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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2026
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 001-38084
FARMERS & MERCHANTS BANCORP, INC.
(Exact name of registrant as specified in its charter)
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Ohio |
34-1469491 |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
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307 North Defiance Street, Archbold, Ohio |
43502 |
(Address of principal executive offices) |
(Zip Code) |
(419) 446-2501
Registrant’s telephone number, including area code
(Former name, former address and former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of Each Exchange |
Common Stock, No Par Value |
FMAO |
NASDAQ Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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☐ |
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Accelerated filer |
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☒ |
Non-accelerated filer |
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☐ |
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Smaller reporting company |
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☐ |
Emerging growth company |
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☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Indicate the number of shares of each of the issuers’ classes of common stock, as of the latest practicable date:
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|
Common Stock, No Par Value |
13,773,162 |
Class |
Outstanding as of July 27, 2026 |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
FARMERS & MERCHANTS BANCORP, INC.
INDEX
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Form 10-Q Items |
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Page |
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PART I. |
FINANCIAL INFORMATION |
3 |
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Item 1. |
Financial Statements (Unaudited) |
3 |
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Condensed Consolidated Balance Sheets - June 30, 2026 and December 31, 2025 |
3 |
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Condensed Consolidated Statements of Income - Three and Six Months Ended June 30, 2026 and June 30, 2025 |
4 |
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Condensed Consolidated Statements of Comprehensive Income - Three and Six Months Ended June 30, 2026 and June 30, 2025 |
6 |
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Condensed Consolidated Statements of Changes to Stockholders’ Equity - Three and Six Months Ended June 30, 2026 and June 30, 2025 |
7 |
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|
|
Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2026 and June 30, 2025 |
9 |
|
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements |
11 |
|
|
|
|
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
48 |
|
|
|
|
|
Item 3. |
Qualitative and Quantitative Disclosures About Market Risk |
73 |
|
|
|
|
|
Item 4. |
Controls and Procedures |
74 |
|
|
|
|
|
PART II. |
OTHER INFORMATION |
74 |
|
|
|
|
|
Item 1. |
Legal Proceedings |
74 |
|
|
|
|
|
Item 1A. |
Risk Factors |
74 |
|
|
|
|
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
76 |
|
|
|
|
|
Item 3. |
Defaults Upon Senior Securities |
76 |
|
|
|
|
|
Item 4. |
Mine Safety Disclosures |
76 |
|
|
|
|
|
Item 5. |
Other Information |
76 |
|
|
|
|
|
Item 6. |
Exhibits |
77 |
|
|
|
|
|
Signatures |
|
78 |
|
|
|
|
|
Exhibit 101.INS |
Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
Exhibit 101.SCH |
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents. |
|
PART 1 - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
|
|
(Unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
Cash and due from banks |
|
$ |
155,879 |
|
|
$ |
97,249 |
|
Federal funds sold |
|
|
511 |
|
|
|
469 |
|
Total cash and cash equivalents |
|
|
156,390 |
|
|
|
97,718 |
|
Interest-bearing time deposits |
|
|
518 |
|
|
|
1,498 |
|
Securities - available-for-sale |
|
|
441,254 |
|
|
|
422,072 |
|
Other securities, at cost |
|
|
10,681 |
|
|
|
13,032 |
|
Loans held for sale |
|
|
2,994 |
|
|
|
3,934 |
|
Loans, net of allowance for credit losses of $27,941 and $27,688 |
|
|
2,677,072 |
|
|
|
2,685,990 |
|
Premises and equipment |
|
|
30,334 |
|
|
|
31,864 |
|
Goodwill |
|
|
86,358 |
|
|
|
86,358 |
|
Loan servicing rights |
|
|
5,085 |
|
|
|
5,175 |
|
Bank owned life insurance |
|
|
48,021 |
|
|
|
47,410 |
|
Other assets |
|
|
43,411 |
|
|
|
39,331 |
|
Total Assets |
|
$ |
3,502,118 |
|
|
$ |
3,434,382 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Deposits |
|
|
|
|
|
|
Noninterest-bearing |
|
$ |
506,119 |
|
|
$ |
527,327 |
|
Interest-bearing |
|
|
|
|
|
|
NOW accounts |
|
|
898,902 |
|
|
|
876,151 |
|
Savings |
|
|
771,379 |
|
|
|
729,472 |
|
Time |
|
|
693,008 |
|
|
|
597,785 |
|
Total deposits |
|
|
2,869,408 |
|
|
|
2,730,735 |
|
Securities sold under agreements to repurchase |
|
|
14,771 |
|
|
|
37,718 |
|
Federal Home Loan Bank (FHLB) advances |
|
|
168,447 |
|
|
|
227,377 |
|
Subordinated notes, net of unamortized issuance costs |
|
|
34,991 |
|
|
|
34,933 |
|
Dividend payable |
|
|
3,130 |
|
|
|
3,125 |
|
Accrued expenses and other liabilities |
|
|
26,655 |
|
|
|
29,632 |
|
Total liabilities |
|
|
3,117,402 |
|
|
|
3,063,520 |
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
|
|
Common stock - No par value; authorized 40,000,000 shares; issued
14,564,425 shares; outstanding 13,779,385 shares 6/30/26 and
13,748,074 shares 12/31/25 |
|
|
135,510 |
|
|
|
135,531 |
|
Treasury stock - 785,040 shares 6/30/26 and 816,351 shares 12/31/25 |
|
|
(10,293 |
) |
|
|
(10,636 |
) |
Retained earnings |
|
|
273,455 |
|
|
|
257,855 |
|
Accumulated other comprehensive loss |
|
|
(13,956 |
) |
|
|
(11,888 |
) |
Total stockholders' equity |
|
|
384,716 |
|
|
|
370,862 |
|
Total Liabilities and Stockholders' Equity |
|
$ |
3,502,118 |
|
|
$ |
3,434,382 |
|
See Notes to Condensed Consolidated Unaudited Financial Statements.
Note: The December 31, 2025, Condensed Consolidated Balance Sheet has been derived from the audited Consolidated Balance Sheet as of that date.
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands, Except Per Share Data) |
|
|
(In Thousands, Except Per Share Data) |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
Interest Income |
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
|
$ |
40,839 |
|
|
$ |
39,530 |
|
|
$ |
80,666 |
|
|
$ |
76,602 |
|
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and government agencies |
|
|
2,712 |
|
|
|
2,231 |
|
|
|
5,017 |
|
|
|
4,328 |
|
Municipalities |
|
|
347 |
|
|
|
369 |
|
|
|
696 |
|
|
|
751 |
|
Dividends |
|
|
239 |
|
|
|
311 |
|
|
|
484 |
|
|
|
649 |
|
Federal funds sold and other |
|
|
1,510 |
|
|
|
1,051 |
|
|
|
2,082 |
|
|
|
2,164 |
|
Total interest income |
|
|
45,647 |
|
|
|
43,492 |
|
|
|
88,945 |
|
|
|
84,494 |
|
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
14,432 |
|
|
|
14,813 |
|
|
|
27,681 |
|
|
|
28,801 |
|
Federal funds purchased and securities sold under
agreements to repurchase |
|
|
118 |
|
|
|
272 |
|
|
|
263 |
|
|
|
543 |
|
Borrowed funds |
|
|
1,894 |
|
|
|
2,411 |
|
|
|
4,070 |
|
|
|
4,961 |
|
Subordinated notes |
|
|
285 |
|
|
|
285 |
|
|
|
569 |
|
|
|
569 |
|
Total interest expense |
|
|
16,729 |
|
|
|
17,781 |
|
|
|
32,583 |
|
|
|
34,874 |
|
Net Interest Income - Before Provision for Credit
Losses |
|
|
28,918 |
|
|
|
25,711 |
|
|
|
56,362 |
|
|
|
49,620 |
|
Provision for Credit Losses - Loans |
|
|
173 |
|
|
|
661 |
|
|
|
475 |
|
|
|
1,472 |
|
Provision for (Recovery) of Credit Losses - Off
Balance Sheet Credit Exposures |
|
|
148 |
|
|
|
27 |
|
|
|
154 |
|
|
|
(233 |
) |
Net Interest Income - After Provision for Credit
Losses |
|
|
28,597 |
|
|
|
25,023 |
|
|
|
55,733 |
|
|
|
48,381 |
|
Noninterest Income |
|
|
|
|
|
|
|
|
|
|
|
|
Customer service fees |
|
|
544 |
|
|
|
330 |
|
|
|
1,027 |
|
|
|
711 |
|
Other service charges and fees |
|
|
1,301 |
|
|
|
1,206 |
|
|
|
2,584 |
|
|
|
2,330 |
|
Interchange income |
|
|
1,347 |
|
|
|
1,259 |
|
|
|
2,860 |
|
|
|
2,680 |
|
Loan servicing income |
|
|
846 |
|
|
|
629 |
|
|
|
1,684 |
|
|
|
1,391 |
|
Net gain on sale of loans |
|
|
683 |
|
|
|
257 |
|
|
|
1,258 |
|
|
|
541 |
|
Increase in cash surrender value of bank owned
life insurance |
|
|
681 |
|
|
|
239 |
|
|
|
1,336 |
|
|
|
483 |
|
Gain (loss) on sale of other assets owned |
|
|
30 |
|
|
|
15 |
|
|
|
30 |
|
|
|
(39 |
) |
Loss on sale of available-for-sale securities |
|
|
- |
|
|
|
- |
|
|
|
(347 |
) |
|
|
- |
|
Total noninterest income |
|
|
5,432 |
|
|
|
3,935 |
|
|
|
10,432 |
|
|
|
8,097 |
|
(continued)
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands, Except Per Share Data) |
|
|
(In Thousands, Except Per Share Data) |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
Noninterest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and wages |
|
|
8,381 |
|
|
|
7,567 |
|
|
|
16,648 |
|
|
|
15,445 |
|
Employee benefits |
|
|
2,338 |
|
|
|
2,265 |
|
|
|
4,717 |
|
|
|
4,669 |
|
Net occupancy expense |
|
|
931 |
|
|
|
1,075 |
|
|
|
2,100 |
|
|
|
2,274 |
|
Furniture and equipment |
|
|
1,594 |
|
|
|
1,414 |
|
|
|
3,160 |
|
|
|
2,692 |
|
Data processing |
|
|
778 |
|
|
|
1,057 |
|
|
|
1,772 |
|
|
|
1,614 |
|
Franchise taxes |
|
|
395 |
|
|
|
397 |
|
|
|
795 |
|
|
|
794 |
|
ATM expense |
|
|
561 |
|
|
|
761 |
|
|
|
1,137 |
|
|
|
1,252 |
|
Advertising |
|
|
363 |
|
|
|
356 |
|
|
|
835 |
|
|
|
859 |
|
FDIC assessment |
|
|
389 |
|
|
|
448 |
|
|
|
785 |
|
|
|
913 |
|
Servicing rights amortization - net |
|
|
328 |
|
|
|
234 |
|
|
|
851 |
|
|
|
361 |
|
Loan expense |
|
|
578 |
|
|
|
328 |
|
|
|
887 |
|
|
|
556 |
|
Consulting fees |
|
|
325 |
|
|
|
494 |
|
|
|
579 |
|
|
|
1,239 |
|
Professional fees |
|
|
425 |
|
|
|
502 |
|
|
|
925 |
|
|
|
1,061 |
|
Intangible asset amortization |
|
|
304 |
|
|
|
444 |
|
|
|
609 |
|
|
|
889 |
|
Other general and administrative |
|
|
1,574 |
|
|
|
1,918 |
|
|
|
3,265 |
|
|
|
3,402 |
|
Total noninterest expense |
|
|
19,264 |
|
|
|
19,260 |
|
|
|
39,065 |
|
|
|
38,020 |
|
Income Before Income Taxes |
|
|
14,765 |
|
|
|
9,698 |
|
|
|
27,100 |
|
|
|
18,458 |
|
Income Taxes |
|
|
2,968 |
|
|
|
1,988 |
|
|
|
5,725 |
|
|
|
3,796 |
|
Net Income |
|
$ |
11,797 |
|
|
$ |
7,710 |
|
|
$ |
21,375 |
|
|
$ |
14,662 |
|
Basic Earnings Per Share |
|
$ |
0.86 |
|
|
$ |
0.56 |
|
|
$ |
1.55 |
|
|
$ |
1.07 |
|
Diluted Earnings Per Share |
|
$ |
0.86 |
|
|
$ |
0.56 |
|
|
$ |
1.55 |
|
|
$ |
1.07 |
|
Dividends Declared |
|
$ |
0.23000 |
|
|
$ |
0.22125 |
|
|
$ |
0.46000 |
|
|
$ |
0.44250 |
|
See Notes to Condensed Consolidated Unaudited Financial Statements.
