v3.26.1
Loans and ACL
 6 Months Ended
Jun. 30, 2026
Receivables [Abstract]  
Loans and ACL Loans and ACL
Loan Composition
The following table provides a detailed listing of our loan portfolio, excluding loans HFS, as of the dates indicated:
June 30, 2026December 31, 2025
(dollars in thousands)BalancePercent of TotalBalancePercent of Total
Commercial and industrial
Secured$198,156 12.47%$189,071 12.31%
Unsecured33,434 2.10%31,379 2.04%
Total commercial and industrial231,590 14.57%220,450 14.35%
Commercial real estate
Commercial mortgage owner occupied242,550 15.26%229,906 14.96%
Commercial mortgage non-owner occupied223,980 14.09%223,984 14.58%
Commercial mortgage 1-4 family investor106,150 6.68%101,400 6.60%
Commercial mortgage multifamily100,591 6.31%84,468 5.50%
Total commercial real estate673,271 42.34%639,758 41.64%
Advances to mortgage brokers75,159 4.73%76,676 4.99%
Agricultural
Agricultural mortgage67,620 4.25%69,769 4.54%
Agricultural other29,842 1.88%32,340 2.11%
Total agricultural97,462 6.13%102,109 6.65%
Residential real estate
Senior lien388,931 24.47%372,287 24.23%
Junior lien11,697 0.74%10,970 0.71%
Home equity lines of credit49,364 3.11%44,623 2.91%
Total residential real estate449,992 28.32%427,880 27.85%
Consumer
Secured - direct26,755 1.68%28,648 1.86%
Secured - indirect32,001 2.01%37,456 2.44%
Unsecured3,442 0.22%3,387 0.22%
Total consumer62,198 3.91%69,491 4.52%
Total$1,589,672 100.00%$1,536,364 100.00%
We grant commercial, agricultural, residential real estate, and consumer loans to customers primarily in Bay, Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties in Michigan. The ability of borrowers to honor their repayment obligations is often dependent upon the real estate, agricultural, manufacturing, retail, gaming, tourism, health care, higher education, and general economic conditions of this region. Substantially all of our consumer and residential real estate loans are secured by various items of property, while commercial loans are secured primarily by real estate, business assets, and personal guarantees. A portion of loans are unsecured.
Loans that we have the intent and ability to hold in our portfolio are reported at their outstanding principal balance adjusted for any charge-offs, the ACL, and deferred fees or costs. Unless a loan has a nonaccrual status, interest income is accrued over the term of the loan based on the principal amount outstanding. We made an accounting policy election to exclude accrued interest receivable on loans from the amortized cost basis of loans. Accrued interest receivable on loans was $6.0 million and $6.7 million at June 30, 2026 and December 31, 2025, respectively, which is included in other assets on the consolidated balance sheets. Loan origination fees and certain direct loan origination costs are capitalized and recognized as a component of interest income over the term of the loan using the interest method. Net unamortized deferred loan costs were $2.9 million and $3.0 million as of June 30, 2026 and December 31, 2025, respectively.
Commercial and agricultural loans include loans for commercial real estate, commercial operating loans, advances to mortgage brokers, farmland and agricultural production, and loans to states and political subdivisions. Repayment of these loans is dependent upon the successful operation and management of a business. We minimize our risk by limiting the amount of direct
credit exposure to any one borrower to $18.0 million. Borrowers with direct credit needs of more than $18.0 million may be serviced through the use of loan participations with other commercial banks. Commercial and agricultural real estate loans commonly require loan-to-value limits of 80% or less. Depending upon the type of loan, past credit history, and current operating results, we may require the borrower to pledge accounts receivable, inventory, property, or equipment. Government agency guarantees may be required. Personal guarantees and/or life insurance beneficiary assignments are generally required from the owners of closely held corporations, partnerships, and sole proprietorships. In addition, we may require annual financial statements, prepare cash flow analyses, and review credit reports of our borrowers.
We offer adjustable-rate mortgages, construction loans, and fixed rate residential real estate loans which have amortization periods up to a maximum of 30 years. We consider the anticipated direction of interest rates, balance sheet duration, the sensitivity of our balance sheet to changes in interest rates, our liquidity needs, and overall loan demand to determine whether or not to sell fixed rate loans to Freddie Mac.
Our lending policies generally limit the maximum loan-to-value ratio on residential real estate loans to 100% of the lower of the appraised value of the property or the purchase price. Private mortgage insurance is typically required on loans with loan-to-value ratios in excess of 80% unless the loan qualifies for government guarantees.
Underwriting criteria for originated residential real estate loans generally include:
•Evaluation of the borrower’s ability to make monthly payments.
•Evaluation of the value of the property securing the loan.
•Ensuring the payment of principal, interest, taxes, and hazard insurance generally does not exceed 28% of a borrower’s gross income.
