10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒

 Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended

March 31, 2024

☐

 Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period __________ to __________

Commission File Number:

0-26486

Auburn National Bancorporation, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

63-0885779

(I.R.S. Employer

Identification No.)

100 N. Gay Street

Auburn

,

Alabama

36830

 (

334

)

821-9200

 (Address and telephone number of principal executive offices)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01

AUBN

NASDAQ

 Global Market

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 and

posted pursuant to Rule 405 of Regulation S-T 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 Act). Yes

☐

 No

☒

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

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 May 7, 2024

Common Stock, $0.01 par value per share

3,493,699

 shares

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

INDEX

PAGE

Item 1

3 

4

5

6

7

8

Item 2 

26

41

42

43

Item 3

44

Item 4

44

Item 1

44

Item 1A

44

Item 3

45

Item 4

45

Item 5

45

Item 6

46

3

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

March 31,

December 31,

(Dollars in thousands, except share data)

2024

2023

Assets:

Cash and due from banks

$

18,444

$

27,127

Federal funds sold

17,356

31,412

Interest-bearing bank deposits

36,781

12,830

Cash and cash equivalents

72,581

71,369

Securities available-for-sale 

260,770

270,910

Loans held for sale

175

—

Loans

567,520

557,294

Allowance for credit losses

(7,215)

(6,863)

Loans, net

560,305

550,431

Premises and equipment, net

46,193

45,535

Bank-owned life insurance

17,212

17,110

Other assets

21,803

19,900

Total assets

$

979,039

$

975,255

Liabilities:

Deposits:

Noninterest-bearing 

$

263,484

$

270,723

Interest-bearing

636,189

625,520

Total deposits

899,673

896,243

Federal funds purchased and securities sold under agreements to repurchase

1,513

1,486

Accrued expenses and other liabilities

3,364

1,019

Total liabilities

904,550

898,748

Stockholders' equity:

Preferred stock of $

.01

 par value; authorized

200,000

 shares;

no shares issued

—

—

Common stock of $

.01

 par value; authorized

8,500,000

 shares;

issued

3,957,135

 shares

39

39

Additional paid-in capital

3,802

3,801

Retained earnings

113,563

113,398

Accumulated other comprehensive loss, net

(31,213)

(29,029)

Less treasury stock, at cost -

463,436

 shares and

463,521

 at March 31, 2024

and December 31, 2023, respectively

(11,702)

(11,702)

Total stockholders’ equity

74,489

76,507

Total liabilities and stockholders’ equity

$

979,039

$

975,255

See accompanying notes to consolidated financial statements

4

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Statements of Earnings

(Unaudited)

Quarter ended March 31,

(Dollars in thousands, except share and per share data)

2024

2023

Interest income:

Loans, including fees

$

6,990

$

5,754

Securities

Taxable

1,411

1,865

Tax-exempt

74

403

Federal funds sold and interest bearing bank deposits

754

213

Total interest income

9,229

8,235

Interest expense:

Deposits

2,570

1,118

Short-term borrowings

2

8

Total interest expense

2,572

1,126

Net interest income

6,657

7,109

Provision for credit losses

334

66

Net interest income after provision for credit losses

6,323

7,043

Noninterest income:

Service charges on deposit accounts

156

154

Mortgage lending

150

93

Bank-owned life insurance

102

156

Other

479

389

Total noninterest income

887

792

Noninterest expense:

Salaries and benefits

3,071

2,927

Net occupancy and equipment

763

799

Professional fees

326

338

Other

1,515

1,540

Total noninterest expense

5,675

5,604

Earnings before income taxes

1,535

2,231

Income tax expense

164

267

Net earnings

$

1,371

$

1,964

Net earnings per share:

Basic and diluted

$

0.39

$

0.56

Weighted average shares outstanding:

Basic and diluted

3,493,663

3,502,143

See accompanying notes to consolidated financial statements

5

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

Quarter ended March 31,

(Dollars in thousands)

2024

2023

Net earnings

$

1,371

$

1,964

Other comprehensive (loss) income, net of tax:

Unrealized net holding (loss) gain on securities net of 

tax benefit of $

734

 and tax expense of $

1,834

, respectively

(2,184)

5,463

Other comprehensive (loss) income

(2,184)

5,463

Comprehensive (loss) income

$

(813)

$

7,427

See accompanying notes to consolidated financial statements

6

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

(Unaudited)

Accumulated

Common

Additional

other

Shares

Common

paid-in

Retained 

comprehensive

Treasury

(Dollars in thousands, except share data)

Outstanding

Stock

capital

earnings

loss

stock

Total

Quarter ended March 31, 2024

Balance, December 31, 2023

3,493,614

$

39

$

3,801

$

113,398

$

(29,029)

$

(11,702)

$

76,507

Cumulative effect of change in accounting

standard

—

—

—

(263)

—

—

(263)

Net earnings

—

—

—

1,371

—

—

1,371

Other comprehensive loss

—

—

—

—

(2,184)

—

(2,184)

Cash dividends paid ($

.27

 per share)

—

—

—

(943)

—

—

(943)

Sale of treasury stock

85

—

1

—

—

—

1

Balance, March 31, 2024

3,493,699

$

39

$

3,802

$

113,563

$

(31,213)

$

(11,702)

$

74,489

Quarter ended March 31, 2023

Balance, December 31, 2022

3,503,452

$

39

$

3,797

$

116,600

$

(40,920)

$

(11,475)

$

68,041

Cumulative effect of change in accounting

standard

—

—

—

(821)

—

—

(821)

Net earnings

—

—

—

1,964

—

—

1,964

Other comprehensive income

—

—

—

—

5,463

—

5,463

Cash dividends paid ($

.27

 per share)

—

—

—

(945)

—

—

(945)

Stock repurchases

(2,648)

—

—

—

—

(64)

(64)

Sale of treasury stock

75

—

1

—

—

1

2

Balance, March 31, 2023

3,500,879

$

39

$

3,798

$

116,798

$

(35,457)

$

(11,538)

$

73,640

See accompanying notes to consolidated financial statements

7

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

Quarter ended March 31, 

(Dollars in thousands)

2024

2023

Cash flows from operating activities:

Net earnings

$

1,371

$

1,964

Adjustments to reconcile net earnings to net cash provided by

operating activities:

Provision for credit losses

334

66

Depreciation and amortization

434

423

Premium amortization and discount accretion, net

386

612

Net gain on sale of loans held for sale

(57)

(4)

Loans originated for sale

(3,123)

—

Proceeds from sale of loans

2,993

—

Increase in cash surrender value of bank-owned life insurance

(102)

(104)

Income recognized from death benefit on bank-owned life insurance

—

(52)

Net (increase) decrease in other assets

(1,500)

4,420

Net increase (decrease) in accrued expenses and other liabilities

2,345

(2,434)

Net cash provided by operating activities

3,081

4,891

Cash flows from investing activities:

Proceeds from prepayments and maturities of securities available-for-sale

6,836

6,296

Increase in loans, net

(10,208)

(586)

Net purchases of premises and equipment

(1,043)

(5)

Proceeds from bank-owned life insurance death benefit

—

215

Decrease in FHLB stock

32

41

Net cash (used in) provided by investing activities

(4,383)

5,961

Cash flows from financing activities:

Net decrease in noninterest-bearing deposits

(7,239)

(7,207)

Net increase (decrease) in interest-bearing deposits

10,669

(3,940)

Net increase (decrease) in federal funds purchased and securities sold 

under agreements to repurchase

27

(94)

Stock repurchases

—

(64)

Dividends paid

(943)

(945)

Net cash provided by (used in) financing activities

2,514

(12,250)

Net change in cash and cash equivalents

1,212

(1,398)

Cash and cash equivalents at beginning of period

71,369

27,254

Cash and cash equivalents at end of period

$

72,581

$

25,856

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Interest

$

2,442

$

877

Income taxes

—

—

See accompanying notes to consolidated financial statements

8

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements 

(Unaudited)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Auburn National Bancorporation, Inc. (the “Company”) provides a full range of banking services to individuals and

commercial customers in Lee County, Alabama and surrounding areas through its wholly owned subsidiary, AuburnBank

(the “Bank”). The Company does not have any segments other than banking that are considered material.

Basis of Presentation and Use of Estimates

The unaudited consolidated financial statements in this report have been prepared in accordance with U.S. generally

accepted accounting principles (“GAAP”) for interim financial information. Accordingly, these financial statements do not

include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited

consolidated financial statements include, in the opinion of management, all adjustments necessary to present a fair

statement of the financial position and the results of operations for all periods presented. All such adjustments are of a

normal recurring nature. The results of operations in the interim statements are not necessarily indicative of the results of

operations that the Company and its subsidiaries may achieve for future interim periods or the entire year. For further

information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form

10-K for the year ended December 31, 2023.

The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. 

Significant intercompany transactions and accounts are eliminated in consolidation.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of

the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could

differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term

include the determination of allowance for credit losses on loans and investment securities, fair value of financial

instruments, and the valuation of deferred tax assets and other real estate owned (“OREO”).

Revenue Recognition

The Company’s sources of income that fall within the scope of ASC 606 include service charges on deposits, interchange

fees and gains and losses on sales of other real estate, all of which are presented as components of noninterest income. The

following is a summary of the revenue streams that fall within the scope of ASC 606: 

●

Service charges on deposits, investment services, ATM and interchange fees – Fees from these services are either

(i) transaction-based, for which the performance obligations are satisfied when the individual transaction is

processed, or (ii) set periodic service charges, for which the performance obligations are satisfied over the period

the service is provided. Transaction-based fees are recognized at the time the transaction is processed, and periodic

service charges are recognized over the service period.

●

Gains on sales of OREO

 –

A gain on sale should be recognized when a contract for sale exists and control of the

asset has been transferred to the buyer. ASC 606 lists several criteria required to conclude that a contract for sale

exists, including a determination that the institution will collect substantially all of the consideration to which it is

entitled. In addition to the loan-to-value ratio, where the seller provides the purchaser with financing, the analysis

is based on various other factors, including the credit quality of the purchaser, the structure of the loan, and any

other factors that we believe may affect collectability.

Subsequent Events 

The Company has evaluated the effects of events and transactions through the date of this filing that have occurred

subsequent to March 31, 2024. The Company does not believe there were any material subsequent events during this

period that would have required further recognition or disclosure in the unaudited consolidated financial statements

included in this report.

9

Correction of Error

The disclosure of loans by vintage in Note 5 – Loans and Allowance for Credit Losses in the Company’s Annual Report on

Form 10-K for year ended December 31, 2023 contained incorrect information as it pertains to loans originated by vintage

and revolving loans. All current period gross charge-off data, total loans by segment and total loans by credit quality

indicator were correctly reported. The loans originated by vintage and revolving loans as of December 31, 2023 have been

corrected in the comparative presentation in Note 5 – Loans and Allowance for Credit Losses in the Notes herein.

Reclassifications

Certain amounts reported in prior periods have been reclassified to conform to the current -period presentation. These

reclassifications had no effect on the Company’s previously reported net earnings or total stockholders’ equity.

Accounting Standards Adopted in 2024

On January 1, 2024, the Company adopted ASU 2023-02,

Investments – Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

. The amendments in this

Update permit reporting entities to elect to account for their equity investments made primarily to receive income tax

credits and other income tax benefits, regardless of the program from which the income tax credits or benefits are received,

using the proportional amortization method if certain conditions are met. The new standard is effective for fiscal years, and

interim periods within those fiscal years, beginning after December 15, 2023. The Company adopted ASU 2023-02

effective January 1, 2024 and recorded a cumulative effect of change in accounting standard adjustment which reduced

beginning retained earnings by $0.3 million. The Company will prospectively account for its investments in New Market

Tax Credits (“NMTCs”) using the proportional amortization method through charges to the provision for income taxes. See

Note 3, Variable Interest Entities.

NOTE 2: BASIC AND DILUTED NET EARNINGS PER SHARE

Basic net earnings per share is computed by dividing net earnings by the weighted average common shares outstanding for

the quarters ended March 31, 2024 and 2023, respectively. Diluted net earnings per share reflect the potential dilution that

could occur upon exercise of securities or other rights for, or convertible into, shares of the Company’s common stock. At

March 31, 2024 and 2023, respectively, the Company had no such securities or rights issued or outstanding, and therefore,

no dilutive effect to consider for the diluted net earnings per share calculation.

The basic and diluted net earnings per share computations for the respective periods are presented below

Quarter ended March 31,

(Dollars in thousands, except share and per share data)

2024

2023

Basic and diluted:

Net earnings

$

1,371

$

1,964

Weighted average common shares outstanding

3,493,663

3,502,143

Net earnings per share

$

0.39

$

0.56

NOTE 3: VARIABLE INTEREST ENTITIES

Generally, a variable interest entity (“VIE”) is a corporation, partnership, trust or other legal structure that does not have

equity investors with substantive or proportional voting rights or has equity investors that do not provide sufficient financial

resources for the entity to support its activities. 

10

At March 31, 2024, the Company did not have any consolidated VIEs but did have one nonconsolidated VIE, discussed

below.

New Markets Tax Credit Investment

The NMTC program provides federal tax incentives to investors to make investments in distressed communities and

promotes economic improvement through the development of successful businesses in these communities. NMTCs are

available to investors over seven years and are subject to recapture if certain events occur during such period. At March 31,

2024 and December 31, 2023, respectively, the Company had one such investment of $1.2 million and $1.7 million,

respectively, which was included in other assets in the Company’s consolidated balance sheets as a VIE. While the

Company’s investment exceeds 50% of the outstanding equity interest in this VIE, the Company does not consolidate the

VIE because the Company lacks the power to direct the activities of the VIE, and therefore is not a primary beneficiary of

the VIE. 

On March 29, 2023, the FASB issued ASU 2023-02, which was effective beginning in 2024 for public business entities.

We have adopted ASU 2023-02 as of January 1, 2024 with respect to accounting for our NMTC investment. The

proportional amortization method results in the tax credit investment being amortized in proportion to the allocation of tax

credits and other tax benefits in each period and a net presentation within the income tax line item. The cumulative effects

of the change in accounting standard resulted in a $0.4 million pre-tax decrease in the Company’s NMTC investment at

January 1, 2024. See Note 1: Summary of Significant Accounting Policies – Accounting Standards Adopted in 2024.

(Dollars in thousands)

Maximum

Loss Exposure

Asset Recognized

Classification

Type:

New Markets Tax Credit investment

$

1,175

$

1,175

Other assets

NOTE 4: SECURITIES

At March 31, 2024 and December 31, 2023, respectively, all securities within the scope of ASC 320,

Investments – Debt

and Equity Securities,

were classified as available-for-sale. The fair value and amortized cost for securities available-for-

sale by contractual maturity at March 31, 2024 and December 31, 2023, respectively, are presented below.

1 year

1 to 5

5 to 10

After 10

Fair

Gross Unrealized 

Amortized

(Dollars in thousands)

or less

years

years

years

Value

Gains

Losses

Cost

March 31, 2024

Agency obligations (a)

$

—

14,416

38,335

—

52,751

—

8,554

$

61,305

Agency MBS (a)

57

15,533

20,254

154,380

190,224

—

30,229

220,453

State and political subdivisions

—

569

9,067

8,159

17,795

—

2,898

20,693

Total available-for-sale

$

57

30,518

67,656

162,539

260,770

—

41,681

$

302,451

December 31, 2023

Agency obligations (a)

$

331

10,339

43,209

—

53,879

—

8,195

$

62,074

Agency MBS (a)

32

15,109

22,090

161,058

198,289

—

27,838

226,127

State and political subdivisions

—

—

9,691

9,051

18,742

1

2,731

21,472

Total available-for-sale

$

363

25,448

74,990

170,109

270,910

1

38,764

$

309,673

(a) Includes securities issued by U.S. government agencies or government-sponsored entities. Expected lives of these 

securities may differ from contractual maturities because (i) issuers may have the right to call or repay such securities

obligations with or without prepayment penalties and (ii) loans incuded in Agency MBS generally have the right to

prepay such loan in whole or in part at any time.

Securities with aggregate fair values of $

204.8

 million and $

211.8

 at March 31, 2024 and December 31, 2023, respectively,

were pledged to secure public deposits, securities sold under agreements to repurchase, Federal Home Loan Bank of

Atlanta (“FHLB of Atlanta”) advances, and for other purposes required or permitted by law. 

11

Included in other assets on the accompanying consolidated balance sheets include non-marketable equity investments. The

carrying amounts of non-marketable equity investments were $

1.4

 million at March 31, 2024 and December 31, 2023,

respectively. Non-marketable equity investments include FHLB of Atlanta stock, Federal Reserve Bank of Atlanta

(“FRB”) stock, and stock in a privately held financial institution.

Gross Unrealized Losses and Fair Value

The fair values and gross unrealized losses on securities at March 31, 2024 and December 31, 2023, respectively,

segregated by those securities that have been in an unrealized loss position for less than 12 months and 12 months or

longer, are presented below.

Less than 12 Months

12 Months or Longer

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(Dollars in thousands)

Value

Losses

Value

Losses

Value

Losses

March 31, 2024:

Agency obligations 

$

—

—

52,751

8,554

$

52,751

8,554

Agency MBS

15

—

190,209

30,229

190,224

30,229

State and political subdivisions

1,459

6

15,010

2,892

16,469

2,898

Total 

$

1,474

6

257,970

41,675

$

259,444

41,681

December 31, 2023:

Agency obligations 

$

—

—

53,879

8,195

$

53,879

8,195

Agency MBS

66

1

198,223

27,837

198,289

27,838

State and political subdivisions

793

2

14,408

2,729

15,201

2,731

Total 

$

859

3

266,510

38,761

$

267,369

38,764

For the securities in the previous table, the Company considers the severity of the unrealized loss as well the Company’s

intent to hold the securities to maturity or the recovery of the cost basis. Unrealized losses have not been recognized into

income as the decline in fair value is largely due to changes in interest rates and other market conditions. For the securities

in the previous table as of March 31, 2024, management does not intend to sell and it is likely that management will not be

required to sell the securities prior to their recovery.

Agency Obligations

Investments in agency obligations are guaranteed of full and timely payments by the issuing agency. Based on

management's analysis and judgement, there were no credit losses attributable to the Company’s investments in agency

obligations at March 31, 2024.

Agency MBS

Investments in agency mortgage backed securities (“MBS”) are issued by Ginnie Mae, Fannie Mae, and Freddie Mac. 

Each of these agencies provide a guarantee of full and timely payments of principal and interest by the issuing agency. 

Based on management's analysis and judgement, there were no credit losses attributable to the Company’s investments in

agency MBS at March 31, 2024.

State and Political Subdivisions

Investments in state and political subdivisions are securities issued by various municipalities in the United States. The

majority of the portfolio was rated AA or higher, with no securities rated below investment grade at March 31, 2024. 

Based on management's analysis and judgement, there were no credit losses attributable to the Company’s investments in

state and political subdivisions at March 31, 2024.

Realized Gains and Losses

The Company had no realized gains or losses on sale of securities during the quarters ended March 31, 2024 and 2023,

respectively.

12

NOTE 5: LOANS AND ALLOWANCE FOR CREDIT LOSSES

March 31,

December 31,

(Dollars in thousands)

2024

2023

Commercial and industrial

$

78,920

$

73,374

Construction and land development

58,909

68,329

Commercial real estate:

Owner occupied

63,826

66,783

Hotel/motel

38,822

39,131

Multi-family

45,634

45,841

Other

152,202

135,552

Total commercial real estate

300,484

287,307

Residential real estate:

Consumer mortgage

59,813

60,545

Investment property

58,427

56,912

Total residential real estate

118,240

117,457

Consumer installment

10,967

10,827

Total Loans

$

567,520

$

557,294

Loans secured by real estate were approximately 84.2% of the Company’s total loan portfolio at March 31, 2024. At March

31, 2024, the Company’s geographic loan distribution was concentrated primarily in Lee County, Alabama, and

surrounding areas.

The loan portfolio segment is defined as the level at which an entity develops and documents a systematic method for

determining its allowance for credit losses. As part of the Company’s quarterly assessment of the allowance, the loan

portfolio included the following portfolio segments: commercial and industrial, construction and land development,

commercial real estate, residential real estate, and consumer installment. Where appropriate, the Company’s loan portfolio

segments are further disaggregated into classes. A class is generally determined based on the initial measurement attribute,

risk characteristics of the loan, and an entity’s method for monitoring and determining credit risk.

The following describes the risk characteristics relevant to each of the portfolio segments and classes.

Commercial and industrial (“C&I”) —

includes loans to finance business operations, equipment purchases, or other needs

for small and medium-sized commercial customers. Also included in this category are loans to finance agricultural

production. Generally, the primary source of repayment is the cash flow from business operations and activities of the

borrower. 

Construction and land development (“C&D”) —

includes both loans and credit lines for the purpose of purchasing,

carrying, and developing land into commercial developments or residential subdivisions. Also included are loans and credit

lines for construction of residential, multi-family, and commercial buildings. Generally, the primary source of repayment is

dependent upon the sale or refinance of the real estate collateral.

Commercial real estate (“CRE”) —

includes loans in these classes: 

●

Owner occupied

 – includes loans secured by business facilities to finance business operations, equipment and

owner-occupied facilities primarily for small and medium-sized commercial customers. Generally, the primary

source of repayment is the cash flow from business operations and activities of the borrower, who owns the

property.

●

Hotel/motel

– includes loans for hotels and motels. Generally, the primary source of repayment is dependent upon

income generated from the hotel/motel securing the loan. The underwriting of these loans takes into consideration

the occupancy and rental rates, as well as the financial health of the borrower.

13

●

Multi-family

 – primarily includes loans to finance income-producing multi-family properties . These include loans

for 5 or more unit residential properties and apartments leased to residents. Generally , the primary source of

repayment is dependent upon income generated from the real estate collateral. The underwriting of these loans

takes into consideration the occupancy and rental rates, as well as the financial health of the respective borrowers. 

●

Other

 – primarily includes loans to finance income-producing commercial properties other than hotels/motels and

multi-family properties, and which are not owner occupied. Loans in this class include loans for neighborhood

retail centers, medical and professional offices, single retail stores, industrial buildings, and warehouses leased to

local and other businesses. Generally, the primary source of repayment is dependent upon income generated from

the real estate collateral. The underwriting of these loans takes into consideration the occupancy and rental rates,

as well as the financial health of the borrower. 

Residential real estate (“RRE”) —

includes loans in these two classes:

●

Consumer mortgage

 – primarily includes first or second lien mortgages and home equity lines of credit to

consumers that are secured by a primary residence or second home. These loans are underwritten in accordance

with the Bank’s general loan policies and procedures which require, among other things, proper documentation of

each borrower’s financial condition, satisfactory credit history , and property value. 

●

Investment property

 – primarily includes loans to finance income-producing 1-4 family residential properties.

Generally, the primary source of repayment is dependent upon income generated from leasing the property

securing the loan. The underwriting of these loans takes into consideration the rental rates and property values, as

well as the financial health of the borrowers. 

Consumer installment —

includes loans to individuals, which may be secured by personal property or are unsecured. Loans

include personal lines of credit, automobile loans, and other retail loans. These loans are underwritten in accordance with

the Bank’s general loan policies and procedures which require, among other things, proper documentation of each

borrower’s financial condition, satisfactory credit history, and, if applicable, property values.

14

The following is a summary of current, accruing past due, and nonaccrual loans by portfolio segment and class as of March

31, 2024 and December 31, 2023.

Accruing

Accruing

Total

30-89 Days

Greater than

Accruing

Non-

Total 

(Dollars in thousands)

Current

Past Due

90 days

Loans

Accrual

Loans

March 31, 2024:

Commercial and industrial

$

78,914

6

—

78,920

—

$

78,920

Construction and land development

58,909

—

—

58,909

—

58,909

Commercial real estate:

Owner occupied

63,061

—

—

63,061

765

63,826

Hotel/motel

38,822

—

—

38,822

—

38,822

Multi-family

45,634

—

—

45,634

—

45,634

Other

152,202

—

—

152,202

—

152,202

Total commercial real estate

299,719

—

—

299,719

765

300,484

Residential real estate:

Consumer mortgage

59,656

60

—

59,716

97

59,813

Investment property

58,427

—

—

58,427

—

58,427

Total residential real estate

118,083

60

—

118,143

97

118,240

Consumer installment

10,935

16

—

10,951

16

10,967

Total

$

566,560

82

—

566,642

878

$

567,520

December 31, 2023:

Commercial and industrial

$

73,108

266

—

73,374

—

$

73,374

Construction and land development

68,329

—

—

68,329

—

68,329

Commercial real estate:

Owner occupied

66,000

—

—

66,000

783

66,783

Hotel/motel

39,131

—

—

39,131

—

39,131

Multi-family

45,841

—

—

45,841

—

45,841

Other

135,552

—

—

135,552

—

135,552

Total commercial real estate

286,524

—

—

286,524

783

287,307

Residential real estate:

Consumer mortgage

60,442

—

—

60,442

103

60,545

Investment property

56,597

290

—

56,887

25

56,912

Total residential real estate

117,039

290

—

117,329

128

117,457

Consumer installment

10,781

46

—

10,827

—

10,827

Total

$

555,781

602

—

556,383

911

$

557,294

15

Credit Quality Indicators

The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the

standard asset classification system used by the federal banking agencies. These categories are utilized to develop the

associated allowance for credit losses using historical losses adjusted for qualitative and environmental factors and are

defined as follows: 

●

Pass – loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if

any) or by the fair value, less cost to acquire and sell, of any underlying collateral.

●

Special Mention – loans with potential weakness that may, if not reversed or corrected, weaken the credit or

inadequately protect the Company’s position at some future date. These loans are not adversely classified and do

not expose an institution to sufficient risk to warrant an adverse classification.

●

Substandard Accruing – loans that exhibit a well-defined weakness which presently jeopardizes debt repayment,

even though they are currently performing. These loans are characterized by the distinct possibility that the

Company may incur a loss in the future if these weaknesses are not corrected .

●

Nonaccrual – includes loans where management has determined that full payment of principal and interest is not

expected.

Substandard accrual and nonaccrual loans are often collectively referred to as “classified.”

The following tables presents credit quality indicators for the loan portfolio segments and classes by year of origination as

of March 31, 2024 and December 31, 2023. The December 31, 2023 table has been revised to correct revolving loans and

properly allocate loans by year of origination. See Note 1: Summary of Significant Accounting Policies – Correction of

Error. 