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
(In Thousands) |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
Net Income |
|
$ |
11,797 |
|
|
$ |
7,710 |
|
|
$ |
21,375 |
|
|
$ |
14,662 |
|
Other Comprehensive Income (Loss) (Net of Tax): |
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gain (loss) on available-for-sale
securities |
|
|
(545 |
) |
|
|
1,149 |
|
|
|
(2,965 |
) |
|
|
7,613 |
|
Reclassification adjustment for realized loss on sale
of available-for-sale securities |
|
|
- |
|
|
|
- |
|
|
|
347 |
|
|
|
- |
|
Net unrealized gain (loss) on available-for-sale
securities |
|
|
(545 |
) |
|
|
1,149 |
|
|
|
(2,618 |
) |
|
|
7,613 |
|
Tax expense (benefit) |
|
|
(115 |
) |
|
|
241 |
|
|
|
(550 |
) |
|
|
1,599 |
|
Other comprehensive income (loss) |
|
|
(430 |
) |
|
|
908 |
|
|
|
(2,068 |
) |
|
|
6,014 |
|
Comprehensive Income |
|
$ |
11,367 |
|
|
$ |
8,618 |
|
|
$ |
19,307 |
|
|
$ |
20,676 |
|
See Notes to Condensed Consolidated Unaudited Financial Statements.
Farmers & Merchants Bancorp, Inc. and Subsidiaries
CONDENSED Consolidated StatementS of Changes TO Stockholders’ Equity
For the THREE AND SIX Months Ended June 30, 2026
(IN THOUSANDS, Except Per Share Data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Shares of |
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
Total |
|
|
|
Common |
|
|
Common |
|
|
Treasury |
|
|
Retained |
|
|
Comprehensive |
|
|
Stockholders' |
|
|
|
Stock |
|
|
Stock |
|
|
Stock |
|
|
Earnings |
|
|
Loss |
|
|
Equity |
|
Balance - January 1, 2026 |
|
|
13,748,074 |
|
|
$ |
135,531 |
|
|
$ |
(10,636 |
) |
|
$ |
257,855 |
|
|
$ |
(11,888 |
) |
|
$ |
370,862 |
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9,578 |
|
|
|
- |
|
|
|
9,578 |
|
Other comprehensive loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,638 |
) |
|
|
(1,638 |
) |
Purchase of treasury stock |
|
|
(2,261 |
) |
|
|
- |
|
|
|
(57 |
) |
|
|
- |
|
|
|
- |
|
|
|
(57 |
) |
Issuance of 23,479 shares of restricted stock
(Net of forfeitures - 625) |
|
|
22,854 |
|
|
|
(592 |
) |
|
|
290 |
|
|
|
302 |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation expense |
|
|
- |
|
|
|
331 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
331 |
|
Cash dividends declared - $0.23 per share |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,128 |
) |
|
|
- |
|
|
|
(3,128 |
) |
Balance - March 31, 2026 |
|
|
13,768,667 |
|
|
|
135,270 |
|
|
|
(10,403 |
) |
|
|
264,607 |
|
|
|
(13,526 |
) |
|
|
375,948 |
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11,797 |
|
|
|
- |
|
|
|
11,797 |
|
Other comprehensive loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(430 |
) |
|
|
(430 |
) |
Purchase of treasury stock |
|
|
(1,460 |
) |
|
|
- |
|
|
|
(42 |
) |
|
|
- |
|
|
|
- |
|
|
|
(42 |
) |
Issuance of 5,813 shares of restricted stock
(Net of forfeitures - 550) |
|
|
5,263 |
|
|
|
(145 |
) |
|
|
61 |
|
|
|
84 |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation expense |
|
|
- |
|
|
|
385 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
385 |
|
Director stock award |
|
|
6,915 |
|
|
|
- |
|
|
|
91 |
|
|
|
97 |
|
|
|
- |
|
|
|
188 |
|
Cash dividends declared - $0.23 per share |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,130 |
) |
|
|
- |
|
|
|
(3,130 |
) |
Balance - June 30, 2026 |
|
|
13,779,385 |
|
|
$ |
135,510 |
|
|
$ |
(10,293 |
) |
|
$ |
273,455 |
|
|
$ |
(13,956 |
) |
|
$ |
384,716 |
|
See Notes to Condensed Consolidated Unaudited Financial Statements.
Farmers & Merchants Bancorp, Inc. and Subsidiaries
CONDENSED Consolidated StatementS of Changes TO Stockholders’ Equity
For the THREE AND SIX months Ended June 30, 2025
(IN THOUSANDS, Except Per Share Data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Shares of |
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
Total |
|
|
|
Common |
|
|
Common |
|
|
Treasury |
|
|
Retained |
|
|
Comprehensive |
|
|
Stockholders' |
|
|
|
Stock |
|
|
Stock |
|
|
Stock |
|
|
Earnings |
|
|
Loss |
|
|
Equity |
|
Balance - January 1, 2025 |
|
|
13,699,536 |
|
|
$ |
135,565 |
|
|
$ |
(10,985 |
) |
|
$ |
235,854 |
|
|
$ |
(25,223 |
) |
|
$ |
335,211 |
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,952 |
|
|
|
- |
|
|
|
6,952 |
|
Other comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,106 |
|
|
|
5,106 |
|
Purchase of treasury stock |
|
|
(981 |
) |
|
|
- |
|
|
|
(23 |
) |
|
|
- |
|
|
|
- |
|
|
|
(23 |
) |
Issuance of 20,731 shares of restricted stock
(Net of forfeitures - 950) |
|
|
19,781 |
|
|
|
(510 |
) |
|
|
240 |
|
|
|
270 |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation expense |
|
|
- |
|
|
|
352 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
352 |
|
Cash dividends declared - $0.22125 per share |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,997 |
) |
|
|
- |
|
|
|
(2,997 |
) |
Balance - March 31, 2025 |
|
|
13,718,336 |
|
|
|
135,407 |
|
|
|
(10,768 |
) |
|
|
240,079 |
|
|
|
(20,117 |
) |
|
|
344,601 |
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,710 |
|
|
|
- |
|
|
|
7,710 |
|
Other comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
908 |
|
|
|
908 |
|
Forfeiture of 250 shares of restricted stock |
|
|
(250 |
) |
|
|
6 |
|
|
|
(6 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation expense |
|
|
- |
|
|
|
392 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
392 |
|
Director stock award |
|
|
7,912 |
|
|
|
- |
|
|
|
100 |
|
|
|
81 |
|
|
|
- |
|
|
|
181 |
|
Cash dividends declared - $0.22125 per share |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,000 |
) |
|
|
- |
|
|
|
(3,000 |
) |
Balance - June 30, 2025 |
|
|
13,725,998 |
|
|
$ |
135,805 |
|
|
$ |
(10,674 |
) |
|
$ |
244,870 |
|
|
$ |
(19,209 |
) |
|
$ |
350,792 |
|
See Notes to Condensed Consolidated Unaudited Financial Statements.
