The following tables summarize the activity related to the allowance for credit losses on loans for the three and six months ended June 30, 2026 and 2025.


	Commercial Loans											Noncommercial Loans
	Commercial			Real estate commercial			Other real estate construction			Other loans		Real estate 1-4 family construction			Real estate residential			Home equity			Consumer			Total
	(dollars in thousands)
Balance, March 31, 2026	$	1,449		$	2,405		$	493		$	14	$	87		$	1,115		$	700		$	136		$	6,399
Provision for (recovery of) credit losses		(146	)		(38	)		(14	)		5		(18	)		(176	)		(24	)		6			(405	)
Charge-offs		(10	)		—			—			—		—			(1	)		—			(51	)		(62	)
Recoveries		25			—			—			—		—			—			4			25			54
Net (charge-offs) recoveries		15			—			—			—		—			(1	)		4			(26	)		(8	)
Balance, June 30, 2026	$	1,318		$	2,367		$	479		$	19	$	69		$	938		$	680		$	116		$	5,986


	Commercial Loans										Noncommercial Loans
	Commercial			Real estate commercial		Other real estate construction		Other loans			Real estate 1-4 family construction		Real estate residential		Home equity			Consumer			Total
	(dollars in thousands)
Balance, March 31, 2025	$	1,699		$	2,324	$	340	$	20		$	57	$	809	$	652		$	164		$	6,065
Provision for (recovery of) credit losses		(284	)		37		69		(5	)		42		455		(2	)		(70	)		242
Charge-offs		(97	)		—		—		—			—		—		—			(6	)		(103	)
Recoveries		15			—		—		—			—		—		1			11			27
Net (charge-offs) recoveries		(82	)		—		—		—			—		—		1			5			(76	)
Balance, June 30, 2025	$	1,333		$	2,361	$	409	$	15		$	99	$	1,264	$	651		$	99		$	6,231


	Commercial Loans											Noncommercial Loans
	Commercial			Real estate commercial			Other real estate construction			Other loans		Real estate 1-4 family construction			Real estate residential			Home equity			Consumer			Total
	(dollars in thousands)
Balance, December 31, 2025	$	1,479		$	2,420		$	487		$	15	$	83		$	1,155		$	687		$	94		$	6,420
Provision for (recovery of) credit losses		(241	)		(53	)		(8	)		4		(14	)		(217	)		(14	)		56			(487	)
Charge-offs		(20	)		—			—			—		—			(1	)		—			(75	)		(96	)
Recoveries		100			—			—			—		—			1			7			41			149
Net (charge-offs) recoveries		80			—			—			—		—			0			7			(34	)		53
Balance, June 30, 2026	$	1,318		$	2,367		$	479		$	19	$	69		$	938		$	680		$	116		$	5,986


	Commercial Loans											Noncommercial Loans
	Commercial			Real estate commercial		Other real estate construction			Other loans			Real estate 1-4 family construction		Real estate residential		Home equity		Consumer			Total
	(dollars in thousands)
Balance, December 31, 2024	$	1,528		$	2,266	$	412		$	18		$	56	$	781	$	588	$	175		$	5,824
Provision for (recovery of) credit losses		(130	)		95		(3	)		(3	)		43		482		62		(16	)		530
Charge-offs		(113	)		—		—			—			—		—		—		(78	)		(191	)
Recoveries		48			—		—			—			—		1		1		18			68
Net (charge-offs) recoveries		(65	)		—		—			—			—		1		1		(60	)		(123	)
Balance, June 30, 2025	$	1,333		$	2,361	$	409		$	15		$	99	$	1,264	$	651	$	99		$	6,231

Past due loan information is used by management when assessing the adequacy of the allowance for credit losses. The following tables summarize the past due information of the loan portfolio by class as of the dates indicated:


June 30, 2026	Loans 30-89 Days Past Due		Nonaccrual Loans		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 Days or More Past Due
	(dollars in thousands)
Commercial	$	15	$	—	$	15	$	110,476	$	110,491	$	—
Real estate - commercial		119		—		119		253,074		253,193		—
Other real estate construction		—		—		—		64,119		64,119		—
Real estate 1-4 family construction		—		—		—		20,447		20,447		—
Real estate - residential		1,373		489		1,862		151,026		152,888		—
Home equity		57		259		316		76,463		76,779		—
Consumer loans		8		23		31		9,194		9,225		—
Other loans		—		—		—		5,089		5,089		—
Total	$	1,572	$	771	$	2,343	$	689,888	$	692,231	$	—


