10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 0-14549

First US Bancshares, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	63-0843362
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

3291 U.S. Highway 280 Birmingham, AL	35243
(Address of Principal Executive Offices)	(Zip Code)

(205) 582-1200

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	FUSB	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at November 6, 2023
Common Stock, $0.01 par value	5,874,781 shares

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

	PAGE
PART I. FINANCIAL INFORMATION	4
ITEM 1. FINANCIAL STATEMENTS	4
Interim Condensed Consolidated Balance Sheets at September 30, 2023 (Unaudited) and December 31, 2022	4
Interim Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)	5
Interim Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)	6
Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)	7
Interim Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (Unaudited)	9
Notes to Interim Condensed Consolidated Financial Statements (Unaudited)	10
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	43
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	59
ITEM 4. CONTROLS AND PROCEDURES	60
PART II. OTHER INFORMATION	61
ITEM 1. LEGAL PROCEEDINGS	61
ITEM 1A. RISK FACTORS	61
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	61
ITEM 6. EXHIBITS	62
Signature Page	63

2

FORWARD-LOOKING STATEMENTS

Statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). In addition, First US Bancshares, Inc. (“Bancshares” and, together with its subsidiaries, the “Company”), through its senior management, from time to time makes forward-looking statements concerning its expected future operations, performance and other developments. The words “estimate,” “project,” “intend,” “anticipate,” “expect,” “believe,” “continues” and similar expressions are indicative of forward-looking statements. Such forward-looking statements are necessarily estimates reflecting the Company’s best judgment based on current information and involve a number of risks and uncertainties. Certain factors that could affect the accuracy of such forward-looking statements and cause actual results to differ materially from those projected in such forward-looking statements are identified in the Company’s filings with the Securities and Exchange Commission (“SEC”), and forward-looking statements contained herein or in other public statements of the Company or its senior management should be considered in light of those factors. Such factors may include adverse developments in the financial services industry; the effects of any government shutdown; loan losses may be greater than anticipated; our ability to ensure that sufficient cash flow and liquid assets are available to satisfy current and future financial obligations; the impact of national and local market conditions on the Company’s business and operations; strong competition in the banking industry; the impact of changes in interest rates and monetary policy on the Company’s performance and financial condition; the pending discontinuation of LIBOR as an interest rate benchmark; the impact of technological changes in the banking and financial service industries and potential information system failures; cybersecurity and data privacy threats; the costs of complying with extensive governmental regulation; the risk that internal controls and procedures might fail or be circumvented; the impact of changing tax laws on the Company’s financial results; the potential impact of climate change and related legislative and regulatory initiatives; the possibility that acquisitions may not produce anticipated results and result in unforeseen integration difficulties; the rate of growth (or lack thereof) in the economy generally and in the Company’s service areas; the volatility of our stock price and our dependence on the soundness of other financial institutions; and other risk factors described from time to time in the Company’s public filings, including, but not limited to, the Company’s most recent Annual Report on Form 10-K. Relative to the Company’s dividend policy, the payment of cash dividends is subject to the discretion of the Board of Directors and will be determined in light of then-current conditions, including the Company’s earnings, leverage, operations, financial conditions, capital requirements and other factors deemed relevant by the Board of Directors. In the future, the Board of Directors may change the Company’s dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions.

3

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Share Amounts)

	September 30,			December 31,
	2023			2022
	(Unaudited)
ASSETS
Cash and due from banks	$	10,311		$	11,844
Interest-bearing deposits in banks		55,818			18,308
Total cash and cash equivalents		66,129			30,152
Federal funds sold		1,143			1,768
Investment securities available-for-sale, at fair value		126,551			130,795
Investment securities held-to-maturity, at amortized cost		1,272			1,862
Federal Home Loan Bank stock, at cost		2,151			1,359
Loans and leases held for investment		815,300			773,873
Less allowance for credit losses		11,380			9,422
Net loans and leases held for investment		803,920			764,451
Premises and equipment, net of accumulated depreciation		24,259			24,439
Cash surrender value of bank-owned life insurance		16,622			16,399
Accrued interest receivable		3,522			3,011
Goodwill and core deposit intangible, net		7,642			7,801
Other real estate owned		617			686
Other assets		11,411			11,944
Total assets	$	1,065,239		$	994,667
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest-bearing	$	157,652		$	169,822
Interest-bearing		769,386			700,203
Total deposits		927,038			870,025
Accrued interest expense		1,864			607
Other liabilities		8,148			8,136
Short-term borrowings		30,000			20,038
Long-term borrowings		10,781			10,726
Total liabilities		977,831			909,532
Shareholders’ equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,738,156 and    7,680,856 shares issued, respectively; 5,874,781 and 5,812,258 shares outstanding,    respectively		75			75
Additional paid-in capital		14,824			14,510
Accumulated other comprehensive loss, net of tax		(8,907	)		(7,241	)
Retained earnings		107,976			104,460
Less treasury stock: 1,863,375 and 1,868,598 shares at cost, respectively		(26,560	)		(26,669	)
Total shareholders’ equity		87,408			85,135
Total liabilities and shareholders’ equity	$	1,065,239		$	994,667

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

4

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(Unaudited)				(Unaudited)
Interest income:
Interest and fees on loans	$	12,584	$	9,750	$	35,330	$	27,339
Interest on investment securities		685		756		2,043		1,927
Interest on deposits in banks		598		136		1,362		265
Other		35		28		126		45
Total interest income		13,902		10,670		38,861		29,576
Interest expense:
Interest on deposits		4,222		864		9,681		1,964
Interest on borrowings		197		291		940		562
Total interest expense		4,419		1,155		10,621		2,526
Net interest income		9,483		9,515		28,240		27,050
Provision for credit losses		184		1,165		753		2,781
Net interest income after provision for credit losses		9,299		8,350		27,487		24,269
Non-interest income:
Service and other charges on deposit accounts		302		311		869		904
Lease income		241		210		707		635
Other income, net		294		567		889		1,234
Total non-interest income		837		1,088		2,465		2,773
Non-interest expense:
Salaries and employee benefits		4,120		4,007		12,310		12,389
Net occupancy and equipment		897		861		2,625		2,468
Computer services		464		417		1,315		1,224
Insurance expense and assessments		423		310		1,156		970
Fees for professional services		331		263		735		811
Other expense		1,084		1,174		3,599		3,104
Total non-interest expense		7,319		7,032		21,740		20,966
Income before income taxes		2,817		2,406		8,212		6,076
Provision for income taxes		704		546		2,004		1,440
Net income	$	2,113	$	1,860	$	6,208	$	4,636
Basic net income per share	$	0.35	$	0.31	$	1.04	$	0.76
Diluted net income per share	$	0.33	$	0.29	$	0.97	$	0.71
Dividends per share	$	0.05	$	0.03	$	0.15	$	0.09

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

5

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
	(Unaudited)						(Unaudited)
Net income	$	2,113		$	1,860		$	6,208		$	4,636
Other comprehensive income (loss):
Unrealized holding losses on securities available-for-sale    arising during period, net of tax benefit of $58, $350, $425,   and $2,768, respectively		(167	)		(1,048	)		(1,271	)		(8,307	)
Unrealized holding gains (losses) arising during the period on    effective cash flow hedge derivatives, net of tax benefit (expense)    of $0, ($130), $18 and ($443), respectively		—			393			(50	)		1,330
Reclassification adjustments on cash flow hedge derivatives realized in net income, net of tax benefit (expense) of $39, ($9), $116 and ($14), respectively		(118	)		27			(345	)		41
Other comprehensive loss		(285	)		(628	)		(1,666	)		(6,936	)
Total comprehensive income (loss)	$	1,828		$	1,232		$	4,542		$	(2,300	)

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

6

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Dollars in Thousands, Except Share and Per Share Data)

For the three months ended September 30, 2023 and 2022 (Unaudited)

	Common Stock Shares Outstanding			Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Treasury Stock, at Cost			Total Shareholders’ Equity
Balance, June 30, 2022		5,876,258		$	75	$	14,263	$	(6,584	)	$	100,838		$	(26,016	)	$	82,576
Net income		—			—		—		—			1,860			—			1,860
Net change in fair value of    securities available-for-sale,    net of tax		—			—		—		(1,048	)		—			—			(1,048	)
Net change in fair value of    derivative instruments, net    of tax		—			—		—		420			—			—			420
Dividends declared: $.03 per    share		—			—		—		—			(175	)		—			(175	)
Impact of stock-based    compensation plans, net		—			—		123		—			—			—			123
Impact of common stock share repurchases		(64,000	)		—		—		—			—			(653	)		(653	)
Balance, September 30, 2022		5,812,258		$	75	$	14,386	$	(7,212	)	$	102,523		$	(26,669	)	$	83,103
Balance, June 30, 2023		5,874,765		$	75	$	14,675	$	(8,622	)	$	106,157		$	(26,560	)	$	85,725
Net income		—			—		—		—			2,113			—			2,113
Net change in fair value of    securities available-for-sale,    net of tax		—			—		—		(167	)		—			—			(167	)
Net change in fair value of    derivative instruments, net    of tax		—			—		—		(118	)		—			—			(118	)
Dividends declared: $.05 per    share		—			—		—		—			(294	)		—			(294	)
Impact of stock-based    compensation plans, net		—			—		149		—			—			—			149
Reissuance of treasury stock as compensation		16			—		—		—			—			—			—
Balance, September 30, 2023		5,874,781		$	75	$	14,824	$	(8,907	)	$	107,976		$	(26,560	)	$	87,408

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

7

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Dollars in Thousands, Except Share and Per Share Data)

For the nine months ended September 30, 2023 and 2022 (Unaudited)

	Common Stock Shares Outstanding			Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Treasury Stock, at Cost			Total Shareholders’ Equity
Balance, December 31, 2021		6,172,378		$	75	$	14,163		$	(276	)	$	98,428		$	(22,326	)	$	90,064
Net income		—			—		—			—			4,636			—			4,636
Net change in fair value of    securities available-for-sale,    net of tax		—			—		—			(8,307	)		—			—			(8,307	)
Net change in fair value of    derivative instruments,    net of tax		—			—		—			1,371			—			—			1,371
Dividends declared: $.09 per    share		—			—		—			—			(541	)		—			(541	)
Impact of stock-based    compensation plans, net		43,096			—		361			—			—			—			361
Reissuance of treasury stock as    compensation		9,184			—		(138	)		—			—			138			—
Impact of common stock share repurchases		(412,400	)		—		—			—			—			(4,481	)		(4,481	)
Balance, September 30, 2022		5,812,258		$	75	$	14,386		$	(7,212	)	$	102,523		$	(26,669	)	$	83,103
Balance, December 31, 2022		5,812,258		$	75	$	14,510		$	(7,241	)	$	104,460		$	(26,669	)	$	85,135
Net income		—			—		—			—			6,208			—			6,208
Net change in fair value of    securities available-for-sale,    net of tax		—			—		—			(1,271	)		—			—			(1,271	)
Net change in fair value of    derivative instruments,    net of tax		—			—		—			(395	)		—			—			(395	)
Dividends declared: $.15 per    share		—			—		—			—			(881	)		—			(881	)
Impact of stock-based    compensation plans, net		53,141			—		448			—			—			(25	)		423
Reissuance of treasury stock as    compensation		9,382					(134	)								134			—
Impact of adopting current expected credit loss accounting model, net of tax		—			—		—			—			(1,811	)		—			(1,811	)
Balance, September 30, 2023		5,874,781		$	75	$	14,824		$	(8,907	)	$	107,976		$	(26,560	)	$	87,408

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

8

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

	Nine Months Ended
	September 30,
	2023			2022
	(Unaudited)
Cash flows from operating activities:
Net income	$	6,208		$	4,636
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		1,180			1,201
Provision for credit losses		753			2,781
Deferred income tax benefit		(566	)		(309	)
Proceeds from settlement of derivative contracts		2,166			—
Reclassification of unrealized gains on terminated derivative contracts		(848	)		—
Stock-based compensation expense		448			361
Net amortization of securities		40			169
Amortization of intangible assets		159			213
Net loss (gain) on premises and equipment and other real estate		613			(350	)
Changes in assets and liabilities:
Increase in accrued interest receivable		(511	)		(135	)
Decrease in other assets		333			750
Increase in accrued interest expense		1,257			495
Decrease in other liabilities		(225	)		(310	)
Net cash provided by operating activities		11,007			9,502
Cash flows from investing activities:
Net decrease (increase) in federal funds sold		625			(38	)
Purchases of investment securities, available-for-sale		(6,756	)		(39,256	)
Proceeds from maturities and prepayments of investment securities, available-for-sale		9,267			15,111
Proceeds from maturities and prepayments of investment securities, held-to-maturity		587			1,317
Net increase in Federal Home Loan Bank stock		(792	)		(1,139	)
Net increase in loans		(43,533	)		(45,590	)
Proceeds from the sale of premises and equipment and other real estate		482			2,892
Purchases of premises and equipment		(979	)		(672	)
Net cash used in investing activities		(41,099	)		(67,375	)
Cash flows from financing activities:
Net increase in deposits		57,013			8,411
Net increase in short-term borrowings		9,962			30,060
Net share-based compensation transactions		(25	)		—
Repurchases of common stock		—			(4,481	)
Dividends paid		(881	)		(541	)
Net cash provided by financing activities		66,069			33,449
Net increase (decrease) in cash and cash equivalents		35,977			(24,424	)
Cash and cash equivalents, beginning of period		30,152			61,244
Cash and cash equivalents, end of period	$	66,129		$	36,820
Supplemental disclosures:
Cash paid for:
Interest	$	9,364		$	2,031
Income taxes		2,374			1,804
Non-cash transactions:
Assets acquired in settlement of loans		1,178			656

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

9

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.GENERAL

The accompanying unaudited interim condensed consolidated financial statements include the accounts of First US Bancshares, Inc. (“Bancshares”) and its subsidiaries (collectively, the “Company”). Bancshares is the parent holding company of First US Bank (the “Bank”). The Company and the Bank are both headquartered in Birmingham, Alabama. As of September 30, 2023, the Bank operated a finance company subsidiary, Acceptance Loan Company, Inc. (“ALC”). During the third quarter of 2021, ALC ceased new business development and permanently closed its 20 branch lending locations in Alabama and Mississippi to the public. Through the third quarter of 2023, ALC continued to service its remaining portfolio of loans from its headquarters in Mobile, Alabama. Effective October 1, 2023, all of ALC’s remaining loans were sold to the Bank in an intercompany transaction. Due to this transaction, management determined that ALC was no longer a separate reportable operating segment. The Bank intends to manage the remaining portfolio through final resolution. All significant intercompany transactions and accounts have been eliminated.

The unaudited interim condensed consolidated financial statements, in the opinion of management, reflect all adjustments necessary for a fair presentation of the Company’s consolidated financial position, results of operations and cash flows for the periods presented. Such adjustments are of a normal, recurring nature, except for the adoption of Accounting Standards Codification (“ASC”) 326, Measurement of Credit Losses on Financial Instruments, as discussed below. The results of operations for any interim period are not necessarily indicative of results expected for the fiscal year ending December 31, 2023. While certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), management believes that the disclosures herein are adequate to make the information presented not misleading. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2022 (the "Company's 2022 Form 10-K").

2.BASIS OF PRESENTATION

Reclassification

Certain amounts in the prior period consolidated financial statements and the notes to the prior period consolidated financial statements have been reclassified to conform to the 2023 presentation. These reclassifications had no effect on the Company’s results of operations, financial position or net cash flow.

Summary of Significant Accounting Policies

Certain significant accounting policies followed by the Company are set forth in Note 2, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in the Company’s 2022 Form 10-K.

Adoption of ASC 326

On January 1, 2023, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as subsequently updated for certain clarifications, targeted relief and codification improvements. ASC 326 replaces the previous "incurred loss" model for measuring credit losses, which required allowances for current known and inherent losses within the loan portfolio, with an "expected loss" model. The newly adopted current expected credit loss ("CECL") model requires the measurement of all expected credit losses for financial assets measured at amortized cost and certain off-balance-sheet credit exposures based on historical experience, current conditions, and reasonable and supportable forecasts. ASC 326 also requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. In addition, ASC 326 includes certain changes to the accounting for available-for-sale securities including the requirement to present credit losses as an allowance rather than as a direct write-down.

The Company adopted ASC 326 using the modified retrospective method for financial assets measured at amortized cost and off-balance-sheet credit exposures. Upon adoption, the Company recognized an increase in the allowance for credit losses (including both loans and unfunded lending commitments) of $2.4 million, which included an after-tax cumulative effect decrease to retained earnings totaling $1.8 million. Operating results for periods after January 1, 2023 are presented in accordance with ASC 326 while prior period amounts continue to be reported in accordance with previously applicable standards and the accounting policies described in Note 2 of the Company's 2022 Form 10-K. In connection with the adoption of ASC 326, the Company revised certain accounting policies and implemented certain accounting policy elections. The revised accounting policies are described below.

10

Loans and Leases Held for Investment

Loans and leases held for investment (“loans”) represent financial instruments that the Company has the intent and the ability to hold for the foreseeable future or until maturity or payoff. Loans are reported at amortized cost, net of the allowance for credit losses. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, fair value hedge accounting adjustments, as well as deferred loan fees and costs. Accrued interest receivable on loans and leases is reported separately on the Company’s consolidated balance sheets and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.

At the time a loan is 90 days delinquent, it is placed on nonaccrual status unless it is well-secured and in process of collection. Interest income is discontinued on all loans on nonaccrual status. Past-due status is based on the contractual terms of the loan. In all cases, loans are moved to nonaccrual status, or charged off at an earlier date, if collection of principal and interest is considered doubtful.

All interest accrued but not received on loans on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery methods, until qualifying for return to accrual. Under the cash-basis method, interest income is recorded when the payment is received in cash. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Loans are returned to accrual status when all of the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Credit Losses – Loans and Leases

The allowance for credit losses is a contra-asset valuation account that is deducted from the amortized cost basis of the loans to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. The allowance for credit losses on loans and leases is adjusted through the provision for (recovery of) credit losses.

Management estimates the allowance balance by using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for estimation of expected credit losses. Adjustments to historical loss information are made for differences in loan-specific risk characteristics such as changes in economic and business conditions, underwriting standards, portfolio mix, and delinquency level. Considerations related to environmental conditions include reasonable and supportable current and forecasted data related to economic factors such as inflation, unemployment levels, and interest rates.

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty as of the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for estimated selling costs as appropriate.

Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company, or management has a reasonable expectation at the reporting date that a loan modification will be made to a borrower experiencing financial difficulty.

Additional information related to the factors considered in evaluating credit losses on loans and leases is included in Note 4.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The following categories of off-balance sheet credit exposures have been identified: unfunded loan commitments, standby letters of credit, and financial guarantees (collectively, “unfunded lending commitments”). The allowance for credit losses on unfunded lending commitments is adjusted through the provision for (recovery of) credit losses. The estimate may include consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded, as well as reasonable practical expedients or industry practices to assist in the evaluation of estimated funding amounts.

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Additional information related to the factors considered in evaluating credit losses on unfunded lending commitments is included in Note 4.

Allowance for Credit Losses – Investment Securities Held-to-Maturity

Expected credit losses on held-to-maturity debt securities are measured on a collective basis by major security type. Accrued interest receivable on held-to-maturity securities is excluded from the estimate of credit losses. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The allowance for credit losses on investment securities held-to-maturity is adjusted through the provision for (recovery of) credit losses.

Additional information related to the factors considered in evaluating credit losses in the held-to-maturity investment portfolio is included in Note 3.

Allowance for Credit Losses – Investment Securities Available-for-Sale

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities available-for-sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes in the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded in the provision for (recovery of) credit losses. Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable on available-for-sale debt securities is excluded from the estimate of credit losses.

Additional information related to the factors considered in evaluating credit losses in the available-for-sale investment portfolio is included in Note 3.

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding ("basic shares"). Included in basic shares are stock equivalent shares that have been accrued as of the balance sheet date as deferred compensation for members of Bancshares’ Board of Directors under the Non-Employee Directors' Deferred Compensation Plan (as defined below and discussed further in Note 9). Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding, adjusted for the effect of potentially dilutive stock awards outstanding during the period ("dilutive shares"). The dilutive shares consist of unexercised nonqualified stock option grants issued to employees and members of Bancshares’ Board of Directors pursuant to the Company's Incentive Plan (as defined below and discussed further in Note 10).

The following table reflects the weighted average shares used to calculate basic and diluted net income per share for the periods presented.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Weighted average shares outstanding		5,874,769		5,839,658		5,858,812		6,016,770
Weighted average director stock equivalent shares		109,793		111,608		113,142		114,853
Basic shares		5,984,562		5,951,266		5,971,954		6,131,623
Dilutive shares		419,650		419,650		419,650		419,650
Diluted shares		6,404,212		6,370,916		6,391,604		6,551,273

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	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(Dollars in Thousands, Except Per Share Data)
Net income	$	2,113	$	1,860	$	6,208	$	4,636
Basic net income per share	$	0.35	$	0.31	$	1.04	$	0.76
Diluted net income per share	$	0.33	$	0.29	$	0.97	$	0.71

Comprehensive Income

Comprehensive income consists of net income, as well as unrealized holding gains and losses that arise during the period associated with the Company’s available-for-sale securities portfolio and the effective portion of cash flow hedge derivatives. In the calculation of comprehensive income, reclassification adjustments are made for gains or losses realized in the statement of operations associated with the sale of available-for-sale securities or settlement of derivative contracts.

Recently Adopted Accounting Guidance

Reference Rate Reform

ASU 2020-04 and ASU 2021-01, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting." These ASUs provide temporary relief, in the form of optional expedients and exceptions, for applying GAAP to modifications of contracts, hedging relationships and other transactions affected by reference rate (e.g. LIBOR) reforms. Historically, the Company utilized LIBOR, among other indexes, as a reference rate for underwriting certain variable rate loans and interest rate hedging instruments. Since the issuance of this guidance, cessation of U.S. dollar LIBOR was extended to June 30, 2023. Accordingly, in December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which deferred the sunset date of ASC Topic 848 from December 31, 2022 to December 31, 2024. The amendments in this update provide optional expedients designed to provide relief from accounting analysis and the impacts that may otherwise be required for modifications to agreements necessitated by reference rate reform. The optional expedients provided by the update include guidance related to modifications of contracts within the scope of ASC Topics 310, Receivables, and 470, Debt, that indicates the modifications should be accounted for by prospectively adjusting the effective interest rate. As of September 30, 2023, the Company’s contracts referencing LIBOR were limited to certain variable-rate loan agreements for which the pricing reset date has not yet occurred. Management has implemented a process to convert the agreements to another reference rate at the next applicable pricing reset date. Due to the prospective nature of the implementation of the revised guidance, the adoption did not have a material impact on the Company’s consolidated financial statements.

Portfolio Layer Hedging Method

ASU 2022-01, "Fair Value Hedging - Portfolio Layer Method - Derivatives and Hedging (Topic 815)." In March 2022, the FASB issued ASU 2022-01. The amendments in this standard expand the current last-of-layer method of hedge accounting to allow multiple hedged layers of a single closed portfolio. The Company adopted ASU 2022-01 on January 1, 2023. Due to the prospective nature of the implementation of this revised guidance, the adoption of this standard update did not have a material impact on the Company's consolidated financial statements.

Intangibles and Goodwill

ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” Issued in January 2017, ASU 2017-04 simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill under Step 2, an entity, prior to the amendments in ASU 2017-04, had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities, including unrecognized assets and liabilities, in accordance with the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. However, under the amendments in ASU 2017-04, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, ASU 2017-04 removes the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. As originally issued, ASU 2017-04 was effective prospectively for annual, or any interim, goodwill impairment tests in fiscal years beginning after December 15, 2019. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2017-04 by three years for smaller reporting companies, including the Company. The ASU became effective for the Company on January 1, 2023. The adoption of this standard update did not have a material effect on the Company’s consolidated financial statements.

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Current Expected Credit Loss Accounting Guidance

ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." Issued in June 2016, ASU 2016-13 removed the thresholds that entities previously applied to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables and held-to-maturity debt securities. Known as the Current Expected Credit Loss (CECL) model, the revised guidance removed all recognition thresholds under previously used incurred loss models and required entities to recognize an allowance for lifetime expected credit losses. The standard also added disclosure requirements intended to enable users of the financial statements to understand credit risk in the portfolio and how management monitors credit quality, management’s estimate of expected credit losses, and changes in the estimate of credit losses during the period. In addition, the standard made changes to the accounting for available for sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available for sale debt securities if management does not intend to sell and does not believe that it is more likely than not they will be required to sell. As originally issued, ASU 2016-13 was effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019, with institutions required to apply the changes through a cumulative-effect adjustment to their retained earnings balance as of the beginning of the first reporting period in which the guidance is effective. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2016-13 by three years for smaller reporting companies, including the Company. The ASU became effective for the Company on January 1, 2023, and the Company recorded a cumulative-effect adjustment that increased the allowance for credit losses by approximately $2.1 million. In addition, the Company recorded a cumulative-effect adjustment that increased other liabilities by $0.3 million as an allowance for credit losses for unfunded commitments. In accordance with transition accounting guidance, the transition adjustments were recorded directly to retained earnings (net of tax) during the first quarter of 2023 and did not impact then-current period earnings.

Troubled Debt Restructurings and Vintage Disclosures

ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures.” Issued in March 2022, ASU 2022-02 sought to improve the decision usefulness of information provided to investors concerning certain loan refinancings, restructurings and write-offs. The ASU eliminated the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL accounting model and enhanced the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The Company adopted the amendments of ASU 2022-02 on January 1, 2023, concurrent with the adoption of the CECL accounting model. The amendments of ASU 2022-02 include only changes to certain financial statement disclosures; and, therefore, adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial statements.

3.INVESTMENT SECURITIES

Details of investment securities available-for-sale and held-to-maturity as of September 30, 2023 and December 31, 2022 were as follows:

	Available-for-Sale
	September 30, 2023
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	41,071	$	—	$	(4,071	)	$	37,000
Commercial		10,020		1		(521	)		9,500
Obligations of U.S. government-sponsored agencies		11,851		—		(919	)		10,932
Obligations of states and political subdivisions		1,633		—		(90	)		1,543
Corporate notes		17,772		—		(3,091	)		14,681
U.S. Treasury securities		56,988		—		(4,093	)		52,895
Total	$	139,335	$	1	$	(12,785	)	$	126,551

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	Held-to-Maturity
	September 30, 2023
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	704	$	—	$	(30	)	$	674
Obligations of U.S. government-sponsored agencies		502		—		(49	)		453
Obligations of states and political subdivisions		66		—		(10	)		56
Total	$	1,272	$	—	$	(89	)	$	1,183

	Available-for-Sale
	December 31, 2022
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	47,659	$	2	$	(3,704	)	$	43,957
Commercial		12,169		4		(480	)		11,693
Obligations of U.S. government-sponsored agencies		5,116		—		(846	)		4,270
Obligations of states and political subdivisions		2,166		—		(94	)		2,072
Corporate notes		17,817		2		(1,898	)		15,921
U.S. Treasury securities		56,956		—		(4,074	)		52,882
Total	$	141,883	$	8	$	(11,096	)	$	130,795

	Held-to-Maturity
	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,167	$	—	$	(41	)	$	1,126
Obligations of U.S. government-sponsored agencies		610		—		(40	)		570
Obligations of states and political subdivisions		85		—		(12	)		73
Total	$	1,862	$	—	$	(93	)	$	1,769

The scheduled maturities of investment securities available-for-sale and held-to-maturity as of September 30, 2023 are presented in the following table:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Maturing within one year	$	12,988	$	12,783	$	—	$	—
Maturing after one to five years		53,676		49,249		324		308
Maturing after five to ten years		60,121		52,780		738		686
Maturing after ten years		12,550		11,739		210		189
Total	$	139,335	$	126,551	$	1,272	$	1,183

For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on the weighted-average contractual maturities of underlying collateral. The mortgage-backed securities generally mature earlier than their weighted-average contractual maturities because of principal prepayments.

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The following tables reflect gross unrealized losses and fair value for securities for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2023.

	Available-for-Sale
	September 30, 2023
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	105	$	(5	)	$	36,860	$	(4,066	)
Commercial		1,532		(13	)		7,934		(508	)
Obligations of U.S. government-sponsored agencies		—		—			4,176		(919	)
Obligations of states and political subdivisions		—		—			1,543		(90	)
Corporate notes		802		(198	)		13,879		(2,893	)
U.S. Treasury securities		—		—			52,895		(4,093	)
Total	$	2,439	$	(216	)	$	117,287	$	(12,569	)

	Held-to-Maturity
	September 30, 2023
	Less than 12 Months				12 Months or More
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	—	$	—	$	674	$	(30	)
Obligations of U.S. government-sponsored agencies		—		—		453		(49	)
Obligations of states and political subdivisions		—		—		56		(10	)
Total	$	—	$	—	$	1,183	$	(89	)

The following tables reflect gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2022. No determination was made concerning the need for an allowance for credit losses as this table reflects information prior to the adoption of ASC 326.

	Available-for-Sale
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	19,876	$	(952	)	$	23,903	$	(2,752	)
Commercial		9,720		(357	)		1,247		(123	)
Obligations of U.S. government-sponsored agencies		—		—			4,270		(846	)
Obligations of states and political subdivisions		1,559		(41	)		513		(53	)
Corporate notes		6,845		(898	)		8,075		(1,000	)
U.S. Treasury securities		21,240		(698	)		31,642		(3,376	)
Total	$	59,240	$	(2,946	)	$	69,650	$	(8,150	)

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	Held-to-Maturity
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,126	$	(41	)	$	—	$	—
Obligations of U.S. government-sponsored agencies		214		(7	)		356		(33	)
Obligations of states and political subdivisions		73		(12	)		—		—
Total	$	1,413	$	(60	)	$	356	$	(33	)

Available-for-Sale Considerations

For any securities classified as available-for-sale that are in an unrealized loss position as of the balance sheet date, the Company assesses whether or not it intends to sell the security, or more-likely-than-not will be required to sell the security, before recovery of its amortized cost basis which would require a write-down to fair value through net income.

As of September 30, 2023, 109 available-for-sale debt securities had been in a loss position for more than 12 months, and six available-for-sale debt securities had been in a loss position for less than 12 months. As of December 31, 2022, 37 available-for-sale debt securities had been in a loss position for more than 12 months, and 75 available-for-sale debt securities had been in a loss position for less than 12 months. The increase in the number of debt securities in a loss position for greater than 12 months was due to the sustained higher interest rate environment during the nine months ended September 30, 2023. As of September 30, 2023, the Company had the current intent and ability to retain its investments for a period of time that management believes to be sufficient to allow for any anticipated recovery of fair value. As of September 30, 2023, the losses for all available-for-sale securities were considered to be a direct result of the effect that the prevailing interest rate environment had on the value of debt securities and were not related to the creditworthiness of the issuers. Accordingly, no allowance for credit losses was considered necessary related to available-for-sale securities as of September 30, 2023.

Held-to-Maturity Considerations

Effective January 1, 2023, the Company adopted the CECL accounting model to evaluate credit losses in the held-to-maturity investment portfolio. Each quarter, management evaluates the portfolio on a collective basis by major security type to determine whether an allowance for credit losses is needed. Qualitative factors are used in the Company’s credit loss assessments, including current and forecasted economic conditions, the characteristics of the debt issuer, and the historic ability of the issuer to make contractual principal and interest payments. Based on these evaluations, no allowance for credit losses was recorded by the Company for the held-to-maturity investment portfolio upon adoption of the CECL accounting model or as of September 30, 2023.

Pledged Securities

Investment securities with a carrying value of $42.3 million and $54.7 million as of September 30, 2023 and December 31, 2022, respectively, were pledged to secure public deposits and for other purposes.

4.LOANS AND ALLOWANCE FOR CREDIT LOSSES

Portfolio Segments

The Company has divided the loan portfolio into the following portfolio segments based on risk characteristics:

Construction, land development and other land loans – Commercial construction, land and land development loans include loans for the development of residential housing projects, loans for the development of commercial and industrial use property, loans for the purchase and improvement of raw land and loans primarily for agricultural production that are secured by farmland. These loans are secured in whole or in part by the underlying real estate collateral and are generally guaranteed by the principals of the borrowing entity.

Secured by 1-4 family residential properties – These loans include conventional mortgage loans on one-to-four family residential properties. These properties may serve as the borrower’s primary residence, vacation home or investment property. Also included in this portfolio are home equity loans and lines of credit. This type of lending, which is secured by a first or second mortgage on the borrower’s residence, allows customers to borrow against the equity in their home.

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Secured by multi-family residential properties – This portfolio segment includes mortgage loans secured by apartment buildings.

Secured by non-farm, non-residential properties – This portfolio segment includes real estate loans secured by commercial and industrial properties, office or mixed-use facilities, strip shopping centers or other commercial property. These loans are generally guaranteed by the principals of the borrowing entity.

Commercial and industrial loans and leases – This portfolio segment includes loans and leases to commercial customers for use in the normal course of business. These credits may be loans, lines of credit and leases to financially strong borrowers, secured by inventories, equipment or receivables, and are generally guaranteed by the principals of the borrowing entity.

Direct consumer – This portfolio segment includes a variety of secured and unsecured personal loans, including automobile loans, loans for household and personal purposes and all other direct consumer installment loans.

Branch retail – This portfolio segment includes loans secured by collateral purchased by consumers at retail stores with whom ALC previously had an established relationship through its branch network to provide financing for the retail products sold if applicable underwriting standards were met. The collateral securing these loans generally includes personal property items such as furniture, ATVs and home appliances.

Indirect consumer – This portfolio segment includes loans secured by collateral purchased by consumers at retail stores with whom the Company has an established relationship to provide financing for the retail products sold if applicable underwriting standards are met. The collateral securing these loans generally includes recreational vehicles, campers, boats, horse trailers and cargo trailers.

As of September 30, 2023 and December 31, 2022, the composition of the loan portfolio by portfolio segment was as follows:

	September 30, 2023		December 31, 2022
Real estate loans:
Construction, land development and other land loans	$	90,051	$	53,914
Secured by 1-4 family residential properties		83,876		87,995
Secured by multi-family residential properties		56,506		67,852
Secured by non-farm, non-residential properties		199,116		200,156
Commercial and industrial loans and leases (1)		59,369		73,546
Consumer loans:
Direct		6,544		9,851
Branch retail		9,648		13,992
Indirect		310,190		266,567
Total loans		815,300		773,873
Allowance for credit losses		11,380		9,422
Net loans	$	803,920	$	764,451

(1)Includes equipment financing leases, which totaled $10.2 million and $10.3 million as of September 30, 2023 and December 31, 2022, respectively.

The Company makes commercial, real estate and installment loans to its customers. Although the Company has a diversified loan portfolio, 52.7% and 53.0% of the portfolio was concentrated in loans secured by real estate as of September 30, 2023 and December 31, 2022, respectively.

Loans with a carrying value of $100.8 million and $100.2 million were pledged as collateral to secure Federal Home Loan Bank (“FHLB”) borrowings as of September 30, 2023 and December 31, 2022, respectively. In addition, loans with a carrying value of $282.6 million were pledged to secure borrowings with the Federal Reserve Bank ("FRB") as of September 30, 2023. No loans were pledged to the FRB as of December 31, 2022. Measures were undertaken by management in 2023 to pledge loans to the FRB in order to provide additional borrowing capacity to the Company in response to heightened liquidity concerns in the banking industry.

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Related Party Loans

In the ordinary course of business, the Bank makes loans to certain officers and directors of the Company, including companies with which they are associated. These loans are made on the same terms as those prevailing for comparable transactions with unrelated parties. Management believes that such loans do not represent more than a normal risk of collectability, nor do they present other unfavorable features. The aggregate balances of such related party loans and commitments were $1.4 million and $0.2 million as of September 30, 2023 and December 31, 2022, respectively. During the nine months ended September 30, 2023, there was one new loan to these parties and no repayments made. During the year ended December 31, 2022, there were no new loans to these parties, and repayments by active related parties totaled $0.1 million.

Allowances for Credit Losses

Effective January 1, 2023, the Company adopted the CECL model to account for credit losses on financial instruments, including loans and leases held for investment, as well as off-balance sheet credit exposures including unfunded lending commitments. In accordance with the CECL accounting guidance, the Company recorded a cumulative-effect adjustment totaling $2.4 million, of which $1.8 million (net of tax) was recorded through retained earnings upon adoption of the model. This amount included estimates for credit losses associated with both loan and lease receivables, as well as unfunded lending commitments. Prospectively, following the date of adoption, all adjustments for credit losses are required to be recorded as a provision for (recovery of) credit losses in the Company’s consolidated statement of operations.

Allowance for Credit Losses - Loans and Leases

Determining the appropriateness of the allowance for credit losses is complex and requires judgment by management about the effects of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, or particular segments of the portfolio, in the context of factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods. The level of the allowance is influenced by loan volumes and mix, historical credit loss experience, average remaining life of portfolio segments, asset quality characteristics, delinquency status, and other conditions including reasonable and supportable forecasts of economic conditions and qualitative adjustment factors based on management’s understanding of various attributes that could impact life-of-loan losses as of the balance sheet date. The methodology to estimate losses includes two basic components: (1) an asset-specific component for individual loans that do not share similar risk characteristics with other loans, and (2) a pooled component for estimated expected credit losses for loans that share similar risk characteristics.

Loans that do not share risk characteristics with other loans are evaluated on an individual basis. The process for determining whether a loan should be evaluated on an individual basis begins with a determination of credit rating. All loans graded substandard or worse with a total commitment of $0.5 million or more are evaluated on an individual basis. At management's discretion, other loans may be evaluated, including loans less than $0.5 million, if management determines that the loans exhibit unique risk characteristics. For loans individually evaluated, the allowance is based primarily on the fair value of the underlying collateral, utilizing independent third-party appraisals, and assessment of borrower guarantees.

For estimating the component of the allowance for credit losses that share similar risk characteristics, loans are segregated into loan segments or categories that share risk characteristics. Loans are designated into pooled segments based on product types, business lines, collateral, and other risk characteristics. For all pooled loan categories, the Company uses a loss-rate methodology to calculate estimated life-of-loan and lease credit losses. This methodology focuses on historical credit loss rates applied over the estimated weighted average remaining life of each loan segment, adjusted by qualitative factors, to estimate life-of-loan losses for each pooled segment. The qualitative factors utilized include, among others, reasonable and supportable forecasts of economic data, including inflation and unemployment levels, as well as interest rates.

The Company’s cumulative-effect adjustment upon the adoption of CECL increased the Company’s allowance for credit losses on loans and leases by $2.1 million. Subsequent to January 1, 2023, the Company recorded additional increases to the allowance for credit losses on loans and leases totaling $0.5 million which were included in the provision for credit losses in the Company’s consolidated statement of operations during the nine months ended September 30, 2023.

19

The following tables present changes in the allowance for credit losses on loans and leases during the nine months ended September 30, 2023 and 2022:

	As of and for the Nine Months Ended September 30, 2023
	Construction, Land Development, and Other			Real Estate 1-4 Family			Real Estate Multi- Family			Non- Farm Non- Residential			Commercial and Industrial			Direct Consumer			Branch Retail			Indirect Consumer			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	517		$	832		$	646		$	1,970		$	919		$	866		$	518		$	3,154		$	9,422
Impact of adopting CECL accounting guidance		(94	)		(39	)		(85	)		(147	)		(20	)		47			628			1,833			2,123
Charge-offs		—			(96	)		—			—			—			(521	)		(359	)		(500	)		(1,476	)
Recoveries		—			39			—			—			—			499			195			40			773
Provision for (recovery of) credit losses		157			18			(156	)		(201	)		(369	)		(404	)		(147	)		1,640			538
Ending balance	$	580		$	754		$	405		$	1,622		$	530		$	487		$	835		$	6,167		$	11,380

	As of and for the Nine Months Ended September 30, 2022
	Construction, Land Development, and Other			Real Estate 1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Commercial and Industrial		Direct Consumer			Branch Retail			Indirect Consumer			Total
	(Dollars in Thousands)
Allowance for loan and lease losses:
Beginning balance	$	628		$	690		$	437	$	1,958	$	860	$	1,004		$	304		$	2,439		$	8,320
Charge-offs		—			(10	)		—		—		—		(1,604	)		(423	)		(238	)		(2,275	)
Recoveries		2			23			—		4		—		387			97			34			547
Provision for (recovery of) loan and lease losses		(246	)		89			210		30		244		1,161			445			848			2,781
Ending balance	$	384		$	792		$	647	$	1,992	$	1,104	$	948		$	423		$	3,083		$	9,373

The following table details the allowance for loan and lease losses and recorded investment in loans by loan classification and by impairment evaluation as of December 31, 2022, as determined in accordance with ASC 310, Receivables, prior to the adoption of ASC 326:

	As of the Year Ended December 31, 2022
	Construction, Land Development, and Other		Real Estate 1-4 Family		Real Estate Multi- Family		Non- Farm Non- Residential		Commercial and Industrial		Direct Consumer		Branch Retail		Indirect Consumer		Total
	(Dollars in Thousands)
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	—	$	7	$	—	$	—	$	252	$	—	$	—	$	—	$	259
Collectively evaluated for impairment		517		825		646		1,970		667		886		518		3,154	$	9,183
Total allowance for loan and lease losses	$	517	$	832	$	646	$	1,970	$	919	$	886	$	518	$	3,154	$	9,442
Ending balance of loans receivable:
Individually evaluated for impairment	$	—	$	582	$	—	$	2,492	$	2,429	$	18	$	—	$	—	$	5,521
Collectively evaluated for impairment		53,914		87,413		67,852		197,664		71,117		9,833		13,992		266,567		768,352
Total loans receivable	$	53,914	$	87,995	$	67,852	$	200,156	$	73,546	$	9,851	$	13,992	$	266,567	$	773,873

Allowance for Credit Losses - Unfunded Lending Commitments

Unfunded lending commitments are off-balance sheet arrangements that represent unconditional commitments of the Company to lend to a borrower that are unfunded as of the balance sheet date. These may include unfunded loan commitments, standby letters of credit, and financial guarantees. The CECL accounting guidance requires that an estimate of expected credit loss be measured on commitments in which an entity is exposed to credit risk via a present contractual obligation to extend credit unless the obligation is unconditionally cancellable by the issuer. For the Company, unconditional lending commitments generally include unfunded term loan agreements, home equity lines of credit, lines of credit, and demand deposit account overdraft protection.

The Company’s cumulative-effect adjustment upon the adoption of CECL included a reserve for unfunded commitments of $0.3 million. Subsequent to January 1, 2023, the Company recorded additional increases to the reserve for unfunded commitments totaling $0.2 million which were included in the provision for credit losses in the Company's consolidated statement of operations during the nine months ended September 30, 2023. As of September 30, 2023, the reserve, which is recorded in other liabilities on the Company’s consolidated balance sheets, totaled $0.5 million. No reserve for unfunded commitments was recorded by the Company as of December 31, 2022.

20

Credit Quality Indicators

The Company utilizes a credit grading system that provides a uniform framework for establishing and monitoring credit risk in the loan portfolio. Under this system, construction, land, multi-family real estate, other commercial real estate, and commercial and industrial loans are graded based on pre-determined risk metrics and categorized into one of nine risk grades. These risk grades can be summarized into categories described as pass, special mention, substandard, doubtful and loss, as described in further detail below.

•Pass (Risk Grades 1-5): Loans in this category include obligations in which the probability of default is considered low.

•Special Mention (Risk Grade 6): Loans in this category exhibit potential credit weaknesses or downward trends deserving management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Although a special mention asset has a higher probability of default than pass-rated categories, its default is not imminent.

•Substandard (Risk Grade 7): Loans in this category have defined weaknesses that jeopardize the orderly liquidation of debt. A substandard loan is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. There is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified as substandard.