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Six Months Ended |
|
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
Cash Flows from Operating Activities |
|
|
|
|
|
|
Net income |
|
$ |
21,375 |
|
|
$ |
14,662 |
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
|
|
Depreciation |
|
|
1,963 |
|
|
|
1,971 |
|
Amortization (accretion) of premiums and discounts on available-for-sale securities, net |
|
|
(207 |
) |
|
|
113 |
|
Capitalized additions to servicing rights |
|
|
(761 |
) |
|
|
(515 |
) |
Servicing rights amortization and impairment |
|
|
851 |
|
|
|
361 |
|
Amortization of core deposit intangible |
|
|
548 |
|
|
|
828 |
|
Amortization of customer list intangible |
|
|
61 |
|
|
|
61 |
|
Net accretion of fair value adjustments |
|
|
(792 |
) |
|
|
(1,177 |
) |
Amortization of subordinated note issuance costs |
|
|
58 |
|
|
|
57 |
|
Stock-based compensation expense |
|
|
716 |
|
|
|
744 |
|
Director stock awards |
|
|
188 |
|
|
|
181 |
|
Provision for credit losses - loans |
|
|
475 |
|
|
|
1,472 |
|
Provision for (recovery of) credit losses - off balance sheet credit exposures |
|
|
154 |
|
|
|
(233 |
) |
Gain on sale of loans held for sale |
|
|
(1,258 |
) |
|
|
(541 |
) |
Originations of loans held for sale |
|
|
(49,435 |
) |
|
|
(30,158 |
) |
Proceeds from sale of loans held for sale |
|
|
51,633 |
|
|
|
27,336 |
|
(Gain) loss on derivatives |
|
|
32 |
|
|
|
(22 |
) |
(Gain) loss on sale of other assets owned |
|
|
(30 |
) |
|
|
39 |
|
Loss on sales of securities available-for-sale |
|
|
347 |
|
|
|
- |
|
Increase in cash surrender value of bank owned life insurance |
|
|
(1,336 |
) |
|
|
(483 |
) |
Change in other assets and other liabilities, net |
|
|
(6,130 |
) |
|
|
(2,583 |
) |
Net cash provided by operating activities |
|
|
18,452 |
|
|
|
12,113 |
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
Activity in available-for-sale securities: |
|
|
|
|
|
|
Maturities, prepayments and calls |
|
|
45,140 |
|
|
|
32,785 |
|
Sales |
|
|
5,354 |
|
|
|
- |
|
Purchases |
|
|
(72,434 |
) |
|
|
(29,831 |
) |
Activity in other securities, at cost: |
|
|
|
|
|
|
Purchases of FHLB stock |
|
|
(521 |
) |
|
|
(472 |
) |
Proceeds from redemption of FHLB stock |
|
|
2,872 |
|
|
|
878 |
|
Purchase of bank owned life insurance |
|
|
(2,500 |
) |
|
|
- |
|
Proceeds from bank owned life insurance |
|
|
3,226 |
|
|
|
- |
|
Change in interest-bearing time deposits |
|
|
980 |
|
|
|
490 |
|
Proceeds from sale of other assets owned |
|
|
977 |
|
|
|
15 |
|
Additions to premises and equipment |
|
|
(872 |
) |
|
|
(1,105 |
) |
Net decrease (increase) on loan originations and principal collections |
|
|
7,561 |
|
|
|
(63,268 |
) |
Net cash used in investing activities |
|
|
(10,217 |
) |
|
|
(60,508 |
) |
(continued)
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Continued)
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Six Months Ended |
|
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
Net change in deposits |
|
|
138,673 |
|
|
|
23,564 |
|
Net change in federal funds purchased and securities sold under agreements
to repurchase |
|
|
(22,947 |
) |
|
|
344 |
|
Proceeds from FHLB advances |
|
|
32,180 |
|
|
|
- |
|
Repayment of FHLB advances |
|
|
(91,117 |
) |
|
|
(57,617 |
) |
Purchase of treasury stock |
|
|
(99 |
) |
|
|
(23 |
) |
Cash dividends paid on common stock |
|
|
(6,253 |
) |
|
|
(5,993 |
) |
Net cash provided by (used in) financing activities |
|
|
50,437 |
|
|
|
(39,725 |
) |
Net Increase (Decrease) in Cash and Cash Equivalents |
|
|
58,672 |
|
|
|
(88,120 |
) |
Cash and Cash Equivalents - Beginning of year |
|
|
97,718 |
|
|
|
176,351 |
|
Cash and Cash Equivalents - End of period |
|
$ |
156,390 |
|
|
$ |
88,231 |
|
|
|
|
|
|
|
|
Supplemental Information |
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
Interest paid |
|
$ |
33,452 |
|
|
$ |
34,859 |
|
Federal income taxes paid |
|
|
5,300 |
|
|
|
4,410 |
|
State income taxes paid |
|
|
335 |
|
|
|
177 |
|
Supplemental noncash disclosures: |
|
|
|
|
|
|
Transfer of loans to other real estate owned |
|
|
319 |
|
|
|
- |
|
Cash dividends declared not paid |
|
|
3,130 |
|
|
|
3,000 |
|
See Notes to Condensed Consolidated Unaudited Financial Statements.
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
NOTE 1 BASIS OF PRESENTATION AND OTHER
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X; accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included. Operating results for the six months ended June 30, 2026 are not necessarily indicative of the results that are expected for the year ended December 31, 2026. The condensed consolidated balance sheet of the Company as of December 31, 2025, has been derived from the audited consolidated balance sheet of the Company as of that date. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Farmers & Merchants Bancorp, Inc. (the "Company")'s Annual Report on Form 10-K for the year ended December 31, 2025.
The Company recognizes revenues as they are earned based on contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured. The Company’s principal source of revenue is interest income from loans and investment securities. The Company also earns noninterest income from various banking and financial services offered primarily through Farmers & Merchants State Bank (the "Bank"). Interest income is primarily recognized on an accrual basis according to nondiscretionary formulas written in contracts, such as loan agreements or investment security contracts. The Company also earns noninterest income from various banking and financial services provided to business and consumer clients such as deposit account, debit card, and mortgage banking services. Revenue is recorded for noninterest income based on the contractual terms for the service or transaction performed.
NOTE 2 BUSINESS COMBINATION AND ASSET PURCHASE
Changes in accretable yield, or income expected to be collected, for the acquisition of Peoples Federal Savings and Loan completed in 2022, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
(In Thousands) |
|
|
|
Three Months Ended
June 30, 2026 |
|
|
Three Months Ended
June 30, 2025 |
|
|
Six Months Ended
June 30, 2026 |
|
|
Six Months Ended
June 30, 2025 |
|
Beginning Balance |
|
$ |
46 |
|
|
$ |
277 |
|
|
$ |
104 |
|
|
$ |
335 |
|
Accretion |
|
|
(46 |
) |
|
|
(58 |
) |
|
|
(104 |
) |
|
|
(116 |
) |
Ending Balance |
|
$ |
- |
|
|
$ |
219 |
|
|
$ |
- |
|
|
$ |
219 |
|
Changes in accretable yield, or income expected to be collected, for the acquisition of Perpetual Federal Savings Bank completed in 2021, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
(In Thousands) |
|
|
|
Three Months Ended
June 30, 2026 |
|
|
Three Months Ended
June 30, 2025 |
|
|
Six Months Ended
June 30, 2026 |
|
|
Six Months Ended
June 30, 2025 |
|
Beginning Balance |
|
$ |
- |
|
|
$ |
1,117 |
|
|
$ |
112 |
|
|
$ |
1,453 |
|
Accretion |
|
|
- |
|
|
|
(335 |
) |
|
|
(112 |
) |
|
|
(671 |
) |
Ending Balance |
|
$ |
- |
|
|
$ |
782 |
|
|
$ |
- |
|
|
$ |
782 |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
Changes in accretable yield, or income expected to be collected, for the acquisition of Ossian State Bank completed in 2021, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
(In Thousands) |
|
|
|
Three Months Ended
June 30, 2026 |
|
|
Three Months Ended
June 30, 2025 |
|
|
Six Months Ended
June 30, 2026 |
|
|
Six Months Ended
June 30, 2025 |
|
Beginning Balance |
|
$ |
- |
|
|
$ |
67 |
|
|
$ |
- |
|
|
$ |
107 |
|
Accretion |
|
|
- |
|
|
|
(39 |
) |
|
|
- |
|
|
|
(79 |
) |
Ending Balance |
|
$ |
- |
|
|
$ |
27 |
|
|
$ |
- |
|
|
$ |
27 |
|
The acquisition of Ossian State Bank resulted in the recognition of $980 thousand in core deposit intangible assets, the acquisition of Perpetual Federal Savings Bank resulted in the recognition of $668 thousand in core deposit intangible assets and the acquisition of Peoples Federal Savings and Loan resulted in the recognition of $6 million in core deposit intangible assets which are all being amortized over its remaining economic useful life of 7 years on a straight line basis. Core deposit intangible is included in other assets on the condensed consolidated balance sheets.
The amortization expense of the core deposit intangible for the six months ended June 30, 2025 was $828 thousand of which $280 thousand was related to the acquisition of Bank of Geneva on January 1, 2019. Of the approximately $1.1 million to be expensed in 2026, $548 thousand has been expensed for the six months ended June 30, 2026. Annual amortization of core deposit intangible assets is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ossian |
|
|
Perpetual |
|
|
Peoples |
|
|
Total |
|
2026 |
|
$ |
140 |
|
|
$ |
95 |
|
|
$ |
861 |
|
|
$ |
1,096 |
|
2027 |
|
|
140 |
|
|
|
95 |
|
|
|
861 |
|
|
|
1,096 |
|
2028 |
|
|
47 |
|
|
|
72 |
|
|
|
861 |
|
|
|
980 |
|
2029 |
|
|
- |
|
|
|
- |
|
|
|
646 |
|
|
|
646 |
|
|
|
$ |
327 |
|
|
$ |
262 |
|
|
$ |
3,229 |
|
|
$ |
3,818 |
|
The purchase of Adams County Financial Resources in 2020 resulted in the allocation of $800 thousand to customer list intangible, included in other assets, to be amortized over 6.5 years on a straight-line basis.
