issued by Fannie Mae as well as

our contracts with Fannie Mae. Remedies could include repurchase of an affected loan.

Although to date repurchase requests related to representation and warranty provisions, and servicing activities have been

limited, it is possible that requests to repurchase mortgage loans may increase in frequency if investors more aggressively

pursue all means of recovering losses on their purchased loans. As of December 31, 2024, we believe that this exposure is

not material due to the historical level of repurchase requests and loss trends, the results of our quality control reviews, and

the fact that 99% of our residential mortgage loans serviced for Fannie Mae were current as of such date. We maintain

ongoing communications with our investors and will continue to evaluate this exposure by monitoring the level and number

of repurchase requests as well as the delinquency rates in our investor portfolios.

The Company was not required to repurchase any loans during 2024 and 2023 as a result of representation and warranty

provisions contained in the Company’s sale agreements with Fannie Mae, and had no pending repurchase or make -whole

requests at December 31, 2024.

Effects of Inflation and Changing Prices

The consolidated financial statements and related consolidated financial data presented herein have been prepared in

accordance with GAAP and practices within the banking industry which require the measurement of financial position and

operating results in terms of historical dollars without considering the changes in the relative purchasing power of money

over time due to inflation. Unlike most industrial companies, virtually all the assets and liabilities of a financial institution

are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance

than the effects of general levels of inflation. 

Inflation can increase our noninterest expenses. It also can affect our customers’ behaviors, the mix of deposits between

interest and noninterest bearing, the levels of interest rates we have to pay on our deposits and other borrowings, and the

interest rates we earn on our earning assets. The difference between our interest expense and interest income is also affected

by the shape of the yield curve and the speeds and amounts at which our various assets and liabilities, respectively, reprice

in response to interest rate changes. The yield curve was inverted during most of 2024, until September, when it began to

normalize. An inverted yield curve which means shorter term interest rates are higher than longer term interest rates. This

results in a lower spread between our costs of funds and our interest income. In addition, net interest income could be

affected by asymmetrical changes in the different interest rate indexes, given that not all of our assets or liabilities are

priced with the same index. Higher market interest rates and reductions in the securities held by the Federal Reserve to

reduce inflation generally reduce economic activity and may reduce loan demand and growth, and may adversely affect

unemployment rates. Inflation and related changes in market interest rates, as the Federal Reserve maintains interest rates to

meet its longer-term inflation goal of 2%, also can adversely affect the values and liquidity of our loans and securities, the

value of collateral securing loans to our borrowers, and the success of our borrowers and such borrowers’ available cash to

pay interest on and principal of our loans to them. 

Beginning in September 2024, in light of inflation moderating, the FOMC had three reductions in its target federal funds

rate range totaling 100 basis points to 4.25% to 4.50%. While the FOMC reaffirmed its target inflation rate of 2% over the

longer run, it indicated it was “recalibrating” its policy based on decreasing inflation rates and the risks of increasing

unemployment, but would act on incoming data, the evolving outlook and the balance of the risks of inflation and

unemployment levels. In the future, the Federal Reserve could further decrease target interest rates, or could increase such

target rates, depending on the data and its outlook. See “Supervision and Regulation – Fiscal and Monetary Policies” and

“- Recent Developments – New Administration.”

74

CURRENT ACCOUNTING DEVELOPMENTS

The following ASU has been issued by the FASB but is not yet effective. 

●

ASU 2023-09,

Income Taxes (Topic 740): Improvements to Income Tax Disclosures.

Information about this pronouncement is described in more detail below.

ASU 2023-09,

Income Taxes (Topic 740): Improvements to Income Tax Disclosures

, the amendments in this Update

enhance the transparency and decision usefulness of income tax disclosures. For public business entities, the new standard

is effective for annual periods beginning after December 15, 2024. The Company does not expect the new standard to have

a material impact on the Company’s consolidated financial statements.

75

Table 1 – Explanation of Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this annual report on Form 10-K includes certain designated net

interest income amounts presented on a tax-equivalent basis, a non-GAAP financial measure, including the presentation of

total revenue and the calculation of the efficiency ratio.

The Company believes the presentation of net interest income on a tax-equivalent basis provides comparability of net

interest income from both taxable and tax-exempt sources and facilitates comparability within the industry. Although the

Company believes these non-GAAP financial measures enhance investors’ understanding of its business and performance,

these non-GAAP financial measures should not be considered an alternative to GAAP. The reconciliation of these non-

GAAP financial measures from GAAP to non-GAAP is presented below.

Year ended December 31

(In thousands)

2024

2023

2022

2021

2020

Net interest income (GAAP)

$

27,125

26,328

27,166

23,990

24,338

Tax-equivalent adjustment

79

417

456

470

492

Net interest income (Tax-equivalent)

$

27,204

26,745

27,622

24,460

24,830

76

Table 2 - Selected Financial Data

Year ended December 31

(Dollars in thousands, except per share amounts)

2024

2023

2022

2021

2020

Income statement

Tax-equivalent interest income (a)

$

38,811

34,791

30,001

26,977

28,686

Total interest expense

11,607

8,046

2,379

2,517

3,856

Tax equivalent net interest income (a)

27,204

26,745

27,622

24,460

24,830

Provision for credit losses

36

135

1,000

(600)

1,100

Total noninterest income

3,474

(2,981)

6,506

4,288

5,375

Total noninterest expense

22,166

22,594

19,823

19,433

19,554

Net earnings before income taxes and 

tax-equivalent adjustment

8,476

1,035

13,305

9,915

9,551

Tax-equivalent adjustment

79

417

456

470

492

Income tax expense

2,000

(777)

2,503

1,406

1,605

Net earnings

$

6,397

1,395

10,346

8,039

7,454

Per share data:

Basic and diluted net earnings 

$

1.83

0.40

2.95

2.27

2.09

Cash dividends declared

$

1.08

1.08

1.06

1.04

1.02

Weighted average shares outstanding

Basic and diluted

3,493,690

3,498,030

3,510,869

3,545,310

3,566,207

Shares outstanding

3,493,699

3,493,614

3,503,452

3,520,485

3,566,276

Stockholders' equity (book value)

$

22.41

21.90

19.42

29.46

30.20

Common stock price

High

$

24.57

24.50

34.49

48.00

63.40

Low

16.63

18.80

22.07

31.32

24.11

Period-end

$

23.49

21.28

23.00

32.30

42.29

To earnings ratio (d)

12.84

x

53.20

7.80

14.23

20.23

To book value

105

%

97

118

110

140

Performance ratios:

Return on average equity 

8.21

%

2.05

12.48

7.54

7.12

Return on average assets 

0.65

%

0.14

0.96

0.78

0.83

Dividend payout ratio

59.02

%

270.00

35.93

45.81

48.80

Average equity to average assets

7.93

%

6.66

7.72

10.39

11.63

Asset Quality:

Allowance for credit losses as a % of:

Loans

1.22

%

1.23

1.14

1.08

1.22

Nonperforming loans

1,366

%

753

211

1,112

1,052

Nonperforming assets as a % of:

Loans and other real estate owned

0.09

%

0.16

0.54

0.18

0.12

Total assets

0.05

%

0.09

0.27

0.07

0.06

Nonperforming loans as % of loans

0.09

%

0.16

0.54

0.10

0.12

Net charge-offs (recoveries) as a % of average loans

 — 

%

0.01

0.04

0.02

(0.03)

Capital Adequacy (c):

CET 1 risk-based capital ratio

14.80

%

14.52

15.39

16.23

17.27

Tier 1 risk-based capital ratio

14.80

%

14.52

15.39

16.23

17.27

Total risk-based capital ratio

15.81

%

15.52

16.25

17.06

18.31

Tier 1 leverage ratio

10.49

%

9.72

10.01

9.35

10.32

Other financial data:

Net interest margin (a)

3.06

%

2.89

2.81

2.55

2.92

Effective income tax rate

23.82

%

(125.73)

19.48

14.89

17.72

Efficiency ratio (b)

72.25

%

95.08

58.08

67.60

64.74

Selected period end balances:

Securities

$

243,012

270,910

405,304

421,891

335,177

Loans, net of unearned income

564,017

557,294

504,458

458,364

461,700

Allowance for credit losses

6,871

6,863

5,765

4,939

5,618

Total assets

977,324

975,255

1,023,888

1,105,150

956,597

Total deposits

895,824

896,243

950,337

994,243

839,792

Total stockholders’ equity

78,292

76,507

68,041

103,726

107,689

(a) Tax-equivalent. See "Table 1 - Explanation of Non-GAAP Financial Measures".

(b) Efficiency ratio is the result of noninterest expense divided by the sum of noninterest income and tax-equivalent net interest income.

(c) Regulatory capital ratios presented are for the Company's wholly-owned subsidiary, AuburnBank.

(d) Calculated by dividing period end share price by earnings per share for the previous four quarters.

77

Table 3 - Average Balance and Net Interest Income Analysis

Year ended December 31

2024

2023

Interest

Interest

Average

Income/

Yield/

Average

Income/

Yield/

(Dollars in thousands)

Balance

Expense

Rate

Balance

Expense

Rate

Interest-earning assets:

Loans and loans held for sale (1)

$

568,733

$

29,735

5.23% 

$

523,838

$

24,925

4.76% 

Securities - taxable

248,072

5,430

2.19% 

335,366

7,208

2.15% 

Securities - tax-exempt (2)

10,084

373

3.70% 

52,122

1,985

3.81% 

Total securities 

258,156

5,803

2.25% 

387,488

9,193

2.37% 

Federal funds sold

17,907

939

5.24% 

5,221

250

4.79% 

Interest bearing bank deposits

44,634

2,334

5.23% 

8,593

423

4.92% 

Total interest-earning assets

889,430

38,811

4.36% 

925,140

34,791

3.76% 

Cash and due from banks

17,779

15,230

Other assets

75,059

81,438

Total assets

$

982,268

$

1,021,808

Interest-bearing liabilities:

Deposits:

NOW

$

192,702

2,680

1.39% 

$

193,451

1,907

0.99% 

Savings and money market

251,778

2,168

0.86% 

289,235

2,132

0.74% 

Certificates of deposit

195,097

6,756

3.46% 

175,085

3,935

2.25% 

Total interest-bearing deposits

639,577

11,604

1.81% 

657,771

7,974

1.21% 

Short-term borrowings

628

3

0.48% 

3,255

72

2.21% 

Total interest-bearing liabilities

640,205

11,607

1.81% 

661,026

8,046

1.22% 

Noninterest-bearing deposits

262,224

289,019

Other liabilities

1,918

3,697

Stockholders' equity

77,921

68,066

Total liabilities and

and stockholders' equity

$

982,268

$

1,021,808

Net interest income and margin

$

27,204

3.06% 

$

26,745

2.89% 

(1) Average loan balances are shown net of unearned income and loans on nonaccrual status have been included

in the computation of average balances.

(2) Yields on tax-exempt securities have been computed on a tax-equivalent basis using an income tax rate

of 21%. See Table 1 - Explanation of Non-GAAP Financial Measures."

78

Table 4 - Volume and Rate Variance Analysis

Year ended December 31, 2024 vs. 2023

Year ended December 31, 2023 vs. 2022

Net

Due to change in

Net

Due to change in

(Dollars in thousands)

Change

Rate (2)

Volume (2)

Change

Rate (2)

Volume (2)

Interest income:

Loans and loans held for sale 

$

4,810

2,463

2,347

$

4,684

1,390

3,294

Securities - taxable

(1,778)

133

(1,911)

632

1,247

(615)

Securities - tax-exempt (1)

(1,612)

(57)

(1,555)

(187)

174

(361)

Total securities 

(3,390)

76

(3,466)

445

1,421

(976)

Federal funds sold

689

24

665

(185)

1,661

(1,846)

Interest bearing bank deposits

1,911

26

1,885

(154)

2,285

(2,439)

Total interest income

$

4,020

2,589

1,431

$

4,790

6,757

(1,967)

Interest expense:

Deposits:

NOW

$

773

783

(10)

$

1,537

1,574

(37)

Savings and money market

36

359

(323)

1,483

1,762

(279)

Certificates of deposit

2,821

2,128

693

2,635

2,167

468

Total interest-bearing deposits

3,630

3,270

360

5,655

5,503

152

Short-term borrowings

(69)

(56)

(13)

12

40

(28)

Total interest expense

3,561

3,214

347

5,667

5,543

124

Net interest income

$

459

(625)

1,084

$

(877)

1,214

(2,091)

(1) Yields on tax-exempt securities have been computed on a tax-equivalent basis using an income 

tax rate of 21%. See "Table 1 - Explanation of Non-GAAP Financial Measures."

(2) Changes that are not solely a result of volume or rate have been allocated to volume. 

79

Table 5 - Net Charge-Offs (Recoveries) to Average Loans

2024

2023

Net

Net

Net

(recovery)

Net

charge-off

(recoveries)

Average

charge-off

charge-offs

Average

(recovery)

(Dollars in thousands)

charge-off

Loans

ratio

(recoveries)

Loans

ratio

Commercial and industrial

$

135

71,279

0.19

%

$

(40)

64,565

(0.06)

%

Construction and land development

— 

70,342

— 

— 

66,492

— 

Commercial real estate

— 

297,140

— 

— 

274,779

— 

Residential real estate

(52)

118,856

(0.04)

(14)

108,891

(0.01)

Consumer installment

(69)

10,381

(0.66)

100

9,638

1.04

Total

$

14

567,998

—

%

$

46

524,365

0.01

%

80

Table 6 - Loan Maturities

December 31, 2024

1 year 

1 to 5

5 to 15 

After 15

(Dollars in thousands)

or less

years

years

years

Total

Commercial and industrial

$

17,599

13,999

30,093

1,583

63,274

Construction and land development

54,818

25,016

2,659

— 

82,493

Commercial real estate

23,022

127,619

135,592

3,759

289,992

Residential real estate

9,105

25,768

34,294

49,460

118,627

Consumer installment

2,979

5,528

1,124

— 

9,631

Total loans

$

107,523

197,930

203,762

54,802

564,017

81

Table 7 - Sensitivities to Changes in Interest Rates on Loans Maturing in More Than One Year 

December 31, 2024

Variable

Fixed

(Dollars in thousands)

Rate

Rate

Total

Commercial and industrial

$

63

45,612

45,675

Construction and land development

16,383

11,292

27,675

Commercial real estate

148

266,822

266,970

Residential real estate

49,368

60,154

109,522

Consumer installment

76

6,576

6,652

Total loans

$

66,038

390,456

456,494

82

Table 8 - Allocation of Allowance for Credit Losses

2024

2023

(Dollars in thousands)

Amount

%*

Amount

%*

Commercial and industrial

$

1,244

11.2

$

1,288

13.2

Construction and land development

1,059

14.6

960

12.3

Commercial real estate

3,842

51.5

3,921

51.5

Residential real estate

588

21.0

546

21.1

Consumer installment

138

1.7

148

1.9

Total allowance for credit losses

$

6,871

$

6,863

* Loan balance in each category expressed as a percentage of total loans.

83

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by ITEM 7A is set forth in ITEM 7 under the caption “Market and Liquidity Risk Management”

and is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index

Page

 (PCAOB ID:

149

)

 84

 86

 87

 88

 89

 90

91

84

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of 

Auburn National Bancorporation, Inc. and Subsidiary 

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Auburn National Bancorporation, Inc. and Subsidiary

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of earnings, comprehensive

income, stockholders' equity and cash flows for the years then ended, and the related notes to the consolidated financial

statements (collectively, the “financial statements”). In our opinion, the financial statements present fairly, in all material

respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its

cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of

America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion

on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the

Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and

Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,

whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its

internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control

over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether

due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test

basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the

accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of

the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements

that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or

disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex

judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements,

taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the

critical audit matters or on the accounts or disclosures to which they relate.

85

Allowance for Credit Losses

As described in Note 5 to the Company’s consolidated financial statements, the Company has a gross loan portfolio of $564

million and related allowance for credit losses of $6.9 million as of December 31, 2024. As described by the Company in

Note 1, the allowance for credit losses is estimated by management using relevant available information, from both internal

and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The Company’s

credit loss assumptions are estimated using a discounted cash flow ("DCF") model for each loan segment, except consumer

loans. The weighted average remaining life method is used to estimate credit loss assumptions for consumer loans. The

DCF model calculates an expected life-of-loan loss percentage by considering the forecasted probability that a borrower

will default (the “PD”), adjusted for relevant forecasted macroeconomic factors, and loss given default (“LGD”), which is

the estimate of the amount of net loss in the event of default. This model utilizes historical correlations between default

experience and certain macroeconomic factors as determined through a statistical regression analysis. Projections of

macroeconomic factors are obtained from an independent third party and are utilized to predict quarterly rates of default

based on the statistical PD models. The weighted average remaining life method uses an annual charge -off rate over several

vintages to estimate credit losses. Additionally, the allowance for credit losses calculation includes subjective adjustments

for qualitative risk factors that are believed likely to cause estimated credit losses to differ from historical experience.

We identified the Company’s estimate of the allowance for credit losses (“ACL”) as a critical audit matter. The principal

considerations for our determination of the allowance for credit losses as a critical audit matter related to the high degree of

subjectivity in the Company’s judgments in determining the macroeconomic data in the reasonable and supportable

forecasts, as well as the qualitative factors. Auditing these complex judgments and assumptions by the Company involves

especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these

matters, including the extent of specialized skill or knowledge needed.

The primary procedures we performed to address this critical audit matter included the following: 

●

We obtained an understanding of the Company’s process for establishing the ACL, including the selection and

application of forecasts and the basis for development and related adjustments of the qualitative factor components

of the ACL.

●

We evaluated the reasonableness of management’s application of qualitative factor adjustments to the ACL,

including the comparison of factors considered by management to third party or internal sources as well as

evaluated the appropriateness and level of the qualitative factor adjustments.

●

We assessed the overall trends in credit quality, including adjustments for the qualitative factors by comparing the

overall allowance for credit losses to those recorded by the Company’s peer institutions.

●

We evaluated subsequent events and transactions and considered whether they corroborated or contradicted the

Company’s conclusion. 

/s/

Elliott Davis, LLC

We have served as the Company's auditor since 2015.

Greenville, South Carolina

March 11, 2025

86

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31

(Dollars in thousands, except share data)

2024

2023

Assets:

Cash and due from banks

$

15,142

$

27,127

Federal funds sold

37,200

31,412

Interest bearing bank deposits

41,012

12,830

Cash and cash equivalents

93,354

71,369

Securities available-for-sale 

243,012

270,910

Loans, net of unearned income

564,017

557,294

Allowance for credit losses

(6,871)

(6,863)

Loans, net

557,146

550,431

Premises and equipment, net

45,931

45,535

Bank-owned life insurance

17,513

17,110

Other assets

20,368

19,900

Total assets

$

977,324

$

975,255

Liabilities:

Deposits:

Noninterest-bearing 

$

260,874

$

270,723

Interest-bearing

634,950

625,520

Total deposits

895,824

896,243

Federal funds purchased and securities sold under agreements to repurchase

—

1,486

Accrued expenses and other liabilities

3,208

1,019

Total liabilities

899,032

898,748

Stockholders' equity:

Preferred stock of $

0.01

 par value; authorized

200,000

 shares;

issued shares - none

—

—

Common stock of $

0.01

 par value; authorized

8,500,000

 shares;

issued

3,957,135

 shares

39

39

Additional paid-in capital

3,802

3,801

Retained earnings

115,759

113,398

Accumulated other comprehensive loss, net

(29,607)

(29,029)

Less treasury stock, at cost -

463,436

 shares and

463,521

 shares

at December 31, 2024 and 2023, respectively

(11,701)

(11,702)

Total stockholders’ equity

78,292

76,507

Total liabilities and stockholders’ equity

$

977,324

$

975,255

See accompanying notes to consolidated financial statements

87

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Statements of Earnings

Year ended December 31

(Dollars in thousands, except share and per share data)

2024

2023

Interest income:

Loans, including fees

$

29,735

$

24,925

Securities:

Taxable

5,430

7,208

Tax-exempt

294

1,568

Federal funds sold and interest-bearing bank deposits

3,273

673

Total interest income

38,732

34,374

Interest expense:

Deposits

11,604

7,974

Short-term borrowings

3

72

Total interest expense

11,607

8,046

Net interest income

27,125

26,328

Provision for credit losses

36

135

Net interest income after provision for credit losses

27,089

26,193

Noninterest income:

Service charges on deposit accounts

614

603

Mortgage lending

608

430

Bank-owned life insurance

403

411

Other

1,849

1,870

Securities losses, net

—

(6,295)

Total noninterest income

3,474

(2,981)

Noninterest expense:

Salaries and benefits

12,534

12,101

Net occupancy and equipment

2,508

2,954

Professional fees

1,188

1,299

FDIC and other regulatory assessments

564

631

Other

5,372

5,609

Total noninterest expense

22,166

22,594

Earnings before income taxes

8,397

618

Income tax expense (benefit)

2,000

(777)

Net earnings

$

6,397

$

1,395

Net earnings per share:

Basic and diluted

$

1.83

$

0.40

Weighted average shares outstanding:

Basic and diluted

3,493,690

3,498,030

See accompanying notes to consolidated financial statements

88

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

Year ended December 31

(Dollars in thousands)

2024

2023

Net earnings

$

6,397

$

1,395

Other comprehensive (loss) income, net of tax:

Unrealized net holding (loss) gain on securities, net of 

tax benefit of $

195

 and tax expense of $

2,407

 for the years

ended December 31, 2024 and 2023, respectively

(578)

7,177

Reclassification adjustment for net loss on securities 

recognized in net earnings, net of tax benefit of none and $

1,581

for the years ended December 31, 2024 and 2023, respectively

—

4,714

Other comprehensive (loss) income

(578)

11,891

Comprehensive income

$

5,819

$

13,286

See accompanying notes to consolidated financial statements

89

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

Accumulated

Common

Additional

other

Shares

Common

paid-in

Retained 

comprehensive

Treasury

(Dollars in thousands, except share data)

Outstanding

Stock

capital

earnings

(loss) income

stock

Total

Balance, December 31, 2022

3,503,452

$

39

3,797

116,600

(40,920)

(11,475)

$

68,041

Cumulative effect of change in 

accounting standard

—

—

—

(821)

—

—

(821)

Net earnings

—

—

—

1,395

—

—

1,395

Other comprehensive income

—

—

—

—

11,891

—

11,891

Cash dividends paid ($

1.08

 per share)

—

—

—

(3,776)

—

—

(3,776)

Stock repurchases

(10,108)

—

—

—

—

(229)

(229)

Sale of treasury stock

270

—

4

—

—

2

6

Balance, December 31, 2023

3,493,614

$

39

$

3,801

$

113,398

$

(29,029)

$

(11,702)

$

76,507

Cumulative effect of change in 

accounting standard

—

—

—

(263)

—

—

(263)

Net earnings

—

—

—

6,397

—

—

6,397

Other comprehensive loss

—

—

—

—

(578)

—

(578)

Cash dividends paid ($

1.08

 per share)

—

—

—

(3,773)

—

—

(3,773)

Sale of treasury stock

85

—

1

—

—

1

2

Balance, December 31, 2024

3,493,699

$

39

$

3,802

$

115,759

$

(29,607)

$

(11,701)

$

78,292

See accompanying notes to consolidated financial statements

90

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Year ended December 31

(In thousands)

2024

2023

Cash flows from operating activities:

Net earnings

$

6,397

$

1,395

Adjustments to reconcile net earnings to net cash provided by

operating activities:

Provision for credit losses

36

135

Depreciation and amortization

1,933

1,700

Premium amortization and discount accretion, net

1,505

2,380

Deferred tax expense (benefit)

438

(195)

Net loss on sale of securities available for sale

—

6,295

Net gain on sale of loans held for sale

(261)

(71)

Loans originated for sale

(10,439)

(4,141)

Proceeds from sale of loans

10,622

4,174

Increase in cash surrender value of bank owned life insurance

(403)

(359)

Income recognized from death benefit on bank-owned life insurance

—

(52)

Net (increase) decrease in other assets

(1,168)

2,652

Net increase (decrease) in accrued expenses and other liabilities

2,149

(2,011)

Net cash provided by operating activities

$

10,809

$

11,902

Cash flows from investing activities:

Proceeds from sales of securities available-for-sale

—

111,269

Proceeds from maturities, paydowns and calls of securities available-for -sale

25,620

30,329

Increase in loans, net

(6,709)

(52,892)

Net purchases of premises and equipment

(2,089)

(418)

Decrease (increase) in FHLB stock

32

(164)

Proceeds from bank-owned life insurance death benefit

—

216

Proceeds from surrender of bank-owned life insurance

—

3,037

Net cash provided by investing activities

$

16,854

$

91,377

Cash flows from financing activities:

Net decrease in noninterest-bearing deposits

(9,849)

(40,648)

Net increase (decrease) in interest-bearing deposits

9,430

(13,446)

Net decrease in federal funds purchased and securities sold 

under agreements to repurchase

(1,486)

(1,065)

Stock repurchases

—

(229)

Dividends paid

(3,773)

(3,776)

Net cash used in financing activities

$

(5,678)

$

(59,164)

Net change in cash and cash equivalents

$

21,985

$

44,115

Cash and cash equivalents at beginning of period

71,369

27,254

Cash and cash equivalents at end of period

$

93,354

$

71,369

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Interest

$

11,520

$

7,516

Income taxes

1,244

1,230

See accompanying notes to consolidated financial statements

91

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Auburn National Bancorporation, Inc. (the “Company”) is a bank holding company whose primary business is conducted

by its wholly-owned subsidiary, AuburnBank (the “Bank”). AuburnBank is a commercial bank located in Auburn,

Alabama. The Bank provides a full range of banking services in its primary market area, Lee County, which includes the

Auburn-Opelika Metropolitan Statistical Area.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which are

managed as a single business segment. Significant intercompany transactions and accounts are eliminated in consolidation.

Revenue Recognition 

The Company’s sources of income that fall within the scope of ASC 606 include service charges on deposits, investment

services, interchange fees and gains and losses on sales of other real estate, all of which are presented as components of

noninterest income. The following is a summary of the revenue streams that fall within the scope of ASC 606: 

Service charges on deposits, investment services, ATM and interchange fees – Fees from these services are either

transaction-based, for which the performance obligations are satisfied when the individual transaction is processed, or set

periodic service charges, for which the performance obligations are satisfied over the period the service is provided.

Transaction-based fees are recognized at the time the transaction is processed, and periodic service charges are recognized

over the service period.

Gains on sales of other real estate

 –

A gain on sale should be recognized when a contract for sale exists and control of the

asset has been transferred to the buyer. ASC 606 lists several criteria required to conclude that a contract for sale exists,

including a determination that the institution will collect substantially all of the consideration to which it is entitled. In

addition to the loan-to-value, the analysis is based on various other factors, including the credit quality of the borrower, the

structure of the loan, and any other factors that may affect collectability.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure

of contingent assets and liabilities as of the balance sheet date and the reported amounts of income and expense during the

reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to

significant change in the near term include the determination of the allowance for credit losses, fair value measurements,

valuation of other real estate owned, and valuation of deferred tax assets.

Reclassifications 

Certain amounts reported in the prior period have been reclassified to conform to the current-period presentation. These

reclassifications had no impact on the Company’s previously reported net earnings or total stockholders’ equity.

Subsequent Events 

The Company has evaluated the effects of events or transactions through the date of this filing that have occurred

subsequent to December 31, 2024. The Company does not believe there are any material subsequent events that would

require further recognition or disclosure.

92

Correction of Error

The disclosure of loans by vintage in Note 5 – Loans and Allowance for Credit Losses in the Company’s Annual Report on

Form 10-K for year ended December 31, 2023 contained incorrect information as it pertains to loans originated by vintage

and revolving loans. All current period gross charge-off data, total loans by segment and total loans by credit quality

indicator were correctly reported. The loans originated by vintage and revolving loans as of December 31, 2023 have been

corrected in the comparative presentation in Note 5 – Loans and Allowance for Credit Losses in the Notes herein.

Accounting Standards Adopted in 2024

ASU 2023-02,

Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit

Structures Using the Proportional Amortization Method

. ASU 2023-02 now permits reporting entities to elect to account

for their equity investments made primarily to receive income tax credits and other income tax benefits, regardless of the

program from which the income tax credits or benefits are received, using the proportional amortization method if certain

conditions are met. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning

after December 15, 2023. The Company adopted ASU 2023-02 effective January 1, 2024 and recorded a cumulative effect

of change in accounting standard adjustment which reduced beginning retained earnings by $0.3 million and reduced our

investment in New Markets Tax Credits (“NMTCs”) by $0.4 million. The Company, beginning January 1, 2024, accounts

for its investments in NMTCs using the proportional amortization method through charges to the provision for income

taxes. See Note 3, Variable Interest Entities.

ASU 2023-07,

Segment Reporting (Topic 280) - Improvement to Reportable Segment Disclosures. 

The amendments in

ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual basis to

enable investors to develop more decisions-useful financial analyses. ASU 2023-07 is effective for fiscal years beginning

after December 31, 2023. The Company has adopted ASU 2023-07 as of January 1, 2024 and has determined that its

banking services and branch locations meet the aggregation criteria of ASC 280,

Segment Reporting

, since each of its

banking services and branch locations offer similar products and services, operate in a similar manner, have similar

customers and report to the same regulatory authority, and therefore operate one line of business located in a single

geographic area. The Company's Chief Executive Officer has been identified as the chief operating decision maker

(“CODM”).

The CODM regularly assesses performance of the aggregated single operating and reporting segment and decides how to

allocate resources based on the net income calculated on the same basis as the net income reported in the Company's

consolidated statements of earnings and other comprehensive earnings and total assets calculated on the same basis as the

total assets reported in the Company’s consolidated balance sheets. The CODM is also regularly provided with expense

information at a level that is consistent with that disclosed in the Company's consolidated statements of earnings and other

comprehensive earnings. 

Issued not yet effective accounting standards

ASU 2023-09,

Income Taxes (Topic 740): Improvements to Income Tax Disclosures.

 The amendments in this Update

enhance the transparency and decision usefulness of income tax disclosures. For public business entities, the new standard

is effective for annual periods beginning after December 15, 2024. The Company does not expect the new standard to have

a material impact on the Company’s consolidated financial statements.

93

Cash Equivalents

Cash equivalents include cash on hand, cash items in process of collection, amounts due from banks, including interest

bearing deposits with other banks, and federal funds sold.

Securities

Securities are classified based on management’s intention at the date of purchase. At December 31, 2024, all of the

Company’s securities were classified as available-for-sale. Securities available-for-sale are used as part of the Company’s

interest rate risk and liquidity management strategy, and they may be sold in response to changes in interest rates, changes

in prepayment risks or other factors. All securities classified as available-for-sale are recorded at fair value with any

unrealized gains and losses reported in accumulated other comprehensive income (loss), net of the deferred income tax

effects. Interest and dividends on securities, including the amortization of premiums and accretion of discounts are

recognized in interest income using the effective interest method. Premiums are amortized to the earliest call date while

discounts are accreted over the estimated life of the security. Realized gains and losses from the sale of securities are

determined using the specific identification method. 

For any securities classified as available-for-sale that are in an unrealized loss position at the balance sheet date, the

Company assesses whether or not it intends to sell the security, or more likely than not will be required to sell the security,

before recovery of its amortized cost basis. If either of these criteria are met, the security's amortized cost basis is written

down to fair value through net income. If neither criterion is met, the Company evaluates whether any portion of the decline

in fair value is the result of credit deterioration. Such evaluations consider the extent to which the amortized cost of the

security exceeds its fair value, changes in credit ratings and any other known adverse conditions related to the specific

security. If the evaluation indicates that a credit loss exists, an allowance for credit losses is recorded for the amount by

which the amortized cost basis of the security exceeds the present value of cash flows expected to be collected, limited by

the amount by which the amortized cost exceeds fair value. Any impairment not recognized in the allowance for credit

losses is recognized in other comprehensive income.

Loans held for sale

The Company originates residential mortgage loans for sale. Such loans are carried at the lower of cost or estimated fair

value in the aggregate. Loan sales are recognized when the transaction closes, the proceeds are collected, and ownership is

transferred. Continuing involvement, through the sales agreement, consists of the right to service the loan for a fee for the

life of the loan, if applicable. Gains on the sale of loans held for sale are recorded net of related costs, such as

commissions, and reflected as a component of mortgage lending income in the consolidated statements of earnings. 

The Bank makes various representations and warranties to the purchaser of the residential mortgage loans they originated

and sells, primarily to Fannie Mae. Every loan closed by the Bank’s mortgage center is run through Fannie Mae or other

purchasing government sponsored enterprise (“GSE”) automated underwriting system. Any exceptions noted during this

process are remedied prior to sale. These representations and warranties also apply to underwriting the real estate appraisal

opinion of value for the collateral securing these loans. Failure by the Company to comply with the underwriting and/or

appraisal standards could result in the Company being required to repurchase the mortgage loan or to reimburse the investor

for losses incurred (make whole requests) if the Company cannot cure such failure within the specified period following

discovery.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported

at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts and

deferred fees and costs. Accrued interest receivable related to loans is recorded in other assets on the consolidated balance

sheets. Interest income is accrued on the unpaid principal balance.

Loan origination fees, net of certain direct origination

costs, are deferred and recognized in interest income using methods that approximate a level yield without anticipating

prepayments.

94

The accrual of interest is generally discontinued when a loan becomes 90 days past due and is not well collateralized and in

the process of collection, or when management believes, after considering economic and business conditions and collection

efforts, that the principal or interest will not be collectible in the normal course of business. Past due status is based on

contractual terms of the loan. A loan is considered to be past due when a scheduled payment has not been received 30 days

after the contractual due date.

All accrued but unpaid interest is reversed against interest income when a loan is placed on nonaccrual status. Interest

received on such loans is accounted for using the cost-recovery method, until the loan qualifies for return to accrual. Loans

are returned to accrual status when all the principal and interest amounts contractually due are brought current, there is a

sustained period of repayment performance, and future payments are reasonably assured. Otherwise, under the cost

recovery method, interest income is not recognized until the loan balance is reduced to zero.

Allowance for Credit Losses – Loans

The allowance for credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net

amount expected to be collected on the loans. Loans are charged off against the allowance when management confirms the

loan balance is uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged -off and

expected to be charged-off. Accrued interest receivable is excluded from the estimate of credit losses.

The allowance for credit losses represents management’s estimate of lifetime credit losses inherent in loans as of the

balance sheet date. The allowance for credit losses is estimated by management using relevant available information, from

both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. 

The Company’s loan loss estimation process includes procedures to appropriately consider the unique characteristics of its

respective loan segments (commercial and industrial, construction and land development, commercial real estate,

residential real estate, and consumer loans). These segments are further disaggregated into loan classes, the level at which

credit quality is monitored. See Note 5, Loans and Allowance for Credit Losses, for additional information about our loan

portfolio.

Credit loss assumptions are estimated using a discounted cash flow ("DCF") model for each loan segment, except consumer

loans. The weighted average remaining life method is used to estimate credit loss assumptions for consumer loans. 

The DCF model calculates an expected life-of-loan loss percentage by considering the forecasted probability that a

borrower will default (the “PD”), adjusted for relevant forecasted macroeconomic factors, and loss given default (“LGD”),

which is the estimate of the amount of net loss in the event of default. This model utilizes historical correlations between

default experience and certain macroeconomic factors as determined through a statistical regression analysis. The

forecasted Alabama unemployment rate is considered in the model for commercial and industrial, construction and land

development, commercial real estate, and residential real estate loans. In addition, forecasted changes in the Alabama

home price index is considered in the model for construction and land development and residential real estate loans. 

Forecasted changes in the national commercial real estate (“CRE”) price index is considered in the model for commercial

real estate and multifamily loans; and forecasted changes in the Alabama gross state product is considered in the model for

multifamily loans. Projections of these macroeconomic factors, obtained from an independent third party, are utilized to

predict quarterly rates of default based on the statistical PD models. 

Expected credit losses are estimated over the contractual term of the loan, adjusted for expected prepayments and principal

payments (“curtailments”) when appropriate. Management's determination of the contract term excludes expected

extensions, renewals, and modifications unless the extension or renewal option is included in the contract at the reporting

date and is not unconditionally cancellable by the Company. To the extent the lives of the loans in the portfolio extend

beyond the period for which a reasonable and supportable forecast can be made (which is 4 quarters for the Company), the

Company reverts, on a straight-line basis back to the historical rates over an 8-quarter reversion period.

During the first quarter of 2024, as part of the Company’s ongoing model monitoring procedures, the annual loss driver

analysis and prepayment, curtailment and funding studies were performed. The analysis and studies resulted in changes for

all DCF models. The changes were a result of updating the Company’s peer group and incorporating data through 2022.

The weighted average remaining life method was deemed most appropriate for the consumer loan segment because

consumer loans contain many different payment structures, payment streams and collateral. The weighted average

remaining life method uses an annual charge-off rate over several vintages to estimate credit losses. The average annual

charge-off rate is applied to the contractual term adjusted for prepayments.

95

Additionally, the allowance for credit losses calculation includes subjective adjustments for qualitative risk factors that are

believed likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments may

increase reserve levels and include adjustments for lending management experience and risk tolerance, loan review and

audit results, asset quality and portfolio trends, loan portfolio growth, industry concentrations, trends in underlying

collateral, external factors and economic conditions not already captured.

Loans secured by real estate with balances equal to or greater than $500 thousand and loans not secured by real estate with

balances equal to or greater than $250 thousand that do not share risk characteristics are evaluated on an individual basis.

When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the

expected credit losses are based on the estimated fair value of collateral held at the reporting date, adjusted for selling costs

as appropriate. 

Allowance for Credit Losses – Unfunded Commitments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial

letters of credit issued to meet customer financing needs. The Company’s exposure to credit loss in the event of

nonperformance by the other party to the financial instrument for off -balance sheet loan commitments is represented by the

contractual amount of those instruments. Such financial instruments are recorded when they are funded.

The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to

extend credit are unconditionally cancelable, through a charge to provision for credit losses in the Company’s consolidated

statements of earnings. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment

at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans,

taking into consideration the likelihood that funding will occur as well as any third-party guarantees. The allowance for

unfunded commitments is included in other liabilities on the Company’s consolidated balance sheets.

Premises and Equipment

Land is carried at cost. Land improvements, buildings and improvements, and furniture, fixtures, and equipment are carried

at cost, less accumulated depreciation computed on a straight-line metho d over the estimated useful lives of the assets or the

expected terms of the leases, if shorter. Expected terms include lease option periods to the extent that the exercise of such

options is reasonably assured.

Nonmarketable equity investments

Nonmarketable equity investments include equity securities that are not publicly traded and securities acquired for various

purposes. The Bank is required to maintain certain minimum levels of equity investments in (i) Federal Reserve Bank of

Atlanta based on the Bank’s capital stock and surplus, and the (ii) Federal Home Bank of Atlanta (“FHLB – Atlanta”)

based on various factors including, the Bank’s total assets, its borrowings and outstanding letters of credit from the FHLB -

Atlanta and its “acquired member asset” sales to FHLB - Atlanta. These nonmarketable equity securities are accounted for

at cost which equals par or redemption value. These securities do not have a readily determinable fair value as their

ownership is restricted and there is no market for these securities. These securities can only be redeemed or sold at their par

value by the respective issuer bank or, in the case of FHLB – Atlanta stock upon FHLB – Atlanta approval sale to another

member of FHLB – Atlanta and law applicable to the member. The Company records these nonmarketable equity securities

as a component of other assets, which are periodically evaluated for impairment. Management considers these

nonmarketable equity securities to be long-term investments. Accordingly, when evaluating these securities for impairment,

management considers the ultimate recoverability of the par value rather than by recognizing temporary declines in value.

Transfers of Financial Assets

Transfers of an entire financial asset (i.e. loan sales), a group of entire financial assets, or a participating interest in an entire

financial asset (i.e. loan participations sold) are accounted for as sales when control over the assets have been surrendered.

Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company,

(2) the transferee obtains the right (free of conditions that constrain it from taking that right) to pledge or exchange the

transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an

agreement to repurchase them before their maturity.

96

Mortgage Servicing Rights

The Company recognizes as assets the rights to service mortgage loans which it originates and sells to others, principally

Fannie Mae. These servicing rights are called “MSRs”. The Company determines the fair value of MSRs on sold loans at

the date the loan is transferred. An estimate of the Company’s MSRs is determined using assumptions that market

participants would use in estimating future net servicing income, including estimates of prepayment speeds, discount rate,

default rates, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees.

