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LOANS AND ALLOWANCE FOR CREDIT LOSSES

3 Months Ended

Mar. 31, 2024

LOANS AND ALLOWANCE FOR CREDIT LOSSES

NOTE E: LOANS AND ALLOWANCE FOR CREDIT LOSSES

The segments of the Company’s loan portfolio are summarized as follows:


	March 31,		December 31,
(000’s omitted)	2024		2023
CRE – multifamily	$	658,278	$	619,794
CRE – owner occupied		777,302		752,774
CRE – non-owner occupied		1,750,038		1,711,198
Commercial & industrial and other business loans		1,034,581		1,000,630
Consumer mortgage		3,317,467		3,285,018
Consumer indirect		1,716,028		1,703,440
Consumer direct		183,750		185,229
Home equity		446,056		446,515
Gross loans, including deferred origination costs		9,883,500		9,704,598
Allowance for credit losses		(70,091)		(66,669)
Loans, net of allowance for credit losses	$	9,813,409	$	9,637,929

The following table presents the aging of the amortized cost basis of the Company’s past due loans by segment as of March 31, 2024 and December 31, 2023:


	Past Due		90+ Days Past
(000’s omitted)	30 – 89		Due and				Total
March 31, 2024	Days		Still Accruing		Nonaccrual		Past Due		Current		Total Loans
CRE – multifamily	$	0	$	0	$	0	$	0	$	658,278	$	658,278
CRE – owner occupied		1,602		0		1,536		3,138		774,164		777,302
CRE – non-owner occupied		247		0		13,368		13,615		1,736,423		1,750,038
Commercial & industrial and other business loans		1,402		0		647		2,049		1,032,532		1,034,581
Consumer mortgage		17,265		3,115		27,066		47,446		3,270,021		3,317,467
Consumer indirect		16,604		865		0		17,469		1,698,559		1,716,028
Consumer direct		1,163		72		21		1,256		182,494		183,750
Home equity		3,848		502		2,266		6,616		439,440		446,056
Total	$	42,131	$	4,554	$	44,904	$	91,589	$	9,791,911	$	9,883,500


	Past Due		90+ Days Past
(000’s omitted)	30 – 89		Due and				Total
December 31, 2023	Days		Still Accruing		Nonaccrual		Past Due		Current		Total Loans
CRE – multifamily	$	0	$	0	$	0	$	0	$	619,794	$	619,794
CRE – owner occupied		1,477		0		1,953		3,430		749,344		752,774
CRE – non-owner occupied		2,311		0		17,964		20,275		1,690,923		1,711,198
Commercial & industrial and other business loans		880		0		336		1,216		999,414		1,000,630
Consumer mortgage		18,434		4,559		26,043		49,036		3,235,982		3,285,018
Consumer indirect		20,215		776		0		20,991		1,682,449		1,703,440
Consumer direct		1,579		135		23		1,737		183,492		185,229
Home equity		3,546		416		2,368		6,330		440,185		446,515
Total	$	48,442	$	5,886	$	48,687	$	103,015	$	9,601,583	$	9,704,598

No interest income on nonaccrual loans was recognized during the three months ended March 31, 2024 and 2023. An immaterial amount of accrued interest was written off on nonaccrual loans by reversing interest income.

The Company uses several credit quality indicators to assess credit risk in an ongoing manner. The Company’s primary credit quality indicator for its business lending portfolio is an internal credit risk rating system that categorizes loans as “pass”, “special mention”, “substandard”, or “doubtful”. Credit risk ratings are applied to loans individually based on a case-by-case evaluation. In general, the following are the definitions of the Company’s credit quality indicators:


Pass		The condition of the borrower and the performance of the loans are satisfactory or better.
Special Mention		The condition of the borrower has deteriorated and the loan has potential weaknesses, although the loan performs as agreed. Loss may be incurred at some future date if conditions deteriorate further.
Substandard		The condition of the borrower has significantly deteriorated and the loan has a well-defined weakness or weaknesses. The performance of the loan could further deteriorate and incur loss if deficiencies are not corrected.
Doubtful		The condition of the borrower has deteriorated to the point that collection of the balance is improbable based on current facts and conditions and loss is likely.