•Ensuring all debt servicing does not exceed 40% of income.
•Verification of acceptable credit reports.
•Verification of employment, income, and financial information.
Appraisals are performed by independent appraisers and are reviewed for appropriateness. Generally, mortgage loan requests are reviewed by our mortgage loan committee or through a secondary market underwriting system. Loans in excess of $1.5 million require the approval of one or more of the following Bank committees: Internal Loan Committee, the Executive Loan Committee, or the Board of Directors.
Consumer loans include secured and unsecured personal loans. Loans are amortized for a period of up to 15 years based on the age and value of the underlying collateral. The underwriting emphasis is on a borrower’s perceived intent and ability to pay rather than collateral value. No consumer loans are sold to the secondary market.
Nonaccrual and Past Due Loans
Nonaccrual loan policies, including a description of nonaccrual loans, are discussed in detail in Note 1, Significant Accounting Policies, and Note 3, Loans and ACL, in the consolidated financial statements included within the 2025 Annual Report on Form 10-K. There have been no material changes to these policies in 2026. The following table summarizes nonaccrual loan data by class of loans as of the dates indicated:
June 30, 2026December 31, 2025
(dollars in thousands)Total Nonaccrual LoansNonaccrual Loans with No ACLTotal Nonaccrual LoansNonaccrual Loans with No ACL
Commercial and industrial
Secured$623 $200 $442 $— 
Commercial real estate
Commercial mortgage owner occupied726 — 766 — 
Commercial mortgage 1-4 family investor3,002 3,002 3,000 3,000 
Agricultural
Agricultural mortgage919 919 — — 
Agricultural other1,948 1,948 — — 
Residential real estate
Senior lien572 572 370 370 
Total$7,790 $6,641 $4,578 $3,370 
The following tables summarize the past due and current loans for the entire loan portfolio as of the dates indicated:
June 30, 2026
Past Due:Accruing Loans 90 or More Days Past Due
(dollars in thousands)30-59
Days		60-89
Days		90 Days
or More		CurrentTotal
Commercial and industrial
Secured$51 $— $— $198,105 $198,156 $— 
Unsecured25 — — 33,409 33,434 — 
Total commercial and industrial76 — — 231,514 231,590 — 
Commercial real estate
Commercial mortgage owner occupied— — — 242,550 242,550 — 
Commercial mortgage non-owner occupied136 — — 223,844 223,980 — 
Commercial mortgage 1-4 family investor— — 3,002 103,148 106,150 — 
Commercial mortgage multifamily— — — 100,591 100,591 — 
Total commercial real estate136 — 3,002 670,133 673,271 — 
Advances to mortgage brokers— — — 75,159 75,159 — 
Agricultural
Agricultural mortgage855 — — 66,765 67,620 — 
Agricultural other1,100 776 — 27,966 29,842 — 
Total agricultural1,955 776 — 94,731 97,462 — 
Residential real estate
Senior lien14 433 312 388,172 388,931 — 
Junior lien— — — 11,697 11,697 — 
Home equity lines of credit88 — — 49,276 49,364 — 
Total residential real estate102 433 312 449,145 449,992 — 
Consumer
Secured - direct27 — — 26,728 26,755 — 
Secured - indirect45 25 — 31,931 32,001 — 
Unsecured32 — — 3,410 3,442 — 
Total consumer104 25 — 62,069 62,198 — 
Total$2,373 $1,234 $3,314 $1,582,751 $1,589,672 $— 
December 31, 2025
Past Due:Accruing Loans 90 or More Days Past Due
(dollars in thousands)30-59
Days		60-89
Days		90 Days
or More		CurrentTotal
Commercial and industrial
Secured$121 $443 $— $188,507 $189,071 $— 
Unsecured— — — 31,379 31,379 — 
Total commercial and industrial121 443 — 219,886 220,450 — 
Commercial real estate
Commercial mortgage owner occupied— 766 — 229,140 229,906 — 
Commercial mortgage non-owner occupied839 — — 223,145 223,984 — 
Commercial mortgage 1-4 family investor67 — 3,000 98,333 101,400 — 
Commercial mortgage multifamily— — — 84,468 84,468 — 
Total commercial real estate906 766 3,000 635,086 639,758 — 
Advances to mortgage brokers— — — 76,676 76,676 — 
Agricultural
Agricultural mortgage— — — 69,769 69,769 — 
Agricultural other60 — — 32,280 32,340 — 
Total agricultural60 — — 102,049 102,109 — 
Residential real estate
Senior lien5,012 385 — 366,890 372,287 — 
Junior lien12 — — 10,958 10,970 — 
Home equity lines of credit115 — — 44,508 44,623 — 
Total residential real estate5,139 385 — 422,356 427,880 — 
Consumer
Secured - direct21 — — 28,627 28,648 — 
Secured - indirect284 30 — 37,142 37,456 — 
Unsecured1 5 — 3,381 3,387 — 
Total consumer306 35 — 69,150 69,491 — 
Total$6,532 $1,629 $3,000 $1,525,203 $1,536,364 $— 
Credit Quality Ratings and Indicators
We have certain lending policies and procedures in place designed to maximize loan income within an acceptable level of risk. The Board of Directors reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the Board of Directors with frequent reports related to loan production, loan quality, and concentration of credit, loan delinquencies, nonperforming loans and potential problem loans. We seek to diversify the loan portfolio as a means of managing risk associated with fluctuations in economic conditions.