Subsequent to the date of sale of the residential mortgage loans, the Company has elected to measure its MSRs on such sold

mortgage loans under the amortization method. Under the amortization method, MSRs are amortized in proportion to, and

over the period of, estimated net servicing income. The amortization of MSRs is analyzed monthly and is adjusted to

reflect changes in prepayment speeds, as well as other factors. MSRs are evaluated for impairment based on the fair value

of those assets. Impairment is determined by stratifying MSRs into groupings based on predominant risk characteristics,

such as interest rate and loan type. If, by individual stratum, the carrying amount of the MSRs exceeds fair value, a

valuation allowance is established through a charge to earnings. The valuation allowance is adjusted as the fair value

changes. MSRs are included in the other assets category in the accompanying consolidated balance sheets at the lower of

cost or fair value. See Note 13 “Fair Value”

Securities sold under agreements to repurchase 

Securities sold under agreements to repurchase generally mature less than one year from the transaction date. Securities

sold under agreements to repurchase are reflected as a secured borrowing in the accompanying consolidated balance sheets

at the amount of cash received in connection with each transaction.

Income Taxes 

Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying

amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces

deferred tax assets to the amount expected to be realized. The net deferred tax asset is reflected as a component of other

assets in the accompanying consolidated balance sheets.

Income tax expense or benefit for the year is allocated among continuing operations and other comprehensive income

(loss), as applicable. The amount allocated to continuing operations is the income tax effect of the pretax income or loss

from continuing operations that occurred during the year, plus or minus income tax effects of (1) changes in certain

circumstances that cause a change in judgment about the realization of deferred tax assets in future years, (2) changes in

income tax laws or rates, and (3) changes in income tax status, subject to certain exceptions. The amount allocated to other

comprehensive income (loss) is related solely to changes in the valuation allowance on items that are normally accounted

for in other comprehensive income (loss) such as unrealized gains or losses on available-for-sale securities.

In accordance with ASC 740,

Income Taxes

, a tax position is recognized as a benefit only if it is “more likely than not” that

the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount

recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax

positions not meeting the “more likely than not” test, no tax benefit is recorded. It is the Company’s policy to recognize

interest and penalties related to income tax matters in income tax expense. The Company and its wholly-owned subsidiaries

file consolidated Federal and State of Alabama income tax returns.

Fair Value Measurements 

ASC 820,

Fair Value Measurements,

which defines fair value, establishes a framework for measuring fair value in U.S.

generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 applies only to

fair-value measurements that are already required or permitted by other accounting standards. The definition of fair value

focuses on the exit price, i.e., the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date, not the entry price, i.e., the price that would be paid to

acquire the asset or received to assume the liability at the measurement date. The statement emphasizes that fair value is a

market-based measurement; not an entity-specific measurement. Therefore, the fair value measurement should be

determined based on the assumptions that market participants would use in pricing the asset or liability. For more

information related to fair value measurements, please refer to Note 13, Fair Value.

97

NOTE 2: BASIC AND DILUTED NET EARNINGS PER SHARE

Basic net earnings per share is computed by dividing net earnings by the weighted average common shares outstanding for

the year. Diluted net earnings per share reflect the potential dilution that could occur upon exercise of securities or other

rights for, or convertible into, shares of the Company’s common stock. As of December 31, 2024 and 2023, respectively,

the Company had no such securities or other rights issued or outstanding, and therefore, no dilutive effect to consider for

the diluted net earnings per share calculation. 

The basic and diluted net earnings per share computations for the respective years are presented below.

Year ended December 31

(Dollars in thousands, except share and per share data)

2024

2023

Basic and diluted:

Net earnings

$

6,397

$

1,395

Weighted average common shares outstanding

3,493,690

3,498,030

Net earnings per share

$

1.83

$

0.40

NOTE 3: VARIABLE INTEREST ENTITIES

Generally, a variable interest entity (“VIE”) is a corporation, partnership, trust or other legal structure that does not have

equity investors with substantive or proportional voting rights or has equity investors that do not provide sufficient financial

resources for the entity to support its activities. 

At December 31, 2024, the Company did not have any consolidated VIEs and had one nonconsolidated VIE, which is

discussed below.

New Markets Tax Credit Investment

The New Markets Tax Credit (“NMTC”) program provides federal tax incentives to investors to make investments in

distressed communities and promotes economic improvement through the development of successful businesses in these

communities. The NMTCs are available to investors over seven years and is subject to recapture if certain events occur

during such period. The Company had one NMTC investment with a balance of $0.9 million and $

1.7

 million at December

31, 2024 and 2023, respectively, which is included in other assets in the Company’s consolidated balance sheets as a VIE.

While the Company’s investment exceeds 50% of the outstanding equity interests in this VIE, the Company does not

consolidate the VIE because the Company lacks the power to direct the activities of the VIE, and therefore is not a primary

beneficiary of the VIE.

The Company adopted ASU 2023-02 as of January 1, 2024 which allows us to account for our NMTC investment using the

proportional amortization method. The following table presents a summary of our NMTC investment at December 31,

2024, and the related tax credit and amortization expense for 2024.

(Dollars in thousands)

December 31,

2024

Balance Sheet Location

New Markets Tax Credit investment

$

898

Other assets

(Dollars in thousands)

Year ended

December 31,

2024

Income Statement Location

Income tax credits and other income tax benefits

$

(445)

Income tax expense

Amortization expense

369

Income tax expense

98

NOTE 4: SECURITIES

At December 31, 2024 and 2023, respectively, all securities within the scope of ASC 320,

Investments – Debt and Equity

Securities

were classified as available-for-sale. The fair value and amortized cost for securities available-for-sale by

contractual maturity at December 31, 2024 and 2023, respectively, are presented below.

1 year

1 to 5

5 to 10

After 10

Fair

Gross Unrealized 

Amortized

(Dollars in thousands)

or less

years

years

years

Value

Gains

Losses

Cost

December 31, 2024

Agency obligations (a)

$

—

26,655

25,756

—

52,411

—

7,734

$

60,145

Agency MBS (a)

10

19,863

14,904

138,899

173,676

—

28,901

202,577

State and political subdivisions

—

966

8,244

7,715

16,925

—

2,901

19,826

Total available-for-sale

$

10

47,484

48,904

146,614

243,012

—

39,536

$

282,548

December 31, 2023

Agency obligations (a)

$

331

10,339

43,209

—

53,879

—

8,195

$

62,074

Agency MBS (a)

32

15,109

22,090

161,058

198,289

—

27,838

226,127

State and political subdivisions

—

—

9,691

9,051

18,742

1

2,731

21,472

Total available-for-sale

$

363

25,448

74,990

170,109

270,910

1

38,764

$

309,673

(a) Includes securities issued by U.S. government agencies or government sponsored entities. Expected lives of

these securities may differ from contractual maturities because (i) issuers may have the right to call or repay such securities

obligations with or without prepayment penalties and (ii) loans included in Agency MBS generally have the right to prepay

such loans in whole or in part at any time.

Securities with aggregate fair values of $

222.3

 million and $

211.8

 million at December 31, 2024 and 2023, respectively,

were pledged to secure public deposits, securities sold under agreements to repurchase, FHLB advances, and for other

purposes required or permitted by law. 

Included in other assets on the accompanying consolidated balance sheets are nonmarketable equity investments. The

carrying amounts of nonmarketable equity investments were $

1.4

 million at both December 31, 2024 and 2023,

respectively. Nonmarketable equity investments include FHLB-Atlanta stock, Federal Reserve Bank stock, and stock in a

privately held financial institution.

Fair Value and Gross Unrealized Losses

The fair values and gross unrealized losses on securities at December 31, 2024 and 2023, respectively, segregated by those

securities that have been in an unrealized loss position for less than 12 months and 12 months or more are presented below.

Less than 12 Months

12 Months or Longer

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(Dollars in thousands)

Value

Losses

Value

Losses

Value

Losses

December 31, 2024:

Agency obligations 

$

—

—

52,411

7,734

52,411

$

7,734

Agency MBS

7

—

173,669

28,901

173,676

28,901

State and political subdivisions

1,798

17

14,776

2,884

16,574

2,901

Total 

$

1,805

17

240,856

39,519

242,661

$

39,536

December 31, 2023:

Agency obligations 

$

—

—

53,879

8,195

53,879

$

8,195

Agency MBS

66

1

198,223

27,837

198,289

27,838

State and political subdivisions

793

2

14,408

2,729

15,201

2,731

Total 

$

859

3

266,510

38,761

267,369

$

38,764

99

For the securities in the previous table, the Company assesses whether or not it intends to sell the security, or more likely

than not will be required to sell the security, before recovery of its amortized cost basis. Unrealized losses have not been

recognized into income as the decline in fair value is largely due to changes in interest rates and other market

conditions. For the securities in the previous table, as of December 31, 2024, management does not intend to sell and it is

likely that management will not be required to sell the securities prior to their anticipated recovery. 

Agency Obligations

Investments in agency obligations are guaranteed of full and timely payments by the issuing agency. Based on

management's analysis and judgement, there were no credit losses attributable to the Company’s investments in

agency obligations at December 31, 2024. 

Agency MBS

Investments in agency MBS are issued by Ginnie Mae, Fannie Mae, and Freddie Mac. Each of these agencies provide a

guarantee of full and timely payments of principal and interest by the issuing agency. Based on management's analysis and

judgement, there were no credit losses attributable to the Company’s investments in agency MBS at December 31, 2024.

State and Political Subdivisions

Investments in state and political subdivisions are securities issued by various municipalities in the United States. The

majority of the portfolio was rated AA or higher, with no securities rated below investment grade at December 31,

2024. Based on management's analysis and judgement, there were no credit losses attributable to the Company’s

investments in state and political subdivisions at December 31, 2024.

Realized Gains and Losses

The following table presents the gross realized gains and losses on sales related to securities.

Year ended December 31

(Dollars in thousands)

2024

2023

Gross realized gains

$

—

1

Gross realized losses

—

(6,296)

Realized losses, net

$

—

(6,295)

NOTE 5: LOANS AND ALLOWANCE FOR CREDIT LOSSES

December 31

(In thousands)

2024

2023

Commercial and industrial

$

63,274

$

73,374

Construction and land development

82,493

68,329

Commercial real estate:

Owner occupied

55,346

66,783

Hotel/motel

35,210

39,131

Multifamily

43,556

45,841

Other

155,880

135,552

Total commercial real estate

289,992

287,307

Residential real estate:

Consumer mortgage

60,399

60,545

Investment property

58,228

56,912

Total residential real estate

118,627

117,457

Consumer installment

9,631

10,827

Total loans, net of unearned income

564,017

557,294

100

Loans secured by real estate were approximately

87.1

% of the total loan portfolio at December 31, 2024. At December 31,

2024, the Company’s geographic loan distribution was concentrated primarily in Lee County, Alabama and surrounding

areas.

The loan portfolio segment is defined as the level at which an entity develops and documents a systematic method for

determining its allowance for credit losses. As part of the Company’s quarterly assessment of the allowance, the loan

portfolio is disaggregated into the following portfolio segments: commercial and industrial, construction and land

development, commercial real estate, residential real estate and consumer installment. Where appropriate, the Company’s

loan portfolio segments are further disaggregated into classes. A class is generally determined based on the initial

measurement attribute, risk characteristics of the loan, and an entity’s method for monitoring and determining credit risk.

The following describe the risk characteristics relevant to each of the portfolio segments and classes.

Commercial and industrial (“C&I”) —

includes loans to finance business operations, equipment purchases, or other needs

for small and medium-sized commercial customers. Also included in this category are loans to finance agricultural

production. Generally, the primary source of repayment is the cash flow from business operations and activities of the

borrower.

Construction and land development (“C&D”) —

includes both loans and credit lines for the purpose of purchasing,

carrying and developing land into commercial developments or residential subdivisions. Also included are loans and lines

for construction of residential, multi-family and commercial buildings. Generally the primary source of repayment is

dependent upon the sale or refinance of the real estate collateral.

Commercial real estate (“CRE”) —

includes loans disaggregated in these classes:

 Owner occupied

 – includes loans secured by business facilities to finance business operations, equipment and

 owner-occupied facilities primarily for small and medium-sized commercial customers. Generally the primary source

 of loan repayment are the cash flows from the business operations and activities of the borrower, who owns the

 property.

 Hotel/motel

– includes loans for hotels and motels. Generally, the primary source of repayment is dependent upon

 income generated from the real estate collateral. The underwriting of these loans takes into consideration the 

 occupancy and rental rates, as well as the financial health of the borrower.

 Multifamily

 – primarily includes loans to finance income-producing multi-family properties. Loans in this class include

 loans for 5 or more unit residential property and apartments leased to residents. Generally, the primary source of

 repayment is dependent upon income generated from the real estate collateral. The underwriting of these loans takes

 into consideration the occupancy and rental rates, as well as the financial health of the borrower.

 Other

 – primarily includes loans to finance income-producing commercial properties. Loans in this class include loans

 for neighborhood retail centers, medical and professional offices, single retail stores, industrial buildings, and

 warehouses leased generally to local businesses and residents. Generally, the primary source of repayment is dependent

 upon income generated from the real estate collateral. The underwriting of these loans takes into consideration the

 occupancy and rental rates as well as the financial health of the borrower. 

Residential real estate (“RRE”) —

includes loans disaggregated into two classes:

 Consumer mortgage

 – primarily includes first or second lien mortgages and home equity lines to consumers that are

 secured by a primary residence or second home. These loans are underwritten in accordance with the Bank’s general

 loan policies and procedures which require, among other things, proper documentation of each borrower’s financial

 condition, satisfactory credit history and property value.

 Investment property

 – primarily includes loans to finance income-producing 1-4 family residential properties.

 Generally, the primary source of repayment is dependent upon income generated from leasing the property securing the

 loan. The underwriting of these loans takes into consideration the rental rates as well as the financial health of the

 borrower.

101

Consumer installment —

includes loans to individuals both secured by personal property and unsecured. Loans include

personal lines of credit, automobile loans, and other retail loans. These loans are underwritten in accordance with the

Bank’s general loan policies and procedures which require, among other things, proper documentation of each borrower’s

financial condition, satisfactory credit history, and if applicable, property value.

The following is a summary of current, accruing past due and nonaccrual loans by portfolio class as of December 31, 2024

and 2023.

Accruing

Accruing

Total

30-89 Days

Greater than

Accruing

Non-

Total 

(In thousands)

Current

Past Due

90 days

Loans

Accrual

Loans

December 31, 2024:

Commercial and industrial

$

63,163

12

—

63,175

99

$

63,274

Construction and land development

82,089

—

—

82,089

404

82,493

Commercial real estate:

Owner occupied

55,346

—

—

55,346

—

55,346

Hotel/motel

35,210

—

—

35,210

—

35,210

Multifamily

43,556

—

—

43,556

—

43,556

Other

155,880

—

—

155,880

—

155,880

Total commercial real estate

289,992

—

—

289,992

—

289,992

Residential real estate:

Consumer mortgage

59,677

722

—

60,399

—

60,399

Investment property

58,179

49

—

58,228

—

58,228

Total residential real estate

117,856

771

—

118,627

—

118,627

Consumer installment

9,579

52

—

9,631

—

9,631

Total

$

562,679

835

—

563,514

503

$

564,017

December 31, 2023:

Commercial and industrial

$

73,108

266

—

73,374

—

$

73,374

Construction and land development

68,329

—

—

68,329

—

68,329

Commercial real estate:

Owner occupied

66,000

—

—

66,000

783

66,783

Hotel/motel

39,131

—

—

39,131

—

39,131

Multifamily

45,841

—

—

45,841

—

45,841

Other

135,552

—

—

135,552

—

135,552

Total commercial real estate

286,524

—

—

286,524

783

287,307

Residential real estate:

Consumer mortgage

60,442

—

—

60,442

103

60,545

Investment property

56,597

290

—

56,887

25

56,912

Total residential real estate

117,039

290

—

117,329

128

117,457

Consumer installment

10,781

46

—

10,827

—

10,827

Total

$

555,781

602

—

556,383

911

$

557,294

102

Credit Quality Indicators

The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the

standard asset classification system used by the federal banking agencies. These categories are utilized to develop the

associated allowance for credit losses using historical losses adjusted for qualitative and environmental factors and are

defined as follows: 

●

Pass – loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if

any) or by the fair value, less cost to acquire and sell, of any underlying collateral. 

●

Special Mention – loans with potential weakness that may, if not reversed or corrected, weaken the credit or

inadequately protect the Company’s position at some future date. These loans are not adversely classified and do

not expose an institution to sufficient risk to warrant an adverse classification.

●

Substandard Accruing – loans that exhibit a well-defined weakness which presently jeopardizes debt repayment,

even though they are currently performing. These loans are characterized by the distinct possibility that the

Company may incur a loss in the future if these weaknesses are not corrected.

Nonaccrual – includes loans where management has determined that full payment of principal and interest is not expected.

The following tables presents credit quality indicators for the loan portfolio segments and classes by year of origination as

of December 31, 2024 and 2023. The December 31, 2023 table has been revised to correct revolving loans and properly

allocate loans by year of origination. See Note 1: Summary of Significant Accounting Policies – Correction of Error.

103

(Dollars in thousands)

2024

2023

2022

2021

2020

Prior to

2020

Revolving

Loans

Total 

Loans

December 31, 2024: 

Commercial and industrial

Pass

$

11,290

7,265

8,488

9,677

4,659

16,989

4,425

$

62,793

Special mention

49

74

—

—

—

—

—

123

Substandard

50

21

181

7

—

—

—

259

Nonaccrual

—

99

—

—

—

—

—

99

Total commercial and industrial

11,389

7,459

8,669

9,684

4,659

16,989

4,425

63,274

Current period gross charge-offs

—

—

9

—

—

—

—

9

Construction and land development

Pass

31,144

29,520

16,504

1,794

1,434

104

1,589

$

82,089

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

404

—

—

—

—

—

—

404

Total construction and land development

31,548

29,520

16,504

1,794

1,434

104

1,589

82,493

Current period gross charge-offs

—

—

—

—

—

—

—

—

Commercial real estate:

Owner occupied

Pass

1,921

11,206

6,776

17,114

3,396

12,030

1,552

$

53,995

Special mention

—

249

—

—

591

—

—

840

Substandard

511

—

—

—

—

—

—

511

Nonaccrual

—

—

—

—

—

—

—

—

Total owner occupied

2,432

11,455

6,776

17,114

3,987

12,030

1,552

55,346

Current period gross charge-offs

—

—

—

—

—

—

—

—

Hotel/motel

Pass

480

6,480

5,303

3,079

1,299

14,437

4,132

$

35,210

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total hotel/motel

480

6,480

5,303

3,079

1,299

14,437

4,132

35,210

Current period gross charge-offs

—

—

—

—

—

—

—

—

104

(Dollars in thousands)

2024

2023

2022

2021

2020

Prior to

2020

Revolving

Loans

Total 

Loans

December 31, 2024: 

Multi-family

Pass

3,739

6,041

17,037

1,863

3,493

6,400

4,983

43,556

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total multi-family

3,739

6,041

17,037

1,863

3,493

6,400

4,983

43,556

Current period gross charge-offs

—

—

—

—

—

—

—

—

Other

Pass

43,753

21,085

32,521

21,249

16,743

16,289

4,120

155,760

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

120

—

—

120

Nonaccrual

—

—

—

—

—

—

—

—

Total other

43,753

21,085

32,521

21,249

16,863

16,289

4,120

155,880

Current period gross charge-offs

—

—

—

—

—

—

—

—

Residential real estate:

Consumer mortgage

Pass

5,885

18,389

18,434

2,466

2,565

10,590

808

59,137

Special mention

243

—

—

—

2

486

—

731

Substandard

—

—

—

—

—

531

—

531

Nonaccrual

—

—

—

—

—

—

—

—

Total consumer mortgage

6,128

18,389

18,434

2,466

2,567

11,607

808

60,399

Current period gross charge-offs

—

—

—

—

—

61

—

61

Investment property

Pass

10,339

10,824

10,651

8,305

11,435

4,794

1,317

57,665

Special mention

—

—

—

—

—

—

—

—

Substandard

278

40

93

9

143

—

—

563

Nonaccrual

—

—

—

—

—

—

—

—

Total investment property

10,617

10,864

10,744

8,314

11,578

4,794

1,317

58,228

Current period gross charge-offs

—

—

—

—

—

—

—

—

Consumer installment

Pass

5,015

2,057

1,911

296

90

113

67

9,549

Special mention

—

9

—

9

—

—

—

18

Substandard

39

15

10

—

—

—

—

64

Nonaccrual

—

—

—

—

—

—

—

—

Total consumer installment

5,054

2,081

1,921

305

90

113

67

9,631

Current period gross charge-offs

25

42

42

1

—

4

—

114

Total loans

Pass

113,566

112,867

117,625

65,843

45,114

81,746

22,993

559,754

Special mention

292

332

—

9

593

486

—

1,712

Substandard

878

76

284

16

263

531

—

2,048

Nonaccrual

404

99

—

—

—

—

—

503

Total loans

$

115,140

113,374

117,909

65,868

45,970

82,763

22,993

$

564,017

Total current period gross charge-offs

$

25

42

51

1

—

65

—

184

105

Year of Origination

2023

2022

2021

2020

2019

Prior to

2019

Revolving

Loans

Total 

Loans

(Dollars in thousands)

December 31, 2023: 

Commercial and industrial

Pass

$

11,571

18,074

13,746

5,602

7,298

7,819

9,003

$

73,113

Special mention

—

—

—

—

—

—

—

—

Substandard

55

203

—

—

3

—

—

261

Nonaccrual

—

—

—

—

—

—

—

—

Total commercial and industrial

11,626

18,277

13,746

5,602

7,301

7,819

9,003

73,374

Current period gross charge-offs

—

—

13

—

151

—

—

164

Construction and land development

Pass

38,646

25,382

1,716

1,526

120

157

782

68,329

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total construction and land development

38,646

25,382

1,716

1,526

120

157

782

68,329

Current period gross charge-offs

—

—

—

—

—

—

—

—

Commercial real estate:

Owner occupied

Pass

12,966

7,337

18,548

10,458

3,948

9,786

2,647

65,690

Special mention

260

—

—

—

—

—

—

260

Substandard

—

—

—

—

50

—

—

50

Nonaccrual

—

—

—

—

783

—

—

783

Total owner occupied

13,226

7,337

18,548

10,458

4,781

9,786

2,647

66,783

Current period gross charge-offs

—

—

—

—

—

—

—

—

Hotel/motel

Pass

9,025

9,873

3,205

1,493

3,881

11,654

—

39,131

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total hotel/motel

9,025

9,873

3,205

1,493

3,881

11,654

—

39,131

Current period gross charge-offs

—

—

—

—

—

—

—

—

106

Year of Origination

2023

2022

2021

2020

2019

Prior to

2019

Revolving

Loans

Total 

Loans

(Dollars in thousands)

December 31, 2023: 

Multi-family

Pass

12,379

17,955

1,953

6,112

3,790

3,043

609

45,841

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total multi-family

12,379

17,955

1,953

6,112

3,790

3,043

609

45,841

Current period gross charge-offs

—

—

—

—

—

—

—

—

Other

Pass

25,810

36,076

31,687

14,597

10,736

15,440

1,052

135,398

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

154

—

—

—

154

Nonaccrual

—

—

—

—

—

—

—

—

Total other

25,810

36,076

31,687

14,751

10,736

15,440

1,052

135,552

Current period gross charge-offs

—

—

—

—

—

—

—

—

Residential real estate:

Consumer mortgage

Pass

20,147

20,177

2,683

2,665

1,281

12,217

249

59,419

Special mention

—

—

—

—

190

305

—

495

Substandard

—

—

—

—

—

528

—

528

Nonaccrual

—

—

—

—

—

103

—

103

Total consumer mortgage

20,147

20,177

2,683

2,665

1,471

13,153

249

60,545

Current period gross charge-offs

—

—

—

—

—

—

—

—

Investment property

Pass

13,398

12,490

9,397

12,209

5,485

1,865

1,478

56,322

Special mention

41

—

—

—

—

—

—

41

Substandard

43

248

—

233

—

—

—

524

Nonaccrual

—

—

—

—

—

25

—

25

Total investment property

13,482

12,738

9,397

12,442

5,485

1,890

1,478

56,912

Current period gross charge-offs

—

—

—

—

—

—

—

—

Consumer installment

Pass

5,688

3,837

740

206

106

141

—

10,718

Special mention

9

25

9

2

—

—

—

45

Substandard

37

11

5

11

—

—

—

64

Nonaccrual

—

—

—

—

—

—

—

—

Total consumer installment

5,734

3,873

754

219

106

141

—

10,827

Current period gross charge-offs

34

57

13

1

—

—

—

105

Total loans

Pass

149,630

151,201

83,675

54,868

36,645

62,122

15,820

553,961

Special mention

310

25

9

2

190

305

—

841

Substandard

135

462

5

398

53

528

—

1,581

Nonaccrual

—

—

—

—

783

128

—

911

Total loans

$

150,075

151,688

83,689

55,268

37,671

63,083

15,820

$

557,294

Total current period gross charge-offs

$

34

57

26

1

151

—

—

269

107

Allowance for Credit Losses

The Company adopted ASC 326 on January 1, 2023, which introduced the Current Expected Credit Losses (“CECL”)

methodology for estimating all expected losses over the life of a financial asset. Under the CECL methodology, the

allowance for credit losses is measured on a collective basis for pools of loans with similar risk characteristics, and for

loans that do not share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an

individual basis.

The composition of the provision for (reversal of) credit losses for the respective periods is presented below.

Year ended December 31,

(Dollars in thousands)

2024

2023

Provision for credit losses:

Loans

$

(6)

$

125

Reserve for unfunded commitments

42

10

Total provision for (reversal of) credit losses

$

36

$

135

The following table details the changes in the allowance for credit losses by portfolio segment for the years ended

December 31, 2024 and 2023.

(in thousands)

Commercial

and industrial

Construction

and land

Development

Commercial

Real Estate

Residential

Real Estate

Consumer

Installment

Total

Balance, December 31, 2022

$

747

949

3,109

828

132

$

5,765

Impact of adopting ASC 326

532

(17)

873

(347)

(22)

1,019

Charge-offs

(164)

—

—

—

(105)

(269)

Recoveries

204

—

—

14

5

223

Net (charge-offs) recoveries

40

—

—

14

(100)

(46)

Provision

(31)

28

(61)

51

138

125

Balance, December 31, 2023

$

1,288

960

3,921

546

148

$

6,863

Charge-offs

(9)

—

—

(61)

(114)

(184)

Recoveries

144

—

—

9

45

198

Net recoveries (charge-offs)

135

—

—

(52)

(69)

14

Provision

(179)

99

(79)

94

59

(6)

Balance, December 31, 2024

$

1,244

1,059

3,842

588

138

$

6,871

108

The Company did not recognize any interest income on nonaccrual loans during 2024 and 2023.

The Company designates individually evaluated loans on nonaccrual status as collateral -dependent loans, as well as other

loans that management of the Company designates as having higher risk. Collateral-dependent loans are loans for which

the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is

experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the

collectively evaluated loans for determining the allowance for credit losses. Under CECL, for collateral-dependent loans,

the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of

collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair

value of the loan’s collateral, which is adjusted for liquidation costs/discounts, and amortized costs. If the fair value of the

collateral exceeds the amortized cost, no allowance is required.

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to

determine expected credit losses for the years ended December 31, 2024 and 2023:

(Dollars in thousands)

Real Estate

Business Assets

Total Loans

December 31, 2024:

Commercial and industrial

$

—

99

$

99

Construction and land development

404

—

404

Total 

$

404

99

$

503

December 31, 2023:

Commercial real estate

$

783

—

$

783

Total 

$

783

—

$

783

The gross interest income which would have been recorded under the original terms of those nonaccrual loans had they

been accruing interest, amounted to approximately $

14

 thousand and $

47

 thousand for the years ended December 31, 2024

and 2023, respectively.

The following table summarizes the Company’s nonaccrual loan by major categories as of December 31, 2024 and 2023.

Nonaccrual loans

Nonaccrual loans

Total

(Dollars in thousands)

with no Allowance

with an Allowance

Nonaccrual Loans

December 31, 2024

Commercial and industrial

$

—

99

$

99

Construction and land development

404

—

404

Total 

$

404

99

$

503

December 31, 2023

Commercial real estate

$

783

—

$

783

Residential real estate

—

128

128

Total 

$

783

128

$

911

The Company had no modifications to loans made to borrowers experiencing financial difficulty at December 31, 2024 and

2023.

109

NOTE 6: PREMISES AND EQUIPMENT

Premises and equipment at December 31, 2024 and 2023 is presented below.

December 31

(Dollars in thousands)

2024

2023

Land and improvements

$

12,800

12,800

Buildings and improvements

36,978

35,442

Furniture, fixtures, and equipment

4,335

3,986

Construction in progress

38

39

Total premises and equipment

54,151

52,267

Less: accumulated depreciation

(8,220)

(6,732)

Premises and equipment, net

$

45,931

45,535

Depreciation expense was approximately $

1.7

 million and $

1.4

 million for the years ended December 31, 2024 and 2023,

respectively, and is a component of net occupancy and equipment expense in the consolidated statements of earnings.

NOTE 7: MORTGAGE SERVICING RIGHTS, NET 

MSRs are recognized based on the fair value of the servicing rights on the date the corresponding mortgage loans are sold. 

An estimate of the Company’s MSRs is determined using assumptions that market participants would use in estimating

future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service, escrow

account earnings, contractual servicing fee income, ancillary income, and late fees. Subsequent to the date of transfer, the

Company has elected to measure its MSRs under the amortization method. Under the amortization method, MSRs are

amortized in proportion to, and over the period of, estimated net servicing income. Servicing fee income is recorded net of

related amortization expense and recognized in earnings as part of mortgage lending income. 

The Company has recorded MSRs related to loans sold without recourse to Fannie Mae. The Company generally sells

conforming, fixed-rate, closed-end, residential mortgages to Fannie Mae. MSRs are included in other assets on the

accompanying consolidated balance sheets.

The Company evaluates MSRs for impairment on a quarterly basis. Impairment is determined by stratifying MSRs into

groupings based on predominant risk characteristics, such as interest rate and loan type. If, by individual stratum, the

carrying amount of the MSRs exceeds fair value, a valuation allowance is established. The valuation allowance is adjusted

as the fair value changes. Changes in the valuation allowance are recognized in earnings as a component of mortgage

lending income.

The following table details the changes in amortized MSRs and the related valuation allowance for the years ended

December 31, 2024 and 2023.

Year ended December 31

(Dollars in thousands)

2024

2023

Beginning balance

$

992

1,151

Additions, net

79

38

Amortization expense

(179)

(197)

Ending balance

$

892

992

Valuation allowance included in MSRs, net:

Beginning of period

$

—

—

End of period

—

—

Fair value of amortized MSRs:

Beginning of period

$

2,382

2,369

End of period

2,204

2,382

110

Data and assumptions used in the fair value calculation related to MSRs at December 31, 2024 and 2023, respectively, are

presented below.

December 31

(Dollars in thousands)

2024

2023

Unpaid principal balance

$

205,915

216,648

Weighted average prepayment speed (CPR)

7.3

%

6.0

Discount rate (annual percentage)

10.0

%

10.5

Weighted average coupon interest rate

3.6

%

3.5

Weighted average remaining maturity (months)

242

245

Weighted average servicing fee (basis points)

25.0

25.0

At December 31, 2024, the weighted average amortization period for MSRs was

7.1

 years. Estimated amortization expense

for each of the next five years is presented below.

(Dollars in thousands)

December 31, 2024

2025

$

118

2026

104

2027

91

2028

80

2029

71

NOTE 8: DEPOSITS

At December 31, 2024, the scheduled maturities of certificates of deposit and other time deposits are presented below.

(Dollars in thousands)

December 31, 2024

2025

$

174,608

2026

7,972

2027

6,267

2028

1,636

2029

764

Thereafter

—

Total certificates of deposit and other time deposits 

$

191,247

Additionally, at December 31, 2024 and 2023, approximately $

87.7

 million and $

97.6

 million, respectively, of certificates

of deposit and other time deposits were issued in denominations greater than $250 thousand.

At December 31, 2024 and 2023, the amount of deposit accounts in overdraft status that were reclassified to loans on the

accompanying consolidated balance sheets was not material.

111

NOTE 9: LEASE COMMITMENTS

We lease certain office facilities and equipment under operating leases. Rent expense for all operating leases totaled $

0.1

million and $

0.2

 million for the years ended December 31, 2024 and 2023, respectively. Aggregate lease right of use assets

were $

0.2

 million and $

0.5

 million at December 31, 2024 and 2023, respectively. Aggregate lease liabilities were $0.2

million and $

0.5

 million at December 31, 2024 and 2023, respectively. Rent expense includes amounts related to items that

are not included in the determination of lease right of use assets including expenses related to short-term leases totaling

$

0.1

 million for the year ended December 31, 2024.

Lease payments under operating leases that were applied to our operating lease liability totaled $

0.1

 million during the year

ended December 31, 2024. The following table reconciles future undiscounted lease payments due under non-cancelable

operating leases (those amounts subject to recognition) to the aggregate operating lease liability as of December 31, 2024.

Future lease

(Dollars in thousands)

payments

2025

$

81

2026

60

2027

60

2028

45

2029

—

Thereafter

—

Total undiscounted operating lease liabilities

$

246

Imputed interest

15

Total operating lease liabilities included in the accompanying consolidated balance sheets

$

231

Weighted-average lease terms in years

3.47

Weighted-average discount rate

3.20

%

NOTE 10: INCOME TAXES

For the years ended December 31, 2024 and 2023 the components of income tax expense from continuing operations are

presented below.

Year ended December 31

(Dollars in thousands)

2024

2023

Current income tax expense (benefit):

Federal

$

991

(448)

State

571

(134)

Total current income tax expense (benefit)

1,562

(582)

Deferred income tax expense (benefit):

Federal

473

(293)

State

(35)

98

Total deferred income tax expense (benefit)

438

(195)

Total income tax expense (benefit)

$

2,000

(777)

112

Total income tax expense differs from the amounts computed by applying the statutory federal income tax rate of 21% to

earnings before income taxes. A reconciliation of the differences for the years ended December 31, 2024 and 2023, is

presented below.

2024

2023

Percent of

Percent of

pre-tax

pre-tax

(Dollars in thousands)

Amount

earnings

Amount

earnings

Earnings before income taxes

$

8,397

618

Income taxes at statutory rate

1,763

21.0

%

130

21.0

%

Tax-exempt interest

(290)

(3.5)

(493)

(79.8)

State income taxes, net of 

federal tax effect

388

4.6

(43)

(7.0)

New Markets Tax Credit

(58)

(0.7)

(356)

(57.6)

Bank-owned life insurance

(85)

(1.0)

(88)

(14.2)

Other

282

3.4

73

11.9

Total income tax expense (benefit)

$

2,000

23.8

%

(777)

(125.7)

%

At December 31, 2024 and 2023, the Company had a net deferred tax asset of $10.2 million and $10.3 million, respectively,

included in other assets on the consolidated balance sheet. The tax effects of temporary differences that give rise to

significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023 are presented

below.

December 31

(Dollars in thousands)

2024

2023

Deferred tax assets:

Allowance for credit losses

$

1,726

1,724

Unrealized loss on securities

9,929

9,734

Net operating loss carry-forwards

 — 

253

Tax credit carry-forwards

 — 

356

Accrued bonus 

207

185

Right of use liability

58

128

Other

99

71

Total deferred tax assets

12,019

12,451

Deferred tax liabilities:

Premises and equipment

1,212

1,315

Originated mortgage servicing rights

224

249

Right of use asset

58

122

New Markets Tax Credit investment

 — 

181

Other

333

332

Total deferred tax liabilities

1,827

2,199

Net deferred tax asset

$

10,192

10,252

A valuation allowance is recognized for a deferred tax asset if, based on the weight of available evidence, it is more-likely-

than-not that some portion of the entire deferred tax asset will not be realized. The ultimate realization of deferred tax

assets is dependent upon the generation of future taxable income during the periods in which those temporary differences

become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable

income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and

projection for future taxable income over the periods which the temporary differences resulting in the remaining deferred

tax assets are deductible, management believes it is more-likely-than-not that the Company will realize the benefits of these

deductible differences at December 31, 2024. The amount of the deferred tax assets considered realizable, however, could

be reduced in the near term if estimates of future taxable income are reduced.

113

The change in the net deferred tax asset for the years ended December 31, 2024 and 2023, is presented

 below.

Year ended December 31

(Dollars in thousands)

2024

2023

Net deferred tax asset (liability):

Balance, beginning of year

$

10,252

13,769

Cumulative effect of change in accounting standard

183

276

Deferred tax expense (benefit) related to continuing operations

(438)

195

Stockholders' equity, for accumulated other comprehensive income

195

(3,988)

Balance, end of year

$

10,192

10,252

ASC 740,

Income Taxes,

 defines the threshold for recognizing the benefits of tax return positions in the financial statements

as “more-likely-than-not” to be sustained by the taxing authority. This section also provides guidance on the de-

recognition, measurement, and classification of income tax uncertainties in interim periods. As of December 31, 2024, the

Company had no unrecognized tax benefits related to federal or state income tax matters. The Company does not anticipate

any material increase or decrease in unrecognized tax benefits during 2025 relative to any tax positions taken prior to

December 31, 2024. As of December 31, 2024, the Company has accrued no interest and no penalties related to uncertain

tax positions. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax

expense. 

The Company and its subsidiaries file consolidated U.S. federal and State of Alabama income tax returns. The Company is

currently open to audit under the statute of limitations by the Internal Revenue Service and the State of Alabama for the

years ended December 31, 2021 through 2024.

NOTE 11: EMPLOYEE BENEFIT PLAN

The Company sponsors a qualified defined contribution retirement plan, the Auburn National Bancorporation, Inc. 401(k)

Plan (the "Plan"). Eligible employees may contribute up to 100% of eligible compensation, subject to statutory limits upon

completion of 2 months of service. Furthermore, the Company allows employer Safe Harbor contributions. Participants are

immediately vested in employer Safe Harbor contributions. The Company's matching contributions on behalf of

participants were equal to $1.00 for each $1.00 contributed by participants, up to 3% of each participant's eligible

compensation, and $0.50 for every $1.00 contributed by participants, above 3% up to 5% of each participant's eligible

compensation, for a maximum matching contribution of 4% of the participants' eligible compensation. Company matching

contributions to the Plan were approximately $

0.3

 million for both of the years ended December 31, 2024 and 2023,

respectively, and are included in salaries and benefits expense.

NOTE 12: COMMITMENTS AND CONTINGENT LIABILITIES

Credit-Related Financial Instruments

The Company is party to credit related financial instruments with off -balance sheet risk in the normal course of business to

meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby

letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the

amount recognized in the consolidated balance sheets.

The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company

follows the same credit policies in making commitments as it does for on-balance sheet instruments.

At December 31, 2024 and 2023, the following financial instruments were outstanding whose contract amount represents

credit risk.

December 31

(Dollars in thousands)

2024

2023

Commitments to extend credit

$

84,667

$

73,606

Standby letters of credit

738

629

Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition

established in the commitment agreement and provided the commitments are not otherwise cancelable by the Bank. 

114

Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The

commitments for lines of credit may expire without being drawn upon. Therefore, total commitment amounts do not

necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the

Company, is based on management’s credit evaluation of the customer. The Company records an allowance for credit

losses on off-balance sheet exposures, unless the commitments to extend credit are unconditionally cancelable, through a

charge to provision for credit losses in the Company’s Consolidated Statement of Earnings. The allowance for credit losses

related to unfunded commitments was $

0.3

 million at both December 31, 2024 and 2023, respectively, and is included in

other liabilities on the Company’s Consolidated Balance Sheet. 

See “Note 1: Summary of Significant Accounting Policies –

Allowance for credit losses – Unfunded commitments.”

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer

to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan

facilities to customers. The Company holds various assets as collateral, including accounts receivable, inventory,

equipment, marketable securities, and property to support those commitments for which collateral is deemed necessary. 

The Company has a recorded a liability for the estimated fair value of these standby letters of credit in the amount of $

13

thousand and $

9

 thousand at December 31, 2024 and 2023, respectively.

Contingent Liabilities

The Company and the Bank are involved in various legal proceedings, arising in connection with their business. In the

opinion of management, based upon consultation with legal counsel, the ultimate resolution of these proceedings will not

have a material adverse effect upon the consolidated financial condition or results of operations of the Company and the

Bank.