The amortization expense of the customer list intangible for the six months ended June 30, 2025 was $61 thousand. Of the $123 thousand to be expensed in 2026, $61 thousand has been expensed for the six months ended June 30, 2026. Annual amortization expense of customer list intangible is as follows:
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Adams County Financial Resources |
|
2026 |
|
$ |
123 |
|
2027 |
|
|
49 |
|
|
|
$ |
172 |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
NOTE 3 SECURITIES
Mortgage-backed securities, as shown in the following tables, are all government sponsored enterprises. The amortized cost and fair value of securities, with gross unrealized gains and losses at June 30, 2026 and December 31, 2025, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
June 30, 2026 |
|
|
|
Amortized |
|
|
Gross Unrealized |
|
|
Gross Unrealized |
|
|
Fair |
|
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
Available-for-Sale: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
118,587 |
|
|
$ |
- |
|
|
$ |
(3,047 |
) |
|
$ |
115,540 |
|
U.S. Government agencies |
|
|
109,297 |
|
|
|
5 |
|
|
|
(3,601 |
) |
|
|
105,701 |
|
Mortgage-backed securities |
|
|
173,176 |
|
|
|
186 |
|
|
|
(8,656 |
) |
|
|
164,706 |
|
State and local governments |
|
|
57,860 |
|
|
|
28 |
|
|
|
(2,581 |
) |
|
|
55,307 |
|
Total available-for-sale securities |
|
$ |
458,920 |
|
|
$ |
219 |
|
|
$ |
(17,885 |
) |
|
$ |
441,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
December 31, 2025 |
|
|
|
Amortized |
|
|
Gross Unrealized |
|
|
Gross Unrealized |
|
|
Fair |
|
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
Available-for-Sale: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
91,988 |
|
|
$ |
157 |
|
|
$ |
(2,292 |
) |
|
$ |
89,853 |
|
U.S. Government agencies |
|
|
136,026 |
|
|
|
116 |
|
|
|
(4,181 |
) |
|
|
131,961 |
|
Mortgage-backed securities |
|
|
150,081 |
|
|
|
1,034 |
|
|
|
(7,733 |
) |
|
|
143,382 |
|
State and local governments |
|
|
59,025 |
|
|
|
71 |
|
|
|
(2,220 |
) |
|
|
56,876 |
|
Total available-for-sale securities |
|
$ |
437,120 |
|
|
$ |
1,378 |
|
|
$ |
(16,426 |
) |
|
$ |
422,072 |
|
Information pertaining to securities with gross unrealized losses at June 30, 2026 and December 31, 2025, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
June 30, 2026 |
|
|
|
Less Than Twelve Months |
|
|
Twelve Months & Over |
|
|
Total |
|
|
|
Gross Unrealized |
|
|
Fair |
|
|
Gross Unrealized |
|
|
Fair |
|
|
Gross Unrealized |
|
|
Fair |
|
|
|
Losses |
|
|
Value |
|
|
Losses |
|
|
Value |
|
|
Losses |
|
|
Value |
|
U.S. Treasury |
|
$ |
(851 |
) |
|
$ |
72,400 |
|
|
$ |
(2,196 |
) |
|
$ |
43,140 |
|
|
$ |
(3,047 |
) |
|
$ |
115,540 |
|
U.S. Government agencies |
|
|
(38 |
) |
|
|
5,089 |
|
|
|
(3,563 |
) |
|
|
96,666 |
|
|
|
(3,601 |
) |
|
|
101,755 |
|
Mortgage-backed securities |
|
|
(943 |
) |
|
|
80,649 |
|
|
|
(7,713 |
) |
|
|
49,771 |
|
|
|
(8,656 |
) |
|
|
130,420 |
|
State and local governments |
|
|
(48 |
) |
|
|
4,480 |
|
|
|
(2,533 |
) |
|
|
44,691 |
|
|
|
(2,581 |
) |
|
|
49,171 |
|
Total available-for-sale securities |
|
$ |
(1,880 |
) |
|
$ |
162,618 |
|
|
$ |
(16,005 |
) |
|
$ |
234,268 |
|
|
$ |
(17,885 |
) |
|
$ |
396,886 |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
December 31, 2025 |
|
|
|
Less Than Twelve Months |
|
|
Twelve Months & Over |
|
|
Total |
|
|
|
Gross Unrealized |
|
|
Fair |
|
|
Gross Unrealized |
|
|
Fair |
|
|
Gross Unrealized |
|
|
Fair |
|
|
|
Losses |
|
|
Value |
|
|
Losses |
|
|
Value |
|
|
Losses |
|
|
Value |
|
U.S. Treasury |
|
$ |
(5 |
) |
|
$ |
7,038 |
|
|
$ |
(2,287 |
) |
|
$ |
50,161 |
|
|
$ |
(2,292 |
) |
|
$ |
57,199 |
|
U.S. Government agencies |
|
|
- |
|
|
|
- |
|
|
|
(4,181 |
) |
|
|
120,103 |
|
|
|
(4,181 |
) |
|
|
120,103 |
|
Mortgage-backed securities |
|
|
(50 |
) |
|
|
8,214 |
|
|
|
(7,683 |
) |
|
|
59,386 |
|
|
|
(7,733 |
) |
|
|
67,600 |
|
State and local governments |
|
|
(6 |
) |
|
|
2,534 |
|
|
|
(2,214 |
) |
|
|
45,202 |
|
|
|
(2,220 |
) |
|
|
47,736 |
|
Total available-for-sale securities |
|
$ |
(61 |
) |
|
$ |
17,786 |
|
|
$ |
(16,365 |
) |
|
$ |
274,852 |
|
|
$ |
(16,426 |
) |
|
$ |
292,638 |
|
Unrealized losses on securities have not been recognized into income because the issuers’ bonds are of high credit quality, values have only been impacted by rate changes, and the Company has the intent and ability to hold the securities for the foreseeable future. The fair value is expected to recover as the bonds approach the maturity date.
Proceeds from sales of securities totaled approximately $5.4 million during the first quarter of 2026, resulting in gross losses of $347 thousand. There were no sales of securities during the six months ended June 30, 2025. Below are the gross realized gains or losses for the three and six months ended June 30, 2026 and June 30, 2025.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
(In Thousands) |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
Gross realized gains |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Gross realized losses |
|
|
- |
|
|
|
- |
|
|
|
(347 |
) |
|
|
- |
|
Net realized losses |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(347 |
) |
|
$ |
- |
|
Tax benefit related to net realized losses |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(73 |
) |
|
$ |
- |
|
Net realized loss on sales and related tax benefit is reclassified out of accumulated other comprehensive loss. The net realized loss is included in net loss on sale of available-for-sale securities and the related tax benefit is included in income taxes in the condensed consolidated statements of income and comprehensive income.
The amortized cost and fair value of debt securities at June 30, 2026, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Amortized |
|
|
|
|
|
|
Cost |
|
|
Fair Value |
|
One year or less |
|
$ |
65,453 |
|
|
$ |
64,672 |
|
After one year through five years |
|
|
186,681 |
|
|
|
178,901 |
|
After five years through ten years |
|
|
33,610 |
|
|
|
32,975 |
|
After ten years |
|
|
- |
|
|
|
- |
|
Total |
|
$ |
285,744 |
|
|
$ |
276,548 |
|
Mortgage-backed securities |
|
|
173,176 |
|
|
|
164,706 |
|
Total |
|
$ |
458,920 |
|
|
$ |
441,254 |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
Investments with a carrying value of $250.6 million and $238.2 million at June 30, 2026 and December 31, 2025, respectively, were pledged to secure public deposits and securities sold under repurchase agreements. Investments with a carrying value of $26.5 million and $28.3 million were pledged to the Federal Reserve's Discount Window to provide additional borrowing capacity at June 30, 2026 and December 31, 2025, respectively.
Other securities include Federal Home Loan Bank of Cincinnati and Indianapolis stock in the amount of $10.7 million as of June 30, 2026 and $13 million as of December 31, 2025.
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
NOTE 4 LOANS
The Company had $3 million in loans held for sale at June 30, 2026 as compared to $3.9 million in loans held for sale at December 31, 2025.
Loan balances as of June 30, 2026 and December 31, 2025 are summarized below:
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
Loans: |
|
June 30, 2026 |
|
|
December 31, 2025 |
|
Consumer Real Estate |
|
$ |
533,438 |
|
|
$ |
526,439 |
|
Agricultural Real Estate |
|
|
208,223 |
|
|
|
217,034 |
|
Agricultural |
|
|
244,611 |
|
|
|
218,050 |
|
Commercial Real Estate |
|
|
1,308,600 |
|
|
|
1,355,571 |
|
Commercial and Industrial |
|
|
337,487 |
|
|
|
314,405 |
|
Consumer |
|
|
50,953 |
|
|
|
58,838 |
|
Other |
|
|
22,574 |
|
|
|
23,133 |
|
|
|
|
2,705,886 |
|
|
|
2,713,470 |
|
Less: Net deferred loan fees and costs |
|
|
(1,419 |
) |
|
|
(1,511 |
) |
|
|
|
2,704,467 |
|
|
|
2,711,959 |
|
Less: Allowance for credit losses |
|
|
(27,941 |
) |
|
|
(27,688 |
) |
Plus: Basis adjustment related to fair value hedges |
|
|
546 |
|
|
|
1,719 |
|
Loans - Net |
|
$ |
2,677,072 |
|
|
$ |
2,685,990 |
|
Presented below are fixed rate loans and variable rate loans by portfolio segment as of June 30, 2026 and December 31, 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
|
|
Fixed |
|
|
Variable |
|
|
Fixed |
|
|
Variable |
|
Consumer Real Estate |
|
$ |
256,141 |
|
|
$ |
277,297 |
|
|
$ |
267,368 |
|
|
$ |
259,071 |
|
Agricultural Real Estate |
|
|
96,221 |
|
|
|
112,002 |
|
|
|
104,902 |
|
|
|
112,132 |
|
Agricultural |
|
|
63,014 |
|
|
|
181,597 |
|
|
|
63,789 |
|
|
|
154,261 |
|
Commercial Real Estate |
|
|
733,863 |
|
|
|
574,737 |
|
|
|
800,127 |
|
|
|
555,444 |
|
Commercial and Industrial |
|
|
145,428 |
|
|
|
192,059 |
|
|
|
147,465 |
|
|
|
166,940 |
|
Consumer |
|
|
50,849 |
|
|
|
104 |
|
|
|
58,809 |
|
|
|
29 |
|
Other |
|
|
13,278 |
|
|
|
9,296 |
|
|
|
13,709 |
|
|
|
9,424 |
|
Variable rate loans that have reached ceiling or floor limits are reported as fixed rate loans until such time as their rates adjust away from those limits.
Following are the characteristics and underwriting criteria for each major type of loan the Bank offers:
Consumer Real Estate: Purchase, refinance, or equity financing of one to four family owner occupied dwelling. Success in repayment is subject to borrower’s income, debt level, character in fulfilling payment obligations, employment, and other factors.
Agricultural Real Estate: Purchase of farm real estate or for permanent improvements to the farm real estate. Cash flow from the farm operation is the repayment source and is therefore subject to the financial success of the farm operation.
Agricultural: Loans for the production and housing of crops, fruits, vegetables, and livestock or to fund the purchase or refinance of capital assets such as machinery and equipment and livestock. The production of crops and livestock is especially vulnerable to commodity prices and weather.
Commercial Real Estate: Construction, purchase, and refinance of business purpose real estate. Risks include potential construction delays and overruns, vacancies, collateral value subject to market value fluctuations, interest rate, market demands, borrower’s ability to repay in orderly fashion, and other factors.
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
Commercial and Industrial: Loans to proprietorships, partnerships, or corporations to provide temporary working capital and seasonal loans as well as long term loans for capital asset acquisition. Risks include adequacy of cash flow, reasonableness of projections, financial leverage, economic trends, management ability and estimated capital expenditures during the fiscal year.
Consumer: Funding for individual and family purposes. Success in repayment is subject to borrower’s income, debt level, character in fulfilling payment obligations, employment and other factors.
Other: Primarily funds public improvements in the Bank’s service area. Repayment ability is based on the continuance of the taxation revenue as the source of repayment.
As of June 30, 2026 and December 31, 2025 one to four family residential mortgage loans amounting to $169.1 million and $175.8 million, respectively, and HELOC loans amounting to $17.2 million and $15.8 million, respectively, have been pledged as security for future loans and existing loans the Bank has received from the Federal Home Loan Bank "FHLB". The Bank has also pledged eligible commercial real estate loans of $223.2 million and $231.8 million as of June 30, 2026 and December 31, 2025, respectively, to the FHLB in addition to eligible multi-family real estate loans which amounted to $21 million and $29.1 million as of June 30, 2026 and December 31, 2025, respectively.
