Loans

6 Months Ended

Jun. 30, 2024

NOTE 3 – LOANS

The composition of net loans receivable as of June 30, 2024 and December 31, 2023:


(Dollars in thousands)	June 30, 2024			December 31, 2023
Commercial and industrial	$	143,950		$	152,125
Commercial real estate		194,637			190,702
Commercial lessors of buildings		96,235			82,687
Construction		55,275			49,214
Consumer mortgage		171,198			166,891
Home equity line of credit		44,331			43,269
Consumer installment		10,646			10,636
Consumer indirect		5,734			5,957
Total loans		722,006			701,481
Allowance for credit losses		(10,587	)		(6,607	)
Deferred loan fees, net		(90	)		(77	)
Net Loans	$	711,329		$	694,797

Loan Origination/Risk Management

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Underwriting standards are designed to promote relationship banking rather than transactional banking. The Company’s management examines current and occasionally projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers; however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable, inventory, and equipment, and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

NOTE 3 – LOANS (CONTINUED)

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single industry. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied.

The top ten collateral exposures in commercial real estate and commercial lessors of buildings at June 30, 2024 are as follows: Industrial, manufacturing and production $57 million; warehouses $38 million; healthcare $27 million; residential investment property $24 million; retail strip centers $17 million; senior housing $17 million; automotive industry $15 million; retail buildings $14 million; lodging $11 million; and office buildings $8 million.

With respect to loans to developers and builders that are secured by non-owner-occupied properties, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success. Construction and land development loans are underwritten utilizing independent appraisal reviews, sensitivity analysis of absorption and lease rates, and financial analysis of the developers and property owners. Construction and land development loans are generally based upon estimates of costs and value associated with the completed project. These estimates may be inaccurate.

Construction and land development loans often involve the disbursement of substantial funds with repayment dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property, or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing.

The Company originates consumer loans utilizing a judgmental underwriting process. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, mitigates risk.

The Company maintains an independent credit department that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures.

Loans serviced for others approximated $136 million and $132 million on June 30, 2024 and December 31, 2023, respectively.

NOTE 3 – LOANS (CONTINUED)

Concentrations of Credit

Nearly all the Company’s lending activity occurs within the state of Ohio, including the four counties of Holmes, Stark, Tuscarawas and Wayne, as well as other markets. The majority of the Company’s loan portfolio consists of commercial and commercial real estate loans. Credit concentrations, including commitments, as determined using North American Industry Classification Codes (NAICS), to the three largest industries compared to total loans on June 30, 2024, included $75.8 million, or 11%, of total loans to lessors of non-residential buildings, $39.3 million, or 5%, of total loans to manufacturers of animal food, and $30.5 million, or 4%, of total loans to hotels. These loans are generally secured by real property and equipment, with repayment expected from operational cash flow. Credit evaluation is based on a review of cash flow coverage of principal, interest payments, and the adequacy of the collateral received.

Allowance for Credit Losses

The following table details activity in the allowance for credit losses ("ACL") by portfolio segment for the three-months ended June 30, 2024 and 2023. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

For the three and six months ended June 30, 2024, the increase in the provision for commercial and industrial loans and commercial real estate loans primarily relates to one individually evaluated commercial loan relationship which has a collateral shortfall. As of June 30, 2024, this loan relationship has a specific reserve of $4.1 million. The remaining provision amounts for the quarter are primarily a result of changes in loan volume and weighted average remaining maturities of the loans in each category.

For the three and six month periods in 2023 the increase in the provision for commercial and industrial loans primarily related to the increase in loan volume. The change in provision for commercial lessors of buildings related to the increase in loans graded special mention. The decrease in provision for commercial real estate loans was due to the payoff of one larger loan relationship with a specific allocation.


(Dollars in thousands)	Beginning Balance		Charge-offs			Recoveries		Provisions (Recovery)			Ending Balance
Three Months Ended June 30, 2024
Commercial and industrial	$	2,224	$	(257	)	$	12	$	3,295		$	5,274
Commercial real estate		1,612		—			1		420			2,033
Commercial lessors of buildings		1,344		—			—		(16	)		1,328
Construction		323		—			—		3			326
Consumer mortgage		1,068		—			8		(15	)		1,061
Home equity line of credit		284		—			—		(8	)		276
Consumer installment		74		(17	)		4		13			74
Consumer indirect		207		—			3		5			215
	$	7,136	$	(274	)	$	28	$	3,697		$	10,587