•Doubtful (Risk Grade 8): Loans classified as doubtful have all of the weaknesses found in substandard loans, with the added characteristic that the weaknesses make collection of debt in full, based on currently existing facts, conditions and values, highly questionable or improbable. Serious problems exist such that partial loss of principal is likely; however, because of certain important, reasonably specific pending factors that may work to strengthen the assets, the loans’ classification as estimated losses is deferred until a more exact status may be determined. Such pending factors may include proposed merger, acquisition or liquidation procedures, capital injection, perfection of liens on additional collateral and refinancing plans. Loans classified as doubtful may include loans to borrowers that have demonstrated a history of failing to live up to agreements. The Company did not have any loans classified as Doubtful (Risk Grade 8) as of September 30, 2023 or December 31, 2022.

•Loss (Risk Grade 9): Loans are classified in this category when borrowers are deemed incapable of repayment of unsecured debt. Loans to such borrowers are considered uncollectable and of such little value that continuance as active assets of the Company is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not prudent to defer writing off these assets, even though partial recovery may be realized in the future. The Company did not have any loans classified as Loss (Risk Grade 9) as of September 30, 2023 or December 31, 2022.

Because residential real estate and consumer loans are more uniform in nature, each loan is categorized into one of two risk grades, depending on whether the loan is considered to be performing or nonperforming. Performing loans are loans that are paying principal and interest in accordance with a contractual agreement. Nonperforming loans are loans that have demonstrated characteristics that indicate a probability of loss.

21

The tables below illustrate the carrying amount of loans and leases by credit quality indicator and year of origination as of September 30, 2023:

		September 30, 2023
		Loans at Amortized Cost Basis by Origination Year
		2023		2022		2021		2020		2019		Prior		Total
		(Dollars in Thousands)
Commercial:
Construction, land development and other land loans	Pass	$	3,716	$	38,961	$	40,404	$	6,377	$	—	$	593	$	90,051
	Special Mention		—		—		—		—		—		—		—
	Substandard		—		—		—		—		—		—		—
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
	Subtotal	$	3,716	$	38,961	$	40,404	$	6,377	$	—	$	593	$	90,051
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by multi-family residential properties	Pass	$	383	$	28,513	$	5,991	$	686	$	7,151	$	13,782	$	56,506
	Special Mention		—		—		—		—		—		—		—
	Substandard		—		—		—		—		—		—		—
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
	Subtotal	$	383	$	28,513	$	5,991	$	686	$	7,151	$	13,782	$	56,506
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by non-farm, non-residential properties	Pass	$	8,683	$	35,499	$	25,519	$	56,913	$	18,618	$	47,516	$	192,748
	Special Mention		—		536		1,295		347		—		1,690		3,868
	Substandard		—		—		—		152		—		2,348		2,500
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
	Subtotal	$	8,683	$	36,035	$	26,814	$	57,412	$	18,618	$	51,554	$	199,116
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial loans and leases	Pass	$	7,435	$	7,401	$	15,424	$	2,494	$	3,802	$	20,643	$	57,199
	Special Mention		—		170		899		199		57		—		1,325
	Substandard		—		44		209		25		305		262		845
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
	Subtotal	$	7,435	$	7,615	$	16,532	$	2,718	$	4,164	$	20,905	$	59,369
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total commercial	Pass	$	20,217	$	110,374	$	87,338	$	66,470	$	29,571	$	82,534	$	396,504
	Special Mention		—		706		2,194		546		57		1,690		5,193
	Substandard		—		44		209		177		305		2,610		3,345
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
		$	20,217	$	111,124	$	89,741	$	67,193	$	29,933	$	86,834	$	405,042
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

22

		September 30, 2023
		Loans at Amortized Cost Basis by Origination Year
		2023		2022		2021		2020		2019		Prior		Total
		(Dollars in Thousands)
Consumer:
Secured by 1-4 family residential properties	Performing	$	4,282	$	21,592	$	14,886	$	12,028	$	9,323	$	20,917	$	83,028
	Non-performing		—		—		—		—		—		848		848
	Subtotal	$	4,282	$	21,592	$	14,886	$	12,028	$	9,323	$	21,765	$	83,876
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	96	$	96
Direct	Performing	$	2,052	$	1,379	$	1,961	$	739	$	288	$	125	$	6,544
	Non-performing		—		—		—		—		—		—		—
	Subtotal	$	2,052	$	1,379	$	1,961	$	739	$	288	$	125	$	6,544
	Current period gross charge-offs	$	—	$	5	$	274	$	115	$	39	$	88	$	521
Branch retail	Performing	$	—	$	—	$	2,405	$	2,990	$	1,794	$	2,459	$	9,648
	Non-performing		—		—		—		—		—		—		—
	Subtotal	$	—	$	—	$	2,405	$	2,990	$	1,794	$	2,459	$	9,648
	Current period gross charge-offs	$	—	$	—	$	84	$	127	$	28	$	120	$	359
Indirect	Performing	$	82,347	$	92,898	$	69,122	$	53,564	$	5,878	$	6,239	$	310,048
	Non-performing		—		34		—		108		—		—		142
	Subtotal	$	82,347	$	92,932	$	69,122	$	53,672	$	5,878	$	6,239	$	310,190
	Current period gross charge-offs	$	—	$	128	$	171	$	153	$	13	$	35	$	500
Total consumer	Performing	$	88,681	$	115,869	$	88,374	$	69,321	$	17,283	$	29,740	$	409,268
	Non-performing		—		34		—		108		—		848		990
		$	88,681	$	115,903	$	88,374	$	69,429	$	17,283	$	30,588	$	410,258
	Current period gross charge-offs	$	—	$	133	$	529	$	395	$	80	$	339	$	1,476

23

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2022:

	December 31, 2022
	Pass 1-5			Special Mention 6			Substandard 7			Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	53,914		$	—		$	—		$	53,914
Secured by multi-family residential properties		67,852			—			—			67,852
Secured by non-farm, non-residential properties		197,004			651			2,501			200,156
Commercial and industrial loans		70,500			—			3,046			73,546
Total	$	389,270		$	651		$	5,547		$	395,468
As a percentage of total loans		98.43	%		0.17	%		1.40	%		100.00	%

	December 31, 2022
	Performing			Nonperforming			Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	86,871		$	1,124		$	87,995
Consumer loans:
Direct		9,805			46			9,851
Branch retail		13,960			32			13,992
Indirect		266,496			71			266,567
Total	$	377,132		$	1,273		$	378,405
As a percentage of total loans		99.66	%		0.34	%		100.00	%

The following table provides an aging analysis of past due loans by class as of September 30, 2023:

	As of September 30, 2023
	30-59 Days Past Due			60-89 Days Past Due			90 Days Or Greater			Total Past Due			Current			Total Loans			Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development    and other land loans	$	—		$	—		$	—		$	—		$	90,051		$	90,051		$	—
Secured by 1-4 family residential    properties		93			36			—			129			83,747			83,876			—
Secured by multi-family residential    properties		—			—			—			—			56,506			56,506			—
Secured by non-farm, non-residential    properties		1,314			—			—			1,314			197,802			199,116			—
Commercial and industrial loans		22			—			62			84			59,285			59,369			—
Consumer loans:								—
Direct		52			—			—			52			6,492			6,544			—
Branch retail		100			—			—			100			9,548			9,648			—
Indirect		335			171			142			648			309,542			310,190			—
Total	$	1,916		$	207		$	204		$	2,327		$	812,973		$	815,300		$	—
As a percentage of total loans		0.24	%		0.02	%		0.03	%		0.29	%		99.71	%		100.00	%

24

The following table provides an aging analysis of past due loans by class as of December 31, 2022:

	As of December 31, 2022
	30-59 Days Past Due			60-89 Days Past Due			90 Days Or Greater			Total Past Due			Current			Total Loans			Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development    and other land loans	$	—		$	—		$	—		$	—		$	53,914		$	53,914		$	—
Secured by 1-4 family residential    properties		801			87			78			966			87,029			87,995			—
Secured by multi-family residential    properties		—			—			—			—			67,852			67,852			—
Secured by non-farm, non-residential    properties		137			—			—			137			200,019			200,156			—
Commercial and industrial loans		61			—			300			361			73,185			73,546			—
Consumer loans:
Direct		251			50			30			330			9,521			9,851			—
Branch retail		258			85			32			375			13,617			13,992			—
Indirect		186			55			71			312			266,255			266,567			—
Total	$	1,694		$	277		$	511		$	2,481		$	771,392		$	773,873		$	—
As a percentage of total loans		0.21	%		0.04	%		0.07	%		0.32	%		99.68	%		100.00	%

The table below presents the amortized cost of loans on nonaccrual status and loans past due 90 days or more and still accruing interest as of September 30, 2023. Also presented is the balance of loans on nonaccrual status at September 30, 2023 for which there was no related allowance for credit losses recorded.

	Loans on Non-Accrual Status
	September 30, 2023
	(Dollars in Thousands)
	Total nonaccrual loans		Nonaccrual loans with no allowance for credit losses		Loans past due 90 days or more and still accruing
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		891		462		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,314		1,314		—
Commercial and industrial loans		85		77		—
Consumer loans:						—
Direct		—		—		—
Branch retail		—		—		—
Indirect		142		—		—
Total loans	$	2,432	$	1,853	$	—

25

The following table provides an analysis of nonaccruing loans by portfolio segment as of December 31, 2022:

	Loans on Non-Accrual Status
	December 31, 2022
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—
Secured by 1-4 family residential properties		914
Secured by multi-family residential properties		—
Secured by non-farm, non-residential properties		—
Commercial and industrial loans		605
Consumer loans:
Direct		29
Branch retail		32
Indirect		71
Total loans	$	1,651

The following table presents the amortized cost basis of collateral dependent loans as of September 30, 2023, which loans are individually evaluated to determine credit losses:

	September 30, 2023
	Real Estate		Other		Total
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		498		—		498
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,353		—		2,353
Commercial and industrial		—		126		126
Direct consumer		—		—		—
Total loans individually evaluated	$	2,851	$	126	$	2,977

26

The following table presents impaired loans as of December 31, 2022 as determined under ASC 310 prior to the adoption of ASC 326. Impaired loans generally include nonaccrual loans and other loans deemed to be impaired but that continue to accrue interest. Presented are the carrying amount, unpaid principal balance and related allowance of impaired loans as of December 31, 2022 by portfolio segment:

	December 31, 2022
	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Impaired loans with no related allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		568		568		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,492		2,492		—
Commercial and industrial		2,076		2,076		—
Direct consumer		18		18		—
Total impaired loans with no related allowance recorded	$	5,154	$	5,154	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		14		14		7
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		353		353		252
Direct consumer		—		—		—
Total impaired loans with an allowance recorded	$	367	$	367	$	259
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		582		582		7
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,492		2,492		—
Commercial and industrial		2,429		2,429		252
Direct consumer		18		18		—
Total impaired loans	$	5,521	$	5,521	$	259

The following table details the average recorded investment and the amount of interest income recognized and received for the nine months ended September 30, 2022, respectively, related to impaired loans as determined under ASC 310 prior to the adoption of ASC 326:

	Nine Months Ended September 30, 2022
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	116	$	2	$	—
Secured by 1-4 family residential properties		624		4		4
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,116		38		35
Commercial and industrial		872		7		4
Direct consumer		19		1		1
Total	$	2,747	$	52	$	44

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Loan Modifications Made to Borrowers Experiencing Financial Difficulty

From time to time, the Company may modify the terms of loan agreements with borrowers that are experiencing financial difficulties. Modification of the terms of such loans typically include one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. No modifications in 2023 or 2022 resulted in the permanent reduction of the recorded investment in the loan.

During the nine months ended September 30, 2023, the Company did not modify any loans to borrowers experiencing financial difficulty, and there were no payment defaults on loans that were modified in the previous twelve months.

5.OTHER REAL ESTATE OWNED AND REPOSSESSED ASSETS

Other Real Estate Owned

Other real estate and certain other assets acquired in foreclosure are reported at the net realizable value of the property, less estimated costs to sell. The following table summarizes foreclosed property activity as of the nine months ended September 30, 2023 and 2022:

	September 30, 2023			September 30, 2022
	(Dollars in Thousands)
Beginning balance	$	686		$	2,149
Additions		—			411
Sales proceeds		—			(2,215	)
Gross gains		—			369
Gross losses		—			(27	)
Net gains		—			342
Impairment		(69	)		(1	)
Ending balance	$	617		$	686

Valuation adjustments are recorded in other non-interest expense and are primarily post-foreclosure write-downs that are a result of continued declining property values based on updated appraisals or other indications of value, such as offers to purchase. Net realizable value less estimated costs to sell of foreclosed residential real estate held by the Company was $20 thousand and zero as of September 30, 2023 and September 30, 2022, respectively. In addition, the Company held zero and $19 thousand in consumer mortgage loans collateralized by residential real estate that were in the process of foreclosure as of September 30, 2023 and 2022, respectively.

Repossessed Assets

The Company also acquires assets through the repossession of the underlying collateral of loans in default. The following table summarizes repossessed asset activity as of the nine months ended September 30, 2023 and 2022:

	September 30, 2023			September 30, 2022
	(Dollars in Thousands)
Beginning balance	$	83		$	154
Transfers from loans		1,178			635
Sales proceeds		(453	)		(331	)
Gross gains		—			—
Gross losses		(535	)		(292	)
Net losses		(535	)		(292	)
Impairment		—			—
Ending balance	$	273		$	166

Repossessed assets are included in Other Assets in the Company’s condensed consolidated balance sheets.

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6.GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill is tested for impairment annually, or more often if circumstances warrant. If, as a result of impairment testing, it is determined that the implied fair value of goodwill is lower than its carrying amount, impairment is indicated, and goodwill must be written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the consolidated financial statements. Goodwill, originally recorded as a result of the Company's acquisition of The Peoples Bank ("TPB") in 2018, totaled $7.4 million as of both September 30, 2023 and December 31, 2022. Goodwill impairment was neither indicated nor recorded during the nine months ended September 30, 2023 or the year ended December 31, 2022.

Core deposit premiums are amortized over a seven-year period and are periodically evaluated, at least annually, as to the recoverability of their carrying value. Core deposit premiums of $2.0 million were recorded during 2018 as part of the TPB acquisition.

The Company’s goodwill and other intangible assets (carrying basis and accumulated amortization) as of September 30, 2023 and December 31, 2022 were as follows:

	September 30, 2023			December 31, 2022
	(Dollars in Thousands)
Goodwill	$	7,435		$	7,435
Core deposit intangible:
Gross carrying amount		2,048			2,048
Accumulated amortization		(1,841	)		(1,682	)
Core deposit intangible, net		207			366
Total	$	7,642		$	7,801

The Company’s estimated remaining amortization expense on intangible assets as of September 30, 2023 was as follows:

	Amortization Expense
	(Dollars in Thousands)
2023	$	36
2024		122
2025		49
Total	$	207

The net carrying amount of the Company’s core deposit premiums is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from use and eventual disposition. That assessment is based on the carrying amount of the intangible assets subject to amortization at the date on which it is tested for recoverability. Intangible assets subject to amortization are tested by the Company for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

7.BORROWINGS

Short-Term Borrowings

Short-term borrowings consist of federal funds purchased, securities sold under repurchase agreements, and short-term FHLB advances with original maturities of one year or less.

•Federal funds purchased, which represent unsecured lines of credit that generally mature within one to 90 days, are available to the Bank through arrangements with correspondent banks and the FRB. As of both September 30, 2023 and December 31, 2022, there were no federal funds purchased outstanding.

•Securities sold under repurchase agreements, which are secured borrowings, generally are reflected at the amount of cash received in connection with the transaction. The Bank may be required to provide additional collateral based on the fair value of the underlying securities. The Bank monitors the fair value of the underlying securities on a daily basis. There were no securities sold under repurchase agreements as of September 30, 2023. As of December 31, 2022, securities sold under repurchase agreements totaled $38 thousand.

•Short-term FHLB advances are secured borrowings available to the Bank as an alternative funding source. As of September 30, 2023 and December 31, 2022, the Bank had $30.0 million and $20.0 million, respectively, in outstanding FHLB advances with original maturities of less than one year.

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Long-Term Borrowings

FHLB Advances

The Company may use FHLB advances with original maturities of more than one year as an alternative to funding sources with similar maturities, such as certificates of deposit or other deposit programs. These advances generally offer more attractive rates than other mid-term financing options. They are also flexible, allowing the Company to quickly obtain the necessary maturities and rates that best suit its overall asset/liability strategy. FHLB advances with an original maturity of more than one year are classified as long-term. As of both September 30, 2023 and December 31, 2022, the Company did not have any long-term FHLB advances outstanding.

Subordinated Debt

On October 1, 2021, the Company completed a private placement of $11.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes that will mature on October 1, 2031 (the “Notes”). The Notes bear interest at a rate of 3.50% per annum for the first five years, after which the interest rate will be reset quarterly to a benchmark interest rate per annum which, subject to certain conditions provided in the Notes, will be equal to the then current three-month term Secured Overnight Financing Rate (“SOFR”) plus 275 basis points. The Company used the net proceeds for general corporate purposes, including repurchasing of the Company’s common stock, and supporting organic growth plans, including the maintenance of capital ratios. Net of unamortized debt issuance costs, the Notes were recorded as long-term borrowings totaling $10.8 million and $10.7 million as of September 30, 2023 and December 31, 2022, respectively. The table below provides additional information related to the Notes as of and for the nine months ended September 30, 2023 and 2022.

	September 30,	September 30,
	2023	2022
	(Dollars in Thousands)
Balance at period-end	$10,781	$10,708
Average balance during the period	$10,775	$10,702
Maximum month-end balance during the year	$10,781	$10,708
Average rate paid during the period, including amortization of debt issuance costs	4.16%	4.16%
Weighted average remaining maturity (in years)	8.00	9.00

Available Credit

As an additional funding source, the Company has available unused lines of credit with correspondent banks, the FRB and the FHLB. Certain of these funding sources are subject to underlying collateral. As of September 30, 2023 and December 31, 2022, the Company’s available unused lines of credit consisted of the following:

Available Unused Lines of Credit	Collateral Requirements	September 30, 2023	December 31, 2022
Correspondent banks	None	$48.0 million	$45.0 million
FHLB advances (1)	Subject to collateral	$260.3 million	$246.8 million
FRB (2)	Subject to collateral	$146.6 million	$1.2 million

(1)These amounts represent the total remaining credit the Company has from the FHLB, but this credit can only be utilized to the extent that underlying collateral exists. The total lendable collateral value of assets pledged (including loans and investment securities) associated with FHLB advances and letters of credit totaled $66.7 million and $68.2 million as of September 30, 2023 and December 31, 2022, respectively. The Company’s collateral exposure with the FHLB in the form of advances and letters of credit was $60.0 million and $50.0 million as of September 30, 2023 and December 31, 2022, respectively, leaving an excess of collateral of $6.7 million and $18.2 million, respectively, available to utilize for additional credit as of the respective dates. The Company also has the ability to pledge additional assets to increase the availability of borrowings.

(2)The Company has access to the FRB's discount window and its Bank Term Funding Program (BTFP), the latter of which was established during the first quarter of 2023 in response to the liquidity events that occurred in the banking industry. Both the discount window and the BTFP allow borrowing on pledged collateral that includes eligible investment securities and, in certain circumstances, eligible loans. The discount window allows borrowing under 90-day terms, while borrowing terms under the BTFP are up to one year. The BTFP also allows investment securities to be pledged as collateral at 100% of par value when par value is greater than fair value. The amounts shown in the table represent the Company's unused borrowing capacity as of the applicable date based on collateral pledged to the FRB's discount window. No collateral was pledged by the Company under the BTFP as of September 30, 2023.

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8.INCOME TAXES

The provision for income taxes was $2.0 million and $1.4 million for the nine months ended September 30, 2023 and 2022, respectively. The Company’s effective tax rate was 24.4% and 23.7%, respectively, for the same periods. The effective tax rate is impacted by recurring permanent differences, such as those associated with bank-owned life insurance and tax-exempt investment and loan income.

The Company had a net deferred tax asset of $6.3 million and $5.2 million as of September 30, 2023 and December 31, 2022, respectively. The net deferred tax asset, which is included on the interim condensed consolidated balance sheet in other assets, is impacted by changes in the fair value of securities available-for-sale and cash flow hedges, changes in net operating loss carryforwards, changes in the allowance for credit losses, and other book-to-tax temporary differences. The net deferred tax asset increased by $0.6 million as a result of the cumulative effect adjustment to adopt ASC 326, effective January 1, 2023.

9.DEFERRED COMPENSATION PLANS

Supplemental Retirement Benefits

The Company has entered into supplemental retirement compensation benefits agreements with certain directors and former executive officers. The measurement of the liability under these agreements includes estimates involving life expectancy, length of time before retirement and the expected returns on the bank-owned life insurance policies used to fund those agreements. Should these estimates prove to be materially wrong, the cost of these agreements could change accordingly. The related deferred compensation obligation to these directors and executive officers included in other liabilities was $3.0 million and $3.1 million as of September 30, 2023 and December 31, 2022, respectively.

Non-Employee Directors' Deferred Compensation Plan

Non-employee directors may elect to defer payment of all or any portion of their director fees under Bancshares’ Non-Employee Directors’ Deferred Compensation Plan (the “Deferral Plan”). The Deferral Plan permits non-employee directors to invest their directors’ fees and to receive the adjusted value of the deferred amounts in cash and/or shares of Bancshares’ common stock, as applicable. Neither Bancshares nor the Bank makes any contribution to participants’ accounts under the Deferral Plan. As of September 30, 2023 and December 31, 2022, a total of 111,340 and 114,190 shares of Bancshares common stock, respectively, were being held as stock equivalents in connection with the Deferral Plan. All deferred fees and shares of Bancshares common stock are reflected as compensation expense in the period earned. The Company classifies all deferred directors’ fees allocated to be paid in shares as equity as additional paid-in capital. The Company may use issued shares or shares of treasury stock to satisfy these obligations when due.

10.STOCK AWARDS

In 2013, Bancshares’ shareholders authorized the Company, under the direction of the Compensation Committee of the Board of Directors, to provide share-based compensation awards to eligible employees, directors and consultants of the Company and its affiliates pursuant to the 2013 Incentive Plan. Available award types included stock options, stock appreciation rights, restricted stock and restricted stock units, and performance share awards. The 2013 Incentive Plan, as amended in 2019, expired in March 2023. In April 2023, Bancshares’ shareholders approved the 2023 Incentive Plan, which authorizes the Compensation Committee to grant substantially the same types of share-based awards to eligible employees, directors and consultants. Collectively, the 2013 Incentive Plan and the 2023 Incentive Plan are herein referred to as the Company’s “Incentive Plan.” In accordance with the Incentive Plan, shares of common stock available for issuance pursuant to the grants may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner. Since the origination of the Incentive Plan, through September 30, 2023, only stock options and restricted stock have been granted. For the nine months ended September 30, 2023, stock-based compensation expense related to stock awards totaled $0.4 million, compared to $0.3 million for the nine months ended September 30, 2022.

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Stock Options

Stock option awards have been granted with an exercise price equal to the market price of the Company’s common stock on the date of the grant and have vesting periods ranging from one to three years, with 10-year contractual terms. The Company recognizes the cost of services received in exchange for stock option awards based on the grant date fair value of the award, with compensation expense recognized on a straight-line basis over the award’s vesting period. The fair value of outstanding awards was determined using the Black-Scholes option pricing model. The Company did not grant any stock option awards during the nine months ended September 30, 2023 or 2022.

The following table summarizes the Company’s stock option activity for the periods presented.

	Nine Months Ended
	September 30, 2023				September 30, 2022
	Number of Shares		Average Exercise Price		Number of Shares		Average Exercise Price
Options:
Outstanding, beginning of period		419,650	$	9.79		420,250	$	9.79
Granted		—		—		—		—
Exercised		—		—		—		—
Expired		—		—		—		—
Forfeited		—		—		600		10.86
Options outstanding, end of period		419,650	$	9.79		419,650	$	9.79
Options exercisable, end of period		419,650	$	9.79		416,249	$	9.77

The aggregate intrinsic value of stock options outstanding (calculated as the amount by which the market value of underlying stock exceeds the exercise price of the option) was $0.1 million and zero as of September 30, 2023 and 2022, respectively.

Restricted Stock

During the nine months ended September 30, 2023 and 2022, 57,300 shares and 45,938 shares, respectively, of restricted stock were granted. The Company recognizes the cost of services received in exchange for restricted stock awards based on the grant date closing price of the stock, with compensation expense recognized on a straight-line basis over the award’s vesting period.

11.LEASES

The Bank and ALC are involved in a number of operating leases, primarily for branch locations. Branch leases have remaining lease terms ranging from two years to six years, some of which include options to extend the leases for up to five years, and some of which include an option to terminate the lease within one year. The Bank also leases certain office facilities to third parties and classifies these leases as operating leases.

The following table provides a summary of the components of lease income and expense, as well as the reporting location in the interim condensed consolidated statements of operations, for the three and nine months ended September 30, 2023 and 2022:

	Location in the Condensed	Three Months Ended				Nine Months Ended
	Consolidated Statements of Operations	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
		(Dollars in Thousands)				(Dollars in Thousands)
Operating lease income (1)	Lease income	$	241	$	210	$	707	$	635
Operating lease expense (2)	Net occupancy and equipment	$	108	$	108	$	324	$	326

(1)Operating lease income includes rental income from owned properties

(2)Includes short-term lease costs. For the three and nine months ended September 30, 2023 and 2022, short-term lease costs were nominal in amount.

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The following table provides supplemental lease information for operating leases on the interim condensed consolidated balance sheet as of September 30, 2023 and December 31, 2022:

	Location in the Condensed
	Consolidated Balance Sheet	September 30, 2023			December 31, 2022
		(Dollars in Thousands)
Operating lease right-of-use assets	Other assets	$	1,605		$	1,883
Operating lease liabilities	Other liabilities	$	1,684		$	1,961
Weighted-average remaining lease term (in years)			4.28			5.03
Weighted-average discount rate			3.30	%		3.30	%

The following table provides supplemental lease information for the interim condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022:

	Nine Months Ended
	September 30, 2023		September 30, 2022
	(Dollars in Thousands)
Cash paid for amounts included in the measurement of    lease liabilities:
Operating cash flows from operating leases	$	323	$	320

The following table is a schedule of remaining future minimum lease payments for operating leases that had an initial or remaining non-cancellable lease term in excess of one year as of September 30, 2023:

	Minimum Rental Payments
	(Dollars in Thousands)
2023	$	109
2024		438
2025		339
2026		346
2027		353
2028 and thereafter		238
Total future minimum lease payments		1,823
Less: Imputed interest		139
Total operating lease liabilities	$	1,684

12.DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of certain balance sheet assets and liabilities. In the normal course of business, the Company also uses derivative financial instruments to add stability to interest income or expense and to manage its exposure to movements in interest rates. The Company does not use derivatives for trading or speculative purposes and only enters into transactions that have a qualifying hedge relationship. The Company’s hedging strategies involving interest rate derivatives are classified as either cash flow hedges or fair value hedges, depending upon the rate characteristic of the hedged item.

Active Hedges

In June 2023, the Company entered into three forward interest rate swap contracts on a pool of fixed rate indirect consumer loans. Each of the three hedge contracts has a $10.0 million notional amount. The interest rate swaps were designated as derivative instruments in fair value hedges with the objective of effectively converting a pool of fixed rate indirect consumer loans to a variable rate throughout the hedge durations in accordance with the portfolio layer method. Under the contractual arrangements, for each swap, the Company pays a fixed interest rate and receives a variable interest rate based on the Secured Overnight Financing Rate (SOFR), on the notional amounts, with monthly net settlements.

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Hedges Terminated in 2023

In February 2023, the Company voluntarily terminated four interest rates swap agreements each with notional amounts of $10.0 million, or an aggregate amount of $40.0 million. Two of the swaps were previously designated as cash flow hedges, while two were previously designated as fair value hedges. The termination of the cash flow hedges resulted in a net unrealized gain totaling $1.1 million. The unrealized gain was initially recorded in accumulated other comprehensive income, net of tax, and is being reclassified to reduce interest expense over the original terms of the swap contracts. The termination of the fair value hedges resulted in an unrealized gain totaling $1.0 million which is being reclassified to increase interest income over the original terms of the swap contracts.

Hedge Terminated in 2022

In May 2022, the Company voluntarily terminated one interest rate swap agreement with a notional amount of $10.0 million. The swap was previously designated as a cash flow hedge. The termination resulted in a net unrealized gain of $0.3 million. The unrealized gain was initially recorded in accumulated other comprehensive income, net of tax, and is being reclassified to reduce interest expense over the original term of the swap contract.

Presentation

The table below reflects the notional amount and fair value of active derivative instruments included on the Company’s consolidated balance sheets on a net basis as of September 30, 2023 and December 31, 2022.

	As of September 30, 2023				As of December 31, 2022
	Notional		Estimated Fair Value		Notional		Estimated Fair Value
	Amount		Gain (Loss) (1)		Amount		Gain (Loss) (1)
	(Dollars in Thousands)
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate swaps related to fixed rate commercial real estate loans	$	—	$	—	$	20,000	$	1,101
Interest rate swaps related to fixed rate indirect consumer loans		30,000		537		—		—
Total fair value hedges				537				1,101
Cash flow hedges:
Interest rate swaps related to variable-rate money market deposit accounts		—		—		20,000		1,205
Interest rate swaps related to FHLB advances		—		—		—		—
Total cash flow hedges				—				1,205
Total hedges designated as hedging instruments, net			$	537			$	2,306

(1)Derivatives in a gain position are recorded as other assets and derivatives in a loss position are recorded as other liabilities in the consolidated balance sheets.

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The following table presents the net effects of derivative hedging instruments on the Company’s interim condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022. The effects, which include the reclassification of unrealized gains on terminated swap contracts, are presented as either an increase or decrease to income before income taxes in the relevant caption of the Company’s interim condensed consolidated statements of operations.

Location in the Condensed		Three Months Ended				Nine Months Ended
Consolidated Statements of Operations		September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
		(Dollars in Thousands)				(Dollars in Thousands)
Interest income	Interest and fees on loans	$	258	$	45	$	603	$	(42	)
Interest expense	Interest on deposits		120		24		376		(103	)
Interest expense	Interest on borrowings		36		36		108		20
	Net increase (decrease) to income before income taxes	$	414	$	105	$	1,087	$	(125	)

13.OTHER OPERATING INCOME AND EXPENSE

Other Operating Income

Other operating income for the three and nine months ended September 30, 2023 and 2022 consisted of the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(Dollars in Thousands)
Bank-owned life insurance	$	119	$	112	$	348	$	335
ATM fee income		93		125		315		403
Gain on sales of premises and equipment and other assets		18		278		18		301
Other income		64		52		208		195
Total	$	294	$	567	$	889	$	1,234

Other Operating Expense

Other operating expense for the three and nine months ended September 30, 2023 and 2022 consisted of the following:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2023		2022			2023		2022
	(Dollars in Thousands)
Postage, stationery and supplies	$	151	$	164		$	472	$	469
Telephone/data communication		128		159			479		518
Collection and recoveries		71		57			252		176
Directors fees		94		98			284		301
Software amortization		86		133			313		331
Other real estate/foreclosure expense, net		9		(5	)		30		(320	)
Other expense		545		568			1,769		1,629
Total	$	1,084	$	1,174		$	3,599	$	3,104

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14.GUARANTEES, COMMITMENTS AND CONTINGENCIES

Credit

The Bank’s exposure to credit loss in the event of nonperformance by the other party for commitments to make loans and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making these commitments as it does for on-balance sheet instruments.

In the normal course of business, there are outstanding commitments and contingent liabilities, such as commitments to extend credit, letters of credit and others, that are not included in the consolidated financial statements. The financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the financial statements. A summary of these commitments and contingent liabilities is presented below:

	September 30, 2023		December 31, 2022
	(Dollars in Thousands)
Standby letters of credit	$	—	$	—
Standby performance letters of credit	$	664	$	556
Commitments to extend credit	$	155,614	$	186,169

Standby letters of credit and standby performance letters of credit are contingent commitments issued by the Bank generally to guarantee the performance of a customer to a third party. The Bank has recourse against the customer for any amount that it is required to pay to a third party under a standby letter of credit or standby performance letter of credit. Revenues are recognized over the lives of the standby letters of credit and standby performance letters of credit. As of September 30, 2023 and December 31, 2022, the potential amounts of future payments that the Bank could be required to make under its standby letters of credit and standby performance letters of credit, which represent the Bank’s total credit risk in these categories, are included in the table above.

A commitment to extend credit is an agreement to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon the extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

In accordance with the adoption of ASC 326 on January 1, 2023, the Company recorded a reserve for unfunded commitments of $0.3 million. The reserve, which is included in other liabilities in the Company’s balance sheet, totaled $0.5 million as of September 30, 2023. Additional discussion related to the calculation of the reserve for unfunded commitments is included in Note 4.

Self-Insurance

The Company is self-insured for a significant portion of employee health benefits. However, the Company maintains stop-loss coverage with third-party insurers to limit the Company’s individual claim and total exposure related to self-insurance. The Company estimates a liability for the ultimate costs to settle known claims, as well as claims incurred but not yet reported, as of the balance sheet date. The Company’s recorded estimated liability for self-insurance is based on the insurance companies' incurred loss estimates and management’s judgment, including assumptions and evaluation of factors related to the frequency and severity of claims, the Company’s claims development history and the Company’s claims settlement practices. The assessment of loss contingencies and self-insurance reserves is a highly subjective process that requires judgments about future events. Contingencies are reviewed at least quarterly to determine the adequacy of self-insurance accruals. Self-insurance accruals totaled $0.2 million as of both September 30, 2023 and December 31, 2022. The ultimate settlement of loss contingencies and self-insurance reserves may differ significantly from amounts accrued in the Company’s consolidated financial statements.

Litigation

The Company is party to certain ordinary course litigation from time to time, and the Company intends to vigorously defend itself in all such litigation. In the opinion of the Company, based on review and consultation with legal counsel, the outcome of such ordinary course litigation should not have a material adverse effect on the Company’s consolidated financial statements or results of operations.

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15.FAIR VALUE OF FINANCIAL INSTRUMENTS

The assumptions used in the Company’s estimation of the fair value of the Company’s financial instruments are detailed below. The following disclosures should not be considered a representation of the liquidation value of the Company, but rather represent a good-faith estimate of the increase or decrease in value of financial instruments held by the Company since purchase, origination or issuance.

Fair Value Hierarchy

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. In determining fair value, the Company uses various methods, including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair value. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

•Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange or Nasdaq. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

•Level 2 — Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

•Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

The Company rarely transfers assets and liabilities measured at fair value between Level 1 and Level 2 measurements. Trading account assets and securities available-for-sale may be periodically transferred to or from Level 3 valuation based on management’s conclusion regarding the best method of pricing for an individual security. Such transfers are accounted for as if they occurred at the beginning of a reporting period. There were no such transfers during the nine months ended September 30, 2023 or the year ended December 31, 2022.

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Fair Value Measurements on a Recurring Basis

Securities Available-for-Sale

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include U.S. Treasury securities. Level 2 securities include agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset-backed and other securities. Level 2 fair values are obtained from quoted prices of securities with similar characteristics. In certain cases, where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Interest Rate Derivative Agreements

Interest rate derivative agreements are used by the Company to mitigate risk associated with changes in interest rates. The fair value of these agreements is based on information obtained from third-party financial institutions. This information is periodically evaluated by the Company and, as necessary, corroborated against other third-party valuations. The Company classifies these derivative assets within Level 2 of the valuation hierarchy.

The following table presents assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022.

	Fair Value Measurements as of September 30, 2023 Using
	Totals At September 30, 2023		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	37,000	$	—	$	37,000	$	—
Commercial		9,500		—		9,500		—
Obligations of U.S. government-sponsored agencies		10,932		—		10,932		—
Obligations of states and political subdivisions		1,543		—		1,543		—
Corporate notes		14,681		—		14,681		—
U.S. Treasury securities		52,895		52,895		—		—
Other assets - derivatives		537		—		537		—

	Fair Value Measurements as of December 31, 2022 Using
	Totals At December 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	43,957	$	—	$	43,957	$	—
Commercial		11,693		—		11,693		—
Obligations of U.S. government-sponsored agencies		4,270		—		4,270
Obligations of states and political subdivisions		2,072		—		2,072		—
Corporate notes		15,921				14,921		1,000
U.S. Treasury securities		52,882		52,882		—		—
Other assets - derivatives		2,306		—		2,306		—

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Fair Value Measurements on a Non-recurring Basis

Collateral Dependent Loans

Collateral dependent loans are measured at the fair value of the collateral securing the loan less estimated selling costs. The fair value of real estate collateral is determined based on real estate appraisals, which are generally based on recent sales of comparable properties which are then adjusted for property specific factors. Non-real estate collateral value is based on various sources, including third party asset valuations and internally determined values based on cost, adjusted for depreciation and other judgmentally determined discount factors. Collateral dependent loans are classified as Level 3 of the valuation hierarchy due to the unobservable inputs used in determining their fair value, such as collateral values and the borrower's underlying financial condition.

OREO and Other Assets Held-for-Sale

OREO consists of properties obtained through foreclosure or in satisfaction of loans and is recorded at net realizable value, less estimated cost to sell. Estimates of fair value are generally based on third-party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes discounted based on management’s knowledge of the property and/or changes in market conditions from the date of the most recent appraisal. Such discounts are typically significant unobservable inputs for determining fair value.

As of September 30, 2023 and December 31, 2022, included within OREO were certain assets that were formerly included as premises and equipment but have been removed from service, and as of the balance sheet date, were designated as assets to be disposed of by sale. These include assets associated with branches of the Bank and ALC that have been closed. When an asset is designated as held-for-sale, the Company ceases depreciation of the asset, and the asset is recorded at the lower of its carrying amount or fair value less estimated cost to sell. Estimates of fair value are generally based on third-party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes discounted based on management’s knowledge of the property and/or changes in market conditions from the date of the most recent appraisal. Such discounts are typically unobservable inputs for determining fair value.

The following table presents the balances of impaired loans, OREO and other assets held-for-sale measured at fair value on a non-recurring basis as of September 30, 2023 and December 31, 2022:

	Fair Value Measurements as of September 30, 2023 Using
	Totals At September 30, 2023		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Collateral dependent loans	$	62	$	—	$	—	$	62
OREO and other assets held-for-sale		617		—		—		617

	Fair Value Measurements as of December 31, 2022 Using
	Totals At December 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	108	$	—	$	—	$	108
OREO and other assets held-for-sale		686		—		—		686

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Non-recurring Fair Value Measurements Using Significant Unobservable Inputs

The following table presents information regarding assets and liabilities measured at fair value using significant unobservable inputs (Level 3) as of September 30, 2023. The table includes the valuation techniques and the significant unobservable inputs utilized. The range of each unobservable input and the weighted average within the range utilized as of September 30, 2023 are both included. Following the table is a description of the valuation technique and the sensitivity of the technique to changes in the significant unobservable input.

	Level 3 Significant Unobservable Input Assumptions
	Fair Value September 30, 2023		Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs (Weighted Average)
	(Dollars in Thousands)
Non-recurring fair value measurements:
Collateral dependent loans	$	62	Multiple data points, including discount to appraised value of collateral based on recent market activity	Appraisal comparability adjustment (discount)	9%-10%	(9.5%)
OREO and other assets held-for-sale	$	617	Discount to appraised value of property based on recent market activity for sales of similar properties	Appraisal comparability adjustment (discount)	9%-10%	(9.5%)

Collateral Dependent Loans

Collateral dependent loans are valued based on multiple data points indicating the fair value for each loan. The primary data point is the appraisal value of the underlying collateral, to which a discount is applied. Management establishes this discount or comparability adjustment based on recent sales of similar property types. As liquidity in the market increases or decreases, the comparability adjustment and the resulting asset valuation are impacted.

OREO

OREO under a binding contract for sale is valued based on contract price. If no sales contract is pending for a specific property, management establishes a comparability adjustment to the appraised value based on historical activity, considering proceeds for properties sold versus the corresponding appraised value. Increases or decreases in realization for properties sold impact the comparability adjustment for similar assets remaining on the balance sheet.

Other Assets Held-for-Sale

Assets designated as held-for-sale that are under a binding contract are valued based on the contract price. If no sales contract is pending for a specific property, management establishes a comparability adjustment to the appraised value based on historical activity, considering proceeds for properties sold versus the corresponding appraised value. Increases or decreases in realization for properties sold impact the comparability adjustment for similar assets remaining on the balance sheet.

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Fair Value of Financial Instruments

ASC Topic 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable to estimate. The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Cash, due from banks and federal funds sold: The carrying amount of cash, due from banks and federal funds sold approximates fair value.

Federal Home Loan Bank stock: Based on the redemption provision of the FHLB, the stock has no quoted market value and is carried at cost.

Investment securities: Fair values of investment securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on market prices of comparable instruments.

Derivative instruments: The fair value of derivative instruments is based on information obtained from a third-party financial institution. This information is periodically evaluated by the Company and, as necessary, corroborated against other third-party information.

Accrued interest receivable and payable: The carrying amount of accrued interest approximates fair value.

Loans, net: The fair value of loans is estimated on an exit price basis incorporating contractual cash flow, prepayment discount spreads, credit loss and liquidity premiums.

Demand and savings deposits: The fair values of demand deposits are equal to the carrying value of such deposits. Demand deposits include non-interest-bearing demand deposits, savings accounts, NOW accounts and money market demand accounts.

Time deposits: The fair values of relatively short-term time deposits are equal to their carrying values. Discounted cash flows are used to value long-term time deposits. The discount rate used is based on interest rates currently offered by the Company on comparable deposits as to amount and term.

Short-term borrowings: These borrowings may consist of federal funds purchased, securities sold under agreements to repurchase and the floating rate borrowings from the FHLB account. Due to the short-term nature of these borrowings, fair values approximate carrying values.

Long-term debt: The fair value of this debt is estimated using discounted cash flows based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements as of the determination date.

Off-balance sheet instruments: The carrying amount of commitments to extend credit and standby letters of credit approximates fair value. The carrying amount of the off-balance sheet financial instruments is based on fees currently charged to enter into such agreements.

The estimated fair value and related carrying or notional amounts, as well as the level within the fair value hierarchy, of the Company’s financial instruments as of September 30, 2023 and December 31, 2022 were as follows:

	September 30, 2023
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	66,129	$	66,129	$	66,129	$	—	$	—
Investment securities available-for-sale		126,551		126,551		52,895		73,656		—
Investment securities held-to-maturity		1,272		1,183		—		1,183		—
Federal funds sold		1,143		1,143		—		1,143		—
Federal Home Loan Bank stock		2,151		2,151		—		—		2,151
Loans, net of allowance for credit losses		803,920		769,466		—		—		769,466
Other assets - derivatives		537		537		—		537		—
Liabilities:
Deposits		927,038		829,435		—		829,435		—
Short-term borrowings		30,000		30,000		—		30,000		—
Long-term borrowings		10,781		9,226		—		9,226		—

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	December 31, 2022
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	30,152	$	30,152	$	30,152	$	—	$	—
Investment securities available-for-sale		130,795		130,795		52,882		76,913		1,000
Investment securities held-to-maturity		1,862		1,769		—		1,769		—
Federal funds sold		1,768		1,768		—		1,768		—
Federal Home Loan Bank stock		1,359		1,359		—		—		1,359
Loans, net of allowance for loan and lease losses		764,451		730,961		—		—		730,961
Other assets - derivatives		2,306		2,306		—		2,306		—
Liabilities:
Deposits		870,025		788,161		—		788,161		—
Short-term borrowings		20,038		20,038		—		20,038		—
Long-term borrowings		10,726		9,702				9,702

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DESCRIPTION OF THE BUSINESS

First US Bancshares, Inc., a Delaware corporation (“Bancshares” and, together with its subsidiaries, the “Company”), is a bank holding company with its principal offices in Birmingham, Alabama. Bancshares operates one commercial banking subsidiary, First US Bank (the “Bank”). As of September 30, 2023, the Bank operated and served its customers through 15 banking offices located in Birmingham, Butler, Calera, Centreville, Gilbertown, Grove Hill, Harpersville, Jackson, Thomasville, Tuscaloosa and Woodstock, Alabama; Knoxville and Powell, Tennessee; and Rose Hill, Virginia. In addition, the Bank operates loan production offices in Mobile, Alabama and the Chattanooga, Tennessee area. The Bank provides a wide range of commercial banking services to small- and medium-sized businesses, property managers, business executives, professionals and other individuals. The Bank also performs indirect lending through third-party retailers and currently conducts this lending in 17 states, including Alabama, Arkansas, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia.