Internally assigned credit risk ratings are reviewed, at a minimum, when loans are renewed or when management has knowledge of improvements or deterioration of the credit quality of individual credits. Descriptions of the internally assigned credit risk ratings for commercial and agricultural loans are discussed in detail in Note 3, Loans and ACL, in the consolidated financial statements included within the 2025 Annual Report on Form 10-K. There have been no material changes to the risk rating definitions in 2026.
The following tables display commercial and agricultural loans by credit risk ratings and year of origination as of the dates indicated:
June 30, 2026
(dollars in thousands)20262025202420232022PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Commercial and industrial: Secured
Risk ratings 1-3$4,709 $530 $9,263 $9,104 $1,310 $4,649 $42,167 $— $71,732 
Risk rating 417,063 16,363 14,750 9,295 3,765 4,193 33,901 — 99,330 
Risk rating 5700 1,108 2,148 142 14,996 27 4,132 — 23,253 
Risk rating 6126 — 64 19 — 4 3,005 — 3,218 
Risk rating 7150 — 423 — — — 50 — 623 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$22,748 $18,001 $26,648 $18,560 $20,071 $8,873 $83,255 $— $198,156 
2026 year-to-date gross charge-offs$— $24 $— $— $— $— $1 $— $25 
Commercial and industrial: Unsecured
Risk ratings 1-3$432 $798 $— $1,743 $341 $— $2,860 $— $6,174 
Risk rating 43,808 8,862 704 594 463 200 10,668 — 25,299 
Risk rating 5— 7 8 59 — 450 1,335 — 1,859 
Risk rating 6— 18 74 — — 10 — — 102 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$4,240 $9,685 $786 $2,396 $804 $660 $14,863 $— $33,434 
2026 year-to-date gross charge-offs$— $— $— $— $— $— $23 $— $23 
Commercial real estate: Owner occupied
Risk ratings 1-3$1,200 $5,353 $3,647 $8,330 $1,336 $32,123 $1,172 $— $53,161 
Risk rating 413,877 39,154 30,959 18,922 26,217 46,808 3,458 — 179,395 
Risk rating 5— 1,814 1,040 530 976 3,141 387 — 7,888 
Risk rating 6— — 1,312 — — 69 — — 1,381 
Risk rating 7— — 725 — — — — — 725 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$15,077 $46,321 $37,683 $27,782 $28,529 $82,141 $5,017 $— $242,550 
2026 year-to-date gross charge-offs$— $— $— $154 $— $— $— $— $154 
June 30, 2026
(dollars in thousands)20262025202420232022PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Commercial real estate: Non-owner occupied
Risk ratings 1-3$6,115 $4,185 $253 $712 $5,768 $4,836 $138 $— $22,007 
Risk rating 413,868 24,717 7,072 20,335 43,396 53,933 1,223 — 164,544 
Risk rating 55,795 247 9,816 8,671 9,994 2,365 500 — 37,388 
Risk rating 6— — — — — 41 — — 41 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$25,778 $29,149 $17,141 $29,718 $59,158 $61,175 $1,861 $— $223,980 
2026 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate: 1-4 family investor
Risk ratings 1-3$314 $735 $708 $221 $2,533 $2,183 $5,272 $— $11,966 
Risk rating 49,075 15,249 8,425 5,762 7,010 36,462 7,321 — 89,304 
Risk rating 5117 114 — 341 210 213 469 — 1,464 
Risk rating 6— — — 233 — 38 142 — 413 
Risk rating 7— 44 — 2,959 — — — — 3,003 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$9,506 $16,142 $9,133 $9,516 $9,753 $38,896 $13,204 $— $106,150 
2026 year-to-date gross charge-offs$— $134 $74 $23 $— $— $— $— $231 
Commercial real estate: Multifamily
Risk ratings 1-3$8,930 $— $869 $— $1,555 $1,771 $188 $— $13,313 
Risk rating 48,349 20,880 5,950 922 18,315 28,483 220 — 83,119 
Risk rating 5— — 475 902 — 2,782 — — 4,159 
Risk rating 6— — — — — — — — — 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$17,279 $20,880 $7,294 $1,824 $19,870 $33,036 $408 $— $100,591 
2026 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Advances to mortgage brokers
Risk ratings 1-3$75,159 $— $— $— $— $— $— $— $75,159 
2026 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Agricultural mortgage
Risk ratings 1-3$316 $2,566 $876 $539 $3,206 $5,208 $29 $— $12,740 
Risk rating 42,649 4,166 2,685 3,626 10,032 16,187 596 — 39,941 
Risk rating 56,229 1,364 264 161 535 1,416 745 — 10,714 
Risk rating 62,500 — — — — 806 — — 3,306 
Risk rating 7— — — — 855 64 — — 919 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$11,694 $8,096 $3,825 $4,326 $14,628 $23,681 $1,370 $— $67,620 
2026 year-to-date gross charge-offs$— $— $— $— $44 $— $— $— $44 
June 30, 2026
