Note 3 – Loans Receivable

Portfolio loans, net of deferred costs and fees, are summarized by type as follows at June 30, 2026 and December 31, 2025:


	Period Ended
	June 30, 2026						December 31, 2025
(dollars in thousands)	Amount			Percent			Amount			Percent
Real estate
One to four family - owner occupied	$	164,069			23.09	%	$	163,964			21.72	%
One to four family - non owner occupied		86,643			12.19	%		94,511			12.52	%
Commercial owner occupied		77,779			10.95	%		79,730			10.56	%
Commercial investor		311,057			43.79	%		321,675			42.60	%
Construction and land		23,844			3.36	%		36,441			4.83	%
Farm loans		8,077			1.14	%		7,231			0.96	%
Total real estate loans		671,469			94.50	%		703,552			93.19	%

Marine and other consumer loans		13,210			1.86	%		14,914			1.98	%
Guaranteed by U.S. Government		2,062			0.29	%		2,175			0.29	%
Commercial		23,884			3.36	%		34,280			4.54	%
Total consumer and commercial		39,156			5.50	%		51,369			6.81	%

Total loans		710,625			100.0	%		754,921			100.0	%
Allowance for credit losses		(6,214	)					(6,437	)
Total loans, net of deferred costs and fees	$	704,411					$	748,484

Net deferred loan origination fees at June 30, 2026 and December 31, 2025 totaled $2.2 million and $2.2 million, respectively.

In the normal course of banking business, risks related to specific loan categories are as follows:

Real Estate Loans – Real estate loans are typically made to consumers and businesses and are secured by real estate. Credit risk arises from the borrower’s continuing financial stability, which can be adversely impacted by the economy as well as borrower-specific occurrences. Also impacting credit risk are any shortfalls in the value of the real estate in relation to the outstanding loan balance in the event of a default or subsequent liquidation of the collateral.

Residential lending repayment is generally dependent on economic and market conditions in the Company's lending area. Commercial real estate, commercial and construction loan repayments are generally dependent on the operations of the related properties or the financial condition of its borrower or guarantor. Accordingly, repayment of such loans can be more susceptible to adverse conditions in the real estate market and the regional economy.

Marine Loans – Marine loans are typically made to consumers and are secured by boats. Credit risk is similar to real estate loans above as it is subject to the borrower’s continuing financial stability and the value of the collateral securing the loan. Marine loans may entail greater risk than residential mortgage loans, as they are collateralized by assets that depreciate rapidly. Repossessed collateral for a defaulted loan may not provide an adequate source of repayment for the outstanding and small remaining deficiency often does not warrant further substantial collection efforts against the borrower.

Other Consumer – Other consumer loans include installment loans and personal lines of credit which may be secured or unsecured. Credit risk is similar to real estate loans above as it is subject to the borrower’s continuing financial stability and the value of the collateral securing the loan, if any. Consumer loans may entail greater risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and a small remaining deficiency often does not warrant further substantial collection efforts against the borrower.

Guaranteed by the U.S. Government – Loans guaranteed by the U.S. Government do not present similar risks as reflected in the other categories mentioned herein because of an explicit guarantee is provided by the government, therefore substantially mitigating any risk of loss in the event of credit deterioration.

Commercial – Commercial loans are secured or unsecured loans used for business purposes. Loans are typically secured by accounts receivable, inventory, equipment and/or other assets of the business. Credit risk arises from the successful operation of the business, which may be affected by competition, rising interest rates, tariffs, regulatory changes and adverse conditions in the local and regional economy.

Non-accrual loans as of June 30, 2026 and December 31, 2025 were as follows:


	June 30, 2026						December 31, 2025
	No		With an				No		With an
(dollars in thousands)	Allowance		Allowance		Total		Allowance		Allowance		Total
Real estate
One to four family - owner occupied	$	1,229	$	—	$	1,229	$	811	$	—	$	811
One to four family - non owner occupied		257		—		257		174		—		174
Commercial owner occupied		804		—		804		860		—		860
Commercial investor		372		—		372		—		—		—
Construction and land		—		—		—		26		—		26
Commercial						—		—		—		—
Farm loans		—		—		—		—		—		—
Total real estate loans		2,662		—		2,662		1,871		—		1,871