The Bank owns all of the stock of Acceptance Loan Company, Inc., an Alabama corporation (“ALC”). ALC is a finance company headquartered in Mobile, Alabama. During the third quarter of 2021, ALC ceased new business development and permanently closed its 20 branch lending locations in Alabama and Mississippi to the public. Through the third quarter of 2023, ALC continued to service its remaining portfolio of loans from its headquarters. Effective October 1, 2023, all of ALC’s remaining loans were sold to the Bank in an intercompany transaction. The Bank intends to manage the remaining portfolio through final resolution.

Delivery of the best possible financial services to customers remains an overall operational focus of the Company. The Company recognizes that attention to detail and responsiveness to customers’ desires are critical to customer satisfaction. The Company continues to upgrade technology, both in its financial services and in the training of its 156 full-time equivalent employees (as of September 30, 2023), to ensure customer satisfaction and convenience.

The preparation of the Company’s consolidated financial statements requires management to make subjective judgments associated with estimates. These estimates are necessary to comply with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and general banking practices. These estimates include accounting for the allowance for credit losses, the right-of-use asset and lease liability, the value of other real estate owned and certain collateral-dependent loans, consideration related to goodwill impairment testing and deferred tax asset valuation. A description of these estimates, which significantly affect the determination of the Company’s consolidated financial position, results of operations and cash flows, is set forth in Note 2, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in the Company's 2022 Form 10-K, as amended in 2023 by the adoption of ASC 326, Measurement of Credit Losses on Financial Instruments, as discussed in Note 2, “Basis of Presentation,” in the Notes to the Interim Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

The emphasis of this discussion is a comparison of assets, liabilities and shareholders’ equity as of September 30, 2023 to December 31, 2022, while comparing income and expense for the nine months ended September 30, 2023 and 2022. All yields and ratios presented and discussed herein are recorded and presented on the accrual basis and not on the tax-equivalent basis, unless otherwise indicated.

This information should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this report and Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in Bancshares’ the Company's 2022 Form 10-K. As used in the following discussion, the words “we,” “us,” “our” and the “Company” refer to Bancshares and its consolidated subsidiaries, unless the context indicates otherwise.

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RECENT MARKET CONDITIONS

During the nine months ended September 30, 2023 the banking industry saw a significant level of volatility due to notable banking failures that began during the first quarter of 2023, as well as ongoing increases in interest rates that have generally led to contraction of net interest margin throughout the industry. While year-over-year inflation levels have eased from 40-year highs that were reached during 2022, inflation remains elevated over the Federal Reserve Bank's ("FRB") long run target. In its ongoing effort to reduce inflation levels, the FRB has continued to raise the target federal funds rate, with four additional increases of 25 basis points during the first nine months of 2023. As of September 30, 2023, the target federal funds rate was a range of 5.25% to 5.50%.

As interest rates have increased, competitive pressures have also increased, particularly related to deposit pricing. Due primarily to the rising cost of funding, net interest margin compressed significantly throughout the banking industry during the nine months ended September 30, 2023. The substantial pace and magnitude of changes in interest rates introduced a higher level of uncertainty throughout the industry, and the impact that such change will have on the Company’s future operating results cannot be predicted with certainty. During this still-ongoing and still-volatile transition period, the yield curve has become significantly inverted at times, indicating substantial economic uncertainty, including the possibility of economic recession. The unusual yield curve effects, including inversion, may continue. Further, if the rate of inflation remains elevated or accelerates, the Company’s operations could be impacted by, among other things, accelerating cost of goods and services, including the cost of salaries and benefits. Additionally, the Company’s borrowers could be negatively impacted by rising expense levels, leading to deterioration of credit quality and/or reductions in the Company’s lending activity. The higher interest rate environment has also led to unrealized losses in the Company's investment portfolio, which consists primarily of fixed-rate instruments.

EXECUTIVE OVERVIEW

Strategic Focus and Impact on Asset Quality

During the third quarter of 2021, the Company executed strategic initiatives that were designed to improve operating efficiency, focus the Company’s loan growth activities, and fortify asset quality. The most significant component of these initiatives was the cessation of new business at ALC. This initiative, which included the closure of ALC’s branch lending locations in September 2021, served to significantly decrease the Company’s non-interest expense, and has led to substantial improvement in the Company’s consumer lending asset quality as ALC’s remaining loans pay down. Historically, ALC’s loans have produced significantly higher levels of charge-offs than the Bank’s other loan portfolios.

As of September 30, 2023, remaining loans at ALC totaled $12.1 million, compared to $20.2 million as of December 31, 2022. In 2023, as ALC’s loans have continued to decrease, the Company has realized substantially lower levels of net charge-offs on the portfolio compared to prior periods. Net charge-offs on ALC loans totaled $0.3 million, or 2.09% of average loans, during the nine months ended September 30, 2023, compared to $1.5 million, or 6.38% of average loans, during the nine months ended September 30, 2022. As of September 30, 2023, $0.2 million, or 1.3% of ALC's loans, were past due, compared to $0.8 million, or 3.8%, as of December 31, 2022.

Effective October 1, 2023, the Company sold all of ALC’s remaining loans to the Bank in an intercompany transaction. The Bank will continue to manage the remaining loans in the portfolio through final resolution. It is expected that all other assets and liabilities of ALC will be transferred to the Bank via an intercompany transaction by the end 2023.

Financial Highlights

The Company earned net income of $2.1 million, or $0.33 per diluted common share, during the three months ended September 30, 2023, compared to $1.9 million, or $0.29 per diluted common share, for the three months ended September 30, 2022. For the nine months ended September 30, 2023, net income totaled $6.2 million, or $0.97 per diluted common share, compared to $4.6 million, or $0.71 per diluted common share, for the nine months ended September 30, 2022.

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Summarized condensed consolidated statements of operations are included below for the three and nine months ended September 30, 2023 and 2022.

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2023		2022		2023		2022
	(Dollars in Thousands, Except Per Share Data)
Interest income	$	13,902	$	10,670	$	38,861	$	29,576
Interest expense		4,419		1,155		10,621		2,526
Net interest income		9,483		9,515		28,240		27,050
Provision for credit losses		184		1,165		753		2,781
Net interest income after provision for credit losses		9,299		8,350		27,487		24,269
Non-interest income		837		1,088		2,465		2,773
Non-interest expense		7,319		7,032		21,740		20,966
Income before income taxes		2,817		2,406		8,212		6,076
Provision for income taxes		704		546		2,004		1,440
Net income	$	2,113	$	1,860	$	6,208	$	4,636
Basic net income per share	$	0.35	$	0.31	$	1.04	$	0.76
Diluted net income per share	$	0.33	$	0.29	$	0.97	$	0.71
Dividends per share	$	0.05	$	0.03	$	0.15	$	0.09

The discussion that follows summarizes the most significant activity that drove changes in the Company’s net income during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

Net Interest Income and Margin

Net interest income increased by $1.2 million, or 4.4%, comparing the nine months ended September 30, 2023 to the nine months ended September 30, 2022. The increase was primarily attributable to growth in loans which averaged $795.0 million during the nine months ended September 30, 2023, compared to $713.0 million during the nine months ended September 30, 2022. The average rate on earning assets totaled 5.41% for the nine months ended September 30, 2023, compared to 4.37% for the nine months ended September 30, 2022.

While yields on earning assets increased significantly in 2023, rates on interest-bearing liabilities increased at a faster pace, causing margin compression. Net interest margin was 3.93% for the nine months ended September 30, 2023, compared to 4.00% for the nine months ended September 30, 2022. The Company’s total funding costs, including the cost of interest and non-interest deposits, as well as borrowings, increased to 1.53% during the nine months ended September 30, 2023, compared to 0.39% during the nine months ended September 30, 2022.

Provision for Credit Losses

The provision for credit losses was $0.8 million during the nine months ended September 30, 2023, compared to $2.8 million during the nine months ended September 30, 2022. The reduction resulted primarily from reduced charge-off levels comparing the two periods, mostly related to ALC’s loans which continued to reduce following implementation of the cessation of business strategy. The Company’s net charge-offs totaled $0.7 million during the nine months ended September 30, 2023, compared to $1.7 million during the nine months ended September 30, 2022. The reduction included a decrease of $1.3 million in net charge-offs associated with ALC’s portfolio, partially offset by an increase in net charge-offs associated with the indirect consumer portfolio totaling $0.3 million. The Company’s net charge-offs as a percentage of average loans totaled 0.12% during the nine months ended September 30, 2023, compared to 0.24% during the nine months ended September 30, 2022.

Non-interest Income

Non-interest income totaled $2.5 million for the nine months ended September 30, 2023, compared to $2.8 million for the nine months ended September 30, 2022. The reduction resulted primarily from gains on the sale of premises and equipment that occurred during the third quarter of 2022, but were not repeated in 2023.

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Non-interest Expense

Non-interest expense totaled $21.7 million for the nine months ended September 30, 2023, compared to $21.0 million for the nine months ended September 30, 2022. The increase resulted primarily from nonrecurring gains on the sale of OREO properties that offset non-interest expense in 2022, but were not repeated in 2023.

Balance Sheet Levels

As of September 30, 2023, the Company’s assets totaled $1,065.2 million, compared to $994.7 million as of December 31, 2022, an increase of 7.1%.

Loans

Total loans increased by $41.4 million, or 5.4%, as of September 30, 2023, compared to December 31, 2022. Loan volume increases during the first nine months of 2023 were driven primarily by growth in indirect consumer and commercial construction loans. Growth in indirect consumer lending was consistent with continued demand for the products collateralized through the Company's indirect program, including recreational vehicles, campers, boats, horse trailers and cargo trailers. Indirect loan growth tends to be seasonal due to its emphasis on outdoor recreational products, with growth typically more pronounced in the spring and early summer months. The increase in commercial construction (construction, land development and other land loans) was primarily attributable to continued growth in construction fundings on multi-family residential projects. The loan growth during the first nine months of 2023 was partially offset by decreases in the residential real estate (including 1-4 family and multi-family) and commercial and industrial categories, as well as the direct consumer and branch retail consumer categories. Loans in direct consumer and branch retail were expected to decrease as they comprise the majority of ALC’s remaining loan balances.

Deposit Growth

Deposits totaled $927.0 million as of September 30, 2023, compared to $870.0 million as of December 31, 2022. The year-to-date growth included an increase of $69.2 million in interest-bearing deposits, partially offset by a decrease of $12.2 million in noninterest-bearing deposits. The year-to-date shift to interest-bearing deposits is consistent with deposit holders seeking to maximize interest earnings on their accounts. In addition, deposit growth for the first nine months of 2023 included growth of $30.2 million in wholesale brokered deposits that were acquired in order to further enhance the Company’s liquidity position following the bank failures that began during the first quarter of 2023. As of September 30, 2023, core deposits, which exclude time deposits of $250 thousand or more and all brokered deposits, totaled $786.8 million, or 84.9% of total deposits, compared to $778.1 million, or 89.4% of total deposits, as of December 31, 2022.

Deployment of Funds

Management seeks to deploy earning assets in an efficient manner to maximize net interest income while maintaining appropriate levels of liquidity to protect the safety and soundness of the organization. Management’s decisions during the first nine months of 2023, particularly following the bank failures that occurred, were focused on maintaining the Company’s strong liquidity position. As part of this focus, management elected to hold higher levels of cash and cash equivalents. Cash and cash equivalents totaled $66.1 million as of September 30, 2023, compared to $30.2 million as of December 31, 2022. Investment securities, including both the available-for-sale and held-to-maturity portfolios, totaled $127.8 million as of September 30, 2023, compared to $132.7 million as of December 31, 2022. The expected average life of securities in the investment portfolio was 3.9 years as of September 30, 2023, compared to 3.5 years as of December 31, 2022. Management will continue to evaluate opportunities to invest excess cash balances within the context of anticipated loan and deposit growth and current liquidity needs.

Shareholders’ Equity

Shareholders’ equity increased by $2.3 million, or 2.7%, as of September 30, 2023, compared to December 31, 2022. The increase in shareholders’ equity resulted from earnings, net of dividends paid, partially offset by the CECL transition adjustment which reduced retained earnings by $1.8 million, net of tax, as well as a net increase in accumulated other comprehensive loss of $1.7 million associated with fair value declines in the available-for-sale investment portfolio and reclassification adjustments associated with terminated interest rate swaps.

Cash Dividends

The Company declared cash dividends totaling $0.15 per share on its common stock during the nine months ended September 30, 2023, compared to cash dividends totaling $0.09 per share on its common stock during the nine months ended September 30, 2022.

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Regulatory Capital

During the nine months ended September 30, 2023, the Bank continued to maintain capital ratios at higher levels than required to be considered a “well-capitalized” institution under applicable banking regulations. As of September 30, 2023, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 10.81%. Its total capital ratio was 12.06%, and its Tier 1 leverage ratio was 9.09%.

Liquidity

As of September 30, 2023, the Company continued to maintain excess funding capacity sufficient to provide adequate liquidity for loan growth, capital expenditures and ongoing operations. The Company benefits from a strong core deposit base, a liquid investment securities portfolio and access to funding from a variety of sources, including federal funds lines, FHLB advances and brokered deposits. In addition, the Company has access to the FRB's discount window and its Bank Term Funding Program (BTFP), the latter of which was established in response to the recent liquidity events that have occurred in the banking industry. Both the discount window and the BTFP allow borrowing on pledged collateral that includes eligible investment securities and, in certain circumstances, eligible loans. In response to heightened liquidity concerns in the banking industry, during 2023 management undertook measures designed to enhance the Company’s liquidity position. These procedures included holding higher levels of on-balance sheet cash, as well as enhancing the availability of off-balance sheet borrowing capacity. As part of these efforts, during the third quarter of 2023, the Company completed the establishment of additional borrowing capacity through the FRB's discount window, primarily via the pledging of the majority of the Company’s indirect loan portfolio as collateral. Due to these efforts, the Company’s immediate borrowing capacity based on collateral pledged through the discount window increased to $146.6 million as of September 30, 2023, compared to $1.2 million as of December 31, 2022.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is calculated as the difference between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates, as well as volume and mix changes in earning assets and interest-bearing liabilities, can materially impact net interest income. The Company’s earning assets consist of loans, taxable and tax-exempt investments, Federal Home Loan Bank stock, federal funds sold by the Bank and interest-bearing deposits in banks. Interest-bearing liabilities consist of interest-bearing demand deposits and savings and time deposits, as well as short- and long-term borrowings.

The following tables show the average balances of each principal category of assets, liabilities and shareholders’ equity for the three and nine months ended September 30, 2023 and 2022. Additionally, the tables provide an analysis of interest revenue or expense associated with each category, along with the accompanying yield or rate percentage. Net interest margin is calculated for each period presented as net interest income divided by average total interest-earning assets.

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	Three Months Ended							Three Months Ended
	September 30, 2023							September 30, 2022
	Average Balance		Interest		Annualized Yield/ Rate %			Average Balance		Interest		Annualized Yield/ Rate %
ASSETS
Interest-earning assets:
Total loans (Note A)	$	821,294	$	12,584		6.08	%	$	743,145	$	9,750		5.21	%
Taxable investment securities		123,290		682		2.19	%		148,964		748		1.99	%
Tax-exempt investment securities		1,037		3		1.15	%		2,322		8		1.37	%
Federal Home Loan Bank stock		1,001		21		8.32	%		1,808		17		3.73	%
Federal funds sold		1,069		14		5.20	%		1,984		11		2.20	%
Interest-bearing deposits in banks		44,379		598		5.35	%		23,166		136		2.33	%
Total interest-earning assets		992,070		13,902		5.56	%		921,389		10,670		4.59	%
Noninterest-earning assets		61,235							64,593
Total	$	1,053,305						$	985,982
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits:
Demand deposits	$	206,540	$	176		0.34	%	$	243,131	$	182		0.30	%
Savings deposits		244,932		1,570		2.54	%		211,724		342		0.64	%
Time deposits		323,824		2,476		3.03	%		209,361		340		0.64	%
Total interest-bearing deposits		775,296		4,222		2.16	%		664,216		864		0.52	%
Noninterest-bearing demand deposits		161,381		—		—			183,612		—		—
Total deposits		936,677		4,222		1.79	%		847,828		864		0.40	%
Borrowings		19,468		197		4.01	%		45,427		291		2.54	%
Total funding costs		956,145		4,419		1.83	%		893,255		1,155		0.51	%
Other noninterest-bearing liabilities		10,263							8,642
Shareholders’ equity		86,897							84,085
Total	$	1,053,305						$	985,982
Net interest income (Note B)			$	9,483						$	9,515
Net interest margin						3.79	%						4.10	%

Note A	—	For the purpose of these computations, non-accruing loans are included in the average loan amounts outstanding. These loans averaged $2.0 million and $1.7 million for the three months ended September 30, 2023 and 2022, respectively.
Note B	—	Loan fees are included in interest amounts presented. Loan fees totaled $0.1 million for both the three months ended September 30, 2023 and 2022.

48

	Nine Months Ended							Nine Months Ended
	September 30, 2023							September 30, 2022
	Average Balance		Interest		Annualized Yield/ Rate %			Average Balance		Interest		Annualized Yield/ Rate %
ASSETS
Interest-earning assets:
Total loans (Note A)	$	795,033	$	35,330		5.94	%	$	713,015	$	27,339		5.13	%
Taxable investment securities		126,341		2,033		2.15	%		142,425		1,896		1.78	%
Tax-exempt investment securities		1,048		10		1.28	%		2,543		31		1.63	%
Federal Home Loan Bank stock		1,347		75		7.44	%		1,165		33		3.79	%
Federal funds sold		1,415		51		4.82	%		853		12		1.88	%
Interest-bearing deposits in banks		35,437		1,362		5.14	%		45,133		265		0.79	%
Total interest-earning assets		960,621		38,861		5.41	%		905,134		29,576		4.37	%
Noninterest-earning assets		61,484							65,379
Total	$	1,022,105						$	970,513
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits:
Demand deposits	$	216,445	$	557		0.34	%	$	249,183	$	438		0.24	%
Savings deposits		221,293		3,279		1.98	%		206,294		693		0.45	%
Time deposits		297,708		5,845		2.62	%		208,621		833		0.53	%
Total interest-bearing deposits		735,446		9,681		1.76	%		664,098		1,964		0.40	%
Noninterest-bearing demand deposits		162,084		—		—			182,862		—		—
Total deposits		897,530		9,681		1.44	%		846,960		1,964		0.31	%
Borrowings		29,375		940		4.28	%		27,994		562		2.68	%
Total funding costs		926,905		10,621		1.53	%		874,954		2,526		0.39	%
Other noninterest-bearing liabilities		9,722							8,833
Shareholders’ equity		85,478							86,726
Total	$	1,022,105						$	970,513
Net interest income (Note B)			$	28,240						$	27,050
Net interest margin						3.93	%						4.00	%

Note A	—	For the purpose of these computations, non-accruing loans are included in the average loan amounts outstanding. These loans averaged $1.5 million and $1.8 million for the nine months ended September 30, 2023 and 2022, respectively.
Note B	—	Loan fees are included in interest amounts presented. Loan fees totaled $0.4 million for both the nine months ended September 30, 2023 and 2022.

49

The following tables summarize the impact of variances in volume and rate of interest-earning assets and interest-bearing liabilities on components of net interest income.

	Three Months Ended September 30, 2023									Nine Months Ended September 30, 2023
	Compared to									Compared to
	Three Months Ended September 30, 2022									Nine Months Ended September 30, 2022
	Increase (Decrease)									Increase (Decrease)
	Due to Change In:									Due to Change In:
	Volume			Average Yield/Rate			Net			Volume			Average Yield/Rate			Net
	(Dollars in Thousands)
Interest earned on:
Total loans	$	1,025		$	1,809		$	2,834		$	3,145		$	4,846		$	7,991
Taxable investment securities		(129	)		63			(66	)		(214	)		351			137
Tax-exempt investment securities		(4	)		(1	)		(5	)		(18	)		(3	)		(21	)
Federal Home Loan Bank stock		(8	)		12			4			5			37			42
Federal funds sold		(5	)		8			3			8			31			39
Interest-bearing deposits in banks		125			337			462			(57	)		1,154			1,097
Total interest-earning assets		1,004			2,228			3,232			2,869			6,416			9,285
Interest expense on:
Demand deposits		(27	)		21			(6	)		(58	)		177			119
Savings deposits		54			1,174			1,228			50			2,536			2,586
Time deposits		186			1,950			2,136			356			4,656			5,012
Borrowings		(166	)		72			(94	)		28			350			378
Total interest-bearing liabilities		47			3,217			3,264			376			7,719			8,095
Increase (decrease) in net interest income	$	957		$	(989	)	$	(32	)	$	2,493		$	(1,303	)	$	1,190

Interest income increased by $9.3 million, comparing the nine months ended September 30, 2023 to the nine months ended September 30, 2022. Of the increase, $6.4 million was attributable to higher average yields on interest-earning assets, while $2.9 million was attributable to growth in average loan volume comparing the two periods. The increase in average yield was attributable to the rise in market interest rates that began in 2022 and has continued in 2023. The increase in interest income associated with loan volume increases was attributable to loan growth during the nine months ended September 30, 2023 of $41.4 million, or 5.4%.

The increase in interest income was partially offset by an increase in interest expense of $8.1 million, comparing the nine months ended September 30, 2023 to the nine months ended September 30, 2022. Of the increase, $7.7 million was attributable to the rise in market interest rates, while $0.4 million was attributable to growth in interest-bearing liabilities, primarily time deposits and borrowings. During the latter half of 2022 and through the first nine months of 2023, the Company has focused a portion of its deposit marketing efforts on growth in time deposits of various maturities in an effort to increase the predictability of funding cash flows. Additionally, the Company has utilized wholesale brokered deposits and short-term FHLB borrowings to a larger extent, particularly during the nine months ended September 30, 2023, in order to enhance the Company’s on-balance sheet liquidity position. Efforts to enhance the Company’s on-balance sheet liquidity were taken primarily as precautionary measures in the wake of liquidity events that impacted the banking industry during 2023.

The rising market interest rate environment has had, and continues to have, a significant impact on the Company and the banking industry in general. Beginning in March 2022 and through September 30, 2023, the FRB raised the federal funds rate by a total of 525 basis points. Statements by FRB officials have indicated that further interest rate increases are possible to address ongoing inflationary pressures. While the Company has generally been positioned to benefit from the rising interest rate environment that has occurred, the Company’s net interest margin began to decline during the nine months ended September 30, 2023 as the cost of interest-bearing liabilities increased at a faster pace than interest-earning assets. Further, in connection with the liquidity events that have occurred in the banking industry, competition for deposits has intensified significantly. This increased competition, coupled with the volatility of the industry, has introduced additional uncertainty into the market. Should market interest rates continue to rise or reduce at significant levels, the Company’s net interest income could be negatively impacted.

50

Provision for Credit Losses

The provision for credit losses was $0.8 million during the nine months ended September 30, 2023, compared to $2.8 million during the nine months ended September 30, 2022. The year-to-date decrease in 2023 compared to 2022 was primarily the result of the cessation of business strategy at ALC, which has led to significantly reduced net charge-offs as ALC’s loans have paid down. Net charge-offs on ALC loans totaled $0.3 million, or 2.09% of average loans, during the nine months ended September 30, 2023, compared to $1.5 million, or 6.38% of average loans, during the nine months ended September 30, 2022.

While the Company experienced improved charge-off metrics during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, the timing of charge-offs, economic developments, and other factors that could impact the provision for credit losses cannot be fully predicted with certainty. Sustained levels of high inflation, combined with the recent rapid rise in market interest rates, could negatively impact the Company’s borrowers, which could lead to increased provisions for credit losses in the future.

Effective January 1, 2023, the Company adopted the CECL model to account for credit losses on financial instruments, including loans and leases, unfunded commitments and held-to-maturity securities. The adoption of the CECL model resulted in a transition adjustment totaling $2.4 million, increasing the Company’s allowance for credit losses on loans and leases by $2.1 million, and establishing a reserve for unfunded commitments of $0.3 million. As of September 30, 2023, the Company’s allowance for credit losses totaled 1.40% of total loans, compared to 1.22% as of December 31, 2022. While management believes that the allowance for credit losses on loans and leases, as well as the reserve for unfunded commitments, was sufficient to absorb life-of-loan credit losses based on circumstances existing as of the balance sheet date, combined with reasonable and supportable forecasts, the determination of the allowance is complex and requires judgment by management about the effects of matters that are inherently uncertain. Changing economic circumstances or forecasts, or changes in management’s judgments and estimates, could result in additional credit loss expense in future periods.

Non-Interest Income

Non-interest income represents fees and income derived from sources other than interest-earning assets. The following table presents the major components of non-interest income for the periods indicated:

	Three Months Ended September 30,										Nine Months Ended September 30,
	2023		2022		$ Change			% Change			2023		2022		$ Change			% Change
	(Dollars in Thousands)										(Dollars in Thousands)
Service charges and other fees on deposit accounts	$	302	$	311	$	(9	)		(2.9	)%	$	869	$	904	$	(35	)		(3.9	)%
Bank-owned life insurance		119		112		7			6.3	%		348		335		13			3.9	%
Gain on sales of premises and equipment and other assets		18		278		(260	)		(93.5	)%		18		301		(283	)		(94.0	)%
Lease income		241		210		31			14.8	%		707		635		72			11.3	%
ATM fee income		93		125		(32	)		(25.6	)%		315		403		(88	)		(21.8	)%
Other income		64		52		12			23.1	%		208		195		13			6.7	%
Total non-interest income	$	837	$	1,088	$	(251	)		(23.1	)%	$	2,465	$	2,773	$	(308	)		(11.1	)%

51

The Company’s non-interest income decreased by $0.3 million comparing the nine months ended September 30, 2023 to the nine months ended September 30, 2022 due primarily to gains on the sale of premises and equipment that occurred during the third quarter of 2022, but were not repeated in 2023. In recent periods, the Company’s sources of non-interest revenue have not fluctuated significantly, with the exception of nonrecurring increases or decreases that have occurred from time to time due to gains or losses on sales of assets or other nonrecurring sources. The majority of the Company’s sources of non-interest income are relatively stable and are not expected to change significantly in the near term. However, non-interest revenues earned from service charges and other fees on deposit accounts have generally declined in recent years for a number of reasons, including a changing regulatory environment associated with these types of revenues. Management continues to evaluate opportunities to add non-interest revenue streams or grow existing streams; however, significant growth in non-interest income is not expected in the near term.

Non-Interest Expense

Non-interest expense represents expenses incurred from sources other than interest-bearing liabilities. The following table presents the major components of non-interest expense for the periods indicated:

	Three Months Ended September 30,											Nine Months Ended September 30,
	2023		2022			$ Change			% Change			2023		2022			$ Change			% Change
	(Dollars in Thousands)											(Dollars in Thousands)
Salaries and employee benefits	$	4,120	$	4,007		$	113			2.8	%	$	12,310	$	12,389		$	(79	)		(0.6	)%
Net occupancy and equipment		897		861			36			4.2	%		2,625		2,468			157			6.4	%
Computer services		464		417			47			11.3	%		1,315		1,224			91			7.4	%
Insurance expense and assessments		423		310			113			36.5	%		1,156		970			186			19.2	%
Fees for professional services		331		263			68			25.9	%		735		811			(76	)		(9.4	)%
Postage, stationery and supplies		151		164			(13	)		(7.9	)%		472		469			3			0.6	%
Telephone/data communications		128		159			(31	)		(19.5	)%		479		518			(39	)		(7.5	)%
Collection and recoveries		71		57			14			24.6	%		252		176			76			43.2	%
Directors fees		94		98			(4	)		(4.1	)%		284		301			(17	)		(5.6	)%
Software amortization		86		133			(47	)		(35.3	)%		313		331			(18	)		(5.4	)%
Other real estate/foreclosure expense, net		9		(5	)		14			(280.0	)%		30		(320	)		350			(109.4	)%
Other expense		545		568			(23	)		(4.0	)%		1,769		1,629			140			8.6	%
Total non-interest expense	$	7,319	$	7,032		$	287			4.1	%	$	21,740	$	20,966		$	774			3.7	%

The Company’s non-interest expense increased by 3.7% comparing the nine months ended September 30, 2023 to the nine months ended September 30, 2022. The majority of the increase resulted from nonrecurring gains on the sale of properties that reduced other real/estate expense in 2022, but were not repeated in 2023. In addition, the Company has experienced increases in other expense categories commensurate with the inflationary environment. Increases in certain categories of non-interest expense were partially offset by decreases in other categories, most notably salaries and employee benefits which decreased by 0.6% comparing the nine months ended September 30, 2023 to the nine months ended September 30, 2022. The reduction in salaries and benefits expense resulted from the impact of the strategic initiatives undertaken by the Company beginning in the third quarter of 2021 to, among other things, improve the Company’s operating efficiency. These initiatives reduced the Company’s expense profile significantly in 2022 and, in some expense areas such as salaries and benefits, continued to benefit the Company during the nine months ended September 30, 2023. However, the current inflationary environment is expected to continue to put upward pressure on non-interest expenses. Accordingly, management will remain focused on efforts to streamline business processes in an effort to continue to improve the Company’s overall efficiency levels.

Provision for Income Taxes

The provision for income taxes was $2.0 million and $1.4 million for the nine months ended September 30, 2023 and 2022, respectively, and the Company’s effective tax rate was 24.4% and 23.7%, respectively, for the same periods.

The effective tax rate is impacted by recurring items, such as changes in tax-exempt interest income earned from bank-qualified municipal bonds and loans and the cash surrender value of bank-owned life insurance. Management makes decisions about whether to invest in tax-exempt instruments on a case-by-case basis after considering a number of factors, including investment return, credit quality and the consistency of such investments with the Company’s overall strategy. The Company’s effective tax rate is expected to fluctuate commensurate with the level of these investments as compared to total pre-tax income.

52

BALANCE SHEET ANALYSIS

Investment Securities

The investment securities portfolio is used by management to provide liquidity, to generate interest income and for use as collateral for public deposits and wholesale funding. Risk and return can be adjusted by altering the duration, composition and/or balance of the portfolio. The expected average life of securities in the investment portfolio was 3.9 years and 3.5 years as of September 30, 2023 and December 31, 2022, respectively.

Available-for-sale securities are recorded at estimated fair value, with unrealized gains or losses recognized, net of taxes, in accumulated other comprehensive loss, a separate component of shareholders’ equity. As of September 30, 2023, available-for-sale securities totaled $126.6 million, or 99.0% of the total investment portfolio, compared to $130.8 million, or 98.6% of the total investment portfolio, as of December 31, 2022. Available-for-sale securities consisted of residential and commercial mortgage-backed securities, U.S. Treasury securities, corporate bonds, obligations of U.S. government-sponsored agencies, and obligations of state and political subdivisions.

Held-to-maturity securities are recorded at amortized cost and represent securities that the Company both intends and has the ability to hold to maturity. As of September 30, 2023, held-to-maturity securities totaled $1.3 million, or 1.0% of the total investment portfolio, compared to $1.9 million, or 1.4% of the total investment portfolio, as of December 31, 2022. Held-to-maturity securities consisted of commercial mortgage-backed securities, obligations of U.S. government-sponsored agencies, and obligations of state and political subdivisions.

Due to the increasing interest rate environment, during the nine months ended September 30, 2023, gross unrealized losses increased, particularly within the Company’s available-for-sale portfolio. Gross unrealized losses in the available-for-sale portfolio totaled $12.8 million as of September 30, 2023, compared to $11.1 million as of December 31, 2022. Unrealized losses within the available-for-sale portfolio were recognized, net of tax, in accumulated other comprehensive loss.

As of September 30, 2023, the Company evaluated both the available-for-sale and held-to-maturity portfolios for credit loss in accordance with the revised accounting guidance of ASC 326. Based on these evaluations, management concluded that no credit losses were included in either portfolio and that the unrealized losses in both portfolios resulted from the prevailing interest rate environment.

Loans and Allowance for Credit Losses

The Company’s total loan portfolio increased by $41.4 million, or 5.4%, as of September 30, 2023, compared to December 31, 2022. The tables below summarize loan balances by portfolio category, as well as the allowance for credit losses, as of the end of each of the most recent five quarters as of September 30, 2023:

	Quarter Ended
	2023						2022
	September 30,		June 30,		March 31,		December 31,		September 30,
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	90,051	$	91,231	$	69,398	$	53,914	$	36,230
Secured by 1-4 family residential properties		83,876		85,101		86,622		87,995		84,452
Secured by multi-family residential properties		56,506		54,719		63,368		67,852		72,377
Secured by non-farm, non-residential properties		199,116		204,270		198,266		200,156		200,707
Commercial and industrial loans		59,369		60,568		65,708		73,546		65,935
Consumer loans:
Direct		6,544		7,593		8,435		9,851		11,950
Branch retail		9,648		10,830		12,222		13,992		15,878
Indirect		310,190		300,182		271,870		266,567		262,742
Total loans	$	815,300	$	814,494	$	775,889	$	773,873	$	750,271
Allowance for credit losses		11,380		11,536		11,599		9,422		9,373
Net loans	$	803,920	$	802,958	$	764,290	$	764,451	$	740,898

53

The tables below summarize changes in the allowance for credit losses on loans and leases for each of the most recent five quarters as of September 30, 2023:

	Quarter Ended
	2023									2022
	September 30,			June 30,			March 31,			December 31,			September 30,
	(Dollars in Thousands)
Balance at beginning of period	$	11,536		$	11,599		$	9,422		$	9,373		$	8,751
Charge-offs:
Real estate loans:
Construction, land development and other land loans		—			—			—			—			—
Secured by 1-4 family residential properties		(41	)		(47	)		(8	)		(30	)		(3	)
Secured by multi-family residential properties		—			—			—			—			—
Secured by non-farm, non-residential properties		—			—			—			—			—
Commercial and industrial loans		—			—			—			—			—
Consumer loans:
Direct		(109	)		(197	)		(215	)		(451	)		(417	)
Branch retail		(93	)		(111	)		(155	)		(111	)		(200	)
Indirect		(198	)		(146	)		(156	)		(144	)		(136	)
Total charge-offs		(441	)		(501	)		(534	)		(736	)		(756	)
Recoveries		225			228			319			258			213
Net charge-offs		(216	)		(273	)		(215	)		(478	)		(543	)
Impact of adopting CECL		—			—			2,123			—			—
Provision for credit losses		60			210			269			527			1,165
Ending balance	$	11,380		$	11,536		$	11,599		$	9,422		$	9,373
Ending balance as a percentage of loans		1.40	%		1.42	%		1.49	%		1.22	%		1.25	%
Net charge-offs as a percentage of average loans		0.10	%		0.14	%		0.11	%		0.25	%		0.29	%

The adoption of CECL was most impactful on the Company’s consumer indirect loan portfolio due primarily to the extension of the loss estimate period to the estimated life of loans in this category. As of January 1, 2023, the estimated average remaining life of the indirect portfolio was between four and five years. As of September 30, 2023, the estimated average remaining life of the indirect portfolio was between five and six years. The branch retail portfolio, which represents indirect lending conducted by ALC, was similarly impacted by the transition to CECL. In addition, the Company’s consumer portfolios were impacted by current economic forecasts using data provided by the Federal Reserve on inflation, unemployment, and the forecasted movement of interest rates.

Reserve for Unfunded Lending Commitments

In connection with the adoption of the CECL accounting model, the Company also reserved approximately $0.3 million in other liabilities for unfunded lending commitments. Unfunded lending commitments are off-balance sheet arrangements that represent unconditional commitments of the Company to lend to a borrower that are unfunded as of the balance sheet date. These may include unfunded loan commitments, standby letters of credit, and financial guarantees. The CECL accounting guidance requires that an estimate of expected credit loss be measured on commitments in which an entity is exposed to credit risk via a present contractual obligation to extend credit unless the obligation is unconditionally cancellable by the issuer. For the Company, unconditional lending commitments generally include unfunded term loan agreements, home equity lines of credit, lines of credit, and demand deposit account overdraft protection. As of September 30, 2023, the Company’s reserve for unfunded commitments, which is recorded in other liabilities in the Company’s consolidated balance sheets, totaled $0.5 million. No reserve for unfunded commitments was recorded by the Company as of December 31, 2022.

54

Nonperforming Assets

Nonperforming assets at the end of the five most recent quarters as of September 30, 2023 were as follows:

	Quarter Ended
	2023									2022
	September 30,			June 30,			March 31,			December 31,			September 30,
	(Dollars in Thousands)
Non-accrual loans	$	2,432		$	979		$	1,214		$	1,651		$	2,077
Other real estate owned		617			617			617			686			686
Total	$	3,049		$	1,596		$	1,831		$	2,337		$	2,763
Nonperforming assets as a percentage of total assets		0.29	%		0.15	%		0.18	%		0.24	%		0.28	%

The increase in nonperforming assets during the third quarter of 2023 resulted primarily from one commercial real estate loan that moved into non-accrual status during the quarter.

Allocation of Allowance for Credit Losses

While no portion of the allowance for credit losses is in any way restricted to any individual loan or group of loans and the entire allowance is available to absorb losses from any and all loans, the following table shows an allocation of the allowance for credit losses as of September 30, 2023 and December 31, 2022:

	September 30, 2023								December 31, 2022
	Allocation Allowance		Percent of Allowance in Each Category to Total Allowance			Percent of Loans in Each Category to Total Loans			Allocation Allowance		Percent of Allowance in Each Category to Total Allowance			Percent of Loans in Each Category to Total Loans
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	580		5.1	%		11.0	%	$	517		5.5	%		7.0	%
Secured by 1-4 family residential properties		754		6.6	%		10.3	%		832		8.8	%		11.4	%
Secured by multi-family residential properties		405		3.6	%		6.9	%		646		6.9	%		8.8	%
Secured by non-farm, non-residential properties		1,622		14.3	%		24.4	%		1,970		20.9	%		25.8	%
Commercial and industrial loans		530		4.7	%		7.3	%		919		9.8	%		9.5	%
Consumer loans:
Direct		487		4.3	%		0.8	%		866		9.2	%		1.3	%
Branch retail		835		7.3	%		1.3	%		518		5.5	%		1.8	%
Indirect		6,167		54.1	%		38.0	%		3,154		33.4	%		34.4	%
Total allowance for credit losses	$	11,380		100.0	%		100.0	%	$	9,422		100.0	%		100.0	%

Deposits

Total deposits increased to $927.0 million as of September 30, 2023, from $870.0 million as of December 31, 2022, an increase of 6.6%. Core deposits, which exclude time deposits of $250 thousand or more and all brokered deposits, provide a relatively stable funding source that supports earning assets. Core deposits totaled $786.8 million, or 84.9% of total deposits, as of September 30, 2023, compared to $778.1 million, or 89.4% of total deposits, as of December 31, 2022.

Core deposits, have historically been the Company’s primary source of funding and have enabled the Company to successfully meet both short-term and long-term liquidity needs. Management anticipates that core deposits will continue to be the Company’s primary source of funding in the future. Management will continue to monitor deposit levels closely to help ensure an adequate level of funding for the Company’s activities. However, various economic and competitive factors could affect this funding source in the future, including increased competition from other financial institutions in deposit gathering, national and local economic conditions and interest rate policies adopted by the FRB and other central banks.

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Other Interest-Bearing Liabilities

Other interest-bearing liabilities consist of federal funds purchased, securities sold under agreements to repurchase, FHLB advances, and subordinated debt that are used by the Company as an alternative source of funds. As of September 30, 2023, other interest-bearing liabilities totaled 5.0% of total interest-bearing liabilities, compared to 4.2% as of December 31, 2022.

Shareholders’ Equity

As of September 30, 2023, shareholders’ equity totaled $87.4 million, or 8.2% of total assets, compared to $85.1 million, or 8.6% of total assets, as of December 31, 2022. The increase in shareholders’ equity resulted from earnings, net of dividends paid, partially offset by the CECL transition adjustment which reduced retained earnings by $1.8 million, net of tax, as well as a net increase in accumulated other comprehensive loss of $1.7 million associated with fair value declines in the available-for-sale investment portfolio and reclassification adjustments associated with terminated interest rate swaps.

During the nine months ended September 30, 2023, the Company declared dividends totaling $0.15 per common share, or approximately $0.9 million in aggregate amount, compared to $0.09 per common share, or approximately $0.5 million in aggregate amount, during the nine months ended September 30, 2022. Bancshares’ Board of Directors evaluates dividend payments based on the Company’s level of earnings and the desire to maintain a strong capital base, as well as regulatory requirements relating to the payment of dividends.

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LIQUIDITY AND CAPITAL RESOURCES

The asset portion of the balance sheet provides liquidity primarily from the following sources: (1) excess cash and interest-bearing deposits in banks, (2) federal funds sold, (3) principal payments and maturities of loans and (4) principal payments and maturities from the investment portfolio. Loans maturing or repricing in one year or less amounted to $227.8 million as of September 30, 2023 and $212.5 million as of December 31, 2022. Investment securities forecasted to mature or reprice in one year or less were estimated to be $20.5 million and $7.1 million of the investment portfolio as of September 30, 2023 and December 31, 2022, respectively.

Although some securities in the investment portfolio have legal final maturities exceeding 10 years, a substantial percentage of the portfolio provides monthly principal and interest payments and consists of securities that are readily marketable and easily convertible into cash on short notice. The investment securities portfolio had an estimated average life of 3.9 years and 3.5 years as of September 30, 2023 and December 31, 2022, respectively. However, management does not rely solely upon the investment portfolio to generate cash flows to fund loans, capital expenditures, dividends, debt repayment and other cash requirements. These activities are also funded by cash flows from loan payments, as well as increases in deposits and short-term borrowings.

The liability portion of the balance sheet provides liquidity through interest-bearing and non-interest-bearing deposit accounts, which represent the Company’s primary sources of funds. In addition, federal funds purchased, FHLB advances, securities sold under agreements to repurchase and short-term and long-term borrowings are additional sources of available liquidity. Liquidity management involves the continual monitoring of the sources and uses of funds to maintain an acceptable cash position. Long-term liquidity management focuses on considerations related to the total balance sheet structure. The Bank manages the pricing of its deposits to maintain a desired deposit balance.

The Company had $30.0 million and $20.0 million of outstanding borrowings under FHLB advances as of September 30, 2023 and December 31, 2022, respectively. In addition, on October 1, 2021, the Company completed a private placement of $11.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes that will mature on October 1, 2031. Net of unamortized debt issuance costs, the subordinated notes were recorded as long-term borrowings totaling $10.8 million and $10.7 million as of September 30, 2023 and December 31, 2022, respectively.

The Company had up to $260.3 million and $246.8 million in remaining unused credit from the FHLB (subject to available collateral, which may include eligible investment securities and loans) as of September 30, 2023 and December 31, 2022, respectively. In addition, the Company had $48.0 million and $45.0 million in unused established federal funds lines as of September 30, 2023 and December 31, 2022, respectively.

The Company also has access to the FRB’s discount window and its Bank Term Funding Program (BTFP), the latter of which was established in response to the recent liquidity events that have occurred in the banking industry. Both the discount window and the BTFP allow borrowing on pledged collateral that includes eligible investment securities and, in certain circumstances, eligible loans. In response to heightened liquidity concerns in the banking industry, during 2023 management undertook measures designed to enhance the Company’s liquidity position. These procedures included holding higher levels of on-balance sheet cash, as well as enhancing the availability of off-balance sheet borrowing capacity. As part of these efforts, during the third quarter of 2023, the Company completed the establishment of additional borrowing capacity through the FRB's discount window, primarily via the pledging of the majority of the Company’s indirect loan portfolio as collateral. Due to these efforts, the Company’s immediate borrowing capacity based on collateral pledged through the discount window increased to $146.6 million as of September 30, 2023, compared to $1.2 million as of December 31, 2022.