16

Year of Origination

2024

2023

2022

2021

2020

Prior to

2020

Revolving

Loans

Total 

Loans

(Dollars in thousands)

March 31, 2024: 

Commercial and industrial

Pass

$

6,167

10,960

19,891

13,067

5,429

14,697

8,449

$

78,660

Special mention

—

—

—

—

—

—

—

—

Substandard

54

—

194

12

—

—

—

260

Nonaccrual

—

—

—

—

—

—

—

—

Total commercial and industrial

6,221

10,960

20,085

13,079

5,429

14,697

8,449

78,920

Current period gross charge-offs

—

—

—

—

—

—

—

—

Construction and land development

Pass

5,668

26,093

22,446

1,615

1,506

200

905

58,433

Special mention

—

302

—

—

—

—

—

302

Substandard

174

—

—

—

—

—

—

174

Nonaccrual

—

—

—

—

—

—

—

—

Total construction and land development

5,842

26,395

22,446

1,615

1,506

200

905

58,909

Current period gross charge-offs

—

—

—

—

—

—

—

—

Commercial real estate:

Owner occupied

Pass

100

12,842

7,197

18,076

10,283

10,744

2,583

61,825

Special mention

931

257

—

—

—

—

—

1,188

Substandard

—

—

—

—

—

48

—

48

Nonaccrual

—

—

—

—

—

765

—

765

Total owner occupied

1,031

13,099

7,197

18,076

10,283

11,557

2,583

63,826

Current period gross charge-offs

—

—

—

—

—

—

—

—

Hotel/motel

Pass

248

8,925

9,765

3,174

1,445

15,265

—

38,822

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total hotel/motel

248

8,925

9,765

3,174

1,445

15,265

—

38,822

Current period gross charge-offs

—

—

—

—

—

—

—

—

17

Year of Origination

2024

2023

2022

2021

2020

Prior to

2020

Revolving

Loans

Total 

Loans

(Dollars in thousands)

March 31, 2024: 

Multi-family

Pass

113

12,270

17,834

1,934

6,060

6,682

741

45,634

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total multi-family

113

12,270

17,834

1,934

6,060

6,682

741

45,634

Current period gross charge-offs

—

—

—

—

—

—

—

—

Other

Pass

19,687

24,583

35,601

31,278

14,036

25,552

1,313

152,050

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

152

—

—

152

Nonaccrual

—

—

—

—

—

—

—

—

Total other

19,687

24,583

35,601

31,278

14,188

25,552

1,313

152,202

Current period gross charge-offs

—

—

—

—

—

—

—

—

Residential real estate:

Consumer mortgage

Pass

1,276

19,445

19,230

2,682

2,636

13,106

327

58,702

Special mention

—

—

—

—

—

493

—

493

Substandard

—

—

—

—

—

521

—

521

Nonaccrual

—

—

—

—

—

97

—

97

Total consumer mortgage

1,276

19,445

19,230

2,682

2,636

14,217

327

59,813

Current period gross charge-offs

—

—

—

—

—

—

—

—

Investment property

Pass

5,736

12,255

11,396

9,219

11,829

6,214

1,369

58,018

Special mention

—

—

—

—

—

—

—

—

Substandard

—

83

96

—

230

—

—

409

Nonaccrual

—

—

—

—

—

—

—

—

Total investment property

5,736

12,338

11,492

9,219

12,059

6,214

1,369

58,427

Current period gross charge-offs

—

—

—

—

—

—

—

—

Consumer installment

Pass

2,095

5,157

2,690

570

148

222

—

10,882

Special mention

—

10

1

—

1

—

—

12

Substandard

10

34

11

2

—

—

—

57

Nonaccrual

—

9

7

—

—

—

—

16

Total consumer installment

2,105

5,210

2,709

572

149

222

—

10,967

Current period gross charge-offs

—

6

17

1

—

—

—

24

Total loans

Pass

41,090

132,530

146,050

81,615

53,372

92,682

15,687

563,026

Special mention

931

569

1

—

1

493

—

1,995

Substandard

238

117

301

14

382

569

—

1,621

Nonaccrual

—

9

7

—

—

862

—

878

Total loans

$

42,259

133,225

146,359

81,629

53,755

94,606

15,687

$

567,520

Total current period gross charge-offs

$

—

6

17

1

—

—

—

24

18

Year of Origination

2023

2022

2021

2020

2019

Prior to

2019

Revolving

Loans

Total 

Loans

(Dollars in thousands)

December 31, 2023: 

Commercial and industrial

Pass

$

11,571

18,074

13,746

5,602

7,298

7,819

9,003

$

73,113

Special mention

—

—

—

—

—

—

—

—

Substandard

55

203

—

—

3

—

—

261

Nonaccrual

—

—

—

—

—

—

—

—

Total commercial and industrial

11,626

18,277

13,746

5,602

7,301

7,819

9,003

73,374

Current period gross charge-offs

—

—

13

—

151

—

—

164

Construction and land development

Pass

38,646

25,382

1,716

1,526

120

157

782

68,329

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total construction and land development

38,646

25,382

1,716

1,526

120

157

782

68,329

Current period gross charge-offs

—

—

—

—

—

—

—

—

Commercial real estate:

Owner occupied

Pass

12,966

7,337

18,548

10,458

3,948

9,786

2,647

65,690

Special mention

260

—

—

—

—

—

—

260

Substandard

—

—

—

—

50

—

—

50

Nonaccrual

—

—

—

—

783

—

—

783

Total owner occupied

13,226

7,337

18,548

10,458

4,781

9,786

2,647

66,783

Current period gross charge-offs

—

—

—

—

—

—

—

—

Hotel/motel

Pass

9,025

9,873

3,205

1,493

3,881

11,654

—

39,131

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total hotel/motel

9,025

9,873

3,205

1,493

3,881

11,654

—

39,131

Current period gross charge-offs

—

—

—

—

—

—

—

—

19

Year of Origination

2023

2022

2021

2020

2019

Prior to

2019

Revolving

Loans

Total 

Loans

(Dollars in thousands)

December 31, 2023: 

Multi-family

Pass

12,379

17,955

1,953

6,112

3,790

3,043

609

45,841

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total multi-family

12,379

17,955

1,953

6,112

3,790

3,043

609

45,841

Current period gross charge-offs

—

—

—

—

—

—

—

—

Other

Pass

25,810

36,076

31,687

14,597

10,736

15,440

1,052

135,398

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

154

—

—

—

154

Nonaccrual

—

—

—

—

—

—

—

—

Total other

25,810

36,076

31,687

14,751

10,736

15,440

1,052

135,552

Current period gross charge-offs

—

—

—

—

—

—

—

—

Residential real estate:

Consumer mortgage

Pass

20,147

20,177

2,683

2,665

1,281

12,217

249

59,419

Special mention

—

—

—

—

190

305

—

495

Substandard

—

—

—

—

—

528

—

528

Nonaccrual

—

—

—

—

—

103

—

103

Total consumer mortgage

20,147

20,177

2,683

2,665

1,471

13,153

249

60,545

Current period gross charge-offs

—

—

—

—

—

—

—

—

Investment property

Pass

13,398

12,490

9,397

12,209

5,485

1,865

1,478

56,322

Special mention

41

—

—

—

—

—

—

41

Substandard

43

248

—

233

—

—

—

524

Nonaccrual

—

—

—

—

—

25

—

25

Total investment property

13,482

12,738

9,397

12,442

5,485

1,890

1,478

56,912

Current period gross charge-offs

—

—

—

—

—

—

—

—

Consumer installment

Pass

5,688

3,837

740

206

106

141

—

10,718

Special mention

9

25

9

2

—

—

—

45

Substandard

37

11

5

11

—

—

—

64

Nonaccrual

—

—

—

—

—

—

—

-

Total consumer installment

5,734

3,873

754

219

106

141

—

10,827

Current period gross charge-offs

34

57

13

1

—

—

—

105

Total loans

Pass

149,630

151,201

83,675

54,868

36,645

62,122

15,820

553,961

Special mention

310

25

9

2

190

305

—

841

Substandard

135

462

5

398

53

528

—

1,581

Nonaccrual

—

—

—

—

783

128

—

911

Total loans

$

150,075

151,688

83,689

55,268

37,671

63,083

15,820

$

557,294

Total current period gross charge-offs

$

34

57

26

1

151

—

—

269

20

Allowance for Credit Losses

The Company adopted ASC 326 on January 1, 2023, which introduced the CECL methodology for estimating all expected

losses over the life of a financial asset. Under the CECL methodology, the allowance for credit losses is measured on a

collective basis for pools of loans with similar risk characteristics, and for loans that do not share similar risk characteristics

with the collectively evaluated pools, evaluations are performed on an individual basis.

The composition of the provision for credit losses for the respective periods is presented below.

Quarter ended March 31, 

(Dollars in thousands)

2024

2023

Provision for credit losses:

Loans

$

285

$

40

Reserve for unfunded commitments

49

26

Total provision for credit losses

$

334

$

66

The following table details the changes in the allowance for credit losses for loans, by portfolio segment, for the respective

periods.

(Dollars in thousands)

Commercial and

industrial

Construction

and land

development

Commercial

real estate

Residential

real estate

Consumer

installment

Total

Quarter ended:

March 31, 2024

Beginning balance

$

1,288

960

3,921

546

148

$

6,863

Charge-offs

—

—

—

—

(24)

(24)

Recoveries

66

—

—

3

22

91

Net recoveries (charge-offs)

66

—

—

3

(2)

67

Provision for credit losses

61

(120)

281

64

(1)

285

Ending balance

$

1,415

840

4,202

613

145

$

7,215

Quarter ended:

March 31, 2023

Beginning balance

$

747

949

3,109

828

132

$

5,765

Impact of adopting ASC 326

532

(17)

873

(347)

(22)

1,019

Charge-offs

—

—

—

—

(11)

(11)

Recoveries

2

—

—

5

1

8

Net recoveries (charge-offs)

2

—

—

5

(10)

(3)

Provision for credit losses

(49)

89

(16)

11

5

40

Ending balance

$

1,232

1,021

3,966

497

105

$

6,821

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to

determine expected credit losses as of March 31, 2024 and December 31, 2023:

(Dollars in thousands)

Real Estate

Total Loans

March 31, 2024:

Commercial real estate

$

765

$

765

Total 

$

765

$

765

December 31, 2023:

Commercial real estate

$

783

$

783

Total

$

783

$

783

21

The following table is a summary of the Company’s nonaccrual loans by major categories as of March 31, 2024 and

December 31, 2023.

CECL

Nonaccrual loans

Nonaccrual loans

Total

(Dollars in thousands)

with no Allowance

with an Allowance

Nonaccrual Loans

March 31, 2024

Commercial real estate

$

765

—

765

Residential real estate

—

97

97

Consumer

—

16

16

Total 

$

765

113

878

December 31, 2023

Commercial real estate

$

783

—

783

Residential real estate

—

128

128

Total 

$

783

128

911

NOTE 6: MORTGAGE SERVICING RIGHTS, NET 

Mortgage servicing rights (“MSRs”) are recognized based on the fair value of the servicing rights on the date the

corresponding mortgage loans are sold. An estimate of the Company’s MSRs is determined using assumptions that market

participants would use in estimating future net servicing income, including estimates of prepayment speeds, discount rate,

default rates, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees. 

Subsequent to the date of transfer, the Company has elected to measure its MSRs under the amortization method. Under

the amortization method, MSRs are amortized in proportion to, and over the period of, estimated net servicing income. 

Increases in market interest rates generally increase the fair value of MSRs by reducing prepayments and refinancings and

therefore reducing the prepayment speed.

The Company has recorded MSRs related to loans sold to Fannie Mae. The Company generally sells conforming, fixed-

rate, closed-end, residential mortgages to Fannie Mae. MSRs are included in other assets on the accompanying

consolidated balance sheets.

The Company evaluates MSRs for impairment on a quarterly basis. Impairment is determined by stratifying MSRs into

groupings based on predominant risk characteristics, such as interest rate and loan type. If, by individual stratum, the

carrying amount of the MSRs exceeds fair value, a valuation allowance is established. The valuation allowance is adjusted

as the fair value changes. Changes in the valuation allowance are recognized in earnings as a component of mortgage

lending income. 

22

The change in amortized MSRs and the related valuation allowance for the quarters ended March 31, 2024 and 2023 are

presented below.

Quarter ended March 31,

(Dollars in thousands)

2024

2023

MSRs, net:

Beginning balance

$

992

$

1,151

Additions, net

12

—

Amortization expense

(39)

(55)

Ending balance

$

965

$

1,096

Valuation allowance included in MSRs, net:

Beginning of period

$

—

$

—

End of period

—

—

Fair value of amortized MSRs:

Beginning of period

$

2,382

$

2,369

End of period

2,378

2,419

NOTE 7: FAIR VALUE 

Fair Value Hierarchy

“Fair value” is defined by ASC 820,

Fair Value Measurements and Disclosures

, and focuses on the exit price, i.e., the price

that would be received to sell an asset or paid to transfer a liability in an orderly transaction occurring in the principal

market (or most advantageous market in the absence of a principal market) for an asset or liability at the measurement date. 

GAAP establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active

markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as

follows:

Level 1—inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active

markets. 

Level 2—inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets,

quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs that are observable for the

asset or liability, either directly or indirectly. 

Level 3—inputs to the valuation methodology are unobservable and reflect the Company’s own assumptions about the

inputs market participants would use in pricing the asset or liability. 

Level changes in fair value measurements 

Transfers between levels of the fair value hierarchy are generally recognized at the end of each reporting period. The

Company monitors the valuation techniques utilized for each category of financial assets and liabilities to ascertain when

transfers between levels have been affected. The nature of the Company’s financial assets and liabilities generally is such

that transfers in and out of any level are expected to be infrequent. For the quarter ended March 31, 2024, there were no

transfers between levels and no changes in valuation techniques for the Company’s financial assets and liabilities.

23

Assets and liabilities measured at fair value on a recurring basis

Securities available-for-sale

Fair values of securities available for sale were primarily measured using Level 2 inputs. For these securities, the Company

obtains pricing data from third party pricing services. These third party pricing services consider observable data that may

include broker/dealer quotes, market spreads, cash flows, benchmark yields, reported trades for similar securities, market

consensus prepayment speeds, credit information, and the securities’ terms and conditions. On a quarterly basis,

management reviews the pricing data received from the third party pricing services for reasonableness given current market

conditions. As part of its review, management may obtain non-binding third party broker/dealer quotes to validate the fair

value measurements. In addition, management will periodically submit pricing information provided by the third party

pricing services to another independent valuation firm on a sample basis. This independent valuation firm will compare the

prices provided by the third party pricing service with its own prices and will review the significant assumptions and

valuation methodologies used with management.

The following table presents the balances of the assets and liabilities measured at fair value on a recurring basis as of March

31, 2024 and December 31, 2023, respectively, by caption, on the accompanying consolidated balance sheets by ASC 820

valuation hierarchy (as described above).

Quoted Prices in

Significant

Active Markets

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

March 31, 2024:

Securities available-for-sale:

Agency obligations 

$

52,751

—

52,751

—

Agency MBS

190,224

—

190,224

—

State and political subdivisions

17,795

—

17,795

—

Total securities available-for-sale

260,770

—

260,770

—

Total assets at fair value

$

260,770

—

260,770

—

December 31, 2023:

Securities available-for-sale:

Agency obligations 

$

53,879

—

53,879

—

Agency MBS

198,289

—

198,289

—

State and political subdivisions

18,742

—

18,742

—

Total securities available-for-sale

270,910

—

270,910

—

Total assets at fair value

$

270,910

—

270,910

—

Assets and liabilities measured at fair value on a nonrecurring 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 is valued 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 within Level 3 of

the hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the borrower's

underlying financial condition.

24

Mortgage servicing rights, net

MSRs, net, included in other assets on the accompanying consolidated balance sheets, are carried at the lower of cost or

estimated fair value. MSRs do not trade in an active market with readily observable prices. To determine the fair value of

MSRs, the Company engages an independent third party. The independent third party’s valuation model calculates the

present value of estimated future net servicing income using assumptions that market participants would use in estimating

future net servicing income, including estimates of mortgage prepayment speeds, discount rates, default rates, costs to

service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees. Periodically, the

Company will review broker surveys and other market research to validate significant assumptions used in the model. The

significant unobservable inputs include mortgage prepayment speeds or the constant prepayment rate (“CPR”) and the

weighted average discount rate. Because the valuation of MSRs requires the use of significant unobservable inputs, all of

the Company’s MSRs are classified within Level 3 of the valuation hierarchy.

The following table presents the balances of the assets and liabilities measured at fair value on a nonrecurring basis as of

March 31, 2024 and December 31, 2023, respectively, by caption, on the accompanying consolidated balance sheets and by

FASB ASC 820 valuation hierarchy (as described above):

Quoted Prices in

Active Markets

Other

Significant

for

Observable

Unobservable

Carrying

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

March 31, 2024:

Loans held for sale

$

175

—

175

—

Loans, net

(1)

765

—

—

765

Other assets

(2)

965

—

—

965

Total assets at fair value

$

1,905

—

175

1,730

December 31, 2023:

Loans, net

(1)

$

783

—

—

783

Other assets

(2)

992

—

—

992

Total assets at fair value

$

1,775

—

—

1,775

(1)

Loans considered collateral dependent under ASC 326.

(2)

Represents MSRs, net, carried at lower of cost or estimated fair value.

Quantitative Disclosures for Level 3 Fair Value Measurements

At March 31, 2024 and December 31, 2023, the Company had no Level 3 assets measured at fair value on a recurring basis. 

For Level 3 assets measured at fair value on a non-recurring basis at March 31, 2024 and December 31, 2023, the

significant unobservable inputs used in the fair value measurements and the range of such inputs with respect to such assets

are presented below.

Range of

Weighted 

Carrying 

Significant 

Unobservable

Average

(Dollars in thousands)

Amount

Valuation Technique

Unobservable Input

Inputs

of Input

March 31, 2024:

Collateral dependent loans

$

765

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

965

Discounted cash flow

Prepayment speed or CPR

6.3

-

11.3

6.6

Discount rate

10.0

-

12.0

10.0

December 31, 2023:

Collateral dependent loans

$

783

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

992

Discounted cash flow

Prepayment speed or CPR

5.9

-

10.6

6.0

Discount rate

10.5

-

12.5

10.5

25

Fair Value of Financial Instruments

ASC 825,

Financial Instruments

, requires disclosure of fair value information about financial instruments, whether or not

recognized on the face of the balance sheet, where it is practicable to estimate that value. The assumptions used in the

estimation of the fair value of the Company’s financial instruments are explained below. Where quoted market prices are

not available, fair values are based on estimates using discounted cash flow analyses. Discounted cash flows can be

significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The

following fair value estimates cannot be substantiated by comparison to independent markets and should not be considered

representative of the liquidation value of the Company’s financial instruments, but rather are good-faith estimates of the fair

value of financial instruments held by the Company. ASC 825 excludes certain financial instruments and all nonfinancial

instruments from its disclosure requirements.

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments: 

Loans, net 

Fair values for loans were calculated using discounted cash flows. The discount rates reflected current rates at which similar

loans would be made for the same remaining maturities. Expected future cash flows were projected based on contractual

cash flows, adjusted for estimated prepayments. The fair value of loans was measured using an exit price notion.

Loans held for sale

Fair values of loans held for sale are determined using quoted secondary market prices for similar loans.

Time Deposits 

Fair values for time deposits were estimated using discounted cash flows. The discount rates were based on rates currently

offered for deposits with similar remaining maturities. 

The carrying value, related estimated fair value, and placement in the fair value hierarchy of the Company’s financial

instruments at March 31, 2024 and December 31, 2023 are presented below. This table excludes financial instruments for

which the carrying amount approximates fair value. Financial assets for which fair value approximates carrying value

included cash and cash equivalents. Financial liabilities for which fair value approximates carrying value included

noninterest-bearing demand deposits, interest-bearing demand deposits, and savings deposits. Fair value approximates

carrying value in these financial liabilities due to these products having no stated maturity. Additionally, financial

liabilities for which fair value approximates carrying value included overnight borrowings such as federal funds purchased

and securities sold under agreements to repurchase.

The following table summarizes our fair value estimates:

Fair Value Hierarchy

Carrying

Estimated

Level 1

Level 2

Level 3

(Dollars in thousands)

amount

fair value

inputs

inputs

Inputs

March 31, 2024:

Financial Assets:

Loans, net (1)

$

560,305

$

522,379

$

—

$

—

$

522,379

Loans held for sale

175

175

—

175

—

Financial Liabilities:

Time Deposits

$

190,603

$

188,651

$

—

$

188,651

$

—

December 31, 2023:

Financial Assets:

Loans, net (1)

$

550,431

$

526,372

$

—

$

—

$

526,372

Financial Liabilities:

Time Deposits

$

198,215

$

195,171

$

—

$

195,171

$

—

(1) Represents loans, net of allowance for credit losses. The fair value of loans was measured using an exit price notion.

26

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

OPERATIONS

The following discussion and analysis is designed to provide a better understanding of various factors related to the results

of operations and financial condition of the Company and the Bank. This discussion is intended to supplement and

highlight information contained in the accompanying unaudited condensed consolidated financial statements and related

notes for the quarters ended March 31, 2024 and 2023, as well as the information contained in our Annual Report on Form

10-K for the year ended December 31, 2023. 

Special Cautionary Notice Regarding Forward-Looking Statements

Various of the statements made herein under the captions “Management’s Discussion and Analysis of Financial Condition

and Results of Operations”, “Quantitative and Qualitative Disclosures about Market Risk”, “Risk Factors” “Description of

Property” and elsewhere, are “forward-looking statements” within the meaning and protections of Section 27A of the

Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations,

anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks,

uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance,

achievements or financial condition of the Company to be materially different from future results, performance,

achievements or financial condition expressed or implied by such forward-looking statements. You should not expect us to

update any forward-looking statements.

All statements other than statements of historical fact are statements that could be forward-looking statements. You can

identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,”

“should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “designed”, “plan,” “point to,”

“project,” “could,” “intend,” “target” and other similar words and expressions of the future. These forward-looking

statements may not be realized due to a variety of factors, including, without limitation:

●

the effects of future economic, business and market conditions and changes, foreign, domestic and locally,

including inflation, seasonality, natural disasters or climate change, such as rising sea and water levels, hurricanes

and tornados, COVID-19 or other health crises, epidemics or pandemics including supply chain disruptions,

inventory volatility, and changes in consumer behaviors;

●

the effects of war or other conflicts, acts of terrorism, trade restrictions, sanctions or other events that may affect

general economic conditions;

●

governmental monetary and fiscal policies, including the amount and costs of borrowing by the federal

government and its agencies, the continuing effects of COVID-19 fiscal and monetary stimuli, and subsequent

changes in monetary policies in response to inflation, including increases in the Federal Reserve’s target federal

funds rate and reductions in the Federal Reserve’s holdings of securities through quantitative tightening; and the

duration that the Federal Reserve will keep its targeted federal funds rates at or above current rates to meet its long

term inflation target of 2%;

●

legislative and regulatory changes, including changes in banking, securities and tax laws, regulations and rules and

their application by our regulators, including capital and liquidity requirements, and changes in the scope and cost

of FDIC insurance;

●

changes in accounting pronouncements and interpretations, including the required use, beginning January 1,

2023,of Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (ASU) 2016-13,

“Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” as

well as the updates issued since June 2016 (collectively, FASB ASC Topic 326) on Current Expected Credit

Losses(“CECL”), and ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures, which eliminates

troubled debt restructurings (“TDRs”) and related guidance;

27

●

the failure of assumptions and estimates, including those used in the Company’s CECL models to establish our

allowance for credit losses and estimate asset impairments, as well as differences in, and changes to, economic,

market and credit conditions, including changes in borrowers’ credit risks and payment behaviors from those used

in our CECL models and loan portfolio reviews;

●

the risks of changes in market interest rates and the shape of the yield curve on customer behaviors; the levels,

composition and costs of deposits, loan demand and mortgage loan originations; the values and liquidity of loan

collateral, our securities portfolio and interest-sensitive assets and liabilities; and the risks and uncertainty of the

amounts realizable on collateral;

●

the risks of increases in market interest rates creating unrealized losses on our securities available for sale, which

adversely affect our stockholders’ equity for financial reporting purposes and our tangible equity;

●

changes in borrower liquidity and credit risks, and savings, deposit and payment behaviors;

●

changes in the availability and cost of credit and capital in the financial markets, and the types of instruments that

may be included as capital for regulatory purposes;

●

changes in the prices, values and sales volumes of residential and commercial real estate;

●

the effects of competition from a wide variety of local, regional, national and other providers of financial,

investment and insurance services, including the disruptive effects of financial technology and other competitors

who are not subject to the same regulation, including capital, and supervision and examination, as the Company

and the Bank and credit unions, which are not subject to federal income taxation;

●

the timing and amount of rental income from third parties following the June 2022 opening of our new

headquarters;

●

the risks of mergers, acquisitions and divestitures, including, without limitation, the related time and costs of

implementing such transactions, integrating operations as part of these transactions and possible failures to achieve

expected gains, revenue growth and/or expense savings from such transactions;

●

changes in technology or products that may be more difficult, costly, or less effective than anticipated;

●

cyber-attacks and data breaches that may compromise our systems, our vendors’ systems or customers’

information;

●

the risks that our deferred tax assets (“DTAs”) included in “other assets” on our consolidated balance sheets, if

any, could be reduced if estimates of future taxable income from our operations and tax planning strategies are less

than currently estimated, and sales of our capital stock could trigger a reduction in the amount of net operating loss

carry-forwards that we may be able to utilize for income tax purposes; 

●

the risks that our dividends, share repurchases and discretionary bonuses are limited by regulation to the

maintenance of a capital conservation buffer of 2.5% and our future earnings and “eligible retained earnings” over

rolling four calendar quarter periods;

●

other factors and risks described under “Risk Factors” herein, in our Annual Report on Form 10-K as of and for

the year ended December 31, 2024 filed with the United States Securities and Exchange Commission (the

“Commission” or “SEC”), and in any of our subsequent reports that we make with the SEC under the Exchange

Act.

All written or oral forward-looking statements that are we make or are attributable to us are expressly qualified in their

entirety by this cautionary notice. 

We

have no obligation and do not undertake to update, revise or correct any of the

forward-looking statements after the date of this report, or after the respective dates on which such statements otherwise are

made.

28

Summary of Results of Operations

Quarter ended March 31,

(Dollars in thousands, except per share data)

2024

2023

Net interest income (a)

$

6,677

$

7,217

Less: tax-equivalent adjustment

20

108

Net interest income (GAAP)

6,657

7,109

Noninterest income 

887

792

Total revenue 

7,544

7,901

Provision for credit losses

334

66

Noninterest expense

5,675

5,604

Income tax expense 

164

267

Net earnings

$

1,371

$

1,964

Basic and diluted earnings per share

$

0.39

$

0.56

(a) Tax-equivalent. See "Table 1 - Explanation of Non-GAAP Financial Measures."

Financial Summary

The Company’s net earnings were $1.4 million for the first three months of 2024, compared to $2.0 million for the first

three months of 2023. Basic and diluted earnings per share were $0.39 per share for the first three months of 2024,

compared to $0.56 per share for the first three months of 2023. 