Marine and other consumer loans		371		—		371		10		—		10
Commercial		286		94		380		286		94		380
Total consumer and commercial loans		657		94		751		296		94		390

Total non-accrual loans	$	3,319	$	94	$	3,413	$	2,167	$	94	$	2,261

Loans can be current but classified as non-accrual due to customer operating results or payment history. All interest accrued but not collected from loans that are placed on non-accrual status or charged off is reversed against interest income. In accordance with the Company’s policy, such interest income is recognized on a cash basis or cost-recovery method, until qualifying for return to accrual status. Interest that would have been accrued under the terms of the non-accrual loans had such loans been performing according to their terms was approximately $170,000 for the six months ended June 30, 2026 and $453,000 for the six months ended June 30, 2025.

The Company considers a loan to be past due or delinquent when the terms of the contractual obligation are not met by the borrower. An analysis of days past due loans as of June 30, 2026 was as follows:


	June 30, 2026
	30 - 59		60 - 89		90+
	Days		Days		Days		Total		Current		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Loans		Loans
Real estate
One to four family - owner occupied	$	496	$	773	$	608	$	1,877	$	162,192	$	164,069
One to four family - non owner occupied		116		—		116		232		86,411		86,643
Commercial owner occupied		1,020		—		292		1,312		76,467		77,779
Commercial investor		—		670		372		1,042		310,015		311,057
Construction and land		—		—		—		—		23,844		23,844
Farm loans		—		—		—		—		8,077		8,077
Total real estate loans		1,632		1,443		1,388		4,463		667,006		671,469

Marine and other consumer loans		37		45		371		453		12,757		13,210
Guaranteed by U.S. Government		—		—		—		—		2,062		2,062
Commercial		—		—		380		380		23,504		23,884
Total consumer and commercial loans		37		45		751		833		38,323		39,156

Total loans	$	1,669	$	1,488	$	2,139	$	5,296	$	705,329	$	710,625

An analysis of days past due loans as of December 31, 2025 was as follows:


	December 31, 2025
	30 - 59		60 - 89		90+
	Days		Days		Days		Total		Current		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Loans		Loans
Real estate
One to four family - owner occupied	$	4,700	$	379	$	787	$	5,866	$	158,098	$	163,964
One to four family - non owner occupied		104		—		174		278		94,233		94,511
Commercial owner occupied		—		566		294		860		78,870		79,730
Commercial investor		—		—		—		—		321,675		321,675
Construction and land		—		—		26		26		36,415		36,441
Farm loans		—		—		—		—		7,231		7,231
Total real estate loans		4,804		945		1,281		7,030		696,522		703,552

Marine and other consumer loans		384		44		10		438		14,476		14,914
Guaranteed by U.S. Government		—		—		—		—		2,175		2,175
Commercial		—		—		380		380		33,900		34,280
Total consumer and commercial loans		384		44		390		818		50,551		51,369

Total loans	$	5,188	$	989	$	1,671	$	7,848	$	747,073	$	754,921

Allowance for Credit Losses

The following tables detail activity in the ACL at and for the three and six months ended June 30, 2026 and 2025. An allocation of the allowance to one category of loans does not prevent the Company from using that allowance to absorb losses in a different category.


Three months ended	June 30, 2026
(dollars in thousands)	Beginning Balance		Charge-offs			Recoveries		Provisions (Recovery)			Ending Balance
Real estate
One to four family - owner occupied	$	1,552	$	—		$	1	$	(27	)	$	1,526
One to four family - non owner occupied		504		—			14		(87	)		431
Commercial owner occupied		418		—			—		(2	)		416
Commercial investor		2,923		—			—		(80	)		2,843
Construction and land		104		—			—		(26	)		78
Farm loans		17		—			—		54			71
Total real estate loans		5,518		—			15		(168	)		5,365

Marine and other consumer loans		470		(6	)		6		(33	)		437
Guaranteed by U.S. Government		—		—			—		83			83
Commercial		411		—			—		(82	)		329
Total consumer and commercial		881		(6	)		6		(32	)		849