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
The following tables present the contractual aging at amortized cost in past due loans by portfolio segment of loans as of June 30, 2026 and December 31, 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
June 30, 2026 |
|
30-59 Days Past Due |
|
|
60-89 Days Past Due |
|
|
Greater Than 90 Days |
|
|
Total Past Due |
|
|
Current |
|
|
Total Financing Receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Real Estate |
|
$ |
2,416 |
|
|
$ |
365 |
|
|
$ |
180 |
|
|
$ |
2,961 |
|
|
$ |
531,151 |
|
|
$ |
534,112 |
|
Agricultural Real Estate |
|
|
413 |
|
|
|
460 |
|
|
|
4,252 |
|
|
|
5,125 |
|
|
|
202,891 |
|
|
|
208,016 |
|
Agricultural |
|
|
205 |
|
|
|
50 |
|
|
|
110 |
|
|
|
365 |
|
|
|
244,594 |
|
|
|
244,959 |
|
Commercial Real Estate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,306,154 |
|
|
|
1,306,154 |
|
Commercial and Industrial |
|
|
474 |
|
|
|
140 |
|
|
|
- |
|
|
|
614 |
|
|
|
336,512 |
|
|
|
337,126 |
|
Consumer |
|
|
103 |
|
|
|
26 |
|
|
|
66 |
|
|
|
195 |
|
|
|
51,331 |
|
|
|
51,526 |
|
Other |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
22,574 |
|
|
|
22,574 |
|
Total |
|
$ |
3,611 |
|
|
$ |
1,041 |
|
|
$ |
4,608 |
|
|
$ |
9,260 |
|
|
$ |
2,695,207 |
|
|
$ |
2,704,467 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
December 31, 2025 |
|
30-59 Days Past Due |
|
|
60-89 Days Past Due |
|
|
Greater Than 90 Days |
|
|
Total Past Due |
|
|
Current |
|
|
Total Financing Receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Real Estate |
|
$ |
3,536 |
|
|
$ |
919 |
|
|
$ |
766 |
|
|
$ |
5,221 |
|
|
$ |
521,822 |
|
|
$ |
527,043 |
|
Agricultural Real Estate |
|
|
516 |
|
|
|
- |
|
|
|
130 |
|
|
|
646 |
|
|
|
216,184 |
|
|
|
216,830 |
|
Agricultural |
|
|
- |
|
|
|
1,444 |
|
|
|
50 |
|
|
|
1,494 |
|
|
|
216,851 |
|
|
|
218,345 |
|
Commercial Real Estate |
|
|
56 |
|
|
|
- |
|
|
|
141 |
|
|
|
197 |
|
|
|
1,352,822 |
|
|
|
1,353,019 |
|
Commercial and Industrial |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
314,096 |
|
|
|
314,096 |
|
Consumer |
|
|
198 |
|
|
|
35 |
|
|
|
83 |
|
|
|
316 |
|
|
|
59,177 |
|
|
|
59,493 |
|
Other |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
23,133 |
|
|
|
23,133 |
|
Total |
|
$ |
4,306 |
|
|
$ |
2,398 |
|
|
$ |
1,170 |
|
|
$ |
7,874 |
|
|
$ |
2,704,085 |
|
|
$ |
2,711,959 |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
The following tables present nonaccrual loans by portfolio segment as of June 30, 2026 and as of December 31, 2025.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
June 30, 2026 |
|
|
|
Nonaccrual |
|
|
|
|
|
Loans Past |
|
|
|
With No |
|
|
|
|
|
Due Over |
|
|
|
Allowance |
|
|
|
|
|
89 Days |
|
|
|
for Credit Loss |
|
|
Nonaccrual |
|
|
Still Accruing |
|
Consumer Real Estate |
|
$ |
2,473 |
|
|
$ |
2,652 |
|
|
$ |
- |
|
Agricultural Real Estate |
|
|
728 |
|
|
|
4,527 |
|
|
|
- |
|
Agricultural |
|
|
116 |
|
|
|
116 |
|
|
|
- |
|
Commercial Real Estate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Commercial & Industrial |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Consumer |
|
|
88 |
|
|
|
88 |
|
|
|
- |
|
Total |
|
$ |
3,405 |
|
|
$ |
7,383 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
December 31, 2025 |
|
|
|
Nonaccrual |
|
|
|
|
|
Loans Past |
|
|
|
With No |
|
|
|
|
|
Due Over |
|
|
|
Allowance |
|
|
|
|
|
89 Days |
|
|
|
for Credit Loss |
|
|
Nonaccrual |
|
|
Still Accruing |
|
Consumer Real Estate |
|
$ |
3,339 |
|
|
$ |
4,050 |
|
|
$ |
- |
|
Agricultural Real Estate |
|
|
5,347 |
|
|
|
5,347 |
|
|
|
- |
|
Agricultural |
|
|
1,441 |
|
|
|
1,441 |
|
|
|
- |
|
Commercial Real Estate |
|
|
141 |
|
|
|
141 |
|
|
|
- |
|
Commercial & Industrial |
|
|
- |
|
|
|
134 |
|
|
|
- |
|
Consumer |
|
|
143 |
|
|
|
143 |
|
|
|
- |
|
Total |
|
$ |
10,411 |
|
|
$ |
11,256 |
|
|
$ |
- |
|
Interest income on nonaccrual loans, recognized on a cash basis, was $67 thousand and $94 thousand for the three and six months ended June 30, 2026 compared to $31 thousand and $52 thousand for the three and six months ended June 30, 2025.
Loans are placed on nonaccrual status in the event that the loan is in past due status for more than 90 days or payment in full of principal and interest is not expected.
The Bank uses a nine tier risk rating system to grade its loans. The grade of a loan may change during the life of the loan.
The risk ratings are described as follows.
1.Zero (0) Unclassified. Any loan which has not been assigned a classification.
2.One (1) Excellent. Credit to premier customers having the highest credit rating based on an extremely strong financial condition, which compares favorably with industry standards (upper quartile of RMA ratios). Financial statements indicate a sound earnings and financial ratio trend for several years with satisfactory profit margins and excellent liquidity exhibited. Prime credits may also be borrowers with loans fully secured by highly liquid collateral such as traded stocks, bonds, certificates of deposit, savings account, etc. No credit or collateral exceptions exist, and the loan adheres to The Bank's loan policy in every respect. Financing alternatives would be readily available and would qualify for unsecured credit. This rate is summarized by high liquidity, minimum risk, strong ratios, and low handling costs.
3.Two (2) Good. Desirable loans of somewhat less stature than rate 1, but with strong financial statements. Loan supported by financial statements containing strong balance sheets and a history of profitability. Probability of serious financial deterioration is unlikely. Possessing a sound repayment source (and a secondary source), which would allow repayment in a reasonable period of time. Individual loans backed by liquid personal assets, established history and unquestionable character.
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
4.Three (3) Satisfactory. Satisfactory loans of average or slightly above average risk – having some deficiency or vulnerability to changing economic conditions, but still fully collectible. Projects should normally demonstrate acceptable debt service coverage. There may be some weakness but with offsetting features of other support readily available. Loans that are meeting the terms of repayment.
Loans may be rated 3 when there is no recent information on which to base a current risk evaluation and the following conditions apply:
At inception, the loan was properly underwritten and did not possess an unwarranted level of credit risk;
1.At inception, the loan was secured with collateral possessing a loan-to-value adequate to protect The Bank from loss;
2.The loan exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance;
3.During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the business is in an industry which is known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk rating is warranted.
5.Four (4) Satisfactory / Monitored. A “4” (Satisfactory/Monitored) risk rating may be established for a loan considered satisfactory but which is of average credit risk due to financial weakness or uncertainty. The loans warrant a higher than average level of monitoring to ensure that weaknesses do not advance. The level of risk in Satisfactory/Monitored classification is considered acceptable and within normal underwriting guidelines, so long as the loan is given management supervision.
6.Five (5) Special Mention. Loans that possess some credit deficiency or potential weakness which deserve close attention, but which do not yet warrant substandard classification. Such loans pose unwarranted financial risk that, if not corrected, could weaken the loan and increase risk in the future. The key distinctions of a 5 (Special Mention) classification are that (1) it is indicative of an unwarranted level of risk, and (2) weaknesses are considered “potential” versus “defined” impairments to the primary source of loan repayment and collateral.
7.Six (6) Substandard. One or more of the following characteristics may be exhibited in loans classified substandard:
1.Loans which possess a defined credit weakness and the likelihood that a loan will be paid from the primary source are uncertain. Financial deterioration is underway and very close attention is warranted to ensure that the loan is collected without loss.
2.Loans are inadequately protected by the current net worth and paying capacity of the borrower.
3.The primary source of repayment is weakened, and The Bank is forced to rely on a secondary source of repayment such as collateral liquidation or guarantees.
4.Loans are characterized by the distinct possibility that The Bank will sustain some loss if deficiencies are not corrected.
5.Unusual courses of action are needed to maintain a high probability of repayment.
6.The borrower is not generating enough cash flow to repay loan principal; however, continues to make interest payments.
7.The lender is forced into a subordinate position or unsecured collateral position due to flaws in documentation.
8.Loans have been restructured so that payment schedules, terms and collateral represent concessions to the borrower when compared to the normal loan terms.
9.The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan
10.There is significant deterioration in the market conditions and the borrower is highly vulnerable to these conditions.
8.Seven (7) Doubtful. One or more of the following characteristics may be exhibited in loans classified Doubtful:
1.Loans have all of the weaknesses of those classified as Substandard. Additionally, however, these weaknesses make collection or liquidation in full based on existing conditions improbable.
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
2.The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.
3.The possibility of loss is high, but, because of certain important pending factors which may strengthen the loan, loss classification is deferred until its exact status is known. A Doubtful classification is established deferring the realization of the loss.