The following tables show the amount of business lending loans by credit quality category at March 31, 2024 and December 31, 2023:


													Revolving		Revolving
													Loans		Loans
(000’s omitted)	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
March 31, 2024	2024		2023		2022		2021		2020		Prior		Cost Basis		to Term		Total
CRE – multifamily:
Risk rating
Pass	$	4,033	$	90,550	$	145,314	$	54,120	$	19,298	$	148,210	$	27,281	$	120,765	$	609,571
Special mention		0		13,175		7,298		0		64		5,322		0		8,258		34,117
Substandard		0		0		0		504		0		1,825		149		12,112		14,590
Doubtful		0		0		0		0		0		0		0		0		0
Total CRE – multifamily	$	4,033	$	103,725	$	152,612	$	54,624	$	19,362	$	155,357	$	27,430	$	141,135	$	658,278
Current period gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

CRE – owner occupied:
Risk rating
Pass	$	24,861	$	57,943	$	86,027	$	56,267	$	45,668	$	262,877	$	27,624	$	172,799	$	734,066
Special mention		0		3,193		2,328		2,130		627		13,392		706		2,797		25,173
Substandard		0		874		2,672		895		1,496		6,890		367		4,869		18,063
Doubtful		0		0		0		0		0		0		0		0		0
Total CRE – owner occupied	$	24,861	$	62,010	$	91,027	$	59,292	$	47,791	$	283,159	$	28,697	$	180,465	$	777,302
Current period gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

CRE – non-owner occupied:
Risk rating
Pass	$	46,146	$	142,425	$	253,828	$	109,985	$	85,180	$	321,511	$	393,412	$	268,762	$	1,621,249
Special mention		160		41		819		15,879		1,292		31,513		18,976		5,781		74,461
Substandard		0		947		135		157		303		24,366		100		27,354		53,362
Doubtful		0		0		0		966		0		0		0		0		966
Total CRE – non-owner occupied	$	46,306	$	143,413	$	254,782	$	126,987	$	86,775	$	377,390	$	412,488	$	301,897	$	1,750,038
Current period gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Commercial & industrial and other business loans:
Risk rating
Pass	$	49,198	$	127,095	$	126,984	$	85,922	$	31,062	$	126,058	$	361,048	$	58,138	$	965,505
Special mention		579		14,812		2,134		2,101		1,412		4,416		16,650		2,250		44,354
Substandard		14		36		944		597		392		912		15,766		6,061		24,722
Doubtful		0		0		0		0		0		0		0		0		0
Total commercial & industrial and other business loans	$	49,791	$	141,943	$	130,062	$	88,620	$	32,866	$	131,386	$	393,464	$	66,449	$	1,034,581
Current period gross charge-offs	$	0	$	64	$	0	$	0	$	0	$	0	$	195	$	2	$	261

Total business lending:
Risk rating
Pass	$	124,238	$	418,013	$	612,153	$	306,294	$	181,208	$	858,656	$	809,365	$	620,464	$	3,930,391
Special mention		739		31,221		12,579		20,110		3,395		54,643		36,332		19,086		178,105
Substandard		14		1,857		3,751		2,153		2,191		33,993		16,382		50,396		110,737
Doubtful		0		0		0		966		0		0		0		0		966
Total business lending	$	124,991	$	451,091	$	628,483	$	329,523	$	186,794	$	947,292	$	862,079	$	689,946	$	4,220,199
Current period gross charge-offs	$	0	$	64	$	0	$	0	$	0	$	0	$	195	$	2	$	261