NOTE 13: FAIR VALUE 

Fair Value Hierarchy

“Fair value” is defined by ASC 820,

Fair Value Measurements and Disclosures

, as the price that would be received to sell

an asset or paid to transfer a liability in an orderly transaction occurring in the principal market (or most advantageous

market in the absence of a principal market) for an asset or liability at the measurement date. GAAP establishes a fair

value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or

liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1—inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active

markets. 

Level 2—inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets,

quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs that are observable for the

asset or liability, either directly or indirectly. 

Level 3—inputs to the valuation methodology are unobservable and reflect the Company’s own assumptions about the

inputs market participants would use in pricing the asset or liability. 

Level changes in fair value measurements

Transfers between levels of the fair value hierarchy are generally recognized at the end of the reporting period. The

Company monitors the valuation techniques utilized for each category of financial assets and liabilities to ascertain when

transfers between levels have been affected. The nature of the Company’s financial assets and liabilities generally is such

that transfers in and out of any level are expected to be infrequent. For the years ended December 31, 2024 and 2023, there

were no transfers between levels and no changes in valuation techniques for the Company’s financial assets and liabilities.

115

Assets and liabilities measured at fair value on a recurring basis

Securities available-for-sale

Fair values of securities available for sale were primarily measured using Level 2 inputs. For these securities, the Company

obtains pricing from third party pricing services. These third-party pricing services consider observable data that may

include broker/dealer quotes, market spreads, cash flows, market consensus prepayment speeds, benchmark yields, reported

trades for similar securities, credit information and the securities’ terms and conditions. On a quarterly basis, management

reviews the pricing received from the third-party pricing services for reasonableness given current market conditions. As

part of its review, management may obtain non-binding third party broker quotes to validate the fair value measurements. 

In addition, management will periodically submit pricing provided by the third-party pricing services to another

independent valuation firm on a sample basis. This independent valuation firm will compare the price provided by the

third-party pricing service with its own price and will review the significant assumptions and valuation methodologies used

with management.

The following table presents the balances of the assets and liabilities measured at fair value on a recurring as of December

31, 2024 and 2023, respectively, by caption, on the accompanying consolidated balance sheets by ASC 820 valuation

hierarchy (as described above).

Quoted Prices in

Significant

Active Markets

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

December 31, 2024:

Securities available-for-sale:

Agency obligations 

$

52,411

—

52,411

—

Agency MBS

173,676

—

173,676

—

State and political subdivisions

16,925

—

16,925

—

Total securities available -for-sale

243,012

—

243,012

—

Total assets at fair value

$

243,012

—

243,012

—

December 31, 2023:

Securities available-for-sale:

Agency obligations 

$

53,879

—

53,879

—

Agency MBS

198,289

—

198,289

—

State and political subdivisions

18,742

—

18,742

—

Total securities available -for-sale

270,910

—

270,910

—

Total assets at fair value

$

270,910

—

270,910

—

Assets and liabilities measured at fair value on a nonrecurring basis

Collateral Dependent Loans

Collateral dependent loans are measured at the fair value of the collateral securing loan less estimated selling costs. The

fair value of real estate collateral is determined based on real estate appraisals which are generally based on recent sales of

comparable properties which are then adjusted for property specific factors. Non-real estate collateral is valued based on

various sources, including third party asset valuations and internally determined values based on cost adjusted for

depreciation and other judgmentally determined discount factors. Collateral dependent loans are classified within Level 3

of the hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the

borrower’s underlying financial condition.

116

Mortgage servicing rights, net

Mortgage servicing rights, net, included in other assets on the accompanying consolidated balance sheets, are carried at the

lower of cost or estimated fair value. MSRs do not trade in an active market with readily observable prices. To determine

the fair value of MSRs, the Company engages an independent third party. The independent third party’s valuation model

calculates the present value of estimated future net servicing income using assumptions that market participants would use

in estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to

service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees. Periodically, the

Company will review broker surveys and other market research to validate significant assumptions used in the model. The

significant unobservable inputs include prepayment speeds or the constant prepayment rate (“CPR”) and the weighted

average discount rate. Because the valuation of MSRs requires the use of significant unobservable inputs, all of the

Company’s MSRs are classified within Level 3 of the valuation hierarchy.

117

The following table presents the balances of the assets and liabilities measured at fair value on a nonrecurring basis as of

December 31, 2024 and 2023, respectively, by caption, on the accompanying consolidated balance sheets and by ASC 820

valuation hierarchy (as described above):

Quoted Prices in

Active Markets

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

December 31, 2024:

Loans, net

(1)

$

503

—

—

503

Other assets

(2)

892

—

—

892

Total assets at fair value

$

1,395

—

—

1,395

December 31, 2023:

Loans, net

(1)

$

783

—

—

783

Other assets

(2)

992

—

—

992

Total assets at fair value

$

1,775

—

—

1,775

(1)

Loans considered collateral dependent under ASC 326.

(2)

Represents MSRs, net carried at lower of cost or estimated fair value.

Quantitative Disclosures for Level 3 Fair Value Measurements

At December 31, 2024 and 2023, the Company had no Level 3 assets measured at fair value on a recurring basis. For Level

3 assets measured at fair value on a non-recurring basis as of December 31, 2024 and 2023, the significant unobservable

inputs used in the fair value measurements are presented below.

Weighted

Carrying

Significant

Average

(Dollars in thousands)

Amount

Valuation Technique

 Unobservable Input

Range

of Input

December 31, 2024:

Collateral dependent loans

$

503

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

892

Discounted cash flow

Prepayment speed or CPR

6.7

-

11.2

%

7.3

%

Discount rate

10.0

-

12.0

%

10.0

%

December 31, 2023:

Collateral dependent loans

$

783

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

992

Discounted cash flow

Prepayment speed or CPR

5.9

-

10.6

%

6.0

%

Discount rate

10.5

-

12.5

%

10.5

%

Fair Value of Financial Instruments

ASC 825,

Financial Instruments

, requires disclosure of fair value information about financial instruments, whether or not

recognized on the face of the balance sheet, for which it is practicable to estimate that value. The assumptions used in the

estimation of the fair value of the Company’s financial instruments are explained below. Where quoted market prices are

not available, fair values are based on estimates using discounted cash flow analyses. Discounted cash flows can be

significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The

following fair value estimates cannot be substantiated by comparison to independent markets and should not be considered

representative of the liquidation value of the Company’s financial instruments, but rather are good faith estimates of the fair

value of financial instruments held by the Company. ASC 825 excludes certain financial instruments and all nonfinancial

instruments from its disclosure requirements. 

118

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments: 

Loans, net

Fair values for loans were calculated using discounted cash flows. The discount rates reflected current rates at which similar

loans would be made for the same remaining maturities. Expected future cash flows were projected based on contractual

cash flows, adjusted for estimated prepayments. The fair value of loans was measured using an exit price notion.

Time Deposits

Fair values for time deposits were estimated using discounted cash flows. The discount rates were based on rates currently

offered for deposits with similar remaining maturities.

The carrying value, related estimated fair value, and placement in the fair value hierarchy of the Company’s financial

instruments at December 31, 2024 and 2023 are presented below. This table excludes financial instruments for which the

carrying amount approximates fair value. Financial assets for which fair value approximates carrying value included cash

and cash equivalents. Financial liabilities for which fair value approximates carrying value included noninterest-bearing

demand deposits, interest-bearing demand deposits, and savings deposits. Fair value approximates carrying value in these

financial liabilities due to these products having no stated maturity. Additionally, financial liabilities for which fair value

approximates carrying value included overnight borrowings such as federal funds purchased and securities sold under

agreements to repurchase.

The following table summarizes our fair value estimates:

Fair Value Hierarchy

Carrying 

Estimated

Level 1

Level 2

Level 3

(Dollars in thousands)

amount

fair value

inputs

inputs

Inputs

December 31, 2024:

Financial Assets:

Loans, net (1)

$

557,146

$

532,344

$

—

$

—

$

532,344

Financial Liabilities:

Time Deposits

$

191,247

$

190,363

$

—

$

190,363

$

—

December 31, 2023:

Financial Assets:

Loans, net (1)

$

550,431

$

526,372

$

—

$

—

$

526,372

Financial Liabilities:

Time Deposits

$

198,215

$

195,171

$

—

$

195,171

$

—

(1) Represents loans, net and the allowance for credit losses. The fair value of loans was measured using an exit price notion.

NOTE 14: RELATED PARTY TRANSACTIONS

The Bank has made, and expects in the future to continue to make in the ordinary course of business, loans to directors and

executive officers of the Company, the Bank, and their immediate families and affiliates. These persons, corporations, and

firms have had transactions in the ordinary course of business with the Company and Bank, including borrowings, all of

which management believes were on substantially the same terms, including interest rates and collateral, as those prevailing

at the time of comparable transactions with unaffiliated persons and did not involve more than the normal risk of

collectability or present other unfavorable features. A summary of such outstanding loans is presented below:

(Dollars in thousands)

Amount

Loans outstanding at December 31, 2023

$

1,897

New loans/advances

442

Repayments

(578)

Loans outstanding at December 31, 2024

$

1,761

119

During 2024 and 2023, certain executive officers , directors and principal shareholders of the Company and the Bank,

including companies and related parties with which they are affiliated, were deposit customers of the bank. Total deposits

for these persons at December 31, 2024 and 2023 amounted to $

9.9

 million and $

21.1

 million, respectively.

NOTE 15: REGULATORY RESTRICTIONS AND CAPITAL RATIOS

As required by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, the Federal Reserve Board

issued rule that expanded applicability of the Board’s small bank holding company policy statement (the “Small BHC

Policy Statement”) and has been added as Appendix C to Federal Reserve Regulation Y. These increased the Small BHC

Policy Statement’s asset limit from $1 billion to $3 billion in total consolidated assets for a bank holding company or

savings and loan holding company that: (1) is not engaged in significant nonbanking activities; (2) does not conduct

significant off-balance sheet activities; and (3) does not have a materi al amount of debt or equity securities, other than trust-

preferred securities, outstanding that are registered with the SEC. The interim final rule provides that, if warranted for

supervisory purposes, the Federal Reserve may exclude a company from this asset level increase. The Federal Reserve has

treated the Company as a small bank holding company for purposes of the Small BHC Policy Statement and therefore has

considered only the Bank’s capital and not the Company’s consolidated capital.

The Bank remains subject to regulatory capital requirements of the Alabama Banking Department and the Federal Reserve.

Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary -

actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under

capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital

guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated

under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by

the regulators about components, risk weightings, necessary capital to support risks and other factors. Notwithstanding the

minimum capital requirements, Federal Reserve Regulation Q states that a Federal Reserve -regulated institution must

maintain capital commensurate with the level and nature of all risks to which such institution is exposed.

Federal Reserve Regulation Q limits “distributions” and discretionary bonus payments from eligible retained income” by

sate member banks, such as the Bank, unless its capital conservation buffer of common equity Tier 1 capital (“CET1”)

exceeds 2.5%. “Distributions” include dividends declared or paid on common stock, and stock repurchases, redemptions or

repurchases of Tier 2 capital instruments (unless replaced by a capital instrument in the same quarter). “Eligible retained

income” for the Bank and other Federal Reserve regulated institutions is the greater of:

(A) The Board-regulated institution's net income, calculated in accordance with the instructions to the institution’s FR Y–

9C or Call Report, for the four calendar quarters preceding the current calendar quarter, net of any distributions and

associated tax effects not already reflected in net income; and 

(B) The average of the Board-regulated institution’s net income, calculated in accordance with the instructions to the

institutions’ FR Y–9C or Call Report, as applicable, for the four calendar quarters preceding the current calendar quarter. 

The Bank’s Call Report is used for its calculation of “eligible retained income”.

As of December 31, 2024, the Bank is “well capitalized” under the regulatory framework for prompt corrective action. To

be categorized as “well capitalized,” the Bank must maintain minimum common equity Tier 1, total risk-based, Tier 1 risk-

based, and Tier 1 leverage ratios as set forth in the following table. Management has not received any notification from the

Bank's regulators that changes the Bank’s regulatory capital status.

120

The actual capital amounts and ratios for the Bank and the aforementioned minimums as of December 31, 2024 and 2023

are presented below.

Minimum for capital

Minimum to be 

Actual

adequacy purposes

well capitalized

(Dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

At December 31, 2024:

Tier 1 Leverage Capital

$

106,288

10.49

%

$

40,543

4.00

%

$

50,679

5.00

%

CET1 Risk-Based Capital

106,288

14.80

32,307

4.50

46,665

6.50

Tier 1 Risk-Based Capital

106,288

14.80

43,075

6.00

57,434

8.00

Total Risk-Based Capital

113,487

15.81

57,434

8.00

71,792

10.00

At December 31, 2023:

Tier 1 Leverage Capital

$

103,886

9.72

%

$

42,732

4.00

%

$

53,415

5.00

%

CET1 Risk-Based Capital

103,886

14.52

32,194

4.50

46,503

6.50

Tier 1 Risk-Based Capital

103,886

14.52

42,926

6.00

57,234

8.00

Total Risk-Based Capital

111,035

15.52

57,234

8.00

71,543

10.00

Dividends paid by the Bank are a principal source of funds available to the Company for payment of dividends to its

stockholders and for other needs which are restricted by Alabama and Federal law and regulations as described above.

Capital adequacy considerations could further limit the availability of dividends from the Bank. At December 31, 2024, the

Bank could have declared additional dividends of approximately $

9.7

 million without prior approval of regulatory

authorities. As a result of this limitation, approximately $

67.2

 million of the Company’s investment in the Bank was

restricted from transfer in the form of dividends.

NOTE 16: AUBURN NATIONAL BANCORPORATION (PARENT COMPANY)

The Parent Company’s condensed balance sheets and related condensed statements of earnings and cash flows are as

follows.

CONDENSED BALANCE SHEETS

December 31

(Dollars in thousands)

2024

2023

Assets:

Cash and due from banks

$

1,001

1,277

Investment in bank subsidiary

76,852

74,857

Other assets

532

523

Total assets

$

78,385

76,657

Liabilities:

Accrued expenses and other liabilities

$

93

150

Total liabilities

93

150

Stockholders' equity

78,292

76,507

Total liabilities and stockholders' equity

$

78,385

76,657

121

CONDENSED STATEMENTS OF EARNINGS

Year ended December 31

(Dollars in thousands)

2024

2023

Income:

Dividends from bank subsidiary

$

3,773

3,776

Noninterest income

1

8

Total income

3,774

3,784

Expense:

Noninterest expense

258

239

Total expense

258

239

Earnings before income tax expense and equity

in undistributed (distributed) earnings of bank subsidiary

3,516

3,545

Income tax benefit

(46)

(30)

Earnings before equity in undistributed (distributed) earnings

of bank subsidiary

3,562

3,575

Equity in undistributed (distributed) earnings of bank subsidiary

2,835

(2,180)

Net earnings

$

6,397

1,395

CONDENSED STATEMENTS OF CASH FLOWS

Year ended December 31

(Dollars in thousands)

2024

2023

Cash flows from operating activities:

Net earnings

$

6,397

1,395

Adjustments to reconcile net earnings to net cash

provided by operating activities:

Net increase in other assets

(9)

(1)

Net (decrease) increase in other liabilities

(56)

8

Equity in (undistributed) distributed earnings of bank subsidiary

(2,835)

2,180

Net cash provided by operating activities

3,497

3,582

Cash flows from financing activities:

Dividends paid

(3,773)

(3,776)

Stock repurchases

—

(229)

Net cash used in financing activities

(3,773)

(4,005)

Net change in cash and cash equivalents

(276)

(423)

Cash and cash equivalents at beginning of period

1,277

1,700

Cash and cash equivalents at end of period

$

1,001

1,277

122

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), the Company’s

management, under the supervision and with the participation of its principal executive and principal financial officer,

conducted an evaluation as of the end of the period covered by this report, of the effectiveness of the Company’s disclosure

controls and procedures as defined in Rule 13a-15(e) under the Exchange Act. Based on that evaluation, and the results of

the audit process described below, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s

disclosure controls and procedures were effective to ensure that information required to be disclosed in the Company’s

reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the

SEC’s rules and regulations, and that such information is accumulated and communicated to the Company’s management,

including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding

disclosure. 

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial

reporting. The Company’s internal control system was designed to provide reasonable assurance to the Company’s

management and board of directors regarding the preparation and fair presentation of published financial statements. All

internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined

to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 

Under the direction of the Company’s Chief Executive Officer and Chief Financial Officer, management has assessed the

effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 in accordance with the

criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal

Control – Integrated Framework (2013). Based on this assessment, management has concluded that such internal control

over financial reporting was effective as of December 31, 2024. 

This annual report does not include an attestation report of the Company’s independent registered public accounting firm

regarding internal control over financial reporting because it is a smaller reporting company. 

Changes in Internal Control Over Financial Reporting

During the period covered by this report, there has not been any change in the Company’s internal controls over financial

reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over

financial reporting. 

123

ITEM 9B. OTHER INFORMATION

Trading Plans. None.

Insider Trading Policy. The Company maintains an Insider Trading Policy that was reviewed, amended and approved most

recently on February 5, 2025. This Policy applies to employees and officers of the Company and its subsidiaries

(collectively, the “Company”), (2) members of the boards of directors of the Company, the Bank and subsidiaries (the

“Board”), advisory directors and Board observers, and (3) consultants or independent contractors whose business

relationship with the Company provides access to Material Nonpublic Information regarding the Company, and certain of

their family members. It also includes a Policy on Company Trading in its Securities to promote compliance with Nasdaq

listing standards and any insider trading laws, which are applicable to the Company. A complete copy of the Insider

Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION

None.

124

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required by this item is set forth under the headings “Proposal One: Election of Directors - Information about

Nominees for Directors,” and “Executive Officers,” “Additional Information Concerning the Company’s Board of

Directors and Committees,” “Executive Compensation,” “Audit Committee Report” and “Compliance with Section 16(a) of

the Securities Exchange Act of 1934” in our Proxy Statement, and is incorporated herein by reference.

The Board of Directors has adopted a Code of Conduct and Ethics applicable to the Company’s directors, officers and

employees, including the Company’s principal executive officer, principal financial and principal accounting officer,

controller and other senior financial officers performing similar functions. The Code of Conduct and Ethics, as well as the

charters for the Audit Committee, Compensation Committee, and the Nominating and Corporate Governance Committee,

can be found by hovering over the heading “About Us” on the Company’s website,

www.auburnbank.com

, and then

clicking on “Investor Relations”, and then clicking on “Governance Documents”. In addition, this information is available

in print to any shareholder who requests it. Written requests for a copy of the Company’s Code of Conduct and Ethics or

the Audit Committee, Compensation Committee, or Nominating and Corporate Governance Committee Charters may be

sent to Auburn National Bancorporation, Inc., 100 N. Gay Street, Auburn, Alabama 36830, Attention: Marla Kickliter,

Senior Vice President of Compliance and Internal Audit. Requests may also be made via telephone by contacting Marla

Kickliter, Senior Vice President of Compliance and Internal Audit, or Laura Carrington, Vice President of Human

Resources, at (334) 821-9200.

ITEM 11. EXECUTIVE COMPENSATION

Information required by this item is set forth under the headings “Corporate Governance,” “Executive Officers” and

“Executive Compensation” in the Proxy Statement, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS

Information required by this item is set forth under the headings “Proposal One: Election of Directors - Information about

Nominees for Directors and Executive Officers,” “Equity Compensation Plan Information” and “Stock Ownership by

Certain Persons” in the Proxy Statement, and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Information required by this item is set forth under the headings “Proposal One: Election of Directors – Information about

Nominees for Directors and Executive Officers,” “Corporate Governance” and “Certain Transactions and Business

Relationships” in the Proxy Statement, and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 

Information required by this item is set forth under the heading Proposal 4: “Ratification of Independent Public

Accountants” in our Proxy Statement, and is incorporated herein by reference. 

125

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

List of all Financial Statements 

The following consolidated financial statements and report of independent registered public accounting firm of the

Company are included in this Annual Report on Form 10-K: 

Report of Independent Registered Public Accounting Firm (Elliott Davis, LLC, Greenville, South Carolina, PCAOB

Firm ID: 149) 

Consolidated Balance Sheets as of December 31, 2024 and 2023 

Consolidated Statements of Earnings for the years ended December 31, 2024 and 2023 

Consolidated Statements of Comprehensive Income for the years ended December 31, 2024 and 2023 

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024 and 2023

Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023

Notes to the Consolidated Financial Statements 

(b)

Exhibits 

3.1.

Certificate of Incorporation of Auburn National Bancorporation, Inc. (incorporated by reference from

Registrant's Form 10-Q dated June 30, 2002 (File No. 000-26486)).

3.2.

Amended and Restated Bylaws of Auburn National Bancorporation, Inc., adopted as of November 13, 2007

(incorporated by reference from Registrant’s Form 10-K dated March 31, 2008 (File No. 000-26486)).

4.1.

Description of the Registrant’s Securities

19.1

Insider Trading Policy

21.1

Subsidiaries of Registrant

23.1

Consent of Independent Registered Public Accounting Firm

31.1

Certification signed by the Chief Executive Officer pursuant to SEC Rule 13a-14(a).

31.2

Certification signed by the Chief Financial Officer pursuant to SEC Rule 13a-14(a).

32.1

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes -Oxley

Act of 2002 by David A. Hedges, President and Chief Executive Offi cer *

32.2

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes -Oxley

Act of 2002 by W. James Walker, IV, Senior Vice President and Chief Financial Officer.*

97.1

Policy Relating to Recovery of Erroneously Awarded Compensation (included by reference from Registrant's

Form 10-K/A dated April 12, 2024 (File No. 000-26486))

126

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101

*

The certifications attached as exhibits 32.1 and 32.2 to this annual report on Form 10-K are “furnished” to the Securities

and Exchange Commission pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed”

by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. 

 (c)

Financial Statement Schedules 

All financial statement schedules required pursuant to this item were either included in the financial information set

forth in (a) above or are inapplicable and therefore have been omitted. 

ITEM 16.

FORM 10-K SUMMARY

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused

this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Auburn, State of

Alabama, on March 11, 2025. 

AUBURN NATIONAL BANCORPORATION, INC.

(Registrant)

By:

 /S/ DAVID A. HEDGES

David A. Hedges

President and CEO

 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

persons on behalf of the registrant and in the capacities and on the dates indicated. 

Signature

Title

Date

 /S/ DAVID A. HEDGES

David A. Hedges

President and Chief Executive Officer

(Principal Executive Officer)

March 11, 2025

 /S/ W. JAMES WALKER, IV

W. James Walker, IV

SVP, Chief Financial Officer

(Principal Financial and Accounting Officer)

March 11, 2025

 /S/ ROBERT W. DUMAS

Robert W. Dumas 

Chairman of the Board

March 11, 2025

 /S/ C. WAYNE ALDERMAN

C. Wayne Alderman

Director

March 11, 2025

 /S/ TERRY W. ANDRUS

Terry W. Andrus

Director

March 11, 2025

 /S/ J. TUTT BARRETT

J. Tutt Barrett

Director

March 11, 2025

 /S/ LAURA J. COOPER

Laura Cooper

Director

March 11, 2025

 /S/ WILLIAM F. HAM, JR.

William F. Ham, Jr.

Director

March 11, 2025

 /S/ DAVID E. HOUSEL

David E. Housel

Director

March 11, 2025

 /S/ MICHAEL A. LAWLER

Michael A. Lawler

Director

March 11, 2025

 /S/ SANDRA J. SPENCER

Sandra J. Spencer

Director

March 11, 2025

 /S/ ANNE M. MAY

Anne M. May

Director

March 11, 2025

EX-4.1

AUBURN NATIONAL BANCORPORATION, INC AND SUBSIDIARIES

EXHIBIT 4.1

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE 

SECURITIES EXCHANGE ACT OF 1934

The following summarizes the terms of certain securities of Auburn National Bancorporation, Inc., a Delaware corporation

(the “Company”). The Company’s common stock is registered under Section 12(b) of the Securities Exchange Act of 1934,

as amended (the “Exchange Act”). The following summary does not purport to be complete and is qualified in its entirety

by reference to the Company’s Certificate of Incorporation (as amended, the “Charter”) and Amended and Restated Bylaws

(as amended, the “Bylaws”), each previously filed with the U.S. Securities and Exchange Commission, as well as reference

to federal and state banking laws and regulations and the Delaware General Corporations Law (the “DGCL”).

Authorized Capital

The Company’s authorized capital stock consists of 8,500,000 shares of common stock, $.01 par value per share and

200,000 shares of preferred stock, $.01 par value per share. 

Common Stock

Voting  Rights.

 Each holder of common stock is entitled to one vote for each share held on all matters on which our

shareholders are entitled to vote. Directors are elected by a majority vote, and no shareholder has the right to cumulative

voting with respect to the election of directors.

Dividend Rights.

 Subject to the prior rights of holders of any then-outstanding shares of preferred stock, each share of

common stock has equal rights to participate in dividends when, as and if declared by the board of directors out of funds

legally available therefor.

Liquidation Rights.

 Subject to the prior rights of creditors and the satisfaction of any liquidation preference granted to the

holders of any outstanding shares of preferred stock, if any, in the event of a liquidation, the holders of common stock will

be entitled to share ratably in any assets remaining after payment of all debts and other liabilities.

Other.

 Holders of common stock have no redemption or subscription, conversion or preemptive rights.

Exchange and Trading Symbol.

 The common stock is listed for trading on the NASDAQ Global Market under the symbol

“AUBN.”

Transfer Agent and Registrar.

 The transfer agent and registrar for the common stock is Computershare Investor Services

LLC.

Preferred Stock

Shares of preferred stock may be issued for any purpose and in any manner permitted by law, in one or more distinctly

designated series, including as a dividend or for such consideration as the board of directors may determine by resolution or

resolutions adopted from time to time. The board of directors is expressly authorized to fix and state, by resolution or

resolutions adopted from time to time prior to the issuance of any shares of a particular series of preferred stock, the

designations, voting powers (if any), preferences, and relative, participating, optional or other special rights, and

qualifications, limitations or restrictions thereof. The rights of the holders of the common stock will generally be subject to

the rights of the holders of any existing outstanding shares of preferred stock with respect to dividends, liquidation

preferences and other matters.

As of the date hereof, the Company has no shares of preferred stock designated or outstanding. 

Anti-takeover Effects

Certain provisions of the Charter and Bylaws could make a merger, tender offer or proxy contest more difficult, even if

such events were perceived by many of shareholders as beneficial to their interests. These provisions include (1) requiring,

under certain circumstances, that a “Business Combination” (as defined in the Charter) be approved by (i) holders of at

least 80% of the outstanding shares entitled to vote, and (ii) by a majority of shares held by persons other than “Related

Persons” (as defined in the Charter), (2) prohibiting shareholders from removing directors without cause, and, in order to

remove a director for cause, requiring approval of (i) at least 80% of the outstanding shares entitled to vote and (ii) a

majority of shares held by persons other than “Related Persons,” (3) advance notice for nominations of directors and

shareholders’ proposals, and (4) authority to issue “blank check” preferred stock with such designations, rights and

preferences as may be determined from time to time by the board of directors. In addition, as a Delaware corporation, the

Company is subject to Section 203 of the Delaware General Corporation Law which, in general, prevents an “interested

shareholder,” defined generally as a person owning 15% or more of a corporation’s outstanding voting stock, from

engaging in a business combination with the corporation for three years following the date that person became an interested

shareholder unless certain specified conditions are satisfied.

Restrictions on Ownership

The ability of a third party to acquire the Company is limited under applicable U.S. banking laws and regulations. The

Bank Holding Company Act, or BHC Act, requires any bank holding company to obtain Federal Reserve approval prior to

acquiring, directly or indirectly, 5% or more of any class of voting securities of the bank holding company. Any “company”

(as defined in the BHC Act) other than a bank holding company would be required to obtain Federal Reserve approval

before acquiring “control” of a bank holding company. “Control” generally means (i) the ownership or control of 25% or

more of a class of voting securities, (ii) the ability to elect a majority of the directors or (iii) the ability otherwise to exercise

a controlling influence over management and policies. A holder of 25% or more of the outstanding common stock of a bank

holding company, other than an individual, is subject to regulation and supervision as a bank holding company under the

BHC Act. On January 30, 2020, the Federal Reserve adopted new rules, effective September 30, 2020 simplifying

determinations of control of banking organizations for BHC Act purposes.

In addition, under the Change in Bank Control Act of 1978, as amended, and the Federal Reserve’s regulations thereunder,

any person, either individually or acting through or in concert with one or more persons, is required to provide notice to the

Federal Reserve prior to acquiring, directly or indirectly, 10% or more of the outstanding voting securities of a bank

holding company, and receive nonobjection from the Federal Reserve.

EX-19.1

AUBURN NATIONAL BANCORPORATION, INC AND SUBSIDIARIES

EXHIBIT 19.1

INSIDER TRADING POLICY

This is  the Insider Trading  Policy (the “Policy”)  of Auburn National  Bancorporation, Inc., AuburnBank  and their

subsidiaries (individually  and collectively, the  “Company”). This Policy  covers all Company  (1) employees and

officers, (2) members of the

any Company

Board of Directors (the “Board”),

advisory directors

and

Board observers, and

(3)

consultants or  independent contractors whose  business relationship with  the Company provides  access to Material

Nonpublic Information regarding the Company (“Representatives”).

This Policy also applies to (1) any family member who lives in the same household as a person covered by this Policy and

any family  members who do not  live in your  household but whose  securities transactions are  directed by you or  are

subject to your influence and control, such as children away at college or parents or children who consult with you before

they trade, or (2) any person controlled by or under common control with any person described in the preceding sentence

(collectively, “Family Members”). You are responsible for the transactions of your Family Members and any entities that

you influence or control, including any corporations, partnerships, trusts or estates (collectively, with Family Members,

“Related Parties”). You shall inform your Related Parties of the need to confer with you before they trade any Company

Securities and  before they trade  the securities of  any other entity  (“Third Party Securities”)  about which you have

communicated Material Nonpublic Information that you obtained in the course of your role with the Company. You and

the persons and entities described in the above paragraphs are “Covered Persons ” under this Policy.

This Policy applies to all direct and indirect transactions in Company Securities and Third-Party Securities by Covered

Persons. Covered Persons are subject to, and shall comply with this Policy in all capacities, including when acting as an

agent, power of attorney, representative, nominee or fiduciary or otherwise for or on behalf of any other person or entity. 

Transactions by your Related Parties will be regarded for the purposes of this Policy and the applicable securities laws as

though made by you. 

The special obligations and liabilities of Section 16 Persons are described in Section III.B. and Article IV below. Various

defined terms used in this Policy are provided in Article VI.

Our Code  of Conduct and  Ethics requires compliance  with this Policy.  You are responsible  for compliance with this

Policy.

If you have any questions regarding this Policy, please contact the Company’s Shareholder Relations Officer or the Chief

Financial Officer.

I.

Reasons for this Policy

Violators of the U.S. insider trading laws face civil penalties of up to three times the profit gained, or loss avoided, by

reason of their Securities trades. A criminal fine of up to $5 million for individuals (up to $25 million for entities) and

criminal forfeiture, and a term of up to 20 years in jail, may be imposed in the event of a willful violation. The Company

and its officers and Board members could also face significant civil penalties for failing to take steps to prevent violations

of the insider trading laws by Company personnel, including penalties of the greater of $1 million or three times the profit

gained or  loss avoided as a  result of an  insider’s violation and  a criminal penalty  for failing to take  adequate steps to

prevent insider trading. Further penalties may be assessed for insider trading under foreign and state securities or “blue

sky” laws (“State Securities Laws”).

In addition,  violations of insider  trading laws can  result in significant  expense to the  Company in connection with

investigations by bank or securities regulators, or criminal authorities, including the United States Department of Justice. 

Violations  could adversely affect the Company’s reputation and prevent the Company from using or assisting customers

to use  SEC Rule 506 for  limited offerings of  securities exempt from  registration under the  Securities Act or require

cautionary disclosures that may discourage investors. The public and the securities markets could lose confidence in the

Company and its securities as a result of violations. These could substantially harm the Company and its shareholders.

II.

Prohibited Insider Trading and Disclosure of Material Nonpublic Information; No Tipping.

All Covered Persons are prohibited from engaging in transactions, including purchases and sales in, and gifts of, any (i)

Company Security while in in possession of Material Nonpublic Information about the Company regardless of whether

the Company’s  Trading Window is  open or closed, or  (ii) Third Party  Securities while in  possession of Material

Nonpublic Information about such issuer that has been obtained by reason of the person’s employment by, or association

with, the Company (individually and collectively, “Insider Trading”).

In addition, all Covered Persons are prohibited from disclosing Material Nonpublic  Information about the  Company or

any Other Entity (as defined in the next paragraph) that has been obtained by reason of the Covered Person’s employment

by, or association with, the Company, to other persons, including colleagues within the Company, and friends and family. 

However,  Material Nonpublic Information may be disclosed to certain persons for the express purpose of performing an

authorized act  or service necessary  to the Company in  accordance with the  Company’s policies, such  as to colleagues

within the Company whose jobs require them to have such information and accountants, attorneys and other persons who

hold a duty of trust and confidence with the Company. 

The other entity (“Other Entity”) may be any other entity with which the Company competes, does business with or is

involved in  an existing or  potential business relationship  or transaction, such  as an existing or  potential: customer,

borrower, counterparty,  strategic partner or  joint venturer, and  others, including a  party to a  potential business

combination or important contract.

All Tipping  and recommendations about  Company Securities or  Third-Party Securities by  Covered Persons are

prohibited, even if you do not believe that the information, standing alone, is Material or do not know if the information is

Material Nonpublic Information, particularly if the person is offering you anything of value in exchange, including non-

monetary compensation  or relationships. Market  Professionals  employ

many means,  including so-called “expert

networks,” to try to extract confidential information from employees at all levels of a company.  Do not Tip or  provide

Material Nonpublic Information to relatives, friends or other persons or entities – it is illegal even if you get no monetary

benefit, and both you and the tippees will be liable.

Disclosure of Material Nonpublic Information to Market Professionals by authorized persons pursuant to any Company

disclosure policy will not violate this Article II.

III.

Specific Procedures Applicable to All Personnel and Section 16 Persons

The following procedures are also considered part of this Policy and your compliance with these is also required.

A.

General

1.

Trading Windows and Blackout Periods.

In addition to the general prohibition on Insider Trading set forth in this Policy, you must observe the “Blackout Periods”

described below. Periods outside Blackout Periods are “Trading Windows. ” Blackout Periods are the following:

a. Covered  Persons cannot engage  in a transaction  in Company Securities  from the beginning  of the second

week prior to the end of each fiscal quarter through the close of business on the second (2

nd

) full trading day

after the Company’s financial results for such quarter have been publicly disclosed.

b. The  Company may provide  a “Blackout Notice”  at any time,  including during a  Trading Window, that a

transaction in Company Securities is not permitted in the event of Material Nonpublic Information that has

arisen and exists at that time. Until such Blackout Notice is terminated, you cannot engage in transactions,

including purchases, sales and gifts) in Company Securities.

c.

The

Company’s Chief  Executive Officer and  Chief Financial Officer,  or either of them,  have the authority to

impose additional  restrictions on trading in Company Securities at any time, including  during periods that

would otherwise  be Trading Windows,  and to apply such  additional restrictions and  the pre-clearance

process applicable to Section 16 Persons to certain Company officers and employees, who may in the course

of their activities have access to or be exposed to Material Nonpublic Information. In such event, notice of

such additional restrictions will be provided to the affected individuals personally or by e-mail or telephone,

including voicemail.  The affected individuals  shall not inform  any other person  of such additional

restrictions. Such notice may be given by the Chief Executive Officer or the Chief Financial Officer, who

may delegate such action to the Shareholder Relations Officer. Nothing herein shall limit or preclude any

additional transfer or other restrictions in any Awards under the 2024 Incentive Plan, or which are adopted

to comply  with any applicable  Securities Law, banking  law or contractual  requirements, including any

lockup agreements.

d. If you have placed a limit order or open instruction to buy or sell Company Securities, you shall terminate

such instructions immediately upon the earliest of (i) the expiration of any trading approval or preclearance,

and (ii) the commencement and during the existence of a Blackout Period or other trading restriction.

2. Preclearance and Approval of Transactions.

a. Preclearance  and prior approval by the Company of transactions in Company Securities is not required of

Covered Persons, when effected during times when the Trading Window is open for the Covered Person.

b. All Rule 10b5-1 Plans and Non-Rule 10b5-1 Trading Arrangements should be adopted, modified, suspended

or terminated only during an open Trading Window which is applicable to that person, and must be approved

by the Company in advance of adoption, modification, suspension or termination, except for certain automatic

transactions expressly approved by the Company as part of the adoption of the Rule 10b5-1 Plans and Non-

Rule 10b5-1 Trading Arrangements.  Transactions made pursuant to previously approved Rule 10b5-1 Plans

and Non-Rule  10b5-1 Trading Arrangements,  Award vesting and exercises of Awards that do not involve a

sale other than cashless exercises of options and tax withholding with the Company as provided in Sections 4,

6.a. and  6.b. of this  Article III do not  require pre-approval. Section16  Persons are responsible  for the

applicable Exchange  Act reporting of any such transactions, including on SEC Forms 3, 4, 5, and Schedule

13D/G.

c. If a request for pre-clearance is made, it must be submitted to the Chief Financial Officer or Chief Executive

Officer at least two (2) business days in advance of the proposed transaction. The Company has no obligation

to approve a transaction submitted for pre-clearance and may determine not to permit the transaction. If a pre-

clearance request  is not approved,  the requesting person  must refrain from  initiating the transaction in

Company Securities and should not inform any other person of the restriction.

d. Any approval or preclearance of a transaction will be granted subject to a time limitation within which the

trade must be executed. If no time limit is specified, then the approval will expire at the close of normal

trading on  the Nasdaq Global  Market (or such  other exchange or  over-the-counter market on  which the

Company’s Securities are then principally traded) on the third trading day after approval (including the day

of approval). If the transaction is not consummated within  such time period,  a new pre-clearance request

must be submitted and approved before such person may engage in the transaction.

e. At the time of entering into, modifying or terminating a Rule 10b5-1 Plan or a Non- Rule 10b5-1 Trading

Arrangement, or placing a trade in or transaction Company Securities, you are responsible for determining

that you  are not in  possession of, and  do not have access  to, Material Nonpublic  Information, and for

verifying that the Comp

any has not imposed any restrictions on your ability to engage in trades.

3.

No Speculative Transactions.

a.

No Covered Person may engage in

speculative

transactions

in

Company Securities at any time. All Covered Persons

are prohibited  at all times from  short-selling Company Securities  or engaging in  transactions involving

Derivative Securities  with respect to  Company Securities or  otherwise, including hedges  of any options,

restricted stock and restricted stock units, appreciation rights or other awards (“Awards”) granted under the

Company’s 2024 Equity and Incentive Plan (the “2024 Incentive  Plan”) or otherwise. These prohibitions

include, but are not limited to, short sales, equity and other swaps, forwards, futures, puts, calls and other

options contracts and derivatives, including straddles, any other Derivative Securities or strategies involving

one or any combinations of such instruments and/or Derivative Securities or short-term buying and selling

of Company Securities. 

b.

Nothing  in this Section 3  shall otherwise prohibit  a Covered Person  from receiving Awards  under the 2024

Incentive Plan or other Company incentive plans and realizing the value in accordance with terms of such

Awards,

provided

 no Covered Person  may use hedging  instruments or strategies,  including Derivative

Securities to increase the value or reduce the risks of such Awards.

4.

Rule 10b5-1 Plans

Transactions  (including gifts) that would otherwise be prohibited at certain times by this Policy are allowed if they are

made pursuant to a Rule 10b5-1 Plan or Non-Rule 10b5-1 Trading Arrangement, which is preapproved by the Company

and is adopted and operated in accordance with this Policy and all SEC Rule10b5-1 requirements and related reporting

obligations. 

See

Article V below.

5.

Gifts of Company Securities, etc.

All gifts  of Company Securities,  and gifts of  Third-Party Securities, if  any, that are  subject to this  Policy, should be

planned and  made during open Trading Windows or  pursuant to a Rule  10b5-1 Plan. This requires year end gifts  and

charitable contributions of such securities to be made before end of the second week of December. Gifts, including bona

fide gifts  are generally considered  by the SEC as  “sales” or “trades”  under Rule 10b5-1  and for Section 16  reporting

purposes on SEC Form 4. Whether a gift is “bona fide” and can be made outside an open Trading Window will depend

on the facts and circumstances surrounding each gift, including the donor’s relationship with the recipient, the nature of

the tax benefit of the donor and the expectation or intent that the recipient will sell the Company Securities received. You

should contact the Shareholder Relations Officer or Chief Financial Officer as to whether any gift is bona fide, including

all relevant facts, and can be made consistent with this Policy outside an open Trading Window at least two (2) business

days in advance of a proposed gift, although exceptions for bona fide gifts are not to be expected or assured. 

