LOANS

12 Months Ended

Dec. 31, 2024

LOANS

LOANS

NOTE C - LOANS:

Certain items previously reported have been reclassified to conform to the current year’s reporting format due to the adoption of CECL.

The composition of the loan portfolio at December 31, 2024 and 2023 is as follows (in thousands):

December 31,	2024		2023
Real estate, residential	$	78,952	$	74,296
Real estate, construction		17,016		27,353
Real estate, nonresidential		114,263		115,014
Commercial and industrial		13,381		12,496
Other		9,964		9,180
Total	$	233,576	$	238,339

In the ordinary course of business, the Company’s bank subsidiary extends loans to certain officers and directors and their personal business interests at, in the opinion of Management, the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans of similar credit risk with persons not related to the Company or its subsidiaries. These loans do not involve more than normal risk of collectability and do not include other unfavorable features. An analysis of the activity with respect to such loans to related parties is as follows (in thousands):

	2024		2023
Balance, January 1	$	6,953	$	6,947
Change in directors/officers loans during the year		(226)		—
New loans and advances		828		452
Repayments		(887)		(446)
Balance, December 31	$	6,668	$	6,953

The age analysis of the loan portfolio, segregated by class of loans, as of December 31, 2024 and 2023 is as follows (in thousands):

													Loans Past
													Due Greater
	Number of Days Past Due												Than 90
					Greater		Total				Total		Days and
	30 - 59		60 - 89		Than 90		Past Due		Current		Loans		Still Accruing
December 31, 2024:
Real estate, residential	$	410	$	33	$	337	$	780	$	78,172	$	78,952	$	—
Real estate, construction		61		—		—		61		16,955		17,016		—
Real estate, nonresidential		749		—		—		749		113,514		114,263		—
Commercial and industrial		40		11		—		51		13,330		13,381		—
Other		20		10		—		30		9,934		9,964		—
Total	$	1,280	$	54	$	337	$	1,671	$	231,905	$	233,576	$	—
December 31, 2023:
Real estate, residential	$	207	$	540	$	—	$	747	$	73,549	$	74,296	$	—
Real estate, construction		131		—		—		131		27,222		27,353		—
Real estate, nonresidential		58		—		—		58		114,956		115,014		—
Commercial and industrial		21		—		—		21		12,475		12,496		—
Other		75		30		—		105		9,075		9,180		—
Total	$	492	$	570	$	—	$	1,062	$	237,277	$	238,339	$	—

The Company monitors the credit quality of its loan portfolio through the use of a loan grading system. A score of 1 – 5 is assigned to the loan based on factors including repayment ability, trends in net worth and/or financial condition of the borrower and guarantors, employment stability, management ability, loan to value fluctuations, the type and structure of the loan, conformity of the loan to bank policy and payment performance. Based on the total score, a loan grade of A, B, C, S, D, E or F is applied. A grade of A will generally be applied to loans for customers that are well known to the Company and that have excellent sources of repayment. A grade of B will generally be applied to loans for customers that have excellent sources of repayment which have no identifiable risk of collection. A grade of C will generally be applied to loans for customers that have adequate sources of repayment which have little identifiable risk of collection. A grade of S will generally be applied to loans for customers who meet the criteria for a grade of C but also warrant additional monitoring by placement on the watch list. A grade of D will generally be applied to loans for customers that are inadequately protected by current sound net worth, paying capacity of the borrower, or pledged collateral. Loans with a grade of D have unsatisfactory characteristics such as cash flow deficiencies, bankruptcy filing by the borrower or dependence on the sale of collateral for the primary source of repayment, causing more than acceptable levels of risk. Loans 60 to 89 days past due receive a grade of D. A grade of E will generally be applied to loans for customers with weaknesses inherent in the D classification and in which collection or liquidation in full is questionable. In addition, on a monthly basis the Company determines which loans are 90 days or more past due and assigns a grade of E to them.

A grade of F is applied to loans which are considered uncollectible and of such little value that their continuance in an active bank is not warranted. Loans with this grade are charged off, even though partial or full recovery may be possible in the future.

The following tables further disaggregates credit quality disclosures by amortized cost by class and vintage for term loans and by revolving and revolving converted to amortizing as of December 31, 2024 and December 31, 2023 (in thousands). The Company defines vintage as the later of origination, or restructure date.