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RESPONSE TO RECENT LIQUIDITY EVENTS

In response to heightened liquidity concerns for the banking industry during 2023, management undertook measures designed to enhance the Company’s liquidity position, including holding higher levels of on-balance sheet cash and enhancing the Company’s off-balance sheet borrowing capacity through both secured and unsecured sources. Although the liquidity events that have occurred in 2023 have strained the banking industry as a whole, the Company’s management remains confident in the stability of the Company’s core deposit base which has served as the Company’s primary funding source for many years. Excluding wholesale brokered deposits, as of September 30, 2023, the Company had over 29 thousand deposit accounts with an average balance of approximately $28.9 thousand per account. Estimated uninsured/uncollateralized deposits (calculated as deposit amounts per deposit holder in excess of $250 thousand, the maximum amount of federal deposit insurance, and excluding deposits secured by pledged assets) totaled $173.0 million, or 18.7% of total deposits, as of September 30, 2023, compared to $148.3 million, or 17.1% of total deposits, as of December 31, 2022.

The table below provides information on the Company’s on-balance sheet liquidity, as well as readily available off-balance sheet sources of liquidity as of both September 30, 2023 and December 31, 2022.

	September 30,  2023			December 31,  2022
	(Dollars in Thousands)
	(Unaudited)			(Unaudited)
Liquidity from cash and federal funds sold:
Cash and cash equivalents	$	66,129		$	30,152
Federal funds sold		1,143			1,768
Liquidity from cash and federal funds sold		67,272			31,920
Liquidity from pledgeable investment securities:
Investment securities available-for sale, at fair value		126,551			130,795
Investment securities held-to-maturity, at amortized cost		1,272			1,862
Less: securities pledged		(42,340	)		(54,717	)
Less: estimated collateral value discounts		(10,943	)		(7,833	)
Liquidity from pledgeable investment securities		74,540			70,107
Liquidity from unused lendable collateral (loans) at FHLB		6,676			18,215
Liquidity from unused lendable collateral (loans and securities) at FRB		146,613			1,198
Unsecured lines of credit with banks		48,000			45,000
Total readily available liquidity	$	343,101		$	166,440

The table calculates readily available sources of liquidity, including cash and cash equivalents, federal funds sold, and other liquidity sources. Certain of the measures have not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”); however, management believes that the non-GAAP measures are beneficial to the reader as they enhance the overall understanding of the Company’s liquidity position and can be used as a supplement to GAAP-based measures of liquidity. Specifically, liquidity from pledgeable investment securities and total readily available liquidity are non-GAAP measures used by management and regulators to analyze a portion of the Company's liquidity. Pledgeable investment securities are considered by management as a readily available source of liquidity since the Company has the ability to pledge the securities with the FHLB or FRB to obtain immediate funding. Both available-for-sale and held-for-maturity securities may be pledged at fair value with the FHLB and through the FRB discount window. The amounts shown as liquidity from pledgeable investment securities represents total investment securities as recorded on the balance sheet, less reductions for securities already pledged and discounts expected to be taken by the lender to determine collateral value. The calculations are intended to reflect minimum levels of liquidity readily available to the Company through the pledging of investment securities, and do not contemplate the additional available liquidity that could be available from the FRB through the BTFP. The non-GAAP financial measures that are discussed in this Quarterly Report should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP.

Management believes that the Company has adequate sources of liquidity to cover its contractual obligations and commitments over the next twelve months.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary purpose of managing interest rate risk is to invest capital effectively and preserve the value created by the Company’s core banking business. This is accomplished through the development and implementation of lending, funding, pricing and hedging strategies designed to maximize net interest income performance under varying interest rate environments, subject to liquidity and interest rate risk guidelines. Effective interest rate sensitivity management ensures that both assets and liabilities respond to changes in interest rates within an acceptable timeframe, thereby minimizing the effect of such interest rate movements on short- and long-term net interest margin and net interest income.

Financial simulation models are the primary tools used by the Asset/Liability Committee of the Bank’s board of directors to measure interest rate exposure. Using a wide range of scenarios, management is provided with extensive information on the potential impact on net interest income caused by changes in interest rates. In these simulations, assumptions are made about the direction and volatility of interest rates, the slope of the yield curve and the changing composition of the Company’s balance sheet resulting from both strategic plans and customer behavior. Simulation models also incorporate management’s assumptions regarding such factors as loan and deposit growth, pricing, prepayment speeds and spreads between interest rates paid on deposits and charged on loans. Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results but rather as a means to better plan and execute appropriate asset-liability management strategies and manage our interest rate risk.

Assessing Short-Term Interest Rate Risk – Net Interest Margin Simulation

On a quarterly basis, management simulates how changes in short- and long-term interest rates will impact future profitability, as reflected by changes in the Bank’s net interest margin and net interest income. The tables below depict how, as of September 30, 2023, pre-tax net interest margin and net interest income are forecasted to change over timeframes of one year and two years under the six listed interest rate scenarios. The interest rate scenarios contemplate immediate and parallel shifts in short- and long-term interest rates.

Average Change in Net Interest Margin from Level Interest Rate Forecast (basis points, pre-tax):

	1 Year			2 Years
+1%		11			10
+2%		19			17
+3%		23			19
-1%		(13	)		(11	)
-2%		(28	)		(26	)
-3%		(44	)		(41	)

Cumulative Change in Net Interest Income from Level Interest Rate Forecast (dollars in thousands, pre-tax):

	1 Year			2 Years
+1%	$	1,149		$	2,119
+2%		2,047			3,646
+3%		2,461			4,119
-1%		(1,378	)		(2,468	)
-2%		(3,056	)		(5,592	)
-3%		(4,736	)		(8,842	)

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ITEM 4. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Bancshares maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in Bancshares’ reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to Bancshares’ management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Bancshares’ management carried out an evaluation, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Bancshares’ disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of September 30, 2023, pursuant to the evaluation of these controls and procedures required by Rule 13a-15 of the Exchange Act. Based on that evaluation, Bancshares’ management concluded, as of September 30, 2023, that Bancshares’ disclosure controls and procedures were effective at the reasonable assurance level to ensure that the information required to be disclosed in Bancshares’ periodic filings with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting

There were no changes in Bancshares’ internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is a party to certain ordinary course litigation, and the Company intends to vigorously defend itself in all such litigation. In the opinion of the Company, based on review and consultation with legal counsel, the outcome of such ordinary course litigation should not have a material adverse effect on the Company’s consolidated financial statements or results of operations.

ITEM 1A. RISK FACTORS

A list of factors that could materially affect the Company’s business, financial condition and/or operating results is included in Part I, Item 1A, “Risk Factors” in the Company's 2022 Form 10-K. There have been no material changes to such risk factors, except as set forth below. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

Adverse developments affecting the financial services industry, such as recent bank failures or concerns involving liquidity, may have a material effect on the Company’s operations.

Recent events relating to the failures of certain banking entities in March and April 2023, including Silicon Valley Bank, Signature Bank and First Republic Bank, have caused general uncertainty and concern regarding the liquidity adequacy of the banking sector as a whole. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, banks, investment banks, mutual funds, and other institutional entities. As a result, defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Many of these transactions expose us to credit risk in the event of default of our counterparty or client. Any such losses could be material and could materially and adversely affect our business, financial condition and results of operations. In addition, we anticipate increased regulatory scrutiny and new regulations directed towards regional banks, and potentially community banks of similar size to us, designed to address the recent negative developments in the banking industry, all of which may increase our costs of doing business and reduce our profitability. In addition, the cost of resolving recent bank failures may prompt the FDIC to increase its premium above the recently increased levels or to issue additional special assessments.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth purchases made by or on behalf of Bancshares or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) of the Exchange Act, of shares of Bancshares’ common stock during the third quarter of 2023:

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs (2)		Maximum Number of Shares that May Yet Be Purchased Under the Programs (2)
July 1 – July 31		1,181	$	8.62		—		596,813
August 1 – August 31		110	$	8.93		—		596,813
September 1 – September 30		110	$	8.80		—		596,813
Total		1,401	$	8.65		—		596,813

(1)1,401 shares were purchased in open-market transactions by an independent trustee for Bancshares’ 401(k) Plan during the third quarter of 2023.

(2)No shares were repurchased during the third quarter pursuant to Bancshares’ publicly announced share repurchase program, which was initially approved by the Board of Directors on January 19, 2006 and authorized the repurchase of up to 642,785 shares of common stock. On each of December 18, 2019 and April 28, 2021, the Board approved the repurchase of additional shares of common stock under the share repurchase program, and the Board has periodically extended the expiration date of the program, most recently to December 31, 2023. As of September 30, 2023, Bancshares was authorized to repurchase up to 596,813 shares of common stock under the share repurchase program.

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ITEM 6. EXHIBITS

Exhibit No.	Description
3.1	Certificate of Incorporation of United Security Bancshares, Inc. (incorporated by reference to Exhibit 3(i) to the Quarterly Report on Form 10-Q (File No. 000-14549), filed on November 12, 1999).
3.1A	Certificate of Amendment to the Certificate of Incorporation of United Security Bancshares, Inc., effective as of October 11, 2016 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 000-14549), filed on October 11, 2016).
3.2	Amended and Restated Bylaws of First US Bancshares, Inc., effective as of November 16, 2022 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 000-14549), filed on November 16, 2022).
10.1	First US Bancshares, Inc. Non-Employee Directors' Deferred Compensation Plan
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
32*	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL: (i) Interim Condensed Consolidated Balance Sheets, (ii) Interim Condensed Consolidated Statements of Comprehensive Income, (iii) Interim Condensed Consolidated Statements of Operations, (iv) Interim Condensed Consolidated Statements of Changes in Shareholders' Equity, (v) Interim Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Interim Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104	The cover page from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL.

________________

*Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FIRST US BANCSHARES, INC.

DATE: November 8, 2023

By:	/s/ Thomas S. Elley
	Thomas S. Elley
	Its Senior Executive Vice President, Treasurer and Assistant Secretary, Chief Financial Officer and Principal Accounting Officer
	(Duly Authorized Officer and Principal Financial Officer)

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EX-10.1

Exhibit 10.1

FIRST US BANCSHARES, INC.

NON-EMPLOYEE DIRECTORS’ DEFERRED COMPENSATION PLAN

First US Bancshares, Inc. (the “Holding Company”) hereby amends and restates, effective as of July 1, 2023, the First US Bancshares, Inc. Non-Employee Directors’ Deferred Compensation Plan (formerly known as the “United Security Bancshares, Inc. Non-Employee Directors’ Deferred Compensation Plan”).

ARTICLE I

PURPOSE OF PLAN

The purpose of the Plan is to assist the Directors of the Holding Company and the Bank in planning for their retirement.

ARTICLE II

DEFINITIONS

Where the following terms appear herein, they shall have the respective meanings set forth in this ARTICLE II, unless the context clearly indicates to the contrary.

Section 2.1. “Bank” shall mean First US Bank, a wholly-owned subsidiary of the Holding Company.

Section 2.2. “Board of Directors” shall mean the board of directors of the Holding Company.

Section 2.3. “Committee” shall mean the compensation committee of the Board of Directors.

Section 2.4. “Compensation” shall mean a Participant’s cash compensation for services as a Director.

Section 2.5. “Deferral Termination Date” shall mean the date a Participant’s termination of his or her directorship constitutes a Separation from Service.

Section 2.6. “Deferred Compensation” shall mean Compensation deferred pursuant to the provisions of the Plan.

Section 2.7. “Deferred Compensation Account” shall mean the Participant’s account established pursuant to Section 4.3 herein.

Section 2.8. “Director” shall mean a non-employee member of the Board of Directors or the board of directors of the Bank.

Section 2.9. “Effective Date” of this amendment and restatement shall mean July 1, 2023. The original effective date of the former Plan is January 22, 2004.

Section 2.10. “Holding Company” shall mean First US Bancshares, Inc.

Section 2.11. “Market Price” shall mean the closing sales price per share for the common stock of the Holding Company or, if no closing sales price is reported, the average of the bid and ask prices per share on such date, as reported on the Nasdaq Stock Market LLC.

Section 2.12. “Participant” shall mean any Director who has elected to have all or a part of his or her Compensation deferred pursuant to the Plan.

Section 2.13. “Plan” shall mean this First US Bancshares, Inc. Non-Employee Directors’ Deferred Compensation Plan, as the same may hereafter be amended from time to time. The Plan was formerly known as the “United Security Bancshares, Inc. Non-Employee Directors’ Deferred Compensation Plan.”

Section 2.14. “Plan Earnings” shall mean amounts of interest to which reference is made in Section 5.1 herein and of dividends and distributions to which reference is made in Sections 6.2 and 6.3 herein.

Section 2.15. “Section 409A” shall mean Internal Revenue Code Section 409A and any and all Treasury regulations and guidance promulgated thereunder.

Section 2.16. “Separation from Service” shall mean a Participant’s “separation from service” within the meaning of Section 409A.

Section 2.17. “Stock Equivalent” shall mean a measure of value equal to one share of the Holding Company’s common stock and shall not include stock appreciation rights.

Section 2.18. “Stock Equivalents Account” shall mean the Participant’s account established pursuant to Section 4.3 herein.

ARTICLE III

ADMINISTRATION OF THE PLAN

Section 3.1. Committee. The Committee or such successor Committee as may be duly appointed by the Board of Directors shall administer, construe and interpret the Plan. Decisions of the Committee with respect to any matter involving the Plan shall be final and binding on the Holding Company, the Bank and all Participants. The Committee shall maintain complete and adequate records pertaining to the Plan, including but not limited to Deferred Compensation Accounts and Stock Equivalents Accounts.

Section 3.2. Indemnity.

(a) The Holding Company (the “Indemnifying Party”) hereby agrees to indemnify and hold harmless the members of the Committee (the “Indemnified Parties”) against any losses, claims, damages or liabilities to which any of the Indemnified Parties may become subject to the extent that such losses, claims, damages, liabilities or actions in respect thereof arise out of or are based upon any act or omission of such Indemnified Party in connection with the administration of the Plan (including any act or omission constituting negligence on the part of such Indemnified Party, but excluding any act or omission constituting gross negligence or willful misconduct on the part of such Indemnified Party), and will reimburse the Indemnified Party for any legal or other

2

expenses reasonably incurred by him or her in connection with investigating or defending against any such loss, claim, damage, liability or action.

(b) Promptly after receipt by the Indemnified Party under Section 3.2(a) herein of notice of the commencement of any action or proceeding for which the Indemnified Party believes he or she is indemnified under Section 3.2(a), the Indemnified Party shall notify the Indemnifying Party in writing of the commencement thereof; provided, however, that the failure to notify the Indemnifying Party shall not relieve it from any liability which it may have to the Indemnified Party to the extent the Indemnifying Party is not prejudiced by such failure. If any such action or proceeding shall be brought against the Indemnified Party and it shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to participate therein, and, to the extent that it shall wish, to assume the defense thereof, with counsel reasonably satisfactory to the Indemnified Party, and the Indemnifying Party shall not be liable to such Indemnified Party under Section 3.2(a) for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof, other than reasonable costs of investigation or reasonable expenses of actions taken at the written request of the Indemnifying Party. The Indemnifying Party shall not be liable for any compromise or settlement of any such action or proceeding effected without its consent, which consent will not be unreasonably withheld.

ARTICLE IV

DEFERRED COMPENSATION

Section 4.1. Initial Elections by Directors. Any Director may (a) within thirty (30) days of the date the Director first becomes a Director or (b) within thirty (30) days prior to a calendar year elect to participate in the Plan and to have all or a portion of the Compensation otherwise payable to him or her as a Director deferred and paid to him or her after his or her Deferral Termination Date. In making such initial election hereunder, a Director shall specify the portion, if any, of such Deferred Compensation which will be (1) held subject to the interest payment provisions of ARTICLE V hereof or (2) translated into Stock Equivalents in accordance with ARTICLE VI hereof. Such election shall be made on a form provided by and delivered to the Committee and shall be applicable only with respect to Compensation earned after the end of the calendar month in which such election is made.

Section 4.2. Subsequent Elections by Directors. Within thirty (30) days prior to the beginning of any calendar year following a Director’s initial election described in Section 4.1, a Participant may make a subsequent election to increase or decrease the portion of his or her Compensation to be deferred pursuant to the Plan and to elect the portion of such Deferred Compensation and any Plan Earnings to be (a) held subject to the interest payment provisions of ARTICLE V hereof or (b) translated into Stock Equivalents in accordance with ARTICLE VI hereof. Any such election shall be effective as of the first day of the calendar year following the calendar year in which such election is made. Notwithstanding anything to the contrary herein, no such subsequent election shall affect a transfer of any amount credited, as of the first day of such calendar year, to either the Deferred Compensation Account or the Stock Equivalents Account from such account to the other account.

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Section 4.3. Establishment of Deferred Compensation Accounts and Stock Equivalents Accounts. There shall be established for each Participant an account to be designated as such Participant’s Deferred Compensation Account and an account to be designated as such Participant’s Stock Equivalents Account, as appropriate.

Section 4.4. Allocations to Accounts. Any Deferred Compensation earned by a Participant during a calendar month shall be credited to the Participant’s Deferred Compensation Account as of the end of the calendar month. Plan Earnings that consist of interest accrued on a Participant’s Deferred Compensation Account due to the portion of Deferred Compensation that is subject to the interest payment provisions of ARTICLE V shall be credited to such Participant’s Deferred Compensation Account as of the end of each month. Plan Earnings that consist of dividends (cash or otherwise) and distributions accrued on a Participant’s Stock Equivalents Account due to the portion of Deferred Compensation that has been translated into Stock Equivalents in accordance with ARTICLE VI shall be credited to such Participant’s Deferred Compensation Account as of the end of each calendar quarter in accordance with ARTICLE VI.

ARTICLE V

DEFERRED COMPENSATION SUBJECT TO INTEREST

Section 5.1. Interest on Deferred Compensation Accounts. A Participant’s Deferred Compensation Account shall be credited as of the end of each calendar month with an amount equivalent to interest for the number of days in such calendar month at the one-month term Secured Overnight Financing Rate (SOFR) plus 75 basis points for the last business day of the immediately preceding calendar month as reported by the Chicago Mercantile Exchange applied to the balance of such account at the beginning of such calendar month; provided, however, no amount credited to a Participant’s Deferred Compensation Account subsequent to the beginning of a calendar month shall bear interest during that calendar month. Interest credited to a Participant’s Deferred Compensation Account shall be held in such account subject to the provisions of Section 4.4 herein.

Section 5.2. Distribution of Deferred Compensation Accounts Subject to Interest.

(a) When a Participant’s Deferral Termination Date shall occur, the balance in such Participant’s Deferred Compensation Account shall be distributed in cash to such Participant in a single lump-sum payment; provided, however, that a Participant who previously elected to be paid in five (5) annual installments pursuant to the prior Plan terms shall have the balance in his or her Deferred Compensation Account paid in accordance with such election. Until payment is made, interest shall continue to accrue in the manner provided in Section 5.1. Plan Earnings accrued to the date of payment of any lump-sum or annual installment on such amount shall be paid in conjunction with such payment. The lump-sum and/or initial annual installment shall be distributed within thirty (30) days after a Participant’s Deferral Termination Date. The remaining installments, if appropriate, shall be distributed at annual intervals thereafter.

(b) If a Participant’s Deferral Termination Date shall occur by reason of his or her death or if he or she shall die after his or her Deferral Termination Date, but prior to receipt of all payments provided for in this Section, all payments distributable hereunder shall be distributed in a lump-sum to such Participant’s beneficiary designated on his or her election form, or if none is

4

designated, to such Participant’s estate or personal representative, as soon as administratively feasible after the Participant’s death but no later than December 31 of the year following the year of his or her death.

ARTICLE VI

STOCK EQUIVALENTS

Section 6.1. Stock Equivalents Accounts. The number of Stock Equivalents, or fractions thereof, to be credited to a Participant’s Stock Equivalents Account in accordance with Section 4.4 shall be determined by dividing the amount of Deferred Compensation and Plan Earnings to be allocated to such account pursuant to the Participant’s specifications given in accordance with ARTICLE IV by the Market Price on the last trading day of the calendar quarter as specified in Section 4.4. The number of Stock Equivalents, so determined, shall be credited to the Stock Equivalents Account established for the Participant.

Section 6.2. Cash and Property Dividend Credits. Additional credits shall be made to a Participant’s Deferred Compensation Account throughout the period of such Participant’s participation in the Plan, and thereafter until all distributions to which the Participant is entitled under Section 6.5 or ARTICLE VIII shall have been made, in amounts equal to the Plan Earnings consisting of the cash or fair market value of any dividends or distributions declared and made with respect to the Holding Company’s common stock payable in cash, securities issued by the Holding Company (other than the Holding Company’s common stock but including any such securities convertible into the Holding Company’s common stock) or other property which the Participant would have received had he or she been the owner on the record dates for the payment of such dividends of the number of shares of the Holding Company’s common stock equal to the number of Stock Equivalents in his or her Stock Equivalents Account on such dates. Each such credit shall be effected as of the end of the calendar quarter in which such dividend or distribution is made. Each amount so credited to a Participant’s Deferred Compensation Account shall be held in such account subject to the provisions of Section 4.4 herein.

Section 6.3. Stock Dividend Credits. Additional credits shall be made to a Participant’s Stock Equivalents Account throughout the period of his or her participation in the Plan, and thereafter until all distributions to which the Participant is entitled under Section 6.5 or ARTICLE VIII shall have been made, of a number of Stock Equivalents equal to the number of shares (including fractional shares) of the Holding Company’s common stock to which the Participant would have been entitled as common stock dividends had such Participant been the owner on the record dates for the payments of such stock dividends of the number of shares of the Holding Company’s common stock equal to the number of Stock Equivalents credited to his or her Stock Equivalents Account on such dates. Such additional credits shall be effected as of the end of the calendar quarter in which payment of such stock dividend is made.

Section 6.4. Recapitalization. If, as a result of a split or combination of the Holding Company’s outstanding common stock or other recapitalization or reorganization, the number of shares of the Holding Company’s outstanding common stock is increased or decreased or all or a portion of the Holding Company’s outstanding common stock is exchanged for or converted into other securities issued by the Holding Company (including without limitation securities convertible into the Holding Company’s common stock) or other property, the number of Stock

5

Equivalents credited to a Participant’s Stock Equivalents Account shall, to the extent reasonably practicable, be equitably adjusted to give effect to such recapitalization or reorganization as if the Participant had owned of record on the effective date of such recapitalization or reorganization a number of shares of the Holding Company’s common stock equal to the number of Stock Equivalents credited to his or her Stock Equivalents Account immediately prior thereto.

Section 6.5. Distributions from Stock Equivalents Account. When a Participant’s Deferral Termination Date shall occur, the Holding Company shall become obligated to make the distributions prescribed in paragraphs (a) and (b) below. At the time of any distribution, each Stock Equivalent to be distributed shall be converted into one share of the Holding Company’s common stock and such share shall be distributed to the Participant. Any fraction of a Stock Equivalent to be distributed shall be converted into an amount in cash equal to the Market Price of one share of the Holding Company’s common stock on the trading day next preceding the date of distribution multiplied by such fraction and such cash shall be distributed to the Participant. Additionally, any amounts earned by a Participant during a calendar quarter not yet allocated to the Participant’s Stock Equivalents Account in accordance with Section 6.1 herein shall be distributed to the Participant in cash.

(a) Distribution shall be made to such Participant in a single lump-sum payment; provided, however, that a Participant who previously elected to be paid in five (5) annual installments pursuant to the prior Plan terms shall have the balance in his or her Deferred Compensation Account paid in accordance with such election. Until payment is made, Plan Earnings shall continue to be credited in the manner provided in Sections 6.2 and 6.3 herein. Plan Earnings accrued to the date of payment of any lump-sum and/or annual installment on such amount shall be paid in conjunction with such payment. The lump-sum and/or initial annual installment shall be distributed within thirty (30) days after a Participant’s Deferral Termination Date. The remaining installments, if appropriate, shall be distributed at annual intervals thereafter.

(b) If a Participant’s Deferral Termination Date shall occur by reason of his or her death or if he or she shall die after his or her Deferral Termination Date but prior to receipt of all distributions provided for in this Section, all Stock Equivalents, or the undistributed balance thereof, shall be distributed to such Participant’s beneficiary designated on his or her election form, or if none is designated, to such Participant’s estate or personal representative, as soon as administratively feasible after the Participant’s death but no later than December 31 of the year following the year of his or her death.

ARTICLE VII

NATURE OF PLAN

Neither the Holding Company nor the Bank is under any obligation (1) to transfer amounts credited to a Participant’s Deferred Compensation Account or Stock Equivalents Account to any trust or escrow account or (2) to secure any amount credited to a Participant’s Deferred Compensation Account or Stock Equivalents Account by any specific assets of the Holding Company or the Bank or any other asset in which the Holding Company or the Bank has an interest. The Plan shall not be construed to require the Holding Company or the Bank to fund any of the benefits provided hereunder nor to establish a trust for such purpose. The Holding Company or the Bank may make such arrangements as it desires to provide for the payment of benefits,

6

including, but not limited to, the establishment of a rabbi trust or such other equivalent arrangement as the Holding Company or the Bank may decide. No such arrangement shall cause the Plan to be a “funded” plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended, nor shall any such arrangement change the nature of the obligation of the Holding Company or the Bank or the rights of the Participants as provided herein. Neither a Participant nor his or her beneficiary, estate or personal representative shall have any rights against the Holding Company or the Bank with respect to any portion of a Deferred Compensation Account or Stock Equivalents Account or any trust, escrow account or other arrangement established in connection with the Plan except as a general unsecured creditor.

ARTICLE VIII

TERMINATION OF THE PLAN

The Board of Directors may terminate the Plan at any time. The termination of the Plan shall not cause any amounts allocated to a Participant’s Deferred Compensation Account or Stock Equivalents Account, as applicable, to be distributed to a Participant, rather, after such termination, distributions shall be made in the manner and at the time prescribed in Section 5.2 or Section 6.5, as applicable; provided, however, notwithstanding the foregoing or as otherwise provided herein, if the Board of Directors terminates the Plan in accordance with Treas. Reg. Section 1.409A-3(j)(4)(ix) and any guidance issued thereunder, the Holding Company shall distribute in accordance with Section 409A the amounts allocated to Participants’ Deferred Compensation Accounts and Stock Equivalents Accounts, determined as of the date of the termination of the Plan.

ARTICLE IX

AMENDMENT OF THE PLAN

The Board of Directors may, without the consent of Participants or their beneficiaries, amend the Plan at any time and from time to time; provided, however, that no amendment may deprive a Participant of the amounts allocated to his or her Deferred Compensation Account or Stock Equivalents Account or be retroactive in effect to the prejudice of any Participant. Notwithstanding the foregoing, the Board of Directors may amend the Plan at any time to comply with legislative changes or tax laws, including without limitation Section 409A.

ARTICLE X

GENERAL PROVISIONS

Section 10.1. No Preference. No Participant shall have any preference over the general creditors of the Holding Company or the Bank in the event of the Holding Company’s or the Bank’s insolvency.

Section 10.2. No Stockholder Rights Conferred. Nothing contained in the Plan will confer upon any Participant or beneficiary any rights of a stockholder of the Holding Company’s common stock, unless and until shares of the Holding Company’s common stock are in fact issued or transferred to such Participant or beneficiary in accordance with Article VI.

7

Section 10.3. Authorized Payments. Subject to compliance with Treas. Reg. Section 1.409A-3(j)(4), if any amounts payable under the Plan are found in a “determination” (within the meaning of Section 1313(a) of the Internal Revenue Code of 1986, as amended) to have been includible in the gross income of a Participant prior to payment of such amounts hereunder, such amounts may be paid to such Participant as soon as practicable after the Committee is advised of such determination. For purposes of this Section, the Committee shall be entitled to rely on an affidavit by a Participant and a copy of the determination to the effect that a determination described herein has occurred.

Section 10.4. Gender Words. Wherever any words are used herein in the masculine, feminine or neuter gender, they shall be construed as though they were also used in another gender in all cases where they would so apply, and whenever any words are used herein in the singular or plural form, they shall be construed as though they were also used in the other form in all cases where they would so apply.

Section 10.5. Assignment of Benefits. Benefits provided under the Plan may not be assigned or alienated, either voluntarily or involuntarily, and shall not be subject to the claims of creditors of any Participants; provided, however, in the event the Participant is indebted to the Holding Company or the Bank, such benefits may be used to offset such indebtedness prior to distribution.

Section 10.6. Conflicts of Laws. The laws of the State of Alabama shall govern the interpretation and performance of the terms of the Plan. The Plan is not intended to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended, or to comply with the Employee Retirement Income Security Act of 1974, as amended.

Section 10.7. Internal Revenue Code Section 409A Compliance. The payments made pursuant to this Plan is intended to comply with the requirements of Section 409A. This Plan and any applicable written agreement related to the payments hereunder shall be interpreted in accordance with Section 409A. Notwithstanding any other provision of this Plan to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A, and a payment or benefit provided hereunder would be subject to additional tax under Section 409A if such payment or benefit is paid within six (6) months after the Participant’s Separation from Service, then such payment or benefit required under this Plan shall not be paid (or commence) during the six-month period immediately following the Participant’s Separation from Service. If the payment of any such amount is delayed in accordance with the previous sentence, then any payments or benefits that would otherwise have been made or provided during such six-month period and which would have incurred such additional tax under Section 409A shall instead be paid to the Participant in a lump-sum cash payment at the beginning of the seventh month following the Participant’s Separation from Service (or such earlier date upon which such amount can be paid under Section 409A without resulting in a prohibited distribution, including as a result of the Participant’s death). If the Participant’s termination of employment hereunder does not constitute a Separation from Service, then any amounts payable hereunder on account of a termination of the Participant’s employment and which are subject to Section 409A shall not be paid until the Participant has experienced a Separation from Service.

8

EX-31.1

Exhibit 31.1

CERTIFICATION

I, James F. House, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of First US Bancshares, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2023

By:	/s/ James F. House
	James F. House
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Thomas S. Elley, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of First US Bancshares, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2023

By:	/s/ Thomas S. Elley
	Thomas S. Elley
	Senior Executive Vice President, Treasurer and Assistant
	Secretary, Chief Financial Officer and
	Principal Accounting Officer

EX-32

Exhibit 32

CERTIFICATION

PURSUANT TO 18 U.S.C. 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, James F. House, President and Chief Executive Officer of First US Bancshares, Inc., and Thomas S. Elley, Senior Vice President, Treasurer and Assistant Secretary, Chief Financial Officer and Principal Accounting Officer of First US Bancshares, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of First US Bancshares, Inc. for the fiscal quarter ended September 30, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of First US Bancshares, Inc. for the periods described herein.

By:	/s/ James F. House
	James F. House
	President and Chief Executive Officer
	November 8, 2023
By:	/s/ Thomas S. Elley
	Thomas S. Elley
	Senior Executive Vice President, Treasurer and Assistant
	Secretary, Chief Financial Officer and Principal
	Accounting Officer
	November 8, 2023

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2023	Nov. 06, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Entity Registrant Name	FIRST US BANCSHARES INC
Entity Central Index Key	0000717806
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		5,874,781
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	0-14549
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	63-0843362
Entity Address, Address Line One	3291 U.S. Highway 280
Entity Address, City or Town	Birmingham
Entity Address, State or Province	AL
Entity Address, Postal Zip Code	35243
City Area Code	205
Local Phone Number	582-1200
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	FUSB
Security Exchange Name	NASDAQ

XML

Interim Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
ASSETS
Cash and due from banks	$ 10,311	$ 11,844
Interest-bearing deposits in banks	55,818	18,308
Total cash and cash equivalents	66,129	30,152
Federal funds sold	1,143	1,768
Investment securities available-for-sale, at fair value	126,551	130,795
Investment securities held-to-maturity, at amortized cost	1,272	1,862
Federal Home Loan Bank stock, at cost	2,151	1,359
Loans and leases held for investment	815,300	773,873
Less allowance for credit losses	11,380	9,422
Net loans and leases held for investment	803,920	764,451
Premises and equipment, net of accumulated depreciation	24,259	24,439
Cash surrender value of bank-owned life insurance	16,622	16,399
Accrued interest receivable	3,522	3,011
Goodwill and core deposit intangible, net	7,642	7,801
Other real estate owned	617	686
Other assets	11,411	11,944
Total assets	1,065,239	994,667
LIABILITIES AND SHAREHOLDERS’ EQUITY
Non-interest-bearing	157,652	169,822
Interest-bearing	769,386	700,203
Total deposits	927,038	870,025
Accrued interest expense	1,864	607
Other liabilities	8,148	8,136
Short-term borrowings	30,000	20,038
Long-term borrowings	10,781	10,726
Total liabilities	977,831	909,532
Shareholders’ equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,738,156 and 7,680,856 shares issued, respectively; 5,874,781 and 5,812,258 shares outstanding, respectively	75	75
Additional paid-in capital	14,824	14,510
Accumulated other comprehensive loss, net of tax	(8,907)	(7,241)
Retained earnings	107,976	104,460
Less treasury stock: 1,863,375 and 1,868,598 shares at cost, respectively	(26,560)	(26,669)
Total shareholders’ equity	87,408	85,135
Total liabilities and shareholders’ equity	$ 1,065,239	$ 994,667

XML

Interim Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	7,738,156	7,680,856
Common stock, shares outstanding (in shares)	5,874,781	5,812,258
Treasury Stock, Shares	1,863,375	1,868,598

XML

Interim Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Interest income:
Interest and fees on loans	$ 12,584	$ 9,750	$ 35,330	$ 27,339
Interest on investment securities	685	756	2,043	1,927
Interest on deposits in banks	598	136	1,362	265
Other	35	28	126	45
Total interest income	13,902	10,670	38,861	29,576
Interest expense:
Interest on deposits	4,222	864	9,681	1,964
Interest on borrowings	197	291	940	562
Total interest expense	4,419	1,155	10,621	2,526
Net interest income	9,483	9,515	28,240	27,050
Provision for credit losses	184	1,165	753	2,781
Net interest income after provision for credit losses	9,299	8,350	27,487	24,269
Non-interest income:
Revenue from Contract with Customer, Including Assessed Tax	$ 302	$ 311	$ 869	$ 904
Revenue, Product and Service [Extensible Enumeration]	us-gaap:ServiceMember	us-gaap:ServiceMember	us-gaap:ServiceMember	us-gaap:ServiceMember
Lease income	$ 241	$ 210	$ 707	$ 635
Other income, net	294	567	889	1,234
Total non-interest income	837	1,088	2,465	2,773
Non-interest expense:
Salaries and employee benefits	4,120	4,007	12,310	12,389
Net occupancy and equipment	897	861	2,625	2,468
Computer services	464	417	1,315	1,224
Insurance expense and assessments	423	310	1,156	970
Fees for professional services	331	263	735	811
Other expense	1,084	1,174	3,599	3,104
Total non-interest expense	7,319	7,032	21,740	20,966
Income before income taxes	2,817	2,406	8,212	6,076
Provision for income taxes	704	546	2,004	1,440
Net income	$ 2,113	$ 1,860	$ 6,208	$ 4,636
Basic net income per share	$ 0.35	$ 0.31	$ 1.04	$ 0.76
Diluted net income per share	0.33	0.29	0.97	0.71
Dividends per share	$ 0.05	$ 0.03	$ 0.15	$ 0.09

XML

Interim Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 2,113	$ 1,860	$ 6,208	$ 4,636
Other comprehensive income (loss):
Unrealized holding losses on securities available-for-sale arising during period, net of tax benefit of $58, $350, $425, and $2,768, respectively	(167)	(1,048)	(1,271)	(8,307)
Unrealized holding gains (losses) arising during the period on effective cash flow hedge derivatives, net of tax benefit (expense) of $0, ($130), $18 and ($443), respectively		393	(50)	1,330
Reclassification adjustments on cash flow hedge derivatives realized in net income, net of tax benefit (expense) of $39, ($9), $116 and ($14), respectively	(118)	27	(345)	41
Other comprehensive loss	(285)	(628)	(1,666)	(6,936)
Total comprehensive income (loss)	$ 1,828	$ 1,232	$ 4,542	$ (2,300)

XML

Interim Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Unrealized holding (losses) on securities available-for-sale arising during period, tax (benefit) expense	$ 58	$ 350	$ 425	$ 2,768
Unrealized holding gains arising during the period on effective cash flow hedge derivatives, tax benefit (expense)	0	(130)	18	(443)
Reclassification adjustment for net gains on cash flow hedge derivatives realized in net income, tax benefit	$ 39	$ (9)	$ 116	$ (14)

XML

Interim Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Loss [Member]	Retained Earnings [Member]	Treasury Stock [Member]
Beginning balance, value at Dec. 31, 2021	$ 90,064	$ 75	$ 14,163	$ (276)	$ 98,428	$ (22,326)
Balance (in shares) at Dec. 31, 2021		6,172,378
Net income	4,636				4,636
Net change in fair value of securities available-for-sale, net of tax	(8,307)			(8,307)
Net change in fair value of derivative instruments, net of tax	1,371			1,371
Dividends declared	(541)				(541)
Impact of stock-based compensation plans, net	361		361
Impact of stock-based compensation plans, net (in shares)		43,096
Reissuance of treasury stock as compensation			(138)			138
Reissuance of treasury stock as compensation (in shares)		9,184
Impact of common stock share repurchases	(4,481)					(4,481)
Impact of common stock share repurchases (in shares)		(412,400)
Ending balance, value at Sep. 30, 2022	83,103	$ 75	14,386	(7,212)	102,523	(26,669)
Balance (in shares) at Sep. 30, 2022		5,812,258
Beginning balance, value at Jun. 30, 2022	82,576	$ 75	14,263	(6,584)	100,838	(26,016)
Balance (in shares) at Jun. 30, 2022		5,876,258
Net income	1,860				1,860
Net change in fair value of securities available-for-sale, net of tax	(1,048)			(1,048)
Net change in fair value of derivative instruments, net of tax	420			420
Dividends declared	(175)				(175)
Impact of stock-based compensation plans, net	123		123
Impact of common stock share repurchases	(653)					(653)
Impact of common stock share repurchases (in shares)		(64,000)
Ending balance, value at Sep. 30, 2022	83,103	$ 75	14,386	(7,212)	102,523	(26,669)
Balance (in shares) at Sep. 30, 2022		5,812,258
Beginning balance, value at Dec. 31, 2022	85,135	$ 75	14,510	(7,241)	104,460	(26,669)
Balance (in shares) at Dec. 31, 2022		5,812,258
Net income	6,208				6,208
Net change in fair value of securities available-for-sale, net of tax	(1,271)			(1,271)
Net change in fair value of derivative instruments, net of tax	(395)			(395)
Dividends declared	(881)				(881)
Impact of stock-based compensation plans, net	423		448			(25)
Impact of stock-based compensation plans, net (in shares)		53,141
Reissuance of treasury stock as compensation			(134)			134
Reissuance of treasury stock as compensation (in shares)		9,382
Ending balance, value at Sep. 30, 2023	87,408	$ 75	14,824	(8,907)	107,976	(26,560)
Ending balance, value (Impact of Adopting CECL [Member]) at Sep. 30, 2023	(1,811)				(1,811)
Balance (in shares) at Sep. 30, 2023		5,874,781
Beginning balance, value at Jun. 30, 2023	85,725	$ 75	14,675	(8,622)	106,157	(26,560)
Balance (in shares) at Jun. 30, 2023		5,874,765
Net income	2,113				2,113
Net change in fair value of securities available-for-sale, net of tax	(167)			(167)
Net change in fair value of derivative instruments, net of tax	(118)			(118)
Dividends declared	(294)				(294)
Impact of stock-based compensation plans, net	149		149
Reissuance of treasury stock as compensation (in shares)		16
Ending balance, value at Sep. 30, 2023	87,408	$ 75	$ 14,824	$ (8,907)	107,976	$ (26,560)
Ending balance, value (Impact of Adopting CECL [Member]) at Sep. 30, 2023	$ (1,811)				$ (1,811)
Balance (in shares) at Sep. 30, 2023		5,874,781

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Interim Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Stockholders' Equity [Abstract]
Dividends per share	$ 0.05	$ 0.03	$ 0.15	$ 0.09

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Interim Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net income	$ 6,208	$ 4,636
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	1,180	1,201
Provision for credit losses	753	2,781
Deferred income tax provision (benefit)	(566)	(309)
Proceeds from settlement of derivative contracts	2,166
Reclassification of unrealized gains on terminated derivative contracts	(848)
Stock-based compensation expense	448	361
Net amortization of securities	40	169
Amortization of intangible assets	159	213
Net loss (gain) on premises and equipment and other real estate	613	(350)
Changes in assets and liabilities:
Increase in accrued interest receivable	(511)	(135)
Decrease in other assets	333	750
Increase in accrued interest expense	1,257	495
Decrease in other liabilities	(225)	(310)
Net cash provided by operating activities	11,007	9,502
Cash flows from investing activities:
Net decrease (increase) in federal funds sold	625	(38)
Purchases of investment securities, available-for-sale	(6,756)	(39,256)
Proceeds from maturities and prepayments of investment securities, available-for-sale	9,267	15,111
Proceeds from maturities and prepayments of investment securities, held-to-maturity	587	1,317
Net increase in Federal Home Loan Bank stock	(792)	(1,139)
Net increase in loans	(43,533)	(45,590)
Proceeds from the sale of premises and equipment and other real estate	482	2,892
Purchases of premises and equipment	(979)	(672)
Net cash used in investing activities	(41,099)	(67,375)
Cash flows from financing activities:
Net increase in deposits	57,013	8,411
Net increase in short-term borrowings	9,962	30,060
Net share-based compensation transactions	(25)
Repurchases of common stock		(4,481)
Dividends paid	(881)	(541)
Net cash provided by financing activities	66,069	33,449
Net increase (decrease) in cash and cash equivalents	35,977	(24,424)
Cash and cash equivalents, beginning of period	30,152	61,244
Cash and cash equivalents, end of period	66,129	36,820
Supplemental disclosures:
Interest	9,364	2,031
Income taxes	2,374	1,804
Non-cash transactions:
Assets acquired in settlement of loans	$ 1,178	$ 656

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General

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

1.GENERAL

The accompanying unaudited interim condensed consolidated financial statements include the accounts of First US Bancshares, Inc. (“Bancshares”) and its subsidiaries (collectively, the “Company”). Bancshares is the parent holding company of First US Bank (the “Bank”). The Company and the Bank are both headquartered in Birmingham, Alabama. As of September 30, 2023, the Bank operated a finance company subsidiary, Acceptance Loan Company, Inc. (“ALC”). During the third quarter of 2021, ALC ceased new business development and permanently closed its 20 branch lending locations in Alabama and Mississippi to the public. Through the third quarter of 2023, ALC continued to service its remaining portfolio of loans from its headquarters in Mobile, Alabama. Effective October 1, 2023, all of ALC’s remaining loans were sold to the Bank in an intercompany transaction. Due to this transaction, management determined that ALC was no longer a separate reportable operating segment. The Bank intends to manage the remaining portfolio through final resolution. All significant intercompany transactions and accounts have been eliminated.

The unaudited interim condensed consolidated financial statements, in the opinion of management, reflect all adjustments necessary for a fair presentation of the Company’s consolidated financial position, results of operations and cash flows for the periods presented. Such adjustments are of a normal, recurring nature, except for the adoption of Accounting Standards Codification (“ASC”) 326, Measurement of Credit Losses on Financial Instruments, as discussed below. The results of operations for any interim period are not necessarily indicative of results expected for the fiscal year ending December 31, 2023. While certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), management believes that the disclosures herein are adequate to make the information presented not misleading. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2022 (the "Company's 2022 Form 10-K").

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Basis of Presentation

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

2.BASIS OF PRESENTATION

Reclassification

Certain amounts in the prior period consolidated financial statements and the notes to the prior period consolidated financial statements have been reclassified to conform to the 2023 presentation. These reclassifications had no effect on the Company’s results of operations, financial position or net cash flow.

Summary of Significant Accounting Policies

Certain significant accounting policies followed by the Company are set forth in Note 2, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in the Company’s 2022 Form 10-K.

Adoption of ASC 326

On January 1, 2023, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as subsequently updated for certain clarifications, targeted relief and codification improvements. ASC 326 replaces the previous "incurred loss" model for measuring credit losses, which required allowances for current known and inherent losses within the loan portfolio, with an "expected loss" model. The newly adopted current expected credit loss ("CECL") model requires the measurement of all expected credit losses for financial assets measured at amortized cost and certain off-balance-sheet credit exposures based on historical experience, current conditions, and reasonable and supportable forecasts. ASC 326 also requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. In addition, ASC 326 includes certain changes to the accounting for available-for-sale securities including the requirement to present credit losses as an allowance rather than as a direct write-down.