All gifts by

Section 16 Persons must be precleared in advance and reported timely on Form 4.

6.

Non-Market Transactions.

Certain limited  non-market transactions described  below (“Non-Market Transactions”)  are allowed even  while in the

possession of Material Nonpublic Information:

a. Stock  Purchase and Dividend  Reinvestment Plans. Acquisitions  of Company Securities  consistent with

instructions established at the time of enrollment in a Company employee or direct stock purchase or dividend

reinvestment plan.  This Policy does  apply, however, to  your elections to  participate or change  your level of

participation in these plans, to transfer shares into or out of such a plan, and to any sales of Company Securities

acquired through  these plans, which  only may be made  when during an  open Trading Window  and otherwise

pursuant to this Policy.

b. Vesting of Awards and Cashless Exercises with the Company. Vesting of restricted stock or other Awards under

the 2024 Incentive Plan, or the exercise of a tax withholding right pursuant to which an election is made to have

the Company withhold shares of Company stock to satisfy tax withholding requirements or a cashless exercise

of a  stock option or  other Award between  the grantee and the  Company where options  or Awards are

surrendered to the Company. Cashless exercises of Awards through brokers, other third parties or on the market

or other transactions are subject to this Policy, however.

c. Other  Non-Market Transactions. A  specific, non-market transaction  approved in writing  in advance by the

Company’s Shareholder Relations Officer or Chief Financial Officer, or if neither of these persons are available

or are a party to such transaction, the Chief Executive Officer).

B.

Additional Procedures Applicable to Section 16 Persons

Section16 Persons must timely report

all

 trades, transfers, pledges or other transactions of Company Securities, including

all

  gifts, including those made when the Trading Window is open for such persons, and are responsible for the applicable

Exchange Act reporting of any such transactions, including on SEC Forms 3, 4, 5 (each A “Section 16 Filing”), and SEC

Schedule 13D/G.

Any transfers, including gifts, of Company Securities and any exercises of Awards under the 2024 Incentive Plan or other

plans, whether or not exempt under Section 16(b), must be reported to the SEC by filing a SEC Form 4 within two (2)

business days. The Shareholder Relations Officer will, if requested, assist in completing the SEC Form 4 or other Section

16 Filings in reliance upon information  provided by, and will file it on behalf of, the Section 16 Person with the SEC.

However, the completion, contents, and  timeliness of any Rule 144, Section 16 filing and any  Schedule 13D/G are the

sole responsibility of each Section 16 Person or other reporting person, as applicable.

Section 16 Persons are also expected to comply with Section 16(b) of the Exchange Act (“Section 16(b)”), which imposes

liability for any profit derived by them as the result of a purchase and sale of Company Securities occurring within any

six-month period. For more information, please see Article IV, Consequences for Violations of this Policy.

C.

Additional Provisions Applicable to All Persons

The terms “Material Information” and “Material Nonpublic Information” are defined in Article VII below. The “Material

Information” definition contains a non-exclusive list of examples of “material” items.

This Policy’s provisions about Material Nonpublic Information regarding the Company apply to you regardless of how

you become  aware of the  information. You may  learn Material Nonpublic  Information about Other  Entities and third

parties as a result of their relationship to the  Company or discussions about possible  relationships or transactions. For

example, if  you are an  administrative assistant and  you have learned  that a large  contract has just  been received by

company A from the Company, or that an acquisition of company B by the Company is about to occur, you are prohibited

from trading in Company Securities through the close of the second (2

nd

) full trading day

after

 Public Disclosure of the

news. Each of company A and company Bb would be Other Entities under this Policy. Therefore, you also cannot trade

in these  Other Entities’ securities  which are Third  Party Securities under  this Policy, as  discussed further in  the next

paragraph. When you are in possession of Material Nonpublic Information of the Company or such Other Entities, you

have a  duty to the  Company to keep  that information confidential and not to use it for your personal benefit, and you

cannot provide it to or Tip anyone for

your or

their benefit.

With respect  to Material Nonpublic  Information concerning an  Other Entity, this  Policy applies to  you if you became

aware of  the Material Nonpublic  Information about the  Other Entity by  reason of your  affiliation or work  with the

Company. In the example above, you also would not be able to trade in the securities of company A or company B until

after Public  Disclosure of the  news. Trading securities  on inside information  is illegal, and  you cannot use Material

Nonpublic Information regarding the Company or Other Entities to trade in their respective securities.:

i.

Possession  of Material Nonpublic Information. If you are aware of Material Nonpublic Information about the

Company, you  are prohibited from  trading in Company  Securities, even if  the Trading Window  is open,

general

ly.

ii.

Questions.  If you have any questions as to whether any information you have about the Company or another

entity you believe may be an Other Entity, is Material Information or is Material Nonpublic Information about

the Company or an Other Entity, and you are contemplating a transaction in Company Securities or the Other

Entity’s Third  Party Securities, you  must contact the  Shareholder Relations Officer  or the Chief Financial

Officer (or  if neither of  these persons is  available, the Company’s  Chief Executive Officer)  at least two (2)

business days prior to executing the transaction to determine if you may properly proceed. Section 16 Persons

should be  particularly careful to  avoid even the

appearance

of engaging  in improper securities  transactions. 

WHEN IN DOUBT, DO NOT TRADE.

iii.

Requests for Information. You should be alert to anyone who appears to be asking you for Material Nonpublic

Information of  any kind about the  Company or Other  Entities. If you  receive such a  request for information,

comments or  interviews regarding the  Company (other than  routine product or  services inquiries) or Other

Entities that  may result in the  dissemination of Material  Information or Material  Nonpublic Information, you

must direct the request to the Company’s Shareholder Relations Officer or Chief Financial Officer, or if he or she

is unavailable  or is a party  to such transaction,  the Chief Executive  Officer, so that  an authorized Company

spokesperson may  determine whether or  how to respond to  any such request  consistent with the applicable

securities  Company’s obligations under SEC Regulation Fair Disclosure (“Reg. FD”) and the Company’s then

current disclosure policy

.

iv.

No Exceptions to Policy. There are no exceptions to this Policy, including for emergencies or to avoid hardship

. 

One of  the Company’s responsibilities  as a public  company is to  enforce this Policy.  Except as specifically

permitted by  this Policy (for  example, in the case  of Non-Market Transactions  and transactions pursuant  to a

Rule 10b5-1  Plan), you must  refrain from a  transaction even if  you planned or  committed to the transaction

before you  came into possession  of the Material  Nonpublic Information, regardless  of the economic loss  you

believe you might suffer as a consequence of not trading. Also, if you are in possession of Material Nonpublic

information, it  does not matter  that publicly disclosed  information might provide  an independent basis for

engaging in  the transaction.

EXCEPT  AS SPECIFICALLY PERMITTED  BY THIS POLICY, YOU

CANNOT  TRADE IN SECURITIES  WHILE IN POSSESSION  OF MATERIAL NONPUBLIC

INFORMATION.

v.

Size of a Securities Transaction. The size or amount of a securities transaction is irrelevant. There are no dollar

minimums or  limits on the size  of a transaction  that will trigger  insider trading liability  or a violation of  this

Policy or  applicable insider trading  laws. The SEC and the United States Department  of Justice have pursued

relatively small trades, and the Company does not permit any Insider Trading,  even if the trades are small.  In

addition, you  can be subject to  civil and criminal  penalties, even if  you receive no  monetary benefit from

disclosing or using Material Nonpublic Information.

IV.

Consequences for Violations of this Policy and Exchange Act, Section 16(b)

Failure to comply with this Policy could result in a serious violation of Securities Laws by you and/or the Company, and

may

subject you to civil and criminal penalties described in Article I above. In addition to any criminal or civil penalties

prescribed by law, violation of this Policy constitutes grounds for adverse actions by the Company, including termination

of your employment for cause, or with respect to Representatives, the termination of any relationship with the Company.

Exchange Act  Section 16(b) imposes  liability on Section  16 Persons for any  profit derived by  them as the result  of a

purchase and  sale occurring within  any six-month period.  Any excess of the  sale price over  the purchase price is

considered “profit,” and must be paid to the Company. It does not matter whether the purchase or the sale occurs first,

and it is not necessary for the same shares to be involved in each of the matched transactions. Transactions are paired so

as to  extract the maximum  profit by matching  the lowest purchase  price and the highest  sale price within  a six-month

period; losses cannot be offset  against gains. The result is that liability may exist under Section 16(b) even  though an

insider’s overall trading in the stock resulted in a loss. 

If Section 16 Persons engage in transactions after they are no longer executive officers or directors, such transactions can

be matched for Section 16(b) purposes if these occur within six months of an opposite-way transaction which occurred

while such person was still a Section 16 Person of the Company. 

Good  faith or inadvertence  on the part of  a Section 16 Person  is no defense to  liability under Section  16(b) and no

knowledge of inside information needs to be involved. If the Company itself does not press a claim for recovery of the

short-swing profit, any stockholder may do so on behalf of the Company (and may be awarded attorneys’ fees as well). 

Section  16(b) plaintiffs’ attorneys  monitor insiders’ Section  16 reports and  request that the  Section Person restore any

profit made or loss avoided to the Company and pay their legal fees.

V.

Rule 10b5-1 Plans and Similar Trading Arrangements

Rule 10b5-1 Plans

SEC Rule 10b5-1, as amended, provides an affirmative defense from insider trading  liability, and permits purchases and

sales Company  Securities under a  qualifying Rule 10b5-1  plan (“Rule 10b5 -1 Plan”) without  regard to certain insider

trading restrictions. A Covered Person Policy must enter into a Rule 10b5-1 plan for transactions in Company Securities

that is approved in advance by the Company and meets the conditions in Rule 10b5-1. A Covered Person may only enter

into a Rule 10b5-1 Plan when that person is not aware of Material Nonpublic Information.

A Rule  10b5-1 Plan must  be a binding  contract to purchase  or sell a Company  Security, instructed another  person to

purchase or sell the security for the instructing person’s account, or adopt a written plan for trading securities. The Rule

10b5-1 Plan must:

•

specify the amount of securities to be bought or sold, and the price and date for the transaction;

•

includes a written formula, algorithm or computer program for determining the amount, price and date of the

purchase or sale; or

•

does  not permit the  person to exercise  any subsequent influence  over how, when or  whether to effect

purchases or sales, while at the same time ensuring that any person effecting trades under the Rule 10b5-1

Plan is not aware of any material nonpublic information while doing so.

Once a  Rule 10b5-1 Plan is  adopted, the person  must not exercise  any influence over  the number of  securities to be

traded, the price at which they are traded or the date of the trade. The Rule 10b5 -1 Plan must either specify the amount,

pricing and timing of transactions in advance or delegate discretion on these matters to an independent third party.

Any Rule 10b5-1 Plan must be submitted to the Company for prior approval at least 10 business days prior to the entry

into the  Rule 10b5-1 Plan.  In order for a  Rule 10b5-1 Plan to  be approved, the  following requirements must be

observed:

•

the person adopting the Rule 10b5-1 Plan must include a representation certifying that he or she is adopting the

plan in good faith, at a time when he or she is not in possession of material nonpublic information and not as part

of a plan to evade insider trading prohibitions.

•

the  Rule 10b5-1 Plan must include a cooling-off  period between the  adoption of the Rule 10b5-1 Plan and the

first trade under the Rule 10b5-1 Plan. For Section 16 Persons, the cooling off period is of the later of (A) 90

days after  the adoption of the  Rule 10b5-1 Plan  and (B) two business  days following the  disclosure of the

Company’s  financial results on a Form 10-Q or  Form 10-K for the completed  fiscal quarter in  which the Rule

10b5-1 Plan is adopted; provided, in no event will the required cooling-off period exceed 120 days following the

adoption of the Rule 10b5-1 Plan. For all other Covered Persons, the cooling off period is at least 30 days after

the adoption of the Rule 10b5-1 Plan.

•

Covered Persons may not have more than one Rule 10b5-1 Plan in effect at the same time other than under the

following limited  exceptions: (i) a  series of separate  contracts with different  broker-dealers or other  agents to

execute trades  that are treated  as part of a  single plan, provided  that the contracts  taken as a whole  meet the

conditions of  Rule10b5-1 and remain  subject to such  Rule; (ii) one  later-commencing Rule 10b5-1  Plan for

purchases or sales of securities in the open market under which trading is not authorized to begin until after all

trades under the earlier-commencing Rule 10b5-1 Plan have been completed or have expired without execution;

and (iii)  a Rule 10b5-1 Plan  that authorizes an  agent to sell only  securities that are  necessary to satisfy tax

withholding obligations arising exclusively from the vesting of compensatory awards such as restricted stock or

stock appreciation  rights and the  person does not  exercise control over  the timing of sales  (“sell-to-cover

transactions”).

•

a Covered Person may not have more than one Rule 10b5-1 Plan that is intended to effect open-market purchases

or sales of a total amount  of securities as a single transaction in  any 12-month period  (other than sell-to-cover

transactions for tax withholding purposes); and

In addition, there are various other conditions, disclosure and filing requirements on users of such plans and the Company:

•

That the person establishing such 10b5-1 plan did not have any other contracts, instructions, or plans that would

qualify under  Rule 10b5-1(c)(1), except  for specified exceptions  available under such  Rule 10b5-1 when such

person entered into such the 10b5-1 plan;

•

Quarterly  disclosures by the  Company of the use  of 10b5-1 plans  and similar “Non-Rule  10b5-1 trading

arrangements,” by the Company’s directors and officers;

•

Annual disclosure of the Company’s insider trading policies and procedures; and

•

A requirement that Section 16 Persons report transactions in the Rule 10b5-1 Plan timely on SEC Forms 4 and 5

and indicate on that such transactions were intended to satisfy the affirmative defense conditions of Rule10b5-1.

Non-Rule 10b5-1 Trading Arrangements

Non-Rule 10b5-1  Trading Arrangements are  similar to Rule  10b5-1 Plans, that  are intended to  satisfy the affirmative

defense of  Rule 10b5-1, but  do not include  either the cooling  off or certification  provisions required for  Rule 10b5-1

Plans. Non-Rule  10b5-1 Trading Arrangements  must be submitted  to the Company for  prior approval and  include the

same information as Rule 10b5-1 Plans, as applicable, to the Company at least 10 business days prior to the entry into the

Rule 10b5-1 Plan. 

Please  contact the Shareholder  Relations Officer or  Chief Financial Officer  at least 10  business days in  advance of

establishing any  Rule 10b5-1 Plan,  Non-Rule 10b5-1 Trading  Arrangement or other  trading plan, and  coordinate with

those officers  so that you and  the Company can  comply with the  SEC requirements, including  receipt of trade

confirmations and timely reporting of all transactions on SEC Form 4 and other Section 16 Filings.

VI.

Company Trading in its Securities

The Company’s Policy on trading in its securities is attached as Exhibit A.

VII.

Certain Reporting

The Company is required to publicly disclose information filed by Section 16 Persons and this Policy. SEC Form 3, 4 or 5

filings by Section 16 Persons are posted by the Company on its website. The Company’s proxy statement for its annual

shareholders’  meeting is required  to include disclosure  of delinquent Section  16 reports by the  Company’s Section 16

Persons. Such reports include the names of delinquent filers, the number of late reports, the number of transactions that

were not reported on a timely basis, and any known failure to file a required form.

The Company’s  annual and quarterly  reports are required to disclose the adoption  and termination of 10b5-1 Plans and

any contract,  instruction or arrangement  (each, an “arrangement”)  under Rule 10b5-1 or otherwise, including Non-Rule

10b5-1 Plans, by Company Section 16 Persons in the Company’s annual and quarterly reports on SEC Forms 10-Q and

10-K, ,  including the material  terms thereof, such  as the name and  title of the  director or executive  officer, the date of

adoption or termination of the plan or arrangement, the duration of the plan or arrangement and the aggregate number of

shares to be purchased or sold pursuant to the plan or arrangement.

This Policy is filed with the SEC.

VIII.

Definitions

The following defined terms are provided for ease of reference. Additionally, as used in this Policy, the singular includes

the plural and vice versa, and any reference to gender includes all genders. The words “include,” “including”  or any

derivation thereof  are not limited by  virtue of any  enumeration and shall  be deemed followed  by the words “without

limitation.”

“Company Securities” means all Securities issued by the Company or its subsidiaries, including Company common stock.

“Derivative Securities” are swaps, options, warrants, restricted stock units, stock and other appreciation rights or similar

rights or other instruments, including other Awards, whose value is derived from the value of an equity or other security,

including Company Securities.

“Exchange  Act” means the  means the federal  Securities Exchange Act  of 1934, and the  SEC rules and regulations

thereunder, each as amended and in effect.

“Insider” is a person who is in possession of Material Nonpublic Information concerning the Company or another entity

by reason of his or her affiliation with the Company. This includes all Covered Persons. For purposes of this Policy, any

family member who lives in the same household as an Insider is also considered an Insider.

“Market Professional” is any person who is, or is associated with (i) a securities broker-dealer, (ii) an investment adviser

or certain institutional investment managers, and (iii) investment companies, private equity and hedge funds, other funds

and family offices, and their affiliated persons. These categories include sell-side analysts, buy-side analysts, institutional

investment managers  and other market  professionals who may  be likely to trade  on the basis of  selectively disclosed

information.

“Material  Information” is information  that a reasonable  investor would consider  important in deciding whether to buy,

hold or sell securities. “Materiality” is fact-specific, and it is not possible to define all categories of Material Information or

determine whether  specific information is  Material outside its  particular factual context,  the following types of

information typically are regarded as Material. The following are examples only, and this list is not intended to be and is

not a complete or exclusive list of all information that may be Material:

•

Revenue, including revenue growth rates;

•

Gross and net interest margins and spreads including projections of such items;

•

Earnings, including estimates on future earnings and changes in earnings guidance;

•

Changes in credit quality, provisions for loan losses and potential losses outside the ordinary course of business;

•

Liquidity;

•

Proposals,  plans or agreements  (whether or not  binding) regarding mergers,  acquisitions, divestitures, tender

offers, joint ventures, strategic alliances or purchase or sales of material assets or securities outside the ordinary

course;

•

Significant regulatory developments affecting the Company or its subsidiaries;

•

Developments regarding customers (when applicable) or strategic partners (including the acquisition or loss of an

important contract or relationship);

•

Changes in business plans or strategies

•

Changes in senior management or auditors;

•

Changes in compensation policy;

•

A change in auditors or auditor notification that the Company may no longer rely on an audit report, or that the

auditor is resigning or declining to be reappointed;

•

Financings  and other events,  plans or proposals  regarding the Company’s  Securities (e.g., defaults  on debt

Securities, calls of Securities for redemption, repurchase plans, stock splits, proposed

public

or private offerings or

sales of Company Securities, tender offers, and repurchases of Securities);

•

Material litigation or governmental investigations or proceedings;

•

Material data or cybersecurity breaches;

•

Bankruptcy, corporate restructurings or receivership; and

•

Any factor that would cause the Company’s financial results to be substantially different from the Company’s

publicly announced projections, analyst estimates, prior trends or previous filings.

Material Information also could be information similar to that in the above list relating to any other person or entity with

which the  Company does business  with or is  involved in a  business relationship, or  potential business relationship or

transaction, such  as, for example, an  existing or potential  customer, counterparty, vendor,  strategic partner, potential

merger partner or large shareholder.

“Material Nonpublic Information” means Material Information that has not been Publicly Disclosed by the Company or a

third party, as applicable.

“Publicly Disclosed” or “Public Disclosure” means a communication or series of communications calculated to reach the

general public, such as a press release widely disseminated, including over a national wire service, a SEC Form 8-K or

other public  filing with the SEC,  or a public  webcast presentation. Generally,  disclosure to a  large group of financial

analysts, other Market Professionals or investors, or comments made in interviews or via social media do

not

constitute

Public Disclosure,  unless the information  has been previously  Publicly Disclosed or  until such information  is Publicly

Disclosed. Generally,  Public Disclosure will be deemed to have been accomplished by the close of business immediately

following the second full trading day after such information is publicly disclosed as manner described above.

“Rule 10b5-1” means SEC Rule 10b5-1 as amended and in effect on any date of determination.

“Rule 10b5-1  Plan” generally is  a written plan that  has been adopted  and implemented by  a Covered Person for

purchasing or selling Company Securities that meets each of the requirements under SEC Rule 10b5-1, including: (1) the

plan is  adopted during a  period when the  quarterly Trading Window  is open and no  Blackout Notice or  other trading

restrictions have been imposed; (2) the plan is adopted during a period when the individual is not in possession of Material

Nonpublic Information; (3) purchasing or selling under the plan does not commence until after the applicable cooling off period

in Rule 10b5-1(c)(ii); (4) the  plan is adhered to  strictly; (5) the  plan either (a)  specifies the amount  of Securities to be

purchased or

sold and the date on which the Securities are to be

purchased or

sold, (b) includes a written formula or algorithm,

or computer program, for determining the amount of Securities to be sold and the price at which and the date on which the

Securities are  to be purchased or  sold, or (c) does not permit any Insider to exercise any subsequent influence over how,

when, or whether to effect sales;

provided  that

 any  other person who,  pursuant to the  contract, instruction, or  plan, did

exercise such influence must not have been aware of the Material Nonpublic Information when doing so; and (6) at the

time it is adopted the plan conforms to all other requirements of SEC Rule 10b5-1

“SEC” means the United States Securities and Exchange Commission.

“Section 16” means Section 16 of the Exchange Act.

“Section 16 Person” means any Company director, executive officer described in SEC Rule 16a -1(f) under the Securities

Exchange Act, including the Company’s president, principal financial officer, principal accounting officer (or, if there is

no such  accounting officer, the  controller), any vice-president  of the Company  identified by the  Company who is in

charge of a principal business unit, division or function, any other officer who performs a policy -making function, any

other person who performs similar policy-making functions for the Company, and shareholders of the Company holding

10% or  more of the  Company’s outstanding common  stock. Officers of  the Company’s subsidiaries  (or any parent

company, if any) are deemed officers of the Company, if they perform such policy-making functions for the Company.

“Securities”  includes common stock,  preferred stock, options,  warrants, restricted stock,  restricted stock units, stock

appreciation rights, debentures and

derivatives, including

all other securities of an entity the value of which is related to or

derived from an entity’s common stock or other securities.

“Securities  Act” means the  federal Securities Act  of 1933, and the  SEC rules and  regulations thereunder, each as

amended and in effect.

“Securities Laws” means the Securities Act of 1933, the Exchange Act (the  “U.S. Securities Laws”),  and all applicable

State Securities Laws, domestic and foreign.

“Tip” and  “Tipping” refer to  when a person  subject to this  Policy discloses material  nonpublic information about the

Company or another company to another person or recommends that another person trade in the securities of any company

while in  possession of Material  Nonpublic information about  that company and  the other person  either: (i) trades that

company’s  securities while in  possession of that  material nonpublic information;  or (ii) provides the  material nonpublic

information to a third party who then trades in such company’s securities. Tipping is illegal even if you do not personally

make a trade or otherwise benefit monetarily from disclosing Material Nonpublic Information.

Exhibit A

Auburn National Bancorporation, Inc.

Policy on Company Trading in its Securities

Auburn National Bancorporation, Inc. and its subsidiari es (the “Company”) may, from time to time, in the future, issue or

repurchase their  own securities, but  do not otherwise  trade in their  securities. Any such  issuances or repurchases of

Company securities will be reasonably designed to promote compliance with (i) the Nasdaq listing standards applicable to

the Company, and (ii) any insider trading laws that are applicable to the Company in connection to such transactions.

EX-21.1

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

EXHIBIT 21.1 - SUBSIDIARIES

DIRECT SUBSIDIARIES

JURISDICTION OF INCORPORATION

AuburnBank

Alabama

INDIRECT SUBSIDIARIES

Banc of Auburn, Inc.

Alabama

Auburn Mortgage Corporation

Alabama

EX-23.1

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Exhibit 23.1 Consent of Independent Registered Public Accounting Firm

We  consent to the  incorporation by reference  in the Registration  Statement No. 333-283711  on Form S-8 and  the

Registration Statement No. 333-03516 on Form S-3 of Auburn National Bancorporation, Inc. of our report dated March 11,

2025, relating to the consolidated financial statements of Auburn National Bancorporation, Inc. and Subsidiary, appearing

in the  Annual Report to  Stockholders, which is  incorporated in this  Annual Report on  Form 10-K of  Auburn National

Bancorporation, Inc. for the year ended December 31, 2024. 

/s/ Elliott Davis, LLC

Greenville, South Carolina

March 11, 2025

EX-31.1

AUBURN NATIONAL BANCORPORATION, INC AND SUBSIDIARIES

EXHIBIT 31.1

CERTIFICATION PURSUANT TO 

RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, 

AS ADOPTED PURSUANT TO 

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

CERTIFICATION

I, David A. Hedges, certify that: 

1. I have reviewed this Annual Report on Form 10-K of Auburn National Bancorporation, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material

fact necessary to make the statements made, in light of the circumstances under which such statements were made, not

misleading with respect to the period covered by this report; 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in

all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods

presented in this report; 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and

procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as

defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be

designed under our supervision, to ensure that material information relating to the registrant, including its

consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in

which this report is being prepared; 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to

be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting

and the preparation of financial statements for external purposes in accordance with generally accepted

accounting principles; 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered

by this report based on such evaluation; and 

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred

during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual

report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control

over financial reporting; and 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over

financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons

performing the equivalent functions): 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial

reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and

report financial information; and 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in

the registrant’s internal control over financial reporting. 

Date: March 11, 2025

/s/ David A. Hedges 

President and CEO

EX-31.2

AUBURN NATIONAL BANCORPORATION, INC AND SUBSIDIARIES

EXHIBIT 31.2

CERTIFICATION PURSUANT TO 

RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, 

AS ADOPTED PURSUANT TO 

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

CERTIFICATION

I, W. James Walker, IV, certify that: 

1. I have reviewed this Annual Report on Form 10-K of Auburn National Bancorporation, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material

fact necessary to make the statements made, in light of the circumstances under which such statements were made, not

misleading with respect to the period covered by this report; 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in

all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods

presented in this report; 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and

procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as

defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be

designed under our supervision, to ensure that material information relating to the registrant, including its

consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in

which this report is being prepared; 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to

be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting

and the preparation of financial statements for external purposes in accordance with generally accepted

accounting principles; 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered

by this report based on such evaluation; and 

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred

during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual

report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control

over financial reporting; and 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over

financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons

performing the equivalent functions): 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial

reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and

report financial information; and 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in

the registrant’s internal control over financial reporting. 

Date: March 11, 2025

/s/ W. James Walker, IV

SVP, Chief Financial Officer

EX-32.1

AUBURN NATIONAL BANCORPORATION, INC AND SUBSIDIARIES

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 

18 U.S.C. SECTION 1350, 

AS ADOPTED PURSUANT TO 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 

In connection with the Annual Report of Auburn National Bancorporation, Inc. (the “Company”) on Form 10-K for the

period ending December 31, 2024, as filed with the Securities and Exchange Commission as of the date hereof (the

“Report”), I, David A. Hedges, President and Chief Executive Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted

pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act

of 1934; and 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and

results of operations of the Company. 

Date: March 11, 2025

/s/ David A. Hedges

David A. Hedges

President and CEO

This certification accompanies this Annual Report and shall not be deemed “filed” for purposes of Section 18 of the

Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. This certification will not be deemed

to be incorporated by reference into any filing under the Securities Exchange Act of 1934, except to the extent that the

registrant specifically incorporates it by reference.

A signed original of this written statement required by Section 906 has been provided to, and will be retained by, Auburn

National Bancorporation, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

AUBURN NATIONAL BANCORPORATION, INC AND SUBSIDIARIES

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 

18 U.S.C. SECTION 1350, 

AS ADOPTED PURSUANT TO 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 

In connection with the Annual Report of Auburn National Bancorporation, Inc. (the “Company”) on Form 10-K for the

period ending December 31, 2024, as filed with the Securities and Exchange Commission as of the date hereof (the

“Report”), I, W. James Walker, IV, Senior Vice President, Chief Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as

adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act

of 1934; and 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and

results of operations of the Company. 

Date: March 11, 2025 

/s/ W. James Walker, IV

W. James Walker, IV

SVP, Chief Financial Officer

This certification accompanies this Annual Report and shall not be deemed “filed” for purposes of Section 18 of the

Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. This certification will not be deemed

to be incorporated by reference into any filing under the Securities Exchange Act of 1934, except to the extent that the

registrant specifically incorporates it by reference.

A signed original of this written statement required by Section 906 has been provided to, and will be retained by, Auburn

National Bancorporation, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2024	Mar. 10, 2025	Jun. 30, 2024
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2024
Document Transition Report	false
Entity File Number	0-26486
Entity registrant name	Auburn National Bancorporation, Inc.
Entity incorporatoin state	DE
Entity tax identification number	63-0885779
Entity Address Line 1	100 N. Gay Street
Entity Address city	Auburn,
Entity Address State	AL
Entity Address Postal Zip Code	36830
City Area Code	334
Local Phone Number	821-9200
Entity current reporting status	Yes
Entity filer category	Non-accelerated Filer
Entity Interactive Data Status Current	Yes
entity small business	true
Entity Emerging Growth	false
ICFR Audit Attestation Flag	false
Entity Shell Company	false
Entity common stock shares outstanding		3,493,699
Entity public float			$ 40,992,280
Entity central index key	0000750574
Current fiscal year end date	--12-31
Document Year Focus	2024
Document Period Focus	FY
Amendment flag	false
Entity well known seasoned issuer	No
Entity voluntary filers	No
Security 12B Title	Common Stock
Trading Symbol	AUBN
Security Exchange	NASDAQ
Auditor Name	Elliott Davis, LLC
Auditor Location	Greenville, South Carolina
Auditor Firm ID	149
Document Fin Stmt Error Correction Flag	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Assets:
Cash And Due From Banks	$ 15,142	$ 27,127
Federal funds sold	37,200	31,412
Interest bearing bank deposits	41,012	12,830
Cash and cash equivalents	93,354	71,369
Securities available-for-sale	243,012	270,910
Total Loans	564,017	557,294
Allowance for credit losses	6,871	6,863
Loans, net	557,146	550,431
Premises and equipment, net	45,931	45,535
Bank-owned life insurance	17,513	17,110
Other assets	20,368	19,900
Total assets	977,324	975,255
Deposits:
Noninterest-bearing	260,874	270,723
Interest-bearing	634,950	625,520
Total deposits	895,824	896,243
Federal funds purchased and securities sold under agreements to repurchase		1,486
Accrued expenses and other liabilities	3,208	1,019
Total liabilities	899,032	898,748
Stockholders' equity:
Preferred stock	0	0
Common stock	39	39
Additional paid-in capital	3,802	3,801
Retained earnings	115,759	113,398
Accumulated other comprehensive income (loss), net	(29,607)	(29,029)
Less treasury stock, at cost	11,701	11,702
Total stockholders' equity	78,292	76,507
Total liabilities and stockholders' equity	$ 977,324	$ 975,255

XML

Consolidated Balance Sheets (Parentheticals) - $ / shares	Dec. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Preferred stock par value	$ 0.01	$ 0.01
Authorized shares, preferred	200,000	200,000
Issued shares, preferred	0	0
Common stock par value	$ 0.01	$ 0.01
Authorized shares, common	8,500,000	8,500,000
Issued shares, common	3,957,135	3,957,135
Treasury stock, shares held	463,436	463,521

XML

Consolidated Statements of Earnings - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Interest income:
Loans, including fees	$ 29,735	$ 24,925
Securities - Taxable	5,430	7,208
Securities - Tax-exempt	294	1,568
Federal funds sold and interest bearing bank deposits	3,273	673
Total interest income	38,732	34,374
Interest expense:
Deposits	11,604	7,974
Short-term borrowings	3	72
Total interest expense	11,607	8,046
Net interest income	27,125	26,328
Provision for credit losses	36	135
Net interest income after provision for credit losses	27,089	26,193
Noninterest income:
Service charge on deposit accounts	614	603
Mortgage lending	608	430
Bank-owned life insurance income	403	411
Other noninterest income	1,849	1,870
Securities losses, net	0	(6,295)
Total noninterest income	3,474	(2,981)
Noninterest expense:
Salaries and benefits	12,534	12,101
Net occupancy and equipment	2,508	2,954
Professional fees	1,188	1,299
FDIC and other regulatory assessments	564	631
Other noninterest expense	5,372	5,609
Total noninterest expense	22,166	22,594
Earnings before income taxes	8,397	618
Income tax expense	2,000	(777)
Net earnings	$ 6,397	$ 1,395
Net earnings per share:
Basic and diluted earnings per share	$ 1.83	$ 0.40
Weighted average shares outstanding:
Basic and diluted weighted average shares outstanding	3,493,690	3,498,030

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Statements of Comprehensive Income [Abstract]
Net earnings	$ 6,397	$ 1,395
Other comprehensive income (loss), net of tax:
Unrealized net holding gain (loss) on securities	(578)	7,177
Other Comprehensive Income Loss Reclassification Adjustment From A OCI For Sale Of Securities Net Of Tax	0	(4,714)
Other comprehensive income (loss)	(578)	11,891
Comprehensive income	$ 5,819	$ 13,286

XML

Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Other Comprehensive Income Loss Tax Parenthetical Disclosures [Abstract]
Other Comprehensive Income Unrealized Holding Gain Loss On Securities Arising During Period Tax	$ 195	$ 2,407
Other Comprehensive Income Loss Reclassification Adjustment From AOCI For Sale Of Securities Tax		$ 1,581

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock Member	Additional Paid In Capital Member	Retained Earnings Member	Accumulated Other Comprehensive Income Member	Treasury Stock Member
Balance, shares at Dec. 31, 2022	3,503,452
Balance, Beg at Dec. 31, 2022	$ 68,041	$ 39	$ 3,797	$ 116,600	$ (40,920)	$ (11,475)
Cumulative Effect Of Change In Accounting Standard	(821)	0	0	(821)	0	0
Net earnings	1,395	0	0	1,395	0	0
Other comprehensive (loss)	11,891	0	0	0	11,891	0
Cash dividends paid	3,776	0	0	3,776	0	0
Treasury Stock, acquired	229	$ 0	0	0	0	229
Treasury Stock, acquired shares		(10,108)
Sale of treasury stock	6	$ 0	4	0	0	2
Sale of treasury stock shares		270
Balance, End at Dec. 31, 2023	$ 76,507	$ 39	3,801	113,398	(29,029)	(11,702)
Balance, shares at Dec. 31, 2023	3,493,614
Cumulative Effect Of Change In Accounting Standard	$ (263)	0	0	(263)	0	0
Net earnings	6,397	0	0	6,397	0	0
Other comprehensive (loss)	(578)	0	0	0	(578)	0
Cash dividends paid	3,773	0	0	3,773	0	0
Treasury Stock, acquired	0	$ 0	0	0	0	0
Treasury Stock, acquired shares		0
Sale of treasury stock	2	$ 0	1	0	0	1
Sale of treasury stock shares		85
Balance, End at Dec. 31, 2024	$ 78,292	$ 39	$ 3,802	$ 115,759	$ (29,607)	$ (11,701)
Balance, shares at Dec. 31, 2024	3,493,699

XML

Consolidated Statements of Stockholders' Equity (Parentheticals) - $ / shares	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Statement of Stockholders' Equity (Parentheticals)
Cash dividends paid per share	$ 1.08	$ 1.08

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Cash flows from operating activities:
Net earnings	$ 6,397	$ 1,395
Adjustments to reconcile net earnings to net cash provided by operating activties:
Provision for credit losses	36	135
Depreciation and amortization	1,933	1,700
Premium amortization and discount accretion, net	(1,505)	(2,380)
Deferred income tax (benefit) expense	438	(195)
Net (gain) loss on securities available for sale	0	(6,295)
Net gain on sale of loans held for sale	261	71
Loans originated for sale	10,439	4,141
Proceeds from sale of loans	10,622	4,174
Increase in cash surrender value of bank owned life insurance	403	359
Income Recognized From Death Benefit Of Life Insurance	0	52
Net increase in other assets	1,168	(2,652)
Net increase (decrease) in accrued expenses and other liabilities	2,149	(2,011)
Net cash provided by operating activities	10,809	11,902
Cash flows from investing activities:
Proceeds from sales of securities available-for-sale	0	111,269
Proceeds from prepayments and maturities of securities available-for-sale	25,620	30,329
Decrease (increase) in loans, net	6,709	52,892
Payments to Acquire Property, Plant, and Equipment	2,089	418
Decrease in FHLB stock	(32)	164
Proceeds from bank-owned life insurance death benefit	0	216
Proceeds from surrender of bank-owned life insurance	0	3,037
Net cash used in investing activities	16,854	91,377
Cash flows from financing activities:
Net (decrease) increase in noninterest-bearing deposits	(9,849)	(40,648)
Net increase (decrease) in interest-bearing deposits	9,430	(13,446)
Net decrease in federal funds purchased and securities sold under agreements to repurchase	(1,486)	(1,065)
Stock repurchases	0	229
Payments of Ordinary Dividends	3,773	3,776
Net cash used in financing activities	(5,678)	(59,164)
Net change in cash and cash equivalents	21,985	44,115
Cash and cash equivalents at beginning of period	71,369	27,254
Cash and cash equivalents at end of period	93,354	71,369
Cash paid (received) during period for:
Interest	11,520	7,516
Income taxes	$ 1,244	$ 1,230

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2024

Summary of Signficant Accounting Policies

Basis of Presentation

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Auburn National Bancorporation, Inc. (the “Company”) is a bank holding company whose primary business is conducted

by its wholly-owned subsidiary, AuburnBank (the “Bank”). AuburnBank is a commercial bank located in Auburn,

Alabama. The Bank provides a full range of banking services in its primary market area, Lee County, which includes the

Auburn-Opelika Metropolitan Statistical Area.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which are

managed as a single business segment. Significant intercompany transactions and accounts are eliminated in consolidation.

Revenue Recognition 

The Company’s sources of income that fall within the scope of ASC 606 include service charges on deposits, investment

services, interchange fees and gains and losses on sales of other real estate, all of which are presented as components of

noninterest income. The following is a summary of the revenue streams that fall within the scope of ASC 606: 

Service charges on deposits, investment services, ATM and interchange fees – Fees from these services are either

transaction-based, for which the performance obligations are satisfied when the individual transaction is processed, or set

periodic service charges, for which the performance obligations are satisfied over the period the service is provided.

Transaction-based fees are recognized at the time the transaction is processed, and periodic service charges are recognized

over the service period.

Gains on sales of other real estate

 –

A gain on sale should be recognized when a contract for sale exists and control of the

asset has been transferred to the buyer. ASC 606 lists several criteria required to conclude that a contract for sale exists,

including a determination that the institution will collect substantially all of the consideration to which it is entitled. In

addition to the loan-to-value, the analysis is based on various other factors, including the credit quality of the borrower, the

structure of the loan, and any other factors that may affect collectability.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure

of contingent assets and liabilities as of the balance sheet date and the reported amounts of income and expense during the

reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to

significant change in the near term include the determination of the allowance for credit losses, fair value measurements,

valuation of other real estate owned, and valuation of deferred tax assets.

Reclassifications 

Certain amounts reported in the prior period have been reclassified to conform to the current-period presentation. These

reclassifications had no impact on the Company’s previously reported net earnings or total stockholders’ equity.

Subsequent Events 

The Company has evaluated the effects of events or transactions through the date of this filing that have occurred

subsequent to December 31, 2024. The Company does not believe there are any material subsequent events that would

require further recognition or disclosure.

Correction of Error

The disclosure of loans by vintage in Note 5 – Loans and Allowance for Credit Losses in the Company’s Annual Report on

Form 10-K for year ended December 31, 2023 contained incorrect information as it pertains to loans originated by vintage

and revolving loans. All current period gross charge-off data, total loans by segment and total loans by credit quality

indicator were correctly reported. The loans originated by vintage and revolving loans as of December 31, 2023 have been

corrected in the comparative presentation in Note 5 – Loans and Allowance for Credit Losses in the Notes herein.

