v3.26.1
LOANS
 6 Months Ended
Jun. 30, 2026
Receivables [Abstract]  
LOANS

NOTE 6 LOANS

 

Loans receivable outstanding as of June 30, 2026, and December 31, 2025, are summarized as follows:

 

          
(Dollars in thousands)  June 30,  
2026		   December 31,
2025		 
Real estate secured:          
Commercial  $253,872   $255,707 
Construction and land development   53,645    42,826 
Residential 1-4 family   254,109    252,624 
Multifamily   51,044    45,964 
Farmland   25,478    23,385 
Total real estate loans   638,148    620,506 
Commercial   58,699    53,175 
Agriculture   4,566    4,384 
Consumer installment and all other loans   30,847    31,522 
Total loans  $732,260   $709,587 

 

Also included in total loans above are deferred loan fees of $2.3 million and $2.2 million as of June 30, 2026 and December 31, 2025, respectively. Deferred loan costs were $2.1 million as of June 30, 2026 and December 31, 2025. Income from net deferred fees and costs is recognized over the lives of the respective loans as a yield adjustment. If loans repay prior to scheduled maturities, any unamortized fees or costs are recognized at that time.

 

During the second quarter of 2026, the Company transferred its $1.3 million credit card portfolio from loans held for investment to loans held for sale based on management’s decision to sell the portfolio. The loans were transferred at the lower of amortized cost or fair value, determined on an aggregate basis which resulted in no fair value writedown at the date of transfer. The sale of the portfolio is not expected to be finalized until 2027.

 

Loans receivable on nonaccrual status as of June 30, 2026, and December 31, 2025, are summarized as follows:

 

                              
   June 30, 2026   December 31, 2025 
   With No Allowance   With an Allowance   Total   With No Allowance   With an Allowance   Total 
(Dollars in thousands)                        
Real estate secured:                              
Commercial  $—   $—   $—   $—   $415   $415 
Construction and land development   —    19    19    —    23    23 
Residential 1-4 family   703    1,752    2,455    960    1,323    2,283 
Farmland   —    14    14    —    16    16 
Total real estate loans   703    1,785    2,488    960    1,777    2,737 
Commercial   —    23    23    —    25    25 
Agriculture   105    512    617    446    305    751 
Consumer installment loans and other loans   —    185    185    —    85    85 
                               
Total loans receivable on nonaccrual status  $808   $2,505   $3,313   $1,406   $2,192   $3,598 

 

The Company evaluates loans that do not share risk characteristics on an individual basis utilizing the collateral or discounted cash flow methods. The following table presents the unpaid principal balance of individually evaluated loans, by measurement method, and the related ACL allocated to those loans as of June 30, 2026 and December 31, 2025:

 

                    
   June 30, 2026   December 31, 2025 
   Unpaid
Principal
Balance		   Related
Allowance		   Unpaid
Principal
Balance		   Related
Allowance		 
(Dollars in thousands)                
Collateral Dependent Loans                    
Real estate secured:                    
Commercial  $—   $—   $408   $108 
Residential 1-4 family   1,147    13    998    39 
Total real estate loans   1,147    13    1,406    147 
Agriculture   181    37    752    54 
                     
Total collateral dependent  $1,328   $50   $2,158   $201 
                     
Discounted Cash Flow Method                    
Agriculture  $437   $91   $—   $— 
                     
Total DCF method  $437   $91   $—   $— 
                     
Total individually evaluated  $1,765   $141   $2,158   $201 

 

During the second quarter of 2026, the Company began individually evaluating one agriculture loan relationship using the discounted cash flow method rather than the fair value of collateral. The borrower has ceased making payments and has filed for bankruptcy protection, and repayment is expected to occur through payments under the borrower’s bankruptcy plan over an extended period rather than through the operation or sale of collateral. Expected credit losses on this loan were measured as the difference between the loan’s amortized cost basis and the present value of estimated future cash flows, discounted at the loan’s effective interest rate. As of June 30, 2026, the loan had an unpaid principal balance of approximately $437,000, net of a $50,000 charge-off recorded during the prior year, and a related specific allowance for credit losses of approximately $91,000.

 

The following table is an age analysis of past due loans receivable as of June 30, 2026, segregated by class:

 

                              

June 30, 2026 

(Dollars in thousands) 

  Loans
30-59
Days
  Past  
Due		   Loans 
60-89 
Days 
Past 
Due		   Loans 
90 or
More
Days
Past
Due		   Total
Past 
Due 
Loans		   Current 
Loans		   Total 
Loans		 
Real estate secured:                              
Commercial  $55   $—   $—   $55   $253,817   $253,872 
Construction and land development   169    —    —    169    53,476    53,645 
Residential 1-4 family   1,323    1,231    831    3,385    250,724    254,109 
Multifamily   —    —    —    —    51,044    51,044 
Farmland   —    —    —    —    25,478    25,478 
Total real estate loans   1,547    1,231    831    3,609    634,539    638,148 
Commercial   130    124    3    257    58,442    58,699 
Agriculture   —    —    618    618    3,948    4,566 
Consumer installment and all other loans    235    58    26    319    30,528    30,847 
Total loans  $1,912   $1,413   $1,478   $4,803   $727,457   $732,260 