(dollars in thousands)20262025202420232022PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Agricultural other
Risk ratings 1-3$323 $800 $316 $345 $562 $424 $4,309 $— $7,079 
Risk rating 41,387 1,363 600 614 419 330 9,943 — 14,656 
Risk rating 514 668 20 107 20 904 2,989 — 4,722 
Risk rating 61,350 — — — — — 87 — 1,437 
Risk rating 7— 1,876 — 72 — — — — 1,948 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$3,074 $4,707 $936 $1,138 $1,001 $1,658 $17,328 $— $29,842 
2026 year-to-date gross charge-offs$— $58 $— $— $— $— $— $— $58 
December 31, 2025
(dollars in thousands)20252024202320222021PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Commercial and industrial: Secured
Risk ratings 1-3$257 $10,256 $8,605 $1,841 $3,660 $2,471 $36,713 $— $63,803 
Risk rating 420,722 19,606 13,553 5,939 5,653 1,278 30,804 — 97,555 
Risk rating 52,271 2,290 139 15,215 45 — 4,085 — 24,045 
Risk rating 681 75 19 — 30 6 3,015 — 3,226 
Risk rating 7— 442 — — — — — — 442 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$23,331 $32,669 $22,316 $22,995 $9,388 $3,755 $74,617 $— $189,071 
2025 year-to-date gross charge-offs$— $— $22 $— $— $— $— $— $22 
Commercial and industrial: Unsecured
Risk ratings 1-3$867 $25 $2,165 $156 $10 $312 $3,302 $— $6,837 
Risk rating 411,882 955 813 1,240 188 274 7,080 — 22,432 
Risk rating 52 — 61 — 476 — 1,488 — 2,027 
Risk rating 6— 83 — — — — — — 83 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$12,751 $1,063 $3,039 $1,396 $674 $586 $11,870 $— $31,379 
2025 year-to-date gross charge-offs$— $50 $— $— $— $— $— $— $50 
Commercial real estate: Owner occupied
Risk ratings 1-3$5,021 $4,101 $8,467 $1,385 $17,482 $16,095 $1,419 $— $53,970 
Risk rating 433,004 33,403 20,559 27,541 26,605 23,021 2,380 — 166,513 
Risk rating 51,687 192 557 1,149 131 2,866 372 — 6,954 
Risk rating 6— 1,327 304 — 72 — — — 1,703 
Risk rating 7— 766 — — — — — — 766 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$39,712 $39,789 $29,887 $30,075 $44,290 $41,982 $4,171 $— $229,906 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
December 31, 2025
(dollars in thousands)20252024202320222021PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Commercial real estate: Non-owner occupied
Risk ratings 1-3$3,346 $273 $4,996 $5,910 $9,132 $3,360 $102 $— $27,119 
Risk rating 426,715 7,300 21,512 44,632 31,180 26,464 1,595 — 159,398 
Risk rating 5249 9,938 7,641 10,192 1,612 6,343 466 — 36,441 
Risk rating 6— — 982 — — 44 — — 1,026 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$30,310 $17,511 $35,131 $60,734 $41,924 $36,211 $2,163 $— $223,984 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate: 1-4 family investor
Risk ratings 1-3$615 $764 $225 $2,631 $1,445 $1,126 $3,068 $— $9,874 
Risk rating 415,675 9,486 7,180 7,873 26,081 13,609 6,983 — 86,887 
Risk rating 5269 — 137 216 — 122 338 — 1,082 
Risk rating 6— — 515 — — 42 — — 557 
Risk rating 7— — 3,000 — — — — — 3,000 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$16,559 $10,250 $11,057 $10,720 $27,526 $14,899 $10,389 $— $101,400 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate: Multifamily
Risk ratings 1-3$— $885 $363 $1,603 $852 $1,099 $288 $— $5,090 
Risk rating 420,842 5,030 957 18,892 10,087 19,158 220 — 75,186 
Risk rating 5— 480 914 — — 2,798 — — 4,192 
Risk rating 6— — — — — — — — — 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$20,842 $6,395 $2,234 $20,495 $10,939 $23,055 $508 $— $84,468 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Advances to mortgage brokers
Risk ratings 1-3$76,676 $— $— $— $— $— $— $— $76,676 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Agricultural mortgage
Risk ratings 1-3$2,647 $714 $419 $2,993 $1,990 $3,945 $338 $— $13,046 
Risk rating 44,426 4,098 3,449 11,231 5,864 11,802 1,642 — 42,512 
Risk rating 5852 269 1,083 418 5,829 622 952 — 10,025 
Risk rating 6535 — — 2,068 69 1,514 — — 4,186 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$8,460 $5,081 $4,951 $16,710 $13,752 $17,883 $2,932 $— $69,769 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
December 31, 2025
(dollars in thousands)20252024202320222021PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Agricultural other
Risk ratings 1-3$860 $503 $434 $671 $221 $277 $4,054 $— $7,020 
Risk rating 42,055 801 738 610 483 62 11,202 — 15,951 