Accounting Standards Adopted in 2024

ASU 2023-02,

Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit

Structures Using the Proportional Amortization Method

. ASU 2023-02 now permits reporting entities to elect to account

for their equity investments made primarily to receive income tax credits and other income tax benefits, regardless of the

program from which the income tax credits or benefits are received, using the proportional amortization method if certain

conditions are met. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning

after December 15, 2023. The Company adopted ASU 2023-02 effective January 1, 2024 and recorded a cumulative effect

of change in accounting standard adjustment which reduced beginning retained earnings by $0.3 million and reduced our

investment in New Markets Tax Credits (“NMTCs”) by $0.4 million. The Company, beginning January 1, 2024, accounts

for its investments in NMTCs using the proportional amortization method through charges to the provision for income

taxes. See Note 3, Variable Interest Entities.

ASU 2023-07,

Segment Reporting (Topic 280) - Improvement to Reportable Segment Disclosures. 

The amendments in

ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual basis to

enable investors to develop more decisions-useful financial analyses. ASU 2023-07 is effective for fiscal years beginning

after December 31, 2023. The Company has adopted ASU 2023-07 as of January 1, 2024 and has determined that its

banking services and branch locations meet the aggregation criteria of ASC 280,

Segment Reporting

, since each of its

banking services and branch locations offer similar products and services, operate in a similar manner, have similar

customers and report to the same regulatory authority, and therefore operate one line of business located in a single

geographic area. The Company's Chief Executive Officer has been identified as the chief operating decision maker

(“CODM”).

The CODM regularly assesses performance of the aggregated single operating and reporting segment and decides how to

allocate resources based on the net income calculated on the same basis as the net income reported in the Company's

consolidated statements of earnings and other comprehensive earnings and total assets calculated on the same basis as the

total assets reported in the Company’s consolidated balance sheets. The CODM is also regularly provided with expense

information at a level that is consistent with that disclosed in the Company's consolidated statements of earnings and other

comprehensive earnings. 

Issued not yet effective accounting standards

ASU 2023-09,

Income Taxes (Topic 740): Improvements to Income Tax Disclosures.

 The amendments in this Update

enhance the transparency and decision usefulness of income tax disclosures. For public business entities, the new standard

is effective for annual periods beginning after December 15, 2024. The Company does not expect the new standard to have

a material impact on the Company’s consolidated financial statements.

Cash Equivalents

Cash equivalents include cash on hand, cash items in process of collection, amounts due from banks, including interest

bearing deposits with other banks, and federal funds sold.

Securities

Securities are classified based on management’s intention at the date of purchase. At December 31, 2024, all of the

Company’s securities were classified as available-for-sale. Securities available-for-sale are used as part of the Company’s

interest rate risk and liquidity management strategy, and they may be sold in response to changes in interest rates, changes

in prepayment risks or other factors. All securities classified as available-for-sale are recorded at fair value with any

unrealized gains and losses reported in accumulated other comprehensive income (loss), net of the deferred income tax

effects. Interest and dividends on securities, including the amortization of premiums and accretion of discounts are

recognized in interest income using the effective interest method. Premiums are amortized to the earliest call date while

discounts are accreted over the estimated life of the security. Realized gains and losses from the sale of securities are

determined using the specific identification method. 

For any securities classified as available-for-sale that are in an unrealized loss position at the balance sheet date, the

Company assesses whether or not it intends to sell the security, or more likely than not will be required to sell the security,

before recovery of its amortized cost basis. If either of these criteria are met, the security's amortized cost basis is written

down to fair value through net income. If neither criterion is met, the Company evaluates whether any portion of the decline

in fair value is the result of credit deterioration. Such evaluations consider the extent to which the amortized cost of the

security exceeds its fair value, changes in credit ratings and any other known adverse conditions related to the specific

security. If the evaluation indicates that a credit loss exists, an allowance for credit losses is recorded for the amount by

which the amortized cost basis of the security exceeds the present value of cash flows expected to be collected, limited by

the amount by which the amortized cost exceeds fair value. Any impairment not recognized in the allowance for credit

losses is recognized in other comprehensive income.

Loans held for sale

The Company originates residential mortgage loans for sale. Such loans are carried at the lower of cost or estimated fair

value in the aggregate. Loan sales are recognized when the transaction closes, the proceeds are collected, and ownership is

transferred. Continuing involvement, through the sales agreement, consists of the right to service the loan for a fee for the

life of the loan, if applicable. Gains on the sale of loans held for sale are recorded net of related costs, such as

commissions, and reflected as a component of mortgage lending income in the consolidated statements of earnings. 

The Bank makes various representations and warranties to the purchaser of the residential mortgage loans they originated

and sells, primarily to Fannie Mae. Every loan closed by the Bank’s mortgage center is run through Fannie Mae or other

purchasing government sponsored enterprise (“GSE”) automated underwriting system. Any exceptions noted during this

process are remedied prior to sale. These representations and warranties also apply to underwriting the real estate appraisal

opinion of value for the collateral securing these loans. Failure by the Company to comply with the underwriting and/or

appraisal standards could result in the Company being required to repurchase the mortgage loan or to reimburse the investor

for losses incurred (make whole requests) if the Company cannot cure such failure within the specified period following

discovery.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported

at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts and

deferred fees and costs. Accrued interest receivable related to loans is recorded in other assets on the consolidated balance

sheets. Interest income is accrued on the unpaid principal balance.

Loan origination fees, net of certain direct origination

costs, are deferred and recognized in interest income using methods that approximate a level yield without anticipating

prepayments.

The accrual of interest is generally discontinued when a loan becomes 90 days past due and is not well collateralized and in

the process of collection, or when management believes, after considering economic and business conditions and collection

efforts, that the principal or interest will not be collectible in the normal course of business. Past due status is based on

contractual terms of the loan. A loan is considered to be past due when a scheduled payment has not been received 30 days

after the contractual due date.

All accrued but unpaid interest is reversed against interest income when a loan is placed on nonaccrual status. Interest

received on such loans is accounted for using the cost-recovery method, until the loan qualifies for return to accrual. Loans

are returned to accrual status when all the principal and interest amounts contractually due are brought current, there is a

sustained period of repayment performance, and future payments are reasonably assured. Otherwise, under the cost

recovery method, interest income is not recognized until the loan balance is reduced to zero.

Allowance for Credit Losses – Loans

The allowance for credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net

amount expected to be collected on the loans. Loans are charged off against the allowance when management confirms the

loan balance is uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged -off and

expected to be charged-off. Accrued interest receivable is excluded from the estimate of credit losses.

The allowance for credit losses represents management’s estimate of lifetime credit losses inherent in loans as of the

balance sheet date. The allowance for credit losses is estimated by management using relevant available information, from

both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. 

The Company’s loan loss estimation process includes procedures to appropriately consider the unique characteristics of its

respective loan segments (commercial and industrial, construction and land development, commercial real estate,

residential real estate, and consumer loans). These segments are further disaggregated into loan classes, the level at which

credit quality is monitored. See Note 5, Loans and Allowance for Credit Losses, for additional information about our loan

portfolio.

Credit loss assumptions are estimated using a discounted cash flow ("DCF") model for each loan segment, except consumer

loans. The weighted average remaining life method is used to estimate credit loss assumptions for consumer loans. 

The DCF model calculates an expected life-of-loan loss percentage by considering the forecasted probability that a

borrower will default (the “PD”), adjusted for relevant forecasted macroeconomic factors, and loss given default (“LGD”),

which is the estimate of the amount of net loss in the event of default. This model utilizes historical correlations between

default experience and certain macroeconomic factors as determined through a statistical regression analysis. The

forecasted Alabama unemployment rate is considered in the model for commercial and industrial, construction and land

development, commercial real estate, and residential real estate loans. In addition, forecasted changes in the Alabama

home price index is considered in the model for construction and land development and residential real estate loans. 

Forecasted changes in the national commercial real estate (“CRE”) price index is considered in the model for commercial

real estate and multifamily loans; and forecasted changes in the Alabama gross state product is considered in the model for

multifamily loans. Projections of these macroeconomic factors, obtained from an independent third party, are utilized to

predict quarterly rates of default based on the statistical PD models. 

Expected credit losses are estimated over the contractual term of the loan, adjusted for expected prepayments and principal

payments (“curtailments”) when appropriate. Management's determination of the contract term excludes expected

extensions, renewals, and modifications unless the extension or renewal option is included in the contract at the reporting

date and is not unconditionally cancellable by the Company. To the extent the lives of the loans in the portfolio extend

beyond the period for which a reasonable and supportable forecast can be made (which is 4 quarters for the Company), the

Company reverts, on a straight-line basis back to the historical rates over an 8-quarter reversion period.

During the first quarter of 2024, as part of the Company’s ongoing model monitoring procedures, the annual loss driver

analysis and prepayment, curtailment and funding studies were performed. The analysis and studies resulted in changes for

all DCF models. The changes were a result of updating the Company’s peer group and incorporating data through 2022.

The weighted average remaining life method was deemed most appropriate for the consumer loan segment because

consumer loans contain many different payment structures, payment streams and collateral. The weighted average

remaining life method uses an annual charge-off rate over several vintages to estimate credit losses. The average annual

charge-off rate is applied to the contractual term adjusted for prepayments.

Additionally, the allowance for credit losses calculation includes subjective adjustments for qualitative risk factors that are

believed likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments may

increase reserve levels and include adjustments for lending management experience and risk tolerance, loan review and

audit results, asset quality and portfolio trends, loan portfolio growth, industry concentrations, trends in underlying

collateral, external factors and economic conditions not already captured.

Loans secured by real estate with balances equal to or greater than $500 thousand and loans not secured by real estate with

balances equal to or greater than $250 thousand that do not share risk characteristics are evaluated on an individual basis.

When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the

expected credit losses are based on the estimated fair value of collateral held at the reporting date, adjusted for selling costs

as appropriate. 

Allowance for Credit Losses – Unfunded Commitments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial

letters of credit issued to meet customer financing needs. The Company’s exposure to credit loss in the event of

nonperformance by the other party to the financial instrument for off -balance sheet loan commitments is represented by the

contractual amount of those instruments. Such financial instruments are recorded when they are funded.

The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to

extend credit are unconditionally cancelable, through a charge to provision for credit losses in the Company’s consolidated

statements of earnings. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment

at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans,

taking into consideration the likelihood that funding will occur as well as any third-party guarantees. The allowance for

unfunded commitments is included in other liabilities on the Company’s consolidated balance sheets.

Premises and Equipment

Land is carried at cost. Land improvements, buildings and improvements, and furniture, fixtures, and equipment are carried

at cost, less accumulated depreciation computed on a straight-line metho d over the estimated useful lives of the assets or the

expected terms of the leases, if shorter. Expected terms include lease option periods to the extent that the exercise of such

options is reasonably assured.

Nonmarketable equity investments

Nonmarketable equity investments include equity securities that are not publicly traded and securities acquired for various

purposes. The Bank is required to maintain certain minimum levels of equity investments in (i) Federal Reserve Bank of

Atlanta based on the Bank’s capital stock and surplus, and the (ii) Federal Home Bank of Atlanta (“FHLB – Atlanta”)

based on various factors including, the Bank’s total assets, its borrowings and outstanding letters of credit from the FHLB -

Atlanta and its “acquired member asset” sales to FHLB - Atlanta. These nonmarketable equity securities are accounted for

at cost which equals par or redemption value. These securities do not have a readily determinable fair value as their

ownership is restricted and there is no market for these securities. These securities can only be redeemed or sold at their par

value by the respective issuer bank or, in the case of FHLB – Atlanta stock upon FHLB – Atlanta approval sale to another

member of FHLB – Atlanta and law applicable to the member. The Company records these nonmarketable equity securities

as a component of other assets, which are periodically evaluated for impairment. Management considers these

nonmarketable equity securities to be long-term investments. Accordingly, when evaluating these securities for impairment,

management considers the ultimate recoverability of the par value rather than by recognizing temporary declines in value.

Transfers of Financial Assets

Transfers of an entire financial asset (i.e. loan sales), a group of entire financial assets, or a participating interest in an entire

financial asset (i.e. loan participations sold) are accounted for as sales when control over the assets have been surrendered.

Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company,

(2) the transferee obtains the right (free of conditions that constrain it from taking that right) to pledge or exchange the

transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an

agreement to repurchase them before their maturity.

Mortgage Servicing Rights

The Company recognizes as assets the rights to service mortgage loans which it originates and sells to others, principally

Fannie Mae. These servicing rights are called “MSRs”. The Company determines the fair value of MSRs on sold loans at

the date the loan is transferred. An estimate of the Company’s MSRs is determined using assumptions that market

participants would use in estimating future net servicing income, including estimates of prepayment speeds, discount rate,

default rates, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees.

Subsequent to the date of sale of the residential mortgage loans, the Company has elected to measure its MSRs on such sold

mortgage loans under the amortization method. Under the amortization method, MSRs are amortized in proportion to, and

over the period of, estimated net servicing income. The amortization of MSRs is analyzed monthly and is adjusted to

reflect changes in prepayment speeds, as well as other factors. MSRs are evaluated for impairment based on the fair value

of those assets. Impairment is determined by stratifying MSRs into groupings based on predominant risk characteristics,

such as interest rate and loan type. If, by individual stratum, the carrying amount of the MSRs exceeds fair value, a

valuation allowance is established through a charge to earnings. The valuation allowance is adjusted as the fair value

changes. MSRs are included in the other assets category in the accompanying consolidated balance sheets at the lower of

cost or fair value. See Note 13 “Fair Value”

Securities sold under agreements to repurchase 

Securities sold under agreements to repurchase generally mature less than one year from the transaction date. Securities

sold under agreements to repurchase are reflected as a secured borrowing in the accompanying consolidated balance sheets

at the amount of cash received in connection with each transaction.

Income Taxes 

Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying

amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces

deferred tax assets to the amount expected to be realized. The net deferred tax asset is reflected as a component of other

assets in the accompanying consolidated balance sheets.

Income tax expense or benefit for the year is allocated among continuing operations and other comprehensive income

(loss), as applicable. The amount allocated to continuing operations is the income tax effect of the pretax income or loss

from continuing operations that occurred during the year, plus or minus income tax effects of (1) changes in certain

circumstances that cause a change in judgment about the realization of deferred tax assets in future years, (2) changes in

income tax laws or rates, and (3) changes in income tax status, subject to certain exceptions. The amount allocated to other

comprehensive income (loss) is related solely to changes in the valuation allowance on items that are normally accounted

for in other comprehensive income (loss) such as unrealized gains or losses on available-for-sale securities.

In accordance with ASC 740,

Income Taxes

, a tax position is recognized as a benefit only if it is “more likely than not” that

the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount

recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax

positions not meeting the “more likely than not” test, no tax benefit is recorded. It is the Company’s policy to recognize

interest and penalties related to income tax matters in income tax expense. The Company and its wholly-owned subsidiaries

file consolidated Federal and State of Alabama income tax returns.

Fair Value Measurements 

ASC 820,

Fair Value Measurements,

which defines fair value, establishes a framework for measuring fair value in U.S.

generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 applies only to

fair-value measurements that are already required or permitted by other accounting standards. The definition of fair value

focuses on the exit price, i.e., the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date, not the entry price, i.e., the price that would be paid to

acquire the asset or received to assume the liability at the measurement date. The statement emphasizes that fair value is a

market-based measurement; not an entity-specific measurement. Therefore, the fair value measurement should be

determined based on the assumptions that market participants would use in pricing the asset or liability. For more

information related to fair value measurements, please refer to Note 13, Fair Value.

XML

Basic and Diluted Earnings Per Share

12 Months Ended

Dec. 31, 2024

Basic and Diluted Earnings Per Share [Abstract]

Basic and Diluted Earnings Per Share Text Block

NOTE 2: BASIC AND DILUTED NET EARNINGS PER SHARE

Basic net earnings per share is computed by dividing net earnings by the weighted average common shares outstanding for

the year. Diluted net earnings per share reflect the potential dilution that could occur upon exercise of securities or other

rights for, or convertible into, shares of the Company’s common stock. As of December 31, 2024 and 2023, respectively,

the Company had no such securities or other rights issued or outstanding, and therefore, no dilutive effect to consider for

the diluted net earnings per share calculation. 

The basic and diluted net earnings per share computations for the respective years are presented below.

Year ended December 31

(Dollars in thousands, except share and per share data)

2024

2023

Basic and diluted:

Net earnings

$

6,397

$

1,395

Weighted average common shares outstanding

3,493,690

3,498,030

Net earnings per share

$

1.83

$

0.40

XML

Variable Interest Entity

12 Months Ended

Dec. 31, 2024

Variable interest entities [Abstract]

Variable interest entity

NOTE 3: VARIABLE INTEREST ENTITIES

Generally, a variable interest entity (“VIE”) is a corporation, partnership, trust or other legal structure that does not have

equity investors with substantive or proportional voting rights or has equity investors that do not provide sufficient financial

resources for the entity to support its activities. 

At December 31, 2024, the Company did not have any consolidated VIEs and had one nonconsolidated VIE, which is

discussed below.

New Markets Tax Credit Investment

The New Markets Tax Credit (“NMTC”) program provides federal tax incentives to investors to make investments in

distressed communities and promotes economic improvement through the development of successful businesses in these

communities. The NMTCs are available to investors over seven years and is subject to recapture if certain events occur

during such period. The Company had one NMTC investment with a balance of $0.9 million and $

1.7

 million at December

31, 2024 and 2023, respectively, which is included in other assets in the Company’s consolidated balance sheets as a VIE.

While the Company’s investment exceeds 50% of the outstanding equity interests in this VIE, the Company does not

consolidate the VIE because the Company lacks the power to direct the activities of the VIE, and therefore is not a primary

beneficiary of the VIE.

The Company adopted ASU 2023-02 as of January 1, 2024 which allows us to account for our NMTC investment using the

proportional amortization method. The following table presents a summary of our NMTC investment at December 31,

2024, and the related tax credit and amortization expense for 2024.

(Dollars in thousands)

December 31,

2024

Balance Sheet Location

New Markets Tax Credit investment

$

898

Other assets

(Dollars in thousands)

Year ended

December 31,

2024

Income Statement Location

Income tax credits and other income tax benefits

$

(445)

Income tax expense

Amortization expense

369

Income tax expense

XML

Securities

12 Months Ended

Dec. 31, 2024

Investments debt and equity securities [Abstract]

Investments In Debt And Marketable Equity Securities And Certain Trading Assets Disclosure Text Block

NOTE 4: SECURITIES

At December 31, 2024 and 2023, respectively, all securities within the scope of ASC 320,

Investments – Debt and Equity

Securities

were classified as available-for-sale. The fair value and amortized cost for securities available-for-sale by

contractual maturity at December 31, 2024 and 2023, respectively, are presented below.

1 year

1 to 5

5 to 10

After 10

Fair

Gross Unrealized 

Amortized

(Dollars in thousands)

or less

years

years

years

Value

Gains

Losses

Cost

December 31, 2024

Agency obligations (a)

$

—

26,655

25,756

—

52,411

—

7,734

$

60,145

Agency MBS (a)

10

19,863

14,904

138,899

173,676

—

28,901

202,577

State and political subdivisions

—

966

8,244

7,715

16,925

—

2,901

19,826

Total available-for-sale

$

10

47,484

48,904

146,614

243,012

—

39,536

$

282,548

December 31, 2023

Agency obligations (a)

$

331

10,339

43,209

—

53,879

—

8,195

$

62,074

Agency MBS (a)

32

15,109

22,090

161,058

198,289

—

27,838

226,127

State and political subdivisions

—

—

9,691

9,051

18,742

1

2,731

21,472

Total available-for-sale

$

363

25,448

74,990

170,109

270,910

1

38,764

$

309,673

(a) Includes securities issued by U.S. government agencies or government sponsored entities. Expected lives of

these securities may differ from contractual maturities because (i) issuers may have the right to call or repay such securities

obligations with or without prepayment penalties and (ii) loans included in Agency MBS generally have the right to prepay

such loans in whole or in part at any time.

Securities with aggregate fair values of $

222.3

 million and $

211.8

 million at December 31, 2024 and 2023, respectively,

were pledged to secure public deposits, securities sold under agreements to repurchase, FHLB advances, and for other

purposes required or permitted by law. 

Included in other assets on the accompanying consolidated balance sheets are nonmarketable equity investments. The

carrying amounts of nonmarketable equity investments were $

1.4

 million at both December 31, 2024 and 2023,

respectively. Nonmarketable equity investments include FHLB-Atlanta stock, Federal Reserve Bank stock, and stock in a

privately held financial institution.

Fair Value and Gross Unrealized Losses

The fair values and gross unrealized losses on securities at December 31, 2024 and 2023, respectively, segregated by those

securities that have been in an unrealized loss position for less than 12 months and 12 months or more are presented below.

Less than 12 Months

12 Months or Longer

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(Dollars in thousands)

Value

Losses

Value

Losses

Value

Losses

December 31, 2024:

Agency obligations 

$

—

—

52,411

7,734

52,411

$

7,734

Agency MBS

7

—

173,669

28,901

173,676

28,901

State and political subdivisions

1,798

17

14,776

2,884

16,574

2,901

Total 

$

1,805

17

240,856

39,519

242,661

$

39,536

December 31, 2023:

Agency obligations 

$

—

—

53,879

8,195

53,879

$

8,195

Agency MBS

66

1

198,223

27,837

198,289

27,838

State and political subdivisions

793

2

14,408

2,729

15,201

2,731

Total 

$

859

3

266,510

38,761

267,369

$

38,764

For the securities in the previous table, the Company assesses whether or not it intends to sell the security, or more likely

than not will be required to sell the security, before recovery of its amortized cost basis. Unrealized losses have not been

recognized into income as the decline in fair value is largely due to changes in interest rates and other market

conditions. For the securities in the previous table, as of December 31, 2024, management does not intend to sell and it is

likely that management will not be required to sell the securities prior to their anticipated recovery. 

Agency Obligations

Investments in agency obligations are guaranteed of full and timely payments by the issuing agency. Based on

management's analysis and judgement, there were no credit losses attributable to the Company’s investments in

agency obligations at December 31, 2024. 

Agency MBS

Investments in agency MBS are issued by Ginnie Mae, Fannie Mae, and Freddie Mac. Each of these agencies provide a

guarantee of full and timely payments of principal and interest by the issuing agency. Based on management's analysis and

judgement, there were no credit losses attributable to the Company’s investments in agency MBS at December 31, 2024.

State and Political Subdivisions

Investments in state and political subdivisions are securities issued by various municipalities in the United States. The

majority of the portfolio was rated AA or higher, with no securities rated below investment grade at December 31,

2024. Based on management's analysis and judgement, there were no credit losses attributable to the Company’s

investments in state and political subdivisions at December 31, 2024.

Realized Gains and Losses

The following table presents the gross realized gains and losses on sales related to securities.

Year ended December 31

(Dollars in thousands)

2024

2023

Gross realized gains

$

—

1

Gross realized losses

—

(6,296)

Realized losses, net

$

—

(6,295)

XML

Loan and Allowance for Loan Losses

12 Months Ended

Dec. 31, 2024

Loans And Leases Receivable Disclosure [Abstract]

Loans and leases receivable disclosure [Text Block]

NOTE 5: LOANS AND ALLOWANCE FOR CREDIT LOSSES

December 31

(In thousands)

2024

2023

Commercial and industrial

$

63,274

$

73,374

Construction and land development

82,493

68,329

Commercial real estate:

Owner occupied

55,346

66,783

Hotel/motel

35,210

39,131

Multifamily

43,556

45,841

Other

155,880

135,552

Total commercial real estate

289,992

287,307

Residential real estate:

Consumer mortgage

60,399

60,545

Investment property

58,228

56,912

Total residential real estate

118,627

117,457

Consumer installment

9,631

10,827

Total loans, net of unearned income

564,017

557,294

Loans secured by real estate were approximately

87.1

% of the total loan portfolio at December 31, 2024. At December 31,

2024, the Company’s geographic loan distribution was concentrated primarily in Lee County, Alabama and surrounding

areas.

The loan portfolio segment is defined as the level at which an entity develops and documents a systematic method for

determining its allowance for credit losses. As part of the Company’s quarterly assessment of the allowance, the loan

portfolio is disaggregated into the following portfolio segments: commercial and industrial, construction and land

development, commercial real estate, residential real estate and consumer installment. Where appropriate, the Company’s

loan portfolio segments are further disaggregated into classes. A class is generally determined based on the initial

measurement attribute, risk characteristics of the loan, and an entity’s method for monitoring and determining credit risk.

The following describe the risk characteristics relevant to each of the portfolio segments and classes.

Commercial and industrial (“C&I”) —

includes loans to finance business operations, equipment purchases, or other needs

for small and medium-sized commercial customers. Also included in this category are loans to finance agricultural

production. Generally, the primary source of repayment is the cash flow from business operations and activities of the

borrower.

Construction and land development (“C&D”) —

includes both loans and credit lines for the purpose of purchasing,

carrying and developing land into commercial developments or residential subdivisions. Also included are loans and lines

for construction of residential, multi-family and commercial buildings. Generally the primary source of repayment is

dependent upon the sale or refinance of the real estate collateral.

Commercial real estate (“CRE”) —

includes loans disaggregated in these classes:

 Owner occupied

 – includes loans secured by business facilities to finance business operations, equipment and

 owner-occupied facilities primarily for small and medium-sized commercial customers. Generally the primary source

 of loan repayment are the cash flows from the business operations and activities of the borrower, who owns the

 property.

 Hotel/motel

– includes loans for hotels and motels. Generally, the primary source of repayment is dependent upon

 income generated from the real estate collateral. The underwriting of these loans takes into consideration the 

 occupancy and rental rates, as well as the financial health of the borrower.

 Multifamily

 – primarily includes loans to finance income-producing multi-family properties. Loans in this class include

 loans for 5 or more unit residential property and apartments leased to residents. Generally, the primary source of

 repayment is dependent upon income generated from the real estate collateral. The underwriting of these loans takes

 into consideration the occupancy and rental rates, as well as the financial health of the borrower.

 Other

 – primarily includes loans to finance income-producing commercial properties. Loans in this class include loans

 for neighborhood retail centers, medical and professional offices, single retail stores, industrial buildings, and

 warehouses leased generally to local businesses and residents. Generally, the primary source of repayment is dependent

 upon income generated from the real estate collateral. The underwriting of these loans takes into consideration the

 occupancy and rental rates as well as the financial health of the borrower. 

Residential real estate (“RRE”) —

includes loans disaggregated into two classes:

 Consumer mortgage

 – primarily includes first or second lien mortgages and home equity lines to consumers that are

 secured by a primary residence or second home. These loans are underwritten in accordance with the Bank’s general

 loan policies and procedures which require, among other things, proper documentation of each borrower’s financial

 condition, satisfactory credit history and property value.

 Investment property

 – primarily includes loans to finance income-producing 1-4 family residential properties.

 Generally, the primary source of repayment is dependent upon income generated from leasing the property securing the

 loan. The underwriting of these loans takes into consideration the rental rates as well as the financial health of the

 borrower.

Consumer installment —

includes loans to individuals both secured by personal property and unsecured. Loans include

personal lines of credit, automobile loans, and other retail loans. These loans are underwritten in accordance with the

Bank’s general loan policies and procedures which require, among other things, proper documentation of each borrower’s

financial condition, satisfactory credit history, and if applicable, property value.

The following is a summary of current, accruing past due and nonaccrual loans by portfolio class as of December 31, 2024

and 2023.

Accruing

Accruing

Total

30-89 Days

Greater than

Accruing

Non-

Total 

(In thousands)

Current

Past Due

90 days

Loans

Accrual

Loans

December 31, 2024:

Commercial and industrial

$

63,163

12

—

63,175

99

$

63,274

Construction and land development

82,089

—

—

82,089

404

82,493

Commercial real estate:

Owner occupied

55,346

—

—

55,346

—

55,346

Hotel/motel

35,210

—

—

35,210

—

35,210

Multifamily

43,556

—

—

43,556

—

43,556

Other

155,880

—

—

155,880

—

155,880

Total commercial real estate

289,992

—

—

289,992

—

289,992

Residential real estate:

Consumer mortgage

59,677

722

—

60,399

—

60,399

Investment property

58,179

49

—

58,228

—

58,228

Total residential real estate

117,856

771

—

118,627

—

118,627

Consumer installment

9,579

52

—

9,631

—

9,631

Total

$

562,679

835

—

563,514

503

$

564,017

December 31, 2023:

Commercial and industrial

$

73,108

266

—

73,374

—

$

73,374

Construction and land development

68,329

—

—

68,329

—

68,329

Commercial real estate:

Owner occupied

66,000

—

—

66,000

783

66,783

Hotel/motel

39,131

—

—

39,131

—

39,131

Multifamily

45,841

—

—

45,841

—

45,841

Other

135,552

—

—

135,552

—

135,552

Total commercial real estate

286,524

—

—

286,524

783

287,307

Residential real estate:

Consumer mortgage

60,442

—

—

60,442

103

60,545

Investment property

56,597

290

—

56,887

25

56,912

Total residential real estate

117,039

290

—

117,329

128

117,457

Consumer installment

10,781

46

—

10,827

—

10,827

Total

$

555,781

602

—

556,383

911

$

557,294

Credit Quality Indicators

The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the

standard asset classification system used by the federal banking agencies. These categories are utilized to develop the

associated allowance for credit losses using historical losses adjusted for qualitative and environmental factors and are

defined as follows: 

●

Pass – loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if

any) or by the fair value, less cost to acquire and sell, of any underlying collateral. 

●

Special Mention – loans with potential weakness that may, if not reversed or corrected, weaken the credit or

inadequately protect the Company’s position at some future date. These loans are not adversely classified and do

not expose an institution to sufficient risk to warrant an adverse classification.

●

Substandard Accruing – loans that exhibit a well-defined weakness which presently jeopardizes debt repayment,

even though they are currently performing. These loans are characterized by the distinct possibility that the

Company may incur a loss in the future if these weaknesses are not corrected.

Nonaccrual – includes loans where management has determined that full payment of principal and interest is not expected.

The following tables presents credit quality indicators for the loan portfolio segments and classes by year of origination as

of December 31, 2024 and 2023. The December 31, 2023 table has been revised to correct revolving loans and properly

allocate loans by year of origination. See Note 1: Summary of Significant Accounting Policies – Correction of Error.

(Dollars in thousands)

2024

2023

2022

2021

2020

Prior to

2020

Revolving

Loans

Total 

Loans

December 31, 2024: 

Commercial and industrial

Pass

$

11,290

7,265

8,488

9,677

4,659

16,989

4,425

$

62,793

Special mention

49

74

—

—

—

—

—

123

Substandard

50

21

181

7

—

—

—

259

Nonaccrual

—

99

—

—

—

—

—

99

Total commercial and industrial

11,389

7,459

8,669

9,684

4,659

16,989

4,425

63,274

Current period gross charge-offs

—

—

9

—

—

—

—

9

Construction and land development

Pass

31,144

29,520

16,504

1,794

1,434

104

1,589

$

82,089

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

404

—

—

—

—

—

—

404

Total construction and land development

31,548

29,520

16,504

1,794

1,434

104

1,589

82,493

Current period gross charge-offs

—

—

—

—

—

—

—

—

Commercial real estate:

Owner occupied

Pass

1,921

11,206

6,776

17,114

3,396

12,030

1,552

$

53,995

Special mention

—

249

—

—

591

—

—

840

Substandard

511

—

—

—

—

—

—

511

Nonaccrual

—

—

—

—

—

—

—

—

Total owner occupied

2,432

11,455

6,776

17,114

3,987

12,030

1,552

55,346

Current period gross charge-offs

—

—

—

—

—

—

—

—

Hotel/motel

Pass

480

6,480

5,303

3,079

1,299

14,437

4,132

$

35,210

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total hotel/motel

480

6,480

5,303

3,079

1,299

14,437

4,132

35,210

Current period gross charge-offs

—

—

—

—

—

—

—

—

(Dollars in thousands)

2024

2023

2022

2021

2020

Prior to

2020

Revolving

Loans

Total 

Loans

December 31, 2024: 

Multi-family

Pass

3,739

6,041

17,037

1,863

3,493

6,400

4,983

43,556

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total multi-family

3,739

6,041

17,037

1,863

3,493

6,400

4,983

43,556

Current period gross charge-offs

—

—

—

—

—

—

—

—

Other

Pass

43,753

21,085

32,521

21,249

16,743

16,289

4,120

155,760

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

120

—

—

120

Nonaccrual

—

—

—

—

—

—

—

—

Total other

43,753

21,085

32,521

21,249

16,863

16,289

4,120

155,880

Current period gross charge-offs

—

—

—

—

—

—

—

—

Residential real estate:

Consumer mortgage

Pass

5,885

18,389

18,434

2,466

2,565

10,590

808

59,137

Special mention

243

—

—

—

2

486

—

731

Substandard

—

—

—

—

—

531

—

531

Nonaccrual

—

—

—

—

—

—

—

—

Total consumer mortgage

6,128

18,389

18,434

2,466

2,567

11,607

808

60,399

Current period gross charge-offs

—

—

—

—

—

61

—

61

Investment property

Pass

10,339

10,824

10,651

8,305

11,435

4,794

1,317

57,665

Special mention

—

—

—

—

—

—

—

—

Substandard

278

40

93

9

143

—

—

563

Nonaccrual

—

—

—

—

—

—

—

—

Total investment property

10,617

10,864

10,744

8,314

11,578

4,794

1,317

58,228

Current period gross charge-offs

—

—

—

—

—

—

—

—

Consumer installment

Pass

5,015

2,057

1,911

296

90

113

67

9,549

Special mention

—

9

—

9

—

—

—

18

Substandard

39

15

10

—

—

—

—

64

Nonaccrual

—

—

—

—

—

—

—

—

Total consumer installment

5,054

2,081

1,921

305

90

113

67

9,631

Current period gross charge-offs

25

42

42

1

—

4

—

114

Total loans

Pass

113,566

112,867

117,625

65,843

45,114

81,746

22,993

559,754

Special mention

292

332

—

9

593

486

—

1,712

Substandard

878

76

284

16

263

531

—

2,048

Nonaccrual

404

99

—

—

—

—

—

503

Total loans

$

115,140

113,374

117,909

65,868

45,970

82,763

22,993

$

564,017

Total current period gross charge-offs

$

25

42

51

1

—

65

—

184

Year of Origination

2023

2022

2021

2020

2019

Prior to

2019

Revolving

Loans

Total 

Loans

(Dollars in thousands)

December 31, 2023: 

Commercial and industrial

Pass

$

11,571

18,074

13,746

5,602

7,298

7,819

9,003

$

73,113

Special mention

—

—

—

—

—

—

—

—

Substandard

55

203

—

—

3

—

—

261

Nonaccrual

—

—

—

—

—

—

—

—

Total commercial and industrial

11,626

18,277

13,746

5,602

7,301

7,819

9,003

73,374

Current period gross charge-offs

—

—

13

—

151

—

—

164

Construction and land development

Pass

38,646

25,382

1,716

1,526

120

157

782

68,329

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total construction and land development

38,646

25,382

1,716

1,526

120

157

782

68,329

Current period gross charge-offs

—

—

—

—

—

—

—

—

Commercial real estate:

Owner occupied

Pass

12,966

7,337

18,548

10,458

3,948

9,786

2,647

65,690

Special mention

260

—

—

—

—

—

—

260

Substandard

—

—

—

—

50

—

—

50

Nonaccrual

—

—

—

—

783

—

—

783

Total owner occupied

13,226

7,337

18,548

10,458

4,781

9,786

2,647

66,783

Current period gross charge-offs

—

—

—

—

—

—

—

—

Hotel/motel

Pass

9,025

9,873

3,205

1,493

3,881

11,654

—

39,131

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total hotel/motel

9,025

9,873

3,205

1,493

3,881

11,654

—

39,131

Current period gross charge-offs

—

—

—

—

—

—

—

—

Year of Origination

2023

2022

2021

2020

2019

Prior to

2019

Revolving

Loans

Total 

Loans

(Dollars in thousands)

December 31, 2023: 

Multi-family

Pass

12,379

17,955

1,953

6,112

3,790

3,043

609

45,841

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total multi-family

12,379

17,955

1,953

6,112

3,790

3,043

609

45,841

Current period gross charge-offs

—

—

—

—

—

—

—

—

Other

Pass

25,810

36,076

31,687

14,597

10,736

15,440

1,052

135,398

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

154

—

—

—

154

Nonaccrual

—

—

—

—

—

—

—

—

Total other

25,810

36,076

31,687

14,751

10,736

15,440

1,052

135,552

Current period gross charge-offs

—

—

—

—

—

—

—

—

Residential real estate:

Consumer mortgage

Pass

20,147

20,177

2,683

2,665

1,281

12,217

249

59,419

Special mention

—

—

—

—

190

305

—

495

Substandard

—

—

—

—

—

528

—

528

Nonaccrual

—

—

—

—

—

103

—

103

Total consumer mortgage

20,147

20,177

2,683

2,665

1,471

13,153

249

60,545

Current period gross charge-offs

—

—

—

—

—

—

—

—

Investment property

Pass

13,398

12,490

9,397

12,209

5,485

1,865

1,478

56,322

Special mention

41

—

—

—

—

—

—

41

Substandard

43

248

—

233

—

—

—

524

Nonaccrual

—

—

—

—

—

25

—

25

Total investment property

13,482

12,738

9,397

12,442

5,485

1,890

1,478

56,912

Current period gross charge-offs

—

—

—

—

—

—

—

—

Consumer installment

Pass

5,688

3,837

740

206

106

141

—

10,718

Special mention

9

25

9

2

—

—

—

45

Substandard

37

11

5

11

—

—

—

64

Nonaccrual

—

—

—

—

—

—

—

—

Total consumer installment

5,734

3,873

754

219

106

141

—

10,827

Current period gross charge-offs

34

57

13

1

—

—

—

105

Total loans

Pass

149,630

151,201

83,675

54,868

36,645

62,122

15,820

553,961

Special mention

310

25

9

2

190

305

—

841

Substandard

135

462

5

398

53

528

—

1,581

Nonaccrual

—

—

—

—

783

128

—

911

Total loans

$

150,075

151,688

83,689

55,268

37,671

63,083

15,820

$

557,294

Total current period gross charge-offs

$

34

57

26

1

151

—

—

269

Allowance for Credit Losses

The Company adopted ASC 326 on January 1, 2023, which introduced the Current Expected Credit Losses (“CECL”)

methodology for estimating all expected losses over the life of a financial asset. Under the CECL methodology, the

allowance for credit losses is measured on a collective basis for pools of loans with similar risk characteristics, and for

loans that do not share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an

individual basis.

The composition of the provision for (reversal of) credit losses for the respective periods is presented below.

Year ended December 31,

(Dollars in thousands)

2024

2023

Provision for credit losses:

Loans

$

(6)

$

125

Reserve for unfunded commitments

42

10

Total provision for (reversal of) credit losses

$

36

$

135

The following table details the changes in the allowance for credit losses by portfolio segment for the years ended

December 31, 2024 and 2023.

(in thousands)

Commercial

and industrial

Construction

and land

Development

Commercial

Real Estate

Residential

Real Estate

Consumer

Installment

Total

Balance, December 31, 2022

$

747

949

3,109

828

132

$

5,765

Impact of adopting ASC 326

532

(17)

873

(347)

(22)

1,019

Charge-offs

(164)

—

—

—

(105)

(269)

Recoveries

204

—

—

14

5

223

Net (charge-offs) recoveries

40

—

—

14

(100)

(46)

Provision

(31)

28

(61)

51

138

125

Balance, December 31, 2023

$

1,288

960

3,921

546

148

$

6,863

Charge-offs

(9)

—

—

(61)

(114)

(184)

Recoveries

144

—

—

9

45

198

Net recoveries (charge-offs)

135

—

—

(52)

(69)

14

Provision

(179)

99

(79)

94

59

(6)

Balance, December 31, 2024

$

1,244

1,059

3,842

588

138

$

6,871

The Company did not recognize any interest income on nonaccrual loans during 2024 and 2023.

The Company designates individually evaluated loans on nonaccrual status as collateral -dependent loans, as well as other

loans that management of the Company designates as having higher risk. Collateral-dependent loans are loans for which

the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is

experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the

collectively evaluated loans for determining the allowance for credit losses. Under CECL, for collateral-dependent loans,

the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of

collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair

value of the loan’s collateral, which is adjusted for liquidation costs/discounts, and amortized costs. If the fair value of the

collateral exceeds the amortized cost, no allowance is required.