 

The following table is an age analysis of past due loans receivable as of December 31, 2025, segregated by class:

 

December 31, 2025 

(Dollars in thousands) 

  Loans 
30-59 
Days 
Past 
Due		   Loans 
60-89 
Days 
Past
Due		   Loans 
90 or
More 
Days 
Past 
Due		   Total
Past
Due
Loans		   Current
Loans		   Total
Loans		 
Real estate secured:                              
Commercial  $468   $—     $423   $891   $254,816   $255,707 
Construction and land development   —      —      —      —      42,826    42,826 
Residential 1-4 family   2,140    1,631    828    4,599    248,025    252,624 
Multifamily   —      —      —      —      45,964    45,964 
Farmland   —      —      —      —      23,385    23,385 
Total real estate loans   2,608    1,631    1,251    5,490    615,016    620,506 
Commercial   203    26    —      229    52,946    53,175 
Agriculture   110    —      802    912    3,472    4,384 
Consumer installment and all other loans   272    26    307    605    30,917    31,522 
Total loans  $3,193   $1,683   $2,360   $7,236   $702,351   $709,587 

 

The Company categorizes loans receivable into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans receivable as to credit risk. The Company uses the following definitions for risk ratings:

 

Pass - Loans in this category are considered to have a low likelihood of loss based on relevant information analyzed about the ability of the borrowers to service their debt and other factors.

 

Special Mention - Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations, credit quality or financial strength. Those loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard classification. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances.  Special mention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect the Company’s credit position at some future date.

 

Substandard - A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

 

Doubtful - Loans classified doubtful have all the weaknesses inherent in loans classified as substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable.

 

The following table presents the credit risk grade of loans by origination year as of June 30, 2026:

 

                                        

As of June 30, 2026

(Dollars in thousands) 

  2026   2025   2024   2023   2022   Prior   Revolving   Total 
Commercial real estate                                        
Pass  $13,266   $28,783   $21,670   $39,345   $41,729   $97,900   $11,179   $253,872 
Total commercial real estate  $13,266   $28,783   $21,670   $39,345   $41,729   $97,900   $11,179   $253,872 
                                         
Current period gross charge-offs  $—   $—   $—   $—   $—   $(103)  $—   $(103)
                                         
Construction and land development                                        
Pass  $9,244   $16,507   $22,808   $478   $2,042   $2,091   $456   $53,626 
Substandard   —    —    19    —    —    —    —    19 
Total construction and land development  $9,244   $16,507   $22,827   $478   $2,042   $2,091   $456   $53,645 
                                         
Current period gross charge-offs  $—   $—   $—   $—   $—   $—   $—   $— 
                                         
Residential 1-4 family                                        
Pass  $14,432   $33,904   $17,556   $20,466   $21,749   $102,692   $40,566   $251,365 
Special Mention   —    —    —    —    —    458    —    458 
Substandard   442    —    —    71    241    1,368    164    2,286 
Total residential 1-4 family  $14,874   $33,904   $17,556   $20,537   $21,990   $104,518   $40,730   $254,109 
                                         
Current period gross charge-offs  $—   $—   $(29)  $—   $—   $—   $—   $(29)
                                         
Multifamily                                        
Pass  $7,266   $18,078   $383   $2,121   $8,856   $13,348   $992   $51,044 
Total multifamily  $7,266   $18,078   $383   $2,121   $8,856   $13,348   $992   $51,044 
                                         
Current period gross charge-offs  $—   $—   $—   $—   $—   $—   $—   $— 
                                         
Farmland                                        
Pass  $1,165   $6,949   $2,404   $1,102   $1,751   $7,541   $4,443   $25,355 
Special Mention   —    —    —    —    —    109    —    109 
Substandard   —    —    —    —    —    14    —    14 
Total farmland  $1,165   $6,949   $2,404   $1,102   $1,751   $7,664   $4,443   $25,478 
                                         
Current period gross charge-offs  $—   $—   $—   $—   $—   $—   $—   $— 
                                         
Commercial                                        
Pass  $15,037   $11,264   $8,161   $5,445   $1,483   $3,357   $13,880   $58,627 
Special Mention   —    —    —    —    —    2    —    2 
Substandard   —    12    —    19    —    20    19    70 
Total commercial  $15,037   $11,276   $8,161   $5,464   $1,483   $3,379   $13,899   $58,699 
                                         
Current period gross charge-offs  $—   $(51)  $(3)  $—   $—   $(19)  $(16)  $(89)
                                         
Agriculture                                        
Pass  $336   $501   $526   $90   $155   $47   $2,189   $3,844 
Special Mention   —    —    —    27    —    —    —    27 
Substandard   —    436    181    —    —    78    —    695 
Doubtful   —    —    —    —    —    —    —    — 
Total agriculture  $336   $937   $707   $117   $155   $125   $2,189   $4,566 
                                         