Six Months Ended June 30, 2024
Commercial and industrial	$	1,737	$	(268	)	$	19	$	3,786		$	5,274
Commercial real estate		1,637		—			1		395			2,033
Commercial lessors of buildings		1,200		—			—		128			1,328
Construction		333		—			—		(7	)		326
Consumer mortgage		1,107		—			9		(55	)		1,061
Home equity line of credit		288		—			—		(12	)		276
Consumer installment		76		(35	)		7		26			74
Consumer indirect		229		(59	)		6		39			215
	$	6,607	$	(362	)	$	42	$	4,300		$	10,587

NOTE 3 – LOANS (CONTINUED)


(Dollars in thousands)	Beginning Balance		Impact of Adopting ASC 326			Charge-offs			Recoveries		Provisions (Recovery)			Ending Balance
Three Months Ended June 30, 2023
Commercial and industrial	$	1,821	$	—		$	—		$	9	$	289		$	2,119
Commercial real estate		2,236		—			—			—		(354	)		1,882
Commercial lessors of buildings		965		—			—			—		272			1,237
Construction		271		—			—			—		12			283
Consumer mortgage		693		—			—			1		20			714
Home equity line of credit		186		—			—			—		(8	)		178
Consumer installment		47		—			(15	)		5		15			52
Consumer indirect		88		—			—			10		(4	)		94
Unallocated		—		—			—			—		—			—
	$	6,307	$	—		$	(15	)	$	25	$	242		$	6,559

Six Months Ended June 30, 2023
Commercial and industrial	$	1,110	$	658		$	—		$	19	$	332		$	2,119
Commercial real estate		2,760		(541	)		—			1		(338	)		1,882
Commercial lessors of buildings		—		974			—			—		263			1,237
Construction		803		(515	)		—			—		(5	)		283
Consumer mortgage		1,268		(580	)		—			1		25			714
Home equity line of credit		—		201			—			—		(23	)		178
Consumer installment		233		(183	)		(23	)		5		20			52
Consumer indirect		—		91			(31	)		34		—			94
Unallocated		664		(664	)		—			—		—			—
	$	6,838	$	(559	)	$	(54	)	$	60	$	274		$	6,559

NOTE 3 – LOANS (CONTINUED)

Age Analysis of Past-Due Loans Receivable and Nonperforming Loans

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past-due status.


(Dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days + Past Due		Total Past Due		Total Loans
June 30, 2024
Commercial and industrial	$	143,869	$	61	$	20	$	—	$	81	$	143,950
Commercial real estate		194,637		—		—		—		—		194,637
Commercial lessors of buildings		96,235		—		—		—		—		96,235
Construction		55,275		—		—		—		—		55,275
Consumer mortgage		169,824		1,286		88		—		1,374		171,198
Home equity line of credit		44,132		93		72		34		199		44,331
Consumer installment		10,620		17		9		—		26		10,646
Consumer indirect		5,682		52		—		—		52		5,734
Total Loans	$	720,274	$	1,509	$	189	$	34	$	1,732	$	722,006

December 31, 2023
Commercial and industrial	$	151,964	$	111	$	50	$	—	$	161	$	152,125
Commercial real estate		190,702		—		—		—		—		190,702
Commercial lessors of buildings		82,687		—		—		—		—		82,687
Construction		49,214		—		—		—		—		49,214
Consumer mortgage		166,411		307		173		—		480		166,891
Home equity line of credit		42,955		33		281		—		314		43,269
Consumer installment		10,602		25		9		—		34		10,636
Consumer indirect		5,821		52		84		—		136		5,957
Total Loans	$	700,356	$	528	$	597	$	—	$	1,125	$	701,481

NOTE 3 – LOANS (CONTINUED)

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of June 30, 2024 and December 31, 2023:


(Dollars in thousands)	Nonaccrual with no ACL		Nonaccrual with ACL		Total Nonaccrual		Loans Past Due 90 Days or More Still Accruing		Total Nonperforming
June 30, 2024
Commercial and industrial	$	39	$	5,251	$	5,290	$	—	$	5,290
Commercial real estate		—		1,099		1,099		—		1,099
Commercial lessors of buildings		13		—		13		—		13
Construction		—		—		—		—		—
Consumer mortgage		122		—		122		—		122
Home equity line of credit		—		—		—		34		34
Consumer installment		14		—		14		—		14
Consumer indirect		111		—		111		—		111
Total Loans	$	299	$	6,350	$	6,649	$	34	$	6,683

December 31, 2023
Commercial and industrial	$	59	$	—	$	59	$	—	$	59
Commercial real estate		62		—		62		—		62
Commercial lessors of buildings		15		—		15		—		15
Construction		—		—		—		—		—
Consumer mortgage		172		—		172		—		172
Home equity line of credit		—		—		—		—		—
Consumer installment		49		—		49		—		49
Consumer indirect		39		—		39		—		39
Total Loans	$	396	$	—	$	396	$	—	$	396

Interest income recognized on nonaccrual loans for the six months ended June 30, 2024 was $33 thousand.