	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2024		2023		2022		2021		2020		Prior		Loans		Term Loans		Total
December 31, 2024:
Real Estate, Residential Loans:
A, B, or C	$	10,203	$	11,135	$	14,611	$	10,386	$	4,348	$	19,348	$	4,448	$	3,537	$	78,016
S		—		—		—		—		—		56		—		—		56
D		—		—		—		—		124		338		—		—		462
E		—		—		—		295		—		123		—		—		418
F		—		—		—		—		—		—		—		—		—
Total Real Estate Residential Loans	$	10,203	$	11,135	$	14,611	$	10,681	$	4,472	$	19,865	$	4,448	$	3,537	$	78,952
Real Estate, Construction Loans:
A, B, or C	$	2,876	$	425	$	1,464	$	1,916	$	854	$	2,701	$	6,578	$	—	$	16,814
S		—		—		—		—		—		—		—		—		—
D		—		121		—		—		81		—		—		—		202
E		—		—		—		—		—		—				—		—
F		—		—		—		—		—		—		—		—		—
Total Real Estate, Construction Loans	$	2,876	$	546	$	1,464	$	1,916	$	935	$	2,701	$	6,578	$	—	$	17,016
Real Estate,Nonresidential Loans:
A, B, or C	$	2,711	$	11,191	$	24,434	$	10,290	$	13,344	$	34,096	$	17,672	$	—	$	113,738
S		—		—		—		—		—		62		—		—		62
D		—		—		—		—		—		463		—		—		463
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Real Estate, Nonresidential Loans	$	2,711	$	11,191	$	24,434	$	10,290	$	13,344	$	34,621	$	17,672	$	—	$	114,263
Commercial and industrial
A, B, or C	$	1,187	$	488	$	524	$	638	$	167	$	2,542	$	7,813	$	—	$	13,359
S		—		—		—		—		—		—		—		—		—
D		—		22		—		—		—		—		—		—		22
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Commercial and Industrial Loans	$	1,187	$	510	$	524	$	638	$	167	$	2,542	$	7,813	$	—	$	13,381
Consumer/Other Loans
A, B, or C	$	4,725	$	3,258	$	804	$	401	$	262	$	254	$	254	$	—	$	9,958
S		—		—		—		—		—		—		—		—		—
D		—		—		1		—		—		—		5		—		6
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Consumer/Other Loans	$	4,725	$	3,258	$	805	$	401	$	262	$	254	$	259	$	—	$	9,964

	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2023		2022		2021		2020		2019		Prior		Loans		Term Loans		Total
December 31, 2023:
Real Estate, Residential Loans:
A, B, or C	$	11,865	$	17,053	$	12,158	$	4,695	$	5,451	$	17,502	$	4,147	$	401	$	73,272
S		—		—		—		—		—		66		—		—		66
D		—		—		122		—		—		623		—		—		745
E		—		—		—		45		27		141		—		—		213
F		—		—		—		—		—		—		—		—		—
Total Real Estate Residential Loans	$	11,865	$	17,053	$	12,280	$	4,740	$	5,478	$	18,332	$	4,147	$	401	$	74,296
Real Estate, Construction Loans:
A, B, or C	$	1,069	$	2,119	$	2,133	$	1,379	$	38	$	3,966	$	12,827	$	—	$	23,531
S		—		—		—		—		—		—		3,735		—		3,735
D		—		—		—		87		—		—		—		—		87
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Real Estate, Construction Loans	$	1,069	$	2,119	$	2,133	$	1,466	$	38	$	3,966	$	16,562	$	—	$	27,353
Real Estate,Nonresidential Loans:
A, B, or C	$	12,387	$	20,951	$	11,056	$	15,008	$	5,497	$	34,330	$	14,959	$	728	$	114,916
S		—		—		—		—		—		—		—		—		—
D		—		—		—		—		—		98		—		—		98
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Real Estate, Nonresidential Loans	$	12,387	$	20,951	$	11,056	$	15,008	$	5,497	$	34,428	$	14,959	$	728	$	115,014
Commercial and industrial
A, B, or C	$	850	$	1,008	$	831	$	263	$	2,742	$	39	$	6,763	$	—	$	12,496
S		—		—		—		—		—		—		—		—		—
D		—		—		—		—		—		—		—		—		—
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Commercial and Industrial Loans	$	850	$	1,008	$	831	$	263	$	2,742	$	39	$	6,763	$	—	$	12,496
Consumer/Other Loans
A, B, or C	$	5,346	$	1,417	$	841	$	439	$	234	$	304	$	508	$	52	$	9,141
S		—		—		—		—		—		—		—		—		—
D		7		6		—		—		18		3		5		—		39
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Consumer/Other Loans	$	5,353	$	1,423	$	841	$	439	$	252	$	307	$	513	$	52	$	9,180

