The Company generates commercial, mortgage and consumer loans and receives deposits from customers located in the Illinois counties of Vermilion, Iroquois, Champaign, and Kankakee, as well as adjacent counties in Illinois and Indiana within 30 miles of a branch or loan production office. The Company generates commercial, mortgage and consumer loans from its location in Osage Beach, Missouri. The Company’s loans are generally secured by specific items of collateral including real property and consumer assets. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent upon economic conditions in the Company’s various locations.

Commitments to originate loans are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a

case-by-case

basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate.

At June 30, 2025 and 2024, the Company had outstanding commitments to originate loans aggregating approximately $7,631,000 and $8,317,000, respectively. The commitments extended over varying periods of time with the majority being disbursed within a

one-year

period. Loan commitments at fixed rates of interest amounted to $5,296,000 and $2,028,000 at June 30, 2025 and 2024, respectively, with the remainder subject to adjustable interest rates. The weighted average interest rates for fixed rate loan commitments were 7.18% and 7.43% as of June 30, 2025 and 2024, respectively.

Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a

case-by-case

basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate.

At June 30, 2025, the Company had granted unused lines of credit to borrowers aggregating approximately $55,815,000 and $13,843,000 for commercial lines and

open-end

consumer lines, respectively. At June 30, 2024, the Company had granted unused lines of credit to borrowers aggregating approximately $58,696,000 and $12,545,000 for commercial lines and

open-end

consumer lines, respectively.

Off-balance

sheet credit instruments include commitments to make loans, and commercial letters of credit, issued to meet customer financing needs. The Company’s exposure to credit loss in the event of

non-performance

by the other party to the financial instrument for

off-balance

sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The ACL on

off-balance

sheet credit exposures is estimated by loan pool on a quarterly basis under the current CECL model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur and is included in other liabilities on the Company’s consolidated balance sheets. The Company records an ACL on

off-balance

sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable. During the year ended June 30, 2025, the Company recorded a credit for credit losses on

off-balance

sheet credit exposures of $23,000, compared to a credit for

credit losses of $118,000 for the year ended June 30, 2024. Our allowance for credit losses (ACL) on

off-balance

sheet credit exposures was $75,000 and $98,000 at June 30, 2025 and 2024, respectively. This reduction was primarily due to a decrease in loans with unfunded balances without the Company’s ability to cancel on demand.