Note 5 - Foreclosed Assets

6 Months Ended

Jun. 30, 2025

NOTE 5 - FORECLOSED ASSETS

Real estate that is acquired through foreclosure or a deed in lieu of foreclosure is classified as other real estate owned ("OREO") until it is sold. When real estate is acquired through foreclosure or by deed in lieu of foreclosure, it is recorded at its fair value, less the estimated costs of disposal. If the fair value of the property is less than the loan balance, the difference is charged against the allowance for credit losses.

Assets are classified as foreclosed when physical possession of the collateral is taken regardless of whether foreclosure proceedings have taken place. Other foreclosed assets received in satisfaction of borrowers’ debts are initially recorded at fair value of the asset less estimated costs to sell.

	*June 30, 2025*						*December 31, 2024*
	*Balance*		*Valuation Allowance*		*Net Balance*		*Balance*		*Valuation Allowance*		*Net Balance*

Other foreclosed assets	$	738	$	—	$	738	$	1,391	$	—	$	1,391

The following represents the roll forward of foreclosed assets:

	*For the Three Months Ended*						*For the Six Months Ended*
	*June 30,*						*June 30,*
	*2025*			*2024*			*2025*			*2024*
Beginning balance	$	1,337		$	2,332		$	1,391		$	2,777
New foreclosed assets		1,133			—			1,185			49
Valuation reductions from sales		—			44			—			111
Direct write-downs		(635	)		—			(635	)		—
Sales		(1,097	)		(478	)		(1,203	)		(1,039	)
Ending balance	$	738		$	1,898		$	738		$	1,898

Activity in the valuation allowance is as follows:

	*For the Three Months Ended*					*For the Six Months Ended*
	*June 30,*					*June 30,*
	*2025*		*2024*			*2025*		*2024*
Beginning balance	$	—	$	44		$	—	$	111
Reductions from sales		—		(44	)		—		(111	)
Ending balance	$	—	$	—		$	—	$	—

At June 30, 2025, there were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process. At December 31, 2024, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process was $93,000. At June 30, 2025, other foreclosed assets consisted of vehicles and machinery repossessed in connection with equipment finance leases.