9.Eight (8) Loss. Loans are considered uncollectable and of such little value that continuing to carry them as assets on the institution’s financial statements is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
The following table represents the risk category of loans at amortized cost, by portfolio segment and year of origination, based on the most recent analysis performed as of June 30, 2026 and December 31, 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving |
|
|
Revolving |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
Loans |
|
|
|
|
|
Term Loans Amortized Cost Basis by Origination Year |
|
|
Term |
|
|
Amortized |
|
|
Converted |
|
|
Grand |
|
|
2026 |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
Prior |
|
|
Total |
|
|
Cost Basis |
|
|
to Term |
|
|
Total |
|
Consumer Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass (1-4) |
$ |
34,326 |
|
|
$ |
49,315 |
|
|
$ |
23,672 |
|
|
$ |
46,466 |
|
|
$ |
65,976 |
|
|
$ |
216,803 |
|
|
$ |
436,558 |
|
|
$ |
92,642 |
|
|
$ |
466 |
|
|
$ |
529,666 |
|
Special Mention (5) |
|
579 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
173 |
|
|
|
752 |
|
|
|
19 |
|
|
|
- |
|
|
|
771 |
|
Substandard (6) |
|
- |
|
|
|
340 |
|
|
|
705 |
|
|
|
503 |
|
|
|
64 |
|
|
|
1,866 |
|
|
|
3,478 |
|
|
|
160 |
|
|
|
37 |
|
|
|
3,675 |
|
Doubtful (7) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total Consumer Real Estate |
$ |
34,905 |
|
|
$ |
49,655 |
|
|
$ |
24,377 |
|
|
$ |
46,969 |
|
|
$ |
66,040 |
|
|
$ |
218,842 |
|
|
$ |
440,788 |
|
|
$ |
92,821 |
|
|
$ |
503 |
|
|
$ |
534,112 |
|
Gross charge-offs YTD |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
3 |
|
|
$ |
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass (1-4) |
$ |
14,799 |
|
|
$ |
23,037 |
|
|
$ |
19,125 |
|
|
$ |
20,522 |
|
|
$ |
26,982 |
|
|
$ |
92,625 |
|
|
$ |
197,090 |
|
|
$ |
81 |
|
|
$ |
- |
|
|
$ |
197,171 |
|
Special Mention (5) |
|
- |
|
|
|
221 |
|
|
|
19 |
|
|
|
880 |
|
|
|
243 |
|
|
|
614 |
|
|
|
1,977 |
|
|
|
- |
|
|
|
- |
|
|
|
1,977 |
|
Substandard (6) |
|
- |
|
|
|
20 |
|
|
|
3,799 |
|
|
|
850 |
|
|
|
2,704 |
|
|
|
1,495 |
|
|
|
8,868 |
|
|
|
- |
|
|
|
- |
|
|
|
8,868 |
|
Doubtful (7) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total Agricultural Real Estate |
$ |
14,799 |
|
|
$ |
23,278 |
|
|
$ |
22,943 |
|
|
$ |
22,252 |
|
|
$ |
29,929 |
|
|
$ |
94,734 |
|
|
$ |
207,935 |
|
|
$ |
81 |
|
|
$ |
- |
|
|
$ |
208,016 |
|
Gross charge-offs YTD |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass (1-4) |
$ |
23,325 |
|
|
$ |
34,628 |
|
|
$ |
5,018 |
|
|
$ |
4,395 |
|
|
$ |
6,588 |
|
|
$ |
5,522 |
|
|
$ |
79,476 |
|
|
$ |
131,541 |
|
|
$ |
- |
|
|
$ |
211,017 |
|
Special Mention (5) |
|
1,026 |
|
|
|
1,524 |
|
|
|
44 |
|
|
|
55 |
|
|
|
234 |
|
|
|
- |
|
|
|
2,883 |
|
|
|
5,803 |
|
|
|
- |
|
|
|
8,686 |
|
Substandard (6) |
|
1,291 |
|
|
|
2,194 |
|
|
|
451 |
|
|
|
476 |
|
|
|
364 |
|
|
|
6 |
|
|
|
4,782 |
|
|
|
20,474 |
|
|
|
- |
|
|
|
25,256 |
|
Doubtful (7) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total Agricultural |
$ |
25,642 |
|
|
$ |
38,346 |
|
|
$ |
5,513 |
|
|
$ |
4,926 |
|
|
$ |
7,186 |
|
|
$ |
5,528 |
|
|
$ |
87,141 |
|
|
$ |
157,818 |
|
|
$ |
- |
|
|
$ |
244,959 |
|
Gross charge-offs YTD |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving |
|
|
Revolving |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
Loans |
|
|
|
|
|
Term Loans Amortized Cost Basis by Origination Year |
|
|
Term |
|
|
Amortized |
|
|
Converted |
|
|
Grand |
|
|
2026 |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
Prior |
|
|
Total |
|
|
Cost Basis |
|
|
to Term |
|
|
Total |
|
Commercial Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass (1-4) |
$ |
119,922 |
|
|
$ |
217,312 |
|
|
$ |
119,962 |
|
|
$ |
148,060 |
|
|
$ |
328,667 |
|
|
$ |
288,782 |
|
|
$ |
1,222,705 |
|
|
$ |
5,489 |
|
|
$ |
- |
|
|
$ |
1,228,194 |
|
Special Mention (5) |
|
- |
|
|
|
4,364 |
|
|
|
1,194 |
|
|
|
24,114 |
|
|
|
13,912 |
|
|
|
7,665 |
|
|
|
51,249 |
|
|
|
- |
|
|
|
- |
|
|
|
51,249 |
|
Substandard (6) |
|
1,104 |
|
|
|
1,781 |
|
|
|
54 |
|
|
|
3,303 |
|
|
|
16,496 |
|
|
|
3,973 |
|
|
|
26,711 |
|
|
|
- |
|
|
|
- |
|
|
|
26,711 |
|
Doubtful (7) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total Commercial Real Estate |
$ |
121,026 |
|
|
$ |
223,457 |
|
|
$ |
121,210 |
|
|
$ |
175,477 |
|
|
$ |
359,075 |
|
|
$ |
300,420 |
|
|
$ |
1,300,665 |
|
|
$ |
5,489 |
|
|
$ |
- |
|
|
$ |
1,306,154 |
|
Gross charge-offs YTD |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial & Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass (1-4) |
$ |
33,062 |
|
|
$ |
56,260 |
|
|
$ |
15,987 |
|
|
$ |
34,447 |
|
|
$ |
24,173 |
|
|
$ |
9,841 |
|
|
$ |
173,770 |
|
|
$ |
128,568 |
|
|
$ |
- |
|
|
$ |
302,338 |
|
Special Mention (5) |
|
1,299 |
|
|
|
166 |
|
|
|
230 |
|
|
|
2,251 |
|
|
|
53 |
|
|
|
- |
|
|
|
3,999 |
|
|
|
18,078 |
|
|
|
- |
|
|
|
22,077 |
|
Substandard (6) |
|
- |
|
|
|
273 |
|
|
|
177 |
|
|
|
- |
|
|
|
15 |
|
|
|
117 |
|
|
|
582 |
|
|
|
12,129 |
|
|
|
- |
|
|
|
12,711 |
|
Doubtful (7) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total Commercial & Industrial |
$ |
34,361 |
|
|
$ |
56,699 |
|
|
$ |
16,394 |
|
|
$ |
36,698 |
|
|
$ |
24,241 |
|
|
$ |
9,958 |
|
|
$ |
178,351 |
|
|
$ |
158,775 |
|
|
$ |
- |
|
|
$ |
337,126 |
|
Gross charge-offs YTD |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
39 |
|
|
$ |
- |
|
|
$ |
39 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass (1-4) |
$ |
326 |
|
|
$ |
586 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
18,340 |
|
|
$ |
19,252 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
19,252 |
|
Special Mention (5) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Substandard (6) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,322 |
|
|
|
3,322 |
|
|
|
- |
|
|
|
- |
|
|
|
3,322 |
|
Doubtful (7) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total Other |
$ |
326 |
|
|
$ |
586 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
21,662 |
|
|
$ |
22,574 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
22,574 |
|
Gross charge-offs YTD |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving |
|
|
Revolving |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
Loans |
|
|
|
|
|
Term Loans Amortized Cost Basis by Origination Year |
|
|
Term |
|
|
Amortized |
|
|
Converted |
|
|
Grand |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
Prior |
|
|
Total |
|
|
Cost Basis |
|
|
to Term |
|
|
Total |
|
Consumer Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass (1-4) |
$ |
52,684 |
|
|
$ |
28,385 |
|
|
$ |
52,324 |
|
|
$ |
71,008 |
|
|
$ |
82,628 |
|
|
$ |
150,780 |
|
|
$ |
437,809 |
|
|
$ |
83,296 |
|
|
$ |
462 |
|
|
$ |
521,567 |
|
Special Mention (5) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
131 |
|
|
|
47 |
|
|
|
178 |
|
|
|
19 |
|
|
|
- |
|
|
|
197 |
|
Substandard (6) |
|
259 |
|
|
|
746 |
|
|
|
578 |
|
|
|
492 |
|
|
|
1,318 |
|
|
|
1,694 |
|
|
|
5,087 |
|
|
|
23 |
|
|
|
169 |
|
|
|
5,279 |
|
Doubtful (7) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total Consumer Real Estate |
$ |
52,943 |
|
|
$ |
29,131 |
|
|
$ |
52,902 |
|
|
$ |
71,500 |
|
|
$ |
84,077 |
|
|
$ |
152,521 |
|
|
$ |
443,074 |
|
|
$ |
83,338 |
|
|
$ |
631 |
|
|
$ |
527,043 |
|
Gross charge-offs YTD |
$ |
- |
|
|
$ |
- |
|
|
$ |
20 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
20 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass (1-4) |
$ |
28,079 |
|
|
$ |
20,758 |
|
|
$ |
23,792 |
|
|
$ |
30,919 |
|
|
$ |
20,242 |
|
|
$ |
84,889 |
|
|
$ |
208,679 |
|
|
$ |
88 |
|
|
$ |
- |
|
|
$ |
208,767 |
|
Special Mention (5) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
32 |
|
|
|
- |
|
|
|
282 |
|
|
|
314 |
|
|
|
- |
|
|
|
- |
|
|
|
314 |
|
Substandard (6) |
|
- |
|
|
|
4,890 |
|
|
|
863 |
|
|
|
845 |
|
|
|
1,065 |
|
|
|
86 |
|
|
|
7,749 |
|
|
|
- |
|
|
|
- |
|
|
|
7,749 |
|
Doubtful (7) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total Agricultural Real Estate |
$ |
28,079 |
|
|
$ |
25,648 |
|
|
$ |
24,655 |
|
|
$ |
31,796 |
|
|
$ |
21,307 |
|
|
$ |
85,257 |
|
|
$ |
216,742 |
|
|
$ |
88 |
|
|
$ |
- |
|
|
$ |
216,830 |
|
Gross charge-offs YTD |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass (1-4) |
$ |
40,636 |
|
|
$ |
7,157 |
|
|
$ |
6,692 |
|
|
$ |
8,617 |
|
|
$ |
3,157 |
|
|
$ |
4,373 |
|
|
$ |
70,632 |
|
|
$ |
126,147 |
|
|
$ |
419 |
|
|
$ |
197,198 |
|
Special Mention (5) |
|
53 |
|
|
|
22 |
|
|
|
- |
|
|
|
305 |
|
|
|
11 |
|
|
|
- |
|
|
|
391 |
|
|
|
4,417 |
|
|
|
- |
|
|
|
4,808 |
|
Substandard (6) |
|
2,293 |
|
|
|
29 |
|
|
|
90 |
|
|
|
44 |
|
|
|
- |
|
|
|
- |
|
|
|
2,456 |
|
|
|
13,883 |
|
|
|
- |
|
|
|
16,339 |
|
Doubtful (7) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total Agricultural |
$ |
42,982 |
|
|
$ |
7,208 |
|
|
$ |
6,782 |
|
|
$ |
8,966 |
|
|
$ |
3,168 |
|
|
$ |
4,373 |
|
|
$ |
73,479 |
|
|
$ |
144,447 |
|
|
$ |
419 |
|
|
$ |
218,345 |
|
Gross charge-offs YTD |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving |
|
|
Revolving |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
Loans |
|
|
|
|
|
Term Loans Amortized Cost Basis by Origination Year |
