v3.25.2
Loans
 6 Months Ended
Jun. 30, 2025
Loans [Abstract]  
Loans
Note 5 – Loans


The Company originates commercial, industrial, agricultural, residential, and consumer loans primarily to customers throughout north central, central and south central Pennsylvania, southern New York, and Wilmington and Dover, Delaware. The HVBC acquisition expanded our lending market further into southeast Pennsylvania, including Montgomery, Bucks and Philadelphia Counties as well as Burlington County, New Jersey. Although the Company had a diversified loan portfolio at June 30, 2025 and December 31, 2024, a substantial portion of its debtors’ ability to honor their contracts is dependent on the economic conditions within these regions. The following table summarizes the primary segments of the loan portfolio and how those segments are analyzed within the allowance for credit losses - loans as of June 30, 2025 and December 31, 2024 (in thousands):


  
   June 30, 2025
     December 31, 2024  
Real estate loans:
            
Residential
  
$
341,671
    
$
351,398
  
Commercial
    
1,151,585
      
1,121,435
  
Agricultural
    
331,995
      
327,722
  
Construction
    
138,307
      
164,326
  
Consumer
    
46,933
      
133,207
  
Other commercial loans
    
150,171
      
131,310
  
Other agricultural loans
    
28,366
      
29,662
  
State and political subdivision loans
    
52,727
      
54,182
  
Total
    
2,241,755
      
2,313,242
  
Allowance for credit losses - loans
    
22,109
   
21,699
Net loans
  
$
2,219,646
    
$
2,291,543
  


Allowance for Credit Losses - Loans
 

The allowance for credit losses related to loans consists of loans evaluated collectively and individually for expected credit losses. It represents an estimate of credit losses over the expected life of the loans as of the balance sheet date and is recorded as a reduction to net loans. Loans individually evaluated for impairment consist of non-accrual commercial loans and recently modified loans that were experiencing financial difficulty at the time of the modification. The allowance for credit losses for off-balance sheet credit exposures includes estimated losses on unfunded loan commitments, letters of credit and other off-balance sheet credit exposures. The total allowance for credit losses is increased by charges to expense, through the provision for credit losses, and decreased by charge-offs, net of recoveries.
 

The following table presents the components of the allowance for credit losses as of June 30, 2025 and December 31, 2024 (in thousands):

   
June 30, 2025
     December 31, 2024   
Allowance for Credit Losses - Loans
  
$
22,109
     $
21,699  
Allowance for Credit Losses - Off-Balance Sheet credit Exposure
    
914
       676  
Total allowance for credit losses
  
$
23,023
     $
22,375  


The following table presents the activity in the allowance for credit losses for the three and six months ended June 30, 2025 and 2024 (in thousands):

   
Allowance for Credit
Losses - Loans
    
Allowance for Credit
Losses - Off-Balance
Sheet credit Exposure
    
Total
  
Balance at March 31, 2025
  
$
22,081
    
$
763
    
$
22,844
  
Loans charge-off
    
(596
)
    
-
      
(596
)
Recoveries of loans previously charged-off
    
25
      
-
      
25
  
Net loans charged-off
    
(571
)
    
-
      
(571
)
Provision for credit losses
    
599
      
151
      
750
  
Balance at June 30, 2025
  
$
22,109
    
$
914
    
$
23,023
  

Balance at December 31, 2024
  
$
21,699
    
$
676
    
$
22,375
  
Loans charge-off
    
(781
)
    
-
      
(781
)
Recoveries of loans previously charged-off
    
54
      
-
      
54
  
Net loans charged-off
    
(727
)
    
-
      
(727
)
Provision for credit losses
    
1,137
      
238
   
1,375
  
Balance at June 30, 2025
  
$
22,109
    
$
914
    
$
23,023
  

   
Allowance for Credit
Losses - Loans
    
Allowance for Credit
Losses - Off-Balance
Sheet credit Exposure
    
Total
  
Balance at March 31, 2024
  
$
21,598
    
$
938
    
$
22,536
  
Loans charge-off
    
(682
)
    
-
      
(682
)
Recoveries of loans previously charged-off
    
7
      
-
      
7
  
Net loans charged-off
    
(675
)
    
-
      
(675
)
Provision for credit losses
    
1,874
      
128
   
2,002
  
Balance at June 30, 2024
  
$
22,797
    
$
1,066
    
$
23,863
  

Balance at December 31, 2023
  
$
21,153
    
$
1,265
    
$
22,418
  
Loans charge-off
    
(1,356
)
    
-
      
(1,356
)
Recoveries of loans previously charged-off
    
14
      
-
      
14
  
Net loans charged-off
    
(1,342
)
    
-
      
(1,342
)
Provision for credit losses
    
2,986
      
(199
)
    
2,787
  
Balance at June 30, 2024
  
$
22,797
    
$
1,066
    
$
23,863
  


The following tables present the activity in the allowance for credit losses – loans, by portfolio segment, for the three and six months ended June 30, 2025 and 2024 (in thousands):


   
For the three months ended June 30, 2025
  
   
Balance at
March 31, 2025
    
Charge-offs
    
Recoveries
    
Provision
    
Balance at
June 30, 2025
  
Real estate loans:
                              
Residential
  
$
3,213
    
$
-
    
$
-
    
$
(151
)
  