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to

determine expected credit losses for the years ended December 31, 2024 and 2023:

(Dollars in thousands)

Real Estate

Business Assets

Total Loans

December 31, 2024:

Commercial and industrial

$

—

99

$

99

Construction and land development

404

—

404

Total 

$

404

99

$

503

December 31, 2023:

Commercial real estate

$

783

—

$

783

Total 

$

783

—

$

783

The gross interest income which would have been recorded under the original terms of those nonaccrual loans had they

been accruing interest, amounted to approximately $

14

 thousand and $

47

 thousand for the years ended December 31, 2024

and 2023, respectively.

The following table summarizes the Company’s nonaccrual loan by major categories as of December 31, 2024 and 2023.

Nonaccrual loans

Nonaccrual loans

Total

(Dollars in thousands)

with no Allowance

with an Allowance

Nonaccrual Loans

December 31, 2024

Commercial and industrial

$

—

99

$

99

Construction and land development

404

—

404

Total 

$

404

99

$

503

December 31, 2023

Commercial real estate

$

783

—

$

783

Residential real estate

—

128

128

Total 

$

783

128

$

911

The Company had no modifications to loans made to borrowers experiencing financial difficulty at December 31, 2024 and

2023.

XML

Premises and Equipment

12 Months Ended

Dec. 31, 2024

Premises and Equipment [Abstract]

Premises and Equipment Text Block

NOTE 6: PREMISES AND EQUIPMENT

Premises and equipment at December 31, 2024 and 2023 is presented below.

December 31

(Dollars in thousands)

2024

2023

Land and improvements

$

12,800

12,800

Buildings and improvements

36,978

35,442

Furniture, fixtures, and equipment

4,335

3,986

Construction in progress

38

39

Total premises and equipment

54,151

52,267

Less: accumulated depreciation

(8,220)

(6,732)

Premises and equipment, net

$

45,931

45,535

Depreciation expense was approximately $

1.7

 million and $

1.4

 million for the years ended December 31, 2024 and 2023,

respectively, and is a component of net occupancy and equipment expense in the consolidated statements of earnings.

XML

Mortgage Servicing Rights, Net

12 Months Ended

Dec. 31, 2024

Mortgage Servicing [Abstract]

Transfers and Servicing of Financial Assets [Text Block]

NOTE 7: MORTGAGE SERVICING RIGHTS, NET 

MSRs are recognized based on the fair value of the servicing rights on the date the corresponding mortgage loans are sold. 

An estimate of the Company’s MSRs is determined using assumptions that market participants would use in estimating

future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service, escrow

account earnings, contractual servicing fee income, ancillary income, and late fees. Subsequent to the date of transfer, the

Company has elected to measure its MSRs under the amortization method. Under the amortization method, MSRs are

amortized in proportion to, and over the period of, estimated net servicing income. Servicing fee income is recorded net of

related amortization expense and recognized in earnings as part of mortgage lending income. 

The Company has recorded MSRs related to loans sold without recourse to Fannie Mae. The Company generally sells

conforming, fixed-rate, closed-end, residential mortgages to Fannie Mae. MSRs are included in other assets on the

accompanying consolidated balance sheets.

The Company evaluates MSRs for impairment on a quarterly basis. Impairment is determined by stratifying MSRs into

groupings based on predominant risk characteristics, such as interest rate and loan type. If, by individual stratum, the

carrying amount of the MSRs exceeds fair value, a valuation allowance is established. The valuation allowance is adjusted

as the fair value changes. Changes in the valuation allowance are recognized in earnings as a component of mortgage

lending income.

The following table details the changes in amortized MSRs and the related valuation allowance for the years ended

December 31, 2024 and 2023.

Year ended December 31

(Dollars in thousands)

2024

2023

Beginning balance

$

992

1,151

Additions, net

79

38

Amortization expense

(179)

(197)

Ending balance

$

892

992

Valuation allowance included in MSRs, net:

Beginning of period

$

—

—

End of period

—

—

Fair value of amortized MSRs:

Beginning of period

$

2,382

2,369

End of period

2,204

2,382

Data and assumptions used in the fair value calculation related to MSRs at December 31, 2024 and 2023, respectively, are

presented below.

December 31

(Dollars in thousands)

2024

2023

Unpaid principal balance

$

205,915

216,648

Weighted average prepayment speed (CPR)

7.3

%

6.0

Discount rate (annual percentage)

10.0

%

10.5

Weighted average coupon interest rate

3.6

%

3.5

Weighted average remaining maturity (months)

242

245

Weighted average servicing fee (basis points)

25.0

25.0

At December 31, 2024, the weighted average amortization period for MSRs was

7.1

 years. Estimated amortization expense

for each of the next five years is presented below.

(Dollars in thousands)

December 31, 2024

2025

$

118

2026

104

2027

91

2028

80

2029

71

XML

Deposits

12 Months Ended

Dec. 31, 2024

Deposits:

Deposits Text Block

NOTE 8: DEPOSITS

At December 31, 2024, the scheduled maturities of certificates of deposit and other time deposits are presented below.

(Dollars in thousands)

December 31, 2024

2025

$

174,608

2026

7,972

2027

6,267

2028

1,636

2029

764

Thereafter

—

Total certificates of deposit and other time deposits 

$

191,247

Additionally, at December 31, 2024 and 2023, approximately $

87.7

 million and $

97.6

 million, respectively, of certificates

of deposit and other time deposits were issued in denominations greater than $250 thousand.

At December 31, 2024 and 2023, the amount of deposit accounts in overdraft status that were reclassified to loans on the

accompanying consolidated balance sheets was not material.

XML

Lease Commitment

12 Months Ended

Dec. 31, 2024

Leases [Abstract]

Lessee Operating Leases [Text Block]

NOTE 9: LEASE COMMITMENTS

We lease certain office facilities and equipment under operating leases. Rent expense for all operating leases totaled $

0.1

million and $

0.2

 million for the years ended December 31, 2024 and 2023, respectively. Aggregate lease right of use assets

were $

0.2

 million and $

0.5

 million at December 31, 2024 and 2023, respectively. Aggregate lease liabilities were $0.2

million and $

0.5

 million at December 31, 2024 and 2023, respectively. Rent expense includes amounts related to items that

are not included in the determination of lease right of use assets including expenses related to short-term leases totaling

$

0.1

 million for the year ended December 31, 2024.

Lease payments under operating leases that were applied to our operating lease liability totaled $

0.1

 million during the year

ended December 31, 2024. The following table reconciles future undiscounted lease payments due under non-cancelable

operating leases (those amounts subject to recognition) to the aggregate operating lease liability as of December 31, 2024.

Future lease

(Dollars in thousands)

payments

2025

$

81

2026

60

2027

60

2028

45

2029

—

Thereafter

—

Total undiscounted operating lease liabilities

$

246

Imputed interest

15

Total operating lease liabilities included in the accompanying consolidated balance sheets

$

231

Weighted-average lease terms in years

3.47

Weighted-average discount rate

3.20

%

XML

Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes Text Block

NOTE 10: INCOME TAXES

For the years ended December 31, 2024 and 2023 the components of income tax expense from continuing operations are

presented below.

Year ended December 31

(Dollars in thousands)

2024

2023

Current income tax expense (benefit):

Federal

$

991

(448)

State

571

(134)

Total current income tax expense (benefit)

1,562

(582)

Deferred income tax expense (benefit):

Federal

473

(293)

State

(35)

98

Total deferred income tax expense (benefit)

438

(195)

Total income tax expense (benefit)

$

2,000

(777)

Total income tax expense differs from the amounts computed by applying the statutory federal income tax rate of 21% to

earnings before income taxes. A reconciliation of the differences for the years ended December 31, 2024 and 2023, is

presented below.

2024

2023

Percent of

Percent of

pre-tax

pre-tax

(Dollars in thousands)

Amount

earnings

Amount

earnings

Earnings before income taxes

$

8,397

618

Income taxes at statutory rate

1,763

21.0

%

130

21.0

%

Tax-exempt interest

(290)

(3.5)

(493)

(79.8)

State income taxes, net of 

federal tax effect

388

4.6

(43)

(7.0)

New Markets Tax Credit

(58)

(0.7)

(356)

(57.6)

Bank-owned life insurance

(85)

(1.0)

(88)

(14.2)

Other

282

3.4

73

11.9

Total income tax expense (benefit)

$

2,000

23.8

%

(777)

(125.7)

%

At December 31, 2024 and 2023, the Company had a net deferred tax asset of $10.2 million and $10.3 million, respectively,

included in other assets on the consolidated balance sheet. The tax effects of temporary differences that give rise to

significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023 are presented

below.

December 31

(Dollars in thousands)

2024

2023

Deferred tax assets:

Allowance for credit losses

$

1,726

1,724

Unrealized loss on securities

9,929

9,734

Net operating loss carry-forwards

 — 

253

Tax credit carry-forwards

 — 

356

Accrued bonus 

207

185

Right of use liability

58

128

Other

99

71

Total deferred tax assets

12,019

12,451

Deferred tax liabilities:

Premises and equipment

1,212

1,315

Originated mortgage servicing rights

224

249

Right of use asset

58

122

New Markets Tax Credit investment

 — 

181

Other

333

332

Total deferred tax liabilities

1,827

2,199

Net deferred tax asset

$

10,192

10,252

A valuation allowance is recognized for a deferred tax asset if, based on the weight of available evidence, it is more-likely-

than-not that some portion of the entire deferred tax asset will not be realized. The ultimate realization of deferred tax

assets is dependent upon the generation of future taxable income during the periods in which those temporary differences

become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable

income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and

projection for future taxable income over the periods which the temporary differences resulting in the remaining deferred

tax assets are deductible, management believes it is more-likely-than-not that the Company will realize the benefits of these

deductible differences at December 31, 2024. The amount of the deferred tax assets considered realizable, however, could

be reduced in the near term if estimates of future taxable income are reduced.

The change in the net deferred tax asset for the years ended December 31, 2024 and 2023, is presented

Year ended December 31

(Dollars in thousands)

2024

2023

Net deferred tax asset (liability):

Balance, beginning of year

$

10,252

13,769

Cumulative effect of change in accounting standard

183

276

Deferred tax expense (benefit) related to continuing operations

(438)

195

Stockholders' equity, for accumulated other comprehensive income

195

(3,988)

Balance, end of year

$

10,192

10,252

ASC 740,

Income Taxes,

 defines the threshold for recognizing the benefits of tax return positions in the financial statements

as “more-likely-than-not” to be sustained by the taxing authority. This section also provides guidance on the de-

recognition, measurement, and classification of income tax uncertainties in interim periods. As of December 31, 2024, the

Company had no unrecognized tax benefits related to federal or state income tax matters. The Company does not anticipate

any material increase or decrease in unrecognized tax benefits during 2025 relative to any tax positions taken prior to

December 31, 2024. As of December 31, 2024, the Company has accrued no interest and no penalties related to uncertain

tax positions. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax

expense. 

The Company and its subsidiaries file consolidated U.S. federal and State of Alabama income tax returns. The Company is

currently open to audit under the statute of limitations by the Internal Revenue Service and the State of Alabama for the

years ended December 31, 2021 through 2024.

XML

Employee Benefits

12 Months Ended

Dec. 31, 2024

Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

NOTE 11: EMPLOYEE BENEFIT PLAN

The Company sponsors a qualified defined contribution retirement plan, the Auburn National Bancorporation, Inc. 401(k)

Plan (the "Plan"). Eligible employees may contribute up to 100% of eligible compensation, subject to statutory limits upon

completion of 2 months of service. Furthermore, the Company allows employer Safe Harbor contributions. Participants are

immediately vested in employer Safe Harbor contributions. The Company's matching contributions on behalf of

participants were equal to $1.00 for each $1.00 contributed by participants, up to 3% of each participant's eligible

compensation, and $0.50 for every $1.00 contributed by participants, above 3% up to 5% of each participant's eligible

compensation, for a maximum matching contribution of 4% of the participants' eligible compensation. Company matching

contributions to the Plan were approximately $

0.3

 million for both of the years ended December 31, 2024 and 2023,

respectively, and are included in salaries and benefits expense.

XML

Commitments and Contigent Liabilities

12 Months Ended

Dec. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE 12: COMMITMENTS AND CONTINGENT LIABILITIES

Credit-Related Financial Instruments

The Company is party to credit related financial instruments with off -balance sheet risk in the normal course of business to

meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby

letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the

amount recognized in the consolidated balance sheets.

The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company

follows the same credit policies in making commitments as it does for on-balance sheet instruments.

At December 31, 2024 and 2023, the following financial instruments were outstanding whose contract amount represents

credit risk.

December 31

(Dollars in thousands)

2024

2023

Commitments to extend credit

$

84,667

$

73,606

Standby letters of credit

738

629

Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition

established in the commitment agreement and provided the commitments are not otherwise cancelable by the Bank. 

Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The

commitments for lines of credit may expire without being drawn upon. Therefore, total commitment amounts do not

necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the

Company, is based on management’s credit evaluation of the customer. The Company records an allowance for credit

losses on off-balance sheet exposures, unless the commitments to extend credit are unconditionally cancelable, through a

charge to provision for credit losses in the Company’s Consolidated Statement of Earnings. The allowance for credit losses

related to unfunded commitments was $

0.3

 million at both December 31, 2024 and 2023, respectively, and is included in

other liabilities on the Company’s Consolidated Balance Sheet. 

See “Note 1: Summary of Significant Accounting Policies –

Allowance for credit losses – Unfunded commitments.”

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer

to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan

facilities to customers. The Company holds various assets as collateral, including accounts receivable, inventory,

equipment, marketable securities, and property to support those commitments for which collateral is deemed necessary. 

The Company has a recorded a liability for the estimated fair value of these standby letters of credit in the amount of $

13

thousand and $

9

 thousand at December 31, 2024 and 2023, respectively.

Contingent Liabilities

The Company and the Bank are involved in various legal proceedings, arising in connection with their business. In the

opinion of management, based upon consultation with legal counsel, the ultimate resolution of these proceedings will not

have a material adverse effect upon the consolidated financial condition or results of operations of the Company and the

Bank.

XML

Fair Value Disclosures

12 Months Ended

Dec. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Disclosures Text Block

NOTE 13: FAIR VALUE 

Fair Value Hierarchy

“Fair value” is defined by ASC 820,

Fair Value Measurements and Disclosures

, as the price that would be received to sell

an asset or paid to transfer a liability in an orderly transaction occurring in the principal market (or most advantageous

market in the absence of a principal market) for an asset or liability at the measurement date. GAAP establishes a fair

value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or

liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1—inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active

markets. 

Level 2—inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets,

quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs that are observable for the

asset or liability, either directly or indirectly. 

Level 3—inputs to the valuation methodology are unobservable and reflect the Company’s own assumptions about the

inputs market participants would use in pricing the asset or liability. 

Level changes in fair value measurements

Transfers between levels of the fair value hierarchy are generally recognized at the end of the reporting period. The

Company monitors the valuation techniques utilized for each category of financial assets and liabilities to ascertain when

transfers between levels have been affected. The nature of the Company’s financial assets and liabilities generally is such

that transfers in and out of any level are expected to be infrequent. For the years ended December 31, 2024 and 2023, there

were no transfers between levels and no changes in valuation techniques for the Company’s financial assets and liabilities.

Assets and liabilities measured at fair value on a recurring basis

Securities available-for-sale

Fair values of securities available for sale were primarily measured using Level 2 inputs. For these securities, the Company

obtains pricing from third party pricing services. These third-party pricing services consider observable data that may

include broker/dealer quotes, market spreads, cash flows, market consensus prepayment speeds, benchmark yields, reported

trades for similar securities, credit information and the securities’ terms and conditions. On a quarterly basis, management

reviews the pricing received from the third-party pricing services for reasonableness given current market conditions. As

part of its review, management may obtain non-binding third party broker quotes to validate the fair value measurements. 

In addition, management will periodically submit pricing provided by the third-party pricing services to another

independent valuation firm on a sample basis. This independent valuation firm will compare the price provided by the

third-party pricing service with its own price and will review the significant assumptions and valuation methodologies used

with management.

The following table presents the balances of the assets and liabilities measured at fair value on a recurring as of December

31, 2024 and 2023, respectively, by caption, on the accompanying consolidated balance sheets by ASC 820 valuation

hierarchy (as described above).

Quoted Prices in

Significant

Active Markets

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

December 31, 2024:

Securities available-for-sale:

Agency obligations 

$

52,411

—

52,411

—

Agency MBS

173,676

—

173,676

—

State and political subdivisions

16,925

—

16,925

—

Total securities available -for-sale

243,012

—

243,012

—

Total assets at fair value

$

243,012

—

243,012

—

December 31, 2023:

Securities available-for-sale:

Agency obligations 

$

53,879

—

53,879

—

Agency MBS

198,289

—

198,289

—

State and political subdivisions

18,742

—

18,742

—

Total securities available -for-sale

270,910

—

270,910

—

Total assets at fair value

$

270,910

—

270,910

—

Assets and liabilities measured at fair value on a nonrecurring basis

Collateral Dependent Loans

Collateral dependent loans are measured at the fair value of the collateral securing loan less estimated selling costs. The

fair value of real estate collateral is determined based on real estate appraisals which are generally based on recent sales of

comparable properties which are then adjusted for property specific factors. Non-real estate collateral is valued based on

various sources, including third party asset valuations and internally determined values based on cost adjusted for

depreciation and other judgmentally determined discount factors. Collateral dependent loans are classified within Level 3

of the hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the

borrower’s underlying financial condition.

Mortgage servicing rights, net

Mortgage servicing rights, net, included in other assets on the accompanying consolidated balance sheets, are carried at the

lower of cost or estimated fair value. MSRs do not trade in an active market with readily observable prices. To determine

the fair value of MSRs, the Company engages an independent third party. The independent third party’s valuation model

calculates the present value of estimated future net servicing income using assumptions that market participants would use

in estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to

service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees. Periodically, the

Company will review broker surveys and other market research to validate significant assumptions used in the model. The

significant unobservable inputs include prepayment speeds or the constant prepayment rate (“CPR”) and the weighted

average discount rate. Because the valuation of MSRs requires the use of significant unobservable inputs, all of the

Company’s MSRs are classified within Level 3 of the valuation hierarchy.

The following table presents the balances of the assets and liabilities measured at fair value on a nonrecurring basis as of

December 31, 2024 and 2023, respectively, by caption, on the accompanying consolidated balance sheets and by ASC 820

valuation hierarchy (as described above):

Quoted Prices in

Active Markets

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

December 31, 2024:

Loans, net

(1)

$

503

—

—

503

Other assets

(2)

892

—

—

892

Total assets at fair value

$

1,395

—

—

1,395

December 31, 2023:

Loans, net

(1)

$

783

—

—

783

Other assets

(2)

992

—

—

992

Total assets at fair value

$

1,775

—

—

1,775

(1)

Loans considered collateral dependent under ASC 326.

(2)

Represents MSRs, net carried at lower of cost or estimated fair value.

Quantitative Disclosures for Level 3 Fair Value Measurements

At December 31, 2024 and 2023, the Company had no Level 3 assets measured at fair value on a recurring basis. For Level

3 assets measured at fair value on a non-recurring basis as of December 31, 2024 and 2023, the significant unobservable

inputs used in the fair value measurements are presented below.

Weighted

Carrying

Significant

Average

(Dollars in thousands)

Amount

Valuation Technique

 Unobservable Input

Range

of Input

December 31, 2024:

Collateral dependent loans

$

503

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

892

Discounted cash flow

Prepayment speed or CPR

6.7

-

11.2

%

7.3

%

Discount rate

10.0

-

12.0

%

10.0

%

December 31, 2023:

Collateral dependent loans

$

783

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

992

Discounted cash flow

Prepayment speed or CPR

5.9

-

10.6

%

6.0

%

Discount rate

10.5

-

12.5

%

10.5

%

Fair Value of Financial Instruments

ASC 825,

Financial Instruments

, requires disclosure of fair value information about financial instruments, whether or not

recognized on the face of the balance sheet, for which it is practicable to estimate that value. The assumptions used in the

estimation of the fair value of the Company’s financial instruments are explained below. Where quoted market prices are

not available, fair values are based on estimates using discounted cash flow analyses. Discounted cash flows can be

significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The

following fair value estimates cannot be substantiated by comparison to independent markets and should not be considered

representative of the liquidation value of the Company’s financial instruments, but rather are good faith estimates of the fair

value of financial instruments held by the Company. ASC 825 excludes certain financial instruments and all nonfinancial

instruments from its disclosure requirements. 

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments: 

Loans, net

Fair values for loans were calculated using discounted cash flows. The discount rates reflected current rates at which similar

loans would be made for the same remaining maturities. Expected future cash flows were projected based on contractual

cash flows, adjusted for estimated prepayments. The fair value of loans was measured using an exit price notion.

Time Deposits

Fair values for time deposits were estimated using discounted cash flows. The discount rates were based on rates currently

offered for deposits with similar remaining maturities.

The carrying value, related estimated fair value, and placement in the fair value hierarchy of the Company’s financial

instruments at December 31, 2024 and 2023 are presented below. This table excludes financial instruments for which the

carrying amount approximates fair value. Financial assets for which fair value approximates carrying value included cash

and cash equivalents. Financial liabilities for which fair value approximates carrying value included noninterest-bearing

demand deposits, interest-bearing demand deposits, and savings deposits. Fair value approximates carrying value in these

financial liabilities due to these products having no stated maturity. Additionally, financial liabilities for which fair value

approximates carrying value included overnight borrowings such as federal funds purchased and securities sold under

agreements to repurchase.

The following table summarizes our fair value estimates:

Fair Value Hierarchy

Carrying 

Estimated

Level 1

Level 2

Level 3

(Dollars in thousands)

amount

fair value

inputs

inputs

Inputs

December 31, 2024:

Financial Assets:

Loans, net (1)

$

557,146

$

532,344

$

—

$

—

$

532,344

Financial Liabilities:

Time Deposits

$

191,247

$

190,363

$

—

$

190,363

$

—

December 31, 2023:

Financial Assets:

Loans, net (1)

$

550,431

$

526,372

$

—

$

—

$

526,372

Financial Liabilities:

Time Deposits

$

198,215

$

195,171

$

—

$

195,171

$

—

(1) Represents loans, net and the allowance for credit losses. The fair value of loans was measured using an exit price notion.

XML

Related Party Transactions

12 Months Ended

Dec. 31, 2024

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 14: RELATED PARTY TRANSACTIONS

The Bank has made, and expects in the future to continue to make in the ordinary course of business, loans to directors and

executive officers of the Company, the Bank, and their immediate families and affiliates. These persons, corporations, and

firms have had transactions in the ordinary course of business with the Company and Bank, including borrowings, all of

which management believes were on substantially the same terms, including interest rates and collateral, as those prevailing

at the time of comparable transactions with unaffiliated persons and did not involve more than the normal risk of

collectability or present other unfavorable features. A summary of such outstanding loans is presented below:

(Dollars in thousands)

Amount

Loans outstanding at December 31, 2023

$

1,897

New loans/advances

442

Repayments

(578)

Loans outstanding at December 31, 2024

$

1,761

During 2024 and 2023, certain executive officers , directors and principal shareholders of the Company and the Bank,

including companies and related parties with which they are affiliated, were deposit customers of the bank. Total deposits

for these persons at December 31, 2024 and 2023 amounted to $

9.9

 million and $

21.1

 million, respectively.

XML

Regulatory Restrictions and Capital Ratios

12 Months Ended

Dec. 31, 2024

Regulatory Capital Requirements [Abstract]

Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE 15: REGULATORY RESTRICTIONS AND CAPITAL RATIOS

As required by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, the Federal Reserve Board

issued rule that expanded applicability of the Board’s small bank holding company policy statement (the “Small BHC

Policy Statement”) and has been added as Appendix C to Federal Reserve Regulation Y. These increased the Small BHC

Policy Statement’s asset limit from $1 billion to $3 billion in total consolidated assets for a bank holding company or

savings and loan holding company that: (1) is not engaged in significant nonbanking activities; (2) does not conduct

significant off-balance sheet activities; and (3) does not have a materi al amount of debt or equity securities, other than trust-

preferred securities, outstanding that are registered with the SEC. The interim final rule provides that, if warranted for

supervisory purposes, the Federal Reserve may exclude a company from this asset level increase. The Federal Reserve has

treated the Company as a small bank holding company for purposes of the Small BHC Policy Statement and therefore has

considered only the Bank’s capital and not the Company’s consolidated capital.

The Bank remains subject to regulatory capital requirements of the Alabama Banking Department and the Federal Reserve.

Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary -

actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under

capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital

guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated

under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by

the regulators about components, risk weightings, necessary capital to support risks and other factors. Notwithstanding the

minimum capital requirements, Federal Reserve Regulation Q states that a Federal Reserve -regulated institution must

maintain capital commensurate with the level and nature of all risks to which such institution is exposed.

Federal Reserve Regulation Q limits “distributions” and discretionary bonus payments from eligible retained income” by

sate member banks, such as the Bank, unless its capital conservation buffer of common equity Tier 1 capital (“CET1”)

exceeds 2.5%. “Distributions” include dividends declared or paid on common stock, and stock repurchases, redemptions or

repurchases of Tier 2 capital instruments (unless replaced by a capital instrument in the same quarter). “Eligible retained

income” for the Bank and other Federal Reserve regulated institutions is the greater of:

(A) The Board-regulated institution's net income, calculated in accordance with the instructions to the institution’s FR Y–

9C or Call Report, for the four calendar quarters preceding the current calendar quarter, net of any distributions and

associated tax effects not already reflected in net income; and 

(B) The average of the Board-regulated institution’s net income, calculated in accordance with the instructions to the

institutions’ FR Y–9C or Call Report, as applicable, for the four calendar quarters preceding the current calendar quarter. 

The Bank’s Call Report is used for its calculation of “eligible retained income”.

As of December 31, 2024, the Bank is “well capitalized” under the regulatory framework for prompt corrective action. To

be categorized as “well capitalized,” the Bank must maintain minimum common equity Tier 1, total risk-based, Tier 1 risk-

based, and Tier 1 leverage ratios as set forth in the following table. Management has not received any notification from the

Bank's regulators that changes the Bank’s regulatory capital status.

The actual capital amounts and ratios for the Bank and the aforementioned minimums as of December 31, 2024 and 2023

are presented below.

Minimum for capital

Minimum to be 

Actual

adequacy purposes

well capitalized

(Dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

At December 31, 2024:

Tier 1 Leverage Capital

$

106,288

10.49

%

$

40,543

4.00

%

$

50,679

5.00

%

CET1 Risk-Based Capital

106,288

14.80

32,307

4.50

46,665

6.50

Tier 1 Risk-Based Capital

106,288

14.80

43,075

6.00

57,434

8.00

Total Risk-Based Capital

113,487

15.81

57,434

8.00

71,792

10.00

At December 31, 2023:

Tier 1 Leverage Capital

$

103,886

9.72

%

$

42,732

4.00

%

$

53,415

5.00

%

CET1 Risk-Based Capital

103,886

14.52

32,194

4.50

46,503

6.50

Tier 1 Risk-Based Capital

103,886

14.52

42,926

6.00

57,234

8.00

Total Risk-Based Capital

111,035

15.52

57,234

8.00

71,543

10.00

Dividends paid by the Bank are a principal source of funds available to the Company for payment of dividends to its

stockholders and for other needs which are restricted by Alabama and Federal law and regulations as described above.

Capital adequacy considerations could further limit the availability of dividends from the Bank. At December 31, 2024, the

Bank could have declared additional dividends of approximately $

9.7

 million without prior approval of regulatory

authorities. As a result of this limitation, approximately $

67.2

 million of the Company’s investment in the Bank was

restricted from transfer in the form of dividends.

XML

Auburn National Bancorporation - Parent Company Financials

12 Months Ended

Dec. 31, 2024

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of Parent Company Only Disclosure [Text Block]

NOTE 16: AUBURN NATIONAL BANCORPORATION (PARENT COMPANY)

The Parent Company’s condensed balance sheets and related condensed statements of earnings and cash flows are as

follows.

CONDENSED BALANCE SHEETS

December 31

(Dollars in thousands)

2024

2023

Assets:

Cash and due from banks

$

1,001

1,277

Investment in bank subsidiary

76,852

74,857

Other assets

532

523

Total assets

$

78,385

76,657

Liabilities:

Accrued expenses and other liabilities

$

93

150

Total liabilities

93

150

Stockholders' equity

78,292

76,507

Total liabilities and stockholders' equity

$

78,385

76,657

CONDENSED STATEMENTS OF EARNINGS

Year ended December 31

(Dollars in thousands)

2024

2023

Income:

Dividends from bank subsidiary

$

3,773

3,776

Noninterest income

1

8

Total income

3,774

3,784

Expense:

Noninterest expense

258

239

Total expense

258

239

Earnings before income tax expense and equity

in undistributed (distributed) earnings of bank subsidiary

3,516

3,545

Income tax benefit

(46)

(30)

Earnings before equity in undistributed (distributed) earnings

of bank subsidiary

3,562

3,575

Equity in undistributed (distributed) earnings of bank subsidiary

2,835

(2,180)

Net earnings

$

6,397

1,395

CONDENSED STATEMENTS OF CASH FLOWS

Year ended December 31

(Dollars in thousands)

2024

2023

Cash flows from operating activities:

Net earnings

$

6,397

1,395

Adjustments to reconcile net earnings to net cash

provided by operating activities:

Net increase in other assets

(9)

(1)

Net (decrease) increase in other liabilities

(56)

8

Equity in (undistributed) distributed earnings of bank subsidiary

(2,835)

2,180

Net cash provided by operating activities

3,497

3,582

Cash flows from financing activities:

Dividends paid

(3,773)

(3,776)

Stock repurchases

—

(229)

Net cash used in financing activities

(3,773)

(4,005)

Net change in cash and cash equivalents

(276)

(423)

Cash and cash equivalents at beginning of period

1,277

1,700

Cash and cash equivalents at end of period

$

1,001

1,277

XML

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2024

Summary of Signficant Accounting Policies

Nature of Business Policy

Nature of Business

Auburn National Bancorporation, Inc. (the “Company”) is a bank holding company whose primary business is conducted

by its wholly-owned subsidiary, AuburnBank (the “Bank”). AuburnBank is a commercial bank located in Auburn,

Alabama. The Bank provides a full range of banking services in its primary market area, Lee County, which includes the

Auburn-Opelika Metropolitan Statistical Area.

Basis of Presentation Policy

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which are

managed as a single business segment. Significant intercompany transactions and accounts are eliminated in consolidation.

Revenue Recognition Policy

Revenue Recognition 

The Company’s sources of income that fall within the scope of ASC 606 include service charges on deposits, investment

services, interchange fees and gains and losses on sales of other real estate, all of which are presented as components of

noninterest income. The following is a summary of the revenue streams that fall within the scope of ASC 606: 

Service charges on deposits, investment services, ATM and interchange fees – Fees from these services are either

transaction-based, for which the performance obligations are satisfied when the individual transaction is processed, or set

periodic service charges, for which the performance obligations are satisfied over the period the service is provided.

Transaction-based fees are recognized at the time the transaction is processed, and periodic service charges are recognized

over the service period.

Gains on sales of other real estate

 –

A gain on sale should be recognized when a contract for sale exists and control of the

asset has been transferred to the buyer. ASC 606 lists several criteria required to conclude that a contract for sale exists,

including a determination that the institution will collect substantially all of the consideration to which it is entitled. In

addition to the loan-to-value, the analysis is based on various other factors, including the credit quality of the borrower, the

structure of the loan, and any other factors that may affect collectability.

Use of Estimates Policy

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure

of contingent assets and liabilities as of the balance sheet date and the reported amounts of income and expense during the

reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to

significant change in the near term include the determination of the allowance for credit losses, fair value measurements,

valuation of other real estate owned, and valuation of deferred tax assets.

Reclassifications Policy

Reclassifications 

Certain amounts reported in the prior period have been reclassified to conform to the current-period presentation. These

reclassifications had no impact on the Company’s previously reported net earnings or total stockholders’ equity.

Subsequent Events Policy

Subsequent Events 

The Company has evaluated the effects of events or transactions through the date of this filing that have occurred

subsequent to December 31, 2024. The Company does not believe there are any material subsequent events that would

require further recognition or disclosure.

Error Correction Policy

Correction of Error

The disclosure of loans by vintage in Note 5 – Loans and Allowance for Credit Losses in the Company’s Annual Report on

Form 10-K for year ended December 31, 2023 contained incorrect information as it pertains to loans originated by vintage

and revolving loans. All current period gross charge-off data, total loans by segment and total loans by credit quality

indicator were correctly reported. The loans originated by vintage and revolving loans as of December 31, 2023 have been

corrected in the comparative presentation in Note 5 – Loans and Allowance for Credit Losses in the Notes herein.

Accounting Standards Adopted

Accounting Standards Adopted in 2024

ASU 2023-02,

Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit

Structures Using the Proportional Amortization Method

. ASU 2023-02 now permits reporting entities to elect to account

for their equity investments made primarily to receive income tax credits and other income tax benefits, regardless of the

program from which the income tax credits or benefits are received, using the proportional amortization method if certain

conditions are met. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning

after December 15, 2023. The Company adopted ASU 2023-02 effective January 1, 2024 and recorded a cumulative effect

of change in accounting standard adjustment which reduced beginning retained earnings by $0.3 million and reduced our

investment in New Markets Tax Credits (“NMTCs”) by $0.4 million. The Company, beginning January 1, 2024, accounts

for its investments in NMTCs using the proportional amortization method through charges to the provision for income

taxes. See Note 3, Variable Interest Entities.

ASU 2023-07,

Segment Reporting (Topic 280) - Improvement to Reportable Segment Disclosures. 

The amendments in

ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual basis to

enable investors to develop more decisions-useful financial analyses. ASU 2023-07 is effective for fiscal years beginning

after December 31, 2023. The Company has adopted ASU 2023-07 as of January 1, 2024 and has determined that its

banking services and branch locations meet the aggregation criteria of ASC 280,

Segment Reporting

, since each of its

banking services and branch locations offer similar products and services, operate in a similar manner, have similar

customers and report to the same regulatory authority, and therefore operate one line of business located in a single

geographic area. The Company's Chief Executive Officer has been identified as the chief operating decision maker

(“CODM”).

The CODM regularly assesses performance of the aggregated single operating and reporting segment and decides how to

allocate resources based on the net income calculated on the same basis as the net income reported in the Company's

consolidated statements of earnings and other comprehensive earnings and total assets calculated on the same basis as the

total assets reported in the Company’s consolidated balance sheets. The CODM is also regularly provided with expense

information at a level that is consistent with that disclosed in the Company's consolidated statements of earnings and other

comprehensive earnings. 

Issued not yet effective accounting standards

ASU 2023-09,

Income Taxes (Topic 740): Improvements to Income Tax Disclosures.

 The amendments in this Update

enhance the transparency and decision usefulness of income tax disclosures. For public business entities, the new standard

is effective for annual periods beginning after December 15, 2024. The Company does not expect the new standard to have

a material impact on the Company’s consolidated financial statements.

Cash Equivalents Policy

Cash Equivalents

Cash equivalents include cash on hand, cash items in process of collection, amounts due from banks, including interest

bearing deposits with other banks, and federal funds sold.

Securities Policy

Securities

Securities are classified based on management’s intention at the date of purchase. At December 31, 2024, all of the

Company’s securities were classified as available-for-sale. Securities available-for-sale are used as part of the Company’s

interest rate risk and liquidity management strategy, and they may be sold in response to changes in interest rates, changes

in prepayment risks or other factors. All securities classified as available-for-sale are recorded at fair value with any

unrealized gains and losses reported in accumulated other comprehensive income (loss), net of the deferred income tax

effects. Interest and dividends on securities, including the amortization of premiums and accretion of discounts are

recognized in interest income using the effective interest method. Premiums are amortized to the earliest call date while

discounts are accreted over the estimated life of the security. Realized gains and losses from the sale of securities are

determined using the specific identification method. 

For any securities classified as available-for-sale that are in an unrealized loss position at the balance sheet date, the

Company assesses whether or not it intends to sell the security, or more likely than not will be required to sell the security,

before recovery of its amortized cost basis. If either of these criteria are met, the security's amortized cost basis is written

down to fair value through net income. If neither criterion is met, the Company evaluates whether any portion of the decline

in fair value is the result of credit deterioration. Such evaluations consider the extent to which the amortized cost of the

security exceeds its fair value, changes in credit ratings and any other known adverse conditions related to the specific

security. If the evaluation indicates that a credit loss exists, an allowance for credit losses is recorded for the amount by

which the amortized cost basis of the security exceeds the present value of cash flows expected to be collected, limited by

the amount by which the amortized cost exceeds fair value. Any impairment not recognized in the allowance for credit

losses is recognized in other comprehensive income.

Loans Held for Sale Policy

Loans held for sale

The Company originates residential mortgage loans for sale. Such loans are carried at the lower of cost or estimated fair

value in the aggregate. Loan sales are recognized when the transaction closes, the proceeds are collected, and ownership is

transferred. Continuing involvement, through the sales agreement, consists of the right to service the loan for a fee for the

life of the loan, if applicable. Gains on the sale of loans held for sale are recorded net of related costs, such as

commissions, and reflected as a component of mortgage lending income in the consolidated statements of earnings. 

The Bank makes various representations and warranties to the purchaser of the residential mortgage loans they originated

and sells, primarily to Fannie Mae. Every loan closed by the Bank’s mortgage center is run through Fannie Mae or other

purchasing government sponsored enterprise (“GSE”) automated underwriting system. Any exceptions noted during this

process are remedied prior to sale. These representations and warranties also apply to underwriting the real estate appraisal

opinion of value for the collateral securing these loans. Failure by the Company to comply with the underwriting and/or

appraisal standards could result in the Company being required to repurchase the mortgage loan or to reimburse the investor

for losses incurred (make whole requests) if the Company cannot cure such failure within the specified period following

discovery.

Loans Policy

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported

at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts and

deferred fees and costs. Accrued interest receivable related to loans is recorded in other assets on the consolidated balance

sheets. Interest income is accrued on the unpaid principal balance.

Loan origination fees, net of certain direct origination

costs, are deferred and recognized in interest income using methods that approximate a level yield without anticipating

prepayments.

The accrual of interest is generally discontinued when a loan becomes 90 days past due and is not well collateralized and in

the process of collection, or when management believes, after considering economic and business conditions and collection

efforts, that the principal or interest will not be collectible in the normal course of business. Past due status is based on

contractual terms of the loan. A loan is considered to be past due when a scheduled payment has not been received 30 days

after the contractual due date.

All accrued but unpaid interest is reversed against interest income when a loan is placed on nonaccrual status. Interest

received on such loans is accounted for using the cost-recovery method, until the loan qualifies for return to accrual. Loans

are returned to accrual status when all the principal and interest amounts contractually due are brought current, there is a

sustained period of repayment performance, and future payments are reasonably assured. Otherwise, under the cost

recovery method, interest income is not recognized until the loan balance is reduced to zero.

Loans, Origination Fees Policy

Loan origination fees, net of certain direct origination

costs, are deferred and recognized in interest income using methods that approximate a level yield without anticipating

prepayments.

Loans, Nonacrrual Policy

The accrual of interest is generally discontinued when a loan becomes 90 days past due and is not well collateralized and in

the process of collection, or when management believes, after considering economic and business conditions and collection

efforts, that the principal or interest will not be collectible in the normal course of business. Past due status is based on

contractual terms of the loan. A loan is considered to be past due when a scheduled payment has not been received 30 days

after the contractual due date.

All accrued but unpaid interest is reversed against interest income when a loan is placed on nonaccrual status. Interest

received on such loans is accounted for using the cost-recovery method, until the loan qualifies for return to accrual. Loans

are returned to accrual status when all the principal and interest amounts contractually due are brought current, there is a

sustained period of repayment performance, and future payments are reasonably assured. Otherwise, under the cost

recovery method, interest income is not recognized until the loan balance is reduced to zero.

Allowance for Loan Losses Policy

Allowance for Credit Losses – Loans

The allowance for credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net

amount expected to be collected on the loans. Loans are charged off against the allowance when management confirms the

loan balance is uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged -off and

expected to be charged-off. Accrued interest receivable is excluded from the estimate of credit losses.

The allowance for credit losses represents management’s estimate of lifetime credit losses inherent in loans as of the

balance sheet date. The allowance for credit losses is estimated by management using relevant available information, from

both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. 