Risk rating 5881 55 133 17 889 391 2,308 — 4,674 
Risk rating 63,476 — 88 — 61 — 1,070 — 4,695 
Risk rating 7— — — — — — — — — 
Risk rating 8— — — — — — — — — 
Risk rating 9— — — — — — — — — 
Total$7,272 $1,359 $1,393 $1,298 $1,654 $730 $18,634 $— $32,340 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Our primary credit quality indicator for residential real estate and consumer loans is the individual loan’s past due status. The following tables display loans by payment status and year of origination as of the dates indicated:
June 30, 2026
(dollars in thousands)20262025202420232022PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Residential real estate: Senior lien
Current$35,742 $67,672 $50,477 $32,889 $39,266 $150,137 $— $11,729 $387,912 
Past due 30-89 days— — — — 249 198 — — 447 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — 85 — 178 309 — — 572 
Total$35,742 $67,672 $50,562 $32,889 $39,693 $150,644 $— $11,729 $388,931 
2026 year-to-date gross charge-offs$— $— $1 $— $— $— $— $— $1 
Residential real estate: Junior lien
Current$1,835 $4,359 $2,937 $1,863 $432 $271 $— $— $11,697 
Past due 30-89 days— — — — — — — — — 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$1,835 $4,359 $2,937 $1,863 $432 $271 $— $— $11,697 
2026 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Residential real estate: Home equity lines of credit
Current$— $— $— $— $— $— $49,276 $— $49,276 
Past due 30-89 days— — — — — — 88 — 88 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$— $— $— $— $— $— $49,364 $— $49,364 
2026 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Consumer: Secured - direct
Current$5,002 $5,769 $4,936 $4,134 $3,137 $3,750 $— $— $26,728 
Past due 30-89 days— — 20 — 7 — — — 27 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$5,002 $5,769 $4,956 $4,134 $3,144 $3,750 $— $— $26,755 
2026 year-to-date gross charge-offs$— $— $24 $66 $14 $3 $— $— $107 
June 30, 2026
(dollars in thousands)20262025202420232022PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Consumer: Secured - indirect
Current$2,398 $3,321 $3,787 $11,348 $3,930 $7,147 $— $— $31,931 
Past due 30-89 days— — 25 15 28 2 — — 70 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$2,398 $3,321 $3,812 $11,363 $3,958 $7,149 $— $— $32,001 
2026 year-to-date gross charge-offs$— $— $— $50 $— $24 $— $— $74 
Consumer: Unsecured
Current$965 $1,115 $377 $56 $23 $1 $873 $— $3,410 
Past due 30-89 days— 11 — — — — 21 — 32 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$965 $1,126 $377 $56 $23 $1 $894 $— $3,442 
2026 year-to-date gross charge-offs$154 $33 $2 $3 $— $1 $3 $— $196 
December 31, 2025
(dollars in thousands)20252024202320222021PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Residential real estate: Senior lien
Current$72,854 $43,102 $35,251 $42,022 $65,769 $93,563 $— $14,223 $366,784 
Past due 30-89 days112 284 633 774 830 2,500 — — 5,133 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — 179 191 — — 370 
Total$72,966 $43,386 $35,884 $42,796 $66,778 $96,254 $— $14,223 $372,287 
2025 year-to-date gross charge-offs$— $— $— $— $— $1 $— $— $1 
Residential real estate: Junior lien
Current$4,786 $3,252 $2,075 $507 $67 $271 $— $— $10,958 
Past due 30-89 days— 12 — — — — — — 12 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$4,786 $3,264 $2,075 $507 $67 $271 $— $— $10,970 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
Residential real estate: Home equity lines of credit
Current$— $— $— $— $— $— $44,467 $41 $44,508 
Past due 30-89 days— — — — — — 115 — 115 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$— $— $— $— $— $— $44,582 $41 $44,623 
2025 year-to-date gross charge-offs$— $— $— $— $— $— $— $— $— 
December 31, 2025
(dollars in thousands)20252024202320222021PriorRevolving
Loans		Revolving Loans Converted to TermTotal
Consumer: Secured - direct
Current$7,870 $6,374 $5,501 $4,088 $2,238 $2,556 $— $— $28,627 
Past due 30-89 days— — 11 9 — 1 — — 21 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$7,870 $6,374 $5,512 $4,097 $2,238 $2,557 $— $— $28,648 
2025 year-to-date gross charge-offs$— $4 $33 $36 $9 $53 $— $— $135 
Consumer: Secured - indirect
Current$4,327 $4,457 $14,532 $5,133 $3,609 $5,084 $— $— $37,142 
Past due 30-89 days— 82 198 — — 34 — — 314 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$4,327 $4,539 $14,730 $5,133 $3,609 $5,118 $— $— $37,456 