													Revolving		Revolving
													Loans		Loans
(000’s omitted)	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
December 31, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total
CRE – multifamily:
Risk rating
Pass	$	90,888	$	145,337	$	52,058	$	19,982	$	41,992	$	112,287	$	3,237	$	106,580	$	572,361
Special mention		13,175		7,317		0		65		0		3,522		0		8,289		32,368
Substandard		0		959		0		0		551		1,293		150		12,112		15,065
Doubtful		0		0		0		0		0		0		0		0		0
Total CRE – multifamily	$	104,063	$	153,613	$	52,058	$	20,047	$	42,543	$	117,102	$	3,387	$	126,981	$	619,794
Current period gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

CRE – owner occupied:
Risk rating
Pass	$	58,544	$	89,616	$	58,798	$	46,465	$	80,361	$	192,345	$	28,023	$	158,652	$	712,804
Special mention		3,258		2,384		649		639		1,472		11,962		743		6,064		27,171
Substandard		880		108		922		1,480		514		7,531		941		423		12,799
Doubtful		0		0		0		0		0		0		0		0		0
Total CRE – owner occupied	$	62,682	$	92,108	$	60,369	$	48,584	$	82,347	$	211,838	$	29,707	$	165,139	$	752,774
Current period gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	19	$	0	$	19

CRE – non-owner occupied:
Risk rating
Pass	$	143,106	$	255,699	$	111,306	$	86,560	$	60,646	$	275,458	$	387,559	$	265,348	$	1,585,682
Special mention		42		827		16,109		1,311		109		29,648		18,806		3,506		70,358
Substandard		947		136		1,123		2,996		1,248		20,578		100		27,542		54,670
Doubtful		0		0		0		488		0		0		0		0		488
Total CRE – non-owner occupied	$	144,095	$	256,662	$	128,538	$	91,355	$	62,003	$	325,684	$	406,465	$	296,396	$	1,711,198
Current period gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Commercial & industrial and other business loans:
Risk rating
Pass	$	146,627	$	133,529	$	94,764	$	34,572	$	34,714	$	99,525	$	337,388	$	55,222	$	936,341
Special mention		15,306		2,071		1,491		1,557		2,553		1,854		16,341		8,045		49,218
Substandard		38		800		558		477		323		1,305		10,800		770		15,071
Doubtful		0		0		0		0		0		0		0		0		0
Total commercial & industrial and other business loans	$	161,971	$	136,400	$	96,813	$	36,606	$	37,590	$	102,684	$	364,529	$	64,037	$	1,000,630
Current period gross charge-offs	$	0	$	160	$	0	$	0	$	0	$	36	$	569	$	0	$	765

Total business lending:
Risk rating
Pass	$	439,165	$	624,181	$	316,926	$	187,579	$	217,713	$	679,615	$	756,207	$	585,802	$	3,807,188
Special mention		31,781		12,599		18,249		3,572		4,134		46,986		35,890		25,904		179,115
Substandard		1,865		2,003		2,603		4,953		2,636		30,707		11,991		40,847		97,605
Doubtful		0		0		0		488		0		0		0		0		488
Total business lending	$	472,811	$	638,783	$	337,778	$	196,592	$	224,483	$	757,308	$	804,088	$	652,553	$	4,084,396
Current period gross charge-offs	$	0	$	160	$	0	$	0	$	0	$	36	$	588	$	0	$	784

All other loans are underwritten and structured using standardized criteria and characteristics, primarily payment performance, and are monitored collectively on a monthly basis. These are typically loans to individuals in the consumer categories and are delineated as either performing or nonperforming. Performing loans include loans classified as current as well as those classified as 30 - 89 days past due. Nonperforming loans include 90+ days past due and still accruing and nonaccrual loans.