$
3,062
  
Commercial
    
9,237
      
-
      
-
      
661
      
9,898
  
Agricultural
    
4,350
      
-
      
-
      
192
      
4,542
  
Construction
    
1,552
      
-
      
-
      
(279
)
    
1,273
  
Consumer
    
1,418
      
(275
)
    
7
      
37
      
1,187
  
Other commercial loans
    
2,032
      
(321
)
    
18
      
196
      
1,925
  
Other agricultural loans
    
137
      
-
      
-
      
(5
)
    
132
  
State and political subdivision loans
    
57
      
-
      
-
      
(1
)
    
56
  
Unallocated
    
85
      
-
      
-
      
(51
)
    
34
  
Total
  
$
22,081
    
$
(596
)
  
$
25
    
$
599
    
$
22,109
  

   
For the six months ended June 30, 2025
  
   
Balance at
December 31, 2024
    
Charge-offs
    
Recoveries
    
Provision
    
Balance at
June 30, 2025
  
Real estate loans:
                              
Residential
  
$
1,940
    
$
-
    
$
-
    
$
1,122
    
$
3,062
  
Commercial
    
9,174
      
(40
)
    
-
      
764
      
9,898
  
Agricultural
    
3,529
      
-
      
-
      
1,013
      
4,542
  
Construction
    
1,402
      
-
      
-
      
(129
)
    
1,273
  
Consumer
    
1,405
      
(297
)
    
33
      
46
      
1,187
  
Other commercial loans
    
3,699
      
(444
)
    
21
      
(1,351
)
    
1,925
  
Other agricultural loans
    
133
      
-
      
-
      
(1
)
    
132
  
State and political subdivision loans
    
61
      
-
      
-
      
(5
)
    
56
  
Unallocated
    
356
      
-
      
-
      
(322
)
    
34
  
Total
  
$
21,699
    
$
(781
)
  
$
54
    
$
1,137
    
$
22,109
  

   
For the three months ended June 30, 2024
  
   
Balance at
March 31, 2024
    
Charge-offs
    
Recoveries
    
Provision
    
Balance at
June 30, 2024
  
Real estate loans:
                              
Residential
  
$
2,347
    
$
-
    
$
-
    
$
8
    
$
2,355
  
Commercial
    
9,741
      
-
      
-
      
542
      
10,283
  
Agricultural
    
3,672
      
-
      
-
      
98
      
3,770
  
Construction
    
1,595
      
-
      
-
      
32
      
1,627
  
Consumer
    
1,266
      
(7
)
    
5
      
(53
)
    
1,211
  
Other commercial loans
    
2,680
      
(675
)
    
2
      
1,249
      
3,256
  
Other agricultural loans
    
174
      
-
      
-
      
32
      
206
  
State and political subdivision loans
    
65
      
-
      
-
      
(2
)
    
63
  
Unallocated
    
58
      
-
      
-
      
(32
)
    
26
  
Total
  
$
21,598
    
$
(682
)
  
$
7
    
$
1,874
    
$
22,797
  

   
For the six months ended June 30, 2024
  
   
Balance at
December 31, 2023
    
Charge-offs
    
Recoveries
    
Provision
    
Balance at
June 30, 2024
  
Real estate loans:
                              
Residential
  
$
2,354
    
$
-
    
$
-
    
$
1
    
$
2,355
  
Commercial
    
9,178
      
-
      
-
      
1,105
      
10,283
  
Agricultural
    
3,264
      
-
      
-
      
506
      
3,770
  
Construction
    
1,950
      
-
      
-
      
(323
)
    
1,627
  
Consumer
    
1,496
      
(37
)
    
10
      
(258
)
    
1,211
  
Other commercial loans
    
2,229
      
(1,319
)
    
4
      
2,342
      
3,256
  
Other agricultural loans
    
270
      
-
      
-
      
(64
)
    
206
  
State and political subdivision loans
    
45
      
-
      
-
      
18
      
63
  
Unallocated
    
367
      
-
      
-
      
(341
)
    
26
  
Total
  
$
21,153
    
$
(1,356
)
  
$
14
    
$
2,986
    
$
22,797
  



The provision for the first six months of 2025 was driven by an increase in the amount of past due loans and the annual update of the loss driver analysis. This update includes revising prepayment and curtailment speeds. In addition, loss rates are updated to include the most recent completed year of 2024. For residential loans, the historical loss rate increased, while the prepayment speed slowed resulting in an increased provision. For other commercial loans, the historical loss rate decreased in the annual update resulting in a decrease in the provision for 2025.



The provision for the first half of 2024 was driven by the annual update of the loss driver analysis and recording specific reserves for certain other commercial loans. This update includes revising prepayment and curtailment speeds. In addition, loss rates are updated to include the most recent completed year of 2023.