2025 year-to-date gross charge-offs$— $— $— $— $— $13 $— $— $13 
Consumer: Unsecured
Current$1,686 $689 $171 $34 $5 $— $796 $— $3,381 
Past due 30-89 days5 — — — — — 1 — 6 
Past due 90 or more days— — — — — — — — — 
Nonaccrual— — — — — — — — — 
Total$1,691 $689 $171 $34 $5 $— $797 $— $3,387 
2025 year-to-date gross charge-offs$328 $1 $10 $1 $1 $— $— $— $341 
Loan Modifications
A loan modification includes terms outside of normal lending practices to a borrower experiencing financial difficulty.
Typical modifications granted include, but are not limited to:
•Agreeing to interest rates below prevailing market rates for debt with similar risk characteristics.
•Extending the maturity date or amortization period beyond typical lending guidelines for loans with similar risk characteristics.
•Agreeing to an interest-only payment structure, delaying principal payments, or delaying payments.
•Forgiving principal.
To determine if a borrower is experiencing financial difficulty, factors we consider include:
•The borrower is currently in default on any debt.
•The borrower would likely default on any debt if the concession is not granted.
•The borrower’s cash flow is insufficient to service all debt if the concession is not granted.
•The borrower has declared, or is in the process of declaring, bankruptcy.
•The borrower is unlikely to continue as a going concern (if the entity is a business).
The following is a summary of the amortized cost basis of loan modifications granted to borrowers experiencing financial difficulty for the periods indicated:
Three Months Ended June 30, 2026
Interest Rate ReductionOther-Than-Insignificant Payment DelayTerm ExtensionInterest Rate Reduction
and Term Extension		Other-Than-Insignificant Payment Delay and Term Extension
(dollars in thousands)Amortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial Receivable
Commercial and industrial
Secured$— 0.00 %$151 0.08 %$151 0.08 %$50 0.03 %$423 0.21 %
Commercial real estate
Commercial mortgage owner occupied366 0.15 %725 0.30 %— 0.00 %— 0.00 %— 0.00 %
Commercial mortgage non-owner occupied— 0.00 %— 0.00 %5,795 2.59 %— 0.00 %— 0.00 %
Agricultural
Agricultural mortgage229 0.34 %— 0.00 %— 0.00 %— 0.00 %— 0.00 %
Agricultural other— 0.00 %— 0.00 %1,350 4.52 %— 0.00 %— 0.00 %
Residential real estate
Senior lien— 0.00 %85 0.02 %— 0.00 %— 0.00 %— 0.00 %
Total$595 $961 $7,296 $50 $423 
Six Months Ended June 30, 2026
Interest Rate ReductionOther-Than-Insignificant Payment DelayTerm ExtensionInterest Rate Reduction
and Term Extension		Other-Than-Insignificant Payment Delay and Term Extension
(dollars in thousands)Amortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial Receivable
Commercial and industrial
Secured$— 0.00 %$151 0.08 %$161 0.08 %$50 0.03 %$423 0.21 %
Commercial real estate
Commercial mortgage owner occupied367 0.15 %2,625 1.08 %— 0.00 %— 0.00 %— 0.00 %
Commercial mortgage non-owner occupied— 0.00 %— 0.00 %5,795 2.59 %— 0.00 %— 0.00 %
Agricultural
Agricultural mortgage229 0.34 %— 0.00 %— 0.00 %— 0.00 %— 0.00 %
Agricultural other— 0.00 %— 0.00 %1,350 4.52 %— 0.00 %1,100 3.69 %
Residential real estate
Senior lien— 0.00 %85 0.02 %— 0.00 %— 0.00 %— 0.00 %
Total$596 $2,861 $7,306 $50 $1,523 
Three Months Ended June 30, 2025
Interest Rate ReductionTerm ExtensionOther-Than-Insignificant Payment Delay and Term Extension
(dollars in thousands)Amortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial Receivable
Commercial and industrial
Secured$20 0.01 %$2,600 1.12%$602 0.26 %
Total$20 $2,600 $602 
Six Months Ended June 30, 2025
Interest Rate ReductionTerm ExtensionOther-Than-Insignificant Payment Delay and Term Extension
(dollars in thousands)Amortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial ReceivableAmortized Cost Basis% of Total Class of Financial Receivable
Commercial and industrial
Secured$20 0.01 %$3,114 1.34%$602 0.26%
Commercial real estate
Commercial mortgage owner occupied— 0.00 %1,511 0.85 %— 0.00 %
Total$20 $4,625 $602 
We do not modify any loans by forgiving principal or accrued interest. We had committed to advance $3,000 and $221,000 in additional funds to be disbursed in connection with modified loans as of June 30, 2026 and December 31, 2025, respectively, as displayed in the tables above.