Current period gross charge-offs  $—   $—   $(117)  $—   $—   $—   $—   $(117)
                                         
Consumer and all other                                        
Pass  $7,294   $12,181   $6,014   $2,446   $817   $1,601   $332   $30,685 
Substandard   —    98    27    37    —    —    —    162 
Total consumer and all other  $7,294   $12,279   $6,041   $2,483   $817   $1,601   $332   $30,847 
                                         
Current period gross charge-offs  $—   $(20)  $(34)  $(10)  $—   $(97)  $(11)  $(172)
                                         
Total  $68,482   $128,713   $79,749   $71,647   $78,823   $230,626   $74,220   $732,260 
Total current period gross charge-offs  $—   $(71)  $(183)  $(10)  $—   $(219)  $(27)  $(510)

 

The following table presents the credit risk grade of loans by origination year as of December 31, 2025:

 

As of December 31, 2025                        
(Dollars in thousands)  2025  2024  2023  2022  2021  Prior  Revolving  Total
Commercial real estate                                        
Pass  $33,892   $22,565   $43,005   $44,828   $42,021   $69,031   $358   $255,700 
Substandard   —      —      —      —      —      7    —      7 
Total commercial real estate  $33,892   $22,565   $43,005   $44,828   $42,021   $69,038   $358   $255,707 
                                         
Current period gross charge-offs  $—     $—     $—     $(1)  $—     $—     $—     $(1)
                                         
Construction and land development                    
Pass  $12,676   $21,666   $2,448   $2,113   $2,122   $1,778   $0   $42,803 
Substandard   —      23    —      —      —      —      —      23 
Total construction and land development  $12,676   $21,689   $2,448   $2,113   $2,122   $1,778   $0   $42,826 
                                         
Current period gross charge-offs  $—     $—     $—     $—     $—     $—     $—     $—   
                                         
Residential 1-4 family                                        
Pass  $35,441   $18,703   $24,178   $24,318   $35,543   $76,674   $34,842   $249,699 
Special Mention   —      —      —      —      —      476    —      476 
Substandard   —      104    197    50    —      2,020    78    2,449 
Total residential 1-4 family  $35,441   $18,807   $24,375   $24,368   $35,543   $79,170   $34,920   $252,624 
                                         
Current period gross charge-offs  $—     $—     $(138)  $—     $—     $(1)  $—     $(139)
                                         
Multifamily                                        
Pass  $17,668   $1,464   $3,197   $9,874   $6,444   $7,317   $—     $45,964 
Total multifamily  $17,668   $1,464   $3,197   $9,874   $6,444   $7,317   $—     $45,964 
                                         
Current period gross charge-offs  $—     $—     $—     $—     $—     $—     $—     $—   
                                         
Farmland                                        
Pass  $9,005   $2,610   $1,142   $1,830   $2,641   $6,020   $—     $23,248 
Special Mention   —      —      —      —      —      121    —      121 
Substandard   —      —      —      —      —      16    —      16 
Total farmland  $9,005   $2,610   $1,142   $1,830   $2,641   $6,157   $—     $23,385 
                                         
Current period gross charge-offs  $—     $—     $—     $—     $—     $—     $—     $—   
                                         
Commercial                                        
Pass  $14,653   $10,852   $8,745   $2,628   $1,284   $3,106   $11,880   $53,148 
Special Mention   —      —      —      —      —      2    —      2 
Substandard   —      —      —      —      —      —      25    25 
Total commercial  $14,653   $10,852   $8,745   $2,628   $1,284   $3,108   $11,905   $53,175 
                                         
Current period gross charge-offs  $—     $(59)  $—     $—     $(23)  $(15)  $—     $(97)
                                         
Agriculture                                        
Pass  $1,437   $683   $162   $176   $104   $98   $942   $3,602 
Special Mention   —      —      —      —      —      —      31    31 
Substandard   —      —      —      —      —      —      —      —   
Doubtful   —      305    —      —      —      —      446    751 
Total agriculture  $1,437   $988   $162   $176   $104   $98   $1,419   $4,384 
                                         
Current period gross charge-offs  $—     $—     $—     $—     $—     $—     $(50)  $(50)
                                         
Consumer and all other                                        
Pass  $16,111   $7,607   $3,599   $1,311   $845   $1,617   $372   $31,462 
Substandard   18    30    10    2    —      0    —      60 
Total consumer and all other  $16,129   $7,637   $3,609   $1,313   $845   $1,617   $372   $31,522 
                                         
Current period gross charge-offs  $(14)  $(47)  $(25)  $(5)  $(5)  $(280)  $—     $(376)
                                         
Total  $140,901   $86,612   $86,683   $87,130   $91,004   $168,283   $48,974   $709,587 
Total current period gross charge-offs  $(14)  $(106)  $(163)  $(6)  $(28)  $(296)  $(50)  $(663)