The following table presents the allowance for credit losses – loans and amortized cost basis of loans under the CECL methodology as of June 30, 2025 and December 31, 2024 (in thousands):


   
Allowance for Credit Losses - Loans
            Loans  
June 30, 2025
  
Collectively
evaluated
   
Individually
evaluated
   
Total Allowance
for Credit
Losses - Loans
    
Collectively
evaluated
   
Individually
evaluated
   
Total
Loans
  
Real estate loans:
                                    
     Residential
  
$
3,034
    
$
28
    
$
3,062
    
$
339,623
    
$
2,048
    
$
341,671
  
     Commercial
    
9,815
      
83
      
9,898
      
1,138,715
      
12,870
      
1,151,585
  
     Agricultural
    
4,542
      
-
      
4,542
      
328,805
      
3,190
      
331,995
  
     Construction
    
1,273
      
-
      
1,273
      
136,978
      
1,329
      
138,307
  
Consumer
    
187
      
1,000
      
1,187
      
45,860
      
1,073
      
46,933
  
Other commercial loans
    
1,560
      
365
      
1,925
      
147,850
      
2,321
      
150,171
  
Other agricultural loans
    
132
      
-
      
132
      
27,963
      
403
      
28,366
  
State and political subdivision loans
    
56
      
-
      
56
      
52,727
      
-
      
52,727
  
Unallocated
    
34
      
-
      
34
      
-
      
-
      
-
  
Total
  
$
20,633
    
$
1,476
    
$
22,109
    
$
2,218,521
    
$
23,234
    
$
2,241,755
  

December 31, 2024
Real estate loans:
                                    
Residential
  
$
1,902
    
$
38
    
$
1,940
    
$
349,909
    
$
1,489
    
$
351,398
  
Commercial
    
9,070
      
104
      
9,174
      
1,105,847
      
15,588
      
1,121,435
  
Agricultural
    
3,529
      
-
      
3,529
      
323,660
      
4,062
      
327,722
  
Construction
    
1,402
      
-
      
1,402
      
164,043
      
283
      
164,326
  
Consumer
    
391
      
1,014
      
1,405
      
132,180
      
1,027
      
133,207
  
Other commercial loans
    
2,952
      
747
      
3,699
      
128,728
      
2,582
      
131,310
  
Other agricultural loans
    
133
      
-
      
133
      
29,125
      
537
      
29,662
  
State and political subdivision loans
    
61
      
-
      
61
      
54,182
      
-
      
54,182
  
Unallocated
    356       -       356       -       -       -  
Total
  
$
19,796
    
$
1,903
    
$
21,699
    
$
2,287,674
    
$
25,568
    
$
2,313,242
  

Non-performing Loans



Non-performing loans include those loans that are considered nonaccrual, described in more detail below, and all loans past due 90 or more days. Loans are considered for non-accrual status upon reaching 90 days delinquency, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans, or if full payment of principal and interest is not expected. Additionally, if management is made aware of other information including bankruptcy, repossession, death, or legal proceedings, the loan may be placed on non-accrual status. If a loan is 90 days or more past due and is well secured and in the process of collection, it may still be considered accruing.


The following table reflects the non-performing loan receivables, as well as those on non-accrual status as of June 30, 2025 and December 31, 2024, respectively. The balances are presented by class of loan receivable (in thousands):

              June 30, 2025     December 31, 2024          
 
   
Nonaccrual
With a
related
allowance
    
Nonaccrual
Without a
related
allowance
    
90 days
or greater
past due
and
accruing
    
Total non-
performing
loans
    
Nonaccrual
With a
related
allowance
    
Nonaccrual
Without a
related
allowance
    
90 days
or greater
past due
and
accruing
    
Total non-
performing
loans
  
Real estate loans:
                                                  
Mortgages
  
$
156
    
$
3,467
    
$
-
    
$
3,623
     $ 165     $
2,541     $ -     $ 2,706  
Home Equity
    
-
      
68
      
-
      
68
       -       165       -       165  
Commercial
    
2,084
      
10,786
      
333
      
13,203
       2,099       12,265       -       14,364  
Agricultural
    
-
      
3,190
      
-
      
3,190
       -       4,062       269       4,331  
Construction
    
-
      
1,329
      
-
      
1,329
       -       283       -       283  
Consumer
    
782
      
-
      
14
      
796
       1,002       -       7       1,009  
Other commercial loans
    
435
      
1,895
      
-
      
2,330
       2,382       200       -       2,582  
Other agricultural loans
     -
        403
       -
        403
        -
       537       -
        537
  
   
$
3,457
    
$
21,138
    
$
347
    
$
24,942
     $ 5,648     $
20,053     $ 276     $
25,977  


As of June 30, 2025, there were $21.1 million of non-accrual loans that did not have a related allowance for credit losses. The estimated fair values of the collateral securing these loans exceeded their carrying amount, or the loans were previously charged down to the realizable collateral values. Accordingly, no specific valuation allowance was considered to be necessary.



The following table presents, by class of loans and leases, the amortized cost basis of collateral-dependent nonaccrual loans and leases and type of collateral as of June 30, 2025 and December 31, 2024 (in thousands):

June 30, 2025  
Real Estate
    
Business Assets
    
None
    
Total
  
Real estate loans:
                        
     Mortgages
  
$
3,623
    
$
-
    
$
-
    
$
3,623
  
     Home Equity
    
68
      
-
      
-
      
68
  
     Commercial
    
12,870
      
-
      
-
      
12,870
  
     Agricultural
    
3,190
      
-
      
-
      
3,190
  
     Construction
    
1,329
      
-
      
-
      
1,329
  
Consumer
    
-
      
-
      
782
      
782
  
Other commercial loans
    
-
      
2,330
      
-
      
2,330
  
Other agricultural loans
    
-
      
403
      
-
      
403
  
   
$
21,080
    
$
2,733
     $
782
    
$
24,595
  

December 31, 2024
  
Real Estate
    Business Assets
    
None
   
Total
 
Real estate loans:
                        