The Company adopted ASC 326 using the modified retrospective method for financial assets measured at amortized cost and off-balance-sheet credit exposures. Upon adoption, the Company recognized an increase in the allowance for credit losses (including both loans and unfunded lending commitments) of $2.4 million, which included an after-tax cumulative effect decrease to retained earnings totaling $1.8 million. Operating results for periods after January 1, 2023 are presented in accordance with ASC 326 while prior period amounts continue to be reported in accordance with previously applicable standards and the accounting policies described in Note 2 of the Company's 2022 Form 10-K. In connection with the adoption of ASC 326, the Company revised certain accounting policies and implemented certain accounting policy elections. The revised accounting policies are described below.

Loans and Leases Held for Investment

Loans and leases held for investment (“loans”) represent financial instruments that the Company has the intent and the ability to hold for the foreseeable future or until maturity or payoff. Loans are reported at amortized cost, net of the allowance for credit losses. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, fair value hedge accounting adjustments, as well as deferred loan fees and costs. Accrued interest receivable on loans and leases is reported separately on the Company’s consolidated balance sheets and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.

At the time a loan is 90 days delinquent, it is placed on nonaccrual status unless it is well-secured and in process of collection. Interest income is discontinued on all loans on nonaccrual status. Past-due status is based on the contractual terms of the loan. In all cases, loans are moved to nonaccrual status, or charged off at an earlier date, if collection of principal and interest is considered doubtful.

All interest accrued but not received on loans on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery methods, until qualifying for return to accrual. Under the cash-basis method, interest income is recorded when the payment is received in cash. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Loans are returned to accrual status when all of the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Credit Losses – Loans and Leases

The allowance for credit losses is a contra-asset valuation account that is deducted from the amortized cost basis of the loans to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. The allowance for credit losses on loans and leases is adjusted through the provision for (recovery of) credit losses.

Management estimates the allowance balance by using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for estimation of expected credit losses. Adjustments to historical loss information are made for differences in loan-specific risk characteristics such as changes in economic and business conditions, underwriting standards, portfolio mix, and delinquency level. Considerations related to environmental conditions include reasonable and supportable current and forecasted data related to economic factors such as inflation, unemployment levels, and interest rates.

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty as of the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for estimated selling costs as appropriate.

Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company, or management has a reasonable expectation at the reporting date that a loan modification will be made to a borrower experiencing financial difficulty.

Additional information related to the factors considered in evaluating credit losses on loans and leases is included in Note 4.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The following categories of off-balance sheet credit exposures have been identified: unfunded loan commitments, standby letters of credit, and financial guarantees (collectively, “unfunded lending commitments”). The allowance for credit losses on unfunded lending commitments is adjusted through the provision for (recovery of) credit losses. The estimate may include consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded, as well as reasonable practical expedients or industry practices to assist in the evaluation of estimated funding amounts.

Additional information related to the factors considered in evaluating credit losses on unfunded lending commitments is included in Note 4.

Allowance for Credit Losses – Investment Securities Held-to-Maturity

Expected credit losses on held-to-maturity debt securities are measured on a collective basis by major security type. Accrued interest receivable on held-to-maturity securities is excluded from the estimate of credit losses. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The allowance for credit losses on investment securities held-to-maturity is adjusted through the provision for (recovery of) credit losses.

Additional information related to the factors considered in evaluating credit losses in the held-to-maturity investment portfolio is included in Note 3.

Allowance for Credit Losses – Investment Securities Available-for-Sale

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities available-for-sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes in the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded in the provision for (recovery of) credit losses. Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable on available-for-sale debt securities is excluded from the estimate of credit losses.

Additional information related to the factors considered in evaluating credit losses in the available-for-sale investment portfolio is included in Note 3.

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding ("basic shares"). Included in basic shares are stock equivalent shares that have been accrued as of the balance sheet date as deferred compensation for members of Bancshares’ Board of Directors under the Non-Employee Directors' Deferred Compensation Plan (as defined below and discussed further in Note 9). Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding, adjusted for the effect of potentially dilutive stock awards outstanding during the period ("dilutive shares"). The dilutive shares consist of unexercised nonqualified stock option grants issued to employees and members of Bancshares’ Board of Directors pursuant to the Company's Incentive Plan (as defined below and discussed further in Note 10).

The following table reflects the weighted average shares used to calculate basic and diluted net income per share for the periods presented.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Weighted average shares outstanding		5,874,769		5,839,658		5,858,812		6,016,770
Weighted average director stock equivalent shares		109,793		111,608		113,142		114,853
Basic shares		5,984,562		5,951,266		5,971,954		6,131,623
Dilutive shares		419,650		419,650		419,650		419,650
Diluted shares		6,404,212		6,370,916		6,391,604		6,551,273

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(Dollars in Thousands, Except Per Share Data)
Net income	$	2,113	$	1,860	$	6,208	$	4,636
Basic net income per share	$	0.35	$	0.31	$	1.04	$	0.76
Diluted net income per share	$	0.33	$	0.29	$	0.97	$	0.71

Comprehensive Income

Comprehensive income consists of net income, as well as unrealized holding gains and losses that arise during the period associated with the Company’s available-for-sale securities portfolio and the effective portion of cash flow hedge derivatives. In the calculation of comprehensive income, reclassification adjustments are made for gains or losses realized in the statement of operations associated with the sale of available-for-sale securities or settlement of derivative contracts.

Recently Adopted Accounting Guidance

Reference Rate Reform

ASU 2020-04 and ASU 2021-01, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting." These ASUs provide temporary relief, in the form of optional expedients and exceptions, for applying GAAP to modifications of contracts, hedging relationships and other transactions affected by reference rate (e.g. LIBOR) reforms. Historically, the Company utilized LIBOR, among other indexes, as a reference rate for underwriting certain variable rate loans and interest rate hedging instruments. Since the issuance of this guidance, cessation of U.S. dollar LIBOR was extended to June 30, 2023. Accordingly, in December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which deferred the sunset date of ASC Topic 848 from December 31, 2022 to December 31, 2024. The amendments in this update provide optional expedients designed to provide relief from accounting analysis and the impacts that may otherwise be required for modifications to agreements necessitated by reference rate reform. The optional expedients provided by the update include guidance related to modifications of contracts within the scope of ASC Topics 310, Receivables, and 470, Debt, that indicates the modifications should be accounted for by prospectively adjusting the effective interest rate. As of September 30, 2023, the Company’s contracts referencing LIBOR were limited to certain variable-rate loan agreements for which the pricing reset date has not yet occurred. Management has implemented a process to convert the agreements to another reference rate at the next applicable pricing reset date. Due to the prospective nature of the implementation of the revised guidance, the adoption did not have a material impact on the Company’s consolidated financial statements.

Portfolio Layer Hedging Method

ASU 2022-01, "Fair Value Hedging - Portfolio Layer Method - Derivatives and Hedging (Topic 815)." In March 2022, the FASB issued ASU 2022-01. The amendments in this standard expand the current last-of-layer method of hedge accounting to allow multiple hedged layers of a single closed portfolio. The Company adopted ASU 2022-01 on January 1, 2023. Due to the prospective nature of the implementation of this revised guidance, the adoption of this standard update did not have a material impact on the Company's consolidated financial statements.

Intangibles and Goodwill

ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” Issued in January 2017, ASU 2017-04 simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill under Step 2, an entity, prior to the amendments in ASU 2017-04, had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities, including unrecognized assets and liabilities, in accordance with the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. However, under the amendments in ASU 2017-04, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, ASU 2017-04 removes the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. As originally issued, ASU 2017-04 was effective prospectively for annual, or any interim, goodwill impairment tests in fiscal years beginning after December 15, 2019. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2017-04 by three years for smaller reporting companies, including the Company. The ASU became effective for the Company on January 1, 2023. The adoption of this standard update did not have a material effect on the Company’s consolidated financial statements.

Current Expected Credit Loss Accounting Guidance

ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." Issued in June 2016, ASU 2016-13 removed the thresholds that entities previously applied to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables and held-to-maturity debt securities. Known as the Current Expected Credit Loss (CECL) model, the revised guidance removed all recognition thresholds under previously used incurred loss models and required entities to recognize an allowance for lifetime expected credit losses. The standard also added disclosure requirements intended to enable users of the financial statements to understand credit risk in the portfolio and how management monitors credit quality, management’s estimate of expected credit losses, and changes in the estimate of credit losses during the period. In addition, the standard made changes to the accounting for available for sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available for sale debt securities if management does not intend to sell and does not believe that it is more likely than not they will be required to sell. As originally issued, ASU 2016-13 was effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019, with institutions required to apply the changes through a cumulative-effect adjustment to their retained earnings balance as of the beginning of the first reporting period in which the guidance is effective. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2016-13 by three years for smaller reporting companies, including the Company. The ASU became effective for the Company on January 1, 2023, and the Company recorded a cumulative-effect adjustment that increased the allowance for credit losses by approximately $2.1 million. In addition, the Company recorded a cumulative-effect adjustment that increased other liabilities by $0.3 million as an allowance for credit losses for unfunded commitments. In accordance with transition accounting guidance, the transition adjustments were recorded directly to retained earnings (net of tax) during the first quarter of 2023 and did not impact then-current period earnings.

Troubled Debt Restructurings and Vintage Disclosures

ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures.” Issued in March 2022, ASU 2022-02 sought to improve the decision usefulness of information provided to investors concerning certain loan refinancings, restructurings and write-offs. The ASU eliminated the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL accounting model and enhanced the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The Company adopted the amendments of ASU 2022-02 on January 1, 2023, concurrent with the adoption of the CECL accounting model. The amendments of ASU 2022-02 include only changes to certain financial statement disclosures; and, therefore, adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial statements.

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Investment Securities

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investment Securities

3.INVESTMENT SECURITIES

Details of investment securities available-for-sale and held-to-maturity as of September 30, 2023 and December 31, 2022 were as follows:

	Available-for-Sale
	September 30, 2023
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	41,071	$	—	$	(4,071	)	$	37,000
Commercial		10,020		1		(521	)		9,500
Obligations of U.S. government-sponsored agencies		11,851		—		(919	)		10,932
Obligations of states and political subdivisions		1,633		—		(90	)		1,543
Corporate notes		17,772		—		(3,091	)		14,681
U.S. Treasury securities		56,988		—		(4,093	)		52,895
Total	$	139,335	$	1	$	(12,785	)	$	126,551

	Held-to-Maturity
	September 30, 2023
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	704	$	—	$	(30	)	$	674
Obligations of U.S. government-sponsored agencies		502		—		(49	)		453
Obligations of states and political subdivisions		66		—		(10	)		56
Total	$	1,272	$	—	$	(89	)	$	1,183

	Available-for-Sale
	December 31, 2022
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	47,659	$	2	$	(3,704	)	$	43,957
Commercial		12,169		4		(480	)		11,693
Obligations of U.S. government-sponsored agencies		5,116		—		(846	)		4,270
Obligations of states and political subdivisions		2,166		—		(94	)		2,072
Corporate notes		17,817		2		(1,898	)		15,921
U.S. Treasury securities		56,956		—		(4,074	)		52,882
Total	$	141,883	$	8	$	(11,096	)	$	130,795

	Held-to-Maturity
	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,167	$	—	$	(41	)	$	1,126
Obligations of U.S. government-sponsored agencies		610		—		(40	)		570
Obligations of states and political subdivisions		85		—		(12	)		73
Total	$	1,862	$	—	$	(93	)	$	1,769

The scheduled maturities of investment securities available-for-sale and held-to-maturity as of September 30, 2023 are presented in the following table:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Maturing within one year	$	12,988	$	12,783	$	—	$	—
Maturing after one to five years		53,676		49,249		324		308
Maturing after five to ten years		60,121		52,780		738		686
Maturing after ten years		12,550		11,739		210		189
Total	$	139,335	$	126,551	$	1,272	$	1,183

For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on the weighted-average contractual maturities of underlying collateral. The mortgage-backed securities generally mature earlier than their weighted-average contractual maturities because of principal prepayments.

The following tables reflect gross unrealized losses and fair value for securities for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2023.

	Available-for-Sale
	September 30, 2023
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	105	$	(5	)	$	36,860	$	(4,066	)
Commercial		1,532		(13	)		7,934		(508	)
Obligations of U.S. government-sponsored agencies		—		—			4,176		(919	)
Obligations of states and political subdivisions		—		—			1,543		(90	)
Corporate notes		802		(198	)		13,879		(2,893	)
U.S. Treasury securities		—		—			52,895		(4,093	)
Total	$	2,439	$	(216	)	$	117,287	$	(12,569	)

	Held-to-Maturity
	September 30, 2023
	Less than 12 Months				12 Months or More
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	—	$	—	$	674	$	(30	)
Obligations of U.S. government-sponsored agencies		—		—		453		(49	)
Obligations of states and political subdivisions		—		—		56		(10	)
Total	$	—	$	—	$	1,183	$	(89	)

The following tables reflect gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2022. No determination was made concerning the need for an allowance for credit losses as this table reflects information prior to the adoption of ASC 326.

	Available-for-Sale
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	19,876	$	(952	)	$	23,903	$	(2,752	)
Commercial		9,720		(357	)		1,247		(123	)
Obligations of U.S. government-sponsored agencies		—		—			4,270		(846	)
Obligations of states and political subdivisions		1,559		(41	)		513		(53	)
Corporate notes		6,845		(898	)		8,075		(1,000	)
U.S. Treasury securities		21,240		(698	)		31,642		(3,376	)
Total	$	59,240	$	(2,946	)	$	69,650	$	(8,150	)

	Held-to-Maturity
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,126	$	(41	)	$	—	$	—
Obligations of U.S. government-sponsored agencies		214		(7	)		356		(33	)
Obligations of states and political subdivisions		73		(12	)		—		—
Total	$	1,413	$	(60	)	$	356	$	(33	)

Available-for-Sale Considerations

For any securities classified as available-for-sale that are in an unrealized loss position as of the balance sheet date, the Company assesses whether or not it intends to sell the security, or more-likely-than-not will be required to sell the security, before recovery of its amortized cost basis which would require a write-down to fair value through net income.

As of September 30, 2023, 109 available-for-sale debt securities had been in a loss position for more than 12 months, and six available-for-sale debt securities had been in a loss position for less than 12 months. As of December 31, 2022, 37 available-for-sale debt securities had been in a loss position for more than 12 months, and 75 available-for-sale debt securities had been in a loss position for less than 12 months. The increase in the number of debt securities in a loss position for greater than 12 months was due to the sustained higher interest rate environment during the nine months ended September 30, 2023. As of September 30, 2023, the Company had the current intent and ability to retain its investments for a period of time that management believes to be sufficient to allow for any anticipated recovery of fair value. As of September 30, 2023, the losses for all available-for-sale securities were considered to be a direct result of the effect that the prevailing interest rate environment had on the value of debt securities and were not related to the creditworthiness of the issuers. Accordingly, no allowance for credit losses was considered necessary related to available-for-sale securities as of September 30, 2023.

Held-to-Maturity Considerations

Effective January 1, 2023, the Company adopted the CECL accounting model to evaluate credit losses in the held-to-maturity investment portfolio. Each quarter, management evaluates the portfolio on a collective basis by major security type to determine whether an allowance for credit losses is needed. Qualitative factors are used in the Company’s credit loss assessments, including current and forecasted economic conditions, the characteristics of the debt issuer, and the historic ability of the issuer to make contractual principal and interest payments. Based on these evaluations, no allowance for credit losses was recorded by the Company for the held-to-maturity investment portfolio upon adoption of the CECL accounting model or as of September 30, 2023.

Pledged Securities

Investment securities with a carrying value of $42.3 million and $54.7 million as of September 30, 2023 and December 31, 2022, respectively, were pledged to secure public deposits and for other purposes.

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Loans and Allowance for Loan and Lease Losses

9 Months Ended

Sep. 30, 2023

Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract]

Loans and Allowance for Credit Losses

4.LOANS AND ALLOWANCE FOR CREDIT LOSSES

Portfolio Segments

The Company has divided the loan portfolio into the following portfolio segments based on risk characteristics:

Construction, land development and other land loans – Commercial construction, land and land development loans include loans for the development of residential housing projects, loans for the development of commercial and industrial use property, loans for the purchase and improvement of raw land and loans primarily for agricultural production that are secured by farmland. These loans are secured in whole or in part by the underlying real estate collateral and are generally guaranteed by the principals of the borrowing entity.

Secured by 1-4 family residential properties – These loans include conventional mortgage loans on one-to-four family residential properties. These properties may serve as the borrower’s primary residence, vacation home or investment property. Also included in this portfolio are home equity loans and lines of credit. This type of lending, which is secured by a first or second mortgage on the borrower’s residence, allows customers to borrow against the equity in their home.

Secured by multi-family residential properties – This portfolio segment includes mortgage loans secured by apartment buildings.

Secured by non-farm, non-residential properties – This portfolio segment includes real estate loans secured by commercial and industrial properties, office or mixed-use facilities, strip shopping centers or other commercial property. These loans are generally guaranteed by the principals of the borrowing entity.

Commercial and industrial loans and leases – This portfolio segment includes loans and leases to commercial customers for use in the normal course of business. These credits may be loans, lines of credit and leases to financially strong borrowers, secured by inventories, equipment or receivables, and are generally guaranteed by the principals of the borrowing entity.

Direct consumer – This portfolio segment includes a variety of secured and unsecured personal loans, including automobile loans, loans for household and personal purposes and all other direct consumer installment loans.

Branch retail – This portfolio segment includes loans secured by collateral purchased by consumers at retail stores with whom ALC previously had an established relationship through its branch network to provide financing for the retail products sold if applicable underwriting standards were met. The collateral securing these loans generally includes personal property items such as furniture, ATVs and home appliances.

Indirect consumer – This portfolio segment includes loans secured by collateral purchased by consumers at retail stores with whom the Company has an established relationship to provide financing for the retail products sold if applicable underwriting standards are met. The collateral securing these loans generally includes recreational vehicles, campers, boats, horse trailers and cargo trailers.

As of September 30, 2023 and December 31, 2022, the composition of the loan portfolio by portfolio segment was as follows:

	September 30, 2023		December 31, 2022
Real estate loans:
Construction, land development and other land loans	$	90,051	$	53,914
Secured by 1-4 family residential properties		83,876		87,995
Secured by multi-family residential properties		56,506		67,852
Secured by non-farm, non-residential properties		199,116		200,156
Commercial and industrial loans and leases (1)		59,369		73,546
Consumer loans:
Direct		6,544		9,851
Branch retail		9,648		13,992
Indirect		310,190		266,567
Total loans		815,300		773,873
Allowance for credit losses		11,380		9,422
Net loans	$	803,920	$	764,451

(1)Includes equipment financing leases, which totaled $10.2 million and $10.3 million as of September 30, 2023 and December 31, 2022, respectively.

The Company makes commercial, real estate and installment loans to its customers. Although the Company has a diversified loan portfolio, 52.7% and 53.0% of the portfolio was concentrated in loans secured by real estate as of September 30, 2023 and December 31, 2022, respectively.

Loans with a carrying value of $100.8 million and $100.2 million were pledged as collateral to secure Federal Home Loan Bank (“FHLB”) borrowings as of September 30, 2023 and December 31, 2022, respectively. In addition, loans with a carrying value of $282.6 million were pledged to secure borrowings with the Federal Reserve Bank ("FRB") as of September 30, 2023. No loans were pledged to the FRB as of December 31, 2022. Measures were undertaken by management in 2023 to pledge loans to the FRB in order to provide additional borrowing capacity to the Company in response to heightened liquidity concerns in the banking industry.

Related Party Loans

In the ordinary course of business, the Bank makes loans to certain officers and directors of the Company, including companies with which they are associated. These loans are made on the same terms as those prevailing for comparable transactions with unrelated parties. Management believes that such loans do not represent more than a normal risk of collectability, nor do they present other unfavorable features. The aggregate balances of such related party loans and commitments were $1.4 million and $0.2 million as of September 30, 2023 and December 31, 2022, respectively. During the nine months ended September 30, 2023, there was one new loan to these parties and no repayments made. During the year ended December 31, 2022, there were no new loans to these parties, and repayments by active related parties totaled $0.1 million.

Allowances for Credit Losses

Effective January 1, 2023, the Company adopted the CECL model to account for credit losses on financial instruments, including loans and leases held for investment, as well as off-balance sheet credit exposures including unfunded lending commitments. In accordance with the CECL accounting guidance, the Company recorded a cumulative-effect adjustment totaling $2.4 million, of which $1.8 million (net of tax) was recorded through retained earnings upon adoption of the model. This amount included estimates for credit losses associated with both loan and lease receivables, as well as unfunded lending commitments. Prospectively, following the date of adoption, all adjustments for credit losses are required to be recorded as a provision for (recovery of) credit losses in the Company’s consolidated statement of operations.

Allowance for Credit Losses - Loans and Leases

Determining the appropriateness of the allowance for credit losses is complex and requires judgment by management about the effects of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, or particular segments of the portfolio, in the context of factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods. The level of the allowance is influenced by loan volumes and mix, historical credit loss experience, average remaining life of portfolio segments, asset quality characteristics, delinquency status, and other conditions including reasonable and supportable forecasts of economic conditions and qualitative adjustment factors based on management’s understanding of various attributes that could impact life-of-loan losses as of the balance sheet date. The methodology to estimate losses includes two basic components: (1) an asset-specific component for individual loans that do not share similar risk characteristics with other loans, and (2) a pooled component for estimated expected credit losses for loans that share similar risk characteristics.

Loans that do not share risk characteristics with other loans are evaluated on an individual basis. The process for determining whether a loan should be evaluated on an individual basis begins with a determination of credit rating. All loans graded substandard or worse with a total commitment of $0.5 million or more are evaluated on an individual basis. At management's discretion, other loans may be evaluated, including loans less than $0.5 million, if management determines that the loans exhibit unique risk characteristics. For loans individually evaluated, the allowance is based primarily on the fair value of the underlying collateral, utilizing independent third-party appraisals, and assessment of borrower guarantees.

For estimating the component of the allowance for credit losses that share similar risk characteristics, loans are segregated into loan segments or categories that share risk characteristics. Loans are designated into pooled segments based on product types, business lines, collateral, and other risk characteristics. For all pooled loan categories, the Company uses a loss-rate methodology to calculate estimated life-of-loan and lease credit losses. This methodology focuses on historical credit loss rates applied over the estimated weighted average remaining life of each loan segment, adjusted by qualitative factors, to estimate life-of-loan losses for each pooled segment. The qualitative factors utilized include, among others, reasonable and supportable forecasts of economic data, including inflation and unemployment levels, as well as interest rates.

The Company’s cumulative-effect adjustment upon the adoption of CECL increased the Company’s allowance for credit losses on loans and leases by $2.1 million. Subsequent to January 1, 2023, the Company recorded additional increases to the allowance for credit losses on loans and leases totaling $0.5 million which were included in the provision for credit losses in the Company’s consolidated statement of operations during the nine months ended September 30, 2023.

The following tables present changes in the allowance for credit losses on loans and leases during the nine months ended September 30, 2023 and 2022:

	As of and for the Nine Months Ended September 30, 2023
	Construction, Land Development, and Other			Real Estate 1-4 Family			Real Estate Multi- Family			Non- Farm Non- Residential			Commercial and Industrial			Direct Consumer			Branch Retail			Indirect Consumer			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	517		$	832		$	646		$	1,970		$	919		$	866		$	518		$	3,154		$	9,422
Impact of adopting CECL accounting guidance		(94	)		(39	)		(85	)		(147	)		(20	)		47			628			1,833			2,123
Charge-offs		—			(96	)		—			—			—			(521	)		(359	)		(500	)		(1,476	)
Recoveries		—			39			—			—			—			499			195			40			773
Provision for (recovery of) credit losses		157			18			(156	)		(201	)		(369	)		(404	)		(147	)		1,640			538
Ending balance	$	580		$	754		$	405		$	1,622		$	530		$	487		$	835		$	6,167		$	11,380

	As of and for the Nine Months Ended September 30, 2022
	Construction, Land Development, and Other			Real Estate 1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Commercial and Industrial		Direct Consumer			Branch Retail			Indirect Consumer			Total
	(Dollars in Thousands)
Allowance for loan and lease losses:
Beginning balance	$	628		$	690		$	437	$	1,958	$	860	$	1,004		$	304		$	2,439		$	8,320
Charge-offs		—			(10	)		—		—		—		(1,604	)		(423	)		(238	)		(2,275	)
Recoveries		2			23			—		4		—		387			97			34			547
Provision for (recovery of) loan and lease losses		(246	)		89			210		30		244		1,161			445			848			2,781
Ending balance	$	384		$	792		$	647	$	1,992	$	1,104	$	948		$	423		$	3,083		$	9,373

The following table details the allowance for loan and lease losses and recorded investment in loans by loan classification and by impairment evaluation as of December 31, 2022, as determined in accordance with ASC 310, Receivables, prior to the adoption of ASC 326:

	As of the Year Ended December 31, 2022
	Construction, Land Development, and Other		Real Estate 1-4 Family		Real Estate Multi- Family		Non- Farm Non- Residential		Commercial and Industrial		Direct Consumer		Branch Retail		Indirect Consumer		Total
	(Dollars in Thousands)
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	—	$	7	$	—	$	—	$	252	$	—	$	—	$	—	$	259
Collectively evaluated for impairment		517		825		646		1,970		667		886		518		3,154	$	9,183
Total allowance for loan and lease losses	$	517	$	832	$	646	$	1,970	$	919	$	886	$	518	$	3,154	$	9,442
Ending balance of loans receivable:
Individually evaluated for impairment	$	—	$	582	$	—	$	2,492	$	2,429	$	18	$	—	$	—	$	5,521
Collectively evaluated for impairment		53,914		87,413		67,852		197,664		71,117		9,833		13,992		266,567		768,352
Total loans receivable	$	53,914	$	87,995	$	67,852	$	200,156	$	73,546	$	9,851	$	13,992	$	266,567	$	773,873

Allowance for Credit Losses - Unfunded Lending Commitments

Unfunded lending commitments are off-balance sheet arrangements that represent unconditional commitments of the Company to lend to a borrower that are unfunded as of the balance sheet date. These may include unfunded loan commitments, standby letters of credit, and financial guarantees. The CECL accounting guidance requires that an estimate of expected credit loss be measured on commitments in which an entity is exposed to credit risk via a present contractual obligation to extend credit unless the obligation is unconditionally cancellable by the issuer. For the Company, unconditional lending commitments generally include unfunded term loan agreements, home equity lines of credit, lines of credit, and demand deposit account overdraft protection.

The Company’s cumulative-effect adjustment upon the adoption of CECL included a reserve for unfunded commitments of $0.3 million. Subsequent to January 1, 2023, the Company recorded additional increases to the reserve for unfunded commitments totaling $0.2 million which were included in the provision for credit losses in the Company's consolidated statement of operations during the nine months ended September 30, 2023. As of September 30, 2023, the reserve, which is recorded in other liabilities on the Company’s consolidated balance sheets, totaled $0.5 million. No reserve for unfunded commitments was recorded by the Company as of December 31, 2022.

Credit Quality Indicators

The Company utilizes a credit grading system that provides a uniform framework for establishing and monitoring credit risk in the loan portfolio. Under this system, construction, land, multi-family real estate, other commercial real estate, and commercial and industrial loans are graded based on pre-determined risk metrics and categorized into one of nine risk grades. These risk grades can be summarized into categories described as pass, special mention, substandard, doubtful and loss, as described in further detail below.

•Pass (Risk Grades 1-5): Loans in this category include obligations in which the probability of default is considered low.

•Special Mention (Risk Grade 6): Loans in this category exhibit potential credit weaknesses or downward trends deserving management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Although a special mention asset has a higher probability of default than pass-rated categories, its default is not imminent.

•Substandard (Risk Grade 7): Loans in this category have defined weaknesses that jeopardize the orderly liquidation of debt. A substandard loan is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. There is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified as substandard.

•Doubtful (Risk Grade 8): Loans classified as doubtful have all of the weaknesses found in substandard loans, with the added characteristic that the weaknesses make collection of debt in full, based on currently existing facts, conditions and values, highly questionable or improbable. Serious problems exist such that partial loss of principal is likely; however, because of certain important, reasonably specific pending factors that may work to strengthen the assets, the loans’ classification as estimated losses is deferred until a more exact status may be determined. Such pending factors may include proposed merger, acquisition or liquidation procedures, capital injection, perfection of liens on additional collateral and refinancing plans. Loans classified as doubtful may include loans to borrowers that have demonstrated a history of failing to live up to agreements. The Company did not have any loans classified as Doubtful (Risk Grade 8) as of September 30, 2023 or December 31, 2022.

•Loss (Risk Grade 9): Loans are classified in this category when borrowers are deemed incapable of repayment of unsecured debt. Loans to such borrowers are considered uncollectable and of such little value that continuance as active assets of the Company is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not prudent to defer writing off these assets, even though partial recovery may be realized in the future. The Company did not have any loans classified as Loss (Risk Grade 9) as of September 30, 2023 or December 31, 2022.

Because residential real estate and consumer loans are more uniform in nature, each loan is categorized into one of two risk grades, depending on whether the loan is considered to be performing or nonperforming. Performing loans are loans that are paying principal and interest in accordance with a contractual agreement. Nonperforming loans are loans that have demonstrated characteristics that indicate a probability of loss.

The tables below illustrate the carrying amount of loans and leases by credit quality indicator and year of origination as of September 30, 2023:

		September 30, 2023
		Loans at Amortized Cost Basis by Origination Year
		2023		2022		2021		2020		2019		Prior		Total
		(Dollars in Thousands)
Commercial:
Construction, land development and other land loans	Pass	$	3,716	$	38,961	$	40,404	$	6,377	$	—	$	593	$	90,051
	Special Mention		—		—		—		—		—		—		—
	Substandard		—		—		—		—		—		—		—
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
	Subtotal	$	3,716	$	38,961	$	40,404	$	6,377	$	—	$	593	$	90,051
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by multi-family residential properties	Pass	$	383	$	28,513	$	5,991	$	686	$	7,151	$	13,782	$	56,506
	Special Mention		—		—		—		—		—		—		—
	Substandard		—		—		—		—		—		—		—
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
	Subtotal	$	383	$	28,513	$	5,991	$	686	$	7,151	$	13,782	$	56,506
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by non-farm, non-residential properties	Pass	$	8,683	$	35,499	$	25,519	$	56,913	$	18,618	$	47,516	$	192,748
	Special Mention		—		536		1,295		347		—		1,690		3,868
	Substandard		—		—		—		152		—		2,348		2,500
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
	Subtotal	$	8,683	$	36,035	$	26,814	$	57,412	$	18,618	$	51,554	$	199,116
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial loans and leases	Pass	$	7,435	$	7,401	$	15,424	$	2,494	$	3,802	$	20,643	$	57,199
	Special Mention		—		170		899		199		57		—		1,325
	Substandard		—		44		209		25		305		262		845
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
	Subtotal	$	7,435	$	7,615	$	16,532	$	2,718	$	4,164	$	20,905	$	59,369
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total commercial	Pass	$	20,217	$	110,374	$	87,338	$	66,470	$	29,571	$	82,534	$	396,504
	Special Mention		—		706		2,194		546		57		1,690		5,193
	Substandard		—		44		209		177		305		2,610		3,345
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
		$	20,217	$	111,124	$	89,741	$	67,193	$	29,933	$	86,834	$	405,042
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

		September 30, 2023
		Loans at Amortized Cost Basis by Origination Year
		2023		2022		2021		2020		2019		Prior		Total
		(Dollars in Thousands)
Consumer:
Secured by 1-4 family residential properties	Performing	$	4,282	$	21,592	$	14,886	$	12,028	$	9,323	$	20,917	$	83,028
	Non-performing		—		—		—		—		—		848		848
	Subtotal	$	4,282	$	21,592	$	14,886	$	12,028	$	9,323	$	21,765	$	83,876
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	96	$	96
Direct	Performing	$	2,052	$	1,379	$	1,961	$	739	$	288	$	125	$	6,544
	Non-performing		—		—		—		—		—		—		—
	Subtotal	$	2,052	$	1,379	$	1,961	$	739	$	288	$	125	$	6,544
	Current period gross charge-offs	$	—	$	5	$	274	$	115	$	39	$	88	$	521
Branch retail	Performing	$	—	$	—	$	2,405	$	2,990	$	1,794	$	2,459	$	9,648
	Non-performing		—		—		—		—		—		—		—
	Subtotal	$	—	$	—	$	2,405	$	2,990	$	1,794	$	2,459	$	9,648
	Current period gross charge-offs	$	—	$	—	$	84	$	127	$	28	$	120	$	359
Indirect	Performing	$	82,347	$	92,898	$	69,122	$	53,564	$	5,878	$	6,239	$	310,048
	Non-performing		—		34		—		108		—		—		142
	Subtotal	$	82,347	$	92,932	$	69,122	$	53,672	$	5,878	$	6,239	$	310,190
	Current period gross charge-offs	$	—	$	128	$	171	$	153	$	13	$	35	$	500
Total consumer	Performing	$	88,681	$	115,869	$	88,374	$	69,321	$	17,283	$	29,740	$	409,268
	Non-performing		—		34		—		108		—		848		990
		$	88,681	$	115,903	$	88,374	$	69,429	$	17,283	$	30,588	$	410,258
	Current period gross charge-offs	$	—	$	133	$	529	$	395	$	80	$	339	$	1,476

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2022:

	December 31, 2022
	Pass 1-5			Special Mention 6			Substandard 7			Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	53,914		$	—		$	—		$	53,914
Secured by multi-family residential properties		67,852			—			—			67,852
Secured by non-farm, non-residential properties		197,004			651			2,501			200,156
Commercial and industrial loans		70,500			—			3,046			73,546
Total	$	389,270		$	651		$	5,547		$	395,468
As a percentage of total loans		98.43	%		0.17	%		1.40	%		100.00	%

	December 31, 2022
	Performing			Nonperforming			Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	86,871		$	1,124		$	87,995
Consumer loans:
Direct		9,805			46			9,851
Branch retail		13,960			32			13,992
Indirect		266,496			71			266,567
Total	$	377,132		$	1,273		$	378,405
As a percentage of total loans		99.66	%		0.34	%		100.00	%

The following table provides an aging analysis of past due loans by class as of September 30, 2023:

	As of September 30, 2023
	30-59 Days Past Due			60-89 Days Past Due			90 Days Or Greater			Total Past Due			Current			Total Loans			Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development    and other land loans	$	—		$	—		$	—		$	—		$	90,051		$	90,051		$	—
Secured by 1-4 family residential    properties		93			36			—			129			83,747			83,876			—
Secured by multi-family residential    properties		—			—			—			—			56,506			56,506			—
Secured by non-farm, non-residential    properties		1,314			—			—			1,314			197,802			199,116			—
Commercial and industrial loans		22			—			62			84			59,285			59,369			—
Consumer loans:								—
Direct		52			—			—			52			6,492			6,544			—
Branch retail		100			—			—			100			9,548			9,648			—
Indirect		335			171			142			648			309,542			310,190			—
Total	$	1,916		$	207		$	204		$	2,327		$	812,973		$	815,300		$	—
As a percentage of total loans		0.24	%		0.02	%		0.03	%		0.29	%		99.71	%		100.00	%

The following table provides an aging analysis of past due loans by class as of December 31, 2022:

	As of December 31, 2022
	30-59 Days Past Due			60-89 Days Past Due			90 Days Or Greater			Total Past Due			Current			Total Loans			Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development    and other land loans	$	—		$	—		$	—		$	—		$	53,914		$	53,914		$	—
Secured by 1-4 family residential    properties		801			87			78			966			87,029			87,995			—
Secured by multi-family residential    properties		—			—			—			—			67,852			67,852			—
Secured by non-farm, non-residential    properties		137			—			—			137			200,019			200,156			—
Commercial and industrial loans		61			—			300			361			73,185			73,546			—
Consumer loans:
Direct		251			50			30			330			9,521			9,851			—
Branch retail		258			85			32			375			13,617			13,992			—
Indirect		186			55			71			312			266,255			266,567			—
Total	$	1,694		$	277		$	511		$	2,481		$	771,392		$	773,873		$	—
As a percentage of total loans		0.21	%		0.04	%		0.07	%		0.32	%		99.68	%		100.00	%

The table below presents the amortized cost of loans on nonaccrual status and loans past due 90 days or more and still accruing interest as of September 30, 2023. Also presented is the balance of loans on nonaccrual status at September 30, 2023 for which there was no related allowance for credit losses recorded.

	Loans on Non-Accrual Status
	September 30, 2023
	(Dollars in Thousands)
	Total nonaccrual loans		Nonaccrual loans with no allowance for credit losses		Loans past due 90 days or more and still accruing
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		891		462		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,314		1,314		—
Commercial and industrial loans		85		77		—
Consumer loans:						—
Direct		—		—		—
Branch retail		—		—		—
Indirect		142		—		—
Total loans	$	2,432	$	1,853	$	—

The following table provides an analysis of nonaccruing loans by portfolio segment as of December 31, 2022:

	Loans on Non-Accrual Status
	December 31, 2022
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—
Secured by 1-4 family residential properties		914
Secured by multi-family residential properties		—
Secured by non-farm, non-residential properties		—
Commercial and industrial loans		605
Consumer loans:
Direct		29
Branch retail		32
Indirect		71
Total loans	$	1,651

The following table presents the amortized cost basis of collateral dependent loans as of September 30, 2023, which loans are individually evaluated to determine credit losses:

	September 30, 2023
	Real Estate		Other		Total
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		498		—		498
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,353		—		2,353
Commercial and industrial		—		126		126
Direct consumer		—		—		—
Total loans individually evaluated	$	2,851	$	126	$	2,977

The following table presents impaired loans as of December 31, 2022 as determined under ASC 310 prior to the adoption of ASC 326. Impaired loans generally include nonaccrual loans and other loans deemed to be impaired but that continue to accrue interest. Presented are the carrying amount, unpaid principal balance and related allowance of impaired loans as of December 31, 2022 by portfolio segment:

	December 31, 2022
	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Impaired loans with no related allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		568		568		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,492		2,492		—
Commercial and industrial		2,076		2,076		—
Direct consumer		18		18		—
Total impaired loans with no related allowance recorded	$	5,154	$	5,154	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		14		14		7
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		353		353		252
Direct consumer		—		—		—
Total impaired loans with an allowance recorded	$	367	$	367	$	259
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		582		582		7
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,492		2,492		—
Commercial and industrial		2,429		2,429		252
Direct consumer		18		18		—
Total impaired loans	$	5,521	$	5,521	$	259

The following table details the average recorded investment and the amount of interest income recognized and received for the nine months ended September 30, 2022, respectively, related to impaired loans as determined under ASC 310 prior to the adoption of ASC 326:

	Nine Months Ended September 30, 2022
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	116	$	2	$	—
Secured by 1-4 family residential properties		624		4		4
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,116		38		35
Commercial and industrial		872		7		4
Direct consumer		19		1		1
Total	$	2,747	$	52	$	44

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

From time to time, the Company may modify the terms of loan agreements with borrowers that are experiencing financial difficulties. Modification of the terms of such loans typically include one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. No modifications in 2023 or 2022 resulted in the permanent reduction of the recorded investment in the loan.

During the nine months ended September 30, 2023, the Company did not modify any loans to borrowers experiencing financial difficulty, and there were no payment defaults on loans that were modified in the previous twelve months.

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Other Real Estate Owned and Repossessed Assets

9 Months Ended

Sep. 30, 2023

Other Real Estate [Abstract]

Other Real Estate Owned and Repossessed Assets

5.OTHER REAL ESTATE OWNED AND REPOSSESSED ASSETS

Other Real Estate Owned

Other real estate and certain other assets acquired in foreclosure are reported at the net realizable value of the property, less estimated costs to sell. The following table summarizes foreclosed property activity as of the nine months ended September 30, 2023 and 2022:

	September 30, 2023			September 30, 2022
	(Dollars in Thousands)
Beginning balance	$	686		$	2,149
Additions		—			411
Sales proceeds		—			(2,215	)
Gross gains		—			369
Gross losses		—			(27	)
Net gains		—			342
Impairment		(69	)		(1	)
Ending balance	$	617		$	686

Valuation adjustments are recorded in other non-interest expense and are primarily post-foreclosure write-downs that are a result of continued declining property values based on updated appraisals or other indications of value, such as offers to purchase. Net realizable value less estimated costs to sell of foreclosed residential real estate held by the Company was $20 thousand and zero as of September 30, 2023 and September 30, 2022, respectively. In addition, the Company held zero and $19 thousand in consumer mortgage loans collateralized by residential real estate that were in the process of foreclosure as of September 30, 2023 and 2022, respectively.

Repossessed Assets

The Company also acquires assets through the repossession of the underlying collateral of loans in default. The following table summarizes repossessed asset activity as of the nine months ended September 30, 2023 and 2022:

	September 30, 2023			September 30, 2022
	(Dollars in Thousands)
Beginning balance	$	83		$	154
Transfers from loans		1,178			635
Sales proceeds		(453	)		(331	)
Gross gains		—			—
Gross losses		(535	)		(292	)
Net losses		(535	)		(292	)
Impairment		—			—
Ending balance	$	273		$	166

Repossessed assets are included in Other Assets in the Company’s condensed consolidated balance sheets.

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

6.GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill is tested for impairment annually, or more often if circumstances warrant. If, as a result of impairment testing, it is determined that the implied fair value of goodwill is lower than its carrying amount, impairment is indicated, and goodwill must be written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the consolidated financial statements. Goodwill, originally recorded as a result of the Company's acquisition of The Peoples Bank ("TPB") in 2018, totaled $7.4 million as of both September 30, 2023 and December 31, 2022. Goodwill impairment was neither indicated nor recorded during the nine months ended September 30, 2023 or the year ended December 31, 2022.

Core deposit premiums are amortized over a seven-year period and are periodically evaluated, at least annually, as to the recoverability of their carrying value. Core deposit premiums of $2.0 million were recorded during 2018 as part of the TPB acquisition.

The Company’s goodwill and other intangible assets (carrying basis and accumulated amortization) as of September 30, 2023 and December 31, 2022 were as follows:

	September 30, 2023			December 31, 2022
	(Dollars in Thousands)
Goodwill	$	7,435		$	7,435
Core deposit intangible:
Gross carrying amount		2,048			2,048
Accumulated amortization		(1,841	)		(1,682	)
Core deposit intangible, net		207			366
Total	$	7,642		$	7,801

The Company’s estimated remaining amortization expense on intangible assets as of September 30, 2023 was as follows:

	Amortization Expense
	(Dollars in Thousands)
2023	$	36
2024		122
2025		49
Total	$	207

The net carrying amount of the Company’s core deposit premiums is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from use and eventual disposition. That assessment is based on the carrying amount of the intangible assets subject to amortization at the date on which it is tested for recoverability. Intangible assets subject to amortization are tested by the Company for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

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Borrowings

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Borrowings

7.BORROWINGS

Short-Term Borrowings

Short-term borrowings consist of federal funds purchased, securities sold under repurchase agreements, and short-term FHLB advances with original maturities of one year or less.

•Federal funds purchased, which represent unsecured lines of credit that generally mature within one to 90 days, are available to the Bank through arrangements with correspondent banks and the FRB. As of both September 30, 2023 and December 31, 2022, there were no federal funds purchased outstanding.

•Securities sold under repurchase agreements, which are secured borrowings, generally are reflected at the amount of cash received in connection with the transaction. The Bank may be required to provide additional collateral based on the fair value of the underlying securities. The Bank monitors the fair value of the underlying securities on a daily basis. There were no securities sold under repurchase agreements as of September 30, 2023. As of December 31, 2022, securities sold under repurchase agreements totaled $38 thousand.

•Short-term FHLB advances are secured borrowings available to the Bank as an alternative funding source. As of September 30, 2023 and December 31, 2022, the Bank had $30.0 million and $20.0 million, respectively, in outstanding FHLB advances with original maturities of less than one year.