Net interest income (tax-equivalent) was $6.7 million for the first three months of 2024, a 7% decrease compared to $7.2

million for the first three months of 2023. This decrease was primarily due to a smaller balance sheet and a decrease in the

Company’s net interest margin. The Company’s net interest margin (tax-equivalent) was 3.04% for the first three months

of 2024 compared to 3.17% for the first three months of 2023. This decrease was primarily due to increased cost of funds

which was partially offset by a more favorable asset mix and higher yields on interest earning assets. Average loans for the

first three months of 2024 were $560.9 million, a 12% increase from the first three months of 2023. Average total

securities for the first three months of 2024 were $267.6 million compared to $402.7 million for the first three months of

2023. The decrease was primarily the result of the Company’s balance sheet repositioning strategy in the fourth quarter of

2024. See “Results of Operations – Average Balance Sheet and Interest Rates” and “Net Interest Income and Margin”

below.

At March 31, 2024, the Company’s allowance for credit losses was $7.2 million, or 1.27% of total loans, compared to $6.9

million, or 1.23% of total loans, at December 31, 2023, and $6.8 million, or 1.35% of total loans, at March 31, 2023.

The Company recorded a provision for credit losses during the first three months of 2024 of $0.3 million, compared to $0.1

million during the first three months of 2023. The provision for credit losses under CECL reflects the Company’s

evaluation of its credit risk profile and its future economic outlook and forecasts. Our CECL model is largely influenced by

economic factors including, most notably, the anticipated unemployment rate. The increase in the provision for credit

losses in the first quarter of 2024, as compared to the first quarter of 2023, was related to changes in the composition of,

and increases in, loans as well as the continued uncertainty in the economic environment which impacts the projected

macroeconomic factors used in our CECL modeling. 

Noninterest income was $0.9 million in the first three months of 2024, compared to $0.8 million in the first three months of

2023.

Noninterest expense was $5.7 million in the first three months of 2024, compared to $5.6 million for the first three months

of 2023. The increase in noninterest expense was primarily due to routine increases in salaries and benefits expense. 

Income tax expense was $0.2 million for the first three months of 2024 compared to $0.3 million for the first three months

of 2023. This decrease was due to a decline in the level of earnings before taxes and the Company’s effective tax rate. The

Company's effective tax rate for the first three months of 2024 was 10.68%, compared to 11.97% in the first three months

of 2023. The Company’s effective income tax rate is affected principally by tax-exempt earnings from the Company’s

investment in municipal securities, bank-owned life insurance (“BOLI”), and New Markets Tax Credits (“NMTCs”).

29

The Company paid cash dividends of $0.27 per share in the first three months of 2024 and 2023 . At March 31, 2024, the

Bank’s regulatory capital ratios were well above the minimum amounts required to be “well capitalized” under current

regulatory standards with a total risk-based capital ratio of 15.69%, a tier 1 leverage ratio of 10.34% and a common equity

tier 1 (“CET1”) ratio of 14.62% at March 31, 2024. 

CRITICAL ACCOUNTING POLICIES

The accounting principles we follow and our methods of applying these principles conform with U.S. GAAP and with

general practices within the banking industry. There have been no significant changes to our Critical Accounting Estimates

as described in our Form 10-K.

RESULTS OF OPERATIONS

Average Balance Sheet and Interest Rates

Quarter ended March 31,

2024

2023

Average

Yield/

Average

Yield/

(Dollars in thousands)

Balance

Rate

Balance

Rate

Interest-earning assets:

Loans and loans held for sale 

$

560,942

5.01%

$

502,158

4.65%

Securities - taxable

257,229

2.21%

344,884

2.19%

Securities - tax-exempt 

10,377

3.64%

57,800

3.59%

Total securities 

267,606

2.26%

402,684

2.38%

Federal funds sold

17,980

5.57%

7,314

4.71%

Interest bearing bank deposits

37,790

5.37%

11,607

4.47%

Total interest-earning assets

884,318

4.21%

923,763

3.66%

Interest-bearing liabilities:

Deposits:

NOW

196,648

1.31%

187,566

0.54%

Savings and money market

241,792

0.57%

300,657

0.39%

Time Deposits

199,562

3.20%

155,676

1.51%

Total interest-bearing deposits

638,002

1.62%

643,899

0.70%

Short-term borrowings

1,592

0.51%

3,046

1.11%

Total interest-bearing liabilities

639,594

1.62%

646,945

0.71%

Net interest income and margin (tax-equivalent)

$

6,677

3.04%

$

7,217

3.17%

Net Interest Income and Margin

Net interest income (tax-equivalent) was $6.7 million for the first three months of 2024, a 7% increase compared to $7.2

million for the first three months of 2023. This decrease was primarily due to a decline in the Company’s net interest

margin (tax-equivalent). The Company’s net interest margin (tax-equivalent) was 3.04% in the first three months of 2024

compared to 3.17% in the first three months of 2023. This decrease was primarily due to higher market interest rates,

which increased our cost of funds, generally, and changes in our deposit mix to higher cost interest bearing deposits, which

was partially offset by a more favorable asset mix and higher yields on interest-earning assets. The cost of interest-bearing

liabilities increased to 162 basis points, compared to 71 basis points in the first three months of 2024. Since March 2022,

the Federal Reserve increased the target federal funds range from 0 – 0.25% to 5.25 – 5.50%. 

The tax-equivalent yield on total interest-earning assets increased by 55 basis points to 4.21% in the first three months of

2024 compared to 3.66% in the first three months of 2023. This increase was primarily due to the Company’s balance

sheet repositioning strategy in the fourth quarter of 2023, which improved our asset mix, and higher market interest rates on

interest earning assets. 

30

The cost of total interest-bearing liabilities increased by 91 basis points to 1.62% in the first three months of 2024

compared to 0.71% in the first three months of 2023. Our deposit costs may continue to increase as the Federal Reserve

maintains or increases its target federal funds rate, market interest rates increase, and as customer behaviors change as a

result of inflation and higher market interest rates, and we compete for deposits against other banks, money market mutual

funds, Treasury securities and other interest bearing alternative investments.

The Company continues to deploy various asset liability management strategies to manage its risks from interest rate

fluctuations. Deposit and loan pricing remain competitive in our markets. We believe this challenging rate environment

will continue throughout 2024. Our ability to compete and manage our deposit costs until our interest-earning assets

reprice and we generate new loans with current market interest rates will be important to our net interest margin during

2024.

Provision for Credit Losses

On January 1, 2023, we adopted ASC 326 and its CECL methodology, which requires us to estimate all expected credit

losses over the remaining life of our loans. Accordingly, the provision for credit losses represents a charge to earnings

necessary to establish an allowance for credit losses that, in management's evaluation, is adequate to provide coverage for

all expected credit losses. The Company recorded a provision for credit losses during the first three months of 2024 of $0.3

million, compared to $0.1 million during the first three months of 2023. Provision expense is affected by organic loan

growth in our loan portfolio, our internal assessment of the credit quality of the loan portfolio, our expectations about future

economic conditions and net charge-offs. Our CECL model is largely influenced by economic factors including, most

notably, the anticipated unemployment rate, which may be affected by monetary policy. The increase in the provision for

credit losses in the first quarter of 2024, as compared to the first quarter of 2023, was related to changes in the composition

of, and increases in, loans as well as the continued uncertainty in the economic environment which impacts the projected

macroeconomic factors used in our CECL modeling.

Our allowance for credit losses reflects an amount we believe appropriate, based on our allowance assessment

methodology, to adequately cover all expected credit losses as of the date the allowance is determined. At March 31, 2024,

the Company’s allowance for credit losses was $7.2 million, or 1.27% of total loans, compared to $6.9 million, or 1.23% of

total loans, at December 31, 2023, and $6.8 million, or 1.35% of total loans, at March 31, 2023. 

Noninterest Income

Quarter ended March 31,

(Dollars in thousands)

2024

2023

Service charges on deposit accounts

$

156

$

154

Mortgage lending income

150

93

Bank-owned life insurance

102

156

Other

479

389

Total noninterest income

$

887

$

792

The Company’s income from mortgage lending is primarily attributable to the (1) origination and sale of mortgage loans

and (2) servicing of mortgage loans. Origination income, net, is comprised of gains or losses from the sale of the mortgage

loans originated, origination fees, underwriting fees, and other fees associated with the origination of loans, which are

netted against the commission expense associated with these originations. The Company’s normal practice is to originate

mortgage loans for sale in the secondary market and to either sell or retain the associated MSRs when the loan is sold. 

MSRs are recognized based on the fair value of the servicing right on the date the corresponding mortgage loan is sold. 

Subsequent to the date of transfer, the Company has elected to measure its MSRs under the amortization method. Servicing

fee income is reported net of any related amortization expense. 

The Company evaluates MSRs for impairment on a quarterly basis. Impairment is determined by grouping MSRs by

common predominant characteristics, such as interest rate and loan type. If the aggregate carrying amount of a particular

group of MSRs exceeds the group’s aggregate fair value, a valuation allowance for that group is established. The valuation

allowance is adjusted as the fair value changes. An increase in mortgage interest rates typically results in an increase in the

fair value of the MSRs while a decrease in mortgage interest rates typically results in a decrease in the fair value of MSRs. 

31

The following table presents a breakdown of the Company’s mortgage lending income.

Quarter ended March 31,

(Dollars in thousands)

2024

2023

Origination income, net

$

57

$

4

Servicing fees, net

93

89

Total mortgage lending income

$

150

$

93

Income from bank-owned life insurance was $102 thousand and $156 thousand for the first three months of 2024 and 2023,

respectively. Excluding a $52 thousand non-taxable death benefit received during the first three months of 2023, income

from bank-owned life insurance would have been $104 thousand for the first three months of 2023.

Other noninterest income was $479 thousand for the first three months of 2024, compared to $389 thousand for the first

three months of 2023. The increase in other noninterest income was primarily due to increased fee income on one-way sell

reciprocal deposits sold through the Intrafi network. 

Noninterest Expense

Quarter ended March 31,

(Dollars in thousands)

2024

2023

Salaries and benefits

$

3,071

$

2,927

Net occupancy and equipment

763

799

Professional fees

326

338

Other

1,515

1,540

Total noninterest expense

$

5,675

$

5,604

The increase in salaries and benefits was primarily due to routine annual increases in salaries and wages.

The decrease in other noninterest expense was primarily due to the Company’s adoption of FASB ASU 2023-02

Investments – Equity Method and Joint Ventures (Topic 323) which allows the proportional amortization method for our

NMTC investments on January 1, 2024. With the adoption of this ASU, amortization of NMTCs are now included in

income tax expense. During the first three months of 2023, other noninterest expense included $105 thousand related to

our equity method investment in NMTCs.

Income Tax Expense

Income tax expense was $0.2 million for the first three months of 2024 compared to $0.3 million for the first three months

of 2023. This decrease was due to declines in earnings before taxes and the Company’s effective tax rate. The Company’s

effective income tax rate for the first three months of 2024 was 10.68 %, compared to 11.97% in the first three months of

2023. The Company’s effective income tax rate is principally impacted by tax-exempt earnings from the Company’s

investments in municipal securities, bank-owned life insurance, and New Mark ets Tax Credits. 

BALANCE SHEET ANALYSIS

Securities 

Securities available-for-sale were $260.8 million at March 31, 2024, compared to $270.9 million at December 31, 2023. 

This decrease reflects a $7.2 million decrease in the amortized cost basis of securities available -for-sale and a decrease in

the fair value of securities available-for-sale of $2.9 million. The average annualized tax-equivalent yields earned on total

securities were 2.26% in the first quarter of 2024 and 2.39% in the first quarter of 2023.

32

Loans

2024

2023

First

Fourth

Third

Second

First

(In thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

Commercial and industrial

$

78,920

73,374

66,014

61,880

59,602

Construction and land development

58,909

68,329

70,129

63,874

66,500

Commercial real estate

300,484

287,307

281,964

275,801

267,962

Residential real estate

118,240

117,457

117,150

109,834

101,975

Consumer installment

10,967

10,827

10,353

9,022

9,002

Total loans

$

567,520

557,294

545,610

520,411

505,041

Total loans were $567.5 million at March 31, 2024, a 2% increase compared to $557.3 million at December 31, 2023. Four

loan categories represented the majority of the loan portfolio at March 31, 2024: commercial real estate (53%), residential

real estate (21%), commercial and industrial (14%) and construction and land development (10%). Approximately 21% of

the Company’s commercial real estate loans were classified as owner-occupied at March 31, 2024.

Within the residential real estate portfolio segment, the Company had junior lien mortgages of approximately $9.2 million,

or 2% of total loans, and $8.7 million, or 2%, of total loans at March 31, 2024 and December 31, 2023, respectively. For

residential real estate mortgage loans with a consumer purpose, the Company had no loans that required interest only

payments at March 31, 2024 and December 31, 2023. The Company’s residential real estate mortgage portfolio does not

include any option or hybrid ARM loans, subprime loans, or any material amount of other consumer mortgage products

which are generally viewed as high risk. 

The average yield earned on loans and loans held for sale was 5.01% in the first quarter of 2024 and 4.65% in the first

quarter of 2023. 

The specific economic and credit risks associated with our loan portfolio include, but are not limited to, the effects of

current economic conditions, including inflation and the continuing increases in market interest rates, remaining COVID-19

pandemic effects including supply chain disruptions, reduced commercial office occupancy levels, housing supply

shortages and inflation on our borrowers’ cash flows, real estate market sales volumes and liquidity, valuations used in

making loans and evaluating collateral, reduced credit availability , (especially for commercial real estate) generally and

higher costs of financing properties, which reduce the transaction and dollar volumes of commercial real estate property

sales. Other risks we face include, among other things, real estate industry concentrations, competitive pressures from a

wide range of other lenders, deterioration in certain credits, interest rate fluctuations, reduced collateral values or non-

existent collateral, title defects, inaccurate appraisals, financial deterioration of borrowers, fraud, and any violation of

applicable laws and regulations. Various projects financed earlier that were based on lower interest rate assumptions than

currently in effect may not be as profitable or successful at the higher interest rates currently in effect and currently

expected in the future.

The Company attempts to reduce these economic and credit risks through its loan-to-value guidelines for collateralized

loans, investigating the creditworthiness of borrowers and monitoring borrowers’ financial position. Also, we have

established and periodically review, lending policies and procedures. Banking regulations limit a bank’s credit exposure by

prohibiting unsecured loan relationships that exceed 10% of its capital; or 20% of capital, if loans in excess of 10% of

capital are fully secured. Under these regulations, we are prohibited from having secured loan relationships in excess of

approximately $22.3 million. Furthermore, we have an internal limit for aggregate credit exposure (loans outstanding plus

unfunded commitments) to a single borrower of $20.1 million. Our loan policy requires that the Loan Committee of the

Board of Directors approve any loan relationships that exceed this internal limit. At March 31, 2024, the Bank had one

loan relationship exceeding our internal limit.

33

We periodically analyze our commercial and industrial and commercial real estate loan portfolios to determine if a

concentration of credit risk exists in any one or more industries. We use classification systems broadly accepted by the

financial services industry in order to categorize our commercial borrowers. Loan concentrations to borrowers in the

following classes exceeded 25% of the Bank’s total risk -based capital at March 31, 2024 and December 31, 2023.

March 31,

December 31,

(Dollars in thousands)

2024

2023

Lessors of 1-4 family residential properties

$

58,427

$

56,912

Multi-family residential properties

45,634

45,841

Hotel/motel

38,822

39,131

Office Buildings

27,897

30,871

Allowance for Credit Losses 

On January 1, 2023, we adopted ASC 326 and its CECL methodology, which requires us to estimate all expected credit

losses over the remaining life of our loan portfolio. Accordingly, beginning in 2023, the allowance for credit losses

represents an amount that, in management's evaluation, is adequate to provide coverage for all expected future credit losses

on outstanding loans. As of March 31, 2024 and December 31, 2023, our allowance for credit losses was approximately

$7.2 million and $6.9 million, respectively, which our management believes to be adequate at each of the respective dates.

Our allowance for credit losses as a percentage of total loans was 1.27% at March 31, 2024, compared to 1.23% at

December 31, 2023.

Our CECL models rely largely on projections of macroeconomic conditions to estimate future credit losses.

Macroeconomic factors used in the model include the Alabama unemployment rate, the Alabama home price index, the

national commercial real estate price index and the Alabama gross state product. Projections of these macroeconomic

factors, obtained from an independent third party, are utilized to predict quarterly rates of default.

Under the CECL methodology the allowance for credit losses is measured on a collective basis for pools of loans with

similar risk characteristics, and for loans that do not share similar risk characteristics with the collectively evaluated pools,

evaluations are performed on an individual basis. Losses are predicted over a period of time determined to be reasonable

and supportable, and at the end of the reasonable and supportable period losses are reverted to long term historical averages.

At March 31, 2024, reasonable and supportable periods of 4 quarters were utilized followed by an 8 quarter straight line

reversion period to long term averages.

A summary of the changes in the allowance for credit losses and certain asset quality ratios for the first quarter of 2024 and

the previous four quarters is presented below.

2024

2023

First

Fourth

Third

Second

First

(Dollars in thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

Balance at beginning of period

$

6,863

6,778

6,634

6,821

5,765

Impact of adopting ASC 326

—

—

—

—

1,019

Charge-offs:

Commercial and industrial

—

(164)

—

—

—

Consumer installment

(24)

(20)

(18)

(56)

(11)

Total charge -offs

(24)

(184)

(18)

(56)

(11)

Recoveries

91

11

4

200

8

Net recoveries (charge-offs)

67

(173)

(14)

144

(3)

Provision for credit losses

285

258

158

(331)

40

Ending balance

$

7,215

6,863

6,778

6,634

6,821

as a % of loans

1.27

%

1.23

1.24

1.27

1.35

as a % of nonperforming loans

822

%

753

559

577

255

Net (recoveries) charge-offs as % of average loans (a)

(0.05)

%

0.13

0.01

(0.11)

—

(a) Net (recoveries) charge-offs are annualized.

34

The allowance for credit losses by loan category for the first quarter of 2024 and the previous four quarters is presented

below.

2024

2023

First Quarter

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

(Dollars in thousands)

Amount

%*

Amount

%*

Amount

%*

Amount

%*

Amount

%*

Commercial and industrial

$

1,415

13.9

$

1,288

13.2

$

1,215

12.1

$

1,198

11.9

$

1,232

11.8

Construction and land 

development

840

10.4

960

12.3

1,073

12.9

1,005

12.3

1,021

13.2

Commercial real estate

4,202

53.0

3,921

51.5

3,803

51.6

3,788

53.0

3,966

53.0

Residential real estate

613

20.8

546

21.1

551

21.5

529

21.1

497

20.2

Consumer installment

145

1.9

148

1.9

136

1.9

114

1.7

105

1.8

Total allowance for credit losses

$

7,215

$

6,863

$

6,778

$

6,634

$

6,821

* Loan balance in each category expressed as a percentage of total loans.

Nonperforming Assets

At March 31, 2024 and December 31, 2023, the Company had $0.9 million in nonperforming assets. 

The table below provides information concerning total nonperforming assets and certain asset quality ratios for the first

quarter of 2024 and the previous four quarters.

2024

2023

First

Fourth

Third

Second

First

(Dollars in thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

Nonperforming assets:

Nonaccrual loans

$

878

911

1,213

1,149

2,680

Total nonperforming assets

$

878

911

1,213

1,149

2,680

as a % of loans and other real estate owned

0.15

%

0.16

0.22

0.22

0.53

as a % of total assets

0.09

%

0.09

0.12

0.11

0.26

Nonperforming loans as a % of total loans

0.15

%

0.16

0.22

0.22

0.53

The table below provides information concerning the composition of nonaccrual loans for the first quarter of 2024 and the

previous four quarters.

2024

2023

First

Fourth

Third

Second

First

(In thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

Nonaccrual loans:

Commercial and industrial

$

—

—

162

178

432

Commercial real estate

765

783

801

819

2,103

Residential real estate

97

128

250

152

135

Consumer installment

16

—

—

—

10

Total nonaccrual loans

$

878

911

1,213

1,149

2,680

The Company discontinues the accrual of interest income when (1) there is a significant deterioration in the financial

condition of the borrower and full repayment of principal and interest is not expected or (2) the principal or interest is

90 days or more past due, unless the loan is both well-secured and in the process of collection . 

The Company had no loans 90 days or more past due and still accruing at March 31, 2024 and December 31, 2023,

respectively.

The Company had no OREO at March 31, 2024 or December 31, 2023. 

35

Deposits

March 31,

December 31,

(In thousands)

2024

2023

Noninterest bearing demand

$

263,484

270,723

NOW

197,044

190,724

Money market

160,980

148,040

Savings

87,562

88,541

Certificates of deposit under $250,000

101,186

100,572

Certificates of deposit and other time deposits of $250,000 or more

89,417

97,643

Total deposits

$

899,673

896,243

Total deposits were $899.7 million at March 31, 2024, compared to $896.2 million at December 31, 2023. At March 31,

2024, the Company had $48.9 million of reciprocal deposits sold, compared to $59.0 million at December 31, 2023. 

Noninterest-bearing deposits were $263.5 million, or 29% of total deposits, at March 31, 2024, compared to $270.7 million,

or 30% of total deposits at December 31, 2023. 

The average rate paid on total interest-bearing deposits was 1.62% in the first quarter of 2024 , compared to 0.70% in first

quarter of 2023.

At March 31, 2024, estimated uninsured deposits totaled $351.5 million, or 39% of total deposits, compared to $356.3

million, or 40% of total deposits at December 31, 2023. During 2023, the Bank began participating in the Certificates of

Deposit Account Registry Service (the “CDARS”) and the Insured Cash Sweep product (“ICS”), which provide for

reciprocal (“two-way”) transactions among banks facilitated by IntraFi for the purpose of improving the FDIC insurance

coverage for our depositors. The total of reciprocal deposits at March 31, 2024 was $10.6 million, compared to none at

December 31, 2023. Uninsured amounts are estimated based on the portion of account balances in excess of FDIC

insurance limits. The Bank’s uninsured deposits at March 31, 2024 and December 31, 2023 include approximately $215.0

million and $206.2 million, respectively, of deposits of state, county and local governments that are collateralized by

securities having an equal fair value to such deposits.

The estimated uninsured time deposits by maturity as of March 31, 2024 is presented below.

(Dollars in thousands)

March 31, 2024

Maturity of:

3 months or less

$

15,297

Over 3 months through 6 months

25,558

Over 6 months through 12 months

20,461

Over 12 months

2,598

Total estimated uninsured time deposits

$

63,914

The FDIC issued a special assessment of 3.36 basis points for a projected eight quarters on large banks with more than $5

billion of uninsured deposits as a result of the systemic risk determination to insure all depositors in connection with the

March 2023 failures of Silicon Valley Bank and Signature Bank. These special assessments do not apply to the Bank.

Other Borrowings and Available Credit

The Company had no long-term debt at March 31, 2024 and December 31, 2023. The Bank utilizes short and long-term

non-deposit borrowings from time to time. Short-term borrowings generally consist of federal funds purchased and

securities sold under agreements to repurchase with an original maturity of one year or less. The Bank had available federal

funds lines totaling $61.0 million with no federal funds borrowings outstanding at March 31, 2024, and December 31,

2023, respectively. Securities sold under agreements to repurchase, which were entered into on behalf of certain customers

totaled $1.5 million at March 31, 2024 and December 31, 2023, respectively . At March 31, 2024 and December 31, 2023,

the Bank had no borrowings from the Federal Reserve discount window and never had any borrowings under the Federal

Reserve’s Bank Term Facility Program (“BTFP”). The BTFP ceased making new loans on March 11, 2024.

36

The Bank is a member of the FHLB of Atlanta and has borrowed, and may in the future borrow from time to time under the

FHLB of Atlanta’s advance program to obtain funding for its growth. FHLB advances include both fixed and variable

terms and are taken out with varying maturities, and are generally secured by eligible assets. The Bank had no borrowings

under FHLB of Atlanta’s advance prog ram at March 31, 2024 and December 31, 2023, respectively. At those dates, the

Bank had $293.2 million and $309.1 million, respectively, of available lines of credit at the FHLB of Atlanta. Advances

include both fixed and variable interest rates and varying maturities may be used.

The average rate paid on the Bank’s short-term borrowings was 0.51% in the first quarter of 2024 compared to 1.11% in the

first quarter of 2023.

CAPITAL ADEQUACY 

The Company’s consolidated stockholders’ equity was $74.5 million and $76.5 million as of March 31, 2024 and

December 31, 2023, respectively. The decrease from December 31, 2023 was primarily driven by an other comprehensive

loss due to the change in unrealized gains/losses on securities available-for-sale, net of tax of $2.2 million, cash dividends

of $0.9 million, and the cumulative effect of adopting NMTC accounting standard of $0.3 million, partially offset by net

earnings of $1.4 million. Total unrealized losses, net of tax, on available-for-sale securities increased from $29.0 million

on December 31, 2023 to $31.2 million March 31, 2024. These unrealized losses do not affect the Bank’s capital for

regulatory capital purposes. 

The Company paid cash dividends of $0.27 per share for both the first quarter of 2024 and first quarter of 2023. 

On January 1, 2015, the Company and Bank became subject to the rules of the Basel III regulatory capital framework and

related Dodd-Frank Wall Street Reform and Consumer Protection Act changes. The rules included the implementation of a

capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. The capital

conservation buffer was subject to a three-year phase-in period that began on January 1, 2016 and was fully phased-in on

January 1, 2019 at 2.5%. A banking organization with a conservation buffer of less than the required amount will be

subject to limitations on capital distributions, including dividend payments and certain discretionary bonus payments to

executive officers. At March 31, 2024, the Bank’s ratio was sufficient to meet the fully phased-in conservation buffer, and

did not limit capital distributions or discretionary bonuses.

On August 26, 2020, the Federal Reserve and the other federal banking regulators adopted a final rule that amended the

capital conservation buffer. The new rule revises the definition of “eligible retained income” for purposes of the maximum

payout ratio to allow banking organizations to more freely use their capital buffers to promote lending and other financial

intermediation activities, by making the limitations on capital distributions more gradual. The eligible retained income is

now the greater of (i) net income for the four preceding quarters, net of distributions and associated tax effects not reflected

in net income; and (ii) the average of all net income over the preceding four quarters. This rule only affects the capital

buffers, and banking organizations were encouraged to make prudent capital distribution decisions.

The Federal Reserve has treated us as a “small bank holding company’ under the Federal Reserve’s Small Bank Holding

Company Policy. Accordingly, our capital adequacy is evaluated at the Bank level, and not for the Company and its

consolidated subsidiaries. The Bank’s tier 1 leverage ratio was 10.34%, CET1 risk-based capital ratio was 14.62%, tier 1

risk-based capital ratio was 14.62%, and total risk-based capital ratio was 15.69% at March 31, 2024. These ratios exceed

the minimum regulatory capital percentages of 5.0% for tier 1 leverage ratio, 6.5% for CET1 risk-based capital ratio, 8.0%

for tier 1 risk-based capital ratio, and 10.0% for total risk-based capital ratio to be considered “well capitalized.” The

Bank’s capital conservation buffer was 7.69% at March 31, 2024. 