The Company’s loan loss estimation process includes procedures to appropriately consider the unique characteristics of its

respective loan segments (commercial and industrial, construction and land development, commercial real estate,

residential real estate, and consumer loans). These segments are further disaggregated into loan classes, the level at which

credit quality is monitored. See Note 5, Loans and Allowance for Credit Losses, for additional information about our loan

portfolio.

Credit loss assumptions are estimated using a discounted cash flow ("DCF") model for each loan segment, except consumer

loans. The weighted average remaining life method is used to estimate credit loss assumptions for consumer loans. 

The DCF model calculates an expected life-of-loan loss percentage by considering the forecasted probability that a

borrower will default (the “PD”), adjusted for relevant forecasted macroeconomic factors, and loss given default (“LGD”),

which is the estimate of the amount of net loss in the event of default. This model utilizes historical correlations between

default experience and certain macroeconomic factors as determined through a statistical regression analysis. The

forecasted Alabama unemployment rate is considered in the model for commercial and industrial, construction and land

development, commercial real estate, and residential real estate loans. In addition, forecasted changes in the Alabama

home price index is considered in the model for construction and land development and residential real estate loans. 

Forecasted changes in the national commercial real estate (“CRE”) price index is considered in the model for commercial

real estate and multifamily loans; and forecasted changes in the Alabama gross state product is considered in the model for

multifamily loans. Projections of these macroeconomic factors, obtained from an independent third party, are utilized to

predict quarterly rates of default based on the statistical PD models. 

Expected credit losses are estimated over the contractual term of the loan, adjusted for expected prepayments and principal

payments (“curtailments”) when appropriate. Management's determination of the contract term excludes expected

extensions, renewals, and modifications unless the extension or renewal option is included in the contract at the reporting

date and is not unconditionally cancellable by the Company. To the extent the lives of the loans in the portfolio extend

beyond the period for which a reasonable and supportable forecast can be made (which is 4 quarters for the Company), the

Company reverts, on a straight-line basis back to the historical rates over an 8-quarter reversion period.

During the first quarter of 2024, as part of the Company’s ongoing model monitoring procedures, the annual loss driver

analysis and prepayment, curtailment and funding studies were performed. The analysis and studies resulted in changes for

all DCF models. The changes were a result of updating the Company’s peer group and incorporating data through 2022.

The weighted average remaining life method was deemed most appropriate for the consumer loan segment because

consumer loans contain many different payment structures, payment streams and collateral. The weighted average

remaining life method uses an annual charge-off rate over several vintages to estimate credit losses. The average annual

charge-off rate is applied to the contractual term adjusted for prepayments.

Additionally, the allowance for credit losses calculation includes subjective adjustments for qualitative risk factors that are

believed likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments may

increase reserve levels and include adjustments for lending management experience and risk tolerance, loan review and

audit results, asset quality and portfolio trends, loan portfolio growth, industry concentrations, trends in underlying

collateral, external factors and economic conditions not already captured.

Loans secured by real estate with balances equal to or greater than $500 thousand and loans not secured by real estate with

balances equal to or greater than $250 thousand that do not share risk characteristics are evaluated on an individual basis.

When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the

expected credit losses are based on the estimated fair value of collateral held at the reporting date, adjusted for selling costs

as appropriate. 

Allowance for Credit Losses – Unfunded Commitments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial

letters of credit issued to meet customer financing needs. The Company’s exposure to credit loss in the event of

nonperformance by the other party to the financial instrument for off -balance sheet loan commitments is represented by the

contractual amount of those instruments. Such financial instruments are recorded when they are funded.

The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to

extend credit are unconditionally cancelable, through a charge to provision for credit losses in the Company’s consolidated

statements of earnings. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment

at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans,

taking into consideration the likelihood that funding will occur as well as any third-party guarantees. The allowance for

unfunded commitments is included in other liabilities on the Company’s consolidated balance sheets.

Premises and Equipment Policy

Premises and Equipment

Land is carried at cost. Land improvements, buildings and improvements, and furniture, fixtures, and equipment are carried

at cost, less accumulated depreciation computed on a straight-line metho d over the estimated useful lives of the assets or the

expected terms of the leases, if shorter. Expected terms include lease option periods to the extent that the exercise of such

options is reasonably assured.

Nonmarketable Equity Investments Policy

Nonmarketable equity investments

Nonmarketable equity investments include equity securities that are not publicly traded and securities acquired for various

purposes. The Bank is required to maintain certain minimum levels of equity investments in (i) Federal Reserve Bank of

Atlanta based on the Bank’s capital stock and surplus, and the (ii) Federal Home Bank of Atlanta (“FHLB – Atlanta”)

based on various factors including, the Bank’s total assets, its borrowings and outstanding letters of credit from the FHLB -

Atlanta and its “acquired member asset” sales to FHLB - Atlanta. These nonmarketable equity securities are accounted for

at cost which equals par or redemption value. These securities do not have a readily determinable fair value as their

ownership is restricted and there is no market for these securities. These securities can only be redeemed or sold at their par

value by the respective issuer bank or, in the case of FHLB – Atlanta stock upon FHLB – Atlanta approval sale to another

member of FHLB – Atlanta and law applicable to the member. The Company records these nonmarketable equity securities

as a component of other assets, which are periodically evaluated for impairment. Management considers these

nonmarketable equity securities to be long-term investments. Accordingly, when evaluating these securities for impairment,

management considers the ultimate recoverability of the par value rather than by recognizing temporary declines in value.

Transfers and Servicing of Financial Assets, Policy

Transfers of Financial Assets

Transfers of an entire financial asset (i.e. loan sales), a group of entire financial assets, or a participating interest in an entire

financial asset (i.e. loan participations sold) are accounted for as sales when control over the assets have been surrendered.

Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company,

(2) the transferee obtains the right (free of conditions that constrain it from taking that right) to pledge or exchange the

transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an

agreement to repurchase them before their maturity.

Mortgage Servicing Rights Policy

Mortgage Servicing Rights

The Company recognizes as assets the rights to service mortgage loans which it originates and sells to others, principally

Fannie Mae. These servicing rights are called “MSRs”. The Company determines the fair value of MSRs on sold loans at

the date the loan is transferred. An estimate of the Company’s MSRs is determined using assumptions that market

participants would use in estimating future net servicing income, including estimates of prepayment speeds, discount rate,

default rates, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees.

Subsequent to the date of sale of the residential mortgage loans, the Company has elected to measure its MSRs on such sold

mortgage loans under the amortization method. Under the amortization method, MSRs are amortized in proportion to, and

over the period of, estimated net servicing income. The amortization of MSRs is analyzed monthly and is adjusted to

reflect changes in prepayment speeds, as well as other factors. MSRs are evaluated for impairment based on the fair value

of those assets. Impairment is determined by stratifying MSRs into groupings based on predominant risk characteristics,

such as interest rate and loan type. If, by individual stratum, the carrying amount of the MSRs exceeds fair value, a

valuation allowance is established through a charge to earnings. The valuation allowance is adjusted as the fair value

changes. MSRs are included in the other assets category in the accompanying consolidated balance sheets at the lower of

cost or fair value. See Note 13 “Fair Value”

Securities Sold Under Agreements to Repurchase Policy

Securities sold under agreements to repurchase 

Securities sold under agreements to repurchase generally mature less than one year from the transaction date. Securities

sold under agreements to repurchase are reflected as a secured borrowing in the accompanying consolidated balance sheets

at the amount of cash received in connection with each transaction.

Income Taxes Policy

Income Taxes 

Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying

amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces

deferred tax assets to the amount expected to be realized. The net deferred tax asset is reflected as a component of other

assets in the accompanying consolidated balance sheets.

Income tax expense or benefit for the year is allocated among continuing operations and other comprehensive income

(loss), as applicable. The amount allocated to continuing operations is the income tax effect of the pretax income or loss

from continuing operations that occurred during the year, plus or minus income tax effects of (1) changes in certain

circumstances that cause a change in judgment about the realization of deferred tax assets in future years, (2) changes in

income tax laws or rates, and (3) changes in income tax status, subject to certain exceptions. The amount allocated to other

comprehensive income (loss) is related solely to changes in the valuation allowance on items that are normally accounted

for in other comprehensive income (loss) such as unrealized gains or losses on available-for-sale securities.

In accordance with ASC 740,

Income Taxes

, a tax position is recognized as a benefit only if it is “more likely than not” that

the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount

recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax

positions not meeting the “more likely than not” test, no tax benefit is recorded. It is the Company’s policy to recognize

interest and penalties related to income tax matters in income tax expense. The Company and its wholly-owned subsidiaries

file consolidated Federal and State of Alabama income tax returns.

Income Taxes, Uncertainties Policy

In accordance with ASC 740,

Income Taxes

, a tax position is recognized as a benefit only if it is “more likely than not” that

the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount

recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax

positions not meeting the “more likely than not” test, no tax benefit is recorded. It is the Company’s policy to recognize

interest and penalties related to income tax matters in income tax expense. The Company and its wholly-owned subsidiaries

file consolidated Federal and State of Alabama income tax returns.

Fair Value Measurements Policy

Fair Value Measurements 

ASC 820,

Fair Value Measurements,

which defines fair value, establishes a framework for measuring fair value in U.S.

generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 applies only to

fair-value measurements that are already required or permitted by other accounting standards. The definition of fair value

focuses on the exit price, i.e., the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date, not the entry price, i.e., the price that would be paid to

acquire the asset or received to assume the liability at the measurement date. The statement emphasizes that fair value is a

market-based measurement; not an entity-specific measurement. Therefore, the fair value measurement should be

determined based on the assumptions that market participants would use in pricing the asset or liability. For more

information related to fair value measurements, please refer to Note 13, Fair Value.

XML

Basic and Diluted Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2024

Basic and Diluted Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

Year ended December 31

(Dollars in thousands, except share and per share data)

2024

2023

Basic and diluted:

Net earnings

$

6,397

$

1,395

Weighted average common shares outstanding

3,493,690

3,498,030

Net earnings per share

$

1.83

$

0.40

XML

Variable Interest Entity (Tables)

12 Months Ended

Dec. 31, 2024

Variable interest entities [Abstract]

us-gaap_ScheduleOfVariableInterestEntitiesTextBlock

(Dollars in thousands)

December 31,

2024

Balance Sheet Location

New Markets Tax Credit investment

$

898

Other assets

(Dollars in thousands)

Year ended

December 31,

2024

Income Statement Location

Income tax credits and other income tax benefits

$

(445)

Income tax expense

Amortization expense

369

Income tax expense

XML

Securities (Tables)

12 Months Ended

Dec. 31, 2024

Investments debt and equity securities [Abstract]

Available-for-sale Securities [Table Text Block]

1 year

1 to 5

5 to 10

After 10

Fair

Gross Unrealized 

Amortized

(Dollars in thousands)

or less

years

years

years

Value

Gains

Losses

Cost

December 31, 2024

Agency obligations (a)

$

—

26,655

25,756

—

52,411

—

7,734

$

60,145

Agency MBS (a)

10

19,863

14,904

138,899

173,676

—

28,901

202,577

State and political subdivisions

—

966

8,244

7,715

16,925

—

2,901

19,826

Total available-for-sale

$

10

47,484

48,904

146,614

243,012

—

39,536

$

282,548

December 31, 2023

Agency obligations (a)

$

331

10,339

43,209

—

53,879

—

8,195

$

62,074

Agency MBS (a)

32

15,109

22,090

161,058

198,289

—

27,838

226,127

State and political subdivisions

—

—

9,691

9,051

18,742

1

2,731

21,472

Total available-for-sale

$

363

25,448

74,990

170,109

270,910

1

38,764

$

309,673

(a) Includes securities issued by U.S. government agencies or government sponsored entities. Expected lives of

these securities may differ from contractual maturities because (i) issuers may have the right to call or repay such securities

obligations with or without prepayment penalties and (ii) loans included in Agency MBS generally have the right to prepay

such loans in whole or in part at any time.

Available-for-sale Securities, Continuous Unrealized Loss Position [Table Text Block]

Less than 12 Months

12 Months or Longer

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(Dollars in thousands)

Value

Losses

Value

Losses

Value

Losses

December 31, 2024:

Agency obligations 

$

—

—

52,411

7,734

52,411

$

7,734

Agency MBS

7

—

173,669

28,901

173,676

28,901

State and political subdivisions

1,798

17

14,776

2,884

16,574

2,901

Total 

$

1,805

17

240,856

39,519

242,661

$

39,536

December 31, 2023:

Agency obligations 

$

—

—

53,879

8,195

53,879

$

8,195

Agency MBS

66

1

198,223

27,837

198,289

27,838

State and political subdivisions

793

2

14,408

2,729

15,201

2,731

Total 

$

859

3

266,510

38,761

267,369

$

38,764

Schedule of Realized Gain (Loss) [Table Text Block]

Year ended December 31

(Dollars in thousands)

2024

2023

Gross realized gains

$

—

1

Gross realized losses

—

(6,296)

Realized losses, net

$

—

(6,295)

XML

Loan and Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2024

Loans And Leases Receivable Disclosure [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

December 31

(In thousands)

2024

2023

Commercial and industrial

$

63,274

$

73,374

Construction and land development

82,493

68,329

Commercial real estate:

Owner occupied

55,346

66,783

Hotel/motel

35,210

39,131

Multifamily

43,556

45,841

Other

155,880

135,552

Total commercial real estate

289,992

287,307

Residential real estate:

Consumer mortgage

60,399

60,545

Investment property

58,228

56,912

Total residential real estate

118,627

117,457

Consumer installment

9,631

10,827

Total loans, net of unearned income

564,017

557,294

Past Due Financing Receivables [Table Text Block]

Accruing

Accruing

Total

30-89 Days

Greater than

Accruing

Non-

Total 

(In thousands)

Current

Past Due

90 days

Loans

Accrual

Loans

December 31, 2024:

Commercial and industrial

$

63,163

12

—

63,175

99

$

63,274

Construction and land development

82,089

—

—

82,089

404

82,493

Commercial real estate:

Owner occupied

55,346

—

—

55,346

—

55,346

Hotel/motel

35,210

—

—

35,210

—

35,210

Multifamily

43,556

—

—

43,556

—

43,556

Other

155,880

—

—

155,880

—

155,880

Total commercial real estate

289,992

—

—

289,992

—

289,992

Residential real estate:

Consumer mortgage

59,677

722

—

60,399

—

60,399

Investment property

58,179

49

—

58,228

—

58,228

Total residential real estate

117,856

771

—

118,627

—

118,627

Consumer installment

9,579

52

—

9,631

—

9,631

Total

$

562,679

835

—

563,514

503

$

564,017

December 31, 2023:

Commercial and industrial

$

73,108

266

—

73,374

—

$

73,374

Construction and land development

68,329

—

—

68,329

—

68,329

Commercial real estate:

Owner occupied

66,000

—

—

66,000

783

66,783

Hotel/motel

39,131

—

—

39,131

—

39,131

Multifamily

45,841

—

—

45,841

—

45,841

Other

135,552

—

—

135,552

—

135,552

Total commercial real estate

286,524

—

—

286,524

783

287,307

Residential real estate:

Consumer mortgage

60,442

—

—

60,442

103

60,545

Investment property

56,597

290

—

56,887

25

56,912

Total residential real estate

117,039

290

—

117,329

128

117,457

Consumer installment

10,781

46

—

10,827

—

10,827

Total

$

555,781

602

—

556,383

911

$

557,294

Financing Receivable Credit Quality Indicators [Table Text Block]

(Dollars in thousands)

2024

2023

2022

2021

2020

Prior to

2020

Revolving

Loans

Total 

Loans

December 31, 2024: 

Commercial and industrial

Pass

$

11,290

7,265

8,488

9,677

4,659

16,989

4,425

$

62,793

Special mention

49

74

—

—

—

—

—

123

Substandard

50

21

181

7

—

—

—

259

Nonaccrual

—

99

—

—

—

—

—

99

Total commercial and industrial

11,389

7,459

8,669

9,684

4,659

16,989

4,425

63,274

Current period gross charge-offs

—

—

9

—

—

—

—

9

Construction and land development

Pass

31,144

29,520

16,504

1,794

1,434

104

1,589

$

82,089

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

404

—

—

—

—

—

—

404

Total construction and land development

31,548

29,520

16,504

1,794

1,434

104

1,589

82,493

Current period gross charge-offs

—

—

—

—

—

—

—

—

Commercial real estate:

Owner occupied

Pass

1,921

11,206

6,776

17,114

3,396

12,030

1,552

$

53,995

Special mention

—

249

—

—

591

—

—

840

Substandard

511

—

—

—

—

—

—

511

Nonaccrual

—

—

—

—

—

—

—

—

Total owner occupied

2,432

11,455

6,776

17,114

3,987

12,030

1,552

55,346

Current period gross charge-offs

—

—

—

—

—

—

—

—

Hotel/motel

Pass

480

6,480

5,303

3,079

1,299

14,437

4,132

$

35,210

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total hotel/motel

480

6,480

5,303

3,079

1,299

14,437

4,132

35,210

Current period gross charge-offs

—

—

—

—

—

—

—

—

(Dollars in thousands)

2024

2023

2022

2021

2020

Prior to

2020

Revolving

Loans

Total 

Loans

December 31, 2024: 

Multi-family

Pass

3,739

6,041

17,037

1,863

3,493

6,400

4,983

43,556

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total multi-family

3,739

6,041

17,037

1,863

3,493

6,400

4,983

43,556

Current period gross charge-offs

—

—

—

—

—

—

—

—

Other

Pass

43,753

21,085

32,521

21,249

16,743

16,289

4,120

155,760

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

120

—

—

120

Nonaccrual

—

—

—

—

—

—

—

—

Total other

43,753

21,085

32,521

21,249

16,863

16,289

4,120

155,880

Current period gross charge-offs

—

—

—

—

—

—

—

—

Residential real estate:

Consumer mortgage

Pass

5,885

18,389

18,434

2,466

2,565

10,590

808

59,137

Special mention

243

—

—

—

2

486

—

731

Substandard

—

—

—

—

—

531

—

531

Nonaccrual

—

—

—

—

—

—

—

—

Total consumer mortgage

6,128

18,389

18,434

2,466

2,567

11,607

808

60,399

Current period gross charge-offs

—

—

—

—

—

61

—

61

Investment property

Pass

10,339

10,824

10,651

8,305

11,435

4,794

1,317

57,665

Special mention

—

—

—

—

—

—

—

—

Substandard

278

40

93

9

143

—

—

563

Nonaccrual

—

—

—

—

—

—

—

—

Total investment property

10,617

10,864

10,744

8,314

11,578

4,794

1,317

58,228

Current period gross charge-offs

—

—

—

—

—

—

—

—

Consumer installment

Pass

5,015

2,057

1,911

296

90

113

67

9,549

Special mention

—

9

—

9

—

—

—

18

Substandard

39

15

10

—

—

—

—

64

Nonaccrual

—

—

—

—

—

—

—

—

Total consumer installment

5,054

2,081

1,921

305

90

113

67

9,631

Current period gross charge-offs

25

42

42

1

—

4

—

114

Total loans

Pass

113,566

112,867

117,625

65,843

45,114

81,746

22,993

559,754

Special mention

292

332

—

9

593

486

—

1,712

Substandard

878

76

284

16

263

531

—

2,048

Nonaccrual

404

99

—

—

—

—

—

503

Total loans

$

115,140

113,374

117,909

65,868

45,970

82,763

22,993

$

564,017

Total current period gross charge-offs

$

25

42

51

1

—

65

—

184

Year of Origination

2023

2022

2021

2020

2019

Prior to

2019

Revolving

Loans

Total 

Loans

(Dollars in thousands)

December 31, 2023: 

Commercial and industrial

Pass

$

11,571

18,074

13,746

5,602

7,298

7,819

9,003

$

73,113

Special mention

—

—

—

—

—

—

—

—

Substandard

55

203

—

—

3

—

—

261

Nonaccrual

—

—

—

—

—

—

—

—

Total commercial and industrial

11,626

18,277

13,746

5,602

7,301

7,819

9,003

73,374

Current period gross charge-offs

—

—

13

—

151

—

—

164

Construction and land development

Pass

38,646

25,382

1,716

1,526

120

157

782

68,329

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total construction and land development

38,646

25,382

1,716

1,526

120

157

782

68,329

Current period gross charge-offs

—

—

—

—

—

—

—

—

Commercial real estate:

Owner occupied

Pass

12,966

7,337

18,548

10,458

3,948

9,786

2,647

65,690

Special mention

260

—

—

—

—

—

—

260

Substandard

—

—

—

—

50

—

—

50

Nonaccrual

—

—

—

—

783

—

—

783

Total owner occupied

13,226

7,337

18,548

10,458

4,781

9,786

2,647

66,783

Current period gross charge-offs

—

—

—

—

—

—

—

—

Hotel/motel

Pass

9,025

9,873

3,205

1,493

3,881

11,654

—

39,131

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total hotel/motel

9,025

9,873

3,205

1,493

3,881

11,654

—

39,131

Current period gross charge-offs

—

—

—

—

—

—

—

—

Year of Origination

2023

2022

2021

2020

2019

Prior to

2019

Revolving

Loans

Total 

Loans

(Dollars in thousands)

December 31, 2023: 

Multi-family

Pass

12,379

17,955

1,953

6,112

3,790

3,043

609

45,841

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total multi-family

12,379

17,955

1,953

6,112

3,790

3,043

609

45,841

Current period gross charge-offs

—

—

—

—

—

—

—

—

Other

Pass

25,810

36,076

31,687

14,597

10,736

15,440

1,052

135,398

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

154

—

—

—

154

Nonaccrual

—

—

—

—

—

—

—

—

Total other

25,810

36,076

31,687

14,751

10,736

15,440

1,052

135,552

Current period gross charge-offs

—

—

—

—

—

—

—

—

Residential real estate:

Consumer mortgage

Pass

20,147

20,177

2,683

2,665

1,281

12,217

249

59,419

Special mention

—

—

—

—

190

305

—

495

Substandard

—

—

—

—

—

528

—

528

Nonaccrual

—

—

—

—

—

103

—

103

Total consumer mortgage

20,147

20,177

2,683

2,665

1,471

13,153

249

60,545

Current period gross charge-offs

—

—

—

—

—

—

—

—

Investment property

Pass

13,398

12,490

9,397

12,209

5,485

1,865

1,478

56,322

Special mention

41

—

—

—

—

—

—

41

Substandard

43

248

—

233

—

—

—

524

Nonaccrual

—

—

—

—

—

25

—

25

Total investment property

13,482

12,738

9,397

12,442

5,485

1,890

1,478

56,912

Current period gross charge-offs

—

—

—

—

—

—

—

—

Consumer installment

Pass

5,688

3,837

740

206

106

141

—

10,718

Special mention

9

25

9

2

—

—

—

45

Substandard

37

11

5

11

—

—

—

64

Nonaccrual

—

—

—

—

—

—

—

—

Total consumer installment

5,734

3,873

754

219

106

141

—

10,827

Current period gross charge-offs

34

57

13

1

—

—

—

105

Total loans

Pass

149,630

151,201

83,675

54,868

36,645

62,122

15,820

553,961

Special mention

310

25

9

2

190

305

—

841

Substandard

135

462

5

398

53

528

—

1,581

Nonaccrual

—

—

—

—

783

128

—

911

Total loans

$

150,075

151,688

83,689

55,268

37,671

63,083

15,820

$

557,294

Total current period gross charge-offs

$

34

57

26

1

151

—

—

269

Schedule Of Composition Of Provision For Credit Losses [Table Text Block]

Year ended December 31,

(Dollars in thousands)

2024

2023

Provision for credit losses:

Loans

$

(6)

$

125

Reserve for unfunded commitments

42

10

Total provision for (reversal of) credit losses

$

36

$

135

Allowance for Credit Losses on Financing Receivables [Table Text Block]

(in thousands)

Commercial

and industrial

Construction

and land

Development

Commercial

Real Estate

Residential

Real Estate

Consumer

Installment

Total

Balance, December 31, 2022

$

747

949

3,109

828

132

$

5,765

Impact of adopting ASC 326

532

(17)

873

(347)

(22)

1,019

Charge-offs

(164)

—

—

—

(105)

(269)

Recoveries

204

—

—

14

5

223

Net (charge-offs) recoveries

40

—

—

14

(100)

(46)

Provision

(31)

28

(61)

51

138

125

Balance, December 31, 2023

$

1,288

960

3,921

546

148

$

6,863

Charge-offs

(9)

—

—

(61)

(114)

(184)

Recoveries

144

—

—

9

45

198

Net recoveries (charge-offs)

135

—

—

(52)

(69)

14

Provision

(179)

99

(79)

94

59

(6)

Balance, December 31, 2024

$

1,244

1,059

3,842

588

138

$

6,871

Schedule Of Financing Receivables Non Accrual Status [Table Text Block]

Nonaccrual loans

Nonaccrual loans

Total

(Dollars in thousands)

with no Allowance

with an Allowance

Nonaccrual Loans

December 31, 2024

Commercial and industrial

$

—

99

$

99

Construction and land development

404

—

404

Total 

$

404

99

$

503

December 31, 2023

Commercial real estate

$

783

—

$

783

Residential real estate

—

128

128

Total 

$

783

128

$

911

Schedule Of Collateral Dependent Loans Individually Evaluated For ACL [Table Text Block]

(Dollars in thousands)

Real Estate

Business Assets

Total Loans

December 31, 2024:

Commercial and industrial

$

—

99

$

99

Construction and land development

404

—

404

Total 

$

404

99

$

503

December 31, 2023:

Commercial real estate

$

783

—

$

783

Total 

$

783

—

$

783

XML

Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2024

Premises and Equipment [Abstract]

Premises and Equipment [Table Text Block]

December 31

(Dollars in thousands)

2024

2023

Land and improvements

$

12,800

12,800

Buildings and improvements

36,978

35,442

Furniture, fixtures, and equipment

4,335

3,986

Construction in progress

38

39

Total premises and equipment

54,151

52,267

Less: accumulated depreciation

(8,220)

(6,732)

Premises and equipment, net

$

45,931

45,535

XML

Mortgage Servicing Rights, Net (Tables)

12 Months Ended

Dec. 31, 2024

Mortgage Servicing [Abstract]

Schedule Of Servicing Assets At Fair Value [Table Text Block]

Year ended December 31

(Dollars in thousands)

2024

2023

Beginning balance

$

992

1,151

Additions, net

79

38

Amortization expense

(179)

(197)

Ending balance

$

892

992

Valuation allowance included in MSRs, net:

Beginning of period

$

—

—

End of period

—

—

Fair value of amortized MSRs:

Beginning of period

$

2,382

2,369

End of period

2,204

2,382

Data And Assumptions Used In Fair Value Calculation Of MSRs [Table Text Block]

December 31

(Dollars in thousands)

2024

2023

Unpaid principal balance

$

205,915

216,648

Weighted average prepayment speed (CPR)

7.3

%

6.0

Discount rate (annual percentage)

10.0

%

10.5

Weighted average coupon interest rate

3.6

%

3.5

Weighted average remaining maturity (months)

242

245

Weighted average servicing fee (basis points)

25.0

25.0

Estimated Amortization Expense Of MSRs For Five Years [Table Text Block]

(Dollars in thousands)

December 31, 2024

2025

$

118

2026

104

2027

91

2028

80

2029

71

XML

Deposits (Tables)

12 Months Ended

Dec. 31, 2024

Deposits:

Maturities Of Certificates Of Deposit And Other Time Deposits [Table Text Block]

(Dollars in thousands)

December 31, 2024

2025

$

174,608

2026

7,972

2027

6,267

2028

1,636

2029

764

Thereafter

—

Total certificates of deposit and other time deposits 

$

191,247

XML

Lease Commitments (Tables)

12 Months Ended

Dec. 31, 2024

Leases [Abstract]

Lessee Operating Lease Liability Maturity [Table Text Block]

Future lease

(Dollars in thousands)

payments

2025

$

81

2026

60

2027

60

2028

45

2029

—

Thereafter

—

Total undiscounted operating lease liabilities

$

246

Imputed interest

15

Total operating lease liabilities included in the accompanying consolidated balance sheets

$

231

Weighted-average lease terms in years

3.47

Weighted-average discount rate

3.20

%

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2024

Income Taxes

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

Year ended December 31

(Dollars in thousands)

2024

2023

Current income tax expense (benefit):

Federal

$

991

(448)

State

571

(134)

Total current income tax expense (benefit)

1,562

(582)

Deferred income tax expense (benefit):

Federal

473

(293)

State

(35)

98

Total deferred income tax expense (benefit)

438

(195)

Total income tax expense (benefit)

$

2,000

(777)

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

2024

2023

Percent of

Percent of

pre-tax

pre-tax

(Dollars in thousands)

Amount

earnings

Amount

earnings

Earnings before income taxes

$

8,397

618

Income taxes at statutory rate

1,763

21.0

%

130

21.0

%

Tax-exempt interest

(290)

(3.5)

(493)

(79.8)

State income taxes, net of 

federal tax effect

388

4.6

(43)

(7.0)

New Markets Tax Credit

(58)

(0.7)

(356)

(57.6)

Bank-owned life insurance

(85)

(1.0)

(88)

(14.2)

Other

282

3.4

73

11.9

Total income tax expense (benefit)

$

2,000

23.8

%

(777)

(125.7)

%

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

December 31

(Dollars in thousands)

2024

2023

Deferred tax assets:

Allowance for credit losses

$

1,726

1,724

Unrealized loss on securities

9,929

9,734

Net operating loss carry-forwards

 — 

253

Tax credit carry-forwards

 — 

356

Accrued bonus 

207

185

Right of use liability

58

128

Other

99

71

Total deferred tax assets

12,019

12,451

Deferred tax liabilities:

Premises and equipment

1,212

1,315

Originated mortgage servicing rights

224

249

Right of use asset

58

122

New Markets Tax Credit investment

 — 

181

Other

333

332

Total deferred tax liabilities

1,827

2,199

Net deferred tax asset

$

10,192

10,252

Schedule of Deferred Tax Asset Rollforward [Table Text Block]

Year ended December 31

(Dollars in thousands)

2024

2023

Net deferred tax asset (liability):

Balance, beginning of year

$

10,252

13,769

Cumulative effect of change in accounting standard

183

276

Deferred tax expense (benefit) related to continuing operations

(438)

195

Stockholders' equity, for accumulated other comprehensive income

195

(3,988)

Balance, end of year

$

10,192

10,252

XML

Commitment and Contigent Liabilities (Tables)

12 Months Ended

Dec. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Schedule Of Commitments To Extend Credit [Table Text Block]

December 31

(Dollars in thousands)

2024

2023

Commitments to extend credit

$

84,667

$

73,606

Standby letters of credit

738

629

XML

Fair Value (Tables)

12 Months Ended

Dec. 31, 2024

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

Quoted Prices in

Significant

Active Markets

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

December 31, 2024:

Securities available-for-sale:

Agency obligations 

$

52,411

—

52,411

—

Agency MBS

173,676

—

173,676

—

State and political subdivisions

16,925

—

16,925

—

Total securities available -for-sale

243,012

—

243,012

—

Total assets at fair value

$

243,012

—

243,012

—

December 31, 2023:

Securities available-for-sale:

Agency obligations 

$

53,879

—

53,879

—

Agency MBS

198,289

—

198,289

—

State and political subdivisions

18,742

—

18,742

—

Total securities available -for-sale

270,910

—

270,910

—

Total assets at fair value

$

270,910

—

270,910

—

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Table Text Block]

Quoted Prices in

Active Markets

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

December 31, 2024:

Loans, net

(1)

$

503

—

—

503

Other assets

(2)

892

—

—

892

Total assets at fair value

$

1,395

—

—

1,395

December 31, 2023:

Loans, net

(1)

$

783

—

—

783

Other assets

(2)

992

—

—

992

Total assets at fair value

$

1,775

—

—

1,775

(1)

Loans considered collateral dependent under ASC 326.

(2)

Represents MSRs, net carried at lower of cost or estimated fair value.

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

Weighted

Carrying

Significant

Average

(Dollars in thousands)

Amount

Valuation Technique

 Unobservable Input

Range

of Input

December 31, 2024:

Collateral dependent loans

$

503

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

892

Discounted cash flow

Prepayment speed or CPR

6.7

-

11.2

%

7.3

%

Discount rate

10.0

-

12.0

%

10.0

%

December 31, 2023:

Collateral dependent loans

$

783

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

992

Discounted cash flow

Prepayment speed or CPR

5.9

-

10.6

%

6.0

%

Discount rate

10.5

-

12.5

%

10.5

%

Financial Instruments [Table Text Block]

Fair Value Hierarchy

Carrying 

Estimated

Level 1

Level 2

Level 3

(Dollars in thousands)

amount

fair value

inputs

inputs

Inputs

December 31, 2024:

Financial Assets:

Loans, net (1)

$

557,146

$

532,344

$

—

$

—

$

532,344

Financial Liabilities:

Time Deposits

$

191,247

$

190,363

$

—

$

190,363

$

—

December 31, 2023:

Financial Assets:

Loans, net (1)

$

550,431

$

526,372

$

—

$

—

$

526,372

Financial Liabilities:

Time Deposits

$

198,215

$

195,171

$

—

$

195,171

$

—

(1) Represents loans, net and the allowance for credit losses. The fair value of loans was measured using an exit price notion.

XML

Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2024

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

(Dollars in thousands)

Amount

Loans outstanding at December 31, 2023

$

1,897

New loans/advances

442

Repayments

(578)

Loans outstanding at December 31, 2024

$

1,761

XML

Regulatory Restrictions and Capital Ratios (Tables)

12 Months Ended

Dec. 31, 2024

Regulatory Capital Requirements [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

Minimum for capital

Minimum to be 

Actual

adequacy purposes

well capitalized

(Dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

At December 31, 2024:

Tier 1 Leverage Capital

$

106,288

10.49

%

$

40,543

4.00

%

$

50,679

5.00

%

CET1 Risk-Based Capital

106,288

14.80

32,307

4.50

46,665

6.50

Tier 1 Risk-Based Capital

106,288

14.80

43,075

6.00

57,434

8.00

Total Risk-Based Capital

113,487

15.81

57,434

8.00

71,792

10.00

At December 31, 2023:

Tier 1 Leverage Capital

$

103,886

9.72

%

$

42,732

4.00

%

$

53,415

5.00

%

CET1 Risk-Based Capital

103,886

14.52

32,194

4.50

46,503

6.50

Tier 1 Risk-Based Capital

103,886

14.52

42,926

6.00

57,234

8.00

Total Risk-Based Capital

111,035

15.52

57,234

8.00

71,543

10.00

XML

Auburn National Bancorporation - Parent Company (Tables)

12 Months Ended

Dec. 31, 2024

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule of Condensed Balance Sheet [Table Text Block]

CONDENSED BALANCE SHEETS

December 31

(Dollars in thousands)

2024

2023

Assets:

Cash and due from banks

$

1,001

1,277

Investment in bank subsidiary

76,852

74,857

Other assets

532

523

Total assets

$

78,385

76,657

Liabilities:

Accrued expenses and other liabilities

$

93

150

Total liabilities

93

150

Stockholders' equity

78,292

76,507

Total liabilities and stockholders' equity

$

78,385

76,657

Schedule of Condensed Income Statement [Table Text Block]

CONDENSED STATEMENTS OF EARNINGS

Year ended December 31

(Dollars in thousands)

2024

2023

Income:

Dividends from bank subsidiary

$

3,773

3,776

Noninterest income

1

8

Total income

3,774

3,784

Expense:

Noninterest expense

258

239

Total expense

258

239

Earnings before income tax expense and equity

in undistributed (distributed) earnings of bank subsidiary

3,516

3,545

Income tax benefit

(46)

(30)

Earnings before equity in undistributed (distributed) earnings

of bank subsidiary

3,562

3,575

Equity in undistributed (distributed) earnings of bank subsidiary

2,835

(2,180)

Net earnings

$

6,397

1,395

Schedule of Condensed Cash Flow Statement [Table Text Block]

CONDENSED STATEMENTS OF CASH FLOWS

Year ended December 31

(Dollars in thousands)

2024

2023

Cash flows from operating activities:

Net earnings

$

6,397

1,395

Adjustments to reconcile net earnings to net cash

provided by operating activities:

Net increase in other assets

(9)

(1)

Net (decrease) increase in other liabilities

(56)

8

Equity in (undistributed) distributed earnings of bank subsidiary

(2,835)

2,180

Net cash provided by operating activities

3,497

3,582

Cash flows from financing activities:

Dividends paid

(3,773)

(3,776)

Stock repurchases

—

(229)

Net cash used in financing activities

(3,773)

(4,005)

Net change in cash and cash equivalents

(276)

(423)

Cash and cash equivalents at beginning of period

1,277

1,700

Cash and cash equivalents at end of period

$

1,001

1,277

XML

Summary of Significant Accounting Policies Textuals (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Summary of Signficant Accounting Policies
Cumulative Effect Of Change In Accounting Standard	$ (263)	$ (821)

XML

Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Basic and Diluted Earnings Per Share [Abstract]
Net earnings	$ 6,397	$ 1,395
Basic and diluted weighted average shares outstanding	3,493,690	3,498,030
Basic and diluted earnings per share	$ 1.83	$ 0.40

XML

Variable Interest Entity (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Variable interest entities [Abstract]
New Market Tax Credit Income Tax Benefit	$ (445)
New Market Tax Credit Amortization Expense	369
New Market Tax	$ 898	$ 1,700

XML

Security Types (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Schedule of Available-for-sale Securities Debt Maturities Fair Value [Line Items]
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value	$ 10	$ 363
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value	47,484	25,448
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value	48,904	74,990
Available-for-sale Securities, Debt Maturities, after Ten Years, Fair Value	146,614	170,109
Available-for-sale Securities, Fair Value, Total	243,012	270,910
Available For Sale Securities, Gross Unrealized Gains	0	1
Available For Sale Securities, Gross Unrealized Losses	39,536	38,764
Available-for-sale Securities, Amortized Cost Basis	282,548	309,673
US Government and Government Agencies and Authorities [Member]
Schedule of Available-for-sale Securities Debt Maturities Fair Value [Line Items]
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value	0	331
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value	26,655	10,339
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value	25,756	43,209
Available-for-sale Securities, Debt Maturities, after Ten Years, Fair Value	0	0
Available-for-sale Securities, Fair Value, Total	52,411	53,879
Available For Sale Securities, Gross Unrealized Gains	0	0
Available For Sale Securities, Gross Unrealized Losses	7,734	8,195
Available-for-sale Securities, Amortized Cost Basis	60,145	62,074
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities Debt Maturities Fair Value [Line Items]
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value	10	32
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value	19,863	15,109
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value	14,904	22,090
Available-for-sale Securities, Debt Maturities, after Ten Years, Fair Value	138,899	161,058
Available-for-sale Securities, Fair Value, Total	173,676	198,289
Available For Sale Securities, Gross Unrealized Gains	0	0
Available For Sale Securities, Gross Unrealized Losses	28,901	27,838
Available-for-sale Securities, Amortized Cost Basis	202,577	226,127
US States and Political Subdivisions Debt Securities [Member]
Schedule of Available-for-sale Securities Debt Maturities Fair Value [Line Items]
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value	0	0
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value	966	0
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value	8,244	9,691
Available-for-sale Securities, Debt Maturities, after Ten Years, Fair Value	7,715	9,051
Available-for-sale Securities, Fair Value, Total	16,925	18,742
Available For Sale Securities, Gross Unrealized Gains	0	1
Available For Sale Securities, Gross Unrealized Losses	2,901	2,731
Available-for-sale Securities, Amortized Cost Basis	$ 19,826	$ 21,472

XML

Securities Continuous Unrealized Loss (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Available For Sale Debt Securities Continous Unrealized Loss Position [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 1,805	$ 859
Available-for-sale Securities Continuous Unrealized Loss Position Less Than 12 Months Accumulated Loss	17	3
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	240,856	266,510
Available-for-sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Accumulated Loss	39,519	38,761
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	242,661	267,369
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Losses	39,536	38,764
US Government and Government Agencies and Authorities [Member]
Available For Sale Debt Securities Continous Unrealized Loss Position [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	52,411	53,879
Available-for-sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Accumulated Loss	7,734	8,195
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	52,411	53,879
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Losses	7,734	8,195
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available For Sale Debt Securities Continous Unrealized Loss Position [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	7	66
Available-for-sale Securities Continuous Unrealized Loss Position Less Than 12 Months Accumulated Loss		1
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	173,669	198,223
Available-for-sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Accumulated Loss	28,901	27,837
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	173,676	198,289
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Losses	28,901	27,838
US States and Political Subdivisions Debt Securities [Member]
Available For Sale Debt Securities Continous Unrealized Loss Position [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	1,798	793
Available-for-sale Securities Continuous Unrealized Loss Position Less Than 12 Months Accumulated Loss	17	2
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	14,776	14,408
Available-for-sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Accumulated Loss	2,884	2,729
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	16,574	15,201
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Losses	$ 2,901	$ 2,731