December 31, 2025	Loans 30-89 Days Past Due		Nonaccrual Loans		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 Days or More Past Due
	(dollars in thousands)
Commercial	$	22	$	—	$	22	$	110,066	$	110,088	$	—
Real estate - commercial		—		—		—		255,944		255,944		—
Other real estate construction		—		—		—		57,247		57,247		—
Real estate 1-4 family construction		—		—		—		19,453		19,453		—
Real estate - residential		561		179		740		158,534		159,274		—
Home equity		104		199		303		72,959		73,262		—
Consumer loan		13		—		13		9,598		9,611		—
Other loans		—		—		—		4,683		4,683		—
Total	$	700	$	378	$	1,078	$	688,484	$	689,562	$	—

The carrying value of foreclosed properties held as other real estate was $0 at June 30, 2026 and December 31, 2025. The Company had $111,000 and $0 of residential real estate in process of foreclosure at June 30, 2026 and December 31, 2025, respectively.

Once a loan becomes 90 days past due, the loan is automatically transferred to a nonaccrual status. The exception to this policy is credit card loans that remain in accruing status 90 days or more until they are paid current or charged off. The composition of nonaccrual loans by class as of June 30, 2026 and December 31, 2025 was as follows:

Loans that are in nonaccrual status or 90 days or more past due and still accruing are considered to be nonperforming. At both June 30, 2026 and December 31, 2025, there were no loans 90 days or more past due and still accruing. The following tables show the breakdown between performing and nonperforming loans by class at June 30, 2026 and December 31, 2025:

Loans that do not share the same risk characteristics as loans in the collectively assessed population will be individually assessed. Individually assessed loans determined to be collateral dependent are evaluated based on the fair value of the underlying collateral, as repayment is expected to be derived through the operation or sale of the collateral. When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the expected credit losses are measured using the fair value of collateral at the reporting date, adjusted for selling costs as appropriate. Loan that are not deemed collateral dependent are assigned a probability of default based on default history. If the loan has defaulted, it will be assigned a 100% probability of default; otherwise, it will be assigned a probability of default based on the Company's historical experience, which is higher than the forecasted probability of default applied in the collectively assessed portfolio.

Management uses a risk-grading program to facilitate the evaluation of probable inherent loan losses and to measure the adequacy of the allowance for credit losses on loans. In this program, risk grades are initially assigned by the loan officers and reviewed and monitored by the lenders and credit administration. The program has nine risk grades summarized in six categories as follows:

Pass: Loans that are pass grade credits include loans that are fundamentally sound, with risk factors that are reasonable and acceptable. They generally conform to policy with only minor exceptions; any major exceptions are clearly mitigated by other economic factors.

Watch: Loans that are acceptable but show signs of weakness in either adequate sources of repayment or collateral but have demonstrated mitigating factors that minimize the risk of delinquency or loss. These loans may deserve management’s attention.

Special Mention: Loans that exhibit potential weakness that deserves management’s close attention. Credits within this category exhibit risk that is increasing beyond the point where the loan would have been originally approved.

Substandard: Loans that are considered substandard are loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or the value of the collateral pledged. All nonaccrual loans are graded as substandard.

Doubtful: Loans that are considered to be doubtful have all weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make the collection or liquidation in full on the basis of current existing facts, conditions and values highly questionable and improbable.

Loss: Loans that are considered to be a loss are considered to be uncollectible and of such little value that their continuance as bankable assets is not warranted.