Total loans	$	6,399	$	(6	)	$	21	$	(200	)	$	6,214


Three months ended	June 30, 2025
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provisions (recovery)			Ending Balance
Real estate
One to four family - owner occupied	$	1,647	$	—	$	13	$	551		$	2,211
One to four family - non owner occupied		617		—		14		36			667
Commercial owner occupied		495		—		—		—			495
Commercial investor		4,032		—		—		(299	)		3,733
Construction and land		955		—		1		(88	)		868
Farm loans		73		—		—		24			97
Total real estate loans		7,819		—		28		224			8,071

Marine and other consumer loans		396		—		1		(27	)		370
Commercial		673		—		—		45			718
Total consumer and commercial		1,069		—		1		18			1,088

Total loans	$	8,888	$	—	$	29	$	242		$	9,159


Six months ended	June 30, 2026
(dollars in thousands)	Beginning Balance		Charge-offs			Recoveries		Provisions (recovery)			Ending Balance
Real estate
One to four family - owner occupied	$	1,306	$	—		$	2	$	218		$	1,526
One to four family - non owner occupied		537		—			33		(139	)		431
Commercial owner occupied		329		—			—		87			416
Commercial investor		3,060		—			—		(217	)		2,843
Construction and land		328		—			—		(250	)		78
Farm loans		23		—			—		48			71
Total real estate loans		5,583		—			35		(253	)		5,365

Marine and other consumer loans		438		(9	)		7		1			437
Guaranteed by U.S. Government		—		—			—		83			83
Commercial		416		—			—		(87	)		329
Total consumer and commercial		854		(9	)		7		(3	)		849

Total loans	$	6,437	$	(9	)	$	42	$	(256	)	$	6,214


Six months ended	June 30, 2025
(dollars in thousands)	Beginning Balance		Charge-offs			Recoveries		Provisions (recovery)			Ending Balance
Real estate
One to four family - owner occupied	$	1,858	$	—		$	16	$	337		$	2,211
One to four family - non owner occupied		742		—			30		(105	)		667
Commercial owner occupied		511		—			—		(16	)		495
Commercial investor		3,592		—			—		141			3,733
Construction and land		940		—			2		(74	)		868
Farm loans		69		—			—		28			97
Total real estate loans		7,712		—			48		311			8,071

Marine and other consumer loans		399		(5	)		1		(25	)		370
Commercial		411		—			—		307			718
Total consumer and commercial		810		(5	)		1		282			1,088

Total loans	$	8,522	$	(5	)	$	49	$	593		$	9,159

The following table summarizes the ACL provision activity for the three and six months ended June 30, 2026 and 2025.


	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2026			2025			2026			2025
Provision for (recovery of) credit losses - loans	$	(200	)	$	242		$	(256	)	$	593
Provision for (recovery of) allowance for securities - HTM		—			(1	)		(1	)		(1	)
Provision for (recovery of ) allowance for credit losses - unfunded commitments		(16	)		(63	)		30			(117	)
Provision for (recovery of) credit losses per the consolidated statements of income	$	(216	)	$	178		$	(227	)	$	475

Term Loans by Origination Year


(dollars in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at June 30, 2026	2026		2025		2024		2023		2022		Prior		Revolving		Total
One to four family - owner occupied
Pass	$	14,422	$	33,682	$	18,038	$	5,262	$	7,387	$	73,864	$	10,519	$	163,174
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		895		—		895
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total One to four family - owner occupied	$	14,422	$	33,682	$	18,038	$	5,262	$	7,387	$	74,759	$	10,519	$	164,069
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

