Exhibit 99.6

Fentura Financial, Inc.

Table of Contents

Interim Condensed Consolidated Financial Statements (Unaudited)
Interim Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	2
Interim Condensed Consolidated Statements of Income for the three and six months ended June 30, 2024 and 2023	3
Interim Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023	4
Interim Condensed Consolidated Statements of Shareholders’ Equity for the six months ended June 30, 2024 and 2023	5
Interim Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	6
Notes to Interim Condensed Consolidated Financial Statements	8

Interim Condensed Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)

	June 30 2024			December 31 2023
ASSETS
Cash and due from banks	$	128,590		$	90,661
Available-for-sale debt securities, at fair value		97,861			105,249
Held-to-maturity debt securities		791			878
Equity securities		1,515			1,488
Residential mortgage loans held-for-sale, at fair value		2,440			747
Gross loans		1,459,929			1,473,471
Less allowance for credit losses		15,300			15,400
Net loans		1,444,629			1,458,071
Premises and equipment, net		13,661			14,561
Federal Home Loan Bank stock		9,179			9,179
Corporate owned life insurance		27,877			27,466
Mortgage servicing rights		8,636			8,776
Accrued interest receivable		4,747			4,472
Goodwill		8,853			8,853
Other assets		7,850			8,551
Total assets	$	1,756,629		$	1,738,952
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non-interest bearing demand	$	404,521		$	423,019
Interest bearing		1,022,538			971,163
Total deposits		1,427,059			1,394,182
Federal Home Loan Bank borrowings		160,000			180,000
Subordinated debentures		14,000			14,000
Other borrowings		4,397			4,500
Accrued interest payable and other liabilities		7,872			7,568
Total liabilities		1,613,328			1,600,250
Shareholders’ equity
Common stock, no par value; 10,000,000 shares authorized, 4,490,087 issued and outstanding (4,470,871 outstanding at December 31, 2023)		74,690			74,230
Retained earnings		78,094			74,309
Accumulated other comprehensive income (loss)		(9,483	)		(9,837	)
Total shareholders’ equity		143,301			138,702
Total liabilities and shareholders’ equity	$	1,756,629		$	1,738,952

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

2

Interim Condensed Consolidated Statements of Income (Unaudited)

(Dollars in thousands except per share amounts)

	Three Months Ended June 30						Six Months Ended June 30
	2024			2023			2024			2023
Interest income
Loans, including fees	$	19,550		$	18,725		$	39,159		$	36,579
Investments
Taxable		350			418			709			853
Tax-exempt		49			59			102			123
Fed funds sold and other		1,538			351			3,058			677
Total interest income		21,487			19,553			43,028			38,232
Interest expense
Deposits		7,909			4,356			15,525			7,919
Borrowings		1,741			2,113			3,440			3,885
Total interest expense		9,650			6,469			18,965			11,804
Net interest income		11,837			13,084			24,063			26,428
Credit loss expense (reversal)		796			205			753			441
Net interest income, after credit loss expense (reversal)		11,041			12,879			23,310			25,987
Noninterest income
Service charges and fees		1,314			1,377			2,607			2,675
Net gain on sales of residential mortgage loans		177			198			320			359
Net gain on sales of commercial loans		98			95			394			95
Net mortgage servicing rights		(44	)		(8	)		(140	)		99
Net change in fair value of equity investments		(3	)		(16	)		(13	)		(1	)
Other		772			814			1,501			1,561
Total noninterest income		2,314			2,460			4,669			4,788
Noninterest expenses
Compensation and benefits		5,842			5,492			11,908			11,284
Professional services		963			1,237			1,857			2,003
Furniture and equipment		689			685			1,416			1,411
Occupancy		605			589			1,228			1,224
Data processing		490			565			1,037			1,078
Loan and collection		425			457			747			697
Advertising and promotional		337			509			685			960
Other		1,570			1,786			3,209			3,296
Total noninterest expenses		10,921			11,320			22,087			21,953
Income before income tax expense		2,434			4,019			5,892			8,822
Income tax expense		454			793			1,122			1,752
Net income	$	1,980		$	3,226		$	4,770		$	7,070
Basic and diluted earnings per common share	$	0.44		$	0.73		$	1.07		$	1.60

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

3

Interim Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in thousands)

	Three Months Ended June 30						Six Months Ended June 30
	2024			2023			2024			2023
Net income	$	1,980		$	3,226		$	4,770		$	7,070
Other comprehensive income
Unrealized gains (losses) on available-for-sale securities		848			(596	)		581			(352	)
Tax effect (1)		(178	)		126			(122	)		74
Unrealized gains (losses) on available-for-sale securities, net of tax		670			(470	)		459			(278	)
Unrealized gains (losses) on cash flow hedges		(179	)		(155	)		(326	)		(496	)
Reclassification adjustment for net interest expense included in net income		97			165			194			316
Unrealized gains (losses) on cash flow hedges		(82	)		10			(132	)		(180	)
Tax effect (1)		16			(2	)		27			38
Unrealized gains (losses) on cash flow hedges, net of tax		(66	)		8			(105	)		(142	)
Other comprehensive income (loss), net of tax		604			(462	)		354			(420	)
Comprehensive income	$	2,584		$	2,764		$	5,124		$	6,650

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

4

Interim Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

(Dollars in thousands except per share amounts)

For the six months ended June 30,

	Common Stock
	Common Shares Issued and Outstanding		Amount		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
January 1, 2023		4,439,725	$	73,569	$	63,044		$	(10,526	)	$	126,087
Issuance of common shares under stock purchase and dividend reinvestment plans		11,457		249		—			—			249
Issuance of common shares under stock grant plan		8,871		—		—			—			—
Common shares vested under stock grant plan		—		175		—			—			175
Cumulative effect adjustment for change in accounting principle, net of tax impact (1)		—		—		(1,580	)		—			(1,580	)
Cash dividends paid ($0.20 per share)		—		—		(891	)		—			(891	)
Comprehensive income (loss)		—		—		7,070			(420	)		6,650
June 30, 2023		4,460,053	$	73,993	$	67,643		$	(10,946	)	$	130,690
January 1, 2024		4,470,871	$	74,230	$	74,309		$	(9,837	)	$	138,702
Issuance of common shares under stock purchase and dividend reinvestment plans		10,633		264		—			—			264
Issuance of common shares under stock grant plan		8,583		—		—			—			—
Common shares vested under stock grant plan		—		196		—			—			196
Cash dividends paid ($0.22 per share)		—		—		(985	)		—			(985	)
Comprehensive income		—		—		4,770			354			5,124
June 30, 2024		4,490,087	$	74,690	$	78,094		$	(9,483	)	$	143,301

⁽¹⁾ Effective January 1, 2023, we adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This election resulted in a reclassification of $1,580 from retained earnings, net of tax.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

5

Interim Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

	Six Months Ended June 30
	Year Ended December 31
	2024			2023
Cash flows from operating activities
Net income	$	4,770		$	7,070
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation of premises and equipment		1,066			1,051
Net amortization on securities		205			229
Net change in the fair value of equity investments		13			1
Net mortgage servicing rights income		140			(99	)
Amortization of core deposit intangible assets		89			152
Credit loss expense (reversal)		753			441
Residential mortgage loans originated for sale		(16,167	)		(16,786	)
Proceeds from sales of residential mortgage loans		14,730			16,491
Net gain on sales of residential mortgage loans		(320	)		(359	)
Commercial loans originated for sale		(4,522	)		(1,742	)
Proceeds from sales of commercial loans		4,916			1,837
Net gain on sales of commercial loans		(394	)		(95	)
Net losses on sales of foreclosed assets		3			(10	)
Increase in cash surrender value of corporate owned life insurance		(411	)		(350	)
Common shares vested under stock grant plan		196			175
Amortization of right-of-use assets		191			197
Net change in:
Accrued interest receivable and other assets		(324	)		331
Accrued interest payable and other liabilities		307			(655	)
Net cash provided by operating activities		5,241			7,879

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

6

Interim Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)

(Dollars in thousands)

	Six Months Ended June 30
	Year Ended December 31
	2024			2023
Cash flows from investing activities
Calls, maturities, and principal paydowns of available-for sale securities	$	7,766		$	6,939
Calls, maturities, and principal paydowns of held-to-maturity securities		85			85
Purchases of equity investments		(40	)		(120	)
Net loan principal (originations) collections		12,689			(36,205	)
Proceeds from sales of foreclosed assets		301			—
Net (purchases) redemptions of Federal Home Loan Bank stock		—			(1,283	)
Net purchases of premises and equipment		(166	)		(825	)
Net cash (used in) provided by investing activities		20,635			(31,409	)
Cash flows from financing activities
Net increase in deposits		32,877			47,309
Net advances (repayments) on line of credit		(103	)		200
Net advances (repayments) from Federal Home Loan Bank		(20,000	)		(22,000	)
Proceeds from common stock issuance		264			249
Cash dividends paid on common stock		(985	)		(891	)
Net cash provided by (used in) financing activities		12,053			24,867
Net change in cash and cash equivalents		37,929			1,337
Cash and cash equivalents, beginning of year		90,661			57,844
Cash and cash equivalents, end of year	$	128,590		$	59,181
Supplemental cash flows information:
Interest paid	$	17,819		$	11,494
Income taxes paid		1,113			3,000
Supplemental noncash information:
Reclassifications of foreclosed loans to other real estate owned	$	—		$	42
Lease liabilities arising from obtaining right-of-use assets		—			503
Net cash provided by operating activities		5,241			7,879

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

7

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Dollars in thousands except per share amounts)

Note 1 - Nature of Operations and Summary of Significant Accounting Policies

Glossary of Abbreviations and Acronyms

The following abbreviations and acronyms may be used throughout these Notes to Interim Condensed Consolidated Financial Statements (Unaudited).