On July 27, 2023, the Federal Reserve, the Comptroller of the Currency and the FDIC issued a joint notice of proposed

rulemaking to implement the Basel III endgame components. The proposal which is subject to public comment and change

only applies to banks and holding companies with $100 billion or more of assets. The proposal includes provisions dealing

with:

●

Credit risk, which arises from the risk that an obligor fails to perform on an obligation;

●

Credit risk, which arises from the risk than an obligor fails to perform on an obligation;

●

Market risk, which results from changes in the value of trading positions;

●

Operational risk, which is the risk of losses resulting from inadequate or failed internal process, people, and

systems, or from external events; and

●

Credit valuation adjustment risk, which results from the risk of losses on certain derivative contracts.

The Basel III endgame regulatory proposals are not applicable to the Company or the Bank .

37

MARKET AND LIQUIDITY RISK MANAGEMENT

Management’s objective is to manage assets and liabilities to provide a satisfactory, consistent level of profitability within

the framework of established liquidity, loan, investment, borrowing, and capital policies. The Bank’s Asset Liability

Management Committee (“ALCO”) is charged with the responsibility of monitoring these policies, which are designed to

ensure an acceptable asset/liability composition. Two critical areas of focus for ALCO are interest rate risk and liquidity

risk management. 

Interest Rate Risk Management

In the normal course of business, the Company is exposed to market risk arising from fluctuations in interest rates. ALCO

measures and evaluates interest rate risk so that the Bank can meet customer demands for various types of loans and

deposits. Measurements used to help manage interest rate sensitivity include an earnings simulation model and an economic

value of equity (“EVE”) model.

Earnings simulation

. Management believes that interest rate risk is best estimated by our earnings simulation modeling.

Forecasted levels of earning assets, interest-bearing liabilities, and off -balance sheet financial instruments are combined

with ALCO forecasts of market interest rates for the next 12 months and other factors in order to produce various earnings

simulations and estimates. To help limit interest rate risk, we have guidelines for earnings at risk which seek to limit the

variance of net interest income from gradual changes in interest rates. For changes up or down in rates from management’s

flat interest rate forecast over the next 12 months, policy limits for net interest income variances are as follows:

●

+/- 20% for a gradual change of 400 basis points

●

+/- 15% for a gradual change of 300 basis points

●

+/- 10% for a gradual change of 200 basis points

●

+/- 5% for a gradual change of 100 basis points

While a gradual change in interest rates was used in the above analysis to provide an estimate of exposure under these

scenarios, our modeling under both a gradual and instantaneous change in interest rates indicates our balance sheet is

liability sensitive over the forecast period of 12 months.

At March 31, 2024, our earnings simulation model indicated that we were in compliance with the policy guidelines noted

above. 

Economic Value of Equity

. EVE measures the extent that the estimated economic values of our assets, liabilities, and off-

balance sheet items will change as a result of interest rate changes. Economic values are estimated by discounting expected

cash flows from assets, liabilities, and off-balance sheet items, which establishes a base case EVE. In contrast with our

earnings simulation model, which evaluates interest rate risk over a 12-month timeframe, EVE uses a terminal horizon

which allows for the re-pricing of all assets, liabilities, and off-balance sheet items. Further, EVE is measured using values

as of a point in time and does not reflect any actions that ALCO might take in responding to or anticipating changes in

interest rates, or market and competitive conditions. To help limit interest rate risk, we have stated policy guidelines for an

instantaneous basis point change in interest rates, such that our EVE should not decrease from our base case by more than

the following:

●

35% for an instantaneous change of +/- 400 basis points

●

30% for an instantaneous change of +/- 300 basis points

●

25% for an instantaneous change of +/- 200 basis points

●

15% for an instantaneous change of +/- 100 basis points

At March 31, 2024, our EVE model indicated that we were in compliance with our policy guidelines.

38

Each of the above analyses may not, on its own, be an accurate indicator of how our net interest income will be affected by

changes in interest rates. Income associated with interest-earning assets and costs associated with interest-bearing liabilities

may not be affected uniformly by changes in interest rates. In addition, the magnitude and duration of changes in interest

rates may have a significant impact on net interest income. For example, although certain assets and liabilities may have

similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates, and other

economic and market factors, including market perceptions. Interest rates on certain types of assets and liabilities fluctuate

in advance of changes in general market rates, while interest rates on other types of assets and liabilities may lag behind

changes in general market rates. In addition, certain assets, such as adjustable rate mortgage loans, have features (generally

referred to as “interest rate caps and floors”) which limit changes in interest rates. Prepayments and early withdrawal levels

also could deviate significantly from those assumed in calculating the maturity of certain instruments. The ability of many

borrowers to service their debts also may decrease during periods of rising interest rates or economic stress, which may

differ across industries and economic sectors. ALCO reviews each of the above interest rate sensitivity analyses along with

several different interest rate scenarios in seeking satisfactory, consistent levels of profitability within the framework of the

Company’s established liquidity, loan, investment, borrowing, and capital policies. 

The Company may also use derivative financial instruments to improve the balance between interest-sensitive assets and

interest-sensitive liabilities, and as a tool to manage interest rate sensitivity while continuing to meet the credit and deposit

needs of our customers. From time to time, the Company also may enter into back-to-back interest rate swaps to facilitate

customer transactions and meet their financing needs. These interest rate swaps qualify as derivatives, but are not

designated as hedging instruments. At March 31, 2024 and December 31, 2023, the Company had no derivative contracts

designated as part of a hedging relationship to assist in managing its interest rate sensitivity. 

Liquidity Risk Management 

Liquidity is the Company’s ability to convert assets into cash equivalents in order to meet daily cash flow requirements,

primarily for deposit withdrawals, loan demand and maturing obligations. The Company seeks to manage its liquidity to

manage or reduce its costs of funds by maintaining liquidity believed adequate to meet its anticipated funding needs, while

balancing against excessive liquidity that likely would reduce earnings due to the cost of foregoing alternative higher-

yielding assets. 

Liquidity is managed at two levels. The first is the liquidity of the Company. The second is the liquidity of the Bank. The

management of liquidity at both levels is essential, because the Company and the Bank are separate and distinct legal

entities with different funding needs and sources, and each are subject to regulatory guidelines and requirements. The

Company depends upon dividends from the Bank for liquidity to pay its operating expenses, debt obligations and

dividends. The Bank’s payment of dividends depends on its earnings, liquidity, capital and the absence of regulatory

restrictions on such dividends. 

The primary source of funding and liquidity for the Company has been dividends received from the Bank. If needed, the

Company could also borrow money, or issue common stock or other securities. Primary uses of funds by the Company

include payment of Company expenses, dividends paid to stockholders and Company stock repurchases. 

Primary sources of funding for the Bank include customer deposits, other borrowings, interest payments on earning assets,

repayment and maturity of securities and loans, sales of securities, and the sale of loans, particularly residential mortgage

loans. The Bank has access to federal funds lines from various banks and borrowings from the Federal Reserve discount

window. In addition to these sources, the Bank is eligible to participate in the FHLB of Atlanta’s advance program to obtain

funding for growth and liquidity. Advances include both fixed and variable terms and may be taken out with varying

maturities. At March 31, 2024, the Bank had no FHLB of Atlanta advances outstanding and available credit from the FHLB

of $293.2 million. At March 31, 2024, the Bank also had $61.0 million of available federal funds lines with no borrowings

outstanding. Primary uses of funds include repayment of maturing obligations and growing the loan portfolio. 

Management believes that the Company and the Bank have adequate sources of liquidity to meet all their respective known

contractual obligations and unfunded commitments, including loan commitments and reasonably expected borrower,

depositor, and creditor requirements over the next twelve months. 

39

Off-Balance Sheet Arrangements, Commitments, Contingencies and Contractual Obligations

At March 31, 2024, the Bank had outstanding standby letters of credit of $0.6 million and unfunded loan commitments

outstanding of $69.1 million. Because these commitments generally have fixed expiration dates and many will expire

without being drawn upon, the total commitment level does not necessarily represent future cash requirements. If needed, to

fund these outstanding commitments, the Bank could liquidate federal funds sold or a portion of our securities available-

for-sale, or draw on its available credit facilities or raise deposits. 

Mortgage lending activities

We generally sell residential mortgage loans in the secondary market to Fannie Mae while retaining the servicing of these

loans. The sale agreements for these residential mortgage loans with Fannie Mae and other investors include various

representations and warranties regarding the origination and characteristics of the residential mortgage loans. Although the

representations and warranties vary among investors, they typically cover ownership of the loan, validity of the lien

securing the loan, the absence of delinquent taxes or liens against the property securing the loan, compliance with loan

criteria set forth in the applicable agreement, compliance with applicable federal, state, and local laws, among other

matters.

As of March 31, 2024, the aggregate unpaid principal balance of residential mortgage loans, which we have originated and

sold, but retained the servicing rights, was $214.0 million. Although these loans are generally sold on a non-recourse basis,

we may be obligated to repurchase residential mortgage loans or reimburse investors for losses incurred (make whole

requests) if a loan review reveals a potential breach of seller representations and warranties. Upon receipt of a repurchase

or make whole request, we work with investors to arrive at a mutually agreeable resolution. Repurchase and make whole

requests are typically reviewed on an individual loan by loan basis to validate the claims made by the investor and to

determine if a contractually required repurchase or make whole event has occurred. We seek to reduce and manage the risks

of potential repurchases, make whole requests, or other claims by mortgage loan investors through our underwriting and

quality assurance practices and by servicing mortgage loans to meet investor and secondary market standards.

The Company was not required to repurchase any loans during the first quarter of 2024 as a result of representation and

warranty provisions contained in the Company’s sale agreements with Fannie Mae, and had no pending repurchase or

make-whole requests at March 31, 2024.

We service all residential mortgage loans originated and sold by us to Fannie Mae. As servicer, our primary duties are to:

(1) collect payments due from borrowers; (2) advance certain delinquent payments of principal and interest; (3) maintain

and administer any hazard, title, or primary mortgage insurance policies relating to the mortgage loans; (4) maintain any

required escrow accounts for payment of taxes and insurance and administer escrow payments; and (5) foreclose on

defaulted mortgage loans or take other actions to mitigate the potential losses to investors consistent with the agreements

governing our rights and duties as servicer.

The agreements under which we act as servicer generally specifies standard s of responsibility for actions taken by us in

such capacity and provides protection against expenses and liabilities incurred by us when acting in compliance with the

respective servicing agreements. However, if we commit a material breach of our obligations as servicer, we may be

subject to termination if the breach is not cured within a specified period following notice. The standards governing

servicing and the possible remedies for violations of such standards are determined by our agreements with Fannie Mae and

Fannie Mae’s mortgage servicing guides. Remedies could include repurchase of an affected loan.

Although repurchase and make whole requests related to representation and warranty provisions and servicing activities

have been limited to date, it is possible that requests to repurchase mortgage loans or reimburse investors for losses incurred

(make whole requests) may increase in frequency if investors more aggressively pursue all means of recovering losses on

their purchased loans. As of March 31, 2024, we do not believe that this exposure is material due to the historical level of

repurchase requests and loss trends, in addition to the fact that 99% of our residential mortgage loans serviced for Fannie

Mae were current as of such date. We maintain ongoing communications with our investors and will continue to evaluate

this exposure by monitoring the level and number of repurchase requests as well as the delinquency rates in our investor

portfolios.

The Bank sells mortgage loans to Fannie Mae and services these on an actual/actual basis. As a result, the Bank is not

obligated to make any advances to Fannie Mae on principal and interest on such mortgage loans where the borrower is

entitled to forbearance.

40

Effects of Inflation and Changing Prices

The consolidated financial statements and related consolidated financial data presented herein have been prepared in

accordance with GAAP and practices within the banking industry which require the measurement of financial position and

operating results in terms of historical dollars without considering the changes in the relative purchasing power of money

over time due to inflation. Unlike most industrial companies, virtually all the assets and liabilities of a financial institution

are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance

than the effects of general levels of inflation.

Inflation can affect our noninterest expenses. It also can affect our customers’ behaviors, and can affect the interest rates we

have to pay on our deposits and other borrowings, and the interest rates we earn on our earning assets. The difference

between our interest expense and interest income is also affected by the shape of the yield curve and the speeds at which

our assets and liabilities, respectively, reprice in response to interest rate changes. The yield curve continued to be inverted

on March 31, 2024, which means shorter term interest rates are higher than longer interest rates. This results in a lower

spread between our costs of funds and our interest income. In addition, net interest income could be affected by

asymmetrical changes in the different interest rate indexes, given that not all of our assets or liabilities are priced with the

same index. Higher market interest rates and reductions in the securities held by the Federal Reserve to reduce inflation

generally reduce economic activity and may reduce loan demand and growth. Inflation and related changes in market

interest rates, as the Federal Reserve acts to meet its long term inflation goal of 2%, also can adversely affect the values and

liquidity of our loans and securities, the value of collateral for our loans, and the success of our borrowers and such

borrowers’ available cash to pay interest on and principal of our loans to them.

Inflation has been running at levels unseen in decades and, while it has declined towards the end of 2023, it has been

persistent through March 31, 2024 and remains above the Federal Reserve’s long term inflation goal of 2.0% annually. 

Beginning in March 2022, the Federal Reserve has been raising target federal funds interest rates and reducing its securities

holdings in an effort to reduce inflation. During 2022, the Federal Reserve increased the target federal funds range from 0 –

0.25% to 4.25 – 4.50%. The target federal funds rate was increased another 25 basis points on each of January 31, March 7,

May 3 and July 26, 2023 to 5.25-5.50%, and further increases in the target federal funds rate may be made if inflation

remains elevated. The Federal Reserve has indicated it will maintain higher target rates and restrictive monetary policy to

meet its goals of (i) 2% target inflation rate over the longer term and (ii) maximum employment goals. Following its May

1, 2024 meeting, the Federal Reserve’s Open Market Committee (“FOMC”) reaffirmed its commitment to the 2% inflation

objective and announced that it “does not expect it will be appropriate to reduce the target range until it has gained greater

confidence that inflation is moving substantially toward 2%.” Further, the FOMC reduced its monthly reduction of

Treasury securities from $60 billion to $25 billion, and was maintaining the monthly reduction on agency debt and agency

mortgage-backed securities at $35 billion.

Our deposit costs may increase as the Federal Reserve increases its target federal funds rate, market interest rates increase,

and as customer savings behaviors change as a result of inflation and customers seek higher market interest rates on

deposits and other alternative investments. Monetary efforts to control inflation may also affect unemployment which is an

important component in our CECL model used to estimate our allowance for credit losses.

CURRENT ACCOUNTING DEVELOPMENTS

The following ASU has been issued by the FASB but is not yet effective. 

●

ASU 2023-09,

Income Taxes (Topic 740): Improvements to Income Tax disclosures

Information about this pronouncement is described in more detail below.

ASU 2023-09,

Income Taxes (Topic 740): Improvements to Income Tax Disclosures,

The amendments in this Update

enhance the transparency and decision usefulness of income tax disclosures. For public business entities, the new standard

is effective for annual periods beginning after December 15, 2024. The Company does not expect the new standard to have

a material impact on the Company’s consolidated financial statements. 

41

Table 1 – Explanation of Non-GAAP Financial Measures

In addition to results presented in accordance with U.S. generally accepted accounting principles (GAAP), this quarterly

report on Form 10-Q includes certain designated net interest income amounts presented on a tax-equivalent basis, a non-

GAAP financial measure, including the presentation and calculation of the efficiency ratio. 

The Company believes the presentation of net interest income on a tax-equivalent basis provides comparability of net

interest income from both taxable and tax-exempt sources and facilitates comparability within the industry. Although the

Company believes these non-GAAP financial measures enhance investors’ understanding of its business and performance,

these non-GAAP financial measures should not be considered an alternative to GAAP. The reconciliations of these non-

GAAP financial measures to their most directly comparable GAAP financial measures are presented below.

2024

2023

First

Fourth

Third

Second

First

(in thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

Net interest income (GAAP)

$

6,657

6,059

6,272

6,888

7,109

Tax-equivalent adjustment

20

95

108

106

108

Net interest income (Tax -equivalent)

$

6,677

6,154

6,380

6,994

7,217

42

Table 2 - Selected Quarterly Financial Data

2024

2023

First

Fourth

Third

Second

First

(Dollars in thousands, except per share amounts)

Quarter

Quarter

Quarter

Quarter

Quarter

Results of Operations

Net interest income (a)

$

6,677

6,154

6,380

6,994

7,217

Less: tax-equivalent adjustment

20

95

108

106

108

Net interest income (GAAP)

6,657

6,059

6,272

6,888

7,109

Noninterest income

887

(5,429)

865

791

792

Total revenue

7,544

630

7,137

7,679

7,901

Provision for credit losses

334

326

105

(362)

66

Noninterest expense

5,675

5,803

5,362

5,825

5,604

Income tax expense

164

(1,514)

182

288

267

Net earnings

$

1,371

(3,985)

1,488

1,928

1,964

Per share data:

Basic and diluted net earnings 

$

0.39

(1.14)

0.43

0.55

0.56

Cash dividends declared

0.27

0.27

0.27

0.27

0.27

Weighted average shares outstanding:

Basic and diluted

3,493,663

3,493,614

3,496,411

3,500,064

3,502,143

Shares outstanding, at period end

3,493,699

3,493,614

3,493,614

3,499,412

3,500,879

Book value

$

21.32

21.90

17.59

20.28

21.03

Common stock price

High

$

21.55

21.99

22.80

24.32

24.50

Low 

18.82

19.72

20.85

18.80

22.55

Period end:

19.27

21.28

21.50

21.26

22.66

To earnings ratio

83.78

53.20

7.65

7.21

7.79

To book value

90

%

97

122

105

108

Performance ratios:

Return on average equity 

7.13

%

(26.40)

8.59

10.37

11.44

Return on average assets 

0.56

%

(1.56)

0.58

0.75

0.77

Dividend payout ratio

69.23

%

(23.68)

62.79

49.09

48.21

Asset Quality:

Allowance for credit losses as a % of:

Loans

1.27

%

1.23

1.24

1.27

1.35

Nonperforming loans

822

%

753

559

577

255

Nonperforming assets as a % of:

Loans and other real estate owned

0.15

%

0.16

0.22

0.22

0.53

Total assets 

0.09

%

0.09

0.12

0.11

0.26

Nonperforming loans as a % of total loans

0.15

%

0.16

0.22

0.22

0.53

Annualized net (recoveries) charge-offs as % of average loans

(0.05)

%

0.13

0.01

(0.11)

-

Capital Adequacy: (c)

CET 1 risk-based capital ratio

14.62

%

14.52

15.01

15.33

15.45

Tier 1 risk-based capital ratio

14.62

%

14.52

15.01

15.33

15.45

Total risk-based capital ratio

15.69

%

15.52

15.98

16.31

16.48

Tier 1 leverage ratio

10.34

%

9.72

10.26

10.23

10.07

Other financial data:

Net interest margin (a)

3.04

%

2.65

2.73

3.03

3.17

Effective income tax rate

10.68

%

(27.53)

10.90

13.00

11.97

Efficiency ratio (b)

75.03

%

800.41

74.01

74.82

69.97

Selected average balances:

Securities available-for-sale

$

267,606

354,065

390,772

402,929

402,684

Loans

560,757

550,938

529,382

512,066

502,158

Total assets

976,930

1,020,476

1,020,980

1,022,874

1,022,938

Total deposits

897,051

953,674

942,533

942,552

948,393

Total stockholders’ equity

76,948

60,372

69,269

74,404

68,655

Selected period end balances: 

Securities available-for-sale

$

260,770

270,910

373,286

394,079

405,692

Loans

567,520

557,294

545,610

520,411

505,041

Allowance for credit losses

7,215

6,863

6,778

6,634

6,821

Total assets

979,039

975,255

1,030,724

1,026,130

1,017,746

Total deposits

899,673

896,243

964,602

950,742

939,190

Total stockholders’ equity

74,489

76,507

61,451

70,976

73,640

(a) Tax-equivalent. See "Table 1 - Explanation of Non-GAAP Financial Measures."

(b) Efficiency ratio is the result of noninterest expense divided by the sum of noninterest income and tax-equivalent net interest income.

See Table 1 - Explanation of Non-GAAP Measures.

(c) Regulatory capital ratios presented are for the Company's wholly-owned subsidiary, AuburnBank.

43

Table 3 - Average Balances and Net Interest Income Analysis

Quarter ended March 31,

2024

2023

Interest

Interest

Average

Income/

Yield/

Average

Income/

Yield/

(Dollars in thousands)

Balance

Expense

Rate

Balance

Expense

Rate

Interest-earning assets:

Loans and loans held for sale (1)

$

560,942

$

6,990

5.01%

$

502,158

$

5,754

4.65%

Securities - taxable (2)

257,229

1,411

2.21%

344,884

1,865

2.19%

Securities - tax-exempt (2)(3)

10,377

94

3.64%

57,800

511

3.59%

Total securities 

267,606

1,505

2.26%

402,684

2,366

2.38%

Federal funds sold

17,980

249

5.57%

7,314

85

4.71%

Interest bearing bank deposits

37,790

505

5.37%

11,607

128

4.47%

Total interest-earning assets

884,318

$

9,249

4.21%

923,763

$

8,343

3.66%

Cash and due from banks

17,772

15,527

Other assets

74,840

83,648

Total assets

$

976,930

$

1,022,938

Interest-bearing liabilities:

Deposits:

NOW

$

196,648

$

640

1.31%

$

187,566

$

248

0.54%

Savings and money market

241,792

340

0.57%

300,657

290

0.39%

Time deposits

199,562

1,590

3.20%

155,676

580

1.51%

Total interest-bearing deposits

638,002

2,570

1.62%

643,899

1,118

0.70%

Short-term borrowings

1,592

2

0.51%

3,046

8

1.11%

Total interest-bearing liabilities

639,594

$

2,572

1.62%

646,945

$

1,126

0.71%

Noninterest-bearing deposits

259,050

304,494

Other liabilities

1,338

2,844

Stockholders' equity

76,948

68,655

Total liabilities and stockholders' equity

$

976,930

$

1,022,938

Net interest income and margin (tax-equivalent)

$

6,677

3.04%

$

7,217

3.17%

(1) Loans on nonaccrual status have been included in the computation of average balances.

(2) Includes average net unrealized gains (losses) on investment securities available for sale

(3) Yields on tax-exempt securities have been computed on a tax-equivalent basis using a federal income

tax rate of 21%.

44

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by ITEM 3 is set forth in ITEM 2 under the caption “MARKET AND LIQUIDITY RISK

MANAGEMENT” and is incorporated herein by reference. 

ITEM 4. CONTROLS AND PROCEDURES

The Company, with the participation of its management, including its Chief Executive Officer and Chief Financial Officer,

carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as

defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the

period covered by this report. Based upon that evaluation and as of the end of the period covered by this report, the

Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and

procedures were effective to allow timely decisions regarding disclosure in its reports that the Company files or submits to

the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. There have been no

changes in the Company’s internal control over financial reporting that occurred during the period covered by this report

that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial

reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the normal course of its business, the Company and the Bank are, from time to time, involved in legal proceedings. The

Company’s and Bank’s management believe there are no pending or threatened legal, governmental, or regulatory

proceedings that, upon resolution, are expected to have a material adverse effect upon the Company’s or the Bank’s

financial condition or results of operations. See also, Part I, Item 3 of the Company’s Annual Report on Form 10-K for the

year ended December 31, 2023. 

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I,

Item 1A. “RISK FACTORS” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023,

which could materially affect our business, financial condition or future results. The risks described in our annual report on

Form 10-K are not the only the risks facing our Company. The persistence of inflation above the Federal Reserve’s long

term targets, and the maintenance of or further increases in, tightened Federal Reserve monetary policy by increased target

interest rates and reductions in the Federal Reserve’s securities portfolio, have and are expected to continue to affect the

levels of interest rates, mortgage originations and income, the market values of our securities portfolio and loans and have

resulted in unrealized losses that have adversely affected our stockholders’ equity. These have affected and are expected to

continue to affect our deposit costs and mixes, and consumer savings and payment behaviors. These may also affect our

borrower’s operating costs, expected returns and cash flows available to service our loans. Additional risks and

uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our

business, financial condition, and/or operating results in the future. 

45

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

The Company did not repurchase any of its common stock during the first quarter of 2024.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

46

ITEM 6. EXHIBITS

Exhibit 

Number Description 

3.1

Certificate of Incorporation of Auburn National Bancorporation, Inc. and all amendments thereto.*

3.2

Amended and Restated Bylaws of Auburn National Bancorporation, Inc., adopted as of November 13, 2007. **

31.1

Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant to Section

302 of the Sarbanes-Oxley Act of 2002, by David A. Hedges, President and Chief Executive Officer.

31.2

Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant to Section

302 of the Sarbanes-Oxley Act of 2002, by W. James Walker, IV, Senior Vice President and Chief Financial

Officer.

32.1

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley

Act of 2002, by David A. Hedges, President and Chief Executive Officer.***

32.2

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley

Act of 2002, by W. James Walker, IV, Senior Vice President and Chief Financial Officer.***

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* 

 Incorporated by reference from Registrant’s Form 10-Q dated June 30, 2002. 

**

 Incorporated by reference from Registrant’s Form 10-K dated March 31, 2008. 

***

The certifications attached as exhibits 32.1 and 32.2 to this quarterly report on Form 10-Q are “furnished” to the

Securities and Exchange Commission pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be

deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. 

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.

AUBURN NATIONAL BANCORPORATION, INC.

 (Registrant)

Date: May 8, 2024 

By: /s/ David A. Hedges 

David A. Hedges

President and CEO

Date: May 8, 2024 

By: /s/

W.

James Walker, IV 

W. James Walker, IV

Senior Vice President and Chief Financial Officer

EX-31.1

AUBURN NATIONAL BANCORPORATION, INC AND SUBSIDIARIES

EXHIBIT 31.1

CERTIFICATION PURSUANT TO 

RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, 

AS ADOPTED PURSUANT TO 

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

CERTIFICATION

I, David A. Hedges, certify that: 

1. I have reviewed this Quarterly Report on Form 10-Q of Auburn National Bancorporation, 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: May 8, 2024

/s/ David A. Hedges 

President and Chief Executive Officer

EX-31.2

AUBURN NATIONAL BANCORPORATION, INC AND SUBSIDIARIES

EXHIBIT 31.2

CERTIFICATION PURSUANT TO 

RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, 

AS ADOPTED PURSUANT TO 

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

CERTIFICATION

I, W. James Walker, IV, certify that: 

1. I have reviewed this Quarterly Report on Form 10-Q of Auburn National Bancorporation, 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: May 8, 2024

/s/ W. James Walker, IV

Senior Vice President and Chief Financial Officer

EX-32.1

AUBURN NATIONAL BANCORPORATION, INC AND SUBSIDIARIES

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 

18 U.S.C. SECTION 1350, 

AS ADOPTED PURSUANT TO 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 

In connection with the Quarterly Report of Auburn National Bancorporation, Inc. (the “Company”) on Form 10-Q for the

period ending March 31, 2024, as filed with the Securities and Exchange Commission as of the date hereof (the “Report”),

I, David A. Hedges, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as

adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that: 

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act

of 1934; and 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and

results of operations of the Company. 