One to four family - non owner occupied
Pass	$	3,675	$	8,425	$	3,646	$	12,232	$	24,804	$	33,418	$	—	$	86,200
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		443		—		443
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total One to four family - non owner occupied	$	3,675	$	8,425	$	3,646	$	12,232	$	24,804	$	33,861	$	—	$	86,643
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial owner occupied
Pass	$	4,294	$	3,581	$	4,032	$	19,446	$	10,179	$	34,392	$	—	$	75,924
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		1,855		—		1,855
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Commercial owner occupied	$	4,294	$	3,581	$	4,032	$	19,446	$	10,179	$	36,247	$	—	$	77,779
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial investor
Pass	$	5,795	$	33,422	$	47,826	$	57,693	$	74,237	$	91,712	$	—	$	310,685
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		372		—		372
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Commercial investor	$	5,795	$	33,422	$	47,826	$	57,693	$	74,237	$	92,084	$	—	$	311,057
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction and land
Pass	$	1,240	$	7,276	$	13,990	$	265	$	419	$	654	$	—	$	23,844
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Construction and land	$	1,240	$	7,276	$	13,990	$	265	$	419	$	654	$	—	$	23,844
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Farm loans
Pass	$	1,301	$	—	$	1,804	$	—	$	294	$	4,678	$	—	$	8,077
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Farm loans	$	1,301	$	—	$	1,804	$	—	$	294	$	4,678	$	—	$	8,077
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Marine and other consumer loans
Pass	$	26	$	731	$	1,209	$	2,320	$	1,484	$	7,078	$	—	$	12,848
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		362		—		362
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Marine and other consumer loans	$	26	$	731	$	1,209	$	2,320	$	1,484	$	7,440	$	—	$	13,210
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	6	$	—	$	6

Guaranteed by U.S. Government
Pass	$	—	$	—	$	—	$	—	$	—	$	2,062	$	—	$	2,062
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Guaranteed by U.S. Government	$	—	$	—	$	—	$	—	$	—	$	2,062	$	—	$	2,062
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial
Pass	$	569	$	12,137	$	6,201	$	186	$	1,217	$	3,194	$	—	$	23,504
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		380		—		—		380
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Commercial	$	569	$	12,137	$	6,201	$	186	$	1,597	$	3,194	$	—	$	23,884
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


(dollars in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at June 30, 2026	2026		2025		2024		2023		2022		Prior		Revolving		Total
Total Loans
Pass	$	31,322	$	99,254	$	96,746	$	97,404	$	120,021	$	251,052	$	10,519	$	706,318
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		380		3,927		—		4,307
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total loans	$	31,322	$	99,254	$	96,746	$	97,404	$	120,401	$	254,979	$	10,519	$	710,625

Term Loans by Origination Year


(dollars in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at December 31, 2025	2025		2024		2023		2022		2021		Prior		Revolving		Total
One to four family - owner occupied
Pass	$	34,231	$	23,919	$	5,315	$	7,503	$	12,345	$	68,285	$	11,790	$	163,388
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		329		247		—		576
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total One to four family - owner occupied	$	34,231	$	23,919	$	5,315	$	7,503	$	12,674	$	68,532	$	11,790	$	163,964
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

One to four family - non owner occupied
Pass	$	8,148	$	4,737	$	12,480	$	26,808	$	14,860	$	27,113	$	—	$	94,146
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		365		—		365
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total One to four family - non owner occupied	$	8,148	$	4,737	$	12,480	$	26,808	$	14,860	$	27,478	$	—	$	94,511
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial owner occupied
Pass	$	3,905	$	4,100	$	19,694	$	10,299	$	5,646	$	34,164	$	—	$	77,808
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		294		1,628		—		1,922
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Commercial owner occupied	$	3,905	$	4,100	$	19,694	$	10,299	$	5,940	$	35,792	$	—	$	79,730
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial investor
Pass	$	34,551	$	34,460	$	61,241	$	80,765	$	66,609	$	44,049	$	—	$	321,675
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Commercial investor	$	34,551	$	34,460	$	61,241	$	80,765	$	66,609	$	44,049	$	—	$	321,675
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction and land
Pass	$	7,957	$	26,805	$	271	$	348	$	448	$	586	$	—	$	36,415
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		26		—		26
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Construction and land	$	7,957	$	26,805	$	271	$	348	$	448	$	612	$	—	$	36,441
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Farm loans
Pass	$	—	$	311	$	—	$	300	$	1,744	$	4,876	$	—	$	7,231
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Farm loans	$	—	$	311	$	—	$	300	$	1,744	$	4,876	$	—	$	7,231
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Marine and other consumer loans
Pass	$	883	$	2,042	$	2,408	$	1,587	$	4,698	$	3,296	$	—	$	14,914
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Marine and other consumer loans	$	883	$	2,042	$	2,408	$	1,587	$	4,698	$	3,296	$	—	$	14,914
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	14	$	—	$	14

Guaranteed by U.S. Government
Pass	$	—	$	—	$	—	$	—	$	—	$	2,175	$	—	$	2,175
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Guaranteed by U.S. Government	$	—	$	—	$	—	$	—	$	—	$	2,175	$	—	$	2,175
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial
Pass	$	12,267	$	6,851	$	138	$	1,339	$	4,726	$	8,579	$	—	$	33,900
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		380		—		—		—		380
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Commercial	$	12,267	$	6,851	$	138	$	1,719	$	4,726	$	8,579	$	—	$	34,280
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


(dollars in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at December 31, 2025	2025		2024		2023		2022		2021		Prior		Revolving		Total
Total Loans
Pass	$	101,942	$	103,225	$	101,547	$	128,949	$	111,076	$	193,123	$	11,790	$	751,652
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		380		623		2,266		—		3,269
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total loans	$	101,942	$	103,225	$	101,547	$	129,329	$	111,699	$	195,389	$	11,790	$	754,921

Classified Assets. Federal regulations provide for the classification of loans and other assets, such as debt and equity securities considered to be of lesser quality, as “substandard,” “doubtful” or “loss.” An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss allowance is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as “special mention” by our management.

When an insured institution classifies problem assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover expected credit losses. General allowances represent loss allowances which have been established to cover expected credit losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, such that additional general or specific loss allowances may be required.

In connection with the filing of our periodic reports with the FDIC and in accordance with our classification of assets policy, we regularly review the problem loans in our portfolio to determine whether any loans require classification in accordance with applicable regulations.

Through our loan evaluation process, we have identified certain loans for which the primary source of loan repayment may no longer be a viable option. The Company is dependent on the liquidation of the collateral to provide funds for repayment of the loan. The following table shows the loans determined by management to be collateral dependent at June 30, 2026.


	Loan Balance		Estimated Collateral Values		Loan Balance		Estimated Collateral Values
(dollars in thousands)	Real Estate		Real Estate		Business\Other Assets		Business\Other Assets
One to four family - owner occupied	$	1,229	$	6,849	$	—	$	—
One to four family - non-owner occupied		257		655		—		—
Commercial owner occupied real estate		804		2,125		—		—
Commercial investor real estate		372		2,485		—		—
Commercial		380		786		—		122
Marine and other consumer		371		—		—		576
Total	$	3,413	$	12,900	$	—	$	698

The following table shows the loans determined by management to be collateral dependent at December 31, 2025.


			Estimated Collateral Values		Loan Balance Business/Other		Estimated Collateral Values
(dollars in thousands)	Real Estate		Real Estate		Business\Other Assets		Business\Other Assets
One to four family - owner occupied	$	811	$	4,535	$	—	$	—
One to four family - non-owner occupied		174		495		—		—
Commercial owner occupied real estate		860		2,250		—		—
Construction and land		26		625		—		—
Commercial		380		664		—		122
Marine and other consumer		10		—		—		50
Total	$	2,261	$	8,569	$	—	$	172

Borrowers experiencing financial difficulty ("BEFD") modifications included in the collateral dependent schedule above, as of June 30, 2026 were as follows:


(dollars in thousands)	Number of Loans		Amortized Cost
One to four family - owner occupied	9		$	1,126
One to four family - non owner occupied	1			123
Commercial owner occupied	1			513
Commercial		—		—
Total BEFD modification loans	11		$	1,762

Modifications on non-accrual	1		$	513

There were no BEFD modifications past due as of June 30, 2026 or December 31, 2025.

The following tables details the amortized cost basis for loans modified to borrowers experiencing financial difficulty during the three and six months ended June 30, 2026.


	Three months ended June 30, 2026
(dollars in thousands)	Term Extensions		Payment Deferral and Term Extensions		Total		Percentage of Total Loans
Commercial owner occupied real estate	$	513		—		513		0.07	%
Total	$	513	$	—	$	513		0.07	%


	Six months ended June 30, 2026
(dollars in thousands)	Term Extensions		Payment Deferral and Term Extensions		Total		Percentage of Total Loans
One to four family - owner occupied	$	82	$	—	$	82		0.01	%
Commercial owner occupied real estate		513		—		513		0.07	%
Total	$	595	$	—	$	595		0.08	%