ACH: Automated Clearing House	FRB: Federal Reserve Bank
ACL: Allowance for credit losses	GAAP: Generally Accepted Accounting Principles
AFS: Available-for-sale	HFS: Held-for-sale
AIR: Accrued interest receivable	HTM: Held-to-maturity
AOCI: Accumulated other comprehensive income	IRA: Individual retirement account
ARRC: Alternative Reference Rates Committee	LIBOR: London Interbank Offered Rate
ASC: Accounting Standards Codification	MSR: Mortgage servicing rights
ASU: Accounting Standards Update	NASDAQ: National Association of Securities Dealers Automated Quotations
ATM: Automated teller machine	NOW: Negotiable order of withdrawal
BSBY: Bloomberg Short Term Bank Yield Index	NSF: Non-sufficient funds
CDI: Core deposit intangible	OCI: Other comprehensive income
CECL: Current expected credit losses	OIS: Overnight Index Swap
CET1: Common equity tier 1	OREO: Other real estate owned
COLI: Corporate owned life insurance	OTTI: Other-than-temporary impairment
DRIP: Dividend Reinvestment Plan	PPP: Paycheck Protection Program
EPS: Earnings Per Common Share	SAB: Staff Accounting Bulletin
ESOP: Employee Stock Ownership Plan	SBA: U.S. Small Business Administration
FASB: Financial Accounting Standards Board	SERP: Supplemental Executive Retirement Plan
FDIC: Federal Deposit Insurance Corporation	SOFR: Secured Overnight Funding Rate
FHLB: Federal Home Loan Bank	TLM: Troubled loan modifications
FHLLC: Fentura Holdings LLC	USDA: United States Department of Agriculture
FHLMC: Federal Home Loan Mortgage Corporation	YTD: Year-to-date
FNMA: Federal National Mortgage Association

Nature of Operations and Principles of Consolidation

The unaudited interim condensed consolidated financial statements include references to the “Corporation”, “Company”, “Fentura”, “we”, “our”, “us”, and similar terms refer to the consolidated entity consisting of Fentura Financial, Inc. (the “Parent”) and its subsidiaries. References to The State Bank or the “Bank” refer to Fentura Financial, Inc.’s subsidiary, The State Bank.

We provide banking and trust services principally to individuals, small businesses and governmental entities through our twenty community banking offices and one loan production center serving Bay, Genesee, Ingham, Jackson, Livingston, Oakland, Saginaw and Shiawassee Counties in locations of central and southeastern Michigan. Our primary deposit products are checking, savings, and term certificate accounts, and our primary lending products are residential mortgage, commercial real estate, commercial, home equity, and consumer loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and real estate. Commercial loans are expected to be repaid from cash flows from operations of businesses. Real estate loans are secured by both residential and commercial real estate. Our exposure to credit risk is substantially affected by the economy in our market area and by changes in commercial real estate values. While the loan portfolio is substantially commercial based, we are not dependent on any single borrower or industry.

The unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. For further information, refer to our audited consolidated financial statements for the year ended December 31, 2023.

8

Our accounting policies are materially the same as those discussed in Note 1 to the Consolidated Financial Statements included in our audited consolidated financial statements for the year ended December 31, 2023.

Use of Estimates

The preparation of the unaudited interim condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the consolidated financial statements and the disclosures provided, and future results could differ. Significant estimates include but are not limited to the determination of the ACL, the fair values of residential mortgage loans held-for-sale and associated mortgage derivatives, credit impairment of securities, goodwill and the carrying value of deferred income taxes.

Allowance for Credit Losses - Loans

The allowance for credit losses (“allowance”) is a valuation account that is deducted from, or added to, the loans’ amortized cost basis to present the net amount expected to be ultimately collected on the loans. Loan losses are charged-off against the allowance when management determines the loan balance to be uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Cash received on previously charged-off amounts is recorded as a recovery to the allowance.

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. We adjust for current and forecasted factors based on trends in delinquencies, trends in charge-offs and recoveries, trends in the volume of loans, changes in underwriting standards, trends in loan review findings, the experience and ability of lending staff, concentrations of credit and changes in the value of collateral.

Reasonable and supportable economic forecasts are incorporated in determining our expected credit losses. The forecast period represents the time frame from the current period end through the point in time that we can reasonably forecast and support entity and environmental factors that are expected to impact the performance of our loan portfolio. Ideally, the economic forecast period would encompass the contractual terms of all loans; however, the ability to produce a forecast that is considered reasonable and supportable becomes more difficult and may not be possible in later periods. Subsequent to the end of the forecast period, we revert to historical loan data based on an ongoing evaluation of each economic forecast in relation to then current economic conditions as well as any developing loan loss activity and resulting historical data. As of June 30, 2024 and December 31, 2023, we used a two-year reasonable and supportable economic forecast period, with a reversion back to historical immediately following the two year forecasted period.

We are not required to develop and use our own economic forecast model and elected to utilize economic forecasts from our third party CECL provider that analyzes and develops forecasts of the economy for the entire United States on at least a quarterly basis.

We measure the allowance on a collective pool basis when similar risk characteristics exist. Loans with similar risk characteristics are grouped into homogenous segments, or pools, for analysis. After analyzing our loans, we determined the asset type or product type was the best pooling option that utilizes product-based call codes as the pooling / segmentations choice within the CECL model. Comparison of loan attributes and loss experience to peers was facilitated by this pooling choice.

We also consider expected credit losses associated with loan commitments over the contractual period in which we are exposed to credit risk on the underlying commitments, unless the obligation is unconditionally cancellable by us. Any allowance for off-balance sheet credit exposures is reported as an other liability on our Interim Condensed Consolidated Balance Sheets and is increased or decreased through other noninterest expense on our Interim Condensed Consolidated Statements of Income. No allowance is recognized if we have the unconditional right to cancel the obligation. The calculation includes consideration of the likelihood that funding will occur and then applying the expected credit loss as calculated using the weighted-average rate methodology for the corresponding balance sheet loan pool. Adjustments to the allowance are reported in the Interim Condensed Consolidated Statements of Income as a component of credit loss expense.

Accrued interest receivable for loans is $4,890 at June 30, 2024 and $4,641 at December 31, 2023, and is in included in accrued interest receivable on our Interim Condensed Consolidated Balance Sheets. We elected not to measure an allowance for accrued interest receivable. We elected to reverse interest income for loans that are placed on nonaccrual status, which is generally when the loan becomes 120 days past due, or earlier if we believe the collection of interest is doubtful. We believe this election results in the timely reversal of uncollectible interest.

The allowance for expected credit losses is a valuation account that is deducted from the loans amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged-off against the allowance when we believe the uncollectability of a loan balance is confirmed.

9

Debt Securities

Debt securities are classified as HTM and carried at amortized cost when we have the positive intent and the ability to hold them to maturity. Debt securities are classified as AFS when they might be sold before maturity. Debt securities AFS are carried at fair value, with unrealized holding gains and losses reported in OCI.

Allowance for Credit Losses - Held-to-Maturity Securities

We measure credit losses on HTM debt securities on a collective basis by major security type with each type sharing similar risk characteristics, and consider historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. HTM debt securities are charged-off against the ACL when deemed uncollectible. Adjustments to the ACL are reported on our Interim Condensed Consolidated Statements of Income in the provision for credit losses. We measure expected credit losses on HTM debt securities on a collective basis by major security type. Our HTM debt security portfolio consists of local municipal issued debt securities. The local municipalities are reviewed at least quarterly for credit worthiness. We utilize a third party vendor to provide a detailed credit write-up for our HTM debt securities. The third party vendor utilizes a proprietary scale between 1 and 8, whereas 1 is the strongest rating and 8 is the weakest rating assigned to a HTM debt security. All of our HTM debt securities were given a 1 rating as of June 30, 2024 and December 31, 2023. At June 30, 2024 and December 31, 2023, there was no ACL related to HTM debt securities.