The following table presents the Company’s recorded investment in loans by credit quality indicators by year of origination as of June 30, 2026:


June 30, 2026	Term Loans by Year of Origination
	2026		2025		2024		2023		2022		Prior			Revolving		Total
	(dollars in thousands)
Commercial
Pass	$	8,113	$	38,930	$	16,941	$	8,899	$	8,663	$	12,109		$	15,977	$	109,632
Watch		172		—		—		1		—		617			69		859
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		—			—		—
Total commercial		8,285		38,930		16,941		8,900		8,663		12,726			16,046		110,491

Real estate - commercial
Pass		9,262		35,885		37,974		39,063		42,355		82,724			2,635		249,898
Watch		—		—		—		—		—		136			89		225
Special Mention		—		—		—		2,730		—		20			—		2,750
Substandard		—		—		—		—		—		320			—		320
Total real estate - commercial		9,262		35,885		37,974		41,793		42,355		83,200			2,724		253,193

Other real estate construction
Pass		25,351		14,502		8,581		2,344		2,660		5,955			1,177		60,570
Watch		—		3,549		—		—		—		—			—		3,549
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		—			—		—
Total other real estate construction		25,351		18,051		8,581		2,344		2,660		5,955	—		1,177		64,119

Real estate 1-4 family construction
Pass		6,361		10,558		3,528		—		—		—			—		20,447
Watch		—		—		—		—		—		—			—		—
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		—			—		—
Total real estate 1-4 family construction		6,361		10,558		3,528		—		—		—			—		20,447

Real estate - residential
Pass		9,818		26,735		20,175		27,775		26,496		38,025			2,249		151,273
Watch		—		—		—		—		—		675			—		675
Special Mention		—		—		—		97		—		134			—		231
Substandard		—		—		—		—		172		537			—		709
Total real estate - residential		9,818		26,735		20,175		27,872		26,668		39,371			2,249		152,888

Home equity
Pass		571		52		68		581		341		2,278			72,483		76,374
Watch		—		—		—		—		14		57			—		71
Special Mention		—		—		—		75		—		—			—		75
Substandard		—		—		—		49		96		114			—		259
Total home equity		571		52		68		705		451		2,449			72,483		76,779

Consumer loans
Pass		2,076		1,557		1,250		556		348		309			3,096		9,192
Watch		10		—		—		—		—		—			—		10
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		23		—		—		—		—			—		23
Total consumer loans		2,086		1,580		1,250		556		348		309			3,096		9,225

Other loans
Pass		539		53		558		—		1,596		2,343			—		5,089
Watch		—		—		—		—		—		—			—		—
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		—			—		—
Total other loans		539		53		558		—		1,596		2,343			—		5,089

Total Pass		62,091		128,272		89,075		79,218		82,459		143,743			97,617		682,475
Total Watch		182		3,549		—		1		14		1,485			158		5,389
Total Special Mention		—		—		—		2,902		—		154			—		3,056
Total Substandard		—		23		—		49		268		971			—		1,311
Total loans	$	62,273	$	131,844	$	89,075	$	82,170	$	82,741	$	146,353		$	97,775	$	692,231

During the six months ended June 30, 2026, forty-six loans totaling $580,000 were converted from revolving to term loans.

The following table presents the Company’s recorded investment in loans by credit quality indicators by year of origination as of December 31, 2025:


December 31, 2025	Term Loans by Year of Origination
	2025		2024		2023		2022		2021		Prior		Revolving		Total
	(dollars in thousands)
Commercial
Pass	$	41,614	$	18,998	$	10,134	$	9,822	$	4,665	$	9,300	$	14,673	$	109,206
Watch		40		—		3		—		640		39		160		882
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total commercial		41,654		18,998		10,137		9,822		5,305		9,339		14,833		110,088

Real estate - commercial
Pass		33,690		44,721		38,979		43,708		35,143		52,174		2,666		251,081
Watch		—		—		—		—		—		148		85		233
Special Mention		—		—		4,267		—		—		24		—		4,291
Substandard		—		—		—		—		—		339		—		339
Total real estate - commercial		33,690		44,721		43,246		43,708		35,143		52,685		2,751		255,944

Other real estate construction
Pass		20,951		14,474		8,480		3,754		1,778		4,633		1,330		55,400
Watch		1,847		—		—		—		—		—		—		1,847
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total other real estate construction		22,798		14,474		8,480		3,754		1,778		4,633		1,330		57,247

Real estate 1-4 family construction
Pass		12,819		6,634		—		—		—		—		—		19,453
Watch		—		—		—		—		—		—		—		—
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total real estate 1-4 family construction		12,819		6,634		—		—		—		—		—		19,453