     Mortgages
  
$
2,706
    
$
-
    
$
-
    
$
2,706
  
     Home Equity
    
165
      
-
      
-
      
165
  
     Commercial
    
14,364
      
-
      
-
      
14,364
  
     Agricultural
    
4,062
      
-
      
-
      
4,062
  
     Construction
    
283
      
-
      
-
      
283
  
Consumer
    
-
      
-
      
1,002
      
1,002
  
Other commercial loans
    
-
      
2,582
      
-
      
2,582
  
Other agricultural loans
    
-
      
537
      
-
      
537
  
   
$
21,580
    
$
3,119
    
$
1,002
    
$
25,701
  

Credit Quality Information


For commercial real estate loans, agricultural real estate loans, construction loans, other commercial loans, other agricultural loans, and state and political subdivision loans, management uses a ten grade internal risk rating system to monitor and assess credit quality. The first six grades under the revised system are considered not criticized and are aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The definitions of each rating are defined below:


 •
Pass (Grades 1-6) – These loans are to customers with credit quality ranging from an acceptable to very high quality and are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.


•
Special Mention (Grade 7) – This loan grade is in accordance with regulatory guidance and includes loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.


•
Substandard (Grade 8) – This loan grade is in accordance with regulatory guidance and includes loans that have a well-defined weakness based on objective evidence and are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.


•
Doubtful (Grade 9) – This loan grade is in accordance with regulatory guidance and includes loans that have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.


•
Loss (Grade 10) – This loan grade is in accordance with regulatory guidance and includes loans that are considered uncollectible, or of such value that continuance as an asset is not warranted.


To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay the loan as agreed, the Company’s loan rating process includes several layers of internal and external oversight. The Company’s loan officers are responsible for the timely and accurate risk rating of the loans in each of their portfolios at origination and on an ongoing basis under the supervision of management.  All commercial, agricultural and state and political relationships over $500,000 are reviewed annually to ensure the appropriateness of the loan grade. In addition, the Company engages an external consultant on at least an annual basis to: 1) review a minimum of 50% of the dollar volume of the commercial loan portfolio on an annual basis, 2) a large sample of relationships in aggregate over $1,000,000, 3) selected loan relationships over $750,000 which are over 30 days past due, or classified Special Mention, Substandard, Doubtful, or Loss, and 4) such other loans which management or the consultant deems appropriate.


The following tables represent credit exposures by internally assigned grades, by origination year, as of June 30, 2025 and December 31, 2024 (in thousands):