Allowance for Credit Losses - Available-for-Sale Securities

For AFS debt securities in an unrealized loss position, we determine whether we intend to sell or if it is more likely than not that we will be required to sell the security before recovery of the amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income with an allowance being established under CECL. Our AFS debt securities consist of multiple agency’s debt securities, as well as bank CD’s that have minimal credit quality risk, as they are guaranteed by the federal government or backed by FDIC insurance. These government backed AFS debt securities were not assessed for credit deterioration. Our population of AFS debt securities that are not agency backed are assessed for credit quality risk and they consist of debt securities issued by Municipalities. For AFS debt securities with unrealized losses not meeting these criteria, we evaluate whether any decline in fair value is due to credit loss factors. In making this assessment, we consider any changes to the rating of the security by rating agencies and adverse conditions specifically related to the issuer of the debt security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Changes in the ACL under ASU Topic 326-30 are recorded as provisions for credit loss expense. Losses are charged-off against the allowance when the collectability of an AFS debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income, net of income taxes. he local municipalities are reviewed at least quarterly for credit worthiness. We utilize a third party vendor to provide a detailed credit write-up for our AFS debt securities that are not supported by the federal government or backed by FDIC insurance. The third party vendor utilizes a proprietary scale between 1 and 8, whereas 1 is the strongest rating and 8 is the weakest rating assigned to an AFS debt security. All of our AFS debt securities were given a 3 rating or better. At June 30, 2024 and December 31, 2023, there was no ACL related to AFS debt securities.

Derivative Instruments and Hedging Activities

ASC 815 provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (1) how and why an entity uses derivative instruments, (2) how the entity accounts for derivative instruments and related hedged items, and (3) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain our objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

Mortgage Banking Derivatives

Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and mandatory forward commitments for the future delivery of these mortgage loans are accounted for as free standing derivatives. The fair value of the interest rate lock is recorded at the time the commitment is executed and is adjusted for the expected exercise of the commitment before the loan is funded. In order to the hedge the change in interest rates resulting from our commitments to fund loans, we enter into forward commitments for the future delivery of mortgage loans when interest rate locks are entered into. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the interest on the loan is locked. Changes in the fair values of these derivatives are included in net gain on sales of residential mortgage loans included on our Interim Condensed Consolidated Statements of Income.

10

Earnings Per Common Share

Basic and diluted EPS are calculated as net income divided by the weighted average number of common shares outstanding during the year. Common stock grants that have a grant date prior to the date of earnings per common share calculation, and ESOP shares, are considered outstanding for this calculation. Unvested common stock grants are not considered outstanding for this calculation.

Reclassification

Certain items in the interim condensed consolidated financial statements of prior years were reclassified to conform to the current year presentation.

Note 2 - Recent Accounting Pronouncements

Pending Implementation

ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures”

In December 2023, ASU 2023-09 was issued and enhances transparency by requiring consistent categorization, greater disaggregation, and detailed disclosure related to income taxes paid. These changes aim to help users of financial statements understand factors contributing to differences between effective and statutory tax rates. The adoption of ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024 and is not expected to have a significant impact on our consolidated financial statements.

11

Note 3 - Investment Securities

The following is a summary of the amortized cost and fair value of investment securities as of:

	June 30, 2024
	Amortized Cost		Gross Unrealized  Gains		Gross  Unrealized Losses			Fair Value
Available-for-sale
U.S. Government and federal agency	$	20,430	$	—	$	(1,313	)	$	19,117
State and municipal		19,108		3		(1,530	)		17,581
Mortgage backed residential		45,808		2		(5,719	)		40,091
Certificates of deposit		2,481		—		(99	)		2,382
Collateralized mortgage obligations - agencies		22,213		—		(3,523	)		18,690
Total available-for-sale	$	110,040	$	5	$	(12,184	)	$	97,861
Held-to-maturity state and municipal	$	791	$	—	$	(24	)	$	767

	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale
U.S. Government and federal agency	$	22,425	$	—	$	(1,461	)	$	20,964
State and municipal		20,460		13		(1,471	)		19,002
Mortgage backed residential		49,076		1		(5,946	)		43,131
Certificates of deposit		2,728		—		(146	)		2,582
Collateralized mortgage obligations - agencies		23,320		—		(3,750	)		19,570
Total available-for-sale	$	118,009	$	14	$	(12,774	)	$	105,249
Held-to-maturity state and municipal	$	878	$	—	$	(10	)	$	868

There was no allowance for credit losses recorded for available-for-sale or held-to-maturity debt securities in the three or six month periods ended June 30, 2024 or 2023.

12

The amortized cost and fair value of AFS debt securities grouped by contractual maturity were as follows as of June 30, 2024:

	Maturing
	Due in One Year or Less		After One Year But Within Five Years		After Five Years But Within Ten Years		After Ten Years		Securities with Variable Monthly Payments or Noncontractual Maturities		Total
U.S. Government and federal agency	$	7,483	$	12,947	$	—	$	—	$	—	$	20,430
State and municipal		1,655		15,219		1,114		1,120		—		19,108
Mortgage backed residential		—		—		—		—		45,808		45,808
Certificates of deposit		2,481		—		—		—		—		2,481
Collateralized mortgage obligations - agencies		—		—		—		—		22,213		22,213
Total amortized cost	$	11,619	$	28,166	$	1,114	$	1,120	$	68,021	$	110,040
Fair value	$	11,206	$	25,863	$	987	$	1,024	$	58,781	$	97,861

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. As a result of their variable monthly payments, mortgage backed residential and collateralized mortgage obligations are not reported by a specific maturing group.

The amortized cost and fair value of state and municipal HTM debt securities grouped by contractual maturity were as follows as of June 30, 2024:

	Maturing
	Due in One Year or Less		After One Year But Within Five Years		After Five Years But Within Ten Years		After Ten Years		Securities with Variable Monthly Payments or Noncontractual Maturities		Total
Amortized Cost	$	341	$	295	$	155	$	—	$	—	$	791
Fair value	$	338	$	282	$	147	$	—	$	—	$	767

Information pertaining to AFS debt securities with unrealized losses aggregated by investment category for which an allowance for credit losses has not been recorded and the length of time that individual securities have been in a continuous loss position is as follows as of:

	June 30, 2024
	Less Than 12 Months				Over 12 Months
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. Government and federal agency	$	—	$	—	$	1,313	$	19,117	$	1,313
State and municipal		—		90		1,530		17,048		1,530
Mortgage backed residential		—		4		5,719		39,947		5,719
Certificates of deposit		—		—		99		2,382		99
Collateralized mortgage obligations - agencies		—		—		3,523		18,690		3,523
Total	$	—	$	94	$	12,184	$	97,184	$	12,184
Number of AFS debt securities in an unrealized loss position:				6				141		147

13

	December 31, 2023
	Less Than 12 Months				Over 12 Months
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. Government and federal agency	$	1	$	—	$	1,460	$	20,963	$	1,461
State and municipal		3		530		1,468		17,849		1,471
Mortgage backed residential		1		—		5,945		43,018		5,946
Certificates of deposit		—		—		146		2,582		146
Collateralized mortgage obligations - agencies		—		—		3,750		19,570		3,750
Total	$	5	$	530	$	12,769	$	103,982	$	12,774
Number of AFS debt securities in an unrealized loss position:				2				155		157

There were no sales of AFS or HTM debt securities in the three or six months ended June 30, 2024 or 2023.

The fair values of equity securities were as follows as of:

	June 30		December 31
	2024		2023
Securities with readily determinable fair values	$	1,515	$	1,488
Total equity securities	$	1,515	$	1,488

As of June 30, 2024 and December 31, 2023, securities with a carrying amount of $23,854 and $25,868, respectively, were pledged to secure public deposits and borrowings.

As of June 30, 2024 and December 31, 2023, there were no holdings of securities of any one issuer, other than the U.S. Government and federal agencies, in an amount greater than 10% of shareholders’ equity.

Allowance for Credit Losses - Available-for-Sale Securities

As of June 30, 2024 and December 31, 2023, no allowance for credit losses was recognized on AFS debt securities in an unrealized loss position, as we do not believe any of the AFS debt securities are impaired due to reasons of credit quality. This is based on our analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors related to our AFS debt securities and consideration of our historical credit loss experience and internal forecasts. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. Furthermore, we do not have the intent to sell any of the debt securities classified as AFS in the table above, and believes it is more likely than not that we will not have to sell any such debt securities before a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying debt securities were purchased. The fair value is expected to recover as the debt securities approach their respective maturity date or repricing date, or if the market yields for such investments decline. We utilize a third party vendor to provide a detailed credit write-up for our AFS debt securities that are not supported by the federal government or backed by FDIC insurance. The third party vendor utilizes a proprietary scale between 1 and 8, whereas 1 is the strongest rating and 8 is the weakest rating assigned to an AFS debt security. All of our AFS debt securities were given a 3 rating or better.