|
|
Term |
|
|
Amortized |
|
|
Converted |
|
|
Grand |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
Prior |
|
|
Total |
|
|
Cost Basis |
|
|
to Term |
|
|
Total |
|
Commercial Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass (1-4) |
$ |
244,689 |
|
|
$ |
132,260 |
|
|
$ |
157,885 |
|
|
$ |
362,675 |
|
|
$ |
175,569 |
|
|
$ |
160,103 |
|
|
$ |
1,233,181 |
|
|
$ |
5,369 |
|
|
$ |
- |
|
|
$ |
1,238,550 |
|
Special Mention (5) |
|
4,355 |
|
|
|
1,211 |
|
|
|
23,915 |
|
|
|
12,380 |
|
|
|
12,381 |
|
|
|
2,088 |
|
|
|
56,330 |
|
|
|
- |
|
|
|
- |
|
|
|
56,330 |
|
Substandard (6) |
|
1,814 |
|
|
|
55 |
|
|
|
34,868 |
|
|
|
13,274 |
|
|
|
1,357 |
|
|
|
6,771 |
|
|
|
58,139 |
|
|
|
- |
|
|
|
- |
|
|
|
58,139 |
|
Doubtful (7) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total Commercial Real Estate |
$ |
250,858 |
|
|
$ |
133,526 |
|
|
$ |
216,668 |
|
|
$ |
388,329 |
|
|
$ |
189,307 |
|
|
$ |
168,962 |
|
|
$ |
1,347,650 |
|
|
$ |
5,369 |
|
|
$ |
- |
|
|
$ |
1,353,019 |
|
Gross charge-offs YTD |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial & Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass (1-4) |
$ |
58,239 |
|
|
$ |
20,557 |
|
|
$ |
38,008 |
|
|
$ |
28,674 |
|
|
$ |
10,454 |
|
|
$ |
6,310 |
|
|
$ |
162,242 |
|
|
$ |
135,200 |
|
|
$ |
45 |
|
|
$ |
297,487 |
|
Special Mention (5) |
|
545 |
|
|
|
42 |
|
|
|
2,418 |
|
|
|
63 |
|
|
|
165 |
|
|
|
- |
|
|
|
3,233 |
|
|
|
1,049 |
|
|
|
- |
|
|
|
4,282 |
|
Substandard (6) |
|
- |
|
|
|
33 |
|
|
|
259 |
|
|
|
21 |
|
|
|
135 |
|
|
|
- |
|
|
|
448 |
|
|
|
11,745 |
|
|
|
- |
|
|
|
12,193 |
|
Doubtful (7) |
|
- |
|
|
|
134 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
134 |
|
|
|
- |
|
|
|
- |
|
|
|
134 |
|
Total Commercial & Industrial |
$ |
58,784 |
|
|
$ |
20,766 |
|
|
$ |
40,685 |
|
|
$ |
28,758 |
|
|
$ |
10,754 |
|
|
$ |
6,310 |
|
|
$ |
166,057 |
|
|
$ |
147,994 |
|
|
$ |
45 |
|
|
$ |
314,096 |
|
Gross charge-offs YTD |
$ |
- |
|
|
$ |
27 |
|
|
$ |
147 |
|
|
$ |
26 |
|
|
$ |
- |
|
|
$ |
50 |
|
|
$ |
250 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass (1-4) |
$ |
600 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
14,870 |
|
|
$ |
3,997 |
|
|
$ |
19,467 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
19,467 |
|
Special Mention (5) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,666 |
|
|
|
3,666 |
|
|
|
- |
|
|
|
- |
|
|
|
3,666 |
|
Substandard (6) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Doubtful (7) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total Other |
$ |
600 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
14,870 |
|
|
$ |
7,663 |
|
|
$ |
23,133 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
23,133 |
|
Gross charge-offs YTD |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
For consumer loans, the Company evaluates credit quality based on the aging status of the loan, as was previously stated, and by payment performance. Consumer loans are placed on nonperforming status in the event that the loan is in past due status for more than 90 days or payment in full of principal and interest is not expected. The following tables present the amortized cost based on payment performance as of June 30, 2026 and December 31, 2025 by year of origination.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
|
|
Term Loans Amortized Cost Basis by Origination Year |
|
|
Term |
|
|
Amortized |
|
|
Grand |
|
|
2026 |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
Prior |
|
|
Total |
|
|
Cost Basis |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment Performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performing |
$ |
6,806 |
|
|
$ |
19,379 |
|
|
$ |
6,085 |
|
|
$ |
5,876 |
|
|
$ |
10,563 |
|
|
$ |
2,101 |
|
|
$ |
50,810 |
|
|
$ |
627 |
|
|
$ |
51,437 |
|
Nonperforming |
|
- |
|
|
|
36 |
|
|
|
19 |
|
|
|
- |
|
|
|
23 |
|
|
|
11 |
|
|
|
89 |
|
|
|
- |
|
|
|
89 |
|
Total Consumer |
$ |
6,806 |
|
|
$ |
19,415 |
|
|
$ |
6,104 |
|
|
$ |
5,876 |
|
|
$ |
10,586 |
|
|
$ |
2,112 |
|
|
$ |
50,899 |
|
|
$ |
627 |
|
|
$ |
51,526 |
|
Gross charge-offs YTD |
$ |
135 |
|
|
$ |
150 |
|
|
$ |
40 |
|
|
$ |
28 |
|
|
$ |
9 |
|
|
$ |
3 |
|
|
$ |
365 |
|
|
$ |
- |
|
|
$ |
365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
|
|
Term Loans Amortized Cost Basis by Origination Year |
|
|
Term |
|
|
Amortized |
|
|
Grand |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
Prior |
|
|
Total |
|
|
Cost Basis |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment Performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performing |
$ |
24,156 |
|
|
$ |
8,134 |
|
|
$ |
7,852 |
|
|
$ |
15,191 |
|
|
$ |
2,671 |
|
|
$ |
816 |
|
|
$ |
58,820 |
|
|
$ |
527 |
|
|
$ |
59,347 |
|
Nonperforming |
|
92 |
|
|
|
1 |
|
|
|
20 |
|
|
|
14 |
|
|
|
15 |
|
|
|
4 |
|
|
|
146 |
|
|
|
- |
|
|
|
146 |
|
Total Consumer |
$ |
24,248 |
|
|
$ |
8,135 |
|
|
$ |
7,872 |
|
|
$ |
15,205 |
|
|
$ |
2,686 |
|
|
$ |
820 |
|
|
$ |
58,966 |
|
|
$ |
527 |
|
|
$ |
59,493 |
|
Gross charge-offs YTD |
$ |
339 |
|
|
$ |
58 |
|
|
$ |
129 |
|
|
$ |
169 |
|
|
$ |
61 |
|
|
$ |
2 |
|
|
$ |
758 |
|
|
$ |
- |
|
|
$ |
758 |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
The following tables present collateral-dependent loans grouped by portfolio segment as of June 30, 2026 and December 31, 2025:
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
June 30, 2026 |
|
|
|
Collateral |
|
|
|
Dependent Loans |
|
Consumer Real Estate |
|
$ |
2,651 |
|
Agricultural Real Estate |
|
|
4,267 |
|
Agricultural |
|
|
110 |
|
Commercial Real Estate |
|
|
- |
|
Commercial & Industrial |
|
|
- |
|
Consumer |
|
|
11 |
|
Total |
|
$ |
7,039 |
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
December 31, 2025 |
|
|
|
Collateral |
|
|
|
Dependent Loans |
|
Consumer Real Estate |
|
$ |
4,016 |
|
Agricultural Real Estate |
|
|
1,433 |
|
Agricultural |
|
|
5,261 |
|
Commercial Real Estate |
|
|
141 |
|
Commercial & Industrial |
|
|
40 |
|
Consumer |
|
|
14 |
|
Total |
|
$ |
10,905 |
|
The Bank periodically evaluates collateral asset values for collateral dependent loans to determine fair value and to measure any anticipated shortfall. Maximum time of re-evaluation is every 12 months for chattels and titled vehicles and every two years for real estate. In this process, third party evaluations are obtained. Until such time that updated appraisals are received, the Bank may discount the collateral value used.
The specific reserve portion of the allowance for credit losses (ACL) for collateral dependent loans was $211 thousand and $145 thousand at June 30, 2026 and December 31, 2025, respectively
The Company periodically modifies a loan for a borrower experiencing financial difficulty in an effort to enhance the borrowers' performance on the note. Modification programs focused on payment pattern changes and/or modified maturity dates with most receiving a combination of the two concessions. The modifications normally do not result in the contractual forgiveness of principal. During the three and six months ended June 30, 2026 and 2025, there were no new loan modifications to borrowers experiencing financial difficulty.
For the three and six months ended June 30, 2026 and 2025, there were no modifications to borrowers experiencing financial difficulty that subsequently defaulted after modification.
As of June 30, 2026, the Company had no foreclosed residential real estate property obtained by physical possession and $208 thousand of consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process according to local jurisdictions. This compares to the Company having no foreclosed residential real estate property obtained by physical possession and $1.4 million of consumer mortgage loans secured by residential real estate properties for which foreclosure proceeding were in process according to local jurisdictions as of December 31, 2025. As of June 30, 2025, the Company had no foreclosed residential real estate property obtained by physical possession and $925 thousand of consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings were in process according to local jurisdictions.
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
The ACL has a direct impact on the provision expense. An increase in the ACL is funded through recoveries and provision expense.
The Company segregates its allowance into two reserves: The ACL and the Allowance for Unfunded Loan Commitments and Letters of Credit (AULC). When combined, these reserves constitute the total ACL as determined using the Current Expected Credit Losses (CECL) methodology.
The allowance does not include an accretable yield of $216 thousand as of December 31, 2025, related to the acquisitions of Perpetual Federal Savings Bank in 2021 and Peoples Federal Savings and Loan Bank in 2022, as previously discussed in Note 2. As of June 30, 2026, the remaining accretable yield has been accreted into income and has a zero balance.
The AULC is reported within other liabilities while the ACL portion associated with loans is netted within the loans, net asset line on the condensed consolidated balance sheets.