                                       
Revolving
    
Revolving
        
    Term Loans Amortized Cost Basis by Origination Year
    
Loans
    
Loans
        
                                       
Amortized
    
Converted
        
June 30, 2025
  
2025
    
2024
    
2023
    
2022
    
2021
    
Prior
    
Cost Basis
    
to Term
    
Total
  
Commercial real estate
                                                      
Risk Rating
                                                      
Pass
  
$
44,305
    
$
66,047
    
$
99,690
    
$
347,623
    
$
179,312
    
$
319,454
    
$
31,039
    
$
1,721
    
$
1,089,191
  
Special Mention
    
-
      
-
      
804
      
5,882
      
4,987
      
8,173
      
737
      
-
      
20,583
  
Substandard
    
-
      
84
      
1,051
      
23,641
      
5,023
      
11,507
      
154
      
351
      
41,811
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total
  
$
44,305
    
$
66,131
    
$
101,545
    
$
377,146
    
$
189,322
    
$
339,134
    
$
31,930
    
$
2,072
    
$
1,151,585
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
40
    
$
-
    
$
-
    
$
40
  
                                                                         
Agricultural real estate
                                                                        
Risk Rating
                                                                        
Pass
  
$
22,323
    
$
32,274
    
$
19,660
    
$
51,040
    
$
23,346
    
$
146,880
    
$
16,135
    
$
204
    
$
311,862
  
Special Mention
    
672
      
586
      
4,177
      
594
      
360
      
3,543
      
860
      
-
      
10,792
  
Substandard
    
495
      
678
      
-
      
2,057
      
692
      
4,700
      
639
      
80
      
9,341
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total
  
$
23,490
    
$
33,538
    
$
23,837
    
$
53,691
    
$
24,398
    
$
155,123
    
$
17,634
    
$
284
    
$
331,995
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
                                                                         
Construction
                                    

                                 
Risk Rating
                                                                        
Pass
  
$
10,321
    
$
34,188
    
$
44,946
    
$
34,451
    
$
-
    
$
-
    
$
4,836
    
$
-
    
$
128,742
  
Special Mention
    
-
      
-
      
-
      
4,501
      
2,946
      
-
      
-
      
-
      
7,447
  
Substandard
    
-
      
-
      
789
      
1,046
      
283
      
-
      
-
      
-
      
2,118
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total
  
$
10,321
    
$
34,188
    
$
45,735
    
$
39,998
    
$
3,229
    
$
-
    
$
4,836
    
$
-
    
$
138,307
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
                                                                         
Other commercial loans
                                    

                                 
Risk Rating
                                                                        
Pass
  
$
18,500
    
$
31,372
    
$
19,367
    
$
5,779
    
$
6,531
    
$
4,903
    
$
54,392
    
$
68
    
$
140,912
  
Special Mention
    
-
      
161
      
-
      
1,798
      
9
      
-
      
4,150
      
31
      
6,149
  
Substandard
    
-
      
-
      
-
      
-
      
39
      
739
      
366
      
1,846
      
2,990
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
111
      
9
      
120
  
Total
  
$
18,500
    
$
31,533
    
$
19,367
    
$
7,577
    
$
6,579
    
$
5,642
    
$
59,019
    
$
1,954
    
$
150,171
  
Current period gross charge-offs
  
$
-
    
$
48
    
$
-
    
$
-
    
$
-
    
$
54
    
$
342
    
$
-
    
$
444
  
                                                                         
Other agricultural loans
                                    

                                 
Risk Rating
                                                                        
Pass
  
$
4,824
    
$
3,600
    
$
1,701
    
$
692
    
$
2,655
    
$
423
    
$
11,453
    
$
-
    
$
25,348
  
Special Mention
    
-
      
1,645
      
20
      
-
      
-
      
-
      
315
      
-
      
1,980
  
Substandard
    
-
      
-
      
300
      
448
      
-
      
57
      
231
      
2
      
1,038
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total
  
$
4,824
    
$
5,245
    
$
2,021
    
$
1,140
    
$
2,655
    
$
480
    
$
11,999
    
$
2
    
$
28,366
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
                                                                         
State and political subdivision loans
                                    

                                 
Risk Rating
                                                                        
Pass
  
$
59
    
$
30
    
$
1,392
    
$
13,387
    
$
10,222
    
$
27,496
    
$
141
    
$
-
    
$
52,727
  
Special Mention
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total
  
$
59
    
$
30
    
$
1,392
    
$
13,387
    
$
10,222
    
$
27,496
    
$
141
    
$
-
    
$
52,727
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
                                                                         
Total
                                    

                                 
Risk Rating
                                                                        
Pass
  
$
100,332
    
$
167,511
    
$
186,756
    
$
452,972
    
$
222,066
    
$
499,156
    
$
117,996
    
$
1,993
    
$
1,748,782
  
Special Mention
    
672
      
2,392
      
5,001
      
12,775
      
8,302
      
11,716
      
6,062
      
31
      
46,951
  
Substandard
    
495
      
762
      
2,140
      
27,192
      
6,037
      
17,003
      
1,390
      
2,279
      
57,298
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
111
      
9
      
120
  
Total
  
$
101,499
    
$
170,665
    
$
193,897
    
$
492,939
    
$
236,405
    
$
527,875
    
$
125,559
    
$
4,312
    
$
1,853,151
  

 
                                      
Revolving
    
Revolving
        
 
   Term Loans Amortized Cost Basis by Origination Year    
Loans
    
Loans
        
 
                                      
Amortized
    
Converted
        
December 31, 2024
  
2024
    
2023
    
2022
    
2021
    
2020
    
Prior
    
Cost Basis
    
to Term
    
Total
  
Commercial real estate
                                                      
Risk Rating
                                                      
Pass
  
$
52,122
    
$
84,465
    
$
360,989
    
$
200,869
    
$
114,839
    
$
223,601
    
$
28,178
    
$
1,786
    
$
1,066,849
  
Special Mention
    
-
      
810
      
3,495
      
1,874
      
1,372
      
8,501
      
1,674
      
-
      
17,726
  
Substandard
    
85
      
1,057
      
19,884
      
2,843
      
629
      
11,785
      
176
      
401
      
36,860
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
  
$
52,207
    
$
86,332
    
$
384,368
    
$
205,586
    
$
116,840
    
$
243,887
    
$
30,028
    
$
2,187
    
$
1,121,435
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
 
                                                                        
Agricultural real estate
                                                                        
Risk Rating
                                                                        
Pass
  
$
32,199
    
$
22,372
    
$
46,644
    
$
26,132
    
$
29,770
    
$
126,876
    
$
14,351
    
$
115
    
$
298,459
  
Special Mention
    
2,930
      
3,138
      
7,109
      
-
      
-
      
5,315
      
2,248
      
-
      
20,740
  
Substandard
    
708
      
140
      
2,179
      
1,250
      
-
      
3,604
      
529
      
113
      
8,523
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
  
$
35,837
    
$
25,650
    
$
55,932
    
$
27,382
    
$
29,770
    
$
135,795
    
$
17,128
    
$
228
    
$
327,722
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
 
                                                                        
Construction
                                    

                                 
Risk Rating
                                                                        
Pass
  
$
48,026
    
$
56,916
    
$
34,995
    
$
-
    
$
-
    
$
-
    
$
1,355
    
$
-
    
$
141,292
  
Special Mention
    
-
      
-
      
19,391
      
2,950
      
-
      
-
      
-
      
-
      
22,341
  
Substandard
    
-
      
-
      
410
      
283
      
-
      
-
      
-
      
-
      
693
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
  
$
48,026
    
$
56,916
    
$
54,796
    
$
3,233
    
$
-
    
$
-
    
$
1,355
    
$
-
    
$
164,326
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
 
                                                                        
Other commercial loans
                                    

                                 
Risk Rating
                                                                        
Pass
  
$
33,211
    
$
22,808
    
$
6,773
    
$
7,542
    
$
2,150
    
$
3,464
    
$
44,871
    
$
75
    
$
120,894
  
Special Mention
    
20
      
-
      
1,798
      
178
      
62
      
56
      
4,888
      
32
      
7,034
  
Substandard
    
213
      
-
      
195
      
-
      
234
      
641
      
422
      
1,661
      
3,366
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
16
      
16
  
Total
  
$
33,444
    
$
22,808
    
$
8,766
    
$
7,720
    
$
2,446
    
$
4,161
    
$
50,181
    
$
1,784
    
$
131,310
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
59
    
$
-
    
$
-
    
$
-
    
$
2,502
    
$
-
    
$
2,561
  
 
                                                                        