Long-Term Borrowings

FHLB Advances

The Company may use FHLB advances with original maturities of more than one year as an alternative to funding sources with similar maturities, such as certificates of deposit or other deposit programs. These advances generally offer more attractive rates than other mid-term financing options. They are also flexible, allowing the Company to quickly obtain the necessary maturities and rates that best suit its overall asset/liability strategy. FHLB advances with an original maturity of more than one year are classified as long-term. As of both September 30, 2023 and December 31, 2022, the Company did not have any long-term FHLB advances outstanding.

Subordinated Debt

On October 1, 2021, the Company completed a private placement of $11.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes that will mature on October 1, 2031 (the “Notes”). The Notes bear interest at a rate of 3.50% per annum for the first five years, after which the interest rate will be reset quarterly to a benchmark interest rate per annum which, subject to certain conditions provided in the Notes, will be equal to the then current three-month term Secured Overnight Financing Rate (“SOFR”) plus 275 basis points. The Company used the net proceeds for general corporate purposes, including repurchasing of the Company’s common stock, and supporting organic growth plans, including the maintenance of capital ratios. Net of unamortized debt issuance costs, the Notes were recorded as long-term borrowings totaling $10.8 million and $10.7 million as of September 30, 2023 and December 31, 2022, respectively. The table below provides additional information related to the Notes as of and for the nine months ended September 30, 2023 and 2022.

	September 30,	September 30,
	2023	2022
	(Dollars in Thousands)
Balance at period-end	$10,781	$10,708
Average balance during the period	$10,775	$10,702
Maximum month-end balance during the year	$10,781	$10,708
Average rate paid during the period, including amortization of debt issuance costs	4.16%	4.16%
Weighted average remaining maturity (in years)	8.00	9.00

Available Credit

As an additional funding source, the Company has available unused lines of credit with correspondent banks, the FRB and the FHLB. Certain of these funding sources are subject to underlying collateral. As of September 30, 2023 and December 31, 2022, the Company’s available unused lines of credit consisted of the following:

Available Unused Lines of Credit	Collateral Requirements	September 30, 2023	December 31, 2022
Correspondent banks	None	$48.0 million	$45.0 million
FHLB advances (1)	Subject to collateral	$260.3 million	$246.8 million
FRB (2)	Subject to collateral	$146.6 million	$1.2 million

(1)These amounts represent the total remaining credit the Company has from the FHLB, but this credit can only be utilized to the extent that underlying collateral exists. The total lendable collateral value of assets pledged (including loans and investment securities) associated with FHLB advances and letters of credit totaled $66.7 million and $68.2 million as of September 30, 2023 and December 31, 2022, respectively. The Company’s collateral exposure with the FHLB in the form of advances and letters of credit was $60.0 million and $50.0 million as of September 30, 2023 and December 31, 2022, respectively, leaving an excess of collateral of $6.7 million and $18.2 million, respectively, available to utilize for additional credit as of the respective dates. The Company also has the ability to pledge additional assets to increase the availability of borrowings.

(2)The Company has access to the FRB's discount window and its Bank Term Funding Program (BTFP), the latter of which was established during the first quarter of 2023 in response to the liquidity events that occurred in the banking industry. Both the discount window and the BTFP allow borrowing on pledged collateral that includes eligible investment securities and, in certain circumstances, eligible loans. The discount window allows borrowing under 90-day terms, while borrowing terms under the BTFP are up to one year. The BTFP also allows investment securities to be pledged as collateral at 100% of par value when par value is greater than fair value. The amounts shown in the table represent the Company's unused borrowing capacity as of the applicable date based on collateral pledged to the FRB's discount window. No collateral was pledged by the Company under the BTFP as of September 30, 2023.

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Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

8.INCOME TAXES

The provision for income taxes was $2.0 million and $1.4 million for the nine months ended September 30, 2023 and 2022, respectively. The Company’s effective tax rate was 24.4% and 23.7%, respectively, for the same periods. The effective tax rate is impacted by recurring permanent differences, such as those associated with bank-owned life insurance and tax-exempt investment and loan income.

The Company had a net deferred tax asset of $6.3 million and $5.2 million as of September 30, 2023 and December 31, 2022, respectively. The net deferred tax asset, which is included on the interim condensed consolidated balance sheet in other assets, is impacted by changes in the fair value of securities available-for-sale and cash flow hedges, changes in net operating loss carryforwards, changes in the allowance for credit losses, and other book-to-tax temporary differences. The net deferred tax asset increased by $0.6 million as a result of the cumulative effect adjustment to adopt ASC 326, effective January 1, 2023.

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Deferred Compensation Plans

9 Months Ended

Sep. 30, 2023

Compensation Related Costs [Abstract]

Deferred Compensation Plans

9.DEFERRED COMPENSATION PLANS

Supplemental Retirement Benefits

The Company has entered into supplemental retirement compensation benefits agreements with certain directors and former executive officers. The measurement of the liability under these agreements includes estimates involving life expectancy, length of time before retirement and the expected returns on the bank-owned life insurance policies used to fund those agreements. Should these estimates prove to be materially wrong, the cost of these agreements could change accordingly. The related deferred compensation obligation to these directors and executive officers included in other liabilities was $3.0 million and $3.1 million as of September 30, 2023 and December 31, 2022, respectively.

Non-Employee Directors' Deferred Compensation Plan

Non-employee directors may elect to defer payment of all or any portion of their director fees under Bancshares’ Non-Employee Directors’ Deferred Compensation Plan (the “Deferral Plan”). The Deferral Plan permits non-employee directors to invest their directors’ fees and to receive the adjusted value of the deferred amounts in cash and/or shares of Bancshares’ common stock, as applicable. Neither Bancshares nor the Bank makes any contribution to participants’ accounts under the Deferral Plan. As of September 30, 2023 and December 31, 2022, a total of 111,340 and 114,190 shares of Bancshares common stock, respectively, were being held as stock equivalents in connection with the Deferral Plan. All deferred fees and shares of Bancshares common stock are reflected as compensation expense in the period earned. The Company classifies all deferred directors’ fees allocated to be paid in shares as equity as additional paid-in capital. The Company may use issued shares or shares of treasury stock to satisfy these obligations when due.

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Stock Awards

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock Awards

10.STOCK AWARDS

In 2013, Bancshares’ shareholders authorized the Company, under the direction of the Compensation Committee of the Board of Directors, to provide share-based compensation awards to eligible employees, directors and consultants of the Company and its affiliates pursuant to the 2013 Incentive Plan. Available award types included stock options, stock appreciation rights, restricted stock and restricted stock units, and performance share awards. The 2013 Incentive Plan, as amended in 2019, expired in March 2023. In April 2023, Bancshares’ shareholders approved the 2023 Incentive Plan, which authorizes the Compensation Committee to grant substantially the same types of share-based awards to eligible employees, directors and consultants. Collectively, the 2013 Incentive Plan and the 2023 Incentive Plan are herein referred to as the Company’s “Incentive Plan.” In accordance with the Incentive Plan, shares of common stock available for issuance pursuant to the grants may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner. Since the origination of the Incentive Plan, through September 30, 2023, only stock options and restricted stock have been granted. For the nine months ended September 30, 2023, stock-based compensation expense related to stock awards totaled $0.4 million, compared to $0.3 million for the nine months ended September 30, 2022.

Stock Options

Stock option awards have been granted with an exercise price equal to the market price of the Company’s common stock on the date of the grant and have vesting periods ranging from one to three years, with 10-year contractual terms. The Company recognizes the cost of services received in exchange for stock option awards based on the grant date fair value of the award, with compensation expense recognized on a straight-line basis over the award’s vesting period. The fair value of outstanding awards was determined using the Black-Scholes option pricing model. The Company did not grant any stock option awards during the nine months ended September 30, 2023 or 2022.

The following table summarizes the Company’s stock option activity for the periods presented.

	Nine Months Ended
	September 30, 2023				September 30, 2022
	Number of Shares		Average Exercise Price		Number of Shares		Average Exercise Price
Options:
Outstanding, beginning of period		419,650	$	9.79		420,250	$	9.79
Granted		—		—		—		—
Exercised		—		—		—		—
Expired		—		—		—		—
Forfeited		—		—		600		10.86
Options outstanding, end of period		419,650	$	9.79		419,650	$	9.79
Options exercisable, end of period		419,650	$	9.79		416,249	$	9.77

The aggregate intrinsic value of stock options outstanding (calculated as the amount by which the market value of underlying stock exceeds the exercise price of the option) was $0.1 million and zero as of September 30, 2023 and 2022, respectively.

Restricted Stock

During the nine months ended September 30, 2023 and 2022, 57,300 shares and 45,938 shares, respectively, of restricted stock were granted. The Company recognizes the cost of services received in exchange for restricted stock awards based on the grant date closing price of the stock, with compensation expense recognized on a straight-line basis over the award’s vesting period.

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Leases

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

11.LEASES

The Bank and ALC are involved in a number of operating leases, primarily for branch locations. Branch leases have remaining lease terms ranging from two years to six years, some of which include options to extend the leases for up to five years, and some of which include an option to terminate the lease within one year. The Bank also leases certain office facilities to third parties and classifies these leases as operating leases.

The following table provides a summary of the components of lease income and expense, as well as the reporting location in the interim condensed consolidated statements of operations, for the three and nine months ended September 30, 2023 and 2022:

	Location in the Condensed	Three Months Ended				Nine Months Ended
	Consolidated Statements of Operations	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
		(Dollars in Thousands)				(Dollars in Thousands)
Operating lease income (1)	Lease income	$	241	$	210	$	707	$	635
Operating lease expense (2)	Net occupancy and equipment	$	108	$	108	$	324	$	326

(1)Operating lease income includes rental income from owned properties

(2)Includes short-term lease costs. For the three and nine months ended September 30, 2023 and 2022, short-term lease costs were nominal in amount.

The following table provides supplemental lease information for operating leases on the interim condensed consolidated balance sheet as of September 30, 2023 and December 31, 2022:

	Location in the Condensed
	Consolidated Balance Sheet	September 30, 2023			December 31, 2022
		(Dollars in Thousands)
Operating lease right-of-use assets	Other assets	$	1,605		$	1,883
Operating lease liabilities	Other liabilities	$	1,684		$	1,961
Weighted-average remaining lease term (in years)			4.28			5.03
Weighted-average discount rate			3.30	%		3.30	%

The following table provides supplemental lease information for the interim condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022:

	Nine Months Ended
	September 30, 2023		September 30, 2022
	(Dollars in Thousands)
Cash paid for amounts included in the measurement of    lease liabilities:
Operating cash flows from operating leases	$	323	$	320

The following table is a schedule of remaining future minimum lease payments for operating leases that had an initial or remaining non-cancellable lease term in excess of one year as of September 30, 2023:

	Minimum Rental Payments
	(Dollars in Thousands)
2023	$	109
2024		438
2025		339
2026		346
2027		353
2028 and thereafter		238
Total future minimum lease payments		1,823
Less: Imputed interest		139
Total operating lease liabilities	$	1,684

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

12.DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of certain balance sheet assets and liabilities. In the normal course of business, the Company also uses derivative financial instruments to add stability to interest income or expense and to manage its exposure to movements in interest rates. The Company does not use derivatives for trading or speculative purposes and only enters into transactions that have a qualifying hedge relationship. The Company’s hedging strategies involving interest rate derivatives are classified as either cash flow hedges or fair value hedges, depending upon the rate characteristic of the hedged item.

Active Hedges

In June 2023, the Company entered into three forward interest rate swap contracts on a pool of fixed rate indirect consumer loans. Each of the three hedge contracts has a $10.0 million notional amount. The interest rate swaps were designated as derivative instruments in fair value hedges with the objective of effectively converting a pool of fixed rate indirect consumer loans to a variable rate throughout the hedge durations in accordance with the portfolio layer method. Under the contractual arrangements, for each swap, the Company pays a fixed interest rate and receives a variable interest rate based on the Secured Overnight Financing Rate (SOFR), on the notional amounts, with monthly net settlements.

Hedges Terminated in 2023

In February 2023, the Company voluntarily terminated four interest rates swap agreements each with notional amounts of $10.0 million, or an aggregate amount of $40.0 million. Two of the swaps were previously designated as cash flow hedges, while two were previously designated as fair value hedges. The termination of the cash flow hedges resulted in a net unrealized gain totaling $1.1 million. The unrealized gain was initially recorded in accumulated other comprehensive income, net of tax, and is being reclassified to reduce interest expense over the original terms of the swap contracts. The termination of the fair value hedges resulted in an unrealized gain totaling $1.0 million which is being reclassified to increase interest income over the original terms of the swap contracts.

Hedge Terminated in 2022

In May 2022, the Company voluntarily terminated one interest rate swap agreement with a notional amount of $10.0 million. The swap was previously designated as a cash flow hedge. The termination resulted in a net unrealized gain of $0.3 million. The unrealized gain was initially recorded in accumulated other comprehensive income, net of tax, and is being reclassified to reduce interest expense over the original term of the swap contract.

Presentation

The table below reflects the notional amount and fair value of active derivative instruments included on the Company’s consolidated balance sheets on a net basis as of September 30, 2023 and December 31, 2022.

	As of September 30, 2023				As of December 31, 2022
	Notional		Estimated Fair Value		Notional		Estimated Fair Value
	Amount		Gain (Loss) (1)		Amount		Gain (Loss) (1)
	(Dollars in Thousands)
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate swaps related to fixed rate commercial real estate loans	$	—	$	—	$	20,000	$	1,101
Interest rate swaps related to fixed rate indirect consumer loans		30,000		537		—		—
Total fair value hedges				537				1,101
Cash flow hedges:
Interest rate swaps related to variable-rate money market deposit accounts		—		—		20,000		1,205
Interest rate swaps related to FHLB advances		—		—		—		—
Total cash flow hedges				—				1,205
Total hedges designated as hedging instruments, net			$	537			$	2,306

(1)Derivatives in a gain position are recorded as other assets and derivatives in a loss position are recorded as other liabilities in the consolidated balance sheets.

The following table presents the net effects of derivative hedging instruments on the Company’s interim condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022. The effects, which include the reclassification of unrealized gains on terminated swap contracts, are presented as either an increase or decrease to income before income taxes in the relevant caption of the Company’s interim condensed consolidated statements of operations.

Location in the Condensed		Three Months Ended				Nine Months Ended
Consolidated Statements of Operations		September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
		(Dollars in Thousands)				(Dollars in Thousands)
Interest income	Interest and fees on loans	$	258	$	45	$	603	$	(42	)
Interest expense	Interest on deposits		120		24		376		(103	)
Interest expense	Interest on borrowings		36		36		108		20
	Net increase (decrease) to income before income taxes	$	414	$	105	$	1,087	$	(125	)

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Other Operating Income and Expense

9 Months Ended

Sep. 30, 2023

Other Income and Expenses [Abstract]

Other Operating Income and Expense

13.OTHER OPERATING INCOME AND EXPENSE

Other Operating Income

Other operating income for the three and nine months ended September 30, 2023 and 2022 consisted of the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(Dollars in Thousands)
Bank-owned life insurance	$	119	$	112	$	348	$	335
ATM fee income		93		125		315		403
Gain on sales of premises and equipment and other assets		18		278		18		301
Other income		64		52		208		195
Total	$	294	$	567	$	889	$	1,234

Other Operating Expense

Other operating expense for the three and nine months ended September 30, 2023 and 2022 consisted of the following:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2023		2022			2023		2022
	(Dollars in Thousands)
Postage, stationery and supplies	$	151	$	164		$	472	$	469
Telephone/data communication		128		159			479		518
Collection and recoveries		71		57			252		176
Directors fees		94		98			284		301
Software amortization		86		133			313		331
Other real estate/foreclosure expense, net		9		(5	)		30		(320	)
Other expense		545		568			1,769		1,629
Total	$	1,084	$	1,174		$	3,599	$	3,104

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Guarantees, Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Guarantees, Commitments and Contingencies

14.GUARANTEES, COMMITMENTS AND CONTINGENCIES

Credit

The Bank’s exposure to credit loss in the event of nonperformance by the other party for commitments to make loans and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making these commitments as it does for on-balance sheet instruments.

In the normal course of business, there are outstanding commitments and contingent liabilities, such as commitments to extend credit, letters of credit and others, that are not included in the consolidated financial statements. The financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the financial statements. A summary of these commitments and contingent liabilities is presented below:

	September 30, 2023		December 31, 2022
	(Dollars in Thousands)
Standby letters of credit	$	—	$	—
Standby performance letters of credit	$	664	$	556
Commitments to extend credit	$	155,614	$	186,169

Standby letters of credit and standby performance letters of credit are contingent commitments issued by the Bank generally to guarantee the performance of a customer to a third party. The Bank has recourse against the customer for any amount that it is required to pay to a third party under a standby letter of credit or standby performance letter of credit. Revenues are recognized over the lives of the standby letters of credit and standby performance letters of credit. As of September 30, 2023 and December 31, 2022, the potential amounts of future payments that the Bank could be required to make under its standby letters of credit and standby performance letters of credit, which represent the Bank’s total credit risk in these categories, are included in the table above.

A commitment to extend credit is an agreement to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon the extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

In accordance with the adoption of ASC 326 on January 1, 2023, the Company recorded a reserve for unfunded commitments of $0.3 million. The reserve, which is included in other liabilities in the Company’s balance sheet, totaled $0.5 million as of September 30, 2023. Additional discussion related to the calculation of the reserve for unfunded commitments is included in Note 4.

Self-Insurance

The Company is self-insured for a significant portion of employee health benefits. However, the Company maintains stop-loss coverage with third-party insurers to limit the Company’s individual claim and total exposure related to self-insurance. The Company estimates a liability for the ultimate costs to settle known claims, as well as claims incurred but not yet reported, as of the balance sheet date. The Company’s recorded estimated liability for self-insurance is based on the insurance companies' incurred loss estimates and management’s judgment, including assumptions and evaluation of factors related to the frequency and severity of claims, the Company’s claims development history and the Company’s claims settlement practices. The assessment of loss contingencies and self-insurance reserves is a highly subjective process that requires judgments about future events. Contingencies are reviewed at least quarterly to determine the adequacy of self-insurance accruals. Self-insurance accruals totaled $0.2 million as of both September 30, 2023 and December 31, 2022. The ultimate settlement of loss contingencies and self-insurance reserves may differ significantly from amounts accrued in the Company’s consolidated financial statements.

Litigation

The Company is party to certain ordinary course litigation from time to time, and the Company intends to vigorously defend itself in all such litigation. In the opinion of the Company, based on review and consultation with legal counsel, the outcome of such ordinary course litigation should not have a material adverse effect on the Company’s consolidated financial statements or results of operations.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

15.FAIR VALUE OF FINANCIAL INSTRUMENTS

The assumptions used in the Company’s estimation of the fair value of the Company’s financial instruments are detailed below. The following disclosures should not be considered a representation of the liquidation value of the Company, but rather represent a good-faith estimate of the increase or decrease in value of financial instruments held by the Company since purchase, origination or issuance.

Fair Value Hierarchy

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. In determining fair value, the Company uses various methods, including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair value. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

•Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange or Nasdaq. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

•Level 2 — Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

•Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

The Company rarely transfers assets and liabilities measured at fair value between Level 1 and Level 2 measurements. Trading account assets and securities available-for-sale may be periodically transferred to or from Level 3 valuation based on management’s conclusion regarding the best method of pricing for an individual security. Such transfers are accounted for as if they occurred at the beginning of a reporting period. There were no such transfers during the nine months ended September 30, 2023 or the year ended December 31, 2022.

Fair Value Measurements on a Recurring Basis

Securities Available-for-Sale

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include U.S. Treasury securities. Level 2 securities include agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset-backed and other securities. Level 2 fair values are obtained from quoted prices of securities with similar characteristics. In certain cases, where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Interest Rate Derivative Agreements

Interest rate derivative agreements are used by the Company to mitigate risk associated with changes in interest rates. The fair value of these agreements is based on information obtained from third-party financial institutions. This information is periodically evaluated by the Company and, as necessary, corroborated against other third-party valuations. The Company classifies these derivative assets within Level 2 of the valuation hierarchy.

The following table presents assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022.

	Fair Value Measurements as of September 30, 2023 Using
	Totals At September 30, 2023		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	37,000	$	—	$	37,000	$	—
Commercial		9,500		—		9,500		—
Obligations of U.S. government-sponsored agencies		10,932		—		10,932		—
Obligations of states and political subdivisions		1,543		—		1,543		—
Corporate notes		14,681		—		14,681		—
U.S. Treasury securities		52,895		52,895		—		—
Other assets - derivatives		537		—		537		—

	Fair Value Measurements as of December 31, 2022 Using
	Totals At December 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	43,957	$	—	$	43,957	$	—
Commercial		11,693		—		11,693		—
Obligations of U.S. government-sponsored agencies		4,270		—		4,270
Obligations of states and political subdivisions		2,072		—		2,072		—
Corporate notes		15,921				14,921		1,000
U.S. Treasury securities		52,882		52,882		—		—
Other assets - derivatives		2,306		—		2,306		—

Fair Value Measurements on a Non-recurring Basis

Collateral Dependent Loans

Collateral dependent loans are measured at the fair value of the collateral securing the loan less estimated selling costs. The fair value of real estate collateral is determined based on real estate appraisals, which are generally based on recent sales of comparable properties which are then adjusted for property specific factors. Non-real estate collateral value is based on various sources, including third party asset valuations and internally determined values based on cost, adjusted for depreciation and other judgmentally determined discount factors. Collateral dependent loans are classified as Level 3 of the valuation hierarchy due to the unobservable inputs used in determining their fair value, such as collateral values and the borrower's underlying financial condition.

OREO and Other Assets Held-for-Sale

OREO consists of properties obtained through foreclosure or in satisfaction of loans and is recorded at net realizable value, less estimated cost to sell. Estimates of fair value are generally based on third-party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes discounted based on management’s knowledge of the property and/or changes in market conditions from the date of the most recent appraisal. Such discounts are typically significant unobservable inputs for determining fair value.

As of September 30, 2023 and December 31, 2022, included within OREO were certain assets that were formerly included as premises and equipment but have been removed from service, and as of the balance sheet date, were designated as assets to be disposed of by sale. These include assets associated with branches of the Bank and ALC that have been closed. When an asset is designated as held-for-sale, the Company ceases depreciation of the asset, and the asset is recorded at the lower of its carrying amount or fair value less estimated cost to sell. Estimates of fair value are generally based on third-party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes discounted based on management’s knowledge of the property and/or changes in market conditions from the date of the most recent appraisal. Such discounts are typically unobservable inputs for determining fair value.

The following table presents the balances of impaired loans, OREO and other assets held-for-sale measured at fair value on a non-recurring basis as of September 30, 2023 and December 31, 2022:

	Fair Value Measurements as of September 30, 2023 Using
	Totals At September 30, 2023		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Collateral dependent loans	$	62	$	—	$	—	$	62
OREO and other assets held-for-sale		617		—		—		617

	Fair Value Measurements as of December 31, 2022 Using
	Totals At December 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	108	$	—	$	—	$	108
OREO and other assets held-for-sale		686		—		—		686

Non-recurring Fair Value Measurements Using Significant Unobservable Inputs

The following table presents information regarding assets and liabilities measured at fair value using significant unobservable inputs (Level 3) as of September 30, 2023. The table includes the valuation techniques and the significant unobservable inputs utilized. The range of each unobservable input and the weighted average within the range utilized as of September 30, 2023 are both included. Following the table is a description of the valuation technique and the sensitivity of the technique to changes in the significant unobservable input.

	Level 3 Significant Unobservable Input Assumptions
	Fair Value September 30, 2023		Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs (Weighted Average)
	(Dollars in Thousands)
Non-recurring fair value measurements:
Collateral dependent loans	$	62	Multiple data points, including discount to appraised value of collateral based on recent market activity	Appraisal comparability adjustment (discount)	9%-10%	(9.5%)
OREO and other assets held-for-sale	$	617	Discount to appraised value of property based on recent market activity for sales of similar properties	Appraisal comparability adjustment (discount)	9%-10%	(9.5%)

Collateral Dependent Loans

Collateral dependent loans are valued based on multiple data points indicating the fair value for each loan. The primary data point is the appraisal value of the underlying collateral, to which a discount is applied. Management establishes this discount or comparability adjustment based on recent sales of similar property types. As liquidity in the market increases or decreases, the comparability adjustment and the resulting asset valuation are impacted.

OREO

OREO under a binding contract for sale is valued based on contract price. If no sales contract is pending for a specific property, management establishes a comparability adjustment to the appraised value based on historical activity, considering proceeds for properties sold versus the corresponding appraised value. Increases or decreases in realization for properties sold impact the comparability adjustment for similar assets remaining on the balance sheet.

Other Assets Held-for-Sale

Assets designated as held-for-sale that are under a binding contract are valued based on the contract price. If no sales contract is pending for a specific property, management establishes a comparability adjustment to the appraised value based on historical activity, considering proceeds for properties sold versus the corresponding appraised value. Increases or decreases in realization for properties sold impact the comparability adjustment for similar assets remaining on the balance sheet.

Fair Value of Financial Instruments

ASC Topic 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable to estimate. The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Cash, due from banks and federal funds sold: The carrying amount of cash, due from banks and federal funds sold approximates fair value.

Federal Home Loan Bank stock: Based on the redemption provision of the FHLB, the stock has no quoted market value and is carried at cost.

Investment securities: Fair values of investment securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on market prices of comparable instruments.

Derivative instruments: The fair value of derivative instruments is based on information obtained from a third-party financial institution. This information is periodically evaluated by the Company and, as necessary, corroborated against other third-party information.

Accrued interest receivable and payable: The carrying amount of accrued interest approximates fair value.

Loans, net: The fair value of loans is estimated on an exit price basis incorporating contractual cash flow, prepayment discount spreads, credit loss and liquidity premiums.

Demand and savings deposits: The fair values of demand deposits are equal to the carrying value of such deposits. Demand deposits include non-interest-bearing demand deposits, savings accounts, NOW accounts and money market demand accounts.

Time deposits: The fair values of relatively short-term time deposits are equal to their carrying values. Discounted cash flows are used to value long-term time deposits. The discount rate used is based on interest rates currently offered by the Company on comparable deposits as to amount and term.

Short-term borrowings: These borrowings may consist of federal funds purchased, securities sold under agreements to repurchase and the floating rate borrowings from the FHLB account. Due to the short-term nature of these borrowings, fair values approximate carrying values.

Long-term debt: The fair value of this debt is estimated using discounted cash flows based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements as of the determination date.

Off-balance sheet instruments: The carrying amount of commitments to extend credit and standby letters of credit approximates fair value. The carrying amount of the off-balance sheet financial instruments is based on fees currently charged to enter into such agreements.

The estimated fair value and related carrying or notional amounts, as well as the level within the fair value hierarchy, of the Company’s financial instruments as of September 30, 2023 and December 31, 2022 were as follows:

	September 30, 2023
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	66,129	$	66,129	$	66,129	$	—	$	—
Investment securities available-for-sale		126,551		126,551		52,895		73,656		—
Investment securities held-to-maturity		1,272		1,183		—		1,183		—
Federal funds sold		1,143		1,143		—		1,143		—
Federal Home Loan Bank stock		2,151		2,151		—		—		2,151
Loans, net of allowance for credit losses		803,920		769,466		—		—		769,466
Other assets - derivatives		537		537		—		537		—
Liabilities:
Deposits		927,038		829,435		—		829,435		—
Short-term borrowings		30,000		30,000		—		30,000		—
Long-term borrowings		10,781		9,226		—		9,226		—

	December 31, 2022
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	30,152	$	30,152	$	30,152	$	—	$	—
Investment securities available-for-sale		130,795		130,795		52,882		76,913		1,000
Investment securities held-to-maturity		1,862		1,769		—		1,769		—
Federal funds sold		1,768		1,768		—		1,768		—
Federal Home Loan Bank stock		1,359		1,359		—		—		1,359
Loans, net of allowance for loan and lease losses		764,451		730,961		—		—		730,961
Other assets - derivatives		2,306		2,306		—		2,306		—
Liabilities:
Deposits		870,025		788,161		—		788,161		—
Short-term borrowings		20,038		20,038		—		20,038		—
Long-term borrowings		10,726		9,702				9,702

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Reclassification

Reclassification

Certain amounts in the prior period consolidated financial statements and the notes to the prior period consolidated financial statements have been reclassified to conform to the 2023 presentation. These reclassifications had no effect on the Company’s results of operations, financial position or net cash flow.

Summary of Significant Accounting Policies

Certain significant accounting policies followed by the Company are set forth in Note 2, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in the Company’s 2022 Form 10-K.

Adoption of ASC 326

On January 1, 2023, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as subsequently updated for certain clarifications, targeted relief and codification improvements. ASC 326 replaces the previous "incurred loss" model for measuring credit losses, which required allowances for current known and inherent losses within the loan portfolio, with an "expected loss" model. The newly adopted current expected credit loss ("CECL") model requires the measurement of all expected credit losses for financial assets measured at amortized cost and certain off-balance-sheet credit exposures based on historical experience, current conditions, and reasonable and supportable forecasts. ASC 326 also requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. In addition, ASC 326 includes certain changes to the accounting for available-for-sale securities including the requirement to present credit losses as an allowance rather than as a direct write-down.

The Company adopted ASC 326 using the modified retrospective method for financial assets measured at amortized cost and off-balance-sheet credit exposures. Upon adoption, the Company recognized an increase in the allowance for credit losses (including both loans and unfunded lending commitments) of $2.4 million, which included an after-tax cumulative effect decrease to retained earnings totaling $1.8 million. Operating results for periods after January 1, 2023 are presented in accordance with ASC 326 while prior period amounts continue to be reported in accordance with previously applicable standards and the accounting policies described in Note 2 of the Company's 2022 Form 10-K. In connection with the adoption of ASC 326, the Company revised certain accounting policies and implemented certain accounting policy elections. The revised accounting policies are described below.

Loans and Leases Held for Investment

Loans and leases held for investment (“loans”) represent financial instruments that the Company has the intent and the ability to hold for the foreseeable future or until maturity or payoff. Loans are reported at amortized cost, net of the allowance for credit losses. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, fair value hedge accounting adjustments, as well as deferred loan fees and costs. Accrued interest receivable on loans and leases is reported separately on the Company’s consolidated balance sheets and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.

At the time a loan is 90 days delinquent, it is placed on nonaccrual status unless it is well-secured and in process of collection. Interest income is discontinued on all loans on nonaccrual status. Past-due status is based on the contractual terms of the loan. In all cases, loans are moved to nonaccrual status, or charged off at an earlier date, if collection of principal and interest is considered doubtful.

All interest accrued but not received on loans on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery methods, until qualifying for return to accrual. Under the cash-basis method, interest income is recorded when the payment is received in cash. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Loans are returned to accrual status when all of the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Credit Losses – Loans and Leases

The allowance for credit losses is a contra-asset valuation account that is deducted from the amortized cost basis of the loans to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. The allowance for credit losses on loans and leases is adjusted through the provision for (recovery of) credit losses.

Management estimates the allowance balance by using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for estimation of expected credit losses. Adjustments to historical loss information are made for differences in loan-specific risk characteristics such as changes in economic and business conditions, underwriting standards, portfolio mix, and delinquency level. Considerations related to environmental conditions include reasonable and supportable current and forecasted data related to economic factors such as inflation, unemployment levels, and interest rates.

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty as of the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for estimated selling costs as appropriate.

Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company, or management has a reasonable expectation at the reporting date that a loan modification will be made to a borrower experiencing financial difficulty.

Additional information related to the factors considered in evaluating credit losses on loans and leases is included in Note 4.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The following categories of off-balance sheet credit exposures have been identified: unfunded loan commitments, standby letters of credit, and financial guarantees (collectively, “unfunded lending commitments”). The allowance for credit losses on unfunded lending commitments is adjusted through the provision for (recovery of) credit losses. The estimate may include consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded, as well as reasonable practical expedients or industry practices to assist in the evaluation of estimated funding amounts.

Additional information related to the factors considered in evaluating credit losses on unfunded lending commitments is included in Note 4.

Allowance for Credit Losses – Investment Securities Held-to-Maturity

Expected credit losses on held-to-maturity debt securities are measured on a collective basis by major security type. Accrued interest receivable on held-to-maturity securities is excluded from the estimate of credit losses. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The allowance for credit losses on investment securities held-to-maturity is adjusted through the provision for (recovery of) credit losses.

Additional information related to the factors considered in evaluating credit losses in the held-to-maturity investment portfolio is included in Note 3.

Allowance for Credit Losses – Investment Securities Available-for-Sale

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities available-for-sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes in the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded in the provision for (recovery of) credit losses. Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable on available-for-sale debt securities is excluded from the estimate of credit losses.

Additional information related to the factors considered in evaluating credit losses in the available-for-sale investment portfolio is included in Note 3.

Net Income Per Share

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding ("basic shares"). Included in basic shares are stock equivalent shares that have been accrued as of the balance sheet date as deferred compensation for members of Bancshares’ Board of Directors under the Non-Employee Directors' Deferred Compensation Plan (as defined below and discussed further in Note 9). Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding, adjusted for the effect of potentially dilutive stock awards outstanding during the period ("dilutive shares"). The dilutive shares consist of unexercised nonqualified stock option grants issued to employees and members of Bancshares’ Board of Directors pursuant to the Company's Incentive Plan (as defined below and discussed further in Note 10).

The following table reflects the weighted average shares used to calculate basic and diluted net income per share for the periods presented.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Weighted average shares outstanding		5,874,769		5,839,658		5,858,812		6,016,770
Weighted average director stock equivalent shares		109,793		111,608		113,142		114,853
Basic shares		5,984,562		5,951,266		5,971,954		6,131,623
Dilutive shares		419,650		419,650		419,650		419,650
Diluted shares		6,404,212		6,370,916		6,391,604		6,551,273

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(Dollars in Thousands, Except Per Share Data)
Net income	$	2,113	$	1,860	$	6,208	$	4,636
Basic net income per share	$	0.35	$	0.31	$	1.04	$	0.76
Diluted net income per share	$	0.33	$	0.29	$	0.97	$	0.71

Comprehensive Income

Comprehensive Income

Comprehensive income consists of net income, as well as unrealized holding gains and losses that arise during the period associated with the Company’s available-for-sale securities portfolio and the effective portion of cash flow hedge derivatives. In the calculation of comprehensive income, reclassification adjustments are made for gains or losses realized in the statement of operations associated with the sale of available-for-sale securities or settlement of derivative contracts.

Recently Adopted Accounting Guidance

Recently Adopted Accounting Guidance

Reference Rate Reform

ASU 2020-04 and ASU 2021-01, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting." These ASUs provide temporary relief, in the form of optional expedients and exceptions, for applying GAAP to modifications of contracts, hedging relationships and other transactions affected by reference rate (e.g. LIBOR) reforms. Historically, the Company utilized LIBOR, among other indexes, as a reference rate for underwriting certain variable rate loans and interest rate hedging instruments. Since the issuance of this guidance, cessation of U.S. dollar LIBOR was extended to June 30, 2023. Accordingly, in December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which deferred the sunset date of ASC Topic 848 from December 31, 2022 to December 31, 2024. The amendments in this update provide optional expedients designed to provide relief from accounting analysis and the impacts that may otherwise be required for modifications to agreements necessitated by reference rate reform. The optional expedients provided by the update include guidance related to modifications of contracts within the scope of ASC Topics 310, Receivables, and 470, Debt, that indicates the modifications should be accounted for by prospectively adjusting the effective interest rate. As of September 30, 2023, the Company’s contracts referencing LIBOR were limited to certain variable-rate loan agreements for which the pricing reset date has not yet occurred. Management has implemented a process to convert the agreements to another reference rate at the next applicable pricing reset date. Due to the prospective nature of the implementation of the revised guidance, the adoption did not have a material impact on the Company’s consolidated financial statements.

Portfolio Layer Hedging Method

ASU 2022-01, "Fair Value Hedging - Portfolio Layer Method - Derivatives and Hedging (Topic 815)." In March 2022, the FASB issued ASU 2022-01. The amendments in this standard expand the current last-of-layer method of hedge accounting to allow multiple hedged layers of a single closed portfolio. The Company adopted ASU 2022-01 on January 1, 2023. Due to the prospective nature of the implementation of this revised guidance, the adoption of this standard update did not have a material impact on the Company's consolidated financial statements.

Intangibles and Goodwill

ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” Issued in January 2017, ASU 2017-04 simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill under Step 2, an entity, prior to the amendments in ASU 2017-04, had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities, including unrecognized assets and liabilities, in accordance with the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. However, under the amendments in ASU 2017-04, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, ASU 2017-04 removes the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. As originally issued, ASU 2017-04 was effective prospectively for annual, or any interim, goodwill impairment tests in fiscal years beginning after December 15, 2019. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2017-04 by three years for smaller reporting companies, including the Company. The ASU became effective for the Company on January 1, 2023. The adoption of this standard update did not have a material effect on the Company’s consolidated financial statements.

Current Expected Credit Loss Accounting Guidance

ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." Issued in June 2016, ASU 2016-13 removed the thresholds that entities previously applied to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables and held-to-maturity debt securities. Known as the Current Expected Credit Loss (CECL) model, the revised guidance removed all recognition thresholds under previously used incurred loss models and required entities to recognize an allowance for lifetime expected credit losses. The standard also added disclosure requirements intended to enable users of the financial statements to understand credit risk in the portfolio and how management monitors credit quality, management’s estimate of expected credit losses, and changes in the estimate of credit losses during the period. In addition, the standard made changes to the accounting for available for sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available for sale debt securities if management does not intend to sell and does not believe that it is more likely than not they will be required to sell. As originally issued, ASU 2016-13 was effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019, with institutions required to apply the changes through a cumulative-effect adjustment to their retained earnings balance as of the beginning of the first reporting period in which the guidance is effective. On October 16, 2019, the FASB approved a delay in the implementation of ASU 2016-13 by three years for smaller reporting companies, including the Company. The ASU became effective for the Company on January 1, 2023, and the Company recorded a cumulative-effect adjustment that increased the allowance for credit losses by approximately $2.1 million. In addition, the Company recorded a cumulative-effect adjustment that increased other liabilities by $0.3 million as an allowance for credit losses for unfunded commitments. In accordance with transition accounting guidance, the transition adjustments were recorded directly to retained earnings (net of tax) during the first quarter of 2023 and did not impact then-current period earnings.

Troubled Debt Restructurings and Vintage Disclosures

ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures.” Issued in March 2022, ASU 2022-02 sought to improve the decision usefulness of information provided to investors concerning certain loan refinancings, restructurings and write-offs. The ASU eliminated the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL accounting model and enhanced the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The Company adopted the amendments of ASU 2022-02 on January 1, 2023, concurrent with the adoption of the CECL accounting model. The amendments of ASU 2022-02 include only changes to certain financial statement disclosures; and, therefore, adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial statements.

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Basis of Presentation (Tables)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Weighted average shares outstanding		5,874,769		5,839,658		5,858,812		6,016,770
Weighted average director stock equivalent shares		109,793		111,608		113,142		114,853
Basic shares		5,984,562		5,951,266		5,971,954		6,131,623
Dilutive shares		419,650		419,650		419,650		419,650
Diluted shares		6,404,212		6,370,916		6,391,604		6,551,273

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(Dollars in Thousands, Except Per Share Data)
Net income	$	2,113	$	1,860	$	6,208	$	4,636
Basic net income per share	$	0.35	$	0.31	$	1.04	$	0.76
Diluted net income per share	$	0.33	$	0.29	$	0.97	$	0.71

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Investment Securities (Tables)

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Schedule of Investment Securities Available-for-Sale and Held-to-Maturity

Details of investment securities available-for-sale and held-to-maturity as of September 30, 2023 and December 31, 2022 were as follows:

	Available-for-Sale
	September 30, 2023
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	41,071	$	—	$	(4,071	)	$	37,000
Commercial		10,020		1		(521	)		9,500
Obligations of U.S. government-sponsored agencies		11,851		—		(919	)		10,932
Obligations of states and political subdivisions		1,633		—		(90	)		1,543
Corporate notes		17,772		—		(3,091	)		14,681
U.S. Treasury securities		56,988		—		(4,093	)		52,895
Total	$	139,335	$	1	$	(12,785	)	$	126,551

	Held-to-Maturity
	September 30, 2023
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	704	$	—	$	(30	)	$	674
Obligations of U.S. government-sponsored agencies		502		—		(49	)		453
Obligations of states and political subdivisions		66		—		(10	)		56
Total	$	1,272	$	—	$	(89	)	$	1,183

	Available-for-Sale
	December 31, 2022
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	47,659	$	2	$	(3,704	)	$	43,957
Commercial		12,169		4		(480	)		11,693
Obligations of U.S. government-sponsored agencies		5,116		—		(846	)		4,270
Obligations of states and political subdivisions		2,166		—		(94	)		2,072
Corporate notes		17,817		2		(1,898	)		15,921
U.S. Treasury securities		56,956		—		(4,074	)		52,882
Total	$	141,883	$	8	$	(11,096	)	$	130,795

	Held-to-Maturity
	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,167	$	—	$	(41	)	$	1,126
Obligations of U.S. government-sponsored agencies		610		—		(40	)		570
Obligations of states and political subdivisions		85		—		(12	)		73
Total	$	1,862	$	—	$	(93	)	$	1,769

Maturities of Investment Securities Available-for-Sale and Held-to-Maturity

The scheduled maturities of investment securities available-for-sale and held-to-maturity as of September 30, 2023 are presented in the following table:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Maturing within one year	$	12,988	$	12,783	$	—	$	—
Maturing after one to five years		53,676		49,249		324		308
Maturing after five to ten years		60,121		52,780		738		686
Maturing after ten years		12,550		11,739		210		189
Total	$	139,335	$	126,551	$	1,272	$	1,183

Schedule of Unrealized Loss on Investments and Fair Value for Securities for Which Allowance for Credit Losses has not been Recorded

The following tables reflect gross unrealized losses and fair value for securities for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2023.

	Available-for-Sale
	September 30, 2023
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	105	$	(5	)	$	36,860	$	(4,066	)
Commercial		1,532		(13	)		7,934		(508	)
Obligations of U.S. government-sponsored agencies		—		—			4,176		(919	)
Obligations of states and political subdivisions		—		—			1,543		(90	)
Corporate notes		802		(198	)		13,879		(2,893	)
U.S. Treasury securities		—		—			52,895		(4,093	)
Total	$	2,439	$	(216	)	$	117,287	$	(12,569	)

	Held-to-Maturity
	September 30, 2023
	Less than 12 Months				12 Months or More
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	—	$	—	$	674	$	(30	)
Obligations of U.S. government-sponsored agencies		—		—		453		(49	)
Obligations of states and political subdivisions		—		—		56		(10	)
Total	$	—	$	—	$	1,183	$	(89	)

The following tables reflect gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2022. No determination was made concerning the need for an allowance for credit losses as this table reflects information prior to the adoption of ASC 326.

	Available-for-Sale
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	19,876	$	(952	)	$	23,903	$	(2,752	)
Commercial		9,720		(357	)		1,247		(123	)
Obligations of U.S. government-sponsored agencies		—		—			4,270		(846	)
Obligations of states and political subdivisions		1,559		(41	)		513		(53	)
Corporate notes		6,845		(898	)		8,075		(1,000	)
U.S. Treasury securities		21,240		(698	)		31,642		(3,376	)
Total	$	59,240	$	(2,946	)	$	69,650	$	(8,150	)

	Held-to-Maturity
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,126	$	(41	)	$	—	$	—
Obligations of U.S. government-sponsored agencies		214		(7	)		356		(33	)
Obligations of states and political subdivisions		73		(12	)		—		—
Total	$	1,413	$	(60	)	$	356	$	(33	)

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Loans and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2023

Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract]

Schedule of Loan Portfolio

As of September 30, 2023 and December 31, 2022, the composition of the loan portfolio by portfolio segment was as follows:

	September 30, 2023		December 31, 2022
Real estate loans:
Construction, land development and other land loans	$	90,051	$	53,914
Secured by 1-4 family residential properties		83,876		87,995
Secured by multi-family residential properties		56,506		67,852
Secured by non-farm, non-residential properties		199,116		200,156
Commercial and industrial loans and leases (1)		59,369		73,546
Consumer loans:
Direct		6,544		9,851
Branch retail		9,648		13,992
Indirect		310,190		266,567
Total loans		815,300		773,873
Allowance for credit losses		11,380		9,422
Net loans	$	803,920	$	764,451

(1)Includes equipment financing leases, which totaled $10.2 million and $10.3 million as of September 30, 2023 and December 31, 2022, respectively.