The following is a summary of the financial effect of the modifications granted to borrowers experiencing financial difficulty for the periods indicated:
Three Months Ended June 30
20262025
(dollars in thousands)Weighted-Average Interest Rate ReductionPayment Delay TermWeighted-Average Term Extension (Years)Weighted-Average Interest Rate ReductionPayment Delay TermWeighted-Average Term Extension (Years)
Commercial and industrial
Secured2.50%7 months5.1610.00%10 months0.50
Commercial real estate
Commercial mortgage owner occupied1.30%7 monthsN/AN/AN/AN/A
Commercial mortgage non-owner occupiedN/AN/A5.00N/AN/AN/A
Agricultural
Agricultural mortgage0.75%N/AN/AN/AN/AN/A
Agricultural otherN/AN/A0.67N/AN/AN/A
Residential real estate
Senior lienN/A3 monthsN/AN/AN/AN/A
Six Months Ended June 30
20262025
(dollars in thousands)Weighted-Average Interest Rate ReductionPayment Delay TermWeighted-Average Term Extension (Years)Weighted-Average Interest Rate ReductionPayment Delay TermWeighted-Average Term Extension (Years)
Commercial and industrial
Secured2.50%7 months5.1310.00%10 months1.04
Commercial real estate
Commercial mortgage owner occupied2.10%7 monthsN/AN/AN/A15.00
Commercial mortgage non-owner occupiedN/AN/A5.00N/AN/AN/A
Agricultural
Agricultural mortgage0.75%N/AN/AN/AN/AN/A
Agricultural otherN/A6 months0.53N/AN/AN/A
Residential real estate
Senior lienN/A3 monthsN/AN/AN/AN/A
We closely monitor the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts. The following tables summarize the amortized cost basis of loans that have been modified within the 12 months prior to the dates indicated:
June 30, 2026
(dollars in thousands)Current30-59 Days
Past Due		60-89 Days
Past Due		90 Days or
More Past Due		Total
Commercial and industrial
Secured$864 $— $— $— $864 
Commercial real estate
Commercial mortgage owner occupied2,992 — — — 2,992 
Commercial mortgage non-owner occupied5,795 — — — 5,795 
Agricultural
Agricultural mortgage563 855 — — 1,418 
Agricultural other1,350 1,100 776 — 3,226 
Residential real estate
Senior lien— — — 85 85 
Total$11,564 $1,955 $776 $85 $14,380 
June 30, 2025
(dollars in thousands)Current30-59 Days
Past Due		60-89 Days
Past Due		90 Days or
More Past Due		Total
Commercial and industrial
Secured$3,637 $99 $— $— $3,736 
Commercial real estate
Commercial mortgage owner occupied2,852 — — — 2,852 
Agricultural
Agricultural mortgage276 — — — 276 
Agricultural other132 — — — 132 
Total$6,897 $99 $— $— $6,996 
The following table summarizes the amortized cost basis of loans that defaulted in the three and six-month periods ended June 30, 2026 and were modified within 12 months prior to the default date. There were no loans that defaulted in the three and six-month period ended June 30, 2025 and were modified within 12 months prior to the default date. Modified loans, including those that have defaulted, are already included in the allowance for credit losses through the various methodologies used to estimate the allowance. As such, no modification to the allowance is recorded specifically due to a modified loan subsequently defaulting.
Three Months Ended June 30, 2026Six Months Ended June 30, 2026
(dollars in thousands)Other-Than-Insignificant Payment DelayTerm ExtensionOther-Than-Insignificant Payment Delay and Term ExtensionOther-Than-Insignificant Payment DelayTerm ExtensionOther-Than-Insignificant Payment Delay and Term Extension
Commercial and industrial
Secured$— $— $— $— $— $423 
Agricultural
Agricultural mortgage855 — — 855 — — 
Agricultural other— 776 1,100 — 776 1,100 
Residential real estate
Senior lien— — — 85 — — 
Total$855 $776 $1,100 $940 $776 $1,523 
ACL - Loans
The credit quality of our loan portfolio is continuously monitored and is reflected within the ACL for loans. The ACL is an estimate of expected losses inherent within our loan portfolio. The ACL is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries.