The following table is a summary of the Company’s nonaccrual loans by major categories for the periods indicated (in thousands):

	December 31, 2024
	Nonaccrual Loans with		Nonaccrual Loans		Total Nonaccrual
	No Allowance		with an Allowance		Loans
Real estate, residential	$	418	$	—	$	418
Total	$	418	$	—	$	418

	December 31, 2023
	Nonaccrual Loans with		Nonaccrual Loans		Total Nonaccrual
	No Allowance		with an Allowance		Loans
Real estate, residential	$	168	$	45	$	213
Total	$	168	$	45	$	213

The Company recognized no interest income on nonaccrual loans during the years ended December 31, 2024 and December 31, 2023.

The following table represents the accrued interest receivables written off by reversing interest income during the years ended December 31, 2024 and December 31, 2023 (in thousands):

	December 31, 2024		December 31, 2023
Real estate, residential	$	3	$	1
Total loans	$	3	$	1

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 cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

The following table presents an analysis of collateral-dependent loans of the Company as of December 31, 2024 and December 31, 2023 (in thousands):

	December 31, 2024		December 31, 2023
	Residential		Residential
	Properties		Properties
Real estate, residential	$	424	$	222
Total loans	$	424	$	222

The following tables further disaggregates nonaccrual disclosures by amortized cost by class and vintage for term loans and by revolving and revolving converted to amortizing as of December 31, 2024 and December 31, 2023 (in thousands). The Company defines vintage as the later of origination or restructure date.

	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2024		2023		2022		2021		2020		Prior		Loans		Term Loans		Total
December 31, 2024:
Real estate, residential	$	—	$	—	$	—	$	295	$	—	$	123	$	—	$	—	$	418
Real estate, construction		—		—		—		—		—		—		—		—		—
Real estate, nonresidential		—		—		—		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—		—		—		—
Consumer/Other		—		—		—		—		—		—		—		—		—
Total Loans on Nonaccrual	$	—	$	—	$	—	$	295	$	—	$	123	$	—	$	—	$	418

	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2023		2022		2021		2020		2019		Prior		Loans		Term Loans		Total
December 31, 2023:
Real estate, residential	$	—	$	—	$	—	$	—	$	—	$	213	$	—	$	—	$	213
Real estate, construction		—		—		—		—		—		—		—		—		—
Real estate, nonresidential		—		—		—		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—		—		—		—
Consumer/Other		—		—		—		—		—		—		—		—		—
Total Loans on Nonaccrual	$	—	$	—	$	—	$	—	$	—	$	213	$	—	$	—	$	213

The Company had one loan modification made to borrowers experiencing financial difficulty as of December 31, 2024 and no loan modifications as of December 31, 2023.

The following table shows the amortized cost basis as of December 31, 2024 of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of loans and type of concession granted and describes the financial effect of the modifications made to borrowers experiencing financial difficulty (in thousands):

	Term Extension
	December 31, 2024
	Amortized Cost		% of Total Loan
	Basis		Type		Financial Effect
Real estate, residential	$	17	0.02	%	Added a weighted average 3 years to the life of loan, which reduced monthly payment amounts for the borrowers. Provided 3 month payment deferrals to borrowers through our standard deferral program. The 3 monthly payments were added to the end of the original loan terms of these.
Total	$	17

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that have been modified in the last 12 months (in thousands):

	Payment Status (Amortized Cost Basis)
	December 31, 2024
			30-89 Days Past		90+ Days Past
	Current		Due		Due
Real estate, residential	$	17	$	—	$	—
Total	$	17	$	—	$	—

The following tables show activity in the allowance for credit losses by portfolio class for the years ended December 31, 2024, 2023, and 2022 as well as the corresponding recorded investment in loans at the end of each period. Effective January 1, 2023, the Company adopted the provisions of ASC 326 (CECL) using a modified retrospective basis. The difference between the December 31, 2023 incurred allowance and the CECL allowance is reflected as a cumulative effect of change in accounting principle in the table below. For further discussion of the day one impact of the CECL adoption, refer to Note A.