Allowance for Credit Losses – Held-to-Maturity Securities

Although all of the HTM debt securities held have been in an unrealized loss position for over 12 months as of June 30, 2024 and December 31, 2023, no allowance for credit losses was recognized, as we do not believe any of the HTM debt securities are impaired due to reasons of credit quality. We measure expected credit losses on HTM debt securities on a collective basis by major security type. Our HTM debt security portfolio consist of local municipal issued debt securities. The local municipalities are reviewed at least quarterly for credit worthiness. We utilize a third party vendor to provide a detailed credit write-up for our HTM debt securities. The third party vendor utilizes a proprietary scale between 1 and 8, whereas 1 is the strongest rating and 8 is the weakest rating assigned to a HTM debt security. All of our HTM debt securities were given a 1 rating as of June 30, 2024 and December 31, 2023.

14

Note 4 - Loans and Allowance for Credit Losses

We primarily originate residential and commercial real estate, commercial and industrial, and consumer loans. The majority of our loan portfolio is based in Genesee, Oakland, Saginaw, Shiawassee, Livingston, Ingham and Jackson counties within central and southeast Michigan. The ability of our debtors to honor their contracts is dependent upon the real estate values and general economic conditions in these areas. A significant amount of our consumer and residential real estate loans are secured by various items of real property. Commercial loans are secured primarily by real estate and business assets. Some of our loans are unsecured.

Total loans by class are summarized as follows as of:

	June 30, 2024						December 31, 2023
	Balance			% of Total			Balance			% of Total
Commercial loans
Commercial and industrial	$	120,331			8.24	%	$	118,089			8.01	%
Commercial real estate		864,200			59.19	%		870,693			59.09	%
Total commercial loans		984,531			67.44	%		988,782			67.11	%
Residential real estate loans
Residential mortgage		418,403			28.66	%		431,836			29.31	%
Home equity		53,133			3.64	%		48,380			3.28	%
Total residential real estate loans		471,536			32.30	%		480,216			32.59	%
Consumer loans		3,862			0.26	%		4,473			0.30	%
Gross loans		1,459,929			100.00	%		1,473,471			100.00	%
Less allowance for expected credit losses		(15,300	)		1.05	%		(15,400	)		1.05	%
Net loans	$	1,444,629					$	1,458,071

Included in total loans above are net deferred loan (fees) costs as of:

	June 30		December 31
	2024		2023
Net deferred loan (fees) costs	$	2,681	$	2,401

We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debts such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. We analyze loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans and is performed on a quarterly basis.

We use the following definitions for classified risk ratings for commercial and industrial and commercial real estate loans:

1: Loans of Exceptional Credit Quality - Loans supported by strong firms/individuals characterized as having minimum credit risk representing a prime credit. Generally fully secured by liquid, properly margined collateral.

2: Loans of High Quality - Loans protected by the borrower’s net worth representing desirable banking risk. Well-seasoned borrowers displaying strong financial condition, consistently superior earning performance, and access to a range of financing alternatives. The borrower’s trends and outlook, as well as those of its industry group, are positive.

3: Loans of Satisfactory Quality - Loans representing a reasonable credit risk. Characterized as being moderate to average risk to established borrowers that display sound financial condition and operating results. The capacity to service debt is stable and demonstrated at a level consistent with or above the industry norms. Borrower and industry trends and outlook are considered good.

4: Satisfactory - Acceptable - Loans to persons or entities with an average financial condition, adequate collateral margins, adequate cash flow to service long-term debt, and net worth comprised mainly of fixed assets are included in the category. These entities are minimally profitable now, with projections indicating continued profitability into the foreseeable future.

5: Satisfactory - Acceptable - Monitor - Loans that are characterized by borrowers who have marginal, but adequate cash flow, marginal profitability, and currently have been meeting the obligations of their loan structure. Adverse changes in the borrower’s circumstances and/or current economic conditions are more likely to impair their capacity for repayment. The borrower has, in the past, satisfactorily handled debts with us, but may be experiencing some minor delinquency in making payments, or other signs of temporary cash flow issues. Borrower may be experiencing declining margins or other negative financial trends, despite the borrower’s continued satisfactory condition and positive cash flow. Other characteristics of borrowers in this class include inadequate credit information, weakness of financial statement, or declining but positive repayment capacity. This classification includes loans to new or established borrowers with satisfactory loan structure, but where near term economic or business issues appears to remain stable and the near-term projections would limit the ability for an improvement in the financial trends of the borrower.

15

6: Special Mention - Loans in this class have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in our credit position at some future date. These potential weaknesses may result in a deterioration of the repayment of the loan and increase the credit risk. Special mention assets are not adversely classified and do not expose us to sufficient risk to warrant adverse classification.

7: Substandard - Loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected.

8: Doubtful - Loans are classified as doubtful because they have all the weaknesses inherent in those classified “Substandard” with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable.

9: Loss - Loans are classified as loss because they are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. Charge-off is recommended.

We use the following definitions for classified risk ratings for residential mortgage, home equity and consumer loans:

Current - Loans are classified as current when payments are made on a timely basis and are not delinquent or in nonaccrual status.

30-89 days past due - Loans are classified as 30-89 days past due when payments are not paid in a timely manner and are considered delinquent.

90+ days past due - Loans are classified as 90+ days past due when payments continue to be delinquent beyond 89 days.

Nonaccrual - Loans are reviewed for nonaccrual when they become delinquent beyond 120 days. When a loan is placed in nonaccrual status, interest income recognized during the current period is reversed out of interest income on our Interim Condensed Consolidated Statements of Income and interest income recognized in prior periods is reversed out of ACL on our Interim Condensed Consolidated Balance Sheets.

16

The following tables present the amortized cost basis of loans by credit quality risk rating, class of financing receivable, and year of origination for term loans as of:

	June 30, 2024
											Revolving
											loans
	Term loans amortized cost basis by origination year										amortized
	2024		2023		2022		2021		Prior		cost basis		Total
Commercial loans
Commercial and industrial
Risk rating 1	$	27	$	5,860	$	—	$	417	$	—	$	—	$	6,304
Risk rating 2				814		534		897		1,745		5,537		9,527
Risk rating 3		1,605		7,408		8,476		1,621		7,323		10,154		36,587
Risk rating 4		466		1,425		2,924		2,699		4,461		28,773		40,748
Risk rating 5		—		—		6,675		4,049		88		5,681		16,493
Risk rating 6		—		1,134		157		625		—		1,679		3,595
Risk rating 7		—		652		—		—		255		6,170		7,077
Risk rating 8		—		—		—		—		—		—		—
Risk rating 9		—		—		—		—		—		—		—
Total commercial and industrial	$	2,098	$	17,293	$	18,766	$	10,308	$	13,872	$	57,994	$	120,331
Current year-to-date gross write-offs	$	—	$	—	$	13	$	47	$	—	$	—	$	60
Commercial real estate
Risk rating 1	$	—	$	—	$	—	$	—	$	—	$	32	$	32
Risk rating 2		620		184		19,639		41,792		47,661		9,333		119,229
Risk rating 3		4,939		13,613		126,625		70,106		122,192		18,354		355,829
Risk rating 4		14,402		25,002		111,467		68,759		101,469		15,589		336,688
Risk rating 5		—		—		19,862		7,408		4,598		—		31,868
Risk rating 6		—		356		478		—		13,663		—		14,497
Risk rating 7		—		—		—		—		5,883		174		6,057
Risk rating 8		—		—		—		—		—		—		—
Risk rating 9		—		—		—		—		—		—		—
Total commercial real estate	$	19,961	$	39,155	$	278,071	$	188,065	$	295,466	$	43,482	$	864,200
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate loans
Residential mortgage
Current	$	7,623	$	35,490	$	136,302	$	99,305	$	126,173	$	7,342	$	412,235
30-89 days past due		—		238		919		1,404		1,331		3		3,895
90+ days past due		—		—		—		—		—		—		—
Nonaccrual		—		101		278		201		1,557		136		2,273
Total residential mortgage	$	7,623	$	35,829	$	137,499	$	100,910	$	129,061	$	7,481	$	418,403
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Home equity
Current	$	871	$	2,229	$	1,935	$	2,307	$	6,889	$	38,480	$	52,711
30-89 days past due		—		—		—		6		59		280		345
90+ days past due		—		—		—		—		—		—		—
Nonaccrual		—		—		—		—		—		77		77
Total home equity	$	871	$	2,229	$	1,935	$	2,313	$	6,948	$	38,837	$	53,133
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	10	$	10
Consumer loans
Current	$	350	$	688	$	423	$	727	$	1,566	$	87	$	3,841
30-89 days past due		1		—		—		—		4		2		7
90+ days past due		—		—		—		14		—		—		14
Nonaccrual		—		—		—		—		—		—		—
Total consumer	$	351	$	688	$	423	$	741	$	1,570	$	89	$	3,862
Current year-to-date gross write-offs	$	15	$	—	$	—	$	—	$	—	$	—	$	15