Collateral-Dependent Financial Assets

When loan repayment is expected to be provided substantially through the operation or sale of collateral and the borrower is experiencing financial difficulty, expected credit losses are based on the fair value of the collateral. The class of loan represents the primary collateral type associated with the loan. There were no collateral dependent loans as of December 31, 2023. The following table presents the amortized cost basis of collateral dependent loans by class of loan:


	Type of Collateral
(Dollars in thousands)	Real Estate		Blanket Liens
June 30, 2024
Commercial and industrial	$	—	$	5,251
Commercial real estate		1,099		—
Total collateral dependent loans	$	1,099	$	5,251

NOTE 3 – LOANS (CONTINUED)

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis includes all commercial loans before origination and an annual review of those with an outstanding commitment greater than $500 thousand. The Company uses the following definitions for risk ratings:

Pass. Loans classified as pass (Cash Secured, Exceptional, Acceptable, Monitor, or Pass Watch) may exhibit a wide array of characteristics but at a minimum represent an acceptable risk to the Bank. Borrowers in this rating may have leveraged but acceptable balance sheet positions, satisfactory asset quality, stable to favorable sales and earnings trends, acceptable liquidity and adequate cash flow. Loans are considered fully collectible and require an average amount of administration. While generally adhering to credit policy, these loans may exhibit occasional exceptions that do not result in undue risk to the Bank. Borrowers are generally capable of absorbing setbacks, financial and otherwise, without the threat of failure.

Special Mention. Assets assigned a Special Mention grade are not considered classified assets but are considered criticized. These assets exhibit potential weaknesses that, deserve management’s close attention. If left uncorrected, those potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. Loans in this rating warrant special attention but have not yet reached the point of concern for loss. These assets have deteriorated sufficiently to the point they would have difficulty refinancing elsewhere. Similarly, purchasers of the business would not be eligible for bank financing unless they represent a significantly stronger credit risk.

Substandard. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

NOTE 3 – LOANS (CONTINUED)

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass rated loans. Based on the most recent analysis performed, the following tables present the recorded investment in non-homogeneous loans by internal risk rating system as of June 30, 2024 and December 31, 2023:


	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	2024		2023				2022				2021				2020				Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
June 30, 2024
Commercial and industrial:
Pass	$	8,357	$	30,310			$	21,888			$	9,692			$	4,015			$	8,008	$	43,459	$	—	$	125,729
Special mention		63		58				179				156				277				—		2,322		—		3,055
Substandard		—		1,486				3,006				938				328				1,056		8,352		—		15,166
Doubtful		—		—				—				—				—				—		—		—		—
Total	$	8,420	$	31,854			$	25,073			$	10,786			$	4,620			$	9,064	$	54,133	$	—	$	143,950
YTD gross charge-offs	$	—	$	246	$	-	$	—	$	-	$	22	$	-	$	—	$	-	$	—	$	—	$	—	$	268
Commercial real estate:
Pass	$	6,793	$	23,687			$	40,996			$	49,193			$	14,045			$	39,537	$	822	$	—	$	175,073
Special Mention		—		237				1,467				3,041				2,069				510		—		—		7,324
Substandard		348		1,099				—				—				—				10,793		—		—		12,240
Doubtful		—		—				—				—				—				—		—		—		—
Total	$	7,141	$	25,023			$	42,463			$	52,234			$	16,114			$	50,840	$	822	$	—	$	194,637
YTD gross charge-offs	$	—	$	—	$	-	$	—	$	-	$	—	$	-	$	—	$	-	$	—	$	—			$	—
Commercial lessors of buildings:
Pass	$	17,262	$	21,112			$	22,031			$	15,655			$	3,274			$	14,544	$	391	$	—	$	94,269
Special Mention		—		—				—				184				—				—		—		—		184
Substandard		—		—				567				233				969				13		—		—		1,782
Doubtful		—		—				—				—				—				—		—		—		—
Total	$	17,262	$	21,112			$	22,598			$	16,072			$	4,243			$	14,557	$	391	$	—	$	96,235
YTD gross charge-offs	$	—	$	—	$	-	$	—	$	-	$	—	$	-	$	—	$	-	$	—	$	—	$	—	$	—
Commercial Construction:
Pass	$	4,785	$	30,418			$	9,926			$	760			$	851			$	470	$	1,352	$	—	$	48,562
Special Mention		—		—				—												—		—		—		—
Substandard		—		—				—				—				—				76		—		—		76
Doubtful		—		—				—				—				—				—		—		—		—
Total	$	4,785	$	30,418			$	9,926			$	760			$	851			$	546	$	1,352	$	—	$	48,638
YTD gross charge-offs	$	—	$	—	$	-	$	—	$	-	$	—	$	-	$	—	$	-	$	—	$	—	$	—	$	—
Total
Pass	$	37,197	$	105,527			$	94,841			$	75,300			$	22,185			$	62,559	$	46,024	$	—	$	443,633
Special Mention		63		295				1,646				3,381				2,346				510		2,322		—		10,563
Substandard		348		2,585				3,573				1,171				1,297				11,938		8,352		—		29,264
Doubtful		—		—				—				—				—				—		—		—		—
Total	$	37,608	$	108,407			$	100,060			$	79,852			$	25,828			$	75,007	$	56,698	$	—	$	483,460
YTD commercial gross charge-offs	$	—	$	246			$	—			$	22			$	—			$	—	$	—	$	—	$	268