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
The following tables present the activity within the ACL for each portfolio segment and shows the contribution provided by both the recoveries and the provision along with the reduction of the allowance caused by charge-offs for the three and six months ended June 30, 2026 and June 30, 2025 in addition to the activity within the ACL for each portfolio segment and ending balances as of and for the year ended December 31, 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Consumer
Real Estate |
|
|
Agricultural
Real Estate |
|
|
Agricultural |
|
|
Commercial
Real Estate |
|
|
Commercial
and Industrial |
|
|
Consumer |
|
|
Other |
|
|
Total |
|
Three Months Ended June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLOWANCE FOR CREDIT LOSSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
4,599 |
|
|
$ |
1,092 |
|
|
$ |
516 |
|
|
$ |
16,282 |
|
|
$ |
3,486 |
|
|
$ |
1,316 |
|
|
$ |
539 |
|
|
$ |
27,830 |
|
Provision for (recovery of) credit losses - loans |
|
|
452 |
|
|
|
(146 |
) |
|
|
298 |
|
|
|
(390 |
) |
|
|
52 |
|
|
|
(89 |
) |
|
|
(4 |
) |
|
|
173 |
|
Charge-offs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(39 |
) |
|
|
(134 |
) |
|
|
- |
|
|
|
(173 |
) |
Recoveries |
|
|
2 |
|
|
|
- |
|
|
|
52 |
|
|
|
2 |
|
|
|
1 |
|
|
|
54 |
|
|
|
- |
|
|
|
111 |
|
Ending Balance |
|
$ |
5,053 |
|
|
$ |
946 |
|
|
$ |
866 |
|
|
$ |
15,894 |
|
|
$ |
3,500 |
|
|
$ |
1,147 |
|
|
$ |
535 |
|
|
$ |
27,941 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Consumer
Real Estate |
|
|
Agricultural
Real Estate |
|
|
Agricultural |
|
|
Commercial
Real Estate |
|
|
Commercial
and Industrial |
|
|
Consumer |
|
|
Other |
|
|
Total |
|
Six Months Ended June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLOWANCE FOR CREDIT LOSSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
4,266 |
|
|
$ |
735 |
|
|
$ |
474 |
|
|
$ |
17,428 |
|
|
$ |
3,286 |
|
|
$ |
953 |
|
|
$ |
546 |
|
|
$ |
27,688 |
|
Provision for (recovery of) credit losses-loans |
|
|
786 |
|
|
|
211 |
|
|
|
340 |
|
|
|
(1,539 |
) |
|
|
250 |
|
|
|
438 |
|
|
|
(11 |
) |
|
|
475 |
|
Charge-offs |
|
|
(3 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(39 |
) |
|
|
(365 |
) |
|
|
- |
|
|
|
(407 |
) |
Recoveries |
|
|
4 |
|
|
|
- |
|
|
|
52 |
|
|
|
5 |
|
|
|
3 |
|
|
|
121 |
|
|
|
- |
|
|
|
185 |
|
Ending Balance |
|
$ |
5,053 |
|
|
$ |
946 |
|
|
$ |
866 |
|
|
$ |
15,894 |
|
|
$ |
3,500 |
|
|
$ |
1,147 |
|
|
$ |
535 |
|
|
$ |
27,941 |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Consumer
Real Estate |
|
|
Agricultural
Real Estate |
|
|
Agricultural |
|
|
Commercial
Real Estate |
|
|
Commercial
and Industrial |
|
|
Consumer |
|
|
Other |
|
|
Total |
|
Three Months Ended June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLOWANCE FOR CREDIT LOSSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
3,683 |
|
|
$ |
771 |
|
|
$ |
306 |
|
|
$ |
16,907 |
|
|
$ |
3,165 |
|
|
$ |
952 |
|
|
$ |
568 |
|
|
$ |
26,352 |
|
Provision for (recovery of) credit
losses - loans |
|
|
(31 |
) |
|
|
(33 |
) |
|
|
27 |
|
|
|
431 |
|
|
|
205 |
|
|
|
53 |
|
|
|
9 |
|
|
|
661 |
|
Charge-offs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(132 |
) |
|
|
- |
|
|
|
(132 |
) |
Recoveries |
|
|
1 |
|
|
|
- |
|
|
|
1 |
|
|
|
16 |
|
|
|
6 |
|
|
|
72 |
|
|
|
- |
|
|
|
96 |
|
Ending Balance |
|
$ |
3,653 |
|
|
$ |
738 |
|
|
$ |
334 |
|
|
$ |
17,354 |
|
|
$ |
3,376 |
|
|
$ |
945 |
|
|
$ |
577 |
|
|
$ |
26,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Consumer
Real Estate |
|
|
Agricultural
Real Estate |
|
|
Agricultural |
|
|
Commercial
Real Estate |
|
|
Commercial
and Industrial |
|
|
Consumer |
|
|
Other |
|
|
Total |
|
Six Months Ended June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLOWANCE FOR CREDIT LOSSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
3,543 |
|
|
$ |
895 |
|
|
$ |
285 |
|
|
$ |
16,560 |
|
|
$ |
2,969 |
|
|
$ |
1,012 |
|
|
$ |
562 |
|
|
$ |
25,826 |
|
Provision for (recovery of) credit
losses - loans |
|
|
108 |
|
|
|
(157 |
) |
|
|
39 |
|
|
|
775 |
|
|
|
420 |
|
|
|
272 |
|
|
|
15 |
|
|
|
1,472 |
|
Charge-offs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(25 |
) |
|
|
(442 |
) |
|
|
- |
|
|
|
(467 |
) |
Recoveries |
|
|
2 |
|
|
|
- |
|
|
|
10 |
|
|
|
19 |
|
|
|
12 |
|
|
|
103 |
|
|
|
- |
|
|
|
146 |
|
Ending Balance |
|
$ |
3,653 |
|
|
$ |
738 |
|
|
$ |
334 |
|
|
$ |
17,354 |
|
|
$ |
3,376 |
|
|
$ |
945 |
|
|
$ |
577 |
|
|
$ |
26,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Consumer
Real Estate |
|
|
Agricultural
Real Estate |
|
|
Agricultural |
|
|
Commercial
Real Estate |
|
|
Commercial
and Industrial |
|
|
Consumer |
|
|
Other |
|
|
Total |
|
Year Ended December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLOWANCE FOR CREDIT LOSSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
3,543 |
|
|
$ |
895 |
|
|
$ |
285 |
|
|
$ |
16,560 |
|
|
$ |
2,969 |
|
|
$ |
1,012 |
|
|
$ |
562 |
|
|
$ |
25,826 |
|
Provision for (recovery of) credit
losses - loans |
|
|
738 |
|
|
|
(160 |
) |
|
|
179 |
|
|
|
844 |
|
|
|
533 |
|
|
|
478 |
|
|
|
(16 |
) |
|
|
2,596 |
|
Charge-offs |
|
|
(20 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(250 |
) |
|
|
(758 |
) |
|
|
- |
|
|
|
(1,028 |
) |
Recoveries |
|
|
5 |
|
|
|
- |
|
|
|
10 |
|
|
|
24 |
|
|
|
34 |
|
|
|
221 |
|
|
|
- |
|
|
|
294 |
|
Ending Balance |
|
$ |
4,266 |
|
|
$ |
735 |
|
|
$ |
474 |
|
|
$ |
17,428 |
|
|
$ |
3,286 |
|
|
$ |
953 |
|
|
$ |
546 |
|
|
$ |
27,688 |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
The following tables present the activity in the AULC for the three and six months ended June 30, 2026 and June 30, 2025 in addition to the activity in the AULC and ending balances as of and for the year ended December 31, 2025:
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Unfunded
Loan
Commitment
& Letters of
Credit |
|
Three Months Ended June 30, 2026 |
|
|
|
ALLOWANCE FOR UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT |
|
|
|
Beginning balance |
|
$ |
1,041 |
|
Provision for credit losses - off balance sheet credit exposures |
|
|
148 |
|
Charge-offs |
|
|
- |
|
Recoveries |
|
|
- |
|
Ending Balance |
|
$ |
1,189 |
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Unfunded
Loan
Commitment
& Letters of
Credit |
|
Six Months Ended June 30, 2026 |
|
|
|
ALLOWANCE FOR UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT |
|
|
|
Beginning balance |
|
$ |
1,035 |
|
Recovery of credit losses-off balance sheet credit exposures |
|
|
154 |
|
Charge-offs |
|
|
- |
|
Recoveries |
|
|
- |
|
Ending Balance |
|
$ |
1,189 |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Unfunded
Loan
Commitment
& Letters of
Credit |
|
Three Months Ended June 30, 2025 |
|
|
|
ALLOWANCE FOR UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT |
|
|
|
Beginning balance |
|
$ |
1,281 |
|
Recovery of credit losses - off balance sheet credit exposures |
|
|
27 |
|
Charge-offs |
|
|
- |
|
Recoveries |
|
|
- |
|
Ending Balance |
|
$ |
1,308 |
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Unfunded
Loan
Commitment
& Letters of
Credit |
|
Six Months Ended June 30, 2025 |
|
|
|
ALLOWANCE FOR UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT |
|
|
|
Beginning balance |
|
$ |
1,541 |
|
Recovery of credit losses-off balance sheet credit exposures |
|
|
(233 |
) |
Charge-offs |
|
|
- |
|
Recoveries |
|
|
- |
|
Ending Balance |
|
$ |
1,308 |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Unfunded
Loan
Commitment
& Letters of
Credit |
|
Year Ended December 31, 2025 |
|
|
|
ALLOWANCE FOR UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT |
|
|
|
Beginning balance |
|
$ |
1,541 |
|
Recovery of credit losses-off balance sheet credit exposures |
|
|
(506 |
) |
Charge-offs |
|
|
- |
|
Recoveries |
|
|
- |
|
Ending Balance |
|
$ |
1,035 |
|
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
NOTE 5 SERVICING
Loans serviced for others are not included in the accompanying Company's consolidated balance sheets. The unpaid principal balances of 1-4 family real estate loans serviced for others were $365.5, $362.8 and $362.6 million at June 30, 2026 and 2025 and at December 31, 2025, respectively. Unpaid principal balances of agricultural real estate loans serviced for others were $168.2, $146.8 and $153.4 million at June 30, 2026 and 2025 and at December 31, 2025, respectively.
The balance of capitalized servicing rights included in assets at June 30, 2026 and 2025 and at December 31, 2025 for 1-4 family real estate loans, was $3.8, $3.5 and $3.6 million, respectively. Agricultural real estate loan servicing rights were $2.6, $2.3 and $2.4 million at June 30, 2026 and 2025 and at December 31, 2025, respectively. The capitalized addition of servicing rights is included in loan servicing income on the Company's consolidated statement of income.
The fair value of the capitalized servicing rights for 1-4 family real estate loans as of June 30, 2026 and 2025 was $4.3 million and $4.7 million, respectively, and at December 31, 2025 was $4.5 million. Capitalized servicing rights for agricultural real estate loans had a fair value of $1.3 million and $2.3 million as of June 30, 2026 and 2025, respectively, and was $1.5 million at December 31, 2025. The valuations were completed by stratifying the loans into like groups based on loan type and term. Impairment was measured by estimating the fair value of each stratum, taking into consideration an estimated level of prepayment based upon current market conditions. An average constant prepayment rate for 1-4 family real estate loans of 11.7% and 7.7% were utilized at June 30, 2026 and 2025, respectively, and 9.8% at December 31, 2025. Agricultural real estate loans utilize an average constant prepayment rate based on the Bank's last twelve months of data. The average constant prepayment rate was 1.536% and 0.447% for fixed rate agricultural real estate loans at June 30, 2026 and 2025, respectively, compared to 1.054% at December 31, 2025. At June 30, 2026, two 1-4 family real estate strata, which included 67 of the total 3,573 loans, were slightly below the carrying value using a discount yield of 5.77% which resulted in the need to establish a $5 thousand valuation allowance. At June 30, 2026, the carrying value of all fourteen agricultural real estate strata, which included 666 loans, using an approximate discount rate of 7.84% were higher than the fair value requiring an impairment expense of $396 thousand, bringing the valuation allowance to $1.3 million. At June 30, 2025, two 1-4 family real estate strata, which included 77 of the total 3,629 loans, were slightly below the carrying value using a discount yield of 5.52% which resulted in the need to establish a $