Date: May 8, 2024

/s/ David A. Hedges

David A. Hedges

President and Chief Executive Officer

EX-32.2

AUBURN NATIONAL BANCORPORATION, INC AND SUBSIDIARIES

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 

18 U.S.C. SECTION 1350, 

AS ADOPTED PURSUANT TO 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 

In connection with the Quarterly Report of Auburn National Bancorporation, Inc. (the “Company”) on Form 10-Q for the

period ending March 31, 2024, as filed with the Securities and Exchange Commission as of the date hereof (the “Report”),

I, W. James Walker, IV, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.

§ 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that: 

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act

of 1934; and 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and

results of operations of the Company. 

Date: May 8, 2024 

/s/ W. James Walker, IV

W. James Walker, IV

Senior Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2024	May 07, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transistion Report	false
Entity File Number	0-26486
Entity Registrant Name	Auburn National Bancorporation, Inc.
Entity Incorporation State	DE
Entity Tax Identification Number	63-0885779
Entity Address Address Line 1	100 N. Gay Street
Entity Address City	Auburn
Entity Address State	AL
Entity Address Postal Zip	36830
City Area Code	334
Local Phone Number	821-9200
Entity current reporting status	Yes
Entity filer category	Non-accelerated Filer
Entity Interactive Data Current	Yes
Entity Small Business	true
Entity Emerging Growth	false
Entity Shell Company	false
Entity common stock shares outstanding		3,493,699
Entity central index key	0000750574
Current fiscal year end date	--12-31
Document Fiscal Year Focus	2024
Document Period Focus	Q1
Amendment flag	false
Title of 12(b) Security	Common Stock, par value $0.01
Trading Symbol	AUBN
Security Exchange Name	NASDAQ

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Assets:
Cash And Due From Banks	$ 18,444	$ 27,127
Federal funds sold	17,356	31,412
Interest bearing bank deposits	36,781	12,830
Cash and cash equivalents	72,581	71,369
Available For Sale Securities Debt Securities	260,770	270,910
Loans held for sale	175	0
Total loans	567,520	557,294
Allowance for credit losses	(7,215)	(6,863)
Loans, net	560,305	550,431
Premises and equipment, net	46,193	45,535
Bank-owned life insurance	17,212	17,110
Other assets	21,803	19,900
Total assets	979,039	975,255
Deposits:
Noninterest-bearing	263,484	270,723
Interest-bearing	636,189	625,520
Total deposits	899,673	896,243
Federal funds purchased and securities sold under agreements to repurchase	1,513	1,486
Accrued expenses and other liabilities	3,364	1,019
Total liabilities	904,550	898,748
Stockholders' equity:
Preferred stock	0	0
Common stock	39	39
Additional paid-in capital	3,802	3,801
Retained earnings	113,563	113,398
Accumulated other comprehensive loss, net	(31,213)	(29,029)
Less treasury stock, at cost	(11,702)	(11,702)
Total stockholders' equity	74,489	76,507
Total liabilities and stockholders' equity	$ 979,039	$ 975,255

XML

Consolidated Balance Sheets (Parentheticals) - $ / shares	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Preferred stock par value	$ 0.01	$ 0.01
Authorized shares, preferred	200,000	200,000
Issued shares, preferred	0	0
Common stock par value	$ 0.01	$ 0.01
Authorized shares, common	8,500,000	8,500,000
Issued shares, common	3,957,135	3,957,135
Treasury stock, shares held	463,436	463,521

XML

Consolidated Statements of Earnings - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Interest income:
Loans, including fees	$ 6,990	$ 5,754
Securities - Taxable	1,411	1,865
Securities - Tax-exempt	74	403
Federal funds sold and interest bearing bank deposits	754	213
Total interest income	9,229	8,235
Interest expense:
Deposits	2,570	1,118
Short-term borrowings	2	8
Total interest expense	2,572	1,126
Net interest income	6,657	7,109
Provision for credit losses	334	66
Net interest income after provision for loan losses	6,323	7,043
Noninterest income:
Service charge on deposit accounts	156	154
Mortgage lending	150	93
Bank-owned life insurance income	102	156
Other noninterest income	479	389
Total noninterest income	887	792
Noninterest expense:
Salaries and benefits	3,071	2,927
Net occupancy and equipment	763	799
Professional fees	326	338
Other noninterest expense	1,515	1,540
Total noninterest expense	5,675	5,604
Earnings before income taxes	1,535	2,231
Income tax expense	164	267
Net earnings	$ 1,371	$ 1,964
Net earnings per share:
Basic and diluted earnings per share	$ 0.39	$ 0.56
Weighted average shares outstanding:
Basic and diluted weighted average shares outstanding	3,493,663	3,502,143

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Statements of Comprehensive Income [Abstract]
Net earnings	$ 1,371	$ 1,964
Other comprehensive income, net of tax:
Unrealized net holding gain (loss) on securities	(2,184)	5,463
Other comprehensive income	(2,184)	5,463
Comprehensive income	$ (813)	$ 7,427

XML

Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
dnu
Other Comprehensive Income Unrealized Holding Gain Loss On Securities Arising During Period Tax	$ 734	$ 1,834

XML

Consolidated Statements of Stockholders' Equity - USD ($)	Total	Common Stock Member	Additional Paid In Capital Member	Retained Earnings Member	Accumulated Other Comprehensive Income Member	Treasury Stock Member
Balance, shares at Dec. 31, 2022		3,503,452
Balance, Beg at Dec. 31, 2022	$ 68,041,000	$ 39,000	$ 3,797,000	$ 116,600,000	$ (40,920,000)	$ (11,475,000)
Cumulative Effect Of Accounting Standard	(821,000)	0	0	(821,000)	0	0
Net earnings	1,964,000	0	0	1,964,000	0	0
Other Comprehensive Income (Loss), Net Of Tax	5,463,000	0	0	0	5,463,000	0
Cash Dividends Paid	945,000	0	0	945,000	0	0
Treasury Stock, acquired	(64,000)	$ 0	0	0	0	(64,000)
Treasury Stock, acquired shares		(2,648)
Sale of treasury stock	2,000	$ 0	1,000	0	0	1,000
Treasury shares sold		75
Balance, End at Mar. 31, 2023	73,640,000	$ 39,000	3,798,000	116,798,000	(35,457,000)	(11,538,000)
Balance, shares at Mar. 31, 2023		3,500,879
Balance, shares at Dec. 31, 2023		3,493,614
Balance, Beg at Dec. 31, 2023	76,507,000	$ 39,000	3,801,000	113,398,000	(29,029,000)	(11,702,000)
Cumulative Effect Of Accounting Standard	(263,000)	0	0	(263,000)	0	0
Net earnings	1,371,000	0	0	1,371,000	0	0
Other Comprehensive Income (Loss), Net Of Tax	(2,184,000)	0	0	0	(2,184,000)	0
Cash Dividends Paid	943,000	0	0	943,000	0	0
Sale of treasury stock	1,000	$ 0	1,000	0	0	0
Treasury shares sold		85
Balance, End at Mar. 31, 2024	$ 74,489,000	$ 39,000	$ 3,802,000	$ 113,563,000	$ (31,213,000)	$ (11,702,000)
Balance, shares at Mar. 31, 2024		3,493,699

XML

Consolidated Statements of Stockholders' Equity (Parentheticals) - $ / shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Statement of Stockholders' Equity (Parentheticals)
Cash dividends paid per share	$ 0.27	$ 0.27

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities:
Net earnings	$ 1,371	$ 1,964
Adjustments to reconcile net earnings to net cash provided by operating activties:
Provision for credit losses	334	66
Depreciation and amortization	434	423
Premium amortization and discount accretion, net	386	612
Net gain on sale of loans held for sale	(57)	(4)
Loans originated for sale	(3,123)	0
Proceeds from sale of loans	2,993	0
Increase in cash surrender value of bank owned life insurance	(102)	(104)
Income recognized on death benefit of life insurance		(52)
Net (increase) decrease in other assets	(1,500)	4,420
Net (decrease) increase in accrued expenses and other liabilities	2,345	(2,434)
Net cash provided by operating activities	3,081	4,891
Cash flows from investing activities:
Proceeds from prepayments and maturities of securities available-for-sale	6,836	6,296
Decrease in loans, net	(10,208)	(586)
Net purchases of premises and equipment	(1,043)	(5)
Proceeds from bank-owned life insurance death benefit		(215)
(Increase) decrease in FHLB stock	32	41
Net cash (used in) provided by investing activities	(4,383)	5,961
Cash flows from financing activities:
Net increase in noninterest-bearing deposits	(7,239)	(7,207)
Net increase in interest-bearing deposits	10,669	(3,940)
Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase	27	(94)
Stock repurchases	0	(64)
Dividends paid	(943)	(945)
Net cash provided by financing activities	2,514	(12,250)
Net change in cash and cash equivalents	1,212	(1,398)
Cash and cash equivalents at beginning of period	71,369	27,254
Cash and cash equivalents at end of period	72,581	25,856
Cash paid during the period for:
Interest	2,442	877
Income taxes	$ 0	$ 0

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Summary of Signficant Accounting Policies

Summary of Significant Accounting Policies Text Block

AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements 

(Unaudited)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Auburn National Bancorporation, Inc. (the “Company”) provides a full range of banking services to individuals and

commercial customers in Lee County, Alabama and surrounding areas through its wholly owned subsidiary, AuburnBank

(the “Bank”). The Company does not have any segments other than banking that are considered material.

Basis of Presentation and Use of Estimates

The unaudited consolidated financial statements in this report have been prepared in accordance with U.S. generally

accepted accounting principles (“GAAP”) for interim financial information. Accordingly, these financial statements do not

include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited

consolidated financial statements include, in the opinion of management, all adjustments necessary to present a fair

statement of the financial position and the results of operations for all periods presented. All such adjustments are of a

normal recurring nature. The results of operations in the interim statements are not necessarily indicative of the results of

operations that the Company and its subsidiaries may achieve for future interim periods or the entire year. For further

information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form

10-K for the year ended December 31, 2023.

The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. 

Significant intercompany transactions and accounts are eliminated in consolidation.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of

the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could

differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term

include the determination of allowance for credit losses on loans and investment securities, fair value of financial

instruments, and the valuation of deferred tax assets and other real estate owned (“OREO”).

Revenue Recognition

The Company’s sources of income that fall within the scope of ASC 606 include service charges on deposits, interchange

fees and gains and losses on sales of other real estate, all of which are presented as components of noninterest income. The

following is a summary of the revenue streams that fall within the scope of ASC 606: 

●

Service charges on deposits, investment services, ATM and interchange fees – Fees from these services are either

(i) transaction-based, for which the performance obligations are satisfied when the individual transaction is

processed, or (ii) set periodic service charges, for which the performance obligations are satisfied over the period

the service is provided. Transaction-based fees are recognized at the time the transaction is processed, and periodic

service charges are recognized over the service period.

●

Gains on sales of OREO

 –

A gain on sale should be recognized when a contract for sale exists and control of the

asset has been transferred to the buyer. ASC 606 lists several criteria required to conclude that a contract for sale

exists, including a determination that the institution will collect substantially all of the consideration to which it is

entitled. In addition to the loan-to-value ratio, where the seller provides the purchaser with financing, the analysis

is based on various other factors, including the credit quality of the purchaser, the structure of the loan, and any

other factors that we believe may affect collectability.

Subsequent Events 

The Company has evaluated the effects of events and transactions through the date of this filing that have occurred

subsequent to March 31, 2024. The Company does not believe there were any material subsequent events during this

period that would have required further recognition or disclosure in the unaudited consolidated financial statements

included in this report.

Correction of Error

The disclosure of loans by vintage in Note 5 – Loans and Allowance for Credit Losses in the Company’s Annual Report on

Form 10-K for year ended December 31, 2023 contained incorrect information as it pertains to loans originated by vintage

and revolving loans. All current period gross charge-off data, total loans by segment and total loans by credit quality

indicator were correctly reported. The loans originated by vintage and revolving loans as of December 31, 2023 have been

corrected in the comparative presentation in Note 5 – Loans and Allowance for Credit Losses in the Notes herein.

Reclassifications

Certain amounts reported in prior periods have been reclassified to conform to the current -period presentation. These

reclassifications had no effect on the Company’s previously reported net earnings or total stockholders’ equity.

Accounting Standards Adopted in 2024

On January 1, 2024, the Company adopted ASU 2023-02,

Investments – Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

. The amendments in this

Update permit reporting entities to elect to account for their equity investments made primarily to receive income tax

credits and other income tax benefits, regardless of the program from which the income tax credits or benefits are received,

using the proportional amortization method if certain conditions are met. The new standard is effective for fiscal years, and

interim periods within those fiscal years, beginning after December 15, 2023. The Company adopted ASU 2023-02

effective January 1, 2024 and recorded a cumulative effect of change in accounting standard adjustment which reduced

beginning retained earnings by $0.3 million. The Company will prospectively account for its investments in New Market

Tax Credits (“NMTCs”) using the proportional amortization method through charges to the provision for income taxes. See

Note 3, Variable Interest Entities.

XML

Basic and Diluted Earnings Per Share

3 Months Ended

Mar. 31, 2024

Basic and Diluted Earnings Per Share [Abstract]

Basic and Diluted Earnings Per Share Text Block

NOTE 2: BASIC AND DILUTED NET EARNINGS PER SHARE

Basic net earnings per share is computed by dividing net earnings by the weighted average common shares outstanding for

the quarters ended March 31, 2024 and 2023, respectively. Diluted net earnings per share reflect the potential dilution that

could occur upon exercise of securities or other rights for, or convertible into, shares of the Company’s common stock. At

March 31, 2024 and 2023, respectively, the Company had no such securities or rights issued or outstanding, and therefore,

no dilutive effect to consider for the diluted net earnings per share calculation.

The basic and diluted net earnings per share computations for the respective periods are presented below

Quarter ended March 31,

(Dollars in thousands, except share and per share data)

2024

2023

Basic and diluted:

Net earnings

$

1,371

$

1,964

Weighted average common shares outstanding

3,493,663

3,502,143

Net earnings per share

$

0.39

$

0.56

XML

Variable Interest Entities

3 Months Ended

Mar. 31, 2024

Variable Interest Entity [Abstract]

Variable Interest Entity (Text Block Disclosure]

NOTE 3: VARIABLE INTEREST ENTITIES

Generally, a variable interest entity (“VIE”) is a corporation, partnership, trust or other legal structure that does not have

equity investors with substantive or proportional voting rights or has equity investors that do not provide sufficient financial

resources for the entity to support its activities. 

At March 31, 2024, the Company did not have any consolidated VIEs but did have one nonconsolidated VIE, discussed

below.

New Markets Tax Credit Investment

The NMTC program provides federal tax incentives to investors to make investments in distressed communities and

promotes economic improvement through the development of successful businesses in these communities. NMTCs are

available to investors over seven years and are subject to recapture if certain events occur during such period. At March 31,

2024 and December 31, 2023, respectively, the Company had one such investment of $1.2 million and $1.7 million,

respectively, which was included in other assets in the Company’s consolidated balance sheets as a VIE. While the

Company’s investment exceeds 50% of the outstanding equity interest in this VIE, the Company does not consolidate the

VIE because the Company lacks the power to direct the activities of the VIE, and therefore is not a primary beneficiary of

the VIE. 

On March 29, 2023, the FASB issued ASU 2023-02, which was effective beginning in 2024 for public business entities.

We have adopted ASU 2023-02 as of January 1, 2024 with respect to accounting for our NMTC investment. The

proportional amortization method results in the tax credit investment being amortized in proportion to the allocation of tax

credits and other tax benefits in each period and a net presentation within the income tax line item. The cumulative effects

of the change in accounting standard resulted in a $0.4 million pre-tax decrease in the Company’s NMTC investment at

January 1, 2024. See Note 1: Summary of Significant Accounting Policies – Accounting Standards Adopted in 2024.

(Dollars in thousands)

Maximum

Loss Exposure

Asset Recognized

Classification

Type:

New Markets Tax Credit investment

$

1,175

$

1,175

Other assets

XML

Securities

3 Months Ended

Mar. 31, 2024

Investments debt and equity securities [Abstract]

Investments In Debt And Marketable Equity Securities And Certain Trading Assets Disclosure Text Block

NOTE 4: SECURITIES

At March 31, 2024 and December 31, 2023, respectively, all securities within the scope of ASC 320,

Investments – Debt

and Equity Securities,

were classified as available-for-sale. The fair value and amortized cost for securities available-for-

sale by contractual maturity at March 31, 2024 and December 31, 2023, respectively, are presented below.

1 year

1 to 5

5 to 10

After 10

Fair

Gross Unrealized 

Amortized

(Dollars in thousands)

or less

years

years

years

Value

Gains

Losses

Cost

March 31, 2024

Agency obligations (a)

$

—

14,416

38,335

—

52,751

—

8,554

$

61,305

Agency MBS (a)

57

15,533

20,254

154,380

190,224

—

30,229

220,453

State and political subdivisions

—

569

9,067

8,159

17,795

—

2,898

20,693

Total available-for-sale

$

57

30,518

67,656

162,539

260,770

—

41,681

$

302,451

December 31, 2023

Agency obligations (a)

$

331

10,339

43,209

—

53,879

—

8,195

$

62,074

Agency MBS (a)

32

15,109

22,090

161,058

198,289

—

27,838

226,127

State and political subdivisions

—

—

9,691

9,051

18,742

1

2,731

21,472

Total available-for-sale

$

363

25,448

74,990

170,109

270,910

1

38,764

$

309,673

(a) Includes securities issued by U.S. government agencies or government-sponsored entities. Expected lives of these 

securities may differ from contractual maturities because (i) issuers may have the right to call or repay such securities

obligations with or without prepayment penalties and (ii) loans incuded in Agency MBS generally have the right to

prepay such loan in whole or in part at any time.

Securities with aggregate fair values of $

204.8

 million and $

211.8

 at March 31, 2024 and December 31, 2023, respectively,

were pledged to secure public deposits, securities sold under agreements to repurchase, Federal Home Loan Bank of

Atlanta (“FHLB of Atlanta”) advances, and for other purposes required or permitted by law. 

Included in other assets on the accompanying consolidated balance sheets include non-marketable equity investments. The

carrying amounts of non-marketable equity investments were $

1.4

 million at March 31, 2024 and December 31, 2023,

respectively. Non-marketable equity investments include FHLB of Atlanta stock, Federal Reserve Bank of Atlanta

(“FRB”) stock, and stock in a privately held financial institution.

Gross Unrealized Losses and Fair Value

The fair values and gross unrealized losses on securities at March 31, 2024 and December 31, 2023, respectively,

segregated by those securities that have been in an unrealized loss position for less than 12 months and 12 months or

longer, are presented below.

Less than 12 Months

12 Months or Longer

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(Dollars in thousands)

Value

Losses

Value

Losses

Value

Losses

March 31, 2024:

Agency obligations 

$

—

—

52,751

8,554

$

52,751

8,554

Agency MBS

15

—

190,209

30,229

190,224

30,229

State and political subdivisions

1,459

6

15,010

2,892

16,469

2,898

Total 

$

1,474

6

257,970

41,675

$

259,444

41,681

December 31, 2023:

Agency obligations 

$

—

—

53,879

8,195

$

53,879

8,195

Agency MBS

66

1

198,223

27,837

198,289

27,838

State and political subdivisions

793

2

14,408

2,729

15,201

2,731

Total 

$

859

3

266,510

38,761

$

267,369

38,764

For the securities in the previous table, the Company considers the severity of the unrealized loss as well the Company’s

intent to hold the securities to maturity or the recovery of the cost basis. Unrealized losses have not been recognized into

income as the decline in fair value is largely due to changes in interest rates and other market conditions. For the securities

in the previous table as of March 31, 2024, management does not intend to sell and it is likely that management will not be

required to sell the securities prior to their recovery.

Agency Obligations

Investments in agency obligations are guaranteed of full and timely payments by the issuing agency. Based on

management's analysis and judgement, there were no credit losses attributable to the Company’s investments in agency

obligations at March 31, 2024.

Agency MBS

Investments in agency mortgage backed securities (“MBS”) are issued by Ginnie Mae, Fannie Mae, and Freddie Mac. 

Each of these agencies provide a guarantee of full and timely payments of principal and interest by the issuing agency. 

Based on management's analysis and judgement, there were no credit losses attributable to the Company’s investments in

agency MBS at March 31, 2024.

State and Political Subdivisions

Investments in state and political subdivisions are securities issued by various municipalities in the United States. The

majority of the portfolio was rated AA or higher, with no securities rated below investment grade at March 31, 2024. 

Based on management's analysis and judgement, there were no credit losses attributable to the Company’s investments in

state and political subdivisions at March 31, 2024.

Realized Gains and Losses

The Company had no realized gains or losses on sale of securities during the quarters ended March 31, 2024 and 2023,

respectively.

XML

Loan and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2024

Loans And Leases Receivable Disclosure [Abstract]

Loans and leases receivable disclosure [Text Block]

NOTE 5: LOANS AND ALLOWANCE FOR CREDIT LOSSES

March 31,

December 31,

(Dollars in thousands)

2024

2023

Commercial and industrial

$

78,920

$

73,374

Construction and land development

58,909

68,329

Commercial real estate:

Owner occupied

63,826

66,783

Hotel/motel

38,822

39,131

Multi-family

45,634

45,841

Other

152,202

135,552

Total commercial real estate

300,484

287,307

Residential real estate:

Consumer mortgage

59,813

60,545

Investment property

58,427

56,912

Total residential real estate

118,240

117,457

Consumer installment

10,967

10,827

Total Loans

$

567,520

$

557,294

Loans secured by real estate were approximately 84.2% of the Company’s total loan portfolio at March 31, 2024. At March

31, 2024, the Company’s geographic loan distribution was concentrated primarily in Lee County, Alabama, and

surrounding areas.

The loan portfolio segment is defined as the level at which an entity develops and documents a systematic method for

determining its allowance for credit losses. As part of the Company’s quarterly assessment of the allowance, the loan

portfolio included the following portfolio segments: commercial and industrial, construction and land development,

commercial real estate, residential real estate, and consumer installment. Where appropriate, the Company’s loan portfolio

segments are further disaggregated into classes. A class is generally determined based on the initial measurement attribute,

risk characteristics of the loan, and an entity’s method for monitoring and determining credit risk.

The following describes the risk characteristics relevant to each of the portfolio segments and classes.

Commercial and industrial (“C&I”) —

includes loans to finance business operations, equipment purchases, or other needs

for small and medium-sized commercial customers. Also included in this category are loans to finance agricultural

production. Generally, the primary source of repayment is the cash flow from business operations and activities of the

borrower. 

Construction and land development (“C&D”) —

includes both loans and credit lines for the purpose of purchasing,

carrying, and developing land into commercial developments or residential subdivisions. Also included are loans and credit

lines for construction of residential, multi-family, and commercial buildings. Generally, the primary source of repayment is

dependent upon the sale or refinance of the real estate collateral.

Commercial real estate (“CRE”) —

includes loans in these classes: 

●

Owner occupied

 – includes loans secured by business facilities to finance business operations, equipment and

owner-occupied facilities primarily for small and medium-sized commercial customers. Generally, the primary

source of repayment is the cash flow from business operations and activities of the borrower, who owns the

property.

●

Hotel/motel

– includes loans for hotels and motels. Generally, the primary source of repayment is dependent upon

income generated from the hotel/motel securing the loan. The underwriting of these loans takes into consideration

the occupancy and rental rates, as well as the financial health of the borrower.

●

Multi-family

 – primarily includes loans to finance income-producing multi-family properties . These include loans

for 5 or more unit residential properties and apartments leased to residents. Generally , the primary source of

repayment is dependent upon income generated from the real estate collateral. The underwriting of these loans

takes into consideration the occupancy and rental rates, as well as the financial health of the respective borrowers. 

●

Other

 – primarily includes loans to finance income-producing commercial properties other than hotels/motels and

multi-family properties, and which are not owner occupied. Loans in this class include loans for neighborhood

retail centers, medical and professional offices, single retail stores, industrial buildings, and warehouses leased to

local and other businesses. Generally, the primary source of repayment is dependent upon income generated from

the real estate collateral. The underwriting of these loans takes into consideration the occupancy and rental rates,

as well as the financial health of the borrower. 

Residential real estate (“RRE”) —

includes loans in these two classes:

●

Consumer mortgage

 – primarily includes first or second lien mortgages and home equity lines of credit to

consumers that are secured by a primary residence or second home. These loans are underwritten in accordance

with the Bank’s general loan policies and procedures which require, among other things, proper documentation of

each borrower’s financial condition, satisfactory credit history , and property value. 

●

Investment property

 – primarily includes loans to finance income-producing 1-4 family residential properties.

Generally, the primary source of repayment is dependent upon income generated from leasing the property

securing the loan. The underwriting of these loans takes into consideration the rental rates and property values, as

well as the financial health of the borrowers. 

Consumer installment —

includes loans to individuals, which may be secured by personal property or are unsecured. Loans

include personal lines of credit, automobile loans, and other retail loans. These loans are underwritten in accordance with

the Bank’s general loan policies and procedures which require, among other things, proper documentation of each

borrower’s financial condition, satisfactory credit history, and, if applicable, property values.

The following is a summary of current, accruing past due, and nonaccrual loans by portfolio segment and class as of March

31, 2024 and December 31, 2023.

Accruing

Accruing

Total

30-89 Days

Greater than

Accruing

Non-

Total 

(Dollars in thousands)

Current

Past Due

90 days

Loans

Accrual

Loans

March 31, 2024:

Commercial and industrial

$

78,914

6

—

78,920

—

$

78,920

Construction and land development

58,909

—

—

58,909

—

58,909

Commercial real estate:

Owner occupied

63,061

—

—

63,061

765

63,826

Hotel/motel

38,822

—

—

38,822

—

38,822

Multi-family

45,634

—

—

45,634

—

45,634

Other

152,202

—

—

152,202

—

152,202

Total commercial real estate

299,719

—

—

299,719

765

300,484

Residential real estate:

Consumer mortgage

59,656

60

—

59,716

97

59,813

Investment property

58,427

—

—

58,427

—

58,427

Total residential real estate

118,083

60

—

118,143

97

118,240

Consumer installment

10,935

16

—

10,951

16

10,967

Total

$

566,560

82

—

566,642

878

$

567,520

December 31, 2023:

Commercial and industrial

$

73,108

266

—

73,374

—

$

73,374

Construction and land development

68,329

—

—

68,329

—

68,329

Commercial real estate:

Owner occupied

66,000

—

—

66,000

783

66,783

Hotel/motel

39,131

—

—

39,131

—

39,131

Multi-family

45,841

—

—

45,841

—

45,841

Other

135,552

—

—

135,552

—

135,552

Total commercial real estate

286,524

—

—

286,524

783

287,307

Residential real estate:

Consumer mortgage

60,442

—

—

60,442

103

60,545

Investment property

56,597

290

—

56,887

25

56,912

Total residential real estate

117,039

290

—

117,329

128

117,457

Consumer installment

10,781

46

—

10,827

—

10,827

Total

$

555,781

602

—

556,383

911

$

557,294

Credit Quality Indicators

The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the

standard asset classification system used by the federal banking agencies. These categories are utilized to develop the

associated allowance for credit losses using historical losses adjusted for qualitative and environmental factors and are

defined as follows: 

●

Pass – loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if

any) or by the fair value, less cost to acquire and sell, of any underlying collateral.