17

	December 31, 2023
	Term loans amortized cost basis by origination year								Revolving loans amortized
	2023		2022		2021		Prior		cost basis		Total
Commercial loans
Commercial and industrial
Risk rating 1	$	882	$	—	$	441	$	—	$	5,002	$	6,325
Risk rating 2		271		577		1,020		2,318		3,831		8,017
Risk rating 3		7,303		17,611		3,265		4,294		23,413		55,886
Risk rating 4		2,548		3,700		2,656		9,719		19,109		37,732
Risk rating 5		—		—		3,743		—		2,077		5,820
Risk rating 6		—		—		1,479		109		276		1,864
Risk rating 7		—		13		170		257		2,005		2,445
Risk rating 8		—		—		—		—		—		—
Risk rating 9		—		—		—		—		—		—
Total commercial and industrial	$	11,004	$	21,901	$	12,774	$	16,697	$	55,713	$	118,089
Current year-to-date gross write-offs	$	—	$	—	$	—	$	85	$	—	$	85
Commercial real estate
Risk rating 1	$	—	$	—	$	—	$	34	$	—	$	34
Risk rating 2		1,173		12,425		32,004		61,457		226		107,285
Risk rating 3		17,465		174,933		85,659		153,157		3,073		434,287
Risk rating 4		18,555		114,322		73,620		96,439		3,305		306,241
Risk rating 5		—		988		5,281		1,782		252		8,303
Risk rating 6		—		—		—		11,265		—		11,265
Risk rating 7		—		—		—		3,278		—		3,278
Risk rating 8		—		—		—		—		—		—
Risk rating 9		—		—		—		—		—		—
Total commercial real estate	$	37,193	$	302,668	$	196,564	$	327,412	$	6,856	$	870,693
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate loans
Residential mortgage
Current	$	41,022	$	142,249	$	106,018	$	137,782	$	—	$	427,071
30-89 days past due		—		714		—		1,324		—		2,038
90+ days past due		—		—		—		—		—		—
Nonaccrual		106		396		204		2,021		—		2,727
Total residential mortgage	$	41,128	$	143,359	$	106,222	$	141,127	$	—	$	431,836
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—
Home equity
Current	$	64	$	339	$	—	$	444	$	46,993	$	47,840
30-89 days past due		—		—		—		—		296		296
90+ days past due		—		—		—		—		—		—
Nonaccrual		—		22		48		89		85		244
Total home equity	$	64	$	361	$	48	$	533	$	47,374	$	48,380
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—
Consumer loans
Current	$	1,278	$	496	$	932	$	1,649	$	79	$	4,434
30-89 days past due		—		5		28		6		—		39
90+ days past due		—		—		—		—		—		—
Nonaccrual		—		—		—		—		—		—
Total consumer	$	1,278	$	501	$	960	$	1,655	$	79	$	4,473
Current year-to-date gross write-offs	$	69	$	1	$	24	$	15	$	—	$	109

18

The following table presents the activity related to the allowance for expected credit losses for the three and six months ended June 30, 2024 and 2023:

	Commercial and Industrial			Commercial Real Estate		Residential Mortgage			Home Equity			Consumer			Total
April 1, 2024	$	1,784		$	8,730	$	4,391		$	318		$	77		$	15,300
Charge-offs		(794	)		—		—			—			(20	)		(814	)
Recoveries		5			4		—			—			9			18
Provision for (reversal of) credit losses		862			169		(258	)		9			14			796
June 30, 2024	$	1,857		$	8,903	$	4,133		$	327		$	80		$	15,300
January 1, 2024	$	1,770		$	8,822	$	4,443		$	321		$	44		$	15,400
Charge-offs		(853	)		—		—			(11	)		(36	)		(900	)
Recoveries		5			11		—			—			31			47
Provision for (reversal of) credit losses		935			70		(310	)		17			41			753
June 30, 2024	$	1,857		$	8,903	$	4,133		$	327		$	80		$	15,300
April 1, 2023	$	1,327		$	8,765	$	4,653		$	416		$	59		$	15,220
Charge-offs		—			—		—			—			(41	)		(41	)
Recoveries		—			—		7			—			9			16
Provision for (reversal of) credit losses		175			217		(173	)		(91	)		77			205
June 30, 2023	$	1,502		$	8,982	$	4,487		$	325		$	104		$	15,400
January 1, 2023	$	1,094		$	7,480	$	3,921		$	370		$	135		$	13,000
Cumulative effect of change in accounting principle		226			1,103		540			(11	)		12			1,870
Charge-offs		—			—		—			—			(70	)		(70	)
Recoveries		—			10		—			1			17			28
Provision for (reversal of) credit losses		182			389		26			(35	)		10			572
June 30, 2023	$	1,502		$	8,982	$	4,487		$	325		$	104		$	15,400

Troubled Loan Modifications

A loan modification is considered to be a TLM when the modification includes terms outside of normal lending practices to a borrower who is experiencing financial difficulties.

Typical concessions granted include, but are not limited to:

● Agreeing to interest rates below prevailing market rates for debt with similar risk characteristics.

● Extending the amortization period beyond typical lending guidelines for loans with similar risk characteristics.

● Agreeing to an interest-only payment structure and delaying principal payments.

● Forgiving principal.

● Forgiving accrued interest.

To determine if a borrower is experiencing financial difficulties, factors we consider include:

● The borrower is currently in default on any debt.

● The borrower would likely default on any debt if the concession is not granted.

● The borrower’s cash flow is insufficient to service all debt if the concession is not granted.

● The borrower has declared, or is in the process of declaring, bankruptcy.

● The borrower is unlikely to continue as a going concern (if the entity is a business).

Based on our historical loss experience, losses associated with TLMs are not significantly different than other impaired loans within the same loan segment. As such, TLMs are analyzed in the same manner as other impaired loans within their respective loan segment.

19

The following is a summary of the amortized cost basis of loan modifications granted to borrowers experiencing financial difficulty during the three and six months ended June 30, 2024:

	Three Months Ended June 30, 2024
	Interest Rate Reduction					Other-Than-Insignificant Payment Delay					Term Extension
	Amortized Cost Basis		% of Total Class of Financing Receivables			Amortized Cost Basis		% of Total Class of Financing Receivables			Amortized Cost Basis		% of Total Class of Financing Receivables
Residential mortgage	$	—		—	%	$	839		0.20	%	$	—		—	%

	Six Months Ended June 30, 2024
	Interest Rate Reduction					Other-Than-Insignificant Payment Delay					Term Extension
	Amortized Cost Basis		% of Total Class of Financing Receivables			Amortized Cost Basis		% of Total Class of Financing Receivables			Amortized Cost Basis		% of Total Class of Financing Receivables
Residential mortgage	$	—		—	%	$	839		0.20	%	$	—		—	%

There were no loan modifications granted to borrowers experiencing financial difficulty during the three or six month periods ended June 30, 2023.

The following is a summary of the period-end amortized cost basis of loan modifications granted to borrowers experiencing financial difficulty in the past 12 months as of:

	June 30, 2024
	Current		30-89 Days Past Due		90+ Days Past Due		Total
Residential mortgage	$	977	$	—	$	—	$	977

	December 31, 2023
	Current		30-89 Days Past Due		90+ Days Past Due		Total
Residential mortgage	$	143	$	—	$	—	$	143

We did not modify any loans by forgiving principal or accrued interest during the three or six month periods ended June 30, 2024 or 2023. We did not have material commitments to lend additional funds to borrowers with loans whose terms have been modified in TLMs or whose loans are on nonaccrual as of June 30, 2024 or 2023. We closely monitor the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts. No modified loans were delinquent as of June 30, 2024 or 2023 and there were no TLMs that defaulted during the three or six month periods ended June 30, 2024 or 2023.

Credit Quality Indicators

The following table summarizes nonaccrual loans by loan class as of:

	June 30, 2024				December 31, 2023
	Total Nonaccrual Loans		Nonaccrual Loans with No ACL		Total Nonaccrual Loans		Nonaccrual Loans with No ACL
Commercial and industrial	$	7,077	$	4,206	$	2,424	$	—
Commercial real estate		174		174		169		169
Residential mortgage		2,273		2,273		2,727		2,727
Home equity		77		77		244		244
Consumer		—		—		—		—
Total	$	9,601	$	6,730	$	5,564	$	3,140

20

Loan delinquency was as follows as of:

	June 30, 2024
	Accruing
	Current		30-89 Days Past Due		90+ Days Past Due		Nonaccrual		Total Loans		Total Past Due and Nonaccrual
Commercial and industrial	$	113,234	$	20	$	—	$	7,077	$	120,331	$	7,097
Commercial real estate		863,758		268		—		174		864,200		442
Residential mortgage		412,236		3,894		—		2,273		418,403		6,167
Home equity		52,711		345		—		77		53,133		422
Consumer		3,841		7		14		—		3,862		21
Total	$	1,445,780	$	4,534	$	14	$	9,601	$	1,459,929	$	14,149