Real estate - residential
Pass		30,041		24,409		31,429		29,022		19,789		20,706		2,268		157,664
Watch		322		—		—		—		200		446		—		968
Special Mention		—		—		99		—		117		22		—		238
Substandard		—		—		—		—		—		404		—		404
Total real estate - residential		30,363		24,409		31,528		29,022		20,106		21,578		2,268		159,274

Home equity
Pass		52		43		610		332		254		2,100		69,507		72,898
Watch		—		—		—		15		—		75		—		90
Special Mention		—		—		75		—		—		—		—		75
Substandard		—		—		—		96		103		—		—		199
Total home equity		52		43		685		443		357		2,175		69,507		73,262

Consumer loans
Pass		3,014		1,800		865		456		62		278		3,086		9,561
Watch		—		50		—		—		—		—		—		50
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total consumer loans		3,014		1,850		865		456		62		278		3,086		9,611

Other loans
Pass		66		567		—		1,597		1,071		1,382		—		4,683
Watch		—		—		—		—		—		—		—		—
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total other loans		66		567		—		1,597		1,071		1,382		—		4,683

Total Pass		142,247		111,646		90,497		88,691		62,762		90,573		93,530		679,946
Total Watch		2,209		50		3		15		840		708		245		4,070
Total Special Mention		—		—		4,441		—		117		46		—		4,604
Total Substandard		—		—		—		96		103		743		—		942
Total loans	$	144,456	$	111,696	$	94,941	$	88,802	$	63,822	$	92,070	$	93,775	$	689,562

During the year ended December 31, 2025 ninety-nine loans totaling $10.4 million were converted from revolving to term loans.

The following tables present gross charge-offs by origination date as of June 30, 2026 and December 31, 2025:


June 30, 2026	Gross Loan Charge-offs by Year of Origination
	2026		2025		2024		2023		2022		Prior		Revolving		Total
	(dollars in thousands)
Commercial
Commercial	$	—	$	9	$	—	$	—	$	—	$	—	$	11	$	20
Real estate - commercial		—		—		—		—		—		—		—		—
Other real estate construction		—		—		—		—		—		—		—		—
Other loans		—		—		—		—		—		—		—		—
Noncommercial
Real estate 1-4 family construction		—		—		—		—		—		—		—		—
Real estate - residential		—		—		—		—		1		—		—		1
Home equity		—		—		—		—		—		—		—		—
Consumer loans		—		9		54		6		—		1		5		75
Total charge-offs	$	—	$	18	$	54	$	6	$	1	$	1	$	16	$	96


December 31, 2025	Gross Loan Charge-offs by Year of Origination
	2025		2024		2023		2022		2021		Prior		Revolving		Total
	(dollars in thousands)
Commercial
Commercial	$	—	$	9	$	—	$	16	$	88	$	—	$	10	$	123
Real estate - commercial		—		—		—		—		—		—		—		—
Other real estate construction		—		—		—		—		—		—		—		—
Other loans		—		—		—		—		—		—		—		—
Noncommercial
Real estate 1-4 family construction		—		—		—		—		—		—		—		—
Real estate - residential		—		—		—		—		—		—		—		—
Home equity		—				—		—		—		89		—		89
Consumer loans		—		33		7		2		—		2		86		130
Total charge-offs	$	—	$	42	$	7	$	18	$	88	$	91	$	96	$	342

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a probability of default/loss given default model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses due to the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. The Company rarely modifies loans by providing principal forgiveness. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses. In some cases, the Company will modify a loan by providing multiple types of concessions. Typically one type of concession is granted initially. If the borrower continues to experience financial difficulty, another concession may be granted. Types of concessions include term extensions beyond customary terms, capitalization of accrued interest, interest rate reductions to below current market rates, payment deferrals or principal forgiveness.

There were no loans modified for borrowers experiencing financial difficulty during the six months ended June 30, 2026 or during the twelve months ended December 31, 2025. As such, the Company did not have any loans made to borrowers experiencing financial difficulty that were modified during the six months ended June 30, 2026 or during the twelve months ended December 31, 2025 that subsequently defaulted. A default on a modified loan is defined as being past due 90 days or being out of compliance with the modification agreement. The Company closely monitors the performance of the loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.