The calculation of the allowance for credit losses under CECL is performed using two primary approaches: a collective approach for pools of loans that have similar risk characteristics using a loss rate analysis, and a specific reserve analysis for credits individually evaluated.

The following table summarizes the activity related to the allowance for credit losses for the year ended December 31, 2024 and December 31, 2023 and the balances of loans and unfunded commitments, individually and collectively evaluated for credit losses, as of December 31, 2024 and December 31, 2023 are as follows (in thousands):

	Real Estate,		Real Estate,		Real Estate,		Commercial and
	Residential		Construction		Nonresidential		Industrial		Other		Total
December 31, 2024
Allowance for credit losses
Beginning balance	$	971	$	173	$	1,807	$	54	$	219	$	3,224
Charge-offs		(59)		—		—		—		(210)		(269)
Recoveries		57		39		6		—		125		227
Net provision for loan losses		(293)		(77)		22		38		110		(200)
Ending Balance	$	676	$	135	$	1,835	$	92	$	244	$	2,982
Reserve for unfunded lending commitments
Beginning balance	$	2	$	34	$	5	$	10	$	4	$	55
Provision for losses on unfunded commitments		—		(11)		5		2		32		28
Ending balance-reserve for unfunded commitments	$	2	$	23	$	10	$	12	$	36	$	83
Total allowance for credit losses	$	678	$	158	$	1,845	$	104	$	280	$	3,065
Allowance for credit losses
Individually evaluated	$	—	$	—	$	—	$	—	$	4	$	4
Collectively evaluated		676		135		1,835		92		240		2,978
Total allowance for credit losses:	$	676	$	135	$	1,835	$	92	$	244	$	2,982
Reserve for unfunded lending commitments
Individually evaluated	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated		2		23		10		12		36		83
Reserve for unfunded lending commitments:	$	2	$	23	$	10	$	12	$	36	$	83
Total allowance for credit losses, December 31, 2024	$	678	$	158	$	1,845	$	104	$	280	$	3,065
Loans, December 31, 2024
Individually evaluated	$	879	$	202	$	463	$	22	$	5	$	1,571
Collectively evaluated		78,073		16,814		113,800		13,359		9,959		232,005
Total loans, December 31, 2024	$	78,952	$	17,016	$	114,263	$	13,381	$	9,964	$	233,576

	Real Estate,		Real Estate,		Real Estate,		Commercial and
	Residential		Construction		Nonresidential		Industrial		Other		Total
December 31, 2023
Allowance for credit losses
Beginning balance	$	1,018	$	392	$	1,535	$	143	$	250	$	3,338
Cumulative effect of change in accounting principle		396		(58)		(215)		(84)		(49)		(10)
Charge-offs		—		—		(270)		—		(197)		(467)
Recoveries		—		9		20		467		111		607
Net provision for loan losses		(443)		(170)		737		(472)		104		(244)
Ending Balance	$	971	$	173	$	1,807	$	54	$	219	$	3,224
Reserve for unfunded lending commitments
Beginning balance	$	—	$	—	$	—	$	—	$	—	$	—
Cumulative effect of change in accounting principle		4		30		5		15		18		72
Provision for losses on unfunded commitments		(2)		4		—		(5)		(14)		(17)
Ending balance-reserve for unfunded commitments	$	2	$	34	$	5	$	10	$	4	$	55
Total allowance for credit losses	$	973	$	207	$	1,812	$	64	$	223	$	3,279
Allowance for credit losses
Individually evaluated	$	40	$	—	$	—	$	—	$	21	$	61
Collectively evaluated		931		173		1,807		54		198		3,163
Total allowance for credit losses:	$	971	$	173	$	1,807	$	54	$	219	$	3,224
Reserve for unfunded lending commitments
Individually evaluated	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated		2		34		5		10		4		55
Reserve for unfunded lending commitments:	$	2	$	34	$	5	$	10	$	4	$	55
Total allowance for credit losses, December 31, 2024	$	973	$	207	$	1,812	$	64	$	223	$	3,279
Loans, December 31, 2023
Individually evaluated	$	958	$	87	$	98	$	—	$	39	$	1,182
Collectively evaluated		73,338		27,266		114,916		12,496		9,141		237,157
Total loans, December 31, 2023	$	74,296	$	27,353	$	115,014	$	12,496	$	9,180	$	238,339