Other agricultural loans
                                    

                                 
Risk Rating
                                                                        
Pass
  
$
4,576
    
$
2,008
    
$
888
    
$
3,870
    
$
407
    
$
220
    
$
14,812
    
$
-
    
$
26,781
  
Special Mention
    
1,341
      
-
      
-
      
-
      
-
      
400
      
67
      
-
      
1,808
  
Substandard
    
-
      
354
      
455
      
9
      
-
      
113
      
131
      
11
      
1,073
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
  
$
5,917
    
$
2,362
    
$
1,343
    
$
3,879
    
$
407
    
$
733
    
$
15,010
    
$
11
    
$
29,662
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
 
                                                                        
State and political subdivision loans
                                    

                                 
Risk Rating
                                                                        
Pass
  
$
-
    
$
1,442
    
$
13,460
    
$
10,522
    
$
5,319
    
$
23,439
    
$
-
    
$
-
    
$
54,182
  
Special Mention
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
  
$
-
    
$
1,442
    
$
13,460
    
$
10,522
    
$
5,319
    
$
23,439
    
$
-
    
$
-
    
$
54,182
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
 
                                                                        
Total
                                    

                                 
Risk Rating
                                                                        
Pass
  
$
170,134
    
$
190,011
    
$
463,749
    
$
248,935
    
$
152,485
    
$
377,600
    
$
103,567
    
$
1,976
    
$
1,708,457
  
Special Mention
    
4,291
      
3,948
      
31,793
      
5,002
      
1,434
      
14,272
      
8,877
      
32
      
69,649
  
Substandard
    
1,006
      
1,551
      
23,123
      
4,385
      
863
      
16,143
      
1,258
      
2,186
      
50,515
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
16
      
16
  
Total
  
$
175,431
    
$
195,510
    
$
518,665
    
$
258,322
    
$
154,782
    
$
408,015
    
$
113,702
    
$
4,210
    
$
1,828,637
  



For residential real estate mortgage loans, home equity loans, and consumer loans, credit quality is monitored based on whether the loan is performing or non-performing, which is typically based on the aging status of the loan and payment activity, unless a specific action, such as bankruptcy, repossession, death or significant delay in payment occurs to raise awareness of a possible credit event. Non-performing loans include those loans that are considered nonaccrual, described in more detail above, and all loans past due 90 or more days and still accruing. The following tables present the recorded investment in those loan classes based on payment activity, by origination year, as of June 30, 2025 and December 31, 2024 (in thousands):


                                       
Revolving
    
Revolving
        
    Term Loans Amortized Cost Basis by Origination Year    
Loans
    
Loans
        
                                       
Amortized
    
Converted
        
June 30, 2025
  
2025
    
2024
    
2023
    
2022
    
2021
    
Prior
    
Cost Basis
    
to Term
    
Total
  
Residential real estate
                                                      
Payment Performance
                                                      
Performing
  
$
3,581
    
$
11,942
    
$
24,191
    
$
84,870
    
$
43,625
    
$
119,017
    
$
-
    
$
-
    
$
287,226
  
Nonperforming
    
-
      
-
      
-
      
1,240
      
725
      
1,658
      
-
      
-
      
3,623
  
Total
  
$
3,581
    
$
11,942
    
$
24,191
    
$
86,110
    
$
44,350
    
$
120,675
    
$
-
    
$
-
    
$
290,849
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
                                                                         
Home equity
                                    

                                 
Payment Performance
                                                                        
Performing
  
$
2,076
    
$
2,969
    
$
2,849
    
$
2,144
    
$
1,268
    
$
8,123
    
$
31,000
    
$
325
    
$
50,754
  
Nonperforming
    
-
      
-
      
-
      
-
      
-
      
68
      
-
      
-
      
68
  
Total
  
$
2,076
    
$
2,969
    
$
2,849
    
$
2,144
    
$
1,268
    
$
8,191
    
$
31,000
    
$
325
    
$
50,822
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
                                                                         
Consumer
                                    

                                 
Payment Performance
                                                                        
Performing
  
$
1,072
    
$
1,342
    
$
616
    
$
436
    
$
446
    
$
2,720
    
$
39,504
    
$
1
    
$
46,137
  
Nonperforming
    
-
      
-
      
2
      
1
      
11
      
782
      
-
      
-
      
796
  
Total
  
$
1,072
    
$
1,342
    
$
618
    
$
437
    
$
457
    
$
3,502
    
$
39,504
    
$
1
    
$
46,933
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
7
    
$
-
    
$
-
    
$
273
    
$
17
    
$
-
    
$
297
  
                                                                         
Total
                                    

                                 
Payment Performance
                                                                        
Performing
  
$
6,729
    
$
16,253
    
$
27,656
    
$
87,450
    
$
45,339
    
$
129,861
    
$
70,504
    
$
326
    
$
384,118
  
Nonperforming
    
-
      
-
      
2
      
1,241
      
736
      
2,507
      
-
      
-
      
4,486
  
Total
  
$
6,729
    
$
16,253
    
$
27,658
    
$
88,691
    
$
46,075
    
$
132,368
    
$
70,504
    
$
326
    
$
388,604
  

 
                                      