The ACL is evaluated on a regular basis for appropriateness. Our periodic review of the collectability of a loan considers historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
The primary factors behind the determination of the level of the ACL are specific allocations for loans individually evaluated, historical loss percentages, delinquency status, and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods.
The methodology for estimating the amount of expected credit losses reported in the ACL is described within Note 3, Loans and ACL, in the consolidated financial statements included within the 2025 Annual Report on Form 10-K. There have been no material changes to the ACL methodology in 2026.
A summary of activity in the ACL for loans, excluding unfunded commitments, by portfolio segment and the recorded investment in loans by segments follows for the periods indicated:
Three Months Ended June 30, 2026
(dollars in thousands)Commercial and IndustrialCommercial Real EstateAgriculturalResidential Real EstateConsumerTotal
March 31, 2026$1,146 $6,222 $300 $5,148 $1,198 $14,014 
Charge-offs(45)(231)(102)— (185)(563)
Recoveries11 8 5 61 94 179 
Provision for (reversal of) credit losses70 664 67 20 28 849 
June 30, 2026$1,182 $6,663 $270 $5,229 $1,135 $14,479 
Six Months Ended June 30, 2026
(dollars in thousands)Commercial and IndustrialCommercial Real EstateAgriculturalResidential Real EstateConsumerTotal
December 31, 2025$1,136 $5,949 $327 $5,059 $1,256 $13,727 
Charge-offs(48)(385)(102)(1)(377)(913)
Recoveries15 29 5 76 151 276 
Provision for (reversal of) credit losses79 1,070 40 95 105 1,389 
June 30, 2026$1,182 $6,663 $270 $5,229 $1,135 $14,479 
Three Months Ended June 30, 2025
(dollars in thousands)Commercial and IndustrialCommercial Real EstateAgriculturalResidential Real EstateConsumerTotal
March 31, 2025$1,239 $5,174 $266 $4,600 $1,456 $12,735 
Charge-offs(72)— — — (318)(390)
Recoveries4 50 — 16 1,752 1,822 
Provision for (reversal of) credit losses147 53 50 57 (1,497)(1,190)
June 30, 2025$1,318 $5,277 $316 $4,673 $1,393 $12,977 
Six Months Ended June 30, 2025
(dollars in thousands)Commercial and IndustrialCommercial Real EstateAgriculturalResidential Real EstateConsumerTotal
December 31, 2024$1,316 $5,171 $287 $4,521 $1,600 $12,895 
Charge-offs(72)— — (1)(489)(562)
Recoveries84 52 — 30 1,880 2,046 
Provision for (reversal of) credit losses(10)54 29 123 (1,598)(1,402)
June 30, 2025$1,318 $5,277 $316 $4,673 $1,393 $12,977 
The following table illustrates the components of the ACL as of the dates indicated:
(dollars in thousands)June 30,
2026		March 31,
2026		December 31,
2025		September 30,
2025		June 30,
2025
ACL
Individually evaluated$199 $227 $259 $— $— 
Collectively evaluated14,280 13,787 13,468 13,149 12,977 
Total$14,479 $14,014 $13,727 $13,149 $12,977 
ACL to loans
Individually evaluated0.01%0.01%0.02%0.00%0.00%
Collectively evaluated0.90%0.89%0.87%0.92%0.93%
Total0.91%0.90%0.89%0.92%0.93%
The following table presents loans that were evaluated for expected credit losses on an individual basis and the related specific allocations, by loan segment as of the dates indicated:
June 30, 2026December 31, 2025
(dollars in thousands)Loan BalanceSpecific AllocationLoan BalanceSpecific Allocation
Commercial and industrial$573 $74 $442 $95 
Commercial real estate3,684 125 3,766 164 
Agricultural2,731 — — — 
Residential real estate572 — 370 — 
Consumer— — — — 
Total$7,560 $199 $4,578 $259 
We have designated loans classified as collateral dependent for which we apply the practical expedient to measure the ACL based on the fair value of the collateral less cost to sell when the repayment is expected to be provided substantially by the sale or operation of the collateral and the borrower is experiencing financial difficulty. The fair value of the collateral is based on appraisals, which may be adjusted due to their age, and the type, location, and condition of the property or area or general market conditions to reflect the expected change in value between the effective date of the appraisal and the measurement date. Appraisals are updated every one to two years depending on the type of loan and the total exposure of the borrower. Loans evaluated for expected credit losses on an individual basis as of June 30, 2026 include $7.6 million in collateral dependent loans secured by commercial real estate, agricultural real estate and equipment, commercial equipment, and residential real estate of $3.7 million, $2.7 million, $573,000, and $572,000, respectively.