Prior to the adoption of ASC 326 on January 1, 2023, the Company calculated the allowance for loan losses under the incurred loss methodology. The following tables are disclosures related to the allowance for loan losses in prior periods (in thousands).

	Real Estate,		Real Estate,		Real Estate,		Commercial and
	Residential		Construction		Nonresidential		Industrial		Other		Total
December 31, 2022:
Allowance for Loan Losses:
Beginning Balance	$	873	$	351	$	1,781	$	228	$	78	$	3,311
Charge-offs		—		—		—		—		(240)		(240)
Recoveries		—		—		48		15		124		187
Provision		145		41		(294)		(100)		288		80
Ending Balance	$	1,018	$	392	$	1,535	$	143	$	250	$	3,338
Allowance for Loan Losses:
Ending balance: individually evaluated for impairment	$	145	$	—	$	84	$	—	$	—	$	229
Ending balance: collectively evaluated for impairment	$	873	$	392	$	1,451	$	143	$	250	$	3,109
Total Loans:
Ending balance: individually evaluated for impairment	$	945	$	31	$	1,811	$	—	$	14	$	2,801
Ending balance: collectively evaluated for impairment	$	66,567	$	30,115	$	120,422	$	10,497	$	7,476	$	235,077

The following table further disaggregates gross charge-off disclosures by amortized cost by credit quality indicator, class, and year of origination as of December 31, 2024 and December 31, 2023 (in thousands). The Company defines vintage as the later of origination or restructure date.

	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2024		2023		2022		2021		2020		Prior		Loans		Term Loans		Total
December 31, 2024:
Real estate, residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
A,B, or C		—		—		—		—		—		—		—		—		—
S		—		—		—		—		—		—		—		—		—
D		—		—		—		—		—		—		—		—		—
E		—		—		—		—		—		59		—		—		59
F		—		—		—		—		—		—		—		—		—
Total Real estate, nonresidential loans	$	—	$	—	$	—	$	—	$	—	$	59	$	—	$	—	$	59
Consumer/Other
A,B, or C	$	156	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	156
S		—		6		—		—		—		—		—		—		6
D		—		10		—		—		—		8		—		—		18
E		—		7		20		—		—		3		—		—		30
F		—		—		—		—		—		—		—		—		—
Total Consumer/Other Loans	$	156	$	23	$	20	$	—	$	—	$	11	$	—	$	—	$	210
Total Gross Loan Chargeoffs:	$	156	$	23	$	20	$	—	$	—	$	70	$	—	$	—	$	269

	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2023		2022		2021		2020		2019		Prior		Loans		Term Loans		Total
December 31, 2023:
Real estate, nonresidential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
A,B, or C		—		—		—		—		—		—		—		—		—
S		—		—		—		—		—		—		—		—		—
D		—		—		—		—		—		—		—		—		—
E		—		—		—		—		—		270		—		—		270
F		—		—		—		—		—		—		—		—		—
Total Real estate, nonresidential loans	$	—	$	—	$	—	$	—	$	—	$	270	$	—	$	—	$	270
Consumer/Other
A,B, or C	$	188	$	5	$	—	$	—	$	—	$	—	$	—	$	—	$	193
S		—		—		—		—		—		—		—		—		—
D		—		—		—		—		—		—		—		—		—
E		—		—		—		4		—		—		—		—		4
F		—		—		—		—		—		—		—		—		—
Total Consumer/Other Loans	$	188	$	5	$	—	$	4	$	—	$	—	$	—	$	—	$	197
Total Gross Loan Chargeoffs:	$	188	$	5	$	—	$	4	$	—	$	270	$	—	$	—	$	467