●

Special Mention – loans with potential weakness that may, if not reversed or corrected, weaken the credit or

inadequately protect the Company’s position at some future date. These loans are not adversely classified and do

not expose an institution to sufficient risk to warrant an adverse classification.

●

Substandard Accruing – loans that exhibit a well-defined weakness which presently jeopardizes debt repayment,

even though they are currently performing. These loans are characterized by the distinct possibility that the

Company may incur a loss in the future if these weaknesses are not corrected .

●

Nonaccrual – includes loans where management has determined that full payment of principal and interest is not

expected.

Year of Origination

2024

2023

2022

2021

2020

Prior to

2020

Revolving

Loans

Total 

Loans

(Dollars in thousands)

March 31, 2024: 

Commercial and industrial

Pass

$

6,167

10,960

19,891

13,067

5,429

14,697

8,449

$

78,660

Special mention

—

—

—

—

—

—

—

—

Substandard

54

—

194

12

—

—

—

260

Nonaccrual

—

—

—

—

—

—

—

—

Total commercial and industrial

6,221

10,960

20,085

13,079

5,429

14,697

8,449

78,920

Current period gross charge-offs

—

—

—

—

—

—

—

—

Construction and land development

Pass

5,668

26,093

22,446

1,615

1,506

200

905

58,433

Special mention

—

302

—

—

—

—

—

302

Substandard

174

—

—

—

—

—

—

174

Nonaccrual

—

—

—

—

—

—

—

—

Total construction and land development

5,842

26,395

22,446

1,615

1,506

200

905

58,909

Current period gross charge-offs

—

—

—

—

—

—

—

—

Commercial real estate:

Owner occupied

Pass

100

12,842

7,197

18,076

10,283

10,744

2,583

61,825

Special mention

931

257

—

—

—

—

—

1,188

Substandard

—

—

—

—

—

48

—

48

Nonaccrual

—

—

—

—

—

765

—

765

Total owner occupied

1,031

13,099

7,197

18,076

10,283

11,557

2,583

63,826

Current period gross charge-offs

—

—

—

—

—

—

—

—

Hotel/motel

Pass

248

8,925

9,765

3,174

1,445

15,265

—

38,822

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total hotel/motel

248

8,925

9,765

3,174

1,445

15,265

—

38,822

Current period gross charge-offs

—

—

—

—

—

—

—

—

Year of Origination

2024

2023

2022

2021

2020

Prior to

2020

Revolving

Loans

Total 

Loans

(Dollars in thousands)

March 31, 2024: 

Multi-family

Pass

113

12,270

17,834

1,934

6,060

6,682

741

45,634

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total multi-family

113

12,270

17,834

1,934

6,060

6,682

741

45,634

Current period gross charge-offs

—

—

—

—

—

—

—

—

Other

Pass

19,687

24,583

35,601

31,278

14,036

25,552

1,313

152,050

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

152

—

—

152

Nonaccrual

—

—

—

—

—

—

—

—

Total other

19,687

24,583

35,601

31,278

14,188

25,552

1,313

152,202

Current period gross charge-offs

—

—

—

—

—

—

—

—

Residential real estate:

Consumer mortgage

Pass

1,276

19,445

19,230

2,682

2,636

13,106

327

58,702

Special mention

—

—

—

—

—

493

—

493

Substandard

—

—

—

—

—

521

—

521

Nonaccrual

—

—

—

—

—

97

—

97

Total consumer mortgage

1,276

19,445

19,230

2,682

2,636

14,217

327

59,813

Current period gross charge-offs

—

—

—

—

—

—

—

—

Investment property

Pass

5,736

12,255

11,396

9,219

11,829

6,214

1,369

58,018

Special mention

—

—

—

—

—

—

—

—

Substandard

—

83

96

—

230

—

—

409

Nonaccrual

—

—

—

—

—

—

—

—

Total investment property

5,736

12,338

11,492

9,219

12,059

6,214

1,369

58,427

Current period gross charge-offs

—

—

—

—

—

—

—

—

Consumer installment

Pass

2,095

5,157

2,690

570

148

222

—

10,882

Special mention

—

10

1

—

1

—

—

12

Substandard

10

34

11

2

—

—

—

57

Nonaccrual

—

9

7

—

—

—

—

16

Total consumer installment

2,105

5,210

2,709

572

149

222

—

10,967

Current period gross charge-offs

—

6

17

1

—

—

—

24

Total loans

Pass

41,090

132,530

146,050

81,615

53,372

92,682

15,687

563,026

Special mention

931

569

1

—

1

493

—

1,995

Substandard

238

117

301

14

382

569

—

1,621

Nonaccrual

—

9

7

—

—

862

—

878

Total loans

$

42,259

133,225

146,359

81,629

53,755

94,606

15,687

$

567,520

Total current period gross charge-offs

$

—

6

17

1

—

—

—

24

Year of Origination

2023

2022

2021

2020

2019

Prior to

2019

Revolving

Loans

Total 

Loans

(Dollars in thousands)

December 31, 2023: 

Commercial and industrial

Pass

$

11,571

18,074

13,746

5,602

7,298

7,819

9,003

$

73,113

Special mention

—

—

—

—

—

—

—

—

Substandard

55

203

—

—

3

—

—

261

Nonaccrual

—

—

—

—

—

—

—

—

Total commercial and industrial

11,626

18,277

13,746

5,602

7,301

7,819

9,003

73,374

Current period gross charge-offs

—

—

13

—

151

—

—

164

Construction and land development

Pass

38,646

25,382

1,716

1,526

120

157

782

68,329

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total construction and land development

38,646

25,382

1,716

1,526

120

157

782

68,329

Current period gross charge-offs

—

—

—

—

—

—

—

—

Commercial real estate:

Owner occupied

Pass

12,966

7,337

18,548

10,458

3,948

9,786

2,647

65,690

Special mention

260

—

—

—

—

—

—

260

Substandard

—

—

—

—

50

—

—

50

Nonaccrual

—

—

—

—

783

—

—

783

Total owner occupied

13,226

7,337

18,548

10,458

4,781

9,786

2,647

66,783

Current period gross charge-offs

—

—

—

—

—

—

—

—

Hotel/motel

Pass

9,025

9,873

3,205

1,493

3,881

11,654

—

39,131

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total hotel/motel

9,025

9,873

3,205

1,493

3,881

11,654

—

39,131

Current period gross charge-offs

—

—

—

—

—

—

—

—

Year of Origination

2023

2022

2021

2020

2019

Prior to

2019

Revolving

Loans

Total 

Loans

(Dollars in thousands)

December 31, 2023: 

Multi-family

Pass

12,379

17,955

1,953

6,112

3,790

3,043

609

45,841

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total multi-family

12,379

17,955

1,953

6,112

3,790

3,043

609

45,841

Current period gross charge-offs

—

—

—

—

—

—

—

—

Other

Pass

25,810

36,076

31,687

14,597

10,736

15,440

1,052

135,398

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

154

—

—

—

154

Nonaccrual

—

—

—

—

—

—

—

—

Total other

25,810

36,076

31,687

14,751

10,736

15,440

1,052

135,552

Current period gross charge-offs

—

—

—

—

—

—

—

—

Residential real estate:

Consumer mortgage

Pass

20,147

20,177

2,683

2,665

1,281

12,217

249

59,419

Special mention

—

—

—

—

190

305

—

495

Substandard

—

—

—

—

—

528

—

528

Nonaccrual

—

—

—

—

—

103

—

103

Total consumer mortgage

20,147

20,177

2,683

2,665

1,471

13,153

249

60,545

Current period gross charge-offs

—

—

—

—

—

—

—

—

Investment property

Pass

13,398

12,490

9,397

12,209

5,485

1,865

1,478

56,322

Special mention

41

—

—

—

—

—

—

41

Substandard

43

248

—

233

—

—

—

524

Nonaccrual

—

—

—

—

—

25

—

25

Total investment property

13,482

12,738

9,397

12,442

5,485

1,890

1,478

56,912

Current period gross charge-offs

—

—

—

—

—

—

—

—

Consumer installment

Pass

5,688

3,837

740

206

106

141

—

10,718

Special mention

9

25

9

2

—

—

—

45

Substandard

37

11

5

11

—

—

—

64

Nonaccrual

—

—

—

—

—

—

—

-

Total consumer installment

5,734

3,873

754

219

106

141

—

10,827

Current period gross charge-offs

34

57

13

1

—

—

—

105

Total loans

Pass

149,630

151,201

83,675

54,868

36,645

62,122

15,820

553,961

Special mention

310

25

9

2

190

305

—

841

Substandard

135

462

5

398

53

528

—

1,581

Nonaccrual

—

—

—

—

783

128

—

911

Total loans

$

150,075

151,688

83,689

55,268

37,671

63,083

15,820

$

557,294

Total current period gross charge-offs

$

34

57

26

1

151

—

—

269

Allowance for Credit Losses

The Company adopted ASC 326 on January 1, 2023, which introduced the CECL methodology for estimating all expected

losses over the life of a financial asset. Under the CECL methodology, the allowance for credit losses is measured on a

collective basis for pools of loans with similar risk characteristics, and for loans that do not share similar risk characteristics

with the collectively evaluated pools, evaluations are performed on an individual basis.

The composition of the provision for credit losses for the respective periods is presented below.

Quarter ended March 31, 

(Dollars in thousands)

2024

2023

Provision for credit losses:

Loans

$

285

$

40

Reserve for unfunded commitments

49

26

Total provision for credit losses

$

334

$

66

The following table details the changes in the allowance for credit losses for loans, by portfolio segment, for the respective

periods.

(Dollars in thousands)

Commercial and

industrial

Construction

and land

development

Commercial

real estate

Residential

real estate

Consumer

installment

Total

Quarter ended:

March 31, 2024

Beginning balance

$

1,288

960

3,921

546

148

$

6,863

Charge-offs

—

—

—

—

(24)

(24)

Recoveries

66

—

—

3

22

91

Net recoveries (charge-offs)

66

—

—

3

(2)

67

Provision for credit losses

61

(120)

281

64

(1)

285

Ending balance

$

1,415

840

4,202

613

145

$

7,215

Quarter ended:

March 31, 2023

Beginning balance

$

747

949

3,109

828

132

$

5,765

Impact of adopting ASC 326

532

(17)

873

(347)

(22)

1,019

Charge-offs

—

—

—

—

(11)

(11)

Recoveries

2

—

—

5

1

8

Net recoveries (charge-offs)

2

—

—

5

(10)

(3)

Provision for credit losses

(49)

89

(16)

11

5

40

Ending balance

$

1,232

1,021

3,966

497

105

$

6,821

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to

determine expected credit losses as of March 31, 2024 and December 31, 2023:

(Dollars in thousands)

Real Estate

Total Loans

March 31, 2024:

Commercial real estate

$

765

$

765

Total 

$

765

$

765

December 31, 2023:

Commercial real estate

$

783

$

783

Total

$

783

$

783

The following table is a summary of the Company’s nonaccrual loans by major categories as of March 31, 2024 and

December 31, 2023.

CECL

Nonaccrual loans

Nonaccrual loans

Total

(Dollars in thousands)

with no Allowance

with an Allowance

Nonaccrual Loans

March 31, 2024

Commercial real estate

$

765

—

765

Residential real estate

—

97

97

Consumer

—

16

16

Total 

$

765

113

878

December 31, 2023

Commercial real estate

$

783

—

783

Residential real estate

—

128

128

Total 

$

783

128

911

XML

Mortgage Servicing Rights, Net

3 Months Ended

Mar. 31, 2024

Mortgage Servicing [Abstract]

Transfers and Servicing of Financial Assets [Text Block]

NOTE 6: MORTGAGE SERVICING RIGHTS, NET 

Mortgage servicing rights (“MSRs”) are recognized based on the fair value of the servicing rights on the date the

corresponding mortgage loans are sold. An estimate of the Company’s MSRs is determined using assumptions that market

participants would use in estimating future net servicing income, including estimates of prepayment speeds, discount rate,

default rates, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees. 

Subsequent to the date of transfer, the Company has elected to measure its MSRs under the amortization method. Under

the amortization method, MSRs are amortized in proportion to, and over the period of, estimated net servicing income. 

Increases in market interest rates generally increase the fair value of MSRs by reducing prepayments and refinancings and

therefore reducing the prepayment speed.

The Company has recorded MSRs related to loans sold to Fannie Mae. The Company generally sells conforming, fixed-

rate, closed-end, residential mortgages to Fannie Mae. MSRs are included in other assets on the accompanying

consolidated balance sheets.

The Company evaluates MSRs for impairment on a quarterly basis. Impairment is determined by stratifying MSRs into

groupings based on predominant risk characteristics, such as interest rate and loan type. If, by individual stratum, the

carrying amount of the MSRs exceeds fair value, a valuation allowance is established. The valuation allowance is adjusted

as the fair value changes. Changes in the valuation allowance are recognized in earnings as a component of mortgage

lending income. 

The change in amortized MSRs and the related valuation allowance for the quarters ended March 31, 2024 and 2023 are

presented below.

Quarter ended March 31,

(Dollars in thousands)

2024

2023

MSRs, net:

Beginning balance

$

992

$

1,151

Additions, net

12

—

Amortization expense

(39)

(55)

Ending balance

$

965

$

1,096

Valuation allowance included in MSRs, net:

Beginning of period

$

—

$

—

End of period

—

—

Fair value of amortized MSRs:

Beginning of period

$

2,382

$

2,369

End of period

2,378

2,419

XML

Fair Value Disclosures

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Disclosures Text Block

NOTE 7: FAIR VALUE 

Fair Value Hierarchy

“Fair value” is defined by ASC 820,

Fair Value Measurements and Disclosures

, and focuses on the exit price, i.e., the price

that would be received to sell an asset or paid to transfer a liability in an orderly transaction occurring in the principal

market (or most advantageous market in the absence of a principal market) for an asset or liability at the measurement date. 

GAAP establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active

markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as

follows:

Level 1—inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active

markets. 

Level 2—inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets,

quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs that are observable for the

asset or liability, either directly or indirectly. 

Level 3—inputs to the valuation methodology are unobservable and reflect the Company’s own assumptions about the

inputs market participants would use in pricing the asset or liability. 

Level changes in fair value measurements 

Transfers between levels of the fair value hierarchy are generally recognized at the end of each reporting period. The

Company monitors the valuation techniques utilized for each category of financial assets and liabilities to ascertain when

transfers between levels have been affected. The nature of the Company’s financial assets and liabilities generally is such

that transfers in and out of any level are expected to be infrequent. For the quarter ended March 31, 2024, there were no

transfers between levels and no changes in valuation techniques for the Company’s financial assets and liabilities.

Assets and liabilities measured at fair value on a recurring basis

Securities available-for-sale

Fair values of securities available for sale were primarily measured using Level 2 inputs. For these securities, the Company

obtains pricing data from third party pricing services. These third party pricing services consider observable data that may

include broker/dealer quotes, market spreads, cash flows, benchmark yields, reported trades for similar securities, market

consensus prepayment speeds, credit information, and the securities’ terms and conditions. On a quarterly basis,

management reviews the pricing data received from the third party pricing services for reasonableness given current market

conditions. As part of its review, management may obtain non-binding third party broker/dealer quotes to validate the fair

value measurements. In addition, management will periodically submit pricing information provided by the third party

pricing services to another independent valuation firm on a sample basis. This independent valuation firm will compare the

prices provided by the third party pricing service with its own prices and will review the significant assumptions and

valuation methodologies used with management.

The following table presents the balances of the assets and liabilities measured at fair value on a recurring basis as of March

31, 2024 and December 31, 2023, respectively, by caption, on the accompanying consolidated balance sheets by ASC 820

valuation hierarchy (as described above).

Quoted Prices in

Significant

Active Markets

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

March 31, 2024:

Securities available-for-sale:

Agency obligations 

$

52,751

—

52,751

—

Agency MBS

190,224

—

190,224

—

State and political subdivisions

17,795

—

17,795

—

Total securities available-for-sale

260,770

—

260,770

—

Total assets at fair value

$

260,770

—

260,770

—

December 31, 2023:

Securities available-for-sale:

Agency obligations 

$

53,879

—

53,879

—

Agency MBS

198,289

—

198,289

—

State and political subdivisions

18,742

—

18,742

—

Total securities available-for-sale

270,910

—

270,910

—

Total assets at fair value

$

270,910

—

270,910

—

Assets and liabilities measured at fair value on a nonrecurring 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 is valued 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 within Level 3 of

the hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the borrower's

underlying financial condition.

Mortgage servicing rights, net

MSRs, net, included in other assets on the accompanying consolidated balance sheets, are carried at the lower of cost or

estimated fair value. MSRs do not trade in an active market with readily observable prices. To determine the fair value of

MSRs, the Company engages an independent third party. The independent third party’s valuation model calculates the

present value of estimated future net servicing income using assumptions that market participants would use in estimating

future net servicing income, including estimates of mortgage prepayment speeds, discount rates, default rates, costs to

service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees. Periodically, the

Company will review broker surveys and other market research to validate significant assumptions used in the model. The

significant unobservable inputs include mortgage prepayment speeds or the constant prepayment rate (“CPR”) and the

weighted average discount rate. Because the valuation of MSRs requires the use of significant unobservable inputs, all of

the Company’s MSRs are classified within Level 3 of the valuation hierarchy.

The following table presents the balances of the assets and liabilities measured at fair value on a nonrecurring basis as of

March 31, 2024 and December 31, 2023, respectively, by caption, on the accompanying consolidated balance sheets and by

FASB ASC 820 valuation hierarchy (as described above):

Quoted Prices in

Active Markets

Other

Significant

for

Observable

Unobservable

Carrying

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

March 31, 2024:

Loans held for sale

$

175

—

175

—

Loans, net

(1)

765

—

—

765

Other assets

(2)

965

—

—

965

Total assets at fair value

$

1,905

—

175

1,730

December 31, 2023:

Loans, net

(1)

$

783

—

—

783

Other assets

(2)

992

—

—

992

Total assets at fair value

$

1,775

—

—

1,775

(1)

Loans considered collateral dependent under ASC 326.

(2)

Represents MSRs, net, carried at lower of cost or estimated fair value.

Quantitative Disclosures for Level 3 Fair Value Measurements

At March 31, 2024 and December 31, 2023, the Company had no Level 3 assets measured at fair value on a recurring basis. 

For Level 3 assets measured at fair value on a non-recurring basis at March 31, 2024 and December 31, 2023, the

significant unobservable inputs used in the fair value measurements and the range of such inputs with respect to such assets

are presented below.

Range of

Weighted 

Carrying 

Significant 

Unobservable

Average

(Dollars in thousands)

Amount

Valuation Technique

Unobservable Input

Inputs

of Input

March 31, 2024:

Collateral dependent loans

$

765

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

965

Discounted cash flow

Prepayment speed or CPR

6.3

-

11.3

6.6

Discount rate

10.0

-

12.0

10.0

December 31, 2023:

Collateral dependent loans

$

783

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

992

Discounted cash flow

Prepayment speed or CPR

5.9

-

10.6

6.0

Discount rate

10.5

-

12.5

10.5

Fair Value of Financial Instruments

ASC 825,

Financial Instruments

, requires disclosure of fair value information about financial instruments, whether or not

recognized on the face of the balance sheet, where it is practicable to estimate that value. The assumptions used in the

estimation of the fair value of the Company’s financial instruments are explained below. Where quoted market prices are

not available, fair values are based on estimates using discounted cash flow analyses. Discounted cash flows can be

significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The

following fair value estimates cannot be substantiated by comparison to independent markets and should not be considered

representative of the liquidation value of the Company’s financial instruments, but rather are good-faith estimates of the fair

value of financial instruments held by the Company. ASC 825 excludes certain financial instruments and all nonfinancial

instruments from its disclosure requirements.

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments: 

Loans, net 

Fair values for loans were calculated using discounted cash flows. The discount rates reflected current rates at which similar

loans would be made for the same remaining maturities. Expected future cash flows were projected based on contractual

cash flows, adjusted for estimated prepayments. The fair value of loans was measured using an exit price notion.

Loans held for sale

Fair values of loans held for sale are determined using quoted secondary market prices for similar loans.

Time Deposits 

Fair values for time deposits were estimated using discounted cash flows. The discount rates were based on rates currently

offered for deposits with similar remaining maturities. 

The carrying value, related estimated fair value, and placement in the fair value hierarchy of the Company’s financial

instruments at March 31, 2024 and December 31, 2023 are presented below. This table excludes financial instruments for

which the carrying amount approximates fair value. Financial assets for which fair value approximates carrying value

included cash and cash equivalents. Financial liabilities for which fair value approximates carrying value included

noninterest-bearing demand deposits, interest-bearing demand deposits, and savings deposits. Fair value approximates

carrying value in these financial liabilities due to these products having no stated maturity. Additionally, financial

liabilities for which fair value approximates carrying value included overnight borrowings such as federal funds purchased

and securities sold under agreements to repurchase.

Fair Value Hierarchy

Carrying

Estimated

Level 1

Level 2

Level 3

(Dollars in thousands)

amount

fair value

inputs

inputs

Inputs

March 31, 2024:

Financial Assets:

Loans, net (1)

$

560,305

$

522,379

$

—

$

—

$

522,379

Loans held for sale

175

175

—

175

—

Financial Liabilities:

Time Deposits

$

190,603

$

188,651

$

—

$

188,651

$

—

December 31, 2023:

Financial Assets:

Loans, net (1)

$

550,431

$

526,372

$

—

$

—

$

526,372

Financial Liabilities:

Time Deposits

$

198,215

$

195,171

$

—

$

195,171

$

—

(1) Represents loans, net of allowance for credit losses. The fair value of loans was measured using an exit price notion.

XML

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2024

Summary of Signficant Accounting Policies

Nature of Business Policy

General

Auburn National Bancorporation, Inc. (the “Company”) provides a full range of banking services to individuals and

commercial customers in Lee County, Alabama and surrounding areas through its wholly owned subsidiary, AuburnBank

(the “Bank”). The Company does not have any segments other than banking that are considered material.

Basis of Presentation Policy

Basis of Presentation and Use of Estimates

The unaudited consolidated financial statements in this report have been prepared in accordance with U.S. generally

accepted accounting principles (“GAAP”) for interim financial information. Accordingly, these financial statements do not

include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited

consolidated financial statements include, in the opinion of management, all adjustments necessary to present a fair

statement of the financial position and the results of operations for all periods presented. All such adjustments are of a

normal recurring nature. The results of operations in the interim statements are not necessarily indicative of the results of

operations that the Company and its subsidiaries may achieve for future interim periods or the entire year. For further

information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form

10-K for the year ended December 31, 2023.

Consolidation Policy

The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. 

Significant intercompany transactions and accounts are eliminated in consolidation.

Use of Estimates Policy

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of

the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could

differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term

include the determination of allowance for credit losses on loans and investment securities, fair value of financial

instruments, and the valuation of deferred tax assets and other real estate owned (“OREO”).

Revenue Recognition Policy

Revenue Recognition

The Company’s sources of income that fall within the scope of ASC 606 include service charges on deposits, interchange

fees and gains and losses on sales of other real estate, all of which are presented as components of noninterest income. The

following is a summary of the revenue streams that fall within the scope of ASC 606: 

●

Service charges on deposits, investment services, ATM and interchange fees – Fees from these services are either

(i) transaction-based, for which the performance obligations are satisfied when the individual transaction is

processed, or (ii) set periodic service charges, for which the performance obligations are satisfied over the period

the service is provided. Transaction-based fees are recognized at the time the transaction is processed, and periodic

service charges are recognized over the service period.

●

Gains on sales of OREO

 –

A gain on sale should be recognized when a contract for sale exists and control of the

asset has been transferred to the buyer. ASC 606 lists several criteria required to conclude that a contract for sale

exists, including a determination that the institution will collect substantially all of the consideration to which it is

entitled. In addition to the loan-to-value ratio, where the seller provides the purchaser with financing, the analysis

is based on various other factors, including the credit quality of the purchaser, the structure of the loan, and any

other factors that we believe may affect collectability.

Subsequent Events Policy

Subsequent Events 

The Company has evaluated the effects of events and transactions through the date of this filing that have occurred

subsequent to March 31, 2024. The Company does not believe there were any material subsequent events during this

period that would have required further recognition or disclosure in the unaudited consolidated financial statements

included in this report.

Error Correction

Correction of Error

The disclosure of loans by vintage in Note 5 – Loans and Allowance for Credit Losses in the Company’s Annual Report on

Form 10-K for year ended December 31, 2023 contained incorrect information as it pertains to loans originated by vintage

and revolving loans. All current period gross charge-off data, total loans by segment and total loans by credit quality

indicator were correctly reported. The loans originated by vintage and revolving loans as of December 31, 2023 have been

corrected in the comparative presentation in Note 5 – Loans and Allowance for Credit Losses in the Notes herein.

Reclassification Policy

Reclassifications

Certain amounts reported in prior periods have been reclassified to conform to the current -period presentation. These

reclassifications had no effect on the Company’s previously reported net earnings or total stockholders’ equity.

Accounting Developments

Accounting Standards Adopted in 2024

On January 1, 2024, the Company adopted ASU 2023-02,

Investments – Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

. The amendments in this

Update permit reporting entities to elect to account for their equity investments made primarily to receive income tax

credits and other income tax benefits, regardless of the program from which the income tax credits or benefits are received,

using the proportional amortization method if certain conditions are met. The new standard is effective for fiscal years, and

interim periods within those fiscal years, beginning after December 15, 2023. The Company adopted ASU 2023-02

effective January 1, 2024 and recorded a cumulative effect of change in accounting standard adjustment which reduced

beginning retained earnings by $0.3 million. The Company will prospectively account for its investments in New Market

Tax Credits (“NMTCs”) using the proportional amortization method through charges to the provision for income taxes. See

Note 3, Variable Interest Entities.