The following tables detail the balances in all other loan categories at March 31, 2024 and December 31, 2023:


													Revolving		Revolving
													Loans		Loans
(000’s omitted)	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
March 31, 2024	2024		2023		2022		2021		2020		Prior		Cost Basis		to Term		Total
Consumer mortgage:
FICO AB⁽¹⁾
Performing	$	64,407	$	349,747	$	347,072	$	448,044	$	195,758	$	740,946	$	0	$	93,588	$	2,239,562
Nonperforming		0		0		435		599		599		5,037		0		191		6,861
Total FICO AB		64,407		349,747		347,507		448,643		196,357		745,983		0		93,779		2,246,423
FICO CDE⁽²⁾
Performing		27,228		148,818		146,921		162,313		100,186		390,278		37,639		34,341		1,047,724
Nonperforming		0		559		2,843		1,837		2,253		14,418		360		1,050		23,320
Total FICO CDE		27,228		149,377		149,764		164,150		102,439		404,696		37,999		35,391		1,071,044
Total consumer mortgage	$	91,635	$	499,124	$	497,271	$	612,793	$	298,796	$	1,150,679	$	37,999	$	129,170	$	3,317,467
Current period gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	93	$	0	$	0	$	93

Consumer indirect:
Performing	$	163,183	$	640,930	$	524,062	$	240,137	$	60,246	$	86,605	$	0	$	0	$	1,715,163
Nonperforming		0		240		289		78		19		239		0		0		865
Total consumer indirect	$	163,183	$	641,170	$	524,351	$	240,215	$	60,265	$	86,844	$	0	$	0	$	1,716,028
Current period gross charge-offs	$	0	$	943	$	1,282	$	393	$	175	$	267	$	0	$	0	$	3,060

Consumer direct:
Performing	$	22,640	$	69,889	$	46,515	$	22,634	$	6,682	$	8,574	$	6,722	$	1	$	183,657
Nonperforming		0		26		17		0		0		25		25		0		93
Total consumer direct	$	22,640	$	69,915	$	46,532	$	22,634	$	6,682	$	8,599	$	6,747	$	1	$	183,750
Current period gross charge-offs	$	0	$	274	$	254	$	227	$	17	$	41	$	60	$	0	$	873

Home equity:
Performing	$	11,042	$	59,649	$	61,180	$	61,104	$	30,104	$	66,718	$	125,865	$	27,626	$	443,288
Nonperforming		0		225		176		38		357		683		908		381		2,768
Total home equity	$	11,042	$	59,874	$	61,356	$	61,142	$	30,461	$	67,401	$	126,773	$	28,007	$	446,056
Current period gross charge-offs	$	0	$	0	$	23	$	0	$	0	$	0	$	0	$	0	$	23

(1)FICO AB refers to higher tiered loans with FICO scores greater than or equal to 720 at origination.

(2)FICO CDE refers to loans with FICO scores less than 720 at origination and potentially higher risk.


													Revolving		Revolving
													Loans		Loans
(000’s omitted)	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
December 31, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total
Consumer mortgage:
FICO AB⁽¹⁾
Performing	$	354,967	$	353,185	$	456,871	$	199,429	$	157,159	$	606,591	$	0	$	86,067	$	2,214,269
Nonperforming		0		371		764		605		279		5,187		0		195		7,401
Total FICO AB		354,967		353,556		457,635		200,034		157,438		611,778		0		86,262		2,221,670
FICO CDE⁽²⁾
Performing		148,443		150,585		164,839		103,003		71,710		331,839		39,630		30,098		1,040,147
Nonperforming		53		2,629		2,477		1,629		1,785		13,201		367		1,060		23,201
Total FICO CDE		148,496		153,214		167,316		104,632		73,495		345,040		39,997		31,158		1,063,348
Total consumer mortgage	$	503,463	$	506,770	$	624,951	$	304,666	$	230,933	$	956,818	$	39,997	$	117,420	$	3,285,018
Current period gross charge-offs	$	0	$	0	$	0	$	0	$	85	$	584	$	0	$	0	$	669

Consumer indirect:
Performing	$	681,824	$	572,799	$	273,035	$	71,428	$	45,203	$	58,375	$	0	$	0	$	1,702,664
Nonperforming		84		443		101		42		19		87		0		0		776
Total consumer indirect	$	681,908	$	573,242	$	273,136	$	71,470	$	45,222	$	58,462	$	0	$	0	$	1,703,440
Current period gross charge-offs	$	926	$	3,595	$	1,969	$	1,171	$	570	$	1,121	$	0	$	0	$	9,352