XML

Securities Gross Realized Gain Loss (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Available-for-sale Securities, Gross Realized Gain (Loss) [Abstract]
Available-for-sale Securities, Gross Realized Gains	$ 0	$ 1
Available-for-sale Securities, Gross Realized Losses	0	6,296
Available-for-sale Securities, Gross Realized Gain (Loss), Net	$ 0	$ (6,295)

XML

Securities Textuals (Details) - USD ($) $ in Millions	Dec. 31, 2024	Dec. 31, 2023
Securities (Textuals) [Abstract]
Available-for-sale Securities Pledged as Collateral	$ 222.3	$ 211.8
Cost-method Securties Investments, Carrying Amount	$ 1.4

XML

Loans (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 564,017	$ 557,294
Commercial and Industrial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	63,274	73,374
Construction And Land Development Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	82,493	68,329
Commercial Real Estate Owner Occupied Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	55,346	66,783
Commercial Real Estate, Hotel Motel [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	35,210	39,131
Commercial Real Estate Multifamily [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	43,556	45,841
Commercial Real Estate Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	155,880	135,552
Commercial Real Estate Loans, Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	289,992	287,307
Residential Real Estate Consumer Mortgage Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	60,399	60,545
Residential Real Estate Investment Property Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	58,228	56,912
Residential Real Estate Loans, Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	118,627	117,457
Consumer Installment and Revolving Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 9,631	$ 10,827

XML

Loans Past Due Analysis (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	$ 563,514	$ 556,383
Financing Receivable, Recorded Investment, Nonaccrual Status	503	911
Total Loans	564,017	557,294
Current
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	562,679	555,781
Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	835	602
Accruing Greater Than 90 days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Commercial and Industrial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	63,175	73,374
Financing Receivable, Recorded Investment, Nonaccrual Status	99	0
Total Loans	63,274	73,374
Commercial and Industrial Loans [Member] | Current
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	63,163	73,108
Commercial and Industrial Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	12	266
Commercial and Industrial Loans [Member] | Accruing Greater Than 90 days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Construction And Land Development Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	82,089	68,329
Financing Receivable, Recorded Investment, Nonaccrual Status	404	0
Total Loans	82,493	68,329
Construction And Land Development Loans [Member] | Current
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	82,089	68,329
Construction And Land Development Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Construction And Land Development Loans [Member] | Accruing Greater Than 90 days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Commercial Real Estate Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	55,346	66,000
Financing Receivable, Recorded Investment, Nonaccrual Status	0	783
Total Loans	55,346	66,783
Commercial Real Estate Owner Occupied Loans [Member] | Current
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	55,346	66,000
Commercial Real Estate Owner Occupied Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Commercial Real Estate Owner Occupied Loans [Member] | Accruing Greater Than 90 days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Commercial Real Estate, Hotel Motel [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	35,210	39,131
Financing Receivable, Recorded Investment, Nonaccrual Status	0	0
Total Loans	35,210	39,131
Commercial Real Estate, Hotel Motel [Member] | Current
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	35,210	39,131
Commercial Real Estate, Hotel Motel [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Commercial Real Estate, Hotel Motel [Member] | Accruing Greater Than 90 days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Commercial Real Estate Multifamily [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	43,556	45,841
Financing Receivable, Recorded Investment, Nonaccrual Status	0	0
Total Loans	43,556	45,841
Commercial Real Estate Multifamily [Member] | Current
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	43,556	45,841
Commercial Real Estate Multifamily [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Commercial Real Estate Multifamily [Member] | Accruing Greater Than 90 days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Commercial Real Estate Other Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	155,880	135,552
Financing Receivable, Recorded Investment, Nonaccrual Status	0	0
Total Loans	155,880	135,552
Commercial Real Estate Other Loans [Member] | Current
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	155,880	135,552
Commercial Real Estate Other Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Commercial Real Estate Other Loans [Member] | Accruing Greater Than 90 days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Commercial Real Estate Loans, Total [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	289,992	286,524
Financing Receivable, Recorded Investment, Nonaccrual Status	0	783
Total Loans	289,992	287,307
Commercial Real Estate Loans, Total [Member] | Current
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	289,992	286,524
Commercial Real Estate Loans, Total [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Commercial Real Estate Loans, Total [Member] | Accruing Greater Than 90 days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Residential Real Estate Consumer Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	60,399	60,442
Financing Receivable, Recorded Investment, Nonaccrual Status	0	103
Total Loans	60,399	60,545
Residential Real Estate Consumer Mortgage Loans [Member] | Current
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	59,677	60,442
Residential Real Estate Consumer Mortgage Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	722	0
Residential Real Estate Consumer Mortgage Loans [Member] | Accruing Greater Than 90 days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Residential Real Estate Investment Property Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	58,228	56,887
Financing Receivable, Recorded Investment, Nonaccrual Status	0	25
Total Loans	58,228	56,912
Residential Real Estate Investment Property Loans [Member] | Current
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	58,179	56,597
Residential Real Estate Investment Property Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	49	290
Residential Real Estate Investment Property Loans [Member] | Accruing Greater Than 90 days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Residential Real Estate Loans, Total [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	118,627	117,329
Financing Receivable, Recorded Investment, Nonaccrual Status	0	128
Total Loans	118,627	117,457
Residential Real Estate Loans, Total [Member] | Current
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	117,856	117,039
Residential Real Estate Loans, Total [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	771	290
Residential Real Estate Loans, Total [Member] | Accruing Greater Than 90 days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	0	0
Consumer Installment and Revolving Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	9,631	10,827
Financing Receivable, Recorded Investment, Nonaccrual Status	0	0
Total Loans	9,631	10,827
Consumer Installment and Revolving Loans [Member] | Current
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	9,579	10,781
Consumer Installment and Revolving Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	52	46
Consumer Installment and Revolving Loans [Member] | Accruing Greater Than 90 days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Still Accruing	$ 0	$ 0

XML

Loan Credit Quality Analysis (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 503	$ 911
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	115,140	150,075
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	113,374	151,688
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	117,909	83,689
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	65,868	55,268
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	45,970	37,671
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	82,763	63,083
Revolving Loans	22,993	15,820
Total Loans	564,017	557,294
Gross charge-offs
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff	25	34
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year Writeoff	42	57
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year Writeoff	51	26
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year Writeoff	1	1
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year Writeoff	0	151
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year Writeoff	65	0
Financing Receivable Revolving Writeoff	0	0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff	184	269
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	113,566	149,630
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	112,867	151,201
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	117,625	83,675
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	65,843	54,868
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	45,114	36,645
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	81,746	62,122
Revolving Loans	22,993	15,820
Total Loans	559,754	553,961
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	292	310
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	332	25
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	9
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	9	2
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	593	190
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	486	305
Revolving Loans	0	0
Total Loans	1,712	841
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	878	135
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	76	462
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	284	5
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	16	398
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	263	53
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	531	528
Revolving Loans	0	0
Total Loans	2,048	1,581
NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	404	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	99	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	783
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	128
Revolving Loans	0	0
Total Loans	503	911
Commercial and Industrial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	99	0
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	11,389	11,626
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	7,459	18,277
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	8,669	13,746
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	9,684	5,602
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	4,659	7,301
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	16,989	7,819
Revolving Loans	4,425	9,003
Total Loans	63,274	73,374
Gross charge-offs
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year Writeoff	9	13
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year Writeoff	0	151
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Revolving Writeoff	0	0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff	9	164
Commercial and Industrial Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	11,290	11,571
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	7,265	18,074
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	8,488	13,746
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	9,677	5,602
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	4,659	7,298
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	16,989	7,819
Revolving Loans	4,425	9,003
Total Loans	62,793	73,113
Commercial and Industrial Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	49	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	74	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	123	0
Commercial and Industrial Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	50	55
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	21	203
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	181	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	7	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	3
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	259	261
Commercial and Industrial Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	99	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	99	0
Construction And Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	404	0
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	31,548	38,646
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	29,520	25,382
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	16,504	1,716
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	1,794	1,526
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	1,434	120
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	104	157
Revolving Loans	1,589	782
Total Loans	82,493	68,329
Gross charge-offs
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Revolving Writeoff	0	0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff	0	0
Construction And Land Development Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	31,144	38,646
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	29,520	25,382
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	16,504	1,716
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	1,794	1,526
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	1,434	120
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	104	157
Revolving Loans	1,589	782
Total Loans	82,089	68,329
Construction And Land Development Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	0	0
Construction And Land Development Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	0	0
Construction And Land Development Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	404	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	404	0
Commercial Real Estate Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	783
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	2,432	13,226
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	11,455	7,337
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	6,776	18,548
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	17,114	10,458
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	3,987	4,781
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	12,030	9,786
Revolving Loans	1,552	2,647
Total Loans	55,346	66,783
Gross charge-offs
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Revolving Writeoff	0	0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff	0	0
Commercial Real Estate Owner Occupied Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	1,921	12,966
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	11,206	7,337
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	6,776	18,548
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	17,114	10,458
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	3,396	3,948
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	12,030	9,786
Revolving Loans	1,552	2,647
Total Loans	53,995	65,690
Commercial Real Estate Owner Occupied Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	260
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	249	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	591	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	840	260
Commercial Real Estate Owner Occupied Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	511	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	50
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	511	50
Commercial Real Estate Owner Occupied Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	783
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	0	783
Commercial Real Estate, Hotel Motel [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	0
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	480	9,025
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	6,480	9,873
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	5,303	3,205
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	3,079	1,493
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	1,299	3,881
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	14,437	11,654
Revolving Loans	4,132	0
Total Loans	35,210	39,131
Gross charge-offs
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Revolving Writeoff	0	0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff	0	0
Commercial Real Estate, Hotel Motel [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	480	9,025
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	6,480	9,873
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	5,303	3,205
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	3,079	1,493
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	1,299	3,881
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	14,437	11,654
Revolving Loans	4,132	0
Total Loans	35,210	39,131
Commercial Real Estate, Hotel Motel [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	0	0
Commercial Real Estate, Hotel Motel [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	0	0
Commercial Real Estate, Hotel Motel [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	0	0
Commercial Real Estate Multifamily [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	0
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	3,739	12,379
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	6,041	17,955
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	17,037	1,953
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	1,863	6,112
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	3,493	3,790
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	6,400	3,043
Revolving Loans	4,983	609
Total Loans	43,556	45,841
Gross charge-offs
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Revolving Writeoff	0	0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff	0	0
Commercial Real Estate Multifamily [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	3,739	12,379
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	6,041	17,955
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	17,037	1,953
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	1,863	6,112
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	3,493	3,790
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	6,400	3,043
Revolving Loans	4,983	609
Total Loans	43,556	45,841
Commercial Real Estate Multifamily [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	0	0
Commercial Real Estate Multifamily [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	0	0
Commercial Real Estate Multifamily [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	0	0
Commercial Real Estate Other Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	0
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	43,753	25,810
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	21,085	36,076
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	32,521	31,687
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	21,249	14,751
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	16,863	10,736
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	16,289	15,440
Revolving Loans	4,120	1,052
Total Loans	155,880	135,552
Gross charge-offs
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Revolving Writeoff	0	0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff	0	0
Commercial Real Estate Other Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	43,753	25,810
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	21,085	36,076
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	32,521	31,687
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	21,249	14,597
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	16,743	10,736
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	16,289	15,440
Revolving Loans	4,120	1,052
Total Loans	155,760	135,398
Commercial Real Estate Other Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	0	0
Commercial Real Estate Other Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	154
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	120	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	120	154
Commercial Real Estate Other Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	0	0
Commercial Real Estate Loans, Total [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	783
Total Loans	289,992	287,307
Residential Real Estate Consumer Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	103
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	6,128	20,147
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	18,389	20,177
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	18,434	2,683
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	2,466	2,665
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	2,567	1,471
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	11,607	13,153
Revolving Loans	808	249
Total Loans	60,399	60,545
Gross charge-offs
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year Writeoff	61	0
Financing Receivable Revolving Writeoff	0	0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff	61	0
Residential Real Estate Consumer Mortgage Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	5,885	20,147
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	18,389	20,177
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	18,434	2,683
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	2,466	2,665
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	2,565	1,281
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	10,590	12,217
Revolving Loans	808	249
Total Loans	59,137	59,419
Residential Real Estate Consumer Mortgage Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	243	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	2	190
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	486	305
Revolving Loans	0	0
Total Loans	731	495
Residential Real Estate Consumer Mortgage Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	531	528
Revolving Loans	0	0
Total Loans	531	528
Residential Real Estate Consumer Mortgage Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	103
Revolving Loans	0	0
Total Loans	0	103
Residential Real Estate Investment Property Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	25
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	10,617	13,482
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	10,864	12,738
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	10,744	9,397
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	8,314	12,442
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	11,578	5,485
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	4,794	1,890
Revolving Loans	1,317	1,478
Total Loans	58,228	56,912
Gross charge-offs
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Revolving Writeoff	0	0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff	0	0
Residential Real Estate Investment Property Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	10,339	13,398
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	10,824	12,490
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	10,651	9,397
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	8,305	12,209
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	11,435	5,485
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	4,794	1,865
Revolving Loans	1,317	1,478
Total Loans	57,665	56,322
Residential Real Estate Investment Property Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	41
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	0	41
Residential Real Estate Investment Property Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	278	43
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	40	248
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	93	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	9	233
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	143	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	563	524
Residential Real Estate Investment Property Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	25
Revolving Loans	0	0
Total Loans	0	25
Residential Real Estate Loans, Total [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	128
Total Loans	118,627	117,457
Consumer Installment and Revolving Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	0
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	5,054	5,734
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	2,081	3,873
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	1,921	754
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	305	219
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	90	106
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	113	141
Revolving Loans	67	0
Total Loans	9,631	10,827
Gross charge-offs
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff	25	34
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year Writeoff	42	57
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year Writeoff	42	13
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year Writeoff	1	1
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year Writeoff	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year Writeoff	4	0
Financing Receivable Revolving Writeoff	0	0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff	114	105
Consumer Installment and Revolving Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	5,015	5,688
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	2,057	3,837
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	1,911	740
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	296	206
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	90	106
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	113	141
Revolving Loans	67	0
Total Loans	9,549	10,718
Consumer Installment and Revolving Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	9
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	9	25
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	9
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	9	2
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	18	45
Consumer Installment and Revolving Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	39	37
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	15	11
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	10	5
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	11
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	64	64
Consumer Installment and Revolving Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Two Originated Fiscal Year Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Three Originated Two Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Four Originated Three Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Year Five Originated Four Years Before Current Fiscal Year	0	0
Financing Receivable Excluding Accrued Interest Originated More Than Five Years Before Current Fiscal Year	0	0
Revolving Loans	0	0
Total Loans	$ 0	$ 0

XML

Composition of Provision for Credit Losses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Summary Of Provision For Credit Losses [Abstract]
Provision for credit losses on loans	$ (6)	$ 125
Provision for Credit Losses In Reserve For Unfunded Commitments	42	10
Provision for credit losses	$ 36	$ 135

XML

Allowance for Credit Loss (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit losses	$ 6,863	$ 5,765
Impact Of Adoption Of ASC 326		1,019
Financing Receivable, Allowance for Credit Losses, Charge-offs	184	269
Financing Receivable, Allowance for Credit Losses, Recoveries	198	223
Financing Receivable Allowance For Credit Losses Net Chargeoffs Recoveries	14	(46)
Provision for credit losses on loans	(6)	125
Allowance for credit losses	6,871	6,863
Commercial and Industrial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit losses	1,288	747
Impact Of Adoption Of ASC 326		532
Financing Receivable, Allowance for Credit Losses, Charge-offs	9	164
Financing Receivable, Allowance for Credit Losses, Recoveries	144	204
Financing Receivable Allowance For Credit Losses Net Chargeoffs Recoveries	135	40
Provision for credit losses on loans	(179)	(31)
Allowance for credit losses	1,244	1,288
Construction And Land Development Loans [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit losses	960	949
Impact Of Adoption Of ASC 326		(17)
Financing Receivable, Allowance for Credit Losses, Charge-offs	0	0
Financing Receivable, Allowance for Credit Losses, Recoveries	0	0
Financing Receivable Allowance For Credit Losses Net Chargeoffs Recoveries	0	0
Provision for credit losses on loans	99	28
Allowance for credit losses	1,059	960
Commercial Real Estate Loans, Total [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit losses	3,921	3,109
Impact Of Adoption Of ASC 326		873
Financing Receivable, Allowance for Credit Losses, Charge-offs	0	0
Financing Receivable, Allowance for Credit Losses, Recoveries	0	0
Financing Receivable Allowance For Credit Losses Net Chargeoffs Recoveries	0	0
Provision for credit losses on loans	(79)	(61)
Allowance for credit losses	3,842	3,921
Residential Real Estate Loans, Total [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit losses	546	828
Impact Of Adoption Of ASC 326		(347)
Financing Receivable, Allowance for Credit Losses, Charge-offs	61	0
Financing Receivable, Allowance for Credit Losses, Recoveries	9	14
Financing Receivable Allowance For Credit Losses Net Chargeoffs Recoveries	(52)	14
Provision for credit losses on loans	94	51
Allowance for credit losses	588	546
Consumer Installment and Revolving Loans [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit losses	148	132
Impact Of Adoption Of ASC 326		(22)
Financing Receivable, Allowance for Credit Losses, Charge-offs	114	105
Financing Receivable, Allowance for Credit Losses, Recoveries	45	5
Financing Receivable Allowance For Credit Losses Net Chargeoffs Recoveries	(69)	(100)
Provision for credit losses on loans	59	138
Allowance for credit losses	$ 138	$ 148

XML

Collateral Dependent Loan Individually Evaluated (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Collateral Dependent Loans [Line Items]
Financing Receivable Individually Evaluated Collateral Dependent Loans	$ 503	$ 783
Land Collateral [Member]
Collateral Dependent Loans [Line Items]
Financing Receivable Individually Evaluated Collateral Dependent Loans	404
Commercial Real Estate Collateral [Member]
Collateral Dependent Loans [Line Items]
Financing Receivable Individually Evaluated Collateral Dependent Loans		783
Bussiness Assets Collateral [Member]
Collateral Dependent Loans [Line Items]
Financing Receivable Individually Evaluated Collateral Dependent Loans	99
Commercial and Industrial Loans [Member]
Collateral Dependent Loans [Line Items]
Financing Receivable Individually Evaluated Collateral Dependent Loans	99
Commercial and Industrial Loans [Member] | Bussiness Assets Collateral [Member]
Collateral Dependent Loans [Line Items]
Financing Receivable Individually Evaluated Collateral Dependent Loans	99
Construction And Land Development Loans [Member]
Collateral Dependent Loans [Line Items]
Financing Receivable Individually Evaluated Collateral Dependent Loans	404
Construction And Land Development Loans [Member] | Land Collateral [Member]
Collateral Dependent Loans [Line Items]
Financing Receivable Individually Evaluated Collateral Dependent Loans	$ 404
Commercial Real Estate Loans, Total [Member]
Collateral Dependent Loans [Line Items]
Financing Receivable Individually Evaluated Collateral Dependent Loans		783
Commercial Real Estate Loans, Total [Member] | Commercial Real Estate Collateral [Member]
Collateral Dependent Loans [Line Items]
Financing Receivable Individually Evaluated Collateral Dependent Loans		$ 783

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Nonaccrual Loans (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Financing Receivable Nonaccrual Status [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 503	$ 911
Commercial and Industrial Loans [Member]
Financing Receivable Nonaccrual Status [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	99	0
Construction And Land Development Loans [Member]
Financing Receivable Nonaccrual Status [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	404	0
Commercial Real Estate Loans, Total [Member]
Financing Receivable Nonaccrual Status [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	783
Residential Real Estate Loans, Total [Member]
Financing Receivable Nonaccrual Status [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	128
Consumer Installment and Revolving Loans [Member]
Financing Receivable Nonaccrual Status [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 0	$ 0

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Loans Textuals (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Loan and Lease Disclosure (Textuals) [Abstract]
Percentage Of Loans Secured By Real Estate	87.10%
Loans And Leases Receivable Impaired Interest Lost On Nonaccrual Loans	$ 14	$ 47

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Premises and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Property, Plant and Equipment, Net, by Type [Abstract]
Land	$ 12,800	$ 12,800
Buildings and Improvements	36,978	35,442
Furniture, Fixtures, And Equipment	4,335	3,986
Construction In Progress	38	39
Total Premises and Equipment	54,151	52,267
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	8,220	6,732
Premises and equipment, net	$ 45,931	$ 45,535

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Property, Plant Equipment Textuals (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Property, Plant and Equipment, Net, by Type [Abstract]
Depreciation Expense	$ 1.7	$ 1.4

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Mortgage Servicing Rights, Net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Servicing Asset at Amortized Value, Balance [Roll Forward]
Servicing Asset at Amortized Cost, Beginning	$ 992	$ 1,151
Servicing Asset at Amortized Value, Additions	79	38
Servicing Asset at Amortized Value, Amortization	179	197
Servicing Asset at Amortized Cost, Ending	892	992
Valuation Allowance for Impairment of Recognized Servicing Assets, Balance [Abstract]
Valuation Allowance for Impairment of Recognized Servicing Assets, Beginning Balance	0	0
Valuation Allowance for Impairment of Recognized Servicing Assets, Ending Balance	0	0
Servicing Asset at Amortized Value, Fair Value [Abstract]
Servicing Asset at Amortized Value, Fair Value, Beginning	2,382	2,369
Servicing Asset at Amortized Value, Fair Value, Ending	$ 2,204	$ 2,382

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Mortgage Servicing Rights, net Data and Assumptions for Fair Value Calculation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract]
Servicing Assets And Servicing Liabilities At Fair Value, Assumptions Used To Estimate Fair Value, Unpaid Principal Balance	$ 205,915	$ 216,648
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed	7.30%	6.00%
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Discount Rate	10.00%	10.50%
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Weighted Average Coupon Interest Rate	3.60%	3.50%
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Weighted Average Life	242 months	245 months
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Weighted Average Servicing Fee	25.0	25.0

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Mortgage Servicing Rights, net Estimated Amortization Expense For Future Periods (Details) $ in Thousands	Dec. 31, 2024 USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months	$ 118
Finite-Lived Intangible Assets, Amortization Expense, Year Two	104
Finite-Lived Intangible Assets, Amortization Expense, Year Three	91
Finite-Lived Intangible Assets, Amortization Expense, Year Four	80
Finite-Lived Intangible Assets, Amortization Expense, Year Five	$ 71

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Mortgage Servicing Rights Textuals (Details)	Dec. 31, 2024
Mortgage Servicing [Abstract]
Weighted Average Amortization In Years	7.1

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Deposits Time Deposit Maturities (Details) $ in Thousands	Dec. 31, 2024 USD ($)
Time Deposits, Fiscal Year Maturity [Abstract]
Time Deposit Maturities, Next Twelve Months	$ 174,608
Time Deposit Maturities, Year Two	7,972
Time Deposit Maturities, Year Three	6,267
Time Deposit Maturities, Year Four	1,636
Time Deposit Maturities, Year Five	764
Time Deposit Maturities, after Year Five	0
Time Deposits, Total	$ 191,247

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Deposits Textuals (Details) - USD ($) $ in Millions	Dec. 31, 2024	Dec. 31, 2023
Time Deposits [Abstract]
Time Deposits, $250,000 or More	$ 87.7	$ 97.6

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Lease Commitment (Details) - USD ($)	Dec. 31, 2024	Dec. 31, 2023
Operating Lease Liabilities Payments Due [Abstract]
2024	$ 81,000
2025	60,000
2026	60,000
2027	45,000
2028	0
Thereafter	0
Total Undiscounted operating lease liablitiies	246,000
Lessee Operating Lease Liability Undiscounted Excess	15,000
Operating lease liabilities included in the accompanying balance sheet	$ 231,000	$ 500
OperatingLeaseWeightedAverageRemainingLeaseTerm	3 years 5 months 19 days
OperatingLeaseWeightedAverageDiscountRatePerce	3.20%

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Lease Commiment Textuals (Details) - USD ($)	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Leases [Abstract]
Rent Expense	$ 100,000	$ 200,000
Operating lease right-of-use assets	200	500
Operating lease liabilities included in the accompanying balance sheet	231,000	$ 500
Rent Expense Excluded From Right Of Use Asset	100,000
Rent Expense Included In Lease Liablilty	$ 100,000

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Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Current Income Tax Expense (Benefit), Continuing Operations [Abstract]
Current Federal Tax Expense (Benefit)	$ 991	$ (448)
Current State and Local Tax Expense (Benefit)	571	(134)
Current Income Tax Expense (Benefit), Total	1,562	(582)
Deferred Income Tax Expense (Benefit), Continuing Operations [Abstract]
Deferred Federal Income Tax Expense (Benefit)	473	(293)
Deferred State and Local Income Tax Expense (Benefit)	(35)	98
Deferred Income Tax Expense (Benefit), Total	438	(195)
Income Tax Expense (Benefit), Continuing Operations, Total	$ 2,000	$ (777)

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Income Tax Expense Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract]
Earnings before income taxes	$ 8,397	$ 618
Income Tax Reconciliation, Income Tax Expense (Benefit), at Federal Statutory Income Tax Rate	$ 1,763	$ 130
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate	21.00%	21.00%
Income Tax Reconciliation, Tax Exempt Income	$ 290	$ 493
Effective Income Tax Rate Reconciliation, Tax Exempt Income	(3.50%)	(79.80%)
Income Tax Reconciliation, State and Local Income Taxes	$ 388	$ (43)
Effective Income Tax Rate Reconciliation, State and Local Income Taxes	4.60%	(7.00%)
Income Tax Reconciliation, Tax Credits	$ 58	$ 356
Effective Income Tax Rate Reconciliation, Tax Credits, Investment	0.70%	57.60%
Income Tax Reconciliation, Bank Owned Life Insurance	$ 85	$ 88
Effective Income Tax Rate Reconciliation, Bank Owned Life Insurance	1.00%	14.20%
Income Tax Reconciliation, Other Adjustments	$ 282	$ 73
Effective Income Tax Rate Reconciliation, Other Adjustments	3.40%	11.90%
Income Tax Expense (Benefit), Continuing Operations, Total	$ 2,000	$ (777)
Effective Income Tax Rate, Continuing Operations	23.80%	(125.70%)

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Income Tax, Components of Deferred Tax Asset and Liability (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023	Dec. 31, 2022
Deferred Tax Assets, Gross [Abstract]
Deferred Tax Asset, Allowance For Loan Loss	$ 1,726	$ 1,724
Deferred Tax Assets, Unrealized Losses on Available-for-Sale Securities, Gross	9,929	9,734
Deferred Tax Assets, Capital Loss Carryforwards		253
Deferred Tax Assets, Tax Credit Carryforwards, Other		356
Deferred Tax Asset, Bonus	207	185
Deferred Tax Asset Right Of Use Liability	58	128
Deferred Tax Assets, Other	99	71
Deferred Tax Assets, Gross	12,019	12,451
Deferred Tax Liabilities [Abstract]
Deferred Tax Liabilities, Property, Plant and Equipment	1,212	1,315
Deferred Tax Liabilities, Originated Mortgage Servicing Rights	224	249
Deferred Tax Liabilities, Right Of Use Asset	58	122
Deferred Tax Liabilities, New Market Tax Credit		181
Deferred Tax Liabilities, Other	333	332
Deferred Income Tax Liabilities, Gross, Total	1,827	2,199
Deferred Tax Assets (Liabilities), Net	$ 10,192	$ 10,252	$ 13,769

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Change in Net Deferred Tax Asset (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Change In Net Deferred Tax Asset (Liability) [Rollforward]
Deferred Tax Assets (Liabilities), Net	$ 10,252	$ 13,769
Deferred Tax Cumulative Effect Of Change In Accounting Standard	276	183
Deferred Tax (Expense) Benefit Related To Continuing Operations	(438)	195
Deferred Taxes, Stockholders' Equity For Change In Accumulated Other Comprehensive (Income) Loss	195	(3,988)
Deferred Tax Assets (Liabilities), Net	$ 10,192	$ 10,252

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Employee Benefits Textuals (Details)	12 Months Ended
	Dec. 31, 2024 USD ($)
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract]
401k Employer Matching Contribution	$ 300

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Commitment and Contingencies (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Commitments to Extend Credit [Member]
Loss Contingencies [Line Items]
Amount of Commitment	$ 84,667	$ 73,606
Financial Standby Letter of Credit [Member]
Loss Contingencies [Line Items]
Amount of Commitment	$ 738	$ 629

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Commitments and Contingencies Textuals (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Liabilty Recorded For Stanby Letter of Credit [Abstract]
Liability Recorded For Standy Letters Of Credit	$ 13	$ 9
Reserve for Unfunded Commitments	$ 300

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Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Fair Value, Measurements, Recurring [Member]
Fair Value Disclosure, Securities Available-for-Sale [Abstract]
Fair Value Disclosure, Agency Obligations	$ 52,411	$ 53,879
Fair Value Disclosure, Agency RMBS	173,676	198,289
Fair Value Disclosure, State and Political Subdivisions	16,925	18,742
Fair Value Disclosure, Securities Available-for-Sale, Total	243,012	270,910
Assets, Fair Value Disclosure, Recurring	243,012	270,910
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value Disclosure, Securities Available-for-Sale [Abstract]
Fair Value Disclosure, Agency Obligations	0	0
Fair Value Disclosure, Agency RMBS	0	0
Fair Value Disclosure, State and Political Subdivisions	0	0
Fair Value Disclosure, Securities Available-for-Sale, Total	0	0
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Disclosure, Securities Available-for-Sale [Abstract]
Fair Value Disclosure, Agency Obligations	52,411	53,879
Fair Value Disclosure, Agency RMBS	173,676	198,289
Fair Value Disclosure, State and Political Subdivisions	16,925	18,742
Fair Value Disclosure, Securities Available-for-Sale, Total	243,012	270,910
Assets, Fair Value Disclosure, Recurring	243,012	270,910
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Disclosure, Securities Available-for-Sale [Abstract]
Fair Value Disclosure, Agency Obligations	0	0
Fair Value Disclosure, Agency RMBS	0	0
Fair Value Disclosure, State and Political Subdivisions	0	0
Fair Value Disclosure, Securities Available-for-Sale, Total	0	0
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Abstract]
Impaired Loans, Fair Value Disclosure	503	783
Servicing Asset at Fair Value, Amount	892	992
Assets, Fair Value Disclosure, NonRecurring	1,395	1,775
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Abstract]
Impaired Loans, Fair Value Disclosure	0	0
Servicing Asset at Fair Value, Amount	0	0
Assets, Fair Value Disclosure, NonRecurring	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Abstract]
Impaired Loans, Fair Value Disclosure	0	0
Servicing Asset at Fair Value, Amount	0	0
Assets, Fair Value Disclosure, NonRecurring	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Abstract]
Impaired Loans, Fair Value Disclosure	503	783
Servicing Asset at Fair Value, Amount	892	992
Assets, Fair Value Disclosure, NonRecurring	$ 1,395	$ 1,775

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Fair Value Unobservable Inputs (Details) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Impaired Loans [Member]
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Assets, Fair Value Disclosure	$ 503	$ 783
Impaired Loans [Member] | Appraisal, Appraisal Discount [Member]
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Weighted Average of Input Percent	10.00%	10.00%
Impaired Loans [Member] | Appraisal, Appraisal Discount [Member] | Minimum
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Weighted Average of Input Percent	10.00%	10.00%
Impaired Loans [Member] | Appraisal, Appraisal Discount [Member] | Maximum
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Weighted Average of Input Percent	10.00%	10.00%
Mortgage Servicing Rights [Member]
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Assets, Fair Value Disclosure	$ 892	$ 992
Mortgage Servicing Rights [Member] | Discounted Cash Flow, Prepayment Speed [Member]
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Inputs, Weighted Average Of Input Credit Spreads	7.30%	6.00%
Mortgage Servicing Rights [Member] | Discounted Cash Flow, Prepayment Speed [Member] | Minimum
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Inputs, Weighted Average Of Input Credit Spreads	6.70%	5.90%
Mortgage Servicing Rights [Member] | Discounted Cash Flow, Prepayment Speed [Member] | Maximum
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Inputs, Weighted Average Of Input Credit Spreads	11.20%	10.60%
Mortgage Servicing Rights [Member] | Discounted Cash Flow, Discount Rate [Member]
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Weighted Average of Input Percent	10.00%	10.50%
Mortgage Servicing Rights [Member] | Discounted Cash Flow, Discount Rate [Member] | Minimum
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Weighted Average of Input Percent	10.00%	10.50%
Mortgage Servicing Rights [Member] | Discounted Cash Flow, Discount Rate [Member] | Maximum
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Weighted Average of Input Percent	12.00%	12.50%

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Fair Value Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair Value, Financial Assets: [Abstract]
Fair Value, Financial Instruments, Loans, Net	$ 557,146	$ 550,431
Fair Value, Financial Liabilities: [Abstract]
Fair Value, Financial Instruments, Time Deposits	191,247	198,215
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Financial Assets: [Abstract]
Fair Value, Financial Instruments, Loans, Net	532,344	526,372
Fair Value, Financial Liabilities: [Abstract]
Fair Value, Financial Instruments, Time Deposits	190,363	195,171
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Financial Assets: [Abstract]
Fair Value, Financial Instruments, Loans, Net	0	0
Fair Value, Financial Liabilities: [Abstract]
Fair Value, Financial Instruments, Time Deposits	0	0
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Financial Assets: [Abstract]
Fair Value, Financial Instruments, Loans, Net	0	0
Fair Value, Financial Liabilities: [Abstract]
Fair Value, Financial Instruments, Time Deposits	190,363	195,171
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Financial Assets: [Abstract]
Fair Value, Financial Instruments, Loans, Net	532,344	526,372
Fair Value, Financial Liabilities: [Abstract]
Fair Value, Financial Instruments, Time Deposits	$ 0	$ 0

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Related Party Transactions (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2024 USD ($)
Loans and Leases Receivable, Related Parties [Roll Forward]
Loans and Leases Receivable, Related Parties	$ 1,897
Loans and Leases Receivable, Related Parties, Additions	442
Loans and Leases Receivable, Related Parties, Collections	578
Loans and Leases Receivable, Related Parties	$ 1,761

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Related Party Transactions Textuals (Details) - USD ($) $ in Millions	Dec. 31, 2024	Dec. 31, 2023
Related Party Transactions [Abstract]
Related Party Deposit Liabilities	$ 9.9	$ 21.1

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Regulatory Capital (Details) - AuburnBank [Member] $ in Thousands	Dec. 31, 2024 USD ($)	Dec. 31, 2023 USD ($)
Tier One Leverage Capital [Abstract]
Tier One Leverage Capital	$ 106,288	$ 103,886
Tier One Leverage Capital to Average Assets	0.1049	0.0972
Tier One Leverage Capital Required for Capital Adequacy	$ 40,543	$ 42,732
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	0.0400	0.0400
Tier One Leverage Capital Required to be Well Capitalized	$ 50,679	$ 53,415
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	0.0500	0.0500
Common Equity Tier One Capital [Abstract]
Common Equity Tier One Capital Amount	$ 106,288	$ 103,886
Common Equity Tier One Captial To Risk Weighted Assets	0.1480	0.1452
Common Equity Tier One Captial Required For Capital Adequacy	$ 32,307	$ 32,194
Common Equity Tier One Captial Required for Capital Adequacy To Risk Weighted Assets	0.0450	0.0450
Common Equity Tier One Captial Required For Well Capitalized	$ 46,665	$ 46,503
Common Equity Tier One Captial Required For Well Capitalized To Risk Weighted Assets	0.0650	0.0650
Tier One Risk Based Capital [Abstract]
Tier One Risk Based Capital	$ 106,288	$ 103,886
Tier One Risk Based Capital to Risk Weighted Assets	0.1480	0.1452
Tier One Risk Based Capital Required for Capital Adequacy	$ 43,075	$ 42,926
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	0.0600	0.0600
Tier One Risk Based Capital Required to be Well Capitalized	$ 57,434	$ 57,234
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	0.0800	0.0800
Total Risk-Based Capital [Abstract]
Total Risk Based Capital	$ 113,487	$ 111,035
Total Risk Based Capital to Risk Weighted Assets	0.1581	0.1552
Total Risk Based Capital Required for Capital Adequacy	$ 57,434	$ 57,234
Total Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	0.0800	0.0800
Total Risk Based Capital Required to be Well Capitalized	$ 71,792	$ 71,543
Total Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	0.1000	0.1000

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Regulatory Capital Textuals (Details) $ in Millions	Dec. 31, 2024 USD ($)
Regulatory Capital Requirements [Abstract]
Regulatory Capital, Dividends Without Approval Of Regulators	$ 9.7
Regulatory Capital, Restricted Investment From Dividends	$ 67.2

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Auburn National Bancorporation - Parent Only, Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2024	Dec. 31, 2023	Dec. 31, 2022
Assets:
Cash And Due From Banks	$ 15,142	$ 27,127
Premises and equipment, net	45,931	45,535
Other assets	20,368	19,900
Total assets	977,324	975,255
Liabilities:
Accrued expenses and other liabilities	3,208	1,019
Total liabilities	899,032	898,748
Stockholders' equity:
Total stockholders' equity	78,292	76,507	$ 68,041
Total liabilities and stockholders' equity	977,324	975,255
Parent Company [Member]
Assets:
Cash And Due From Banks	1,001	1,277
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	76,852	74,857
Other assets	532	523
Total assets	78,385	76,657
Liabilities:
Accrued expenses and other liabilities	93	150
Total liabilities	93	150
Stockholders' equity:
Total stockholders' equity	78,292	76,507
Total liabilities and stockholders' equity	$ 78,385	$ 76,657

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Auburn National Bancorporation - Parent Only, Statement of Earnings (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Income:
Other noninterest income	$ 1,849	$ 1,870
Other Expenses [Abstract]
Total interest expense	11,607	8,046
Total noninterest expense	22,166	22,594
Income Tax Expense (Benefit)	2,000	(777)
Net earnings	6,397	1,395
Parent Company [Member]
Income:
Dividends from bank subsidiary	3,773	3,776
Other noninterest income	1	8
Total income	3,774	3,784
Other Expenses [Abstract]
Total noninterest expense	258	239
Operating Expenses	258	239
Earnings Before Income Tax Expense (Benefit) And Equity In Undistributed Earnings Of Bank Subsidary	3,516	3,545
Income Tax Expense (Benefit)	(46)	(30)
Earnings Before Equity In Undistributed Earnings Of Bank Subsidary	3,562	3,575
Equity In Undistributed Earnings Of Bank Subsidary	2,835	(2,180)
Net earnings	$ 6,397	$ 1,395

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Auburn National Bancorporation - Parent Only, Statement of Cash Flows (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2024	Dec. 31, 2023
Cash flows from operating activities:
Net earnings	$ 6,397	$ 1,395
Adjustments to reconcile net earnings to net cash provided by operating activties:
Depreciation and amortization	1,933	1,700
Net increase in other assets	1,168	(2,652)
Net increase in accrued expenses and other liabilities	2,149	(2,011)
Net cash provided by operating activities	10,809	11,902
Cash flows from investing activities:
Payments to Acquire Property, Plant, and Equipment	2,089	418
Net cash used in investing activities	16,854	91,377
Cash flows from financing activities:
Stock repurchases	0	229
Payments of Ordinary Dividends	3,773	3,776
Net cash provided by (used in) financing activities	(5,678)	(59,164)
Net change in cash and cash equivalents	21,985	44,115
Cash and cash equivalents at beginning of period	71,369	27,254
Cash and cash equivalents at end of period	93,354	71,369
Parent Company [Member]
Cash flows from operating activities:
Net earnings	6,397	1,395
Adjustments to reconcile net earnings to net cash provided by operating activties:
Net increase in other assets	9	1
Net increase in accrued expenses and other liabilities	(56)	8
Equity In Distributed (Undistributed) Earnings Of Bank Subsidary	(2,835)	2,180
Net cash provided by operating activities	3,497	3,582
Cash flows from financing activities:
Stock repurchases	0	229
Payments of Ordinary Dividends	3,773	3,776
Net cash provided by (used in) financing activities	(3,773)	(4,005)
Net change in cash and cash equivalents	(276)	(423)
Cash and cash equivalents at beginning of period	1,277	1,700
Cash and cash equivalents at end of period	$ 1,001	$ 1,277