NOTE 3 – LOANS (CONTINUED)


	Term Loans Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
December 31, 2023
Commercial and industrial:
Pass	$	32,037	$	25,996	$	12,196	$	5,207	$	3,388	$	7,112	$	45,423	$	—	$	131,359
Special mention		76		225		522		33		33		65		3,872		—		4,826
Substandard		782		2,968		1,021		1,017		106		1,416		8,630		—		15,940
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	32,895	$	29,189	$	13,739	$	6,257	$	3,527	$	8,593	$	57,925	$	—	$	152,125
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate:
Pass	$	22,206	$	38,696	$	54,830	$	12,233	$	19,543	$	21,938	$	647	$	—	$	170,093
Special Mention		241		1,380		2,292		2,496		—		322		—		—		6,731
Substandard		1,150		—		888		—		466		11,374		—		—		13,878
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	23,597	$	40,076	$	58,010	$	14,729	$	20,009	$	33,634	$	647	$	—	$	190,702
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial lessors of buildings:
Pass	$	18,353	$	22,762	$	15,455	$	6,429	$	3,543	$	8,934	$	360	$	—	$	75,836
Special Mention		—		436		1,687		—		3,578		—		—		—		5,701
Substandard		—		—		—		989		—		161		—		—		1,150
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	18,353	$	23,198	$	17,142	$	7,418	$	7,121	$	9,095	$	360	$	—	$	82,687
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial construction:
Pass	$	24,119	$	14,855	$	576	$	272	$	281	$	256	$	—	$	—	$	40,359
Special Mention		—		258		43		635		—		—		—		—		936
Substandard		—		—		—		30		80		—		—		—		110
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	24,119	$	15,113	$	619	$	937	$	361	$	256	$	—	$	—	$	41,405
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total
Pass	$	96,715	$	102,309	$	83,057	$	24,141	$	26,755	$	38,240	$	46,430	$	—	$	417,647
Special Mention		317		2,299		4,544		3,164		3,611		387		3,872		—		18,194
Substandard		1,932		2,968		1,909		2,036		652		12,951		8,630		—		31,078
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	98,964	$	107,576	$	89,510	$	29,341	$	31,018	$	51,578	$	58,932	$	—	$	466,919
YTD commercial gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

NOTE 3 – LOANS (CONTINUED)

The Company monitors the credit risk profile by payment activity for the loan classes listed below. Loans past due 90 days or more and loans on nonaccrual status are considered nonperforming. The following table presents the amortized cost in consumer loans based on payment activity as of June 30, 2024 and December 31, 2023:


	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
June 30, 2024
Consumer mortgage:
Performing	$	8,086	$	27,855	$	33,551	$	34,420	$	30,606	$	36,558	$	—	$	—	$	171,076
Nonperforming		—		—		—		—		—		122		—		—		122
Total	$	8,086	$	27,855	$	33,551	$	34,420	$	30,606	$	36,680	$	—	$	—	$	171,198
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer Construction:
Performing	$	1,884	$	3,142	$	1,076	$	168	$	324	$	43	$	—	$	—	$	6,637
Nonperforming		—		—		—		—		—		—		—		—		—
Total	$	1,884	$	3,142	$	1,076	$	168	$	324	$	43	$	—	$	—	$	6,637
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Home equity line of credit:
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	44,257	$	40	$	44,297
Nonperforming		—		—		—		—		—		—		34		—		34
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	44,291	$	40	$	44,331
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer installment:
Performing	$	2,785	$	4,400	$	2,216	$	623	$	336	$	205	$	67	$	—	$	10,632
Nonperforming		—		7		—		—		—		7		—		—		14
Total	$	2,785	$	4,407	$	2,216	$	623	$	336	$	212	$	67	$	—	$	10,646
YTD gross charge-offs	$	—	$	12	$	15	$	2	$	1	$	5	$	—	$	—	$	35
Consumer indirect:
Performing	$	545	$	715	$	1,011	$	537	$	530	$	2,285	$	—	$	—	$	5,623
Nonperforming		—		22		—		—		—		89		—		—		111
Total	$	545	$	737	$	1,011	$	537	$	530	$	2,374	$	—	$	—	$	5,734
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	59	$	—	$	—	$	59
Total
Performing	$	13,300	$	36,112	$	37,854	$	35,748	$	31,796	$	39,091	$	44,324	$	40	$	238,265
Nonperforming		—		29		—		—		—		218		34		—		281
Total	$	13,300	$	36,141	$	37,854	$	35,748	$	31,796	$	39,309	$	44,358	$	40	$	238,546
YTD consumer gross charge-offs	$	—	$	12	$	15	$	2	$	1	$	64	$	—	$	—	$	94

NOTE 3 – LOANS (CONTINUED)


	Term Loans Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
December 31, 2023
Consumer mortgage:
Performing	$	24,521	$	34,798	$	35,802	$	32,259	$	8,931	$	30,408	$	—	$	—	$	166,719
Nonperforming		—		—		—		—		—		172		—		—		172
Total	$	24,521	$	34,798	$	35,802	$	32,259	$	8,931	$	30,580	$	—	$	—	$	166,891
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer construction:
Performing	$	5,463	$	1,477	$	264	$	483	$	81	$	41	$	—	$	—	$	7,809
Nonperforming		—		—		—		—		—		—		—		—		—
Total	$	5,463	$	1,477	$	264	$	483	$	81	$	41	$	—	$	—	$	7,809
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Home equity line of credit:
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	43,223	$	46	$	43,269
Nonperforming		—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	43,223	$	46	$	43,269
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer installment:
Performing	$	5,705	$	3,067	$	981	$	513	$	118	$	184	$	68	$	—	$	10,636
Nonperforming		—		—		—		—		—		—		—		—		—
Total	$	5,705	$	3,067	$	981	$	513	$	118	$	184	$	68	$	—	$	10,636
YTD gross charge-offs	$	2	$	12	$	19	$	5	$	2	$	6	$	—	$	—	$	46
Consumer indirect:
Performing	$	858	$	1,086	$	622	$	568	$	607	$	2,128	$	—	$	—	$	5,869
Nonperforming		—		3		—		—		81		4		—		—		88
Total	$	858	$	1,089	$	622	$	568	$	688	$	2,132	$	—	$	—	$	5,957
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	66	$	—	$	—	$	66
Total
Performing	$	36,547	$	40,428	$	37,669	$	33,823	$	9,737	$	32,761	$	43,291	$	46	$	234,302
Nonperforming		—		3		—		—		81		176		—		—		260
Total	$	36,547	$	40,431	$	37,669	$	33,823	$	9,818	$	32,937	$	43,291	$	46	$	234,562
YTD consumer gross charge-offs	$	2	$	12	$	19	$	5	$	2	$	72	$	—	$	—	$	112

Consumer mortgages are substantially secured by one to four family owner occupied properties and consumer indirect loans are substantially secured by recreational vehicles. All nonperforming consumer loans are evaluated when placed on nonaccrual status and may be charged down based on the collateral fair value less cost to sell if that value is lower than the outstanding balance. As of June 30, 2024 there were two loans secured by consumer real estate totaling $38 thousand in process of foreclosure.

Modifications to Borrowers Experiencing Financial Difficulty

Occasionally, the Bank modifies loans to borrowers in financial distress by providing – principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

In some cases, the Bank may provide multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

There were no modifications of loans to borrowers in financial distress completed during the six months ended June 30, 2024 and 2023.