Revolving
    
Revolving
        
 
   Term Loans Amortized Cost Basis by Origination Year    
Loans
    
Loans
        
 
                                      
Amortized
    
Converted
        
December 31, 2024
  
2024
    
2023
    
2022
    
2021
    
2020
    
Prior
    
Cost Basis
    
to Term
    
Total
  
Residential real estate
                                                      
Payment Performance
                                                      
Performing
  
$
11,487
    
$
23,870
    
$
88,581
    
$
45,731
    
$
27,537
    
$
101,823
    
$
-
    
$
-
    
$
299,029
  
Nonperforming
    
-
      
-
      
382
      
751
      
463
      
1,110
      
-
      
-
      
2,706
  
Total
  
$
11,487
    
$
23,870
    
$
88,963
    
$
46,482
    
$
28,000
    
$
102,933
    
$
-
    
$
-
    
$
301,735
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
5
    
$
-
    
$
-
    
$
5
  
                                                                         
Home equity
                                    

                                 
Payment Performance
                                                                        
Performing
  
$
2,987
    
$
3,456
    
$
2,418
    
$
1,454
    
$
1,525
    
$
7,937
    
$
29,302
    
$
419
    
$
49,498
  
Nonperforming
    
-
      
-
      
-
      
-
      
83
      
82
      
-
      
-
      
165
  
Total
  
$
2,987
    
$
3,456
    
$
2,418
    
$
1,454
    
$
1,608
    
$
8,019
    
$
29,302
    
$
419
    
$
49,663
  
Current period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
 
                                                                        
Consumer
                                    

                                 
Payment Performance
                                                                        
Performing
  
$
2,076
    
$
880
    
$
589
    
$
543
    
$
317
    
$
2,520
    
$
125,272
    
$
1
    
$
132,198
  
Nonperforming
    
-
      
7
      
-
      
-
      
6
      
996
      
-
      
-
      
1,009
  
Total
  
$
2,076
    
$
887
    
$
589
    
$
543
    
$
323
    
$
3,516
    
$
125,272
    
$
1
    
$
133,207
  
Current period gross charge-offs
  
$
-
    
$
13
    
$
27
    
$
-
    
$
-
    
$
38
    
$
29
    
$
-
    
$
107
  
 
                                                                        
Total
                                    

                                 
Payment Performance
                                                                        
Performing
  
$
16,550
    
$
28,206
    
$
91,588
    
$
47,728
    
$
29,379
    
$
112,280
    
$
154,574
    
$
420
    
$
480,725
  
Nonperforming
    
-
      
7
      
382
      
751
      
552
      
2,188
      
-
      
-
      
3,880
  
Total
  
$
16,550
    
$
28,213
    
$
91,970
    
$
48,479
    
$
29,931
    
$
114,468
    
$
154,574
    
$
420
    
$
484,605
  

Aging Analysis of Past Due Loan Receivables


Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following table includes an aging analysis of the recorded investment of past due loan receivables as of June 30, 2025 and December 31, 2024 (in thousands):

June 30, 2025
  
30-59 Days
Past Due
    
60-89 Days
Past Due
    
90 Days
Or Greater
    
Total Past
Due
    
Current
    
Total
Loans
Receivables
  
Real estate loans:
                                    
Mortgages
  
$
683
    
$
2,232
    
$
1,840
    
$
4,755
    
$
286,094
    
$
290,849
  
Home Equity
    
130
      
110
      
45
      
285
      
50,537
      
50,822
  
Commercial
    
888
      
14,918
      
9,144
      
24,950
      
1,126,635
      
1,151,585
  
Agricultural
    
965
      
74
      
1,919
      
2,958
      
329,037
      
331,995
  
Construction
    
-
      
-
      
283
      
283
      
138,024
      
138,307
  
Consumer
    
242
      
307
      
796
      
1,345
      
45,588
      
46,933
  
Other commercial loans
    
-
      
327
      
2,025
      
2,352
      
147,819
      
150,171
  
Other agricultural loans
    
312
      
-
      
403
      
715
      
27,651
      
28,366
  
State and political subdivision loans
    
-
      
-
      
-
      
-
      
52,727
      
52,727
  
Total
  
$
3,220
    
$
17,968
    
$
16,455
    
$
37,643
    
$
2,204,112
    
$
2,241,755
  
                                                 
Loans considered non-accrual
  
$
2,167
    
$
467
    
$
16,108
    
$
18,742
    
$
5,853
    
$
24,595
  
Loans still accruing
    
1,053
      
17,501
      
347
      
18,901
      
2,198,259
      
2,217,160
  
Total
  
$
3,220
    
$
17,968
    
$
16,455
    
$
37,643
    
$
2,204,112
    
$
2,241,755
  

December 31, 2024
  
30-59 Days
Past Due
    
60-89 Days
Past Due
    
90 Days
Or Greater
    
Total Past
Due
    
Current
    
Total
Loans
Receivables
  
Real estate loans:
                                    