Allowance for Credit Losses on Loans and Leases

The following tables present changes in the allowance for credit losses on loans and leases during the nine months ended September 30, 2023 and 2022:

	As of and for the Nine Months Ended September 30, 2023
	Construction, Land Development, and Other			Real Estate 1-4 Family			Real Estate Multi- Family			Non- Farm Non- Residential			Commercial and Industrial			Direct Consumer			Branch Retail			Indirect Consumer			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	517		$	832		$	646		$	1,970		$	919		$	866		$	518		$	3,154		$	9,422
Impact of adopting CECL accounting guidance		(94	)		(39	)		(85	)		(147	)		(20	)		47			628			1,833			2,123
Charge-offs		—			(96	)		—			—			—			(521	)		(359	)		(500	)		(1,476	)
Recoveries		—			39			—			—			—			499			195			40			773
Provision for (recovery of) credit losses		157			18			(156	)		(201	)		(369	)		(404	)		(147	)		1,640			538
Ending balance	$	580		$	754		$	405		$	1,622		$	530		$	487		$	835		$	6,167		$	11,380

	As of and for the Nine Months Ended September 30, 2022
	Construction, Land Development, and Other			Real Estate 1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Commercial and Industrial		Direct Consumer			Branch Retail			Indirect Consumer			Total
	(Dollars in Thousands)
Allowance for loan and lease losses:
Beginning balance	$	628		$	690		$	437	$	1,958	$	860	$	1,004		$	304		$	2,439		$	8,320
Charge-offs		—			(10	)		—		—		—		(1,604	)		(423	)		(238	)		(2,275	)
Recoveries		2			23			—		4		—		387			97			34			547
Provision for (recovery of) loan and lease losses		(246	)		89			210		30		244		1,161			445			848			2,781
Ending balance	$	384		$	792		$	647	$	1,992	$	1,104	$	948		$	423		$	3,083		$	9,373

Schedule of Loan and Lease Losses and Recorded Investment in Loans by Loan Classification and by Impairment Evaluation

The following table details the allowance for loan and lease losses and recorded investment in loans by loan classification and by impairment evaluation as of December 31, 2022, as determined in accordance with ASC 310, Receivables, prior to the adoption of ASC 326:

	As of the Year Ended December 31, 2022
	Construction, Land Development, and Other		Real Estate 1-4 Family		Real Estate Multi- Family		Non- Farm Non- Residential		Commercial and Industrial		Direct Consumer		Branch Retail		Indirect Consumer		Total
	(Dollars in Thousands)
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	—	$	7	$	—	$	—	$	252	$	—	$	—	$	—	$	259
Collectively evaluated for impairment		517		825		646		1,970		667		886		518		3,154	$	9,183
Total allowance for loan and lease losses	$	517	$	832	$	646	$	1,970	$	919	$	886	$	518	$	3,154	$	9,442
Ending balance of loans receivable:
Individually evaluated for impairment	$	—	$	582	$	—	$	2,492	$	2,429	$	18	$	—	$	—	$	5,521
Collectively evaluated for impairment		53,914		87,413		67,852		197,664		71,117		9,833		13,992		266,567		768,352
Total loans receivable	$	53,914	$	87,995	$	67,852	$	200,156	$	73,546	$	9,851	$	13,992	$	266,567	$	773,873

Loans By Credit Quality Indicators

The tables below illustrate the carrying amount of loans and leases by credit quality indicator and year of origination as of September 30, 2023:

		September 30, 2023
		Loans at Amortized Cost Basis by Origination Year
		2023		2022		2021		2020		2019		Prior		Total
		(Dollars in Thousands)
Commercial:
Construction, land development and other land loans	Pass	$	3,716	$	38,961	$	40,404	$	6,377	$	—	$	593	$	90,051
	Special Mention		—		—		—		—		—		—		—
	Substandard		—		—		—		—		—		—		—
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
	Subtotal	$	3,716	$	38,961	$	40,404	$	6,377	$	—	$	593	$	90,051
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by multi-family residential properties	Pass	$	383	$	28,513	$	5,991	$	686	$	7,151	$	13,782	$	56,506
	Special Mention		—		—		—		—		—		—		—
	Substandard		—		—		—		—		—		—		—
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
	Subtotal	$	383	$	28,513	$	5,991	$	686	$	7,151	$	13,782	$	56,506
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by non-farm, non-residential properties	Pass	$	8,683	$	35,499	$	25,519	$	56,913	$	18,618	$	47,516	$	192,748
	Special Mention		—		536		1,295		347		—		1,690		3,868
	Substandard		—		—		—		152		—		2,348		2,500
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
	Subtotal	$	8,683	$	36,035	$	26,814	$	57,412	$	18,618	$	51,554	$	199,116
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial loans and leases	Pass	$	7,435	$	7,401	$	15,424	$	2,494	$	3,802	$	20,643	$	57,199
	Special Mention		—		170		899		199		57		—		1,325
	Substandard		—		44		209		25		305		262		845
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
	Subtotal	$	7,435	$	7,615	$	16,532	$	2,718	$	4,164	$	20,905	$	59,369
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total commercial	Pass	$	20,217	$	110,374	$	87,338	$	66,470	$	29,571	$	82,534	$	396,504
	Special Mention		—		706		2,194		546		57		1,690		5,193
	Substandard		—		44		209		177		305		2,610		3,345
	Doubtful		—		—		—		—		—		—		—
	Loss		—		—		—		—		—		—		—
		$	20,217	$	111,124	$	89,741	$	67,193	$	29,933	$	86,834	$	405,042
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

		September 30, 2023
		Loans at Amortized Cost Basis by Origination Year
		2023		2022		2021		2020		2019		Prior		Total
		(Dollars in Thousands)
Consumer:
Secured by 1-4 family residential properties	Performing	$	4,282	$	21,592	$	14,886	$	12,028	$	9,323	$	20,917	$	83,028
	Non-performing		—		—		—		—		—		848		848
	Subtotal	$	4,282	$	21,592	$	14,886	$	12,028	$	9,323	$	21,765	$	83,876
	Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	96	$	96
Direct	Performing	$	2,052	$	1,379	$	1,961	$	739	$	288	$	125	$	6,544
	Non-performing		—		—		—		—		—		—		—
	Subtotal	$	2,052	$	1,379	$	1,961	$	739	$	288	$	125	$	6,544
	Current period gross charge-offs	$	—	$	5	$	274	$	115	$	39	$	88	$	521
Branch retail	Performing	$	—	$	—	$	2,405	$	2,990	$	1,794	$	2,459	$	9,648
	Non-performing		—		—		—		—		—		—		—
	Subtotal	$	—	$	—	$	2,405	$	2,990	$	1,794	$	2,459	$	9,648
	Current period gross charge-offs	$	—	$	—	$	84	$	127	$	28	$	120	$	359
Indirect	Performing	$	82,347	$	92,898	$	69,122	$	53,564	$	5,878	$	6,239	$	310,048
	Non-performing		—		34		—		108		—		—		142
	Subtotal	$	82,347	$	92,932	$	69,122	$	53,672	$	5,878	$	6,239	$	310,190
	Current period gross charge-offs	$	—	$	128	$	171	$	153	$	13	$	35	$	500
Total consumer	Performing	$	88,681	$	115,869	$	88,374	$	69,321	$	17,283	$	29,740	$	409,268
	Non-performing		—		34		—		108		—		848		990
		$	88,681	$	115,903	$	88,374	$	69,429	$	17,283	$	30,588	$	410,258
	Current period gross charge-offs	$	—	$	133	$	529	$	395	$	80	$	339	$	1,476

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2022:

	December 31, 2022
	Pass 1-5			Special Mention 6			Substandard 7			Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	53,914		$	—		$	—		$	53,914
Secured by multi-family residential properties		67,852			—			—			67,852
Secured by non-farm, non-residential properties		197,004			651			2,501			200,156
Commercial and industrial loans		70,500			—			3,046			73,546
Total	$	389,270		$	651		$	5,547		$	395,468
As a percentage of total loans		98.43	%		0.17	%		1.40	%		100.00	%

	December 31, 2022
	Performing			Nonperforming			Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	86,871		$	1,124		$	87,995
Consumer loans:
Direct		9,805			46			9,851
Branch retail		13,960			32			13,992
Indirect		266,496			71			266,567
Total	$	377,132		$	1,273		$	378,405
As a percentage of total loans		99.66	%		0.34	%		100.00	%

Aging Analysis of Past Due Loans

The following table provides an aging analysis of past due loans by class as of September 30, 2023:

	As of September 30, 2023
	30-59 Days Past Due			60-89 Days Past Due			90 Days Or Greater			Total Past Due			Current			Total Loans			Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development    and other land loans	$	—		$	—		$	—		$	—		$	90,051		$	90,051		$	—
Secured by 1-4 family residential    properties		93			36			—			129			83,747			83,876			—
Secured by multi-family residential    properties		—			—			—			—			56,506			56,506			—
Secured by non-farm, non-residential    properties		1,314			—			—			1,314			197,802			199,116			—
Commercial and industrial loans		22			—			62			84			59,285			59,369			—
Consumer loans:								—
Direct		52			—			—			52			6,492			6,544			—
Branch retail		100			—			—			100			9,548			9,648			—
Indirect		335			171			142			648			309,542			310,190			—
Total	$	1,916		$	207		$	204		$	2,327		$	812,973		$	815,300		$	—
As a percentage of total loans		0.24	%		0.02	%		0.03	%		0.29	%		99.71	%		100.00	%

The following table provides an aging analysis of past due loans by class as of December 31, 2022:

	As of December 31, 2022
	30-59 Days Past Due			60-89 Days Past Due			90 Days Or Greater			Total Past Due			Current			Total Loans			Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development    and other land loans	$	—		$	—		$	—		$	—		$	53,914		$	53,914		$	—
Secured by 1-4 family residential    properties		801			87			78			966			87,029			87,995			—
Secured by multi-family residential    properties		—			—			—			—			67,852			67,852			—
Secured by non-farm, non-residential    properties		137			—			—			137			200,019			200,156			—
Commercial and industrial loans		61			—			300			361			73,185			73,546			—
Consumer loans:
Direct		251			50			30			330			9,521			9,851			—
Branch retail		258			85			32			375			13,617			13,992			—
Indirect		186			55			71			312			266,255			266,567			—
Total	$	1,694		$	277		$	511		$	2,481		$	771,392		$	773,873		$	—
As a percentage of total loans		0.21	%		0.04	%		0.07	%		0.32	%		99.68	%		100.00	%

Non-accruing Loans

September 30, 2023. Also presented is the balance of loans on nonaccrual status at September 30, 2023 for which there was no related allowance for credit losses recorded.

	Loans on Non-Accrual Status
	September 30, 2023
	(Dollars in Thousands)
	Total nonaccrual loans		Nonaccrual loans with no allowance for credit losses		Loans past due 90 days or more and still accruing
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		891		462		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,314		1,314		—
Commercial and industrial loans		85		77		—
Consumer loans:						—
Direct		—		—		—
Branch retail		—		—		—
Indirect		142		—		—
Total loans	$	2,432	$	1,853	$	—

The following table provides an analysis of nonaccruing loans by portfolio segment as of December 31, 2022:

	Loans on Non-Accrual Status
	December 31, 2022
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—
Secured by 1-4 family residential properties		914
Secured by multi-family residential properties		—
Secured by non-farm, non-residential properties		—
Commercial and industrial loans		605
Consumer loans:
Direct		29
Branch retail		32
Indirect		71
Total loans	$	1,651

Schedule of Amortized Cost Basis of Collateral Dependent Loans

The following table presents the amortized cost basis of collateral dependent loans as of September 30, 2023, which loans are individually evaluated to determine credit losses:

	September 30, 2023
	Real Estate		Other		Total
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		498		—		498
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,353		—		2,353
Commercial and industrial		—		126		126
Direct consumer		—		—		—
Total loans individually evaluated	$	2,851	$	126	$	2,977

Loans Individually Evaluated, as well as any Related Allowance for Loans and Lease Losses

The following table presents impaired loans as of December 31, 2022 as determined under ASC 310 prior to the adoption of ASC 326. Impaired loans generally include nonaccrual loans and other loans deemed to be impaired but that continue to accrue interest. Presented are the carrying amount, unpaid principal balance and related allowance of impaired loans as of December 31, 2022 by portfolio segment:

	December 31, 2022
	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Impaired loans with no related allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		568		568		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,492		2,492		—
Commercial and industrial		2,076		2,076		—
Direct consumer		18		18		—
Total impaired loans with no related allowance recorded	$	5,154	$	5,154	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		14		14		7
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		353		353		252
Direct consumer		—		—		—
Total impaired loans with an allowance recorded	$	367	$	367	$	259
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		582		582		7
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,492		2,492		—
Commercial and industrial		2,429		2,429		252
Direct consumer		18		18		—
Total impaired loans	$	5,521	$	5,521	$	259

The following table details the average recorded investment and the amount of interest income recognized and received for the nine months ended September 30, 2022, respectively, related to impaired loans as determined under ASC 310 prior to the adoption of ASC 326:

	Nine Months Ended September 30, 2022
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	116	$	2	$	—
Secured by 1-4 family residential properties		624		4		4
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,116		38		35
Commercial and industrial		872		7		4
Direct consumer		19		1		1
Total	$	2,747	$	52	$	44

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Other Real Estate Owned and Repossessed Assets (Tables)

9 Months Ended

Sep. 30, 2023

Other Real Estate [Abstract]

Summary of Foreclosed Property Activity

The following table summarizes foreclosed property activity as of the nine months ended September 30, 2023 and 2022:

	September 30, 2023			September 30, 2022
	(Dollars in Thousands)
Beginning balance	$	686		$	2,149
Additions		—			411
Sales proceeds		—			(2,215	)
Gross gains		—			369
Gross losses		—			(27	)
Net gains		—			342
Impairment		(69	)		(1	)
Ending balance	$	617		$	686

Summary of Repossessed Assets Activity

The following table summarizes repossessed asset activity as of the nine months ended September 30, 2023 and 2022:

	September 30, 2023			September 30, 2022
	(Dollars in Thousands)
Beginning balance	$	83		$	154
Transfers from loans		1,178			635
Sales proceeds		(453	)		(331	)
Gross gains		—			—
Gross losses		(535	)		(292	)
Net losses		(535	)		(292	)
Impairment		—			—
Ending balance	$	273		$	166

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Goodwill and Other Intangible Assets

The Company’s goodwill and other intangible assets (carrying basis and accumulated amortization) as of September 30, 2023 and December 31, 2022 were as follows:

	September 30, 2023			December 31, 2022
	(Dollars in Thousands)
Goodwill	$	7,435		$	7,435
Core deposit intangible:
Gross carrying amount		2,048			2,048
Accumulated amortization		(1,841	)		(1,682	)
Core deposit intangible, net		207			366
Total	$	7,642		$	7,801

Schedule of Estimated Remaining Amortization Expense

The Company’s estimated remaining amortization expense on intangible assets as of September 30, 2023 was as follows:

	Amortization Expense
	(Dollars in Thousands)
2023	$	36
2024		122
2025		49
Total	$	207

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Borrowings (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Summary of Long-Term Borrowings

The table below provides additional information related to the Notes as of and for the nine months ended September 30, 2023 and 2022.

	September 30,	September 30,
	2023	2022
	(Dollars in Thousands)
Balance at period-end	$10,781	$10,708
Average balance during the period	$10,775	$10,702
Maximum month-end balance during the year	$10,781	$10,708
Average rate paid during the period, including amortization of debt issuance costs	4.16%	4.16%
Weighted average remaining maturity (in years)	8.00	9.00

Schedule of Available Unused Lines of Credit

As of September 30, 2023 and December 31, 2022, the Company’s available unused lines of credit consisted of the following:

Available Unused Lines of Credit	Collateral Requirements	September 30, 2023	December 31, 2022
Correspondent banks	None	$48.0 million	$45.0 million
FHLB advances (1)	Subject to collateral	$260.3 million	$246.8 million
FRB (2)	Subject to collateral	$146.6 million	$1.2 million

(1)These amounts represent the total remaining credit the Company has from the FHLB, but this credit can only be utilized to the extent that underlying collateral exists. The total lendable collateral value of assets pledged (including loans and investment securities) associated with FHLB advances and letters of credit totaled $66.7 million and $68.2 million as of September 30, 2023 and December 31, 2022, respectively. The Company’s collateral exposure with the FHLB in the form of advances and letters of credit was $60.0 million and $50.0 million as of September 30, 2023 and December 31, 2022, respectively, leaving an excess of collateral of $6.7 million and $18.2 million, respectively, available to utilize for additional credit as of the respective dates. The Company also has the ability to pledge additional assets to increase the availability of borrowings.

(2)The Company has access to the FRB's discount window and its Bank Term Funding Program (BTFP), the latter of which was established during the first quarter of 2023 in response to the liquidity events that occurred in the banking industry. Both the discount window and the BTFP allow borrowing on pledged collateral that includes eligible investment securities and, in certain circumstances, eligible loans. The discount window allows borrowing under 90-day terms, while borrowing terms under the BTFP are up to one year. The BTFP also allows investment securities to be pledged as collateral at 100% of par value when par value is greater than fair value. The amounts shown in the table represent the Company's unused borrowing capacity as of the applicable date based on collateral pledged to the FRB's discount window. No collateral was pledged by the Company under the BTFP as of September 30, 2023.

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Stock Awards (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock Option Activity

The following table summarizes the Company’s stock option activity for the periods presented.

	Nine Months Ended
	September 30, 2023				September 30, 2022
	Number of Shares		Average Exercise Price		Number of Shares		Average Exercise Price
Options:
Outstanding, beginning of period		419,650	$	9.79		420,250	$	9.79
Granted		—		—		—		—
Exercised		—		—		—		—
Expired		—		—		—		—
Forfeited		—		—		600		10.86
Options outstanding, end of period		419,650	$	9.79		419,650	$	9.79
Options exercisable, end of period		419,650	$	9.79		416,249	$	9.77

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Leases (Tables)

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Components of Lease Income and Expense

The following table provides a summary of the components of lease income and expense, as well as the reporting location in the interim condensed consolidated statements of operations, for the three and nine months ended September 30, 2023 and 2022:

	Location in the Condensed	Three Months Ended				Nine Months Ended
	Consolidated Statements of Operations	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
		(Dollars in Thousands)				(Dollars in Thousands)
Operating lease income (1)	Lease income	$	241	$	210	$	707	$	635
Operating lease expense (2)	Net occupancy and equipment	$	108	$	108	$	324	$	326

(1)Operating lease income includes rental income from owned properties

(2)Includes short-term lease costs. For the three and nine months ended September 30, 2023 and 2022, short-term lease costs were nominal in amount.

The following table provides supplemental lease information for operating leases on the interim condensed consolidated balance sheet as of September 30, 2023 and December 31, 2022:

	Location in the Condensed
	Consolidated Balance Sheet	September 30, 2023			December 31, 2022
		(Dollars in Thousands)
Operating lease right-of-use assets	Other assets	$	1,605		$	1,883
Operating lease liabilities	Other liabilities	$	1,684		$	1,961
Weighted-average remaining lease term (in years)			4.28			5.03
Weighted-average discount rate			3.30	%		3.30	%

The following table provides supplemental lease information for the interim condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022:

	Nine Months Ended
	September 30, 2023		September 30, 2022
	(Dollars in Thousands)
Cash paid for amounts included in the measurement of    lease liabilities:
Operating cash flows from operating leases	$	323	$	320

Future Minimum Operating Lease Payments

The following table is a schedule of remaining future minimum lease payments for operating leases that had an initial or remaining non-cancellable lease term in excess of one year as of September 30, 2023:

	Minimum Rental Payments
	(Dollars in Thousands)
2023	$	109
2024		438
2025		339
2026		346
2027		353
2028 and thereafter		238
Total future minimum lease payments		1,823
Less: Imputed interest		139
Total operating lease liabilities	$	1,684

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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amount and Fair Value of Derivative Instruments Included on Company's Consolidated Balance Sheets on a net Basis

The table below reflects the notional amount and fair value of active derivative instruments included on the Company’s consolidated balance sheets on a net basis as of September 30, 2023 and December 31, 2022.

	As of September 30, 2023				As of December 31, 2022
	Notional		Estimated Fair Value		Notional		Estimated Fair Value
	Amount		Gain (Loss) (1)		Amount		Gain (Loss) (1)
	(Dollars in Thousands)
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate swaps related to fixed rate commercial real estate loans	$	—	$	—	$	20,000	$	1,101
Interest rate swaps related to fixed rate indirect consumer loans		30,000		537		—		—
Total fair value hedges				537				1,101
Cash flow hedges:
Interest rate swaps related to variable-rate money market deposit accounts		—		—		20,000		1,205
Interest rate swaps related to FHLB advances		—		—		—		—
Total cash flow hedges				—				1,205
Total hedges designated as hedging instruments, net			$	537			$	2,306

(1)Derivatives in a gain position are recorded as other assets and derivatives in a loss position are recorded as other liabilities in the consolidated balance sheets.

Schedule of Hedging Derivative Instruments' Effect on Company's Interim Condensed Consolidated Statement of Operations

The effects, which include the reclassification of unrealized gains on terminated swap contracts, are presented as either an increase or decrease to income before income taxes in the relevant caption of the Company’s interim condensed consolidated statements of operations.

Location in the Condensed		Three Months Ended				Nine Months Ended
Consolidated Statements of Operations		September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
		(Dollars in Thousands)				(Dollars in Thousands)
Interest income	Interest and fees on loans	$	258	$	45	$	603	$	(42	)
Interest expense	Interest on deposits		120		24		376		(103	)
Interest expense	Interest on borrowings		36		36		108		20
	Net increase (decrease) to income before income taxes	$	414	$	105	$	1,087	$	(125	)

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Other Operating Income and Expense (Tables)

9 Months Ended

Sep. 30, 2023

Other Income and Expenses [Abstract]

Other Operating Income

Other operating income for the three and nine months ended September 30, 2023 and 2022 consisted of the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(Dollars in Thousands)
Bank-owned life insurance	$	119	$	112	$	348	$	335
ATM fee income		93		125		315		403
Gain on sales of premises and equipment and other assets		18		278		18		301
Other income		64		52		208		195
Total	$	294	$	567	$	889	$	1,234

Other Operating Expense

Other operating expense for the three and nine months ended September 30, 2023 and 2022 consisted of the following:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2023		2022			2023		2022
	(Dollars in Thousands)
Postage, stationery and supplies	$	151	$	164		$	472	$	469
Telephone/data communication		128		159			479		518
Collection and recoveries		71		57			252		176
Directors fees		94		98			284		301
Software amortization		86		133			313		331
Other real estate/foreclosure expense, net		9		(5	)		30		(320	)
Other expense		545		568			1,769		1,629
Total	$	1,084	$	1,174		$	3,599	$	3,104

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Guarantees, Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Summary of Commitment and Contingent Liabilities

A summary of these commitments and contingent liabilities is presented below:

	September 30, 2023		December 31, 2022
	(Dollars in Thousands)
Standby letters of credit	$	—	$	—
Standby performance letters of credit	$	664	$	556
Commitments to extend credit	$	155,614	$	186,169

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis

The following table presents assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022.

	Fair Value Measurements as of September 30, 2023 Using
	Totals At September 30, 2023		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	37,000	$	—	$	37,000	$	—
Commercial		9,500		—		9,500		—
Obligations of U.S. government-sponsored agencies		10,932		—		10,932		—
Obligations of states and political subdivisions		1,543		—		1,543		—
Corporate notes		14,681		—		14,681		—
U.S. Treasury securities		52,895		52,895		—		—
Other assets - derivatives		537		—		537		—

	Fair Value Measurements as of December 31, 2022 Using
	Totals At December 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	43,957	$	—	$	43,957	$	—
Commercial		11,693		—		11,693		—
Obligations of U.S. government-sponsored agencies		4,270		—		4,270
Obligations of states and political subdivisions		2,072		—		2,072		—
Corporate notes		15,921				14,921		1,000
U.S. Treasury securities		52,882		52,882		—		—
Other assets - derivatives		2,306		—		2,306		—

Fair Value Assets Measured on Nonrecurring Basis

The following table presents the balances of impaired loans, OREO and other assets held-for-sale measured at fair value on a non-recurring basis as of September 30, 2023 and December 31, 2022:

	Fair Value Measurements as of September 30, 2023 Using
	Totals At September 30, 2023		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Collateral dependent loans	$	62	$	—	$	—	$	62
OREO and other assets held-for-sale		617		—		—		617

	Fair Value Measurements as of December 31, 2022 Using
	Totals At December 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	108	$	—	$	—	$	108
OREO and other assets held-for-sale		686		—		—		686

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques

Following the table is a description of the valuation technique and the sensitivity of the technique to changes in the significant unobservable input.

	Level 3 Significant Unobservable Input Assumptions
	Fair Value September 30, 2023		Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs (Weighted Average)
	(Dollars in Thousands)
Non-recurring fair value measurements:
Collateral dependent loans	$	62	Multiple data points, including discount to appraised value of collateral based on recent market activity	Appraisal comparability adjustment (discount)	9%-10%	(9.5%)
OREO and other assets held-for-sale	$	617	Discount to appraised value of property based on recent market activity for sales of similar properties	Appraisal comparability adjustment (discount)	9%-10%	(9.5%)

Fair Value, by Balance Sheet Grouping

The estimated fair value and related carrying or notional amounts, as well as the level within the fair value hierarchy, of the Company’s financial instruments as of September 30, 2023 and December 31, 2022 were as follows:

	September 30, 2023
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	66,129	$	66,129	$	66,129	$	—	$	—
Investment securities available-for-sale		126,551		126,551		52,895		73,656		—
Investment securities held-to-maturity		1,272		1,183		—		1,183		—
Federal funds sold		1,143		1,143		—		1,143		—
Federal Home Loan Bank stock		2,151		2,151		—		—		2,151
Loans, net of allowance for credit losses		803,920		769,466		—		—		769,466
Other assets - derivatives		537		537		—		537		—
Liabilities:
Deposits		927,038		829,435		—		829,435		—
Short-term borrowings		30,000		30,000		—		30,000		—
Long-term borrowings		10,781		9,226		—		9,226		—

	December 31, 2022
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	30,152	$	30,152	$	30,152	$	—	$	—
Investment securities available-for-sale		130,795		130,795		52,882		76,913		1,000
Investment securities held-to-maturity		1,862		1,769		—		1,769		—
Federal funds sold		1,768		1,768		—		1,768		—
Federal Home Loan Bank stock		1,359		1,359		—		—		1,359
Loans, net of allowance for loan and lease losses		764,451		730,961		—		—		730,961
Other assets - derivatives		2,306		2,306		—		2,306		—
Liabilities:
Deposits		870,025		788,161		—		788,161		—
Short-term borrowings		20,038		20,038		—		20,038		—
Long-term borrowings		10,726		9,702				9,702

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General - Additional Information (Details)	3 Months Ended
	Sep. 30, 2021 Branch
ALC [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of office closed	20

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Basis of Presentation - Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earning Per Share Basic And Diluted [Abstract]
Weighted average shares outstanding	5,874,769	5,839,658	5,858,812	6,016,770
Weighted average director stock equivalent shares	109,793	111,608	113,142	114,853
Basic shares	5,984,562	5,951,266	5,971,954	6,131,623
Dilutive shares	419,650	419,650	419,650	419,650
Diluted shares	6,404,212	6,370,916	6,391,604	6,551,273
Net income	$ 2,113	$ 1,860	$ 6,208	$ 4,636
Basic net income per share	$ 0.35	$ 0.31	$ 1.04	$ 0.76
Diluted net income per share	$ 0.33	$ 0.29	$ 0.97	$ 0.71

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Basis of Presentation - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Jan. 01, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Allowance for Credit Loss [Line Items]
Transition adjustment increase in allowance for credit losses			$ 2,100
Decrease to retained earnings	$ 87,408	$ 85,725		$ 85,135	$ 83,103	$ 82,576	$ 90,064
Impact of Adopting CECL [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Transition adjustment increase in allowance for credit losses			2,400
Decrease to retained earnings	(1,811)
Retained Earnings [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Decrease to retained earnings	107,976	$ 106,157		$ 104,460	$ 102,523	$ 100,838	$ 98,428
Retained Earnings [Member] | Impact of Adopting CECL [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Decrease to retained earnings	$ (1,811)		1,800
Reserve for Unfunded Commitments [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Transition adjustment increase in allowance for credit losses			$ 300

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Investment Securities - Available-for-Sale and Held-to-Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	$ 139,335	$ 141,883
Available-for-sale, gross unrealized gains	1	8
Available-for-sale, gross unrealized losses	(12,785)	(11,096)
Investment securities available-for-sale, at fair value	126,551	130,795
Held-to-maturity, amortized cost	1,272	1,862
Held-to-maturity, gross unrealized losses	(89)	(93)
Held-to-maturity, estimated fair value	1,183	1,769
Residential Mortgage Backed Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	41,071	47,659
Available-for-sale, gross unrealized gains		2
Available-for-sale, gross unrealized losses	(4,071)	(3,704)
Investment securities available-for-sale, at fair value	37,000	43,957
Commercial Mortgage Backed Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	10,020	12,169
Available-for-sale, gross unrealized gains	1	4
Available-for-sale, gross unrealized losses	(521)	(480)
Investment securities available-for-sale, at fair value	9,500	11,693
Held-to-maturity, amortized cost	704	1,167
Held-to-maturity, gross unrealized losses	(30)	(41)
Held-to-maturity, estimated fair value	674	1,126
US Government Agencies Debt Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	11,851	5,116
Available-for-sale, gross unrealized losses	(919)	(846)
Investment securities available-for-sale, at fair value	10,932	4,270
Held-to-maturity, amortized cost	502	610
Held-to-maturity, gross unrealized losses	(49)	(40)
Held-to-maturity, estimated fair value	453	570
US States and Political Subdivisions Debt Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	1,633	2,166
Available-for-sale, gross unrealized losses	(90)	(94)
Investment securities available-for-sale, at fair value	1,543	2,072
Held-to-maturity, amortized cost	66	85
Held-to-maturity, gross unrealized losses	(10)	(12)
Held-to-maturity, estimated fair value	56	73
Corporate Notes [Member]
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	17,772	17,817
Available-for-sale, gross unrealized gains		2
Available-for-sale, gross unrealized losses	(3,091)	(1,898)
Investment securities available-for-sale, at fair value	14,681	15,921
US Treasury Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, amortized cost	56,988	56,956
Available-for-sale, gross unrealized losses	(4,093)	(4,074)
Investment securities available-for-sale, at fair value	$ 52,895	$ 52,882

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Investment Securities - Scheduled Maturities of Investment Securities Available-for-Sale and Held-to-Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract]
Available-for-sale, maturing within one year, amortized cost	$ 12,988
Available-for-sale, maturing after one to five years, amortized cost	53,676
Available-for-sale, maturing after five to ten years, amortized cost	60,121
Available-for-sale, maturing after ten years, amortized cost	12,550
Available-for-sale, amortized cost	139,335	$ 141,883
Available-for-sale, maturing within one year, estimated fair value	12,783
Available-for-sale, maturing after one to five years, estimated fair value	49,249
Available-for-sale, maturing after five to ten years, estimated fair value	52,780
Available-for-sale, maturing after ten years, estimated fair value	11,739
Available-for-sale, amortized cost	126,551	130,795
Held-to-maturity, maturing after one to five years, amortized cost	324
Held-to-maturity, maturing after five to ten years, amortized cost	738
Held-to-maturity, maturing after ten years, amortized cost	210
Held-to-maturity, amortized cost	1,272	1,862
Held-to-maturity, maturing after one to five years, estimated fair value	308
Held-to-maturity, maturity after five to ten years, estimated fair value	686
Held-to-maturity, maturing after ten years, estimated fair value	189
Held-to-maturity, amortized cost	$ 1,183	$ 1,769

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Investment Securities - Schedule of Unrealized Loss on Investments and Fair Value for Securities for Which Allowance for Credit Losses has not been Recorded (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value	$ 2,439	$ 59,240
Available-for-sale, less than 12 months, unrealized losses	(216)	(2,946)
Available-for-sale, 12 months or more, fair value	117,287	69,650
Available-for-sale, 12 months or more, unrealized losses	(12,569)	(8,150)
Held-to-maturity, less than 12 months, fair value		1,413
Held-to-maturity, less than 12 months, unrealized losses		(60)
Held-to-maturity, 12 months or more, fair value	1,183	356
Held-to-maturity, 12 months or more, unrealized losses	(89)	(33)
Residential Mortgage Backed Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value	105	19,876
Available-for-sale, less than 12 months, unrealized losses	(5)	(952)
Available-for-sale, 12 months or more, fair value	36,860	23,903
Available-for-sale, 12 months or more, unrealized losses	(4,066)	(2,752)
Commercial Mortgage Backed Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value	1,532	9,720
Available-for-sale, less than 12 months, unrealized losses	(13)	(357)
Available-for-sale, 12 months or more, fair value	7,934	1,247
Available-for-sale, 12 months or more, unrealized losses	(508)	(123)
Held-to-maturity, less than 12 months, fair value		1,126
Held-to-maturity, less than 12 months, unrealized losses		(41)
Held-to-maturity, 12 months or more, fair value	674
Held-to-maturity, 12 months or more, unrealized losses	(30)
US Government Agencies Debt Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, 12 months or more, fair value	4,176	4,270
Available-for-sale, 12 months or more, unrealized losses	(919)	(846)
Held-to-maturity, less than 12 months, fair value		214
Held-to-maturity, less than 12 months, unrealized losses		(7)
Held-to-maturity, 12 months or more, fair value	453	356
Held-to-maturity, 12 months or more, unrealized losses	(49)	(33)
US States and Political Subdivisions Debt Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value		1,559
Available-for-sale, less than 12 months, unrealized losses		(41)
Available-for-sale, 12 months or more, fair value	1,543	513
Available-for-sale, 12 months or more, unrealized losses	(90)	(53)
Held-to-maturity, less than 12 months, fair value		73
Held-to-maturity, less than 12 months, unrealized losses		(12)
Held-to-maturity, 12 months or more, fair value	56
Held-to-maturity, 12 months or more, unrealized losses	(10)
Corporate Notes [Member]
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value	802	6,845
Available-for-sale, less than 12 months, unrealized losses	(198)	(898)
Available-for-sale, 12 months or more, fair value	13,879	8,075
Available-for-sale, 12 months or more, unrealized losses	(2,893)	(1,000)
US Treasury Securities [Member]
Schedule Of Investments [Line Items]
Available-for-sale, less than 12 months, fair value		21,240
Available-for-sale, less than 12 months, unrealized losses		(698)
Available-for-sale, 12 months or more, fair value	52,895	31,642
Available-for-sale, 12 months or more, unrealized losses	$ (4,093)	$ (3,376)

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Investment Securities - Additional Information (Details)	Sep. 30, 2023 USD ($) DebtSecurities	Jan. 01, 2023 USD ($)	Dec. 31, 2022 USD ($) DebtSecurities
Investments, Debt and Equity Securities [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year | DebtSecurities	109		37
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year | DebtSecurities	6		75
Debt Securities, Available-for-sale, Restricted | $	$ 42,300,000		$ 54,700,000
Allowance for credit losses, held-to-maturity | $	$ 0	$ 0

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Loans and Allowance for Credit Losses - Schedule of Loan Portfolio (Details) - USD ($) $ in Thousands		Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Loans		$ 815,300	$ 773,873
Loans and leases, allowance for credit losses		11,380	9,422	$ 9,373	$ 8,320
Net loans and leases held for investment		803,920	764,451
Construction, Land Development and Other Land Loans [Member]
Loans and leases, allowance for credit losses		580	517	384	628
Secured By Multi family Residential Properties [Member]
Loans and leases, allowance for credit losses		405	646	647	437
Secured By Non-farm Non residential Properties [Member]
Loans and leases, allowance for credit losses		1,622	1,970	1,992	1,958
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Loans		90,051	53,914
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Loans		83,876	87,995
Real Estate [Member] | Secured By Multi family Residential Properties [Member]
Loans		56,506	67,852
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Loans		199,116	200,156
Commercial and Industrial Loans and Leases [Member]
Loans	[1]	59,369	73,546
Consumer Portfolio Segment [Member]
Loans		410,258
Consumer Portfolio Segment [Member] | Secured by 1-4 Family Residential Properties [Member]
Loans		83,876
Consumer Portfolio Segment [Member] | Direct [Member]
Loans		6,544	9,851
Loans and leases, allowance for credit losses		487	866	948	1,004
Consumer Portfolio Segment [Member] | Branch Retail [Member]
Loans		9,648	13,992
Loans and leases, allowance for credit losses		835	518	423	304
Consumer Portfolio Segment [Member] | Indirect [Member]
Loans		310,190	266,567
Loans and leases, allowance for credit losses		$ 6,167	$ 3,154	$ 3,083	$ 2,439

[1] Includes equipment financing leases, which totaled $10.2 million and $10.3 million as of September 30, 2023 and December 31, 2022, respectively.

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Loans and Allowance for Credit Losses - Schedule of Loan Portfolio (Parenthetical) (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Loans	$ 815,300	$ 773,873
Equipment Financing Leases [Member]
Loans	$ 10,200	$ 10,300

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Loans and Allowance for Credit Losses - Additional Information (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022	Jun. 30, 2023	Jan. 01, 2023	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Loans and Leases Receivable, Related Parties, Ending Balance	$ 1,400,000	$ 200,000
Loans and Leases Receivable, Related Parties, Additions		0
Loans and Leases Receivable, Related Parties, Proceeds	0	100,000
Transition adjustment increase in allowance for credit losses				$ 2,100,000
Decrease to retained earnings	87,408,000	85,135,000	$ 85,725,000		$ 83,103,000	$ 82,576,000	$ 90,064,000
Minimum commitment required for evaluating idividually	500,000
Commitment required for evaluating individually at management discretion	500,000
Loans and leases, allowance for credit losses	11,380,000	9,422,000			9,373,000		8,320,000
Retained Earnings [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Decrease to retained earnings	107,976,000	104,460,000	$ 106,157,000		$ 102,523,000	$ 100,838,000	$ 98,428,000
Impact of Adopting CECL [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Transition adjustment increase in allowance for credit losses				2,400,000
Decrease to retained earnings	(1,811,000)
Loans and leases, allowance for credit losses	2,123,000			2,100,000
Additional increase to allowance for credit losses on loans and leases	500,000
Impact of Adopting CECL [Member] | Retained Earnings [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Decrease to retained earnings	(1,811,000)			1,800,000
Reserve for Unfunded Commitments [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Transition adjustment increase in allowance for credit losses				300,000
Loans and leases, allowance for credit losses	$ 500,000	$ 0
Reserve for Unfunded Commitments [Member] | Impact of Adopting CECL [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Loans and leases, allowance for credit losses				$ 300,000
Real Estate [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Percentage of Loan Portfolio	52.70%	53.00%
Pledged as Collateral [Member] | FHLB Borrowings [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Loans pledged as collateral	$ 100,800,000	$ 100,200,000
Pledged as Collateral [Member] | Federal Reserve Bank Advances [Member]
Debt Securities Heldtomaturity Allowance For Credit Loss [Line Items]
Loans pledged as collateral	$ 282,600,000	$ 0

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Loans and Allowance for Credit Losses - Allowance for Credit Losses on Loans and Leases (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Beginning balance	$ 9,422,000	$ 8,320,000
Charge-offs	(1,476,000)	(2,275,000)
Recoveries	773,000	547,000
Provision for (recovery of) credit losses	538,000	2,781,000
Ending balance	11,380,000	9,373,000
Loans	815,300,000		$ 773,873,000
Impact of Adopting CECL [Member]
Ending balance	2,123,000
Construction, Land Development and Other Land Loans [Member]
Beginning balance	517,000	628,000
Recoveries		2,000
Provision for (recovery of) credit losses	157,000	(246,000)
Ending balance	580,000	384,000
Construction, Land Development and Other Land Loans [Member] | Impact of Adopting CECL [Member]
Ending balance	(94,000)
Secured by Real Estate 1-4 Family Residential Properties [Member]
Beginning balance	832,000	690,000
Charge-offs	(96,000)	(10,000)
Recoveries	39,000	23,000
Provision for (recovery of) credit losses	18,000	89,000
Ending balance	754,000	792,000
Secured by Real Estate 1-4 Family Residential Properties [Member] | Impact of Adopting CECL [Member]
Ending balance	(39,000)
Secured By Multi family Residential Properties [Member]
Beginning balance	646,000	437,000
Provision for (recovery of) credit losses	(156,000)	210,000
Ending balance	405,000	647,000
Secured By Multi family Residential Properties [Member] | Impact of Adopting CECL [Member]
Ending balance	(85,000)
Secured By Non-farm Non residential Properties [Member]
Beginning balance	1,970,000	1,958,000
Recoveries		4,000
Provision for (recovery of) credit losses	(201,000)	30,000
Ending balance	1,622,000	1,992,000
Secured By Non-farm Non residential Properties [Member] | Impact of Adopting CECL [Member]
Ending balance	(147,000)
Commercial and Industrial Loans [Member]
Beginning balance	919,000	860,000
Provision for (recovery of) credit losses	(369,000)	244,000
Ending balance	530,000	1,104,000
Loans	59,369,000		73,546,000
Commercial and Industrial Loans [Member] | Impact of Adopting CECL [Member]
Ending balance	(20,000)
Consumer Portfolio Segment [Member]
Loans	410,258,000
Consumer Portfolio Segment [Member] | Secured by 1-4 Family Residential Properties [Member]
Loans	83,876,000
Consumer Portfolio Segment [Member] | Direct [Member]
Beginning balance	866,000	1,004,000
Charge-offs	(521,000)	(1,604,000)
Recoveries	499,000	387,000
Provision for (recovery of) credit losses	(404,000)	1,161,000
Ending balance	487,000	948,000
Loans	6,544,000		9,851,000
Consumer Portfolio Segment [Member] | Direct [Member] | Impact of Adopting CECL [Member]
Ending balance	47,000
Consumer Portfolio Segment [Member] | Branch Retail [Member]
Beginning balance	518,000	304,000
Charge-offs	(359,000)	(423,000)
Recoveries	195,000	97,000
Provision for (recovery of) credit losses	(147)	445,000
Ending balance	835,000	423,000
Loans	9,648,000		13,992,000
Consumer Portfolio Segment [Member] | Branch Retail [Member] | Impact of Adopting CECL [Member]
Ending balance	628,000
Consumer Portfolio Segment [Member] | Indirect Consumer [Member]
Beginning balance	3,154,000	2,439,000
Charge-offs	(500,000)	(238,000)
Recoveries	40,000	34,000
Provision for (recovery of) credit losses	1,640,000	848,000
Ending balance	6,167,000	$ 3,083,000
Loans	310,190,000		$ 266,567,000
Consumer Portfolio Segment [Member] | Indirect Consumer [Member] | Impact of Adopting CECL [Member]
Ending balance	$ 1,833,000