Consumer direct:
Performing	$	80,169	$	52,826	$	26,617	$	8,282	$	4,604	$	5,697	$	6,875	$	1	$	185,071
Nonperforming		33		41		47		0		2		23		12		0		158
Total consumer direct	$	80,202	$	52,867	$	26,664	$	8,282	$	4,606	$	5,720	$	6,887	$	1	$	185,229
Current period gross charge-offs	$	206	$	813	$	450	$	110	$	110	$	159	$	161	$	0	$	2,009

Home equity:
Performing	$	61,065	$	62,801	$	63,102	$	31,094	$	25,721	$	44,832	$	126,939	$	28,177	$	443,731
Nonperforming		0		162		10		253		260		533		1,053		513		2,784
Total home equity	$	61,065	$	62,963	$	63,112	$	31,347	$	25,981	$	45,365	$	127,992	$	28,690	$	446,515
Current period gross charge-offs	$	0	$	0	$	0	$	64	$	0	$	44	$	11	$	0	$	119

(1)FICO AB refers to higher tiered loans with FICO scores greater than or equal to 720 at origination.

(2)FICO CDE refers to loans with FICO scores less than 720 at origination and potentially higher risk.

Business lending loans greater than $0.5 million that are on nonaccrual are individually assessed and, if necessary, a specific allocation of the allowance for credit losses is provided. A summary of individually assessed business loans as of March 31, 2024 and December 31, 2023 follows:


	March 31,		December 31,
(000’s omitted)	2024		2023
Loans with allowance allocation	$	10,189	$	3,484
Loans without allowance allocation		4,322		15,750
Carrying balance		14,511		19,234
Contractual balance		14,645		19,249
Specifically allocated allowance		965		470

The average carrying balance of individually assessed loans was $14.5 million and $3.1 million for the three months ended March 31, 2024 and 2023, respectively. No interest income was recognized on individually assessed loans for the three months ended March 31, 2024 and 2023.

Occasionally, the Company modifies loans to borrowers experiencing financial difficulty by providing principal forgiveness, term extension, payment delay, or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

In some cases, the Company provides multiple types of modifications on one loan. Typically, one type of modification, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another modification, such as principal forgiveness, may be granted. Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. The estimate of allowance for credit losses includes historical losses from loans that were modified due to borrower financial difficulty, therefore a charge to the allowance for credit losses is generally not recorded upon modification.

The following table presents the amortized cost basis of loans at March 31, 2024 that were both experiencing financial difficulty and modified during the three months ended March 31, 2024, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below. The Company did not have any modifications to borrowers experiencing financial difficulty other than term extensions. During the three months ended March 31, 2023, the amount of loans that were modified to borrowers experiencing financial difficulty was immaterial.


	Three Months Ended
	March 31, 2024
			Total Class of
	Term		Financing
(000s omitted except for percentages)	Extension		Receivable
CRE – owner occupied	$	353	0.05	%
CRE – non-owner occupied		224	0.01	%
Commercial & industrial and other business loans		108	0.00	%
Total	$	685	0.01	%

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of such loans that have been modified in the last 12 months.



	March 31, 2024
					90+ Days Past
			Past Due 30 –		Due and Still		Non-
(000s omitted)	Current		89 Days		Accruing		Accrual		Total
CRE – owner occupied	$	1,686	$	0	$	0	$	0	$	1,686
CRE – non-owner occupied		886		0		0		0		886
Commercial & industrial and other business loans		108		0		0		0		108
Consumer mortgage		0		0		0		279		279
Home equity		31		0		0		0		31
Total	$	2,711	$	0	$	0	$	279	$	2,990

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three months ended March 31, 2024:


		Three Months Ended
		March 31, 2024
		Weighted-Average
		Term Extension (Years)
CRE – owner occupied		1.7
CRE – non-owner occupied		8.5
Commercial & industrial and other business loans		3.8
Total		4.2

There were no loans modified to borrowers with financial difficulty that had a payment default subsequent to modification during the three months ended March 31, 2024 and 2023.

