Note 2 - Loans and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Financing Receivables [Text Block]

Note 2: Loans and Allowance for Credit Losses

Loans

The following table presents the composition of the loan portfolio, excluding mortgage loans held for sale, as of the dates indicated.

	March 31, 2024			December 31, 2023
Real estate construction	$	61,486		$	55,379
Consumer real estate		244,946			241,564
Commercial real estate		414,615			419,130
Commercial non real estate		41,835			41,555
Public sector and IDA		59,742			60,551
Consumer non real estate		41,467			38,996
Gross loans	$	864,091		$	857,175
Less unearned income and deferred fees and costs		(543	)		(529	)
Loans, net of unearned income and deferred fees and costs	$	863,548		$	856,646
Allowance for credit losses on loans		(9,055	)		(9,094	)
Total loans, net	$	854,493		$	847,552

The amortized cost of loans excludes accrued interest receivable of $3,035 at March 31, 2024 and $3,032 at December 31, 2023.

Past Due and Nonaccrual Loans

The following tables present the aging of past due loans, by loan pool, as of the dates indicated.

March 31, 2024	Accruing Current Loans		Accruing Loans 30 – 89 Days Past Due		Accruing Loans 90 or More Days Past Due		Nonaccrual Loans		Total Loans		Accruing and Nonaccrual 90 or More Days Past Due
Real Estate Construction
Construction, 1-4 family residential	$	11,603	$	-	$	-	$	-	$	11,603	$	-
Construction, other		49,883		-		-		-		49,883		-
Consumer Real Estate
Equity line		17,404		112		-		-		17,516		-
Residential closed-end first liens		129,086		598		121		-		129,805		121
Residential closed-end junior liens		4,932		11		-		-		4,943		-
Investor-owned residential real estate		92,605		77		-		-		92,682		-
Commercial Real Estate
Multifamily residential real estate		118,309		-		-		-		118,309		-
Commercial real estate owner-occupied		112,302		147		-		2,381		114,830		225
Commercial real estate, other		181,476		-		-		-		181,476		-
Commercial Non Real Estate
Commercial and industrial		41,564		22		39		210		41,835		39
Public Sector and IDA
States and political subdivisions		59,742		-		-		-		59,742		-
Consumer Non-Real Estate
Credit cards		4,664		1		1		-		4,666		1
Automobile		12,817		104		-		-		12,921		-
Other consumer loans		23,762		117		1		-		23,880		1
Total	$	860,149	$	1,189	$	162	$	2,591	$	864,091	$	387

December 31, 2023	Accruing Current Loans		Accruing Loans 30 – 89 Days Past Due		Accruing Loans 90 or More Days Past Due		Nonaccrual Loans		Total Loans		Accruing and Nonaccrual 90 or More Days Past Due
Real Estate Construction
Construction, 1-4 family residential	$	13,442	$	-	$	-	$	-	$	13,442	$	-
Construction, other		41,916		21		-		-		41,937		-
Consumer Real Estate
Equity line		17,178		104		-		-		17,282		-
Residential closed-end first liens		124,886		662		131		-		125,679		131
Residential closed-end junior liens		5,027		12		-		-		5,039		-
Investor-owned residential real estate		93,564		-		-		-		93,564		-
Commercial Real Estate
Multifamily residential real estate		119,052		195		-		-		119,247		-
Commercial real estate owner-occupied		114,477		336		-		2,408		117,221		231
Commercial real estate, other		182,662		-		-		-		182,662		-
Commercial Non-Real Estate
Commercial and industrial		41,249		57		28		221		41,555		28
Public Sector and IDA
States and political subdivisions		60,551		-		-		-		60,551		-
Consumer Non-Real Estate
Credit cards		4,648		17		3		-		4,668		3
Automobile		12,126		135		-		-		12,261		-
Other consumer loans		21,934		107		26		-		22,067		26
Total	$	852,712	$	1,646	$	188	$	2,629	$	857,175	$	419

The following table presents nonaccrual loans, by loan class, as of the dates indicated:

	March 31, 2024						December 31, 2023
	With No Allowance		With an Allowance		Total		With No Allowance		With an Allowance		Total
Commercial Real Estate
Commercial real estate owner-occupied	$	2,156	$	225	$	2,381	$	2,177	$	231	$	2,408
Commercial Non Real Estate
Commercial and industrial		-		210		210		-		221		221
Total	$	2,156	$	435	$	2,591	$	2,177	$	452	$	2,629

During the three months ended March 31, 2024, no accrued interest receivable was reversed against interest income.

Allowance for Credit Losses on Loans (ACLL)

The following tables present the activity in the ACLL by portfolio segment for the periods indicated:

	Activity in the Allowance for Credit Losses on Loans for the Three Months Ended March 31, 2024
	Real Estate Construction			Consumer Real Estate			Commercial Real Estate		Commercial Non Real Estate			Public Sector and IDA			Consumer Non Real Estate			Unallocated		Total
Balance, December 31, 2023	$	408		$	3,162		$	3,576	$	682		$	333		$	583		$	350	$	9,094
Charge-offs		-			-			-		-			-			(109	)		-		(109	)
Recoveries		-			-			16		2			-			47			-		65
Provision for (recovery of) credit losses		(59	)		(194	)		264		(37	)		(12	)		12			31		5
Balance, March 31, 2024	$	349		$	2,968		$	3,856	$	647		$	321		$	533		$	381	$	9,055

	Activity in the Allowance for Credit Losses on Loans for the Three Months Ended March 31, 2023
	Real Estate Construction			Consumer Real Estate			Commercial Real Estate		Commercial Non Real Estate			Public Sector and IDA			Consumer Non Real Estate			Unallocated		Total
Balance, December 31, 2022	$	450		$	2,199		$	3,642	$	930		$	319		$	506		$	179	$	8,225
Adoption of ASU 2016-13		(21	)		1,261			700		216			(15	)		72			129		2,342
Charge-offs		-			-			-		(12	)		-			(80	)		-		(92	)
Recoveries		-			102			12		2			-			57			-		173
Provision for (recovery of) credit losses		22			(260	)		20		58			(10	)		-			172		2
Balance, March 31, 2023	$	451		$	3,302		$	4,374	$	1,194		$	294		$	555		$	480	$	10,650

	Activity in the Allowance for Credit Losses on Loans for the Year Ended December 31, 2023
	Real Estate Construction			Consumer Real Estate			Commercial Real Estate			Commercial Non-Real Estate			Public Sector and IDA			Consumer Non- Real Estate			Unallocated		Total
Balance, December 31, 2022	$	450		$	2,199		$	3,642		$	930		$	319		$	506		$	179	$	8,225
Adoption of ASU 2016-13		(21	)		1,261			700			216			(15	)		72			129		2,342
Charge-offs		-			(17	)		-			(214	)		-			(247	)		-		(478	)
Recoveries		-			103			45			6			-			129			-		283
Provision for (recovery of) for credit losses		(21	)		(384	)		(811	)		(256	)		29			123			42		(1,278	)
Balance, December 31, 2023	$	408		$	3,162		$	3,576		$	682		$	333		$	583		$	350	$	9,094

The following tables present information about the ACLL for individually evaluated loans and collectively evaluated loans by portfolio segment as of the dates indicated.

	Allowance for Credit Losses on Loans by Segment and Evaluation Method
March 31, 2024	Real Estate Construction		Consumer Real Estate		Commercial Real Estate		Commercial Non Real Estate		Public Sector and IDA		Consumer Non Real Estate		Unallocated		Total
Individually evaluated	$	-	$	74	$	362	$	129	$	-	$	3	$	-	$	568
Collectively evaluated		349		2,894		3,494		518		321		530		381		8,487
Total	$	349	$	2,968	$	3,856	$	647	$	321	$	533	$	381	$	9,055

	Allowance for Credit Losses on Loans by Segment and Evaluation Method
December 31, 2023	Real Estate Construction		Consumer Real Estate		Commercial Real Estate		Commercial Non-Real Estate		Public Sector and IDA		Consumer Non- Real Estate		Unallocated		Total
Individually evaluated	$	-	$	74	$	367	$	126	$	-	$	5	$	-	$	572
Collectively evaluated		408		3,088		3,209		556		333		578		350		8,522
Total	$	408	$	3,162	$	3,576	$	682	$	333	$	583	$	350	$	9,094

The following tables present information about individually evaluated loans and collectively evaluated loans by portfolio segment as of the dates indicated.

	Loans by Segment and Evaluation Method as of
March 31, 2024	Real Estate Construction		Consumer Real Estate		Commercial Real Estate		Commercial Non-Real Estate		Public Sector and IDA		Consumer Non-Real Estate		Total
Individually evaluated	$	280	$	1,237	$	8,777	$	237	$	-	$	34	$	10,565
Collectively evaluated		61,206		243,709		405,838		41,598		59,742		41,433		853,526
Total	$	61,486	$	244,946	$	414,615	$	41,835	$	59,742	$	41,467	$	864,091

	Loans by Segment and Evaluation Method as of
December 31, 2023	Real Estate Construction		Consumer Real Estate		Commercial Real Estate		Commercial Non-Real Estate		Public Sector and IDA		Consumer Non-Real Estate		Total
Individually evaluated	$	286	$	1,183	$	8,805	$	227	$	-	$	43	$	10,544
Collectively evaluated		55,093		240,381		410,325		41,328		60,551		38,953		846,631
Total	$	55,379	$	241,564	$	419,130	$	41,555	$	60,551	$	38,996	$	857,175

Collateral Dependent Loans

Loans are collateral dependent when repayment is expected substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. Collateral dependent loans are individually evaluated. The Company measures the ACL on collateral dependent loans based upon the fair value of the collateral, as permitted by ASU 2016-13. Fair value of the collateral is adjusted for liquidation costs/discounts. If the fair value of the collateral falls below the amortized cost of the loan, the shortfall is recognized in the ACLL. If the fair value of the collateral exceeds the amortized cost, no ACL is required.

As of March 31, 2024, five of the Company’s individually evaluated loans were collateral dependent. As of December 31, 2023, three of the Company’s individually evaluated loans were collateral dependent. All collateral dependent loans were secured by real estate as of March 31, 2024 and December 31, 2023. The following table details the amortized cost of the collateral dependent loans as of the date indicated:

	March 31, 2024				December 31, 2023
	Balance		Related Allowance		Balance		Related Allowance
Consumer Real Estate
Residential closed-end first lien	$	121	$	-	$	7		-
Commercial Real Estate
Commercial real estate, owner occupied		2,156		-		2,177		-
Total Loans	$	2,277	$	-	$	2,184	$	-

Credit Quality

The Company categorizes loans by risk based on relevant information about the ability of borrowers to service their debt, including: collateral and financial information, historical payment experience, credit documentation and current economic trends, among other factors. At origination, each loan is assigned a risk rating. Ongoing analysis of the loan portfolio adjusts risk ratings on an individual loan basis to reflect updated information. Loans rated pass have acceptable credit quality. Loans rated special mention have potential weakness due to challenging economic or financial conditions. Loans rated classified have well-defined weaknesses that heighten the risk of default. The tables below present the loan portfolio by amortized cost basis, year of origination, loan class, credit quality, and charge-offs as of the dates indicated.

															Revolving
	Term Loans Amortized Cost Basis by Origination Year														Loans
															Converted
March 31, 2024	Prior		2020		2021		2022		2023		2024		Revolving		to Term		Total
Construction, residential
Pass	$	-	$	-	$	-	$	1,216	$	6,251	$	219	$	3,917	$	-	$	11,603
Construction, other
Pass	$	3,748	$	1,280	$	9,211	$	21,615	$	5,596	$	4,960	$	3,193	$	-	$	49,603
Classified		-		-		280		-		-		-		-		-		280
Total	$	3,748	$	1,280	$	9,491	$	21,615	$	5,596	$	4,960	$	3,193	$	-	$	49,883
Equity lines
Pass	$	76	$	-	$	-	$	-	$	-	$	-	$	17,303	$	47	$	17,426
Classified		-		-		-		-		-		-		90		-		90
Total	$	76	$	-	$	-	$	-	$	-	$	-	$	17,393	$	47	$	17,516
Residential closed-end first liens
Pass	$	37,144	$	14,707	$	30,734	$	30,468	$	12,135	$	4,170	$	-	$	-	$	129,358
Classified		447		-		-		-		-		-		-		-		447
Total	$	37,591	$	14,707	$	30,734	$	30,468	$	12,135	$	4,170	$	-	$	-	$	129,805
Residential closed-end junior liens
Pass	$	1,602	$	-	$	169	$	1,379	$	1,343	$	450	$	-	$	-	$	4,943
Investor-owned residential real estate
Pass	$	28,964	$	23,228	$	18,699	$	13,248	$	4,586	$	1,323	$	1,934	$	-	$	91,982
Classified		700		-		-		-		-		-		-		-		700
Total	$	29,664	$	23,228	$	18,699	$	13,248	$	4,586	$	1,323	$	1,934	$	-	$	92,682
Multifamily residential real estate
Pass	$	41,102	$	2,130	$	40,354	$	25,647	$	8,894	$	62	$	120	$	-	$	118,309
Commercial real estate, owner occupied
Pass	$	51,271	$	23,144	$	4,425	$	16,640	$	8,027	$	120	$	2,426	$	-	$	106,053
Special mention		6,396		-		-		-		-		-		-		-		6,396
Classified		2,381		-		-		-		-		-		-		-		2,381
Total	$	60,048	$	23,144	$	4,425	$	16,640	$	8,027	$	120	$	2,426	$	-	$	114,830
Commercial real estate, other
Pass	$	89,181	$	18,902	$	35,780	$	22,476	$	13,216	$	1,215	$	706	$	-	$	181,476
Commercial and industrial
Pass	$	6,338	$	944	$	12,299	$	6,475	$	6,164	$	2,139	$	7,239	$	-	$	41,598
Classified		210		-		-		7		-		-		20		-		237
Total	$	6,548	$	944	$	12,299	$	6,482	$	6,164	$	2,139	$	7,259	$	-	$	41,835
Public sector and IDA
Pass	$	20,432	$	231	$	26,375	$	6,242	$	6,462	$	-	$	-	$	-	$	59,742
Credit cards
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	4,666	$	-	$	4,666
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	22	$	-	$	22
Automobile
Pass	$	182	$	437	$	1,388	$	2,375	$	6,448	$	2,091	$	-	$	-	$	12,921
Other consumer
Pass	$	367	$	691	$	1,673	$	5,109	$	10,180	$	5,092	$	734	$	-	$	23,846
Special Mention		-		-		-		-		15		11		-		-		26
Classified		-		-		-		-		-		8		-		-		8
Total	$	367	$	691	$	1,673	$	5,109	$	10,195	$	5,111	$	734	$	-	$	23,880
YTD gross charge-offs	$	-	$	4	$	-	$	13	$	46	$	24	$	-	$	-	$	87
Total Loans
Pass	$	280,407	$	85,694	$	181,107	$	152,890	$	89,302	$	21,841	$	42,238	$	47	$	853,526
Special Mention		6,396		-		-		-		15		11		-		-		6,422
Classified		3,738		-		280		7		-		8		110		-		4,143
Total	$	290,541	$	85,694	$	181,387	$	152,897	$	89,317	$	21,860	$	42,348	$	47	$	864,091
YTD gross charge-offs	$	-	$	4	$	-	$	13	$	46	$	24	$	22	$	-	$	109

															Revolving
	Term Loans Amortized Cost Basis by Origination Year														Loans
															Converted
December 31, 2023	Prior		2019		2020		2021		2022		2023		Revolving		to Term		Total
Construction, residential
Pass	$	-	$	-	$	246	$	158	$	3,275	$	5,157	$	4,606	$	-	$	13,442
Construction, other
Pass	$	2,741	$	1,094	$	1,305	$	12,671	$	17,397	$	4,884	$	1,559	$	-	$	41,651
Classified		-		-		-		286		-		-		-		-		286
Total	$	2,741	$	1,094	$	1,305	$	12,957	$	17,397	$	4,884	$	1,559	$	-	$	41,937
Equity lines
Pass	$	51	$	-	$	-	$	-	$	-	$	-	$	17,182	$	-	$	17,233
Classified		-		-		-		-		-		-		49		-		49
Total	$	51	$	-	$	-	$	-	$	-	$	-	$	17,231	$	-	$	17,282
Residential closed-end first liens
Pass	$	32,404	$	5,806	$	14,634	$	31,414	$	29,787	$	11,208	$	-	$	-	$	125,253
Classified		426		-		-		-		-		-		-		-		426
Total	$	32,830	$	5,806	$	14,634	$	31,414	$	29,787	$	11,208	$	-	$	-	$	125,679
YTD gross charge-offs	$	-	$	-	$	17	$	-	$	-	$	-	$	-	$	-	$	17
Residential closed-end junior liens
Pass	$	1,499	$	116	$	-	$	172	$	1,387	$	1,850	$	-	$	15	$	5,039
Investor-owned residential real estate
Pass	$	24,556	$	5,162	$	23,649	$	19,062	$	14,166	$	4,880	$	1,283	$	98	$	92,856
Classified		708		-		-		-		-		-		-		-		708
Total	$	25,264	$	5,162	$	23,649	$	19,062	$	14,166	$	4,880	$	1,283	$	98	$	93,564
Multifamily residential real estate
Pass	$	40,092	$	1,806	$	2,148	$	40,544	$	25,681	$	8,850	$	126	$	-	$	119,247
Commercial real estate, owner occupied
Pass	$	41,573	$	11,091	$	23,407	$	4,792	$	16,720	$	7,914	$	2,919	$	-	$	108,416
Special mention		6,396		-		-		-		-		-		-		-		6,396
Classified		2,409		-		-		-		-		-		-		-		2,409
Total	$	50,378	$	11,091	$	23,407	$	4,792	$	16,720	$	7,914	$	2,919	$	-	$	117,221
Commercial real estate, other
Pass	$	68,889	$	21,841	$	19,098	$	36,157	$	22,697	$	13,279	$	701	$	-	$	182,662
Commercial and industrial
Pass	$	6,004	$	438	$	1,060	$	12,667	$	6,954	$	6,938	$	7,267	$	-	$	41,328
Classified		220		-		-		-		7		-		-		-		227
Total	$	6,224	$	438	$	1,060	$	12,667	$	6,961	$	6,938	$	7,267	$	-	$	41,555
YTD gross charge-offs	$	-	$	12	$	-	$	-	$	-	$	12	$	190	$	-	$	214
Public sector and IDA
Pass	$	20,817	$	-	$	235	$	26,702	$	6,335	$	6,462	$	-	$	-	$	60,551
Credit cards
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	4,668	$	-	$	4,668
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	39	$	-	$	39
Automobile
Pass	$	78	$	204	$	563	$	1,619	$	2,750	$	7,047	$	-	$	-	$	12,261
YTD gross charge-offs	$	-	$	3	$	-	$	1	$	38	$	-	$	-	$	-	$	42
Other Consumer
Pass	$	93	$	334	$	811	$	1,943	$	5,815	$	12,356	$	672	$	-	$	22,024
Special mention		-		-		-		-		-		17		-		-		17
Classified		-		-		-		-		11		15		-		-		26
Total	$	93	$	334	$	811	$	1,943	$	5,826	$	12,388	$	672	$	-	$	22,067
YTD gross charge-offs	$	-	$	-	$	-	$	19	$	52	$	95	$	-	$	-	$	166
Total Loans
Pass	$	238,797	$	47,892	$	87,156	$	187,901	$	152,964	$	90,825	$	40,983	$	113	$	846,631
Special mention		6,396		-		-		-		-		17		-		-		6,413
Classified		3,763		-		-		286		18		15		49		-		4,131
Total	$	248,956	$	47,892	$	87,156	$	188,187	$	152,982	$	90,857	$	41,032	$	113	$	857,175
YTD gross charge-offs	$	-	$	15	$	17	$	20	$	90	$	107	$	229	$	-	$	478

Loan Modifications to Borrowers Experiencing Financial Difficulty

The Company modifies loans for a variety of reasons. At the date of modification, the Company assesses whether the borrower is experiencing financial difficulty. If the borrower is experiencing financial difficulty, the loan’s risk rating is evaluated and is typically changed to special mention or classified, which results in individual evaluation of the loan for the ACLL. There were two loans modified for borrowers experiencing financial difficulty during the three months period ended March 31, 2024. There were no loans to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2023.

The following table presents information about loans modified for borrowers experiencing financial difficulty during the three months and as of the date indicated.

March 31, 2024	Amortized Cost Basis		% of Class			Type of Modification	Financial Effect
Commercial Real Estate
Commercial real estate owner-occupied	$	6,396		5.57	%	Interest only payments	6 months of interest only payments, re-amortization of the balance to contractual maturity.
Commercial Non real estate
Commercial and industrial	$	7		0.02	%	Term extension	Renewal of single-payment note for an additional 3 months.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty. Both loans are in current status as of March 31, 2024.

There were no loans to borrowers experiencing financial difficulty that had a payment default during the three months ended March 31, 2024 and 2023 and were modified in the twelve months prior to that default. Default is determined at 90 or more days past due, upon charge-off, or upon foreclosure. Modified loans in default are individually evaluated for the allowance for credit losses or if the modified loan is deemed uncollectible, the loan, or a portion of the loan, is written off and the allowance for credit losses is adjusted accordingly.

Residential Real Estate Loans In Process of Foreclosure

As of March 31, 2024 the Company had three 1-4 family residential real estate loans totaling $126 in process of foreclosure. As of December 31, 2023, one 1-4 family residential real estate loan of $7 was in process of foreclosure.

ACL on Unfunded Commitments

The following tables present the balance and activity in the ACL for unfunded commitments for the three months ended March 31, 2024 and 2023:

Allowance for Credit Losses on Unfunded Commitments
Balance, December 31, 2023	$	259
Recovery of credit losses		(15	)
Balance, March 31, 2024	$	244

Allowance for Credit Losses on Unfunded Commitments
Balance, December 31, 2022	$	35
Adoption of ASU 2016-13		207
Recovery of credit losses		-
Balance, March 31, 2023	$	242