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Loans and Allowance for Credit Losses - Schedule of Loan and Lease Losses and Recorded Investment in Loans by Loan Classification and by Impairment Evaluation (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Loans and leases, allowance for credit losses	$ 11,380	$ 9,422	$ 9,373	$ 8,320
Loans	815,300	773,873
In Accordance with ASC 310 prior to Adoption of ASC 326 [Member]
Individually evaluated for impairment		259
Collectively evaluated for impairment		9,183
Loans and leases, allowance for credit losses		9,442
Individually evaluated for impairment		5,521
Collectively evaluated for impairment		768,352
Loans		773,873
Construction, Land Development and Other Land Loans [Member]
Loans and leases, allowance for credit losses	580	517	384	628
Construction, Land Development and Other Land Loans [Member] | In Accordance with ASC 310 prior to Adoption of ASC 326 [Member]
Collectively evaluated for impairment		517
Loans and leases, allowance for credit losses		517
Collectively evaluated for impairment		53,914
Loans		53,914
Secured by Real Estate 1-4 Family Residential Properties [Member]
Loans and leases, allowance for credit losses	754	832	792	690
Secured by Real Estate 1-4 Family Residential Properties [Member] | In Accordance with ASC 310 prior to Adoption of ASC 326 [Member]
Individually evaluated for impairment		7
Collectively evaluated for impairment		825
Loans and leases, allowance for credit losses		832
Individually evaluated for impairment		582
Collectively evaluated for impairment		87,413
Loans		87,995
Secured By Multi family Residential Properties [Member]
Loans and leases, allowance for credit losses	405	646	647	437
Secured By Multi family Residential Properties [Member] | In Accordance with ASC 310 prior to Adoption of ASC 326 [Member]
Collectively evaluated for impairment		646
Loans and leases, allowance for credit losses		646
Collectively evaluated for impairment		67,852
Loans		67,852
Secured By Non-farm Non residential Properties [Member]
Loans and leases, allowance for credit losses	1,622	1,970	1,992	1,958
Secured By Non-farm Non residential Properties [Member] | In Accordance with ASC 310 prior to Adoption of ASC 326 [Member]
Collectively evaluated for impairment		1,970
Loans and leases, allowance for credit losses		1,970
Individually evaluated for impairment		2,492
Collectively evaluated for impairment		197,664
Loans		200,156
Direct [Member] | In Accordance with ASC 310 prior to Adoption of ASC 326 [Member]
Collectively evaluated for impairment		886
Loans and leases, allowance for credit losses		886
Individually evaluated for impairment		18
Collectively evaluated for impairment		9,833
Loans		9,851
Branch Retail [Member] | In Accordance with ASC 310 prior to Adoption of ASC 326 [Member]
Collectively evaluated for impairment		518
Loans and leases, allowance for credit losses		518
Collectively evaluated for impairment		13,992
Loans		13,992
Indirect Consumer [Member] | In Accordance with ASC 310 prior to Adoption of ASC 326 [Member]
Collectively evaluated for impairment		3,154
Loans and leases, allowance for credit losses		3,154
Collectively evaluated for impairment		266,567
Loans		266,567
Commercial And Industrial Loans [Member]
Loans and leases, allowance for credit losses	530	919	1,104	860
Loans	59,369	73,546
Commercial And Industrial Loans [Member] | In Accordance with ASC 310 prior to Adoption of ASC 326 [Member]
Individually evaluated for impairment		252
Collectively evaluated for impairment		667
Loans and leases, allowance for credit losses		919
Individually evaluated for impairment		2,429
Collectively evaluated for impairment		71,117
Loans		73,546
Consumer Portfolio Segment [Member]
Loans	410,258
Consumer Portfolio Segment [Member] | Direct [Member]
Loans and leases, allowance for credit losses	487	866	948	1,004
Loans	6,544	9,851
Consumer Portfolio Segment [Member] | Branch Retail [Member]
Loans and leases, allowance for credit losses	835	518	423	304
Loans	9,648	13,992
Consumer Portfolio Segment [Member] | Indirect Consumer [Member]
Loans and leases, allowance for credit losses	6,167	3,154	$ 3,083	$ 2,439
Loans	$ 310,190	$ 266,567

XML

Loans and Allowance for Credit Losses - Schedule of Amortized Cost Basis of Collateral Dependent Loans (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Total loans individually evaluated	$ 2,977
Real Estate [Member] | Secured by Real Estate 1-4 Family Residential Properties [Member]
Total loans individually evaluated	498
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Total loans individually evaluated	2,353
Commercial And Industrial Loans [Member]
Total loans individually evaluated	126
Real Estate [Member]
Total loans individually evaluated	2,851
Real Estate [Member] | Real Estate [Member] | Secured by Real Estate 1-4 Family Residential Properties [Member]
Total loans individually evaluated	498
Real Estate [Member] | Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Total loans individually evaluated	2,353
Other [Member]
Total loans individually evaluated	126
Other [Member] | Commercial And Industrial Loans [Member]
Total loans individually evaluated	$ 126

XML

Loans and Allowance for Credit Losses - Loans By Credit Quality Indicators (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable Recorded Investment [Line Items]
Loans	$ 815,300	$ 773,873
As a percentage of total loans	100.00%	100.00%
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	$ 90,051	$ 53,914
Real Estate [Member] | Secured By Multi family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	56,506	67,852
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	199,116	200,156
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	83,876	87,995
Commercial and Industrial Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	59,369	73,546
Consumer Portfolio Segment [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	410,258
Consumer Portfolio Segment [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	409,268
Consumer Portfolio Segment [Member] | Secured by 1-4 Family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	83,876
Consumer Portfolio Segment [Member] | Secured by 1-4 Family Residential Properties [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	83,028
Consumer Portfolio Segment [Member] | Secured by 1-4 Family Residential Properties [Member] | Nonperforming Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	848
Consumer Portfolio Segment [Member] | Direct [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	6,544	9,851
Consumer Portfolio Segment [Member] | Direct [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	6,544
Consumer Portfolio Segment [Member] | Direct [Member] | Nonperforming Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	990
Consumer Portfolio Segment [Member] | Branch Retail [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	9,648	13,992
Consumer Portfolio Segment [Member] | Branch Retail [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	9,648
Consumer Portfolio Segment [Member] | Indirect [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	310,190	266,567
Consumer Portfolio Segment [Member] | Indirect [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	310,048
Consumer Portfolio Segment [Member] | Indirect [Member] | Nonperforming Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans	$ 142
FUSB [Member] | Pass
Financing Receivable Recorded Investment [Line Items]
Loans		$ 389,270
As a percentage of total loans		98.43%
FUSB [Member] | Pass | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		$ 53,914
FUSB [Member] | Pass | Real Estate [Member] | Secured By Multi family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		67,852
FUSB [Member] | Pass | Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		197,004
FUSB [Member] | Pass | Commercial and Industrial Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		70,500
FUSB [Member] | Special Mention
Financing Receivable Recorded Investment [Line Items]
Loans		$ 651
As a percentage of total loans		0.17%
FUSB [Member] | Special Mention | Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		$ 651
FUSB [Member] | Substandard
Financing Receivable Recorded Investment [Line Items]
Loans		$ 5,547
As a percentage of total loans		1.40%
FUSB [Member] | Substandard | Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		$ 2,501
FUSB [Member] | Substandard | Commercial and Industrial Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		3,046
FUSB [Member] | Pass And Criticized [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		$ 395,468
As a percentage of total loans		100.00%
FUSB [Member] | Pass And Criticized [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		$ 53,914
FUSB [Member] | Pass And Criticized [Member] | Real Estate [Member] | Secured By Multi family Residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		67,852
FUSB [Member] | Pass And Criticized [Member] | Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		200,156
FUSB [Member] | Pass And Criticized [Member] | Commercial and Industrial Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		73,546
ALC [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans		$ 377,132
As a percentage of total loans		99.66%
ALC [Member] | Nonperforming Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans		$ 1,273
As a percentage of total loans		0.34%
ALC [Member] | Performing And Non Performing [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		$ 378,405
As a percentage of total loans		100.00%
ALC [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans		$ 86,871
ALC [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Nonperforming Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans		1,124
ALC [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Performing And Non Performing [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		87,995
ALC [Member] | Consumer Portfolio Segment [Member] | Direct [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans		9,805
ALC [Member] | Consumer Portfolio Segment [Member] | Direct [Member] | Nonperforming Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans		46
ALC [Member] | Consumer Portfolio Segment [Member] | Direct [Member] | Performing And Non Performing [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		9,851
ALC [Member] | Consumer Portfolio Segment [Member] | Branch Retail [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans		13,960
ALC [Member] | Consumer Portfolio Segment [Member] | Branch Retail [Member] | Nonperforming Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans		32
ALC [Member] | Consumer Portfolio Segment [Member] | Branch Retail [Member] | Performing And Non Performing [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		13,992
ALC [Member] | Consumer Portfolio Segment [Member] | Indirect [Member] | Performing Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans		266,496
ALC [Member] | Consumer Portfolio Segment [Member] | Indirect [Member] | Nonperforming Financial Instruments
Financing Receivable Recorded Investment [Line Items]
Loans		71
ALC [Member] | Consumer Portfolio Segment [Member] | Indirect [Member] | Performing And Non Performing [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		$ 266,567

XML

Loans and Allowance for Credit Losses - Carrying Amount of Loans by Credit Quality Indicator and Year of Origination (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable, Credit Quality Indicator [Line Items]
Total	$ 815,300	$ 773,873
Commercial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	20,217
2022	111,124
2021	89,741
2020	67,193
2019	29,933
Prior	86,834
Total	405,042
Commercial [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	20,217
2022	110,374
2021	87,338
2020	66,470
2019	29,571
Prior	82,534
Total	396,504
Commercial [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2022	706
2021	2,194
2020	546
2019	57
Prior	1,690
Total	5,193
Commercial [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2022	44
2021	209
2020	177
2019	305
Prior	2,610
Total	3,345
Commercial [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	3,716
2022	38,961
2021	40,404
2020	6,377
Prior	593
Total	90,051
Commercial [Member] | Construction, Land Development and Other Land Loans [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	3,716
2022	38,961
2021	40,404
2020	6,377
Prior	593
Total	90,051
Commercial [Member] | Secured By Multi family Residential Properties [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	383
2022	28,513
2021	5,991
2020	686
2019	7,151
Prior	13,782
Total	56,506
Commercial [Member] | Secured By Multi family Residential Properties [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	383
2022	28,513
2021	5,991
2020	686
2019	7,151
Prior	13,782
Total	56,506
Commercial [Member] | Secured By Non-farm Non residential Properties [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2022	36,035
2021	26,814
2020	57,412
2019	18,618
Prior	51,554
Total	199,116
Commercial [Member] | Secured By Non-farm Non residential Properties [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	8,683
2022	35,499
2021	25,519
2020	56,913
2019	18,618
Prior	47,516
Total	192,748
Commercial [Member] | Secured By Non-farm Non residential Properties [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2022	536
2021	1,295
2020	347
Prior	1,690
Total	3,868
Commercial [Member] | Secured By Non-farm Non residential Properties [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2020	152
Prior	2,348
Total	2,500
Commercial [Member] | Commercial and Industrial Loans and Leases [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	7,435
2022	7,615
2021	16,532
2020	2,718
2019	4,164
Prior	20,905
Total	59,369
Commercial [Member] | Commercial and Industrial Loans and Leases [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	7,435
2022	7,401
2021	15,424
2020	2,494
2019	3,802
Prior	20,643
Total	57,199
Commercial [Member] | Commercial and Industrial Loans and Leases [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2022	170
2021	899
2020	199
2019	57
Total	1,325
Commercial [Member] | Commercial and Industrial Loans and Leases [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2022	44
2021	209
2020	25
2019	305
Prior	262
Total	845
Consumer [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	88,681
2022	115,903
2021	88,374
2020	69,429
2019	17,283
Prior	30,588
Total	410,258
Current period gross charge-offs, 2022	133
Current period gross charge-offs, 2021	529
Current period gross charge-offs, 2020	395
Current period gross charge-offs, 2019	80
Current period gross charge-offs, Prior	339
Current period gross charge-offs	1,476
Consumer [Member] | Performing [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	88,681
2022	115,869
2021	88,374
2020	69,321
2019	17,283
Prior	29,740
Total	409,268
Consumer [Member] | Non-performing [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2022	34
2020	108
Consumer [Member] | Secured by 1-4 Family Residential Properties [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	4,282
2022	21,592
2021	14,886
2020	12,028
2019	9,323
Prior	21,765
Total	83,876
Current period gross charge-offs, Prior	96
Current period gross charge-offs	96
Consumer [Member] | Secured by 1-4 Family Residential Properties [Member] | Performing [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	4,282
2022	21,592
2021	14,886
2020	12,028
2019	9,323
Prior	20,917
Total	83,028
Consumer [Member] | Secured by 1-4 Family Residential Properties [Member] | Non-performing [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Prior	848
Total	848
Consumer [Member] | Direct [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	2,052
2022	1,379
2021	1,961
2020	739
2019	288
Prior	125
Total	6,544	9,851
Current period gross charge-offs, 2022	5
Current period gross charge-offs, 2021	274
Current period gross charge-offs, 2020	115
Current period gross charge-offs, 2019	39
Current period gross charge-offs, Prior	88
Current period gross charge-offs	521
Consumer [Member] | Direct [Member] | Performing [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	2,052
2022	1,379
2021	1,961
2020	739
2019	288
Prior	125
Total	6,544
Consumer [Member] | Direct [Member] | Non-performing [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Prior	848
Total	990
Consumer [Member] | Branch Retail [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2021	2,405
2020	2,990
2019	1,794
Prior	2,459
Total	9,648	13,992
Current period gross charge-offs, 2021	84
Current period gross charge-offs, 2020	127
Current period gross charge-offs, 2019	28
Current period gross charge-offs, Prior	120
Current period gross charge-offs	359
Consumer [Member] | Branch Retail [Member] | Performing [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2021	2,405
2020	2,990
2019	1,794
Prior	2,459
Total	9,648
Consumer [Member] | Indirect [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	82,347
2022	92,932
2021	69,122
2020	53,672
2019	5,878
Prior	6,239
Total	310,190	$ 266,567
Current period gross charge-offs, 2022	128
Current period gross charge-offs, 2021	171
Current period gross charge-offs, 2020	153
Current period gross charge-offs, 2019	13
Current period gross charge-offs, Prior	35
Current period gross charge-offs	500
Consumer [Member] | Indirect [Member] | Performing [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2023	82,347
2022	92,898
2021	69,122
2020	53,564
2019	5,878
Prior	6,239
Total	310,048
Consumer [Member] | Indirect [Member] | Non-performing [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2022	34
2020	108
Total	$ 142

XML

Loans and Allowance for Credit Losses - Aging Analysis of Past Due Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Loans	$ 815,300	$ 773,873
As a percentage of total loans	100.00%	100.00%
Loans	$ 1,853
As a percentage of total loans, Total Past Due	0.29%	0.32%
As a percentage of total loans, Current	99.71%	99.68%
Financial Asset, 30 to 59 Days Past Due
As a percentage of total loans		0.21%
Financial Asset, 60 to 89 Days Past Due
As a percentage of total loans		0.04%
Financial Asset, Equal to or Greater than 90 Days Past Due
As a percentage of total loans		0.07%
Total Past Due
Loans	$ 2,327	$ 2,481
Current
Loans	812,973	771,392
ALC [Member] | Financial Asset, 30 to 59 Days Past Due
Loans	$ 1,916	1,694
As a percentage of total loans	0.24%
ALC [Member] | Financial Asset, 60 to 89 Days Past Due
Loans	$ 207	277
As a percentage of total loans	0.02%
ALC [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due
Loans	$ 204	511
As a percentage of total loans	0.03%
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Loans	$ 90,051	53,914
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member] | Current
Loans	90,051	53,914
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Loans	83,876	87,995
Loans	462
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Total Past Due
Loans	129	966
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Current
Loans	83,747	87,029
Real Estate [Member] | Secured By Multi family Residential Properties [Member]
Loans	56,506	67,852
Real Estate [Member] | Secured By Multi family Residential Properties [Member] | Current
Loans	56,506	67,852
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Loans	199,116	200,156
Loans	1,314
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member] | Total Past Due
Loans	1,314	137
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member] | Current
Loans	197,802	200,019
Real Estate [Member] | ALC [Member] | Secured by 1-4 Family Residential Properties [Member] | Financial Asset, 30 to 59 Days Past Due
Loans	93	801
Real Estate [Member] | ALC [Member] | Secured by 1-4 Family Residential Properties [Member] | Financial Asset, 60 to 89 Days Past Due
Loans	36	87
Real Estate [Member] | ALC [Member] | Secured by 1-4 Family Residential Properties [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due
Loans		78
Real Estate [Member] | ALC [Member] | Secured By Non-farm Non residential Properties [Member] | Financial Asset, 30 to 59 Days Past Due
Loans	1,314	137
Commercial and Industrial Loans [Member]
Loans	59,369	73,546
Loans	77
Commercial and Industrial Loans [Member] | Total Past Due
Loans	84	361
Commercial and Industrial Loans [Member] | Current
Loans	59,285	73,185
Commercial and Industrial Loans [Member] | ALC [Member] | Financial Asset, 30 to 59 Days Past Due
Loans	22	61
Commercial and Industrial Loans [Member] | ALC [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due
Loans	62	300
Consumer Portfolio Segment [Member]
Loans	410,258
Consumer Portfolio Segment [Member] | Secured by 1-4 Family Residential Properties [Member]
Loans	83,876
Consumer Portfolio Segment [Member] | Direct [Member]
Loans	6,544	9,851
Consumer Portfolio Segment [Member] | Direct [Member] | Total Past Due
Loans	52	330
Consumer Portfolio Segment [Member] | Direct [Member] | Current
Loans	6,492	9,521
Consumer Portfolio Segment [Member] | Branch Retail [Member]
Loans	9,648	13,992
Consumer Portfolio Segment [Member] | Branch Retail [Member] | Total Past Due
Loans	100	375
Consumer Portfolio Segment [Member] | Branch Retail [Member] | Current
Loans	9,548	13,617
Consumer Portfolio Segment [Member] | Indirect Consumer [Member]
Loans	310,190	266,567
Consumer Portfolio Segment [Member] | Indirect Consumer [Member] | Total Past Due
Loans	648	312
Consumer Portfolio Segment [Member] | Indirect Consumer [Member] | Current
Loans	309,542	266,255
Consumer Portfolio Segment [Member] | ALC [Member] | Direct [Member] | Financial Asset, 30 to 59 Days Past Due
Loans	52	251
Consumer Portfolio Segment [Member] | ALC [Member] | Direct [Member] | Financial Asset, 60 to 89 Days Past Due
Loans		50
Consumer Portfolio Segment [Member] | ALC [Member] | Direct [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due
Loans		30
Consumer Portfolio Segment [Member] | ALC [Member] | Branch Retail [Member] | Financial Asset, 30 to 59 Days Past Due
Loans	100	258
Consumer Portfolio Segment [Member] | ALC [Member] | Branch Retail [Member] | Financial Asset, 60 to 89 Days Past Due
Loans		85
Consumer Portfolio Segment [Member] | ALC [Member] | Branch Retail [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due
Loans		32
Consumer Portfolio Segment [Member] | ALC [Member] | Indirect Consumer [Member] | Financial Asset, 30 to 59 Days Past Due
Loans	335	186
Consumer Portfolio Segment [Member] | ALC [Member] | Indirect Consumer [Member] | Financial Asset, 60 to 89 Days Past Due
Loans	171	55
Consumer Portfolio Segment [Member] | ALC [Member] | Indirect Consumer [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due
Loans	$ 142	$ 71

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Loans and Allowance for Credit Losses - Non-accruing Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Non-accruing loans	$ 2,432	$ 1,651
Nonaccrual loans with no allowance for credit losses	1,853
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Non-accruing loans	891	914
Nonaccrual loans with no allowance for credit losses	462
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Non-accruing loans	1,314
Nonaccrual loans with no allowance for credit losses	1,314
Commercial and Industrial Loans [Member]
Non-accruing loans	85	605
Nonaccrual loans with no allowance for credit losses	77
Consumer Portfolio Segment [Member] | Direct [Member]
Non-accruing loans		29
Consumer Portfolio Segment [Member] | Branch Retail [Member]
Non-accruing loans		32
Consumer Portfolio Segment [Member] | Indirect Consumer [Member]
Non-accruing loans	$ 142	$ 71

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Loans and Allowance for Credit Losses - Loans Individually Evaluated, as well as any Related Allowance for Loans and Lease Losses (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2022
Loans individually evaluated with no allowance recorded, carrying amount		$ 5,154
Loans individually evaluated with no allowance recorded, unpaid principal balance		5,154
Loans individually evaluated with no allowance recorded, related allowances		259
Loans individually evaluated with an allowance recorded, carrying amount		367
Loans individually evaluated with an allowance recorded, unpaid principal balance		367
Loans individually evaluated with an allowance recorded, carrying amount		5,521
Loans individually evaluated, unpaid principal balance		5,521
Loans individually evaluated, average recorded investment	$ 2,747
Loans individually evaluated, interest income recognized	52
Loans individually evaluated, interest income received	44
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Loans individually evaluated, average recorded investment	116
Loans individually evaluated, interest income recognized	2
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Loans individually evaluated with no allowance recorded, carrying amount		568
Loans individually evaluated with no allowance recorded, unpaid principal balance		568
Loans individually evaluated with no allowance recorded, related allowances		7
Loans individually evaluated with an allowance recorded, carrying amount		14
Loans individually evaluated with an allowance recorded, unpaid principal balance		14
Loans individually evaluated with an allowance recorded, carrying amount		582
Loans individually evaluated, unpaid principal balance		582
Loans individually evaluated, average recorded investment	624
Loans individually evaluated, interest income recognized	4
Loans individually evaluated, interest income received	4
Real Estate [Member] | Secured By Non-farm Non residential Properties [Member]
Loans individually evaluated with no allowance recorded, carrying amount		2,492
Loans individually evaluated with no allowance recorded, unpaid principal balance		2,492
Loans individually evaluated with an allowance recorded, carrying amount		2,492
Loans individually evaluated, unpaid principal balance		2,492
Loans individually evaluated, average recorded investment	1,116
Loans individually evaluated, interest income recognized	38
Loans individually evaluated, interest income received	35
Commercial and Industrial Loans [Member]
Loans individually evaluated with no allowance recorded, carrying amount		2,076
Loans individually evaluated with no allowance recorded, unpaid principal balance		2,076
Loans individually evaluated with no allowance recorded, related allowances		252
Loans individually evaluated with an allowance recorded, carrying amount		353
Loans individually evaluated with an allowance recorded, unpaid principal balance		353
Loans individually evaluated with an allowance recorded, carrying amount		2,429
Loans individually evaluated, unpaid principal balance		2,429
Loans individually evaluated, average recorded investment	872
Loans individually evaluated, interest income recognized	7
Loans individually evaluated, interest income received	4
Direct Consumer [Member]
Loans individually evaluated with an allowance recorded, carrying amount		18
Loans individually evaluated with an allowance recorded, unpaid principal balance		18
Loans individually evaluated with an allowance recorded, carrying amount		18
Loans individually evaluated, unpaid principal balance		$ 18
Loans individually evaluated, average recorded investment	19
Loans individually evaluated, interest income recognized	1
Loans individually evaluated, interest income received	$ 1

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Other Real Estate Owned and Repossessed Assets - Summary of Foreclosed Property Activity (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Other Real Estate [Abstract]
Beginning balance	$ 686	$ 2,149
Additions		411
Sales proceeds		(2,215)
Gross gains		369
Gross losses		(27)
Net gains (losses)		342
Impairment	(69)	(1)
Ending balance	$ 617	$ 686

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Other Real Estate Owned and Repossessed Assets - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2022
Other Real Estate [Abstract]
Foreclosed real estate owned, fair value less disposal costs	$ 20	$ 0
Mortgage loans in process of foreclosure, amount	$ 0	$ 19

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Other Real Estate Owned and Repossessed Assets - Summary of Repossessed Assets Activity (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Other Real Estate And Other Assets Acquired In Foreclosure [Line Items]
Sales proceeds		$ (2,215)
Gross gains		369
Gross losses		(27)
Net gains (losses)		342
Impairment	$ (69)	(1)
Repossessed Assets [Member]
Other Real Estate And Other Assets Acquired In Foreclosure [Line Items]
Beginning balance	83	154
Transfers from loans	1,178	635
Sales proceeds	(453)	(331)
Gross losses	(535)	(292)
Net gains (losses)	(535)	(292)
Ending balance	$ 273	$ 166

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Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2018
Goodwill And Other Intangible Assets [Line Items]
Goodwill, Ending Balance	$ 7,435	$ 7,435
Finite-Lived Intangible Assets, Net, Ending Balance	$ 207	366
Core Deposits [Member]
Goodwill And Other Intangible Assets [Line Items]
Finite-lived intangible asset, useful life	7 years
Finite-Lived Intangible Assets, Net, Ending Balance			$ 2,000
The Peoples Bank [Member]
Goodwill And Other Intangible Assets [Line Items]
Goodwill, Ending Balance	$ 7,400	$ 7,400

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Goodwill and Other Intangible Assets - Summary of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 7,435	$ 7,435
Gross carrying amount	2,048	2,048
Accumulated amortization	(1,841)	(1,682)
Core deposit intangible, net	207	366
Total	$ 7,642	$ 7,801

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Goodwill and Other Intangible Assets - Estimated Remaining Amortization Expense (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
2023	$ 36
2024	122
2025	49
Core deposit intangible, net	$ 207	$ 366

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Borrowings - Additional Information (Details) - USD ($)		9 Months Ended
	Oct. 01, 2021	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022
Short Term Debt [Line Items]
Federal Funds Purchased		$ 0	$ 0
Securities Sold under Agreements to Repurchase, Total		0	38,000
Federal Home Loan Bank, Advances, Maturities Summary, Due in Next Twelve Months, Total		30,000,000	20,000,000
Long-term Federal Home Loan Bank advances		0	0
Long-Term Debt		$ 10,781,000	10,726,000
Subordinated Debt [Member]
Short Term Debt [Line Items]
Maturity date	Oct. 01, 2031
Interest rate, description		The Notes bear interest at a rate of 3.50% per annum for the first five years, after which the interest rate will be reset quarterly to a benchmark interest rate per annum which, subject to certain conditions provided in the Notes, will be equal to the then current three-month term Secured Overnight Financing Rate (“SOFR”) plus 275 basis points.
Variable rate, description		three-month term Secured Overnight Financing Rate (“SOFR”) plus 275 basis points
Loan, fixed interest rate	3.50%
Variable interest rate	2.75%
Long-Term Debt		$ 10,781,000	$ 10,700,000	$ 10,708,000
Private Placement [Member] | Subordinated Debt [Member]
Short Term Debt [Line Items]
Principal amount	$ 11,000,000
Minimum [Member]
Short Term Debt [Line Items]
Maturity Period of Federal Funds		1 day
Maximum [Member]
Short Term Debt [Line Items]
Maturity Period of Federal Funds		90 days

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Borrowings - Summary of Long-Term Borrowings (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Debt Instrument [Line Items]
Beginning balance	$ 10,726
Ending balance	10,781
Subordinated Debt [Member]
Debt Instrument [Line Items]
Beginning balance	10,700
Average balance during the period	10,775	$ 10,702
Ending balance	$ 10,781	$ 10,708
Average rate paid during the period, including amortization of debt issuance costs	4.16%	4.16%
Weighted average remaining maturity (in years)	8 years	9 years

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Borrowings - Schedule of Available Unused Lines of Credit (Details) - Unused lines of Credit [Member] - USD ($) $ in Millions		9 Months Ended
		Sep. 30, 2023	Dec. 31, 2022
Correspondent Banks [Member]
Short Term Debt [Line Items]
Collateral Requirements		None
Available lines of credit		$ 48.0	$ 45.0
FHLB Advances [Member]
Short Term Debt [Line Items]
Collateral Requirements	[1]	Subject to collateral
Available lines of credit	[1]	$ 260.3	246.8
Federal Reserve Bank [Member]
Short Term Debt [Line Items]
Collateral Requirements	[2]	Subject to collateral
Available lines of credit		$ 146.6	$ 1.2

[1] These amounts represent the total remaining credit the Company has from the FHLB, but this credit can only be utilized to the extent that underlying collateral exists. The total lendable collateral value of assets pledged (including loans and investment securities) associated with FHLB advances and letters of credit totaled $66.7 million and $68.2 million as of September 30, 2023 and December 31, 2022, respectively. The Company’s collateral exposure with the FHLB in the form of advances and letters of credit was $60.0 million and $50.0 million as of September 30, 2023 and December 31, 2022, respectively, leaving an excess of collateral of $6.7 million and $18.2 million, respectively, available to utilize for additional credit as of the respective dates. The Company also has the ability to pledge additional assets to increase the availability of borrowings.

[2] The Company has access to the FRB's discount window and its Bank Term Funding Program (BTFP), the latter of which was established during the first quarter of 2023 in response to the liquidity events that occurred in the banking industry. Both the discount window and the BTFP allow borrowing on pledged collateral that includes eligible investment securities and, in certain circumstances, eligible loans. The discount window allows borrowing under 90-day terms, while borrowing terms under the BTFP are up to one year. The BTFP also allows investment securities to be pledged as collateral at 100% of par value when par value is greater than fair value. The amounts shown in the table represent the Company's unused borrowing capacity as of the applicable date based on collateral pledged to the FRB's discount window. No collateral was pledged by the Company under the BTFP as of September 30, 2023.

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Borrowings - Schedule of Available Unused Lines of Credit (Parenthetical) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Short-Term Debt [Line Items]
Federal Home Loan Bank, advances, general debt obligations, disclosures, collateral pledged	$ 66,700,000	$ 68,200,000
Collateral exposure with FHLB in form of advances	60,000,000	50,000,000
Collateral pledged in excess available to utilize additional credit	$ 6,700,000	$ 18,200,000
Percentage par value allowed as collateral.	100.00%
Asset Pledged as Collateral with Right [Member]
Short-Term Debt [Line Items]
Loans pledged as collateral	$ 0

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Jan. 01, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Income Tax Disclosure [Line Items]
Provision for income taxes		$ 704	$ 546	$ 2,004	$ 1,440
Effective Income Tax Rate Reconciliation, Percent				24.40%	23.70%
Deferred Tax Assets, Net		$ 6,300		$ 6,300		$ 5,200
Cumulative Effect Adjustment
Income Tax Disclosure [Line Items]
Net deferred tax asset increased	$ 600

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Deferred Compensation Plans - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Deferred Compensation Arrangement With Individual Share Based Payments [Line Items]
Deferred Compensation Arrangement with Individual, Common Stock Reserved for Future Issuance	111,340	114,190
Other Liabilities [Member]
Deferred Compensation Arrangement With Individual Share Based Payments [Line Items]
Deferred Compensation Liability, Current and Noncurrent, Total	$ 3.0	$ 3.1

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Stock Awards - Additional Information (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted (in shares)	0	0
Share-based compensation arrangement by share-based payment award, options, outstanding, intrinsic value	$ 0.1	$ 0.0
Employee Stock Option [Member] | Omnibus Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment arrangement, expense	$ 0.4	$ 0.3
Share-based compensation arrangement by share-based payment award, options, vested and expected to vest, outstanding, weighted average remaining contractual term	10 years
Employee Stock Option [Member] | Omnibus Incentive Plan [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	1 year
Employee Stock Option [Member] | Omnibus Incentive Plan [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	3 years
Restricted Stock [Member] | Omnibus Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, equity instruments other than options, grants in period	57,300	45,938

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Stock Awards - Stock Option Activity (Details) - $ / shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	419,650	420,250
Granted (in shares)	0	0
Exercised (in shares)	0	0
Expired (in shares)	0	0
Forfeited (in shares)	0	600
Options outstanding, end of period (in shares)	419,650	419,650
Options exercisable, end of period (in shares)	419,650	416,249
Outstanding, beginning of period, average exercise price (in dollars per share)	$ 9.79	$ 9.79
Granted, average exercise price (in dollars per share)	0	0
Exercised, average exercise price (in dollars per share)	0	0
Expired, average exercise price (in dollars per share)	0	0
Forfeited, average exercise price (in dollars per share)	0	10.86
Options outstanding, end of period, average exercise price (in dollars per share)	9.79	9.79
Options exercisable, end of period, average exercise price (in dollars per share)	$ 9.79	$ 9.77

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Leases - Additional Information (Details)	9 Months Ended
	Sep. 30, 2023
Lessee Lease Description [Line Items]
Lessee, Operating Lease, Renewal Term	5 years
Lessee, Operating Lease, Period of Option to Terminate	1 year
Minimum [Member]
Lessee Lease Description [Line Items]
Lessee, Operating Lease, Remaining Term of Contract	2 years
Maximum [Member]
Lessee Lease Description [Line Items]
Lessee, Operating Lease, Remaining Term of Contract	6 years

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Leases - Components of Lease Income and Expense (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Leases [Abstract]
Operating lease expense	[1]	$ 108	$ 108	$ 324	$ 326
Operating lease income	[2]	241	$ 210	707	635
Operating lease right-of-use assets		1,605		1,605		$ 1,883
Operating lease liabilities		$ 1,684		$ 1,684		$ 1,961
Weighted-average remaining lease term (in years)		4 years 3 months 10 days		4 years 3 months 10 days		5 years 10 days
Weighted-average discount rate		3.30%		3.30%		3.30%
Operating cash flows from operating leases				$ 323	$ 320

[1] Includes short-term lease costs. For the three and nine months ended September 30, 2023 and 2022, short-term lease costs were nominal in amount.

[2] Operating lease income includes rental income from owned properties

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Leases - Future Minimum Operating Lease Payments (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Leases [Abstract]
2023	$ 109
2024	438
2025	339
2026	346
2027	353
2028 and thereafter	238
Total future minimum lease payments	1,823
Less: Imputed interest	139
Total operating lease liabilities	$ 1,684	$ 1,961

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Derivative Financial Instruments - Additional Information (Details) $ in Millions	1 Months Ended
	Jun. 30, 2023 USD ($) Contract	May 31, 2023 USD ($)	Feb. 28, 2023 USD ($) Contract
Derivatives Designated as Hedging Instruments [Member]
Derivative [Line Items]
Notional amount		$ 10.0	$ 40.0
Net unrealized gain		$ 0.3
Number of interest rate swap contracts terminated | Contract			4
Derivatives Designated as Hedging Instruments [Member] | Cash Flow Hedging [Member]
Derivative [Line Items]
Notional amount			$ 10.0
Net unrealized gain			$ 1.1
Number of interest rate swap contracts terminated | Contract			2
Derivatives Designated as Hedging Instruments [Member] | Fair Value Hedging [Member]
Derivative [Line Items]
Net unrealized gain			$ 1.0
Number of interest rate swap contracts terminated | Contract			2
Active Hedges [Member] | Forward Interest Rate Swap Contracts [Member]
Derivative [Line Items]
Number of interest rate swap contracts | Contract	3
Notional amount	$ 10.0

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Derivative Financial Instruments - Schedule of Notional Amount and Fair Value of Derivative Instruments Included on Company's Consolidated Balance Sheets on a net Basis (Details) - Derivatives Designated as Hedging Instruments [Member] - USD ($) $ in Thousands		9 Months Ended	12 Months Ended
		Sep. 30, 2023	Dec. 31, 2022	May 31, 2023	Feb. 28, 2023
Derivatives Fair Value [Line Items]
Notional Amount				$ 10,000	$ 40,000
Estimated Fair Value Gain (Loss)	[1]	$ 537	$ 2,306
Fair Value Hedging [Member]
Derivatives Fair Value [Line Items]
Estimated Fair Value Gain (Loss)	[1]	537	1,101
Fair Value Hedging [Member] | Interest Rate Swaps Related to Fixed Rate Commercial Real Estate Loans [Member]
Derivatives Fair Value [Line Items]
Notional Amount			20,000
Estimated Fair Value Gain (Loss)	[1]		1,101
Fair Value Hedging [Member] | Interest Rate Swaps Related To Fixed Rate Indirect Consumer Loans [Member]
Derivatives Fair Value [Line Items]
Notional Amount		30,000
Estimated Fair Value Gain (Loss)	[1]	$ 537
Cash Flow Hedging [Member]
Derivatives Fair Value [Line Items]
Notional Amount					$ 10,000
Estimated Fair Value Gain (Loss)	[1]		1,205
Cash Flow Hedging [Member] | Interest Rate Swaps Related to Variable-Rate Money Market Deposit Accounts [Member]
Derivatives Fair Value [Line Items]
Notional Amount			20,000
Estimated Fair Value Gain (Loss)	[1]		$ 1,205

[1] Derivatives in a gain position are recorded as other assets and derivatives in a loss position are recorded as other liabilities in the consolidated balance sheets.

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Derivative Financial Instruments - Schedule of Hedging Derivative Instruments' Effect on Company's Interim Condensed Consolidated Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Interest and Fees on Loans [Member]
Derivative Instruments Gain Loss [Line Items]
Interest income (expense)	$ 258	$ 45	$ 603	$ (42)
Interest on Deposits [Member]
Derivative Instruments Gain Loss [Line Items]
Interest income (expense)	120	24	376	(103)
Interest on Borrowings [Member]
Derivative Instruments Gain Loss [Line Items]
Interest income (expense)	36	36	108	20
Net Increase (Decrease) to Income Before Income Taxes [Member]
Derivative Instruments Gain Loss [Line Items]
Interest income (expense)	$ 414	$ 105	$ 1,087	$ (125)

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Segment Reporting - Results for Reportable Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Segment Reporting Revenue Reconciling Item [Line Items]
Total interest income	$ 13,902	$ 10,670	$ 38,861	$ 29,576
Total interest expense	4,419	1,155	10,621	2,526
Net interest income	9,483	9,515	28,240	27,050
Net interest income after provision for credit losses	9,299	8,350	27,487	24,269
Total non-interest income	837	1,088	2,465	2,773
Total non-interest expense	7,319	7,032	21,740	20,966
Income before income taxes	2,817	2,406	8,212	6,076
Provision for income taxes	704	546	2,004	1,440
Net income	2,113	$ 1,860	6,208	4,636
Total assets	1,065,239		1,065,239		$ 994,667
Total loans held for investment, net	803,920		803,920		764,451
Goodwill and core deposit intangible, net	$ 7,642		7,642		$ 7,801
Fixed asset additions			$ 979	$ 672

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Other Operating Income and Expense - Other Operating Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Other Income and Expenses [Abstract]
Bank-owned life insurance	$ 119	$ 112	$ 348	$ 335
ATM fee income	93	125	315	403
Gain on sales of premises and equipment and other assets	18	278	18	301
Other income	64	52	208	195
Total	$ 294	$ 567	$ 889	$ 1,234

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Other Operating Income and Expense - Other Operating Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Postage, stationery and supplies	$ 151,000	$ 164,000	$ 472,000	$ 469,000
Telephone/data communication	128,000	159,000	479,000	518,000
Collection and recoveries	71,000	57,000	252,000	176,000
Directors fees	94,000	98,000	284,000	301,000
Amortization of intangible assets			159,000	213,000
Other real estate/foreclosure expense, net	9,000	(5,000)	30,000	(320,000)
Other expense	545,000	568,000	1,769,000	1,629,000
Total	1,084,000	1,174,000	3,599,000	3,104,000
Software [Member]
Amortization of intangible assets	$ 86,000	$ 133,000	$ 313,000	$ 331

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Guarantees, Commitments and Contingencies - Summary of Commitment and Contingent Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Standby Letters of Credit [Member]
Fair Value Off Balance Sheet Risks Disclosure Information [Line Items]
Commitments and contingent liabilities	$ 0	$ 0
Standby Performance Letters of Credit [Member]
Fair Value Off Balance Sheet Risks Disclosure Information [Line Items]
Commitments and contingent liabilities	664	556
Commitments to Extend Credit [Member]
Fair Value Off Balance Sheet Risks Disclosure Information [Line Items]
Commitments and contingent liabilities	$ 155,614	$ 186,169

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Guarantees, Commitments and Contingencies - Additional Information (Details) - USD ($)	Sep. 30, 2023	Jan. 01, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Loss Contingencies [Line Items]
Loans and leases, allowance for credit losses	$ 11,380,000		$ 9,422,000	$ 9,373,000	$ 8,320,000
Self Insurance Reserve	200,000		200,000
Reserve for Unfunded Commitments [Member]
Loss Contingencies [Line Items]
Loans and leases, allowance for credit losses	500,000		$ 0
ASC 326 [Member]
Loss Contingencies [Line Items]
Loans and leases, allowance for credit losses	$ 2,123,000	$ 2,100,000
ASC 326 [Member] | Reserve for Unfunded Commitments [Member]
Loss Contingencies [Line Items]
Loans and leases, allowance for credit losses		$ 300,000

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Fair Value of Financial Instruments - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Financial and Nonfinancial Liabilities, Fair Value Disclosure	$ 0	$ 0

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Fair Value of Financial Instruments - Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	$ 126,551	$ 130,795
Residential Mortgage Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	37,000	43,957
Residential Mortgage Backed Securities [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	37,000	43,957
Residential Mortgage Backed Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	37,000	43,957
Commercial Mortgage Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	9,500	11,693
Commercial Mortgage Backed Securities [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	9,500	11,693
Commercial Mortgage Backed Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	9,500	11,693
US Government Sponsored Agencies [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	10,932	4,270
US Government Sponsored Agencies [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	10,932	4,270
US Government Sponsored Agencies [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	10,932	4,270
US States and Political Subdivisions Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	1,543	2,072
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	1,543	2,072
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	1,543	2,072
Corporate Notes [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	14,681	15,921
Corporate Notes [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	14,681	15,921
Corporate Notes [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	14,681	14,921
Corporate Notes [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value		1,000
US Treasury Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	52,895	52,882
US Treasury Securities [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	52,895	52,882
US Treasury Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	52,895	52,882
Other Assets [Member] | Fair Value, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	537	2,306
Other Assets [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, at fair value	$ 537	$ 2,306

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Fair Value of Financial Instruments - Assets Measured at Fair Value on Non-recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Collateral dependent loans	$ 62
OREO and other assets held-for-sale	617
Fair Value, Nonrecurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Collateral dependent loans	62
Impaired loans		$ 108
OREO and other assets held-for-sale	617	686
Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Collateral dependent loans	62
Impaired loans		108
OREO and other assets held-for-sale	$ 617	$ 686

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Fair Value of Financial Instruments - Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) (Details) - Fair Value, Inputs, Level 3 [Member] $ in Thousands	Sep. 30, 2023 USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Collateral dependent loans	$ 62
OREO and other assets held-for-sale	$ 617
Minimum [Member] | Measurement Input, Comparability Adjustment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Collateral dependent loans	9
OREO and other assets held-for-sale	9
Maximum [Member] | Measurement Input, Comparability Adjustment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Collateral dependent loans	10
OREO and other assets held-for-sale	10
Weighted Average [Member] | Measurement Input, Comparability Adjustment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Collateral dependent loans	9.5
OREO and other assets held-for-sale	9.5

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Fair Value of Financial Instruments - Estimated Fair Value and Related Carrying or Notional Amounts of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Assets:
Investment securities available-for-sale	$ 126,551	$ 130,795
Investment securities held-to-maturity	1,183	1,769
Carrying Amount [Member]
Assets:
Cash and cash equivalents	66,129	30,152
Investment securities available-for-sale	126,551	130,795
Investment securities held-to-maturity	1,272	1,862
Federal funds sold	1,143	1,768
Federal Home Loan Bank stock	2,151	1,359
Loans, net of allowance for credit losses/loan and lease losses	803,920	764,451
Other assets - derivatives	537	2,306
Liabilities:
Deposits	927,038	870,025
Short-term borrowings	30,000	20,038
Long-term borrowings	10,781	10,726
Estimate of Fair Value Measurement [Member]
Assets:
Cash and cash equivalents	66,129	30,152
Investment securities available-for-sale	126,551	130,795
Investment securities held-to-maturity	1,183	1,769
Federal funds sold	1,143	1,768
Federal Home Loan Bank stock	2,151	1,359
Loans, net of allowance for credit losses/loan and lease losses	769,466	730,961
Other assets - derivatives	537	2,306
Liabilities:
Deposits	829,435	788,161
Short-term borrowings	30,000	20,038
Long-term borrowings	9,226	9,702
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Cash and cash equivalents	66,129	30,152
Investment securities available-for-sale	52,895	52,882
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Investment securities available-for-sale	73,656	76,913
Investment securities held-to-maturity	1,183	1,769
Federal funds sold	1,143	1,768
Other assets - derivatives	537	2,306
Liabilities:
Deposits	829,435	788,161
Short-term borrowings	30,000	20,038
Long-term borrowings	9,226	9,702
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Assets:
Investment securities available-for-sale		1,000
Federal Home Loan Bank stock	2,151	1,359
Loans, net of allowance for credit losses/loan and lease losses	$ 769,466	$ 730,961