XML

Basic and Diluted Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2023

Basic and Diluted Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

Quarter ended March 31,

(Dollars in thousands, except share and per share data)

2024

2023

Basic and diluted:

Net earnings

$

1,371

$

1,964

Weighted average common shares outstanding

3,493,663

3,502,143

Net earnings per share

$

0.39

$

0.56

XML

Variable Interest Entity (Tables)

3 Months Ended

Mar. 31, 2024

Variable Interest Entity [Abstract]

Variable Interest Entity [Table Text Block]

(Dollars in thousands)

Maximum

Loss Exposure

Asset Recognized

Classification

Type:

New Markets Tax Credit investment

$

1,175

$

1,175

Other assets

XML

Securities (Tables)

3 Months Ended

Mar. 31, 2024

Investments debt and equity securities [Abstract]

Available-for-sale Securities [Table Text Block]

1 year

1 to 5

5 to 10

After 10

Fair

Gross Unrealized 

Amortized

(Dollars in thousands)

or less

years

years

years

Value

Gains

Losses

Cost

March 31, 2024

Agency obligations (a)

$

—

14,416

38,335

—

52,751

—

8,554

$

61,305

Agency MBS (a)

57

15,533

20,254

154,380

190,224

—

30,229

220,453

State and political subdivisions

—

569

9,067

8,159

17,795

—

2,898

20,693

Total available-for-sale

$

57

30,518

67,656

162,539

260,770

—

41,681

$

302,451

December 31, 2023

Agency obligations (a)

$

331

10,339

43,209

—

53,879

—

8,195

$

62,074

Agency MBS (a)

32

15,109

22,090

161,058

198,289

—

27,838

226,127

State and political subdivisions

—

—

9,691

9,051

18,742

1

2,731

21,472

Total available-for-sale

$

363

25,448

74,990

170,109

270,910

1

38,764

$

309,673

(a) Includes securities issued by U.S. government agencies or government-sponsored entities. Expected lives of these 

securities may differ from contractual maturities because (i) issuers may have the right to call or repay such securities

obligations with or without prepayment penalties and (ii) loans incuded in Agency MBS generally have the right to

prepay such loan in whole or in part at any time.

Available-for-sale Securities, Continuous Unrealized Loss Position [Table Text Block]

Less than 12 Months

12 Months or Longer

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(Dollars in thousands)

Value

Losses

Value

Losses

Value

Losses

March 31, 2024:

Agency obligations 

$

—

—

52,751

8,554

$

52,751

8,554

Agency MBS

15

—

190,209

30,229

190,224

30,229

State and political subdivisions

1,459

6

15,010

2,892

16,469

2,898

Total 

$

1,474

6

257,970

41,675

$

259,444

41,681

December 31, 2023:

Agency obligations 

$

—

—

53,879

8,195

$

53,879

8,195

Agency MBS

66

1

198,223

27,837

198,289

27,838

State and political subdivisions

793

2

14,408

2,729

15,201

2,731

Total 

$

859

3

266,510

38,761

$

267,369

38,764

XML

Loan and Allowance for Credit Losses (Tables)

3 Months Ended

Mar. 31, 2024

Loans And Leases Receivable Disclosure [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

March 31,

December 31,

(Dollars in thousands)

2024

2023

Commercial and industrial

$

78,920

$

73,374

Construction and land development

58,909

68,329

Commercial real estate:

Owner occupied

63,826

66,783

Hotel/motel

38,822

39,131

Multi-family

45,634

45,841

Other

152,202

135,552

Total commercial real estate

300,484

287,307

Residential real estate:

Consumer mortgage

59,813

60,545

Investment property

58,427

56,912

Total residential real estate

118,240

117,457

Consumer installment

10,967

10,827

Total Loans

$

567,520

$

557,294

Past Due Financing Receivables [Table Text Block]

Accruing

Accruing

Total

30-89 Days

Greater than

Accruing

Non-

Total 

(Dollars in thousands)

Current

Past Due

90 days

Loans

Accrual

Loans

March 31, 2024:

Commercial and industrial

$

78,914

6

—

78,920

—

$

78,920

Construction and land development

58,909

—

—

58,909

—

58,909

Commercial real estate:

Owner occupied

63,061

—

—

63,061

765

63,826

Hotel/motel

38,822

—

—

38,822

—

38,822

Multi-family

45,634

—

—

45,634

—

45,634

Other

152,202

—

—

152,202

—

152,202

Total commercial real estate

299,719

—

—

299,719

765

300,484

Residential real estate:

Consumer mortgage

59,656

60

—

59,716

97

59,813

Investment property

58,427

—

—

58,427

—

58,427

Total residential real estate

118,083

60

—

118,143

97

118,240

Consumer installment

10,935

16

—

10,951

16

10,967

Total

$

566,560

82

—

566,642

878

$

567,520

December 31, 2023:

Commercial and industrial

$

73,108

266

—

73,374

—

$

73,374

Construction and land development

68,329

—

—

68,329

—

68,329

Commercial real estate:

Owner occupied

66,000

—

—

66,000

783

66,783

Hotel/motel

39,131

—

—

39,131

—

39,131

Multi-family

45,841

—

—

45,841

—

45,841

Other

135,552

—

—

135,552

—

135,552

Total commercial real estate

286,524

—

—

286,524

783

287,307

Residential real estate:

Consumer mortgage

60,442

—

—

60,442

103

60,545

Investment property

56,597

290

—

56,887

25

56,912

Total residential real estate

117,039

290

—

117,329

128

117,457

Consumer installment

10,781

46

—

10,827

—

10,827

Total

$

555,781

602

—

556,383

911

$

557,294

Financing Receivable Credit Quality Indicators [Table Text Block]

Year of Origination

2024

2023

2022

2021

2020

Prior to

2020

Revolving

Loans

Total 

Loans

(Dollars in thousands)

March 31, 2024: 

Commercial and industrial

Pass

$

6,167

10,960

19,891

13,067

5,429

14,697

8,449

$

78,660

Special mention

—

—

—

—

—

—

—

—

Substandard

54

—

194

12

—

—

—

260

Nonaccrual

—

—

—

—

—

—

—

—

Total commercial and industrial

6,221

10,960

20,085

13,079

5,429

14,697

8,449

78,920

Current period gross charge-offs

—

—

—

—

—

—

—

—

Construction and land development

Pass

5,668

26,093

22,446

1,615

1,506

200

905

58,433

Special mention

—

302

—

—

—

—

—

302

Substandard

174

—

—

—

—

—

—

174

Nonaccrual

—

—

—

—

—

—

—

—

Total construction and land development

5,842

26,395

22,446

1,615

1,506

200

905

58,909

Current period gross charge-offs

—

—

—

—

—

—

—

—

Commercial real estate:

Owner occupied

Pass

100

12,842

7,197

18,076

10,283

10,744

2,583

61,825

Special mention

931

257

—

—

—

—

—

1,188

Substandard

—

—

—

—

—

48

—

48

Nonaccrual

—

—

—

—

—

765

—

765

Total owner occupied

1,031

13,099

7,197

18,076

10,283

11,557

2,583

63,826

Current period gross charge-offs

—

—

—

—

—

—

—

—

Hotel/motel

Pass

248

8,925

9,765

3,174

1,445

15,265

—

38,822

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total hotel/motel

248

8,925

9,765

3,174

1,445

15,265

—

38,822

Current period gross charge-offs

—

—

—

—

—

—

—

—

Year of Origination

2024

2023

2022

2021

2020

Prior to

2020

Revolving

Loans

Total 

Loans

(Dollars in thousands)

March 31, 2024: 

Multi-family

Pass

113

12,270

17,834

1,934

6,060

6,682

741

45,634

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total multi-family

113

12,270

17,834

1,934

6,060

6,682

741

45,634

Current period gross charge-offs

—

—

—

—

—

—

—

—

Other

Pass

19,687

24,583

35,601

31,278

14,036

25,552

1,313

152,050

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

152

—

—

152

Nonaccrual

—

—

—

—

—

—

—

—

Total other

19,687

24,583

35,601

31,278

14,188

25,552

1,313

152,202

Current period gross charge-offs

—

—

—

—

—

—

—

—

Residential real estate:

Consumer mortgage

Pass

1,276

19,445

19,230

2,682

2,636

13,106

327

58,702

Special mention

—

—

—

—

—

493

—

493

Substandard

—

—

—

—

—

521

—

521

Nonaccrual

—

—

—

—

—

97

—

97

Total consumer mortgage

1,276

19,445

19,230

2,682

2,636

14,217

327

59,813

Current period gross charge-offs

—

—

—

—

—

—

—

—

Investment property

Pass

5,736

12,255

11,396

9,219

11,829

6,214

1,369

58,018

Special mention

—

—

—

—

—

—

—

—

Substandard

—

83

96

—

230

—

—

409

Nonaccrual

—

—

—

—

—

—

—

—

Total investment property

5,736

12,338

11,492

9,219

12,059

6,214

1,369

58,427

Current period gross charge-offs

—

—

—

—

—

—

—

—

Consumer installment

Pass

2,095

5,157

2,690

570

148

222

—

10,882

Special mention

—

10

1

—

1

—

—

12

Substandard

10

34

11

2

—

—

—

57

Nonaccrual

—

9

7

—

—

—

—

16

Total consumer installment

2,105

5,210

2,709

572

149

222

—

10,967

Current period gross charge-offs

—

6

17

1

—

—

—

24

Total loans

Pass

41,090

132,530

146,050

81,615

53,372

92,682

15,687

563,026

Special mention

931

569

1

—

1

493

—

1,995

Substandard

238

117

301

14

382

569

—

1,621

Nonaccrual

—

9

7

—

—

862

—

878

Total loans

$

42,259

133,225

146,359

81,629

53,755

94,606

15,687

$

567,520

Total current period gross charge-offs

$

—

6

17

1

—

—

—

24

Year of Origination

2023

2022

2021

2020

2019

Prior to

2019

Revolving

Loans

Total 

Loans

(Dollars in thousands)

December 31, 2023: 

Commercial and industrial

Pass

$

11,571

18,074

13,746

5,602

7,298

7,819

9,003

$

73,113

Special mention

—

—

—

—

—

—

—

—

Substandard

55

203

—

—

3

—

—

261

Nonaccrual

—

—

—

—

—

—

—

—

Total commercial and industrial

11,626

18,277

13,746

5,602

7,301

7,819

9,003

73,374

Current period gross charge-offs

—

—

13

—

151

—

—

164

Construction and land development

Pass

38,646

25,382

1,716

1,526

120

157

782

68,329

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total construction and land development

38,646

25,382

1,716

1,526

120

157

782

68,329

Current period gross charge-offs

—

—

—

—

—

—

—

—

Commercial real estate:

Owner occupied

Pass

12,966

7,337

18,548

10,458

3,948

9,786

2,647

65,690

Special mention

260

—

—

—

—

—

—

260

Substandard

—

—

—

—

50

—

—

50

Nonaccrual

—

—

—

—

783

—

—

783

Total owner occupied

13,226

7,337

18,548

10,458

4,781

9,786

2,647

66,783

Current period gross charge-offs

—

—

—

—

—

—

—

—

Hotel/motel

Pass

9,025

9,873

3,205

1,493

3,881

11,654

—

39,131

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total hotel/motel

9,025

9,873

3,205

1,493

3,881

11,654

—

39,131

Current period gross charge-offs

—

—

—

—

—

—

—

—

Year of Origination

2023

2022

2021

2020

2019

Prior to

2019

Revolving

Loans

Total 

Loans

(Dollars in thousands)

December 31, 2023: 

Multi-family

Pass

12,379

17,955

1,953

6,112

3,790

3,043

609

45,841

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

—

—

—

—

—

Nonaccrual

—

—

—

—

—

—

—

—

Total multi-family

12,379

17,955

1,953

6,112

3,790

3,043

609

45,841

Current period gross charge-offs

—

—

—

—

—

—

—

—

Other

Pass

25,810

36,076

31,687

14,597

10,736

15,440

1,052

135,398

Special mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

154

—

—

—

154

Nonaccrual

—

—

—

—

—

—

—

—

Total other

25,810

36,076

31,687

14,751

10,736

15,440

1,052

135,552

Current period gross charge-offs

—

—

—

—

—

—

—

—

Residential real estate:

Consumer mortgage

Pass

20,147

20,177

2,683

2,665

1,281

12,217

249

59,419

Special mention

—

—

—

—

190

305

—

495

Substandard

—

—

—

—

—

528

—

528

Nonaccrual

—

—

—

—

—

103

—

103

Total consumer mortgage

20,147

20,177

2,683

2,665

1,471

13,153

249

60,545

Current period gross charge-offs

—

—

—

—

—

—

—

—

Investment property

Pass

13,398

12,490

9,397

12,209

5,485

1,865

1,478

56,322

Special mention

41

—

—

—

—

—

—

41

Substandard

43

248

—

233

—

—

—

524

Nonaccrual

—

—

—

—

—

25

—

25

Total investment property

13,482

12,738

9,397

12,442

5,485

1,890

1,478

56,912

Current period gross charge-offs

—

—

—

—

—

—

—

—

Consumer installment

Pass

5,688

3,837

740

206

106

141

—

10,718

Special mention

9

25

9

2

—

—

—

45

Substandard

37

11

5

11

—

—

—

64

Nonaccrual

—

—

—

—

—

—

—

-

Total consumer installment

5,734

3,873

754

219

106

141

—

10,827

Current period gross charge-offs

34

57

13

1

—

—

—

105

Total loans

Pass

149,630

151,201

83,675

54,868

36,645

62,122

15,820

553,961

Special mention

310

25

9

2

190

305

—

841

Substandard

135

462

5

398

53

528

—

1,581

Nonaccrual

—

—

—

—

783

128

—

911

Total loans

$

150,075

151,688

83,689

55,268

37,671

63,083

15,820

$

557,294

Total current period gross charge-offs

$

34

57

26

1

151

—

—

269

Allowance for Credit Losses on Financing Receivables [Table Text Block]

(Dollars in thousands)

Commercial and

industrial

Construction

and land

development

Commercial

real estate

Residential

real estate

Consumer

installment

Total

Quarter ended:

March 31, 2024

Beginning balance

$

1,288

960

3,921

546

148

$

6,863

Charge-offs

—

—

—

—

(24)

(24)

Recoveries

66

—

—

3

22

91

Net recoveries (charge-offs)

66

—

—

3

(2)

67

Provision for credit losses

61

(120)

281

64

(1)

285

Ending balance

$

1,415

840

4,202

613

145

$

7,215

Quarter ended:

March 31, 2023

Beginning balance

$

747

949

3,109

828

132

$

5,765

Impact of adopting ASC 326

532

(17)

873

(347)

(22)

1,019

Charge-offs

—

—

—

—

(11)

(11)

Recoveries

2

—

—

5

1

8

Net recoveries (charge-offs)

2

—

—

5

(10)

(3)

Provision for credit losses

(49)

89

(16)

11

5

40

Ending balance

$

1,232

1,021

3,966

497

105

$

6,821

Schedule Of Financing Receivables NonAccrual Status [Table Text Block]

CECL

Nonaccrual loans

Nonaccrual loans

Total

(Dollars in thousands)

with no Allowance

with an Allowance

Nonaccrual Loans

March 31, 2024

Commercial real estate

$

765

—

765

Residential real estate

—

97

97

Consumer

—

16

16

Total 

$

765

113

878

December 31, 2023

Commercial real estate

$

783

—

783

Residential real estate

—

128

128

Total 

$

783

128

911

Schedule Of Collateral Dependent Loans Individually Evaluated For ACL [Table Text Block]

(Dollars in thousands)

Real Estate

Total Loans

March 31, 2024:

Commercial real estate

$

765

$

765

Total 

$

765

$

765

December 31, 2023:

Commercial real estate

$

783

$

783

Total

$

783

$

783

Schedule Of Composition Of Provision For Credit Losses [Table Text Block]]

Quarter ended March 31, 

(Dollars in thousands)

2024

2023

Provision for credit losses:

Loans

$

285

$

40

Reserve for unfunded commitments

49

26

Total provision for credit losses

$

334

$

66

XML

Mortgage Servicing Rights, Net (Tables)

3 Months Ended

Mar. 31, 2024

Mortgage Servicing [Abstract]

Schedule Of Servicing Assets At Fair Value [Table Text Block]

Quarter ended March 31,

(Dollars in thousands)

2024

2023

MSRs, net:

Beginning balance

$

992

$

1,151

Additions, net

12

—

Amortization expense

(39)

(55)

Ending balance

$

965

$

1,096

Valuation allowance included in MSRs, net:

Beginning of period

$

—

$

—

End of period

—

—

Fair value of amortized MSRs:

Beginning of period

$

2,382

$

2,369

End of period

2,378

2,419

XML

Fair Value (Tables)

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

Quoted Prices in

Significant

Active Markets

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

March 31, 2024:

Securities available-for-sale:

Agency obligations 

$

52,751

—

52,751

—

Agency MBS

190,224

—

190,224

—

State and political subdivisions

17,795

—

17,795

—

Total securities available-for-sale

260,770

—

260,770

—

Total assets at fair value

$

260,770

—

260,770

—

December 31, 2023:

Securities available-for-sale:

Agency obligations 

$

53,879

—

53,879

—

Agency MBS

198,289

—

198,289

—

State and political subdivisions

18,742

—

18,742

—

Total securities available-for-sale

270,910

—

270,910

—

Total assets at fair value

$

270,910

—

270,910

—

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Table Text Block]

Quoted Prices in

Active Markets

Other

Significant

for

Observable

Unobservable

Carrying

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

March 31, 2024:

Loans held for sale

$

175

—

175

—

Loans, net

(1)

765

—

—

765

Other assets

(2)

965

—

—

965

Total assets at fair value

$

1,905

—

175

1,730

December 31, 2023:

Loans, net

(1)

$

783

—

—

783

Other assets

(2)

992

—

—

992

Total assets at fair value

$

1,775

—

—

1,775

(1)

Loans considered collateral dependent under ASC 326.

(2)

Represents MSRs, net, carried at lower of cost or estimated fair value.

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

Range of

Weighted 

Carrying 

Significant 

Unobservable

Average

(Dollars in thousands)

Amount

Valuation Technique

Unobservable Input

Inputs

of Input

March 31, 2024:

Collateral dependent loans

$

765

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

965

Discounted cash flow

Prepayment speed or CPR

6.3

-

11.3

6.6

Discount rate

10.0

-

12.0

10.0

December 31, 2023:

Collateral dependent loans

$

783

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

992

Discounted cash flow

Prepayment speed or CPR

5.9

-

10.6

6.0

Discount rate

10.5

-

12.5

10.5

Financial Instruments [Table Text Block]

Fair Value Hierarchy

Carrying

Estimated

Level 1

Level 2

Level 3

(Dollars in thousands)

amount

fair value

inputs

inputs

Inputs

March 31, 2024:

Financial Assets:

Loans, net (1)

$

560,305

$

522,379

$

—

$

—

$

522,379

Loans held for sale

175

175

—

175

—

Financial Liabilities:

Time Deposits

$

190,603

$

188,651

$

—

$

188,651

$

—

December 31, 2023:

Financial Assets:

Loans, net (1)

$

550,431

$

526,372

$

—

$

—

$

526,372

Financial Liabilities:

Time Deposits

$

198,215

$

195,171

$

—

$

195,171

$

—

(1) Represents loans, net of allowance for credit losses. The fair value of loans was measured using an exit price notion.

XML

Summary Significant Account Policies Textuals (Details) - USD ($) $ in Thousands		3 Months Ended
	Jan. 01, 2024	Mar. 31, 2024	Mar. 31, 2023
Summary of Signficant Accounting Policies
Cumulative Effect Of Accounting Standard	$ 263	$ (263)	$ (821)

XML

Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Basic and Diluted Earnings Per Share [Abstract]
Net earnings	$ 1,371	$ 1,964
Basic and diluted weighted average shares outstanding	3,493,663	3,502,143
Basic and diluted earnings per share	$ 0.39	$ 0.56

XML

Variable Interest Entities (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Maxium Loss Exposure [Member]
Variable Interest Entities [Line Items]
New Markets Tax Credit Investment	$ 1,175
Asset Recognized [Member]
Variable Interest Entities [Line Items]
New Markets Tax Credit Investment	$ 1,175

XML

Security Types (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Available For Sale Securities Debt Maturities Fair Value [Line Items]
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value	$ 30,518	$ 25,448
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value	67,656	74,990
Available-for-sale Securities, Debt Maturities, after Ten Years, Fair Value	162,539	170,109
Available-for-sale Securities, Fair Value, Total	260,770	270,910
Available For Sale Securities, Gross Unrealized Gains	0	1
Available For Sale Securities, Gross Unrealized Losses	41,681	38,764
Available-for-sale Securities, Amortized Cost Basis	302,451	309,673
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value	57	363
US Government and Government Agencies and Authorities [Member]
Available For Sale Securities Debt Maturities Fair Value [Line Items]
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value	14,416	10,339
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value	38,335	43,209
Available-for-sale Securities, Debt Maturities, after Ten Years, Fair Value	0	0
Available-for-sale Securities, Fair Value, Total	52,751	53,879
Available For Sale Securities, Gross Unrealized Gains	0	0
Available For Sale Securities, Gross Unrealized Losses	8,554	8,195
Available-for-sale Securities, Amortized Cost Basis	61,305	62,074
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value	0	331
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available For Sale Securities Debt Maturities Fair Value [Line Items]
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value	15,533	15,109
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value	20,254	22,090
Available-for-sale Securities, Debt Maturities, after Ten Years, Fair Value	154,380	161,058
Available-for-sale Securities, Fair Value, Total	190,224	198,289
Available For Sale Securities, Gross Unrealized Gains	0	0
Available For Sale Securities, Gross Unrealized Losses	30,229	27,838
Available-for-sale Securities, Amortized Cost Basis	220,453	226,127
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value	57	32
US States and Political Subdivisions Debt Securities [Member]
Available For Sale Securities Debt Maturities Fair Value [Line Items]
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value	569	0
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value	9,067	9,691
Available-for-sale Securities, Debt Maturities, after Ten Years, Fair Value	8,159	9,051
Available-for-sale Securities, Fair Value, Total	17,795	18,742
Available For Sale Securities, Gross Unrealized Gains	0	1
Available For Sale Securities, Gross Unrealized Losses	2,898	2,731
Available-for-sale Securities, Amortized Cost Basis	20,693	21,472
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value	$ 0	$ 0

XML

Securities Continuous Unrealized Loss (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Debt Securities, Available-for-Sale, Unrealized Loss Position [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 1,474	$ 859
Available-for-sale Securities Continuous Unrealized Loss Position Less than 12 Months Aggregate Losses	6	3
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	257,970	266,510
Available-for-sale Securities Continuous Unrealized Loss Position 12 Months or Longer Aggregate Losses	41,675	38,761
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	259,444	267,369
Available-for-sale Securities Continuous Unrealized Loss Position Aggregate Losses	41,681	38,764
US Government and Government Agencies and Authorities [Member]
Debt Securities, Available-for-Sale, Unrealized Loss Position [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	0	0
Available-for-sale Securities Continuous Unrealized Loss Position Less than 12 Months Aggregate Losses	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	52,751	53,879
Available-for-sale Securities Continuous Unrealized Loss Position 12 Months or Longer Aggregate Losses	8,554	8,195
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	52,751	53,879
Available-for-sale Securities Continuous Unrealized Loss Position Aggregate Losses	8,554	8,195
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Debt Securities, Available-for-Sale, Unrealized Loss Position [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	15	66
Available-for-sale Securities Continuous Unrealized Loss Position Less than 12 Months Aggregate Losses	0	1
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	190,209	198,223
Available-for-sale Securities Continuous Unrealized Loss Position 12 Months or Longer Aggregate Losses	30,229	27,837
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	190,224	198,289
Available-for-sale Securities Continuous Unrealized Loss Position Aggregate Losses	30,229	27,838
US States and Political Subdivisions Debt Securities [Member]
Debt Securities, Available-for-Sale, Unrealized Loss Position [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	1,459	793
Available-for-sale Securities Continuous Unrealized Loss Position Less than 12 Months Aggregate Losses	6	2
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	15,010	14,408
Available-for-sale Securities Continuous Unrealized Loss Position 12 Months or Longer Aggregate Losses	2,892	2,729
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	16,469	15,201
Available-for-sale Securities Continuous Unrealized Loss Position Aggregate Losses	$ 2,898	$ 2,731

XML

Securities Textuals (Details) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Securities (Textuals) [Abstract]
Available-for-sale Securities Pledged as Collateral	$ 204.8	$ 211.8
Cost-method Investments, Aggregate Carrying Amount	$ 1.4

XML

Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 567,520	$ 557,294
Commercial and Industrial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	78,920	73,374
Construction And Land Development Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	58,909	68,329
Commercial Real Estate Owner Occupied Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	63,826	66,783
Commercial Real Estate Hotel Motel [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	38,822	39,131
Commercial Real Estate Multifamily [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	45,634	45,841
Commercial Real Estate Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	152,202	135,552
Commercial Real Estate Loans, Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	300,484	287,307
Residential Real Estate Consumer Mortgage Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	59,813	60,545
Residential Real Estate Investment Property Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	58,427	56,912
Residential Real Estate Loans, Total [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	118,240	117,457
Consumer Installment and Revolving Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 10,967	$ 10,827

XML

Loans Past Due Analysis (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	$ 566,642	$ 556,383
Non Accrual	878	911
Loans and Leases Receivable, Gross, Carrying Amount	567,520	557,294
Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	566,560	555,781
Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	82	602
Accruing Greater Than 90 days {Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Commercial and Industrial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	78,920	73,374
Non Accrual	0	0
Loans and Leases Receivable, Gross, Carrying Amount	78,920	73,374
Commercial and Industrial Loans [Member] | Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	78,914	73,108
Commercial and Industrial Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	6	266
Commercial and Industrial Loans [Member] | Accruing Greater Than 90 days {Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Construction And Land Development Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	58,909	68,329
Non Accrual	0
Loans and Leases Receivable, Gross, Carrying Amount	58,909	68,329
Construction And Land Development Loans [Member] | Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	58,909	68,329
Construction And Land Development Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Construction And Land Development Loans [Member] | Accruing Greater Than 90 days {Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Commercial Real Estate Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	63,061	66,000
Non Accrual	765	783
Loans and Leases Receivable, Gross, Carrying Amount	63,826	66,783
Commercial Real Estate Owner Occupied Loans [Member] | Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	63,061	66,000
Commercial Real Estate Owner Occupied Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Commercial Real Estate Owner Occupied Loans [Member] | Accruing Greater Than 90 days {Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Commercial Real Estate Hotel Motel [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	38,822	39,131
Non Accrual	0
Loans and Leases Receivable, Gross, Carrying Amount	38,822	39,131
Commercial Real Estate Hotel Motel [Member] | Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	38,822	39,131
Commercial Real Estate Hotel Motel [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Commercial Real Estate Hotel Motel [Member] | Accruing Greater Than 90 days {Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Commercial Real Estate Multifamily [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	45,634	45,841
Non Accrual	0	0
Loans and Leases Receivable, Gross, Carrying Amount	45,634	45,841
Commercial Real Estate Multifamily [Member] | Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	45,634	45,841
Commercial Real Estate Multifamily [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Commercial Real Estate Multifamily [Member] | Accruing Greater Than 90 days {Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Commercial Real Estate Other Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	152,202	135,552
Non Accrual	0	0
Loans and Leases Receivable, Gross, Carrying Amount	152,202	135,552
Commercial Real Estate Other Loans [Member] | Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	152,202	135,552
Commercial Real Estate Other Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Commercial Real Estate Other Loans [Member] | Accruing Greater Than 90 days {Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Commercial Real Estate Loans, Total [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	299,719	286,524
Non Accrual	765	783
Loans and Leases Receivable, Gross, Carrying Amount	300,484	287,307
Commercial Real Estate Loans, Total [Member] | Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	299,719	286,524
Commercial Real Estate Loans, Total [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Commercial Real Estate Loans, Total [Member] | Accruing Greater Than 90 days {Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Residential Real Estate Consumer Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	59,716	60,442
Non Accrual	97	103
Loans and Leases Receivable, Gross, Carrying Amount	59,813	60,545
Residential Real Estate Consumer Mortgage Loans [Member] | Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	59,656	60,442
Residential Real Estate Consumer Mortgage Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	60	0
Residential Real Estate Consumer Mortgage Loans [Member] | Accruing Greater Than 90 days {Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Residential Real Estate Investment Property Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	58,427	56,887
Non Accrual	0	25
Loans and Leases Receivable, Gross, Carrying Amount	58,427	56,912
Residential Real Estate Investment Property Loans [Member] | Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	58,427	56,597
Residential Real Estate Investment Property Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	290
Residential Real Estate Investment Property Loans [Member] | Accruing Greater Than 90 days {Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Residential Real Estate Loans, Total [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	118,143	117,329
Non Accrual	97	128
Loans and Leases Receivable, Gross, Carrying Amount	118,240	117,457
Residential Real Estate Loans, Total [Member] | Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	118,083	117,039
Residential Real Estate Loans, Total [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	60	290
Residential Real Estate Loans, Total [Member] | Accruing Greater Than 90 days {Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	0	0
Consumer Installment and Revolving Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	10,951	10,827
Non Accrual	16	0
Loans and Leases Receivable, Gross, Carrying Amount	10,967	10,827
Consumer Installment and Revolving Loans [Member] | Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	10,935	10,781
Consumer Installment and Revolving Loans [Member] | Accruing 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	16	46
Consumer Installment and Revolving Loans [Member] | Accruing Greater Than 90 days {Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Accruing Loans	$ 0	$ 0