Mortgages
  
$
1,464
    
$
227
    
$
1,605
    
$
3,296
    
$
298,439
    
$
301,735
  
Home Equity
    
138
      
170
      
148
      
456
      
49,207
      
49,663
  
Commercial
    
2,782
      
1,360
      
6,528
      
10,670
      
1,110,765
      
1,121,435
  
Agricultural
    
1,569
      
140
      
1,845
      
3,554
      
324,168
      
327,722
  
Construction
    
1,119
      
-
      
283
      
1,402
      
162,924
      
164,326
  
Consumer
    
292
      
20
      
1,009
      
1,321
      
131,886
      
133,207
  
Other commercial loans
    
478
      
282
      
2,336
      
3,096
      
128,214
      
131,310
  
Other agricultural loans
    
403
      
-
      
-
      
403
      
29,259
      
29,662
  
State and political subdivision loans
    
-
      
-
      
-
      
-
      
54,182
      
54,182
  
Total
  
$
8,245
    
$
2,199
    
$
13,754
    
$
24,198
    
$
2,289,044
    
$
2,313,242
  
Loans considered non-accrual
  
$
2,428
    
$
-
    
$
13,478
    
$
15,906
    
$
9,795
    
$
25,701
  
Loans still accruing
    
5,817
      
2,199
      
276
      
8,292
      
2,279,249
      
2,287,541
  
Total
  
$
8,245
    
$
2,199
    
$
13,754
    
$
24,198
    
$
2,289,044
    
$
2,313,242
  


Modifications to Borrowers Experiencing Financial Difficulty



Occasionally, the Company 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 Company provides 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.


The following table shows the amortized cost basis by class of loans receivable, information regarding nonaccrual modified loans to borrowers experiencing financial difficulty during the three and six months ended June 30, 2025 (dollars in thousands):


Loan Modifications Made to Borrowers Experiencing Financial Difficulty
  
   
Three months ended June 30, 2025
  
   
Number of loans
    
Amortized Cost Basis
    
% of Total Class of Financing Receivable
  
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
  
Real estate loans:
              
Mortgages
    
1
    
$
109
      
0.04
%
Total
    
1
    
$
109
          
                         
Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
  
Real estate loans:
                        
Commercial
     3     $ 1,059       0.09 %
Total
    
3
    
$
1,059
          

Loan Modifications Made to Borrowers Experiencing Financial Difficulty
  
   
Six months ended June 30, 2025
  
   
Number of loans
    
Amortized Cost Basis
    
% of Total Class of Financing Receivable
  
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
  
Real estate loans:
              
Mortgages
    
1
    
$
109
      
0.04
%
Total
    
1
    
$
109
          
                         
Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
  
Real estate loans:
                        
Commercial
     3     $ 1,059       0.09 %
Other commercial loans     1       185       0.12 %
Total
    
4
    
$
1,244
          


The following table shows, by class of loans receivable, information regarding the financial effect on nonaccrual modified loans to borrowers experiencing financial difficulty during the three and six months ended June 30, 2025:
Three months ended June 30, 2025
    
Term Extension
Loan Type
  
Number of loans
  
Financial Effect
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
    
Real estate loans:
          
Mortgages
    
1
  
Extended the loan maturity 5 years with a 30 year amortization
Total
    
1
    
             
Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty           
Real estate loans:
          
Commercial
    3   Extended the loan maturity 5 years with a 30 year amortization
Total
     3    

Six months ended June 30, 2025
    
Term Extension
Loan Type
  
Number of loans
  
Financial Effect
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
    
Real estate loans:
          
Mortgages
    
1
  
Extended the loan maturity 5 years with a 30 year amortization
Total
    
1
    
             
Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty           
Real estate loans:
          
Commercial
    3   Extended the loan maturity 5 years with a 30 year amortization
Other commercial loans
    1   Extended the loan maturity 10 years as termed out or line of credit
Total
     4    


There were no accrual or nonaccrual modified loans to borrowers experiencing financial difficulty for which there were payment defaults after the modification date for the three and six months ended June 30, 2025.
 

The following presents, by class of loans, the amortized cost and payment status of accruing and nonaccrual modified loans to borrowers experiencing financial difficulty at June 30, 2025 (in thousands):
 
   
June 30, 2025
  
         
30-89 Days
    
90 Days
        
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
  
Current
    
Past Due
    
Or Greater
    
Total
  
Real estate loans:
                        
Mortgages
   $ 109     $ -     $ -     $ 109  
Commercial
    1,059       -       -       1,059  
Other commercial loans
    
185
      
-
      
-
      
185
  
Total
  
$
1,353
    
$
-
    
$
-
    
$
1,353
  

Foreclosed Assets Held For Sale


Foreclosed assets acquired in settlement of loans are carried at fair value, less estimated costs to sell, and are included in other assets on the Consolidated Balance Sheet. As of June 30, 2025 and December 31, 2024, included within other assets are $2,434,000 and $2,635,000, respectively, of foreclosed assets. As of June 30, 2025, included within the foreclosed assets are $76,000 of consumer residential mortgages that were foreclosed on or received via a deed in lieu of foreclosure transaction prior to the period end. As of June 30, 2025, the Company had initiated formal foreclosure proceedings on $767,000 of residential mortgage loans, the collateral properties of which have not yet been transferred into foreclosed assets.