	December 31, 2023
	Accruing
	Current		30-89 Days Past Due		90+ Days Past Due		Nonaccrual		Total Loans		Total Past Due and Nonaccrual
Commercial and industrial	$	115,652	$	13	$	—	$	2,424	$	118,089	$	2,437
Commercial real estate		868,671		1,853		—		169		870,693		2,022
Residential mortgage		427,071		2,038		—		2,727		431,836		4,765
Home equity		47,840		296		—		244		48,380		540
Consumer		4,434		39		—		—		4,473		39
Total	$	1,463,668	$	4,239	$	—	$	5,564	$	1,473,471	$	9,803

Note 5 - Borrowings

Federal Home Loan Bank Borrowings

Borrowings from the FHLB and the associated assets pledged as collateral were as follows as of:

	June 30					December 31
	2024					2023
	Amount		Rate			Amount		Rate
Fixed rate due 2025		10,000		4.11	%		10,000		4.11	%
Fixed rate due 2025		10,000		0.60	%		10,000		0.60	%
Fixed rate due 2026		10,000		3.88	%		10,000		3.88	%
Fixed rate symmetrical due 2027		20,000		3.76	%		20,000		3.76	%
Quarterly putable due 2029, putable quarterly starting 2025		40,000		3.89	%		—		—	%
Quarterly putable due 2031, putable quarterly starting 2025		50,000		3.80	%		—		—	%
Quarterly putable due 2033, putable quarterly starting 2024		20,000		3.28	%		20,000		3.28	%
Quarterly putable due 2028, putable quarterly staring 2024		—		—	%		20,000		3.63	%
Quarterly putable due 2030, putable quarterly staring 2024		—		—	%		20,000		3.33	%
Quarterly putable due 2030, putable quarterly staring 2024		—		—	%		50,000		2.71	%
Quarterly putable due 2033, putable quarterly starting 2024		—		—	%		20,000		2.77	%
Total Federal Home Loan Bank borrowings	$	160,000		3.58	%	$	180,000		3.09	%
Fair value of securities pledged as collateral	$	651				$	735
Loans pledged as collateral	$	818,945				$	788,650

21

The borrowings are payable at their maturity date; a prepayment penalty is assessed with early payoffs of borrowings. As of June 30, 2024 and December 31, 2023, we had the ability to borrow up to an additional $190,000 and $170,000, respectively, based on the lesser of the amount authorized by the Board of Directors or assets pledged as collateral.

Federal funds purchased generally mature within one to four days from the transaction date. The following table provides a summary of our federal funds purchased for the periods ended:

Three Months Ended June 30
2024							2023
Maximum Month End Balance		Average Balance		Weighted Average Interest Rate During the Period			Maximum Month End Balance		Average Balance		Weighted Average Interest Rate During the Period
$	—	$	—		—	%	$	—	$	740		4.05	%

Six Months Ended June 30
2024							2023
Maximum Month End Balance		Average Balance		Weighted Average Interest Rate During the Period			Maximum Month End Balance		Average Balance		Weighted Average Interest Rate During the Period
$	—	$	—		—	%	$	3,000	$	852		5.16	%

Subordinated Debentures and Trust Preferred Securities

We formed a trust and issued $12,000 of trust preferred securities in 2003 as part of a pooled offering of such securities. The interest rate is a floating rate (3 month LIBOR plus 3.00%), and the current rate at June 30, 2024 was 8.60%. We issued subordinated debentures at the same terms as the trust preferred securities to the trust in exchange for the proceeds of the offering; the debentures and related debt issuance costs represent the sole assets of the trust. We may redeem the subordinated debentures, in whole but not in part, any time at a price of 100% of face value. The subordinated debentures must be redeemed no later than 2033.

We formed a trust and issued $2,000 of trust preferred securities in 2005 as part of a pooled offering of such securities. The interest rate is a floating rate (3 month LIBOR plus 1.60%), and the current rate at June 30, 2024 was 7.19%. We issued subordinated debentures at the same terms as the trust preferred securities to the trust in exchange for the proceeds of the offering; the debentures and related debt issuance costs represent the sole assets of the trust. We may redeem the subordinated debentures, in whole but not in part, any time at a price of 100% of face value. The subordinated debentures must be redeemed no later than 2035.

We are not considered the primary beneficiary of these trusts, therefore the trusts are not consolidated in our financial statements; rather, the subordinated debentures are presented as a liability.

As of June 30, 2024, the Parent had a term loan secured by our investment in the Bank. This loan has a term of 3 years with a scheduled maturity in 2027 and has a fixed rate of 7.75%. As of June 30, 2024, the outstanding balance of the note was $4,397.

As of June 30, 2024, the Parent had a $7,000 line of credit secured by our investment in the Bank. This instrument has a variable rate equal to Wall Street Journal Prime, which was 8.50% as of June 30, 2024, with a floor of 5.00%. We did not have any outstanding advances against this line as of June 30, 2024.

As of December 31, 2023, the Parent had an $8,000 line of credit secured by our investment in the Bank. This instrument had the option to be at a fixed or variable rate at the time of each draw and matured annually with any individual draw having a maturity of no more than 3 years. The fixed rate option would be priced at the time of draw. The variable rate spread was 2.25% over the 1 month BSBY, and the rate at December 31, 2023 was 7.63%. We had $4,500 in outstanding advances against this line as of December 31, 2023.

22

Note 6 - Earnings Per Share

The components in the earnings per common and diluted share computation follow for the periods ended:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2024			2023			2024			2023
Net income	$	1,980		$	3,226		$	4,770		$	7,070
Weighted average common shares - issued and outstanding		4,488,080			4,457,806			4,484,638			4,454,198
Average unvested common stock grants		(26,500	)		(29,916	)		(29,160	)		(29,461	)
Weighted average common shares - basic		4,461,580			4,427,890			4,455,478			4,424,737
Basic and diluted earnings per common share	$	0.44		$	0.73		$	1.07		$	1.60

There were no common stock options or other common stock equivalents outstanding at June 30, 2024 or 2023.

Unvested stock grants were not considered in computing basic and diluted earnings per share because they are antidilutive for all periods presented.

23

Note 7 - Revenue Recognition

All of our revenue from contracts with customers included in the scope of ASC Topic 606 is recognized within noninterest income. Items outside the scope of ASC Topic 606 are noted as such. The following table presents our sources of noninterest income for the periods ended:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2024			2023			2024			2023
Net gain on sales of residential mortgage loans (1)	$	177		$	198		$	320		$	359
Net gain on sales of commercial loans (1)		98			95			394			95
Service charges and fees
Debit card fees		254			323			916			961
Trust related administration		353			260			561			646
Investment services (1)		75			74			687			486
Service charges on deposit accounts		470			496			302			442
ATM card fees		162			224			141			140
Total		1,314			1,377			2,607			2,675
Net mortgage servicing rights (1)		(44	)		(8	)		(140	)		99
Net change in fair value of equity investments (1)		(3	)		(16	)		(13	)		(1	)
Other
Residential mortgage loan servicing fees (1)		386			406			780			812
Increase in cash surrender value of corporate owned life insurance (1)		207			178			411			350
Other (1)		179			230			310			399
Total		772			814			1,501			1,561
Total noninterest income	$	2,314		$	2,460		$	4,669		$	4,788

⁽¹⁾ Not within the scope of ASC Topic 606.

A description of our revenue streams accounted for under ASC 606 follows:

Trust related administration

We earn trust related income from contracts with customers to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as we provide the contracted monthly or quarterly services that are generally assessed based on a tiered scale of the market value of assets under management at month-end. Fees that are transaction based are recognized at the point in time that the transaction is executed.

Service charges on deposit accounts and ATM and Debit card fees

We earn fees from deposit customers for transaction-based, account maintenance and overdraft services. Transaction-based fees, which include stop payment charges, statement rendering, ACH and ATM fees, are recognized at the time the transaction is executed as that is the point in time we fulfill the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which we satisfy the performance obligation. Similarly, overdraft fees are recognized at the point in time that the overdraft occurs as this corresponds with our performance obligation. Service charges and ATM fees on deposit accounts are withdrawn from the customer’s account as the transactions occur.

24

Note 8 - Noninterest Expenses

A summary of other noninterest expenses was as follows for the periods ended:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2024		2023		2024		2023
ATM and debit card	$	188	$	179	$	359	$	340
FDIC insurance premiums		327		330		626		531
Telephone and communication		86		100		195		219
Amortization of core deposit intangibles		44		76		89		152
Other general and administrative		925		1,101		1,940		2,054
Total other noninterest expenses	$	1,570	$	1,786	$	3,209	$	3,296

Note 9 - Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values.

Level 1: Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2: Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3: Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of our financial assets and financial liabilities carried at fair value and all financial instruments disclosed at fair value. Transfers of assets or liabilities between levels of the fair value hierarchy are recognized at the beginning of the reporting period, when applicable.

In general, fair value is based upon quoted market prices, where available. If quoted market prices are not available, fair value is based upon third-party pricing services when available. Fair value may also be based on internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be required to record financial instruments at fair value. Any such valuation adjustments are applied consistently over time. Our valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.

While we believe our valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Furthermore, the fair value amounts may change significantly after the date of our Interim Condensed Consolidated Balance Sheets.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Available-for-Sale Securities: The fair values of AFS debt securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Equity Securities: The fair values of equity securities (Level 1 inputs) are determined by obtaining quoted prices on nationally recognized securities exchanges.

Residential Mortgage Loans Held-for-Sale, at Fair Value: The fair values of residential mortgage loans HFS are based on valuation models which use the market price for similar loans sold in the secondary market. As these prices are derived from market observable inputs, we categorize these loans HFS as Level 2.

25

Mortgage Servicing Rights: MSR are accounted for under the fair value measurement methodology. MSR are measured at fair value each reporting period and changes in the fair value are recorded to earnings in the period in which the fair value changes occur using a model that calculates the net present value of estimated future cash flows using various assumptions, including prepayment speeds, the discount rate and servicing costs. We classify the MSR subject to recurring fair value measurements as Level 3 valuation.

Derivatives: We utilize various derivative instruments to manage interest rate risk including interest rate caps, interest rate swaps, forward contracts, and interest rate lock commitments. Derivatives are reported at fair value utilizing Level 2 inputs. Substantially all of the derivative instruments held for risk management purposes are traded in over-the-counter markets where quoted market prices are not readily available. We measure fair value using models that use primarily market observable inputs, such as yield curves and option volatilities, and include the value associated with counterparty credit risk. In addition, we obtain third-party valuations. Derivatives are included in other assets or liabilities on our Interim Condensed Consolidated Balance Sheets.

A description of the various derivative instruments utilized is as follows:

Interest rate swaps: Interest rate swaps are designated as cash flow hedges which involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

Forward contracts: We enter into forward loan sales commitments to sell certain residential mortgage loans which are recorded at fair value based on valuation models. Our expectation of the amount of interest rate lock commitments that will ultimately close is a factor in determining the position. The valuation models utilize the fair value of related residential mortgage loans determined using observable market data.

Interest rate lock commitments: Our interest rate lock commitments are derivative instruments that are recorded at fair value based on valuation models that use the market price for similar loans sold in the secondary market. The interest rate lock commitments are adjusted for expectations of exercise and funding.

Assets measured at fair value on a recurring basis are summarized below as of:

	June 30, 2024
	Total		Level 1		Level 2		Level 3
Available-for-sale debt securities
U.S. Government and federal agency	$	19,117	$	12,059	$	7,058	$	—
State and municipal		17,581		—		17,581		—
Mortgage backed residential		40,091		—		40,091		—
Certificates of deposit		2,382		—		2,382		—
Collateralized mortgage obligations - agencies		18,690		—		18,690		—
Total available-for-sale debt securities	$	97,861	$	12,059	$	85,802	$	—
Equity securities	$	1,515	$	1,515	$	—	$	—
Mortgage servicing rights	$	8,636	$	—	$	—	$	8,636
Residential mortgage loans held-for-sale	$	2,440	$	—	$	2,440	$	—
Interest rate swaps	$	1,223	$	—	$	1,223	$	—
Forward contracts	$	54	$	—	$	54	$	—
Interest rate lock commitments	$	22	$	—	$	22	$	—

26

	December 31, 2023
	Total		Level 1		Level 2		Level 3
Available-for-sale debt securities
U.S. Government and federal agency	$	20,964	$	12,009	$	8,955	$	—
State and municipal		19,002		—		19,002		—
Mortgage backed residential		43,131		—		43,131		—
Certificates of deposit		2,582		—		2,582		—
Collateralized mortgage obligations - agencies		19,570		—		19,570		—
Total available-for-sale debt securities	$	105,249	$	12,009	$	93,240	$	—
Equity securities	$	1,488	$	1,488	$	—	$	—
Mortgage servicing rights	$	8,776	$	—	$	—	$	8,776
Residential mortgage loans held-for-sale	$	747	$	—	$	747	$	—
Interest rate swaps	$	1,065	$	—	$	1,065	$	—
Forward contracts	$	1	$	—	$	1	$	—
Interest rate lock commitments	$	12	$	—	$	12	$	—

There were no reclassifications between levels within the fair value hierarchy during the three and six months ended June 30, 2024 or 2023.

The following table provides a reconciliation of MSR measured at fair value using significant unobservable inputs (Level 3) on a recurring basis. Had there been any transfer into or out of Level 3, the amount included in “Transfers into (out of) Level 3” would represent the beginning balance of an item in the period during which it was transferred.

Activity in MSR measured at fair value using Level 3 inputs on a recurring basis consisted of the following for the periods ended:

	Three Months Ended
	June 30
	2024			2023
April 1	$	8,680		$	8,773
Net change in fair value		(44	)		(8	)
June 30	$	8,636		$	8,765

	Six Months Ended
	June 30
	2024			2023
January 1	$	8,776		$	8,666
Net change in fair value		(140	)		99
June 30	$	8,636		$	8,765

The following table presents quantitative information about recurring Level 3 fair value measurements as of:

	June 30, 2024
					Range
	Fair Value		Valuation Technique	Unobservable Input	Minimum			Maximum			Weighted Average
Mortgage servicing rights	$	8,636	Discounted cash flow	Discount rate		11.00	%		11.00	%		11.00	%
				Prepayment speed		6.00	%		23.59	%		6.46	%

	December 31, 2023
					Range
	Fair Value		Valuation Technique	Unobservable Input	Minimum			Maximum			Weighted Average
Mortgage servicing rights	$	8,776	Discounted cash flow	Discount rate		11.00	%		11.00	%		11.00	%
				Prepayment speed		6.00	%		21.39	%		6.42	%

27

Our MSR valuations were supported by an analysis prepared by an independent third party. The analyses utilized the discounted cash flow valuation method. The unobservable inputs used in the fair value measurement of MSR are discount rate and prepayment speed. Significant changes in these assumptions could result in significant changes to the value of our MSR. Unobservable inputs were weighted by the relative fair value of the instruments.

Financial Instruments Recorded Using Fair Value Option

We elected the fair value option for residential mortgage loans held-for-sale. These loans are intended for sale and we believe that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the note and in accordance with our policy on loans held for investment. None of these loans were 90 days or more past due or in non-accrual status as of June 30, 2024 or December 31, 2023. There were no gains or losses attributable to instrument specific credit risk in the three or six months ended June 30, 2024 or 2023.

The aggregate fair value, contractual balance (including accrued interest), and gain or loss was as follows as of:

	June 30		December 31
	2024		2023
Aggregate fair value	$	2,440	$	747
Contractual balance		2,424		728
Gain (loss)	$	16	$	19

The total amount of gains and losses from changes in fair value included in net income were as follows for the three and six months ended June 30:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2024		2023		2024		2023
Interest Income	$	36	$	30	$	57	$	43
Change in fair value		177		198		320		359
Total change in value	$	213	$	228	$	377	$	402

Assets Measured at Fair Value on a Nonrecurring Basis

There were no material assets recorded at fair value on a nonrecurring basis as of June 30, 2024 or December 31, 2023.

There were no liabilities recorded at fair value on a nonrecurring basis as of June 30, 2024 or December 31, 2023.

Disclosures About Fair Value of Financial Instruments

GAAP requires disclosures about the estimated fair value of our financial instruments, including those financial assets and liabilities that are not measured and reported at fair value on a recurring or nonrecurring basis. We utilized the fair value hierarchy in computing the fair values of our financial instruments. In cases where quoted market prices were not available, we employed the exit-price notion, using unobservable inputs requiring our judgment to estimate the fair values of our financial instruments, which are considered Level 3 valuations. These Level 3 valuations are affected by the assumptions made and, accordingly, are not necessarily indicative of amounts that would be realized in a current market exchange. It is also our general practice and intent to hold the majority of our financial instruments until maturity and, therefore, we do not expect to realize the estimated amounts disclosed.

28

A summary of carrying amounts and estimated fair values of our financial instruments not recorded at fair value in their entirety on a recurring basis on our Interim Condensed Consolidated Balance Sheets are disclosed in the table below as of:

		June 30, 2024				December 31, 2023
	Level in Fair Value Measurement Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Held-to-maturity securities	Level 2	$	791	$	767	$	878	$	868
Net loans	Level 3	$	1,444,629	$	1,355,796	$	1,458,071	$	1,387,580
Liabilities
Time deposits	Level 2	$	324,313	$	326,193	$	295,142	$	238,472
Federal Home Loan Bank borrowings	Level 2	$	160,000	$	157,549	$	180,000	$	177,552
Subordinated debentures	Level 2	$	14,000	$	14,000	$	14,000	$	14,000
Other borrowings	Level 2	$	4,397	$	4,397	$	4,500	$	4,500

There were no reclassifications between Level 1, Level 2 or Level 3 for the three or six months ended June 30, 2024 or 2023.

The short-term nature of certain assets and liabilities result in their carrying value approximating fair value. These include cash and cash equivalents, FHLB stock, non-marketable equity securities, accrued interest receivable, COLI, deposits without defined maturities, federal funds purchased and sold, and accrued interest payable.

Note 10 - Derivatives

Risk Management Objective of Using Derivatives

We are exposed to certain risk arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of our assets and liabilities and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to our mortgage loans, investments and borrowings.

Cash Flow Hedges of Interest Rate Risk

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily uses interest rate swaps and caps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. During the six months ended June 30, 2024 and twelve months ended December 31, 2023, such derivatives were used to hedge the variable cash flows associated with existing variable-rate borrowings and forecasted issuances of borrowings.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt.

Fair Value Hedges of Interest Rate Risk

We are exposed to changes in the fair value of certain of our fixed-rate assets due to changes in benchmark interest rates. We use interest rate swaps to manage our exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate, LIBOR. Interest rate swaps designated as fair value hedges involve the payments of fixed-rate amounts to a counterparty in exchange for receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.

29

Non-designated Hedges of Interest Rate Risk

Derivatives not designated as hedges are not speculative and result from a service we provide to certain customers. We execute interest rate swaps with commercial loan customers to facilitate their respective risk management strategies. The interest rate swaps are simultaneously hedged by offsetting derivatives that we execute with a third party, such that we minimize our net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

The following table presents the carrying amounts of the hedged items accounted for as fair value hedges as of:

	Carrying Amount of the Hedged Assets				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
Line Item in the Interim Condensed Consolidated Balance Sheets in Which the Hedged Item is Included	June 30, 2024		December 31, 2023		June 30, 2024			December 31, 2023
Loans	$	19,029	$	19,612	$	(1,015	)	$	(710	)

The tables below presents the fair value of our derivative financial instruments as well as the classification on our Interim Condensed Consolidated Balance Sheets as of:

		June 30, 2024				December 31, 2023
Derivatives Designated as Hedging Instruments	Location	Notional Amount		Fair Value		Notional Amount		Fair Value
Interest rate derivatives	Other Liabilities	$	29,971	$	1,223	$	30,322	$	1,065

		June 30, 2024				December 31, 2023
Derivatives not Designated as Hedging Instruments	Location	Notional Amount		Fair Value		Notional Amount		Fair Value
Interest rate derivatives	Other Assets	$	8,390	$	71	$	—	$	—
	Other Liabilities	$	8,390	$	85	$	—	$	—

The table below presents the effect of cash flow hedge accounting on AOCI for the periods ended:

	Three Months Ended June 30
	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative					Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings
	2024			2023			2024			2023
Interest rate derivatives	$	(82	)	$	10	Interest Expense	$	(97	)	$	(165	)

	Six Months Ended June 30
	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative						Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings
	2024			2023				2024			2023
Interest rate derivatives	$	(132	)	$	(180	)	Interest Expense	$	(194	)	$	(316	)

30

The table below presents the effect of our derivative financial instruments on the Interim Condensed Consolidated Statements of Income for the periods ended:

	Three Months Ended												Six Months Ended
	June 30, 2024						June 30, 2023						June 30, 2024						June 30, 2023
	Interest Income			Interest Expense			Interest Income			Interest Expense			Interest Income			Interest Expense			Interest Income			Interest Expense
Total amount of income and expense line items presented in the Interim Condensed Consolidated Statements of Income in which the effects of fair value or cash flow hedges are recorded	$	138		$	(97	)	$	121		$	(165	)	$	—		$	(194	)	$	—		$	(316	)
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationship
Interest contracts
Hedged items	$	(4	)	$	—		$	(436	)	$	—		$	(296	)	$	—		$	(77	)	$	—
Derivatives designated as hedging instruments (1)	$	142		$	—		$	557		$	—		$	296		$	—		$	77		$	—
Gain (loss) on cash flow hedging relationship
Interest contracts
Amount of gain (loss) reclassified from accumulated other comprehensive income into earnings	$	—		$	(97	)	$	—		$	(165	)	$	—		$	(194	)	$	—		$	(316	)

⁽¹⁾ Amounts include changes in fair value as well as net settlement on the derivatives.

Amount of gain (loss) reclassified from accumulated other comprehensive income into earnings as a result that a forecasted transaction is no longer probable of occurring.

The follow table presents the effect of our derivatives not designated as hedging instruments on the Interim Condensed Consolidated Statements of Income for the periods ended:

Derivatives Not Designated as Hedging Instruments under Subtopic 815-20	Location of Income or (Expense) Included in our Interim Condensed Consolidated Statements of Income on Derivatives Not Designated as Hedging Instruments	Total Amount of Income or (Expense) Included in our Interim Condensed Consolidated Statements of Income on Derivatives Not Designated as Hedging Instruments
		Three Months Ended					Six Months Ended
		June 30, 2024			June 30, 2023		June 30, 2024			June 30, 2023
Interest rate derivatives	Other income	$	(13	)	$	—	$	(13	)	$	—

The tables below present a gross presentation, the effects of offsetting, and a net presentation of our derivatives as of June 30, 2024 and December 31, 2023. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented:

Offsetting of Derivative Liabilities as of June 30, 2024
							Gross Amounts Not Offset in the Interim Condensed Consolidated Balance Sheets
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Interim Condensed Consolidated Balance Sheets		Net Amounts of Liabilities presented in the Interim Condensed Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received (Posted)		Net Amount
Interest rate derivatives	$	1,223	$	—	$	1,223	$	—	$	5,707	$	(4,484	)

31

Offsetting of Derivative Liabilities as of December 31, 2023
							Gross Amounts Not Offset in the Interim Condensed Consolidated Balance Sheets
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Interim Condensed Consolidated Balance Sheets		Net Amounts of Liabilities presented in the Interim Condensed Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received (Posted)		Net Amount
Interest rate derivatives	$	1,065	$	—	$	1,065	$	—	$	5,555	$	(4,490	)

Mortgage Banking Derivatives 

The following table summarizes the net gains (losses) relating to free-standing derivative instruments used for risk management for the periods ended:

		Three Months Ended					Six Months Ended
		June 30					June 30
Instrument	Location	2024			2023		2024		2023
Mandatory forward contracts	Other noninterest income	$	40		$	30	$	53	$	6
Interest rate lock commitments	Net gain on sales of residential mortgage loans	$	(14	)	$	10	$	10	$	34

The following table reflects the amount and fair value of mortgage banking derivatives included on our Interim Condensed Consolidated Balance Sheets as of:

	June 30, 2024				December 31, 2023
	Notional		Fair		Notional		Fair
	Amount		Value		Amount		Value
Included in other assets:
Mandatory forward contracts	$	2,424	$	54	$	428	$	4
Interest rate lock commitments		—		22		300		12
Total included in other assets	$	2,424	$	76	$	728	$	16
Included in other liabilities:
Mandatory forward contracts	$	2,299	$	—	$	1,231	$	3
Interest rate lock commitments		—		—		138		—
Total included in other liabilities	$	2,299	$	—	$	1,369	$	3

Credit-risk-related Contingent Features

We have agreements with each of our derivative counterparties that contain a provision where if we either default, or are capable of being declared in default, on any of our indebtedness, then we could also be declared in default on our derivative obligations.

The fair value of derivatives in a net liability position (“out-of-the-money”), which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements as of June 30, 2024 and December 31, 2023 was $1,223 and $1,065, respectively. As of June 30, 2024 and December 31, 2023, we had minimum collateral posting thresholds with certain of our derivative counterparties and had posted collateral of $5,707 and $5,555, respectively, in cash collateral on deposit with counterparties. If we had breached any of these provisions, we could have been required to settle our obligations under the agreements at their termination value at June 30, 2024 and December 31, 2023 of $1,223 and $1,065, respectively.

Note 11 - Contingencies

Litigation

We are party to litigation arising during the normal course of business. In our opinion, based on consultation with legal counsel, the resolution of such litigation is not expected to have a material effect on our interim condensed consolidated financial statements.

32

Note 12 - Subsequent Events

We evaluated subsequent events after June 30, 2024 through the date our interim condensed consolidated financial statements were issued for potential recognition and disclosure.

On July 25, 2024, Fentura and ChoiceOne Financial Services, Inc. (“ChoiceOne”) entered into a merger agreement. Pursuant to the merger of Fentura with and into ChoiceOne, with ChoiceOne surviving the merger. Pursuant to the terms and subject to the conditions of the merger agreement, which has been approved by the Fentura Board of Directors and the ChoiceOne Board of Directors, each share of Fentura common stock outstanding immediately prior to completion of the merger will be converted into the right to receive 1.35 shares of ChoiceOne common stock. The transaction is expected to close in the first quarter of 2025, subject to satisfaction of customary closing conditions, including the receipt of regulatory approvals and the approval of Fentura and ChoiceOne shareholders.

No other subsequent events require financial statement recognition or disclosure between June 30, 2024 and the date our interim condensed consolidated financial statements were issued.

33