XML

Loan Credit Quality Analysis (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 878,000	$ 911,000
Current Year	42,259,000	150,075,000
1 Year Prior	133,225,000	151,688,000
2 year prior	146,359,000	83,689,000
3 year prior	81,629,000	55,268,000
4 year pior	53,755,000	37,671,000
Prior	94,606,000	63,083,000
Revolving Loans	15,687,000	15,820,000
Total loans	567,520,000	557,294,000
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff	0	34,000
Financing Receivable Excluding Accrued Interest Year Two Originated Current Fiscal Year Writeoff	6,000	57,000
Financing Receivable Excluding Accrued Interest Year Three Originated Current Fiscal Year Writeoff	17,000	26,000
Financing Receivable Excluding Accrued Interest Year Four Originated Current Fiscal Year Writeoff	1,000	1,000
Financing Receivable Excluding Accrued Interest Year Five Originated Current Fiscal Year Writeoff		151,000
Financing Receivable Excluding Accrued Interest Year Originated More Than Five Years Before Current Fiscal Year Writeoff		0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff	24,000	269,000
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	41,090,000	149,630,000
1 Year Prior	132,530,000	151,201,000
2 year prior	146,050,000	83,675,000
3 year prior	81,615,000	54,868,000
4 year pior	53,372,000	36,645,000
Prior	92,682,000	62,122,000
Revolving Loans	15,687,000	15,820,000
Total loans	563,026,000	553,961,000
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	931,000	310,000
1 Year Prior	569,000	25,000
2 year prior	1,000	9,000
3 year prior	0	2,000
4 year pior	1,000	190,000
Prior	493,000	305,000
Revolving Loans	0	0
Total loans	1,995,000	841,000
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	238,000	135,000
1 Year Prior	117,000	462,000
2 year prior	301,000	5,000
3 year prior	14,000	398,000
4 year pior	382,000	53,000
Prior	569,000	528,000
Revolving Loans	0	0
Total loans	1,621,000	1,581,000
NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	9,000	0
2 year prior	7,000	0
3 year prior	0	0
4 year pior	0	783,000
Prior	862,000	128,000
Revolving Loans	0	0
Total loans	878,000	911,000
Commercial and Industrial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	0
Current Year	6,221,000	11,626,000
1 Year Prior	10,960,000	18,277,000
2 year prior	20,085,000	13,746,000
3 year prior	13,079,000	5,602,000
4 year pior	5,429,000	7,301,000
Prior	14,697,000	7,819,000
Revolving Loans	8,449,000	9,003,000
Total loans	78,920,000	73,374,000
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff		0
Financing Receivable Excluding Accrued Interest Year Two Originated Current Fiscal Year Writeoff		0
Financing Receivable Excluding Accrued Interest Year Three Originated Current Fiscal Year Writeoff		13,000
Financing Receivable Excluding Accrued Interest Year Four Originated Current Fiscal Year Writeoff		0
Financing Receivable Excluding Accrued Interest Year Five Originated Current Fiscal Year Writeoff		151,000
Financing Receivable Excluding Accrued Interest Year Originated More Than Five Years Before Current Fiscal Year Writeoff		0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff		164,000
Commercial and Industrial Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	6,167,000	11,571,000
1 Year Prior	10,960,000	18,074,000
2 year prior	19,891,000	13,746,000
3 year prior	13,067,000	5,602,000
4 year pior	5,429,000	7,298,000
Prior	14,697,000	7,819,000
Revolving Loans	8,449,000	9,003,000
Total loans	78,660,000	73,113,000
Commercial and Industrial Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	0	0
Commercial and Industrial Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	54,000	55,000
1 Year Prior	0	203,000
2 year prior	194,000	0
3 year prior	12,000	0
4 year pior	0	3,000
Prior	0	0
Revolving Loans	0	0
Total loans	260,000	261,000
Commercial and Industrial Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	0	0
Construction And Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0
Current Year	5,842,000	38,646,000
1 Year Prior	26,395,000	25,382,000
2 year prior	22,446,000	1,716,000
3 year prior	1,615,000	1,526,000
4 year pior	1,506,000	120,000
Prior	200,000	157,000
Revolving Loans	905,000	782,000
Total loans	58,909,000	68,329,000
Construction And Land Development Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	5,668,000	38,646,000
1 Year Prior	26,093,000	25,382,000
2 year prior	22,446,000	1,716,000
3 year prior	1,615,000	1,526,000
4 year pior	1,506,000	120,000
Prior	200,000	157,000
Revolving Loans	905,000	782,000
Total loans	58,433,000	68,329,000
Construction And Land Development Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	302,000	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	302,000	0
Construction And Land Development Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	174,000	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	174,000	0
Construction And Land Development Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	0	0
Commercial Real Estate Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	765,000	783,000
Current Year	1,031,000	13,226,000
1 Year Prior	13,099,000	7,337,000
2 year prior	7,197,000	18,548,000
3 year prior	18,076,000	10,458,000
4 year pior	10,283,000	4,781,000
Prior	11,557,000	9,786,000
Revolving Loans	2,583,000	2,647,000
Total loans	63,826,000	66,783,000
Commercial Real Estate Owner Occupied Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	100,000	12,966,000
1 Year Prior	12,842,000	7,337,000
2 year prior	7,197,000	18,548,000
3 year prior	18,076,000	10,458,000
4 year pior	10,283,000	3,948,000
Prior	10,744,000	9,786,000
Revolving Loans	2,583,000	2,647,000
Total loans	61,825,000	65,690,000
Commercial Real Estate Owner Occupied Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	931,000	260,000
1 Year Prior	257,000	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	1,188,000	260,000
Commercial Real Estate Owner Occupied Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	50,000
Prior	48,000	0
Revolving Loans	0	0
Total loans	48,000	50,000
Commercial Real Estate Owner Occupied Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	783,000
Prior	765,000	0
Revolving Loans	0	0
Total loans	765,000	783,000
Commercial Real Estate Hotel Motel [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0
Current Year	248,000	9,025,000
1 Year Prior	8,925,000	9,873,000
2 year prior	9,765,000	3,205,000
3 year prior	3,174,000	1,493,000
4 year pior	1,445,000	3,881,000
Prior	15,265,000	11,654,000
Revolving Loans	0	0
Total loans	38,822,000	39,131,000
Commercial Real Estate Hotel Motel [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	248,000	9,025,000
1 Year Prior	8,925,000	9,873,000
2 year prior	9,765,000	3,205,000
3 year prior	3,174,000	1,493,000
4 year pior	1,445,000	3,881,000
Prior	15,265,000	11,654,000
Revolving Loans	0	0
Total loans	38,822,000	39,131,000
Commercial Real Estate Hotel Motel [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	0	0
Commercial Real Estate Hotel Motel [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	0	0
Commercial Real Estate Hotel Motel [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	0	0
Commercial Real Estate Multifamily [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	0
Current Year	113,000	12,379,000
1 Year Prior	12,270,000	17,955,000
2 year prior	17,834,000	1,953,000
3 year prior	1,934,000	6,112,000
4 year pior	6,060,000	3,790,000
Prior	6,682,000	3,043,000
Revolving Loans	741,000	609,000
Total loans	45,634,000	45,841,000
Commercial Real Estate Multifamily [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	113,000	12,379,000
1 Year Prior	12,270,000	17,955,000
2 year prior	17,834,000	1,953,000
3 year prior	1,934,000	6,112,000
4 year pior	6,060,000	3,790,000
Prior	6,682,000	3,043,000
Revolving Loans	741,000	609,000
Total loans	45,634,000	45,841,000
Commercial Real Estate Multifamily [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	0	0
Commercial Real Estate Multifamily [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	0	0
Commercial Real Estate Multifamily [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	0	0
Commercial Real Estate Other Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	0
Current Year	19,687,000	25,810,000
1 Year Prior	24,583,000	36,076,000
2 year prior	35,601,000	31,687,000
3 year prior	31,278,000	14,751,000
4 year pior	14,188,000	10,736,000
Prior	25,552,000	15,440,000
Revolving Loans	1,313,000	1,052,000
Total loans	152,202,000	135,552,000
Commercial Real Estate Other Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	19,687,000	25,810,000
1 Year Prior	24,583,000	36,076,000
2 year prior	35,601,000	31,687,000
3 year prior	31,278,000	14,597,000
4 year pior	14,036,000	10,736,000
Prior	25,552,000	15,440,000
Revolving Loans	1,313,000	1,052,000
Total loans	152,050,000	135,398,000
Commercial Real Estate Other Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	0	0
Commercial Real Estate Other Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	154,000
4 year pior	152,000	0
Prior	0	0
Revolving Loans	0	0
Total loans	152,000	154,000
Commercial Real Estate Other Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	0	0
Commercial Real Estate Loans, Total [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	765,000	783,000
Total loans	300,484,000	287,307,000
Residential Real Estate Consumer Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	97,000	103,000
Current Year	1,276,000	20,147,000
1 Year Prior	19,445,000	20,177,000
2 year prior	19,230,000	2,683,000
3 year prior	2,682,000	2,665,000
4 year pior	2,636,000	1,471,000
Prior	14,217,000	13,153,000
Revolving Loans	327,000	249,000
Total loans	59,813,000	60,545,000
Residential Real Estate Consumer Mortgage Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	1,276,000	20,147,000
1 Year Prior	19,445,000	20,177,000
2 year prior	19,230,000	2,683,000
3 year prior	2,682,000	2,665,000
4 year pior	2,636,000	1,281,000
Prior	13,106,000	12,217,000
Revolving Loans	327,000	249,000
Total loans	58,702,000	59,419,000
Residential Real Estate Consumer Mortgage Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	190,000
Prior	493,000	305,000
Revolving Loans	0	0
Total loans	493,000	495,000
Residential Real Estate Consumer Mortgage Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	521,000	528,000
Revolving Loans	0	0
Total loans	521,000	528,000
Residential Real Estate Consumer Mortgage Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	97,000	103,000
Revolving Loans	0	0
Total loans	97,000	103,000
Residential Real Estate Investment Property Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	25,000
Current Year	5,736,000	13,482,000
1 Year Prior	12,338,000	12,738,000
2 year prior	11,492,000	9,397,000
3 year prior	9,219,000	12,442,000
4 year pior	12,059,000	5,485,000
Prior	6,214,000	1,890,000
Revolving Loans	1,369,000	1,478,000
Total loans	58,427,000	56,912,000
Residential Real Estate Investment Property Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	5,736,000	13,398,000
1 Year Prior	12,255,000	12,490,000
2 year prior	11,396,000	9,397,000
3 year prior	9,219,000	12,209,000
4 year pior	11,829,000	5,485,000
Prior	6,214,000	1,865,000
Revolving Loans	1,369,000	1,478,000
Total loans	58,018,000	56,322,000
Residential Real Estate Investment Property Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	41,000
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	0	41,000
Residential Real Estate Investment Property Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	43,000
1 Year Prior	83,000	248,000
2 year prior	96,000	0
3 year prior	0	233,000
4 year pior	230,000	0
Prior	0	0
Revolving Loans	0	0
Total loans	409,000	524,000
Residential Real Estate Investment Property Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	0	0
2 year prior	0	0
3 year prior	0	0
4 year pior	0	0
Prior	0	25,000
Revolving Loans	0	0
Total loans	0	25,000
Residential Real Estate Loans, Total [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	97,000	128,000
Total loans	118,240,000	117,457,000
Consumer Installment and Revolving Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	16,000	0
Current Year	2,105,000	5,734,000
1 Year Prior	5,210,000	3,873,000
2 year prior	2,709,000	754,000
3 year prior	572,000	219,000
4 year pior	149,000	106,000
Prior	222,000	141,000
Revolving Loans	0	0
Total loans	10,967,000	10,827,000
Financing Receivable Excluding Accrued Interest Year One Originated Current Fiscal Year Writeoff	0	34,000
Financing Receivable Excluding Accrued Interest Year Two Originated Current Fiscal Year Writeoff	6,000	57,000
Financing Receivable Excluding Accrued Interest Year Three Originated Current Fiscal Year Writeoff	17,000	13,000
Financing Receivable Excluding Accrued Interest Year Four Originated Current Fiscal Year Writeoff	1,000	1,000
Financing Receivable Excluding Accrued Interest Year Five Originated Current Fiscal Year Writeoff		0
Financing Receivable Excluding Accrued Interest Year Originated More Than Five Years Before Current Fiscal Year Writeoff		0
Financing Receivable Excluding Accrued Interest Allowance For Credit Loss Writeoff	24,000	105,000
Consumer Installment and Revolving Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	2,095,000	5,688,000
1 Year Prior	5,157,000	3,837,000
2 year prior	2,690,000	740,000
3 year prior	570,000	206,000
4 year pior	148,000	106,000
Prior	222,000	141,000
Revolving Loans	0	0
Total loans	10,882,000	10,718,000
Consumer Installment and Revolving Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	9,000
1 Year Prior	10,000	25,000
2 year prior	1,000	9,000
3 year prior	0	2,000
4 year pior	1,000	0
Prior	0	0
Revolving Loans	0	0
Total loans	12,000	45,000
Consumer Installment and Revolving Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	10,000	37,000
1 Year Prior	34,000	11,000
2 year prior	11,000	5,000
3 year prior	2,000	11,000
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	57,000	64,000
Consumer Installment and Revolving Loans [Member] | NonAccrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Current Year	0	0
1 Year Prior	9,000	0
2 year prior	7,000	0
3 year prior	0	0
4 year pior	0	0
Prior	0	0
Revolving Loans	0	0
Total loans	$ 16,000	$ 0

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Composition of Provision for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Summary Of Provision For Credit Losses [Abstract]
Provision for credit losses related to loans and leases	$ 285	$ 40
Provision For Credit Losses In Reserve For Unfunded Commitments	49	26
Total Provision for credit losses	$ 334	$ 66

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Allowance for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Financing Receivable, Allowance for Credit Losses	$ 6,863	$ 5,765
Impact of Adoption of ASC 326		1,019
Financing Receivable, Allowance for Credit Losses, Charge-offs	(24)	(11)
Financing Receivable, Allowance for Credit Losses, Recoveries	91	8
Financing Receivable Allowance For Credit Losses Net Chargeoffs Recoveries	67	(3)
Provision for credit losses	285	40
Financing Receivable, Allowance for Credit Losses	7,215	6,821
Commercial and Industrial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Financing Receivable, Allowance for Credit Losses	1,288	747
Impact of Adoption of ASC 326		532
Financing Receivable, Allowance for Credit Losses, Charge-offs		0
Financing Receivable, Allowance for Credit Losses, Recoveries	66	2
Financing Receivable Allowance For Credit Losses Net Chargeoffs Recoveries	66	2
Provision for credit losses	61	(49)
Financing Receivable, Allowance for Credit Losses	1,415	1,232
Construction And Land Development Loans [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Financing Receivable, Allowance for Credit Losses	960	949
Impact of Adoption of ASC 326		(17)
Financing Receivable, Allowance for Credit Losses, Charge-offs		0
Financing Receivable, Allowance for Credit Losses, Recoveries	0	0
Financing Receivable Allowance For Credit Losses Net Chargeoffs Recoveries	0	0
Provision for credit losses	(120)	89
Financing Receivable, Allowance for Credit Losses	840	1,021
Commercial Real Estate Loans, Total [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Financing Receivable, Allowance for Credit Losses	3,921	3,109
Impact of Adoption of ASC 326		873
Financing Receivable, Allowance for Credit Losses, Charge-offs		0
Financing Receivable, Allowance for Credit Losses, Recoveries	0	0
Financing Receivable Allowance For Credit Losses Net Chargeoffs Recoveries	0	0
Provision for credit losses	281	(16)
Financing Receivable, Allowance for Credit Losses	4,202	3,966
Residential Real Estate Loans, Total [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Financing Receivable, Allowance for Credit Losses	546	828
Impact of Adoption of ASC 326		(347)
Financing Receivable, Allowance for Credit Losses, Charge-offs		0
Financing Receivable, Allowance for Credit Losses, Recoveries	3	5
Financing Receivable Allowance For Credit Losses Net Chargeoffs Recoveries	3	5
Provision for credit losses	64	11
Financing Receivable, Allowance for Credit Losses	613	497
Consumer Installment and Revolving Loans [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Financing Receivable, Allowance for Credit Losses	148	132
Impact of Adoption of ASC 326		(22)
Financing Receivable, Allowance for Credit Losses, Charge-offs	(24)	(11)
Financing Receivable, Allowance for Credit Losses, Recoveries	22	1
Financing Receivable Allowance For Credit Losses Net Chargeoffs Recoveries	(2)	(10)
Provision for credit losses	(1)	5
Financing Receivable, Allowance for Credit Losses	$ 145	$ 105

XML

Nonaccural Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Financing Receivable Nonaccrual Status [Line Items]
Financing Receivable Nonaccrual No Allowance	$ 765	$ 783
Financing Receivable Nonaccrual With Allowance	113	128
Financing Receivable, Recorded Investment, Nonaccrual Status	878	911
Commercial and Industrial Loans [Member]
Financing Receivable Nonaccrual Status [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	0
Construction And Land Development Loans [Member]
Financing Receivable Nonaccrual Status [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0
Commercial Real Estate Loans, Total [Member]
Financing Receivable Nonaccrual Status [Line Items]
Financing Receivable Nonaccrual No Allowance	765	783
Financing Receivable Nonaccrual With Allowance	0	0
Financing Receivable, Recorded Investment, Nonaccrual Status	765	783
Residential Real Estate Loans, Total [Member]
Financing Receivable Nonaccrual Status [Line Items]
Financing Receivable Nonaccrual No Allowance	0	0
Financing Receivable Nonaccrual With Allowance	97	128
Financing Receivable, Recorded Investment, Nonaccrual Status	97	128
Consumer Installment and Revolving Loans [Member]
Financing Receivable Nonaccrual Status [Line Items]
Financing Receivable Nonaccrual No Allowance	0
Financing Receivable Nonaccrual With Allowance	16
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 16	$ 0

XML

Collateral Dependent Loans Individually Evaluated (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Collateral Dependent Loans [Line Items]
Financing Receivable, Individually Evaluated Collateral Depedent Loans	$ 765	$ 783
Commercial Real Estate Collateral [Member]
Collateral Dependent Loans [Line Items]
Financing Receivable, Individually Evaluated Collateral Depedent Loans	765	783
Commercial Real Estate Loans, Total [Member]
Collateral Dependent Loans [Line Items]
Financing Receivable, Individually Evaluated Collateral Depedent Loans	765	783
Commercial Real Estate Loans, Total [Member] | Commercial Real Estate Collateral [Member]
Collateral Dependent Loans [Line Items]
Financing Receivable, Individually Evaluated Collateral Depedent Loans	$ 765	$ 783

XML

Loans Textuals (Details)	Mar. 31, 2024
Loan and Lease Disclosure (Textuals) [Abstract]
Percentage Of Loans Secured By Real Estate	84.20%

XML

Mortgage Servicing Rights, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Servicing Asset at Amortized Value, Balance [Roll Forward]
Servicing Asset at Amortized Cost, Beginning	$ 992	$ 1,151
Servicing Asset at Amortized Value, Additions	12	0
Servicing Asset at Amortized Value, Amortization	39	55
Servicing Asset at Amortized Cost, Ending	965	1,096
Valuation Allowance for Impairment of Recognized Servicing Assets, Balance [Abstract]
Valuation Allowance for Impairment of Recognized Servicing Assets, Beginning Balance	0	0
Valuation Allowance for Impairment of Recognized Servicing Assets, Ending Balance	0	0
Servicing Asset at Amortized Value, Fair Value [Abstract]
Servicing Asset at Amortized Value, Fair Value, Beginning	2,382	2,369
Servicing Asset at Amortized Value, Fair Value, Ending	$ 2,378	$ 2,419

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Fair Value Recurring (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Fair Value, Measurements, Recurring [Member]
Fair Value Disclosure, Securities Available-for-Sale [Abstract]
Fair Value Disclosure, Agency Obligations	$ 52,751	$ 53,879
Fair Value Disclosure, Agency RMBS	190,224	198,289
Fair Value Disclosure, State and Political Subdivisions	17,795	18,742
Fair Value Disclosure, Securities Available-for-Sale, Total	260,770	270,910
Other Assets, Fair Value Disclosure	260,770	270,910
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value Disclosure, Securities Available-for-Sale [Abstract]
Fair Value Disclosure, Agency Obligations	0	0
Fair Value Disclosure, Agency RMBS	0	0
Fair Value Disclosure, State and Political Subdivisions	0	0
Fair Value Disclosure, Securities Available-for-Sale, Total	0	0
Other Assets, Fair Value Disclosure	0	0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Disclosure, Securities Available-for-Sale [Abstract]
Fair Value Disclosure, Agency Obligations	52,751	53,879
Fair Value Disclosure, Agency RMBS	190,224	198,289
Fair Value Disclosure, State and Political Subdivisions	17,795	18,742
Fair Value Disclosure, Securities Available-for-Sale, Total	260,770	270,910
Other Assets, Fair Value Disclosure	260,770	270,910
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Disclosure, Securities Available-for-Sale [Abstract]
Fair Value Disclosure, Agency Obligations	0	0
Fair Value Disclosure, Agency RMBS	0	0
Fair Value Disclosure, State and Political Subdivisions	0	0
Fair Value Disclosure, Securities Available-for-Sale, Total	0	0
Other Assets, Fair Value Disclosure	0	0
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Abstract]
Loans Held-for-sale, Fair Value Disclosure	175
Impaired Loans, Fair Value Disclosure	765	783
Other Assets Fair Value Nonrecurring	965	992
Assets, Fair Value Disclosure, Nonrecurring	1,905	1,775
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Abstract]
Loans Held-for-sale, Fair Value Disclosure	0
Impaired Loans, Fair Value Disclosure	0	0
Other Assets Fair Value Nonrecurring	0	0
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Abstract]
Loans Held-for-sale, Fair Value Disclosure	175
Impaired Loans, Fair Value Disclosure	0	0
Other Assets Fair Value Nonrecurring	0	0
Assets, Fair Value Disclosure, Nonrecurring	175	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Abstract]
Loans Held-for-sale, Fair Value Disclosure	0
Impaired Loans, Fair Value Disclosure	765	783
Other Assets Fair Value Nonrecurring	965	992
Assets, Fair Value Disclosure, Nonrecurring	$ 1,730	$ 1,775

XML

Fair Value Unobservable Inputs (Details) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Impaired Loans [Member]
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Assets, Fair Value Disclosure	$ 765	$ 783
Impaired Loans [Member] | Appraisal, Appraisal Discount [Member] | Minimum
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Input Percent	10.00%	10.00%
Impaired Loans [Member] | Appraisal, Appraisal Discount [Member] | Maximum
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Input Percent	10.00%	10.00%
Impaired Loans [Member] | Appraisal, Appraisal Discount [Member] | Weighted Average
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Input Percent	10.00%	10.00%
Mortgage Servicing Rights [Member]
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Assets, Fair Value Disclosure	$ 965	$ 992
Mortgage Servicing Rights [Member] | Discounted Cash Flow, Prepayment Speed [Member] | Minimum
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Input Percent	6.30%	5.90%
Mortgage Servicing Rights [Member] | Discounted Cash Flow, Prepayment Speed [Member] | Maximum
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Input Percent	11.30%	10.60%
Mortgage Servicing Rights [Member] | Discounted Cash Flow, Prepayment Speed [Member] | Weighted Average
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Input Percent	6.60%	6.00%
Mortgage Servicing Rights [Member] | Discounted Cash Flow, Discount Rate [Member] | Minimum
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Input Percent	10.00%	10.50%
Mortgage Servicing Rights [Member] | Discounted Cash Flow, Discount Rate [Member] | Maximum
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Input Percent	12.00%	12.50%
Mortgage Servicing Rights [Member] | Discounted Cash Flow, Discount Rate [Member] | Weighted Average
Schedule Of Fair Value Significant Unobservable Inputs Used [Line Items]
Unobservable Input, Input Percent	10.00%	10.50%

XML

Fair Value Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair Value, Financial Assets: [Abstract]
Fair Value, Financial Instruments, Loans, Net	$ 560,305	$ 550,431
Fair Value, Financial Instruments, Loans Held For Sale	175
Fair Value, Financial Liabilities: [Abstract]
Fair Value, Financial Instruments, Time Deposits	190,603	198,215
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Financial Assets: [Abstract]
Fair Value, Financial Instruments, Loans, Net	522,379	526,372
Fair Value, Financial Instruments, Loans Held For Sale	175
Fair Value, Financial Liabilities: [Abstract]
Fair Value, Financial Instruments, Time Deposits	188,651	195,171
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Financial Assets: [Abstract]
Fair Value, Financial Instruments, Loans, Net	0	0
Fair Value, Financial Instruments, Loans Held For Sale	0
Fair Value, Financial Liabilities: [Abstract]
Fair Value, Financial Instruments, Time Deposits	0	0
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Financial Assets: [Abstract]
Fair Value, Financial Instruments, Loans, Net	0	0
Fair Value, Financial Instruments, Loans Held For Sale	175
Fair Value, Financial Liabilities: [Abstract]
Fair Value, Financial Instruments, Time Deposits	188,651	195,171
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Financial Assets: [Abstract]
Fair Value, Financial Instruments, Loans, Net	522,379	526,372
Fair Value, Financial Instruments, Loans Held For Sale	0
Fair Value, Financial Liabilities: [Abstract]
Fair Value, Financial Instruments, Time Deposits	$ 0	$ 0