Allowance for Credit Losses

The following presents by loan segment the activity in the allowance for credit losses during the three months ended March 31, 2024 and 2023:


	Three Months Ended March 31, 2024
	Beginning		Charge-						Ending
(000’s omitted)	balance		offs		Recoveries		Provision		balance
Business lending	$	26,854	$	(261)	$	39	$	2,739	$	29,371
Consumer mortgage		15,333		(93)		3		(753)		14,490
Consumer indirect		18,585		(3,060)		1,209		3,560		20,294
Consumer direct		3,269		(873)		215		744		3,355
Home equity		1,628		(23)		3		(27)		1,581
Unallocated		1,000		0		0		0		1,000
Allowance for credit losses – loans		66,669		(4,310)		1,469		6,263		70,091
Liabilities for off-balance-sheet credit exposures		913		0		0		(115)		798
Total allowance for credit losses	$	67,582	$	(4,310)	$	1,469	$	6,148	$	70,889


	Three Months Ended March 31, 2023
	Beginning		Charge-						Ending
(000’s omitted)	balance		offs		Recoveries		Provision		balance
Business lending	$	23,297	$	(175)	$	172	$	1,933	$	25,227
Consumer mortgage		14,343		(19)		7		(53)		14,278
Consumer indirect		17,852		(2,531)		1,347		1,379		18,047
Consumer direct		2,973		(505)		187		375		3,030
Home equity		1,594		0		6		(12)		1,588
Unallocated		1,000		0		0		0		1,000
Allowance for credit losses – loans		61,059		(3,230)		1,719		3,622		63,170
Liabilities for off-balance-sheet credit exposures		1,123		0		0		(122)		1,001
Total allowance for credit losses	$	62,182	$	(3,230)	$	1,719	$	3,500	$	64,171

The allowance for credit losses increased to $70.1 million at March 31, 2024 compared to $66.7 million at December 31, 2023 and $63.2 million at March 31, 2023, reflective of an increase in loans outstanding, a stable economic forecast and an increase in the qualitative assessment of future uncertainty primarily concerning the business lending and consumer indirect portfolios.

Accrued interest receivable on loans, included in accrued interest and fees receivable on the consolidated statements of condition, totaled $34.4 million at March 31, 2024, and is excluded from the estimate of credit losses and amortized cost basis of loans.

Under ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), also referred to as CECL, the Company utilizes the historical loss rate on its loan portfolio as the initial basis for the estimate of credit losses using the cumulative loss, vintage loss and line loss methods, which is derived from the Company’s historical loss experience. Adjustments to historical loss experience were made for differences in current loan-specific risk characteristics and to address current period delinquencies, charge-off rates, risk ratings, lack of loan level data through an entire economic cycle, changes in loan sizes and underwriting standards as well as the addition of acquired loans which were not underwritten by the Company. The Company considered historical losses immediately prior, through and following the Great Recession compared to the historical period used for modeling to adjust the historical information to account for longer-term expectations for loan credit performance. Under CECL, the Company is required to consider future economic conditions to determine current expected credit losses. Management selected an eight-quarter reasonable and supportable forecast period with a four-quarter reversion to the historical mean to use as part of the economic forecast, and utilizes a two-quarter lag adjustment for economic factors that are not dependent on collateral values, and no lag for factors that utilize collateral values. Management determined that these qualitative adjustments were needed to adjust historical information for expected losses and to reflect changes as a result of current conditions.

For qualitative macroeconomic adjustments, the Company uses third party forecasted economic data scenarios utilizing a base scenario and two alternative scenarios that are weighted, with forecasts available as of March 31, 2024. These forecasts were factored into the qualitative portion of the calculation of the estimated credit losses and include the impact of a decline in residential real estate and vehicle prices as well as inflation. The scenarios utilized forecast stable unemployment levels, modest GDP and real household income growth, offset by some declines in auto, housing and commercial real estate prices.

Management developed expected loss estimates considering factors for segments as outlined below:

●

Business lending – non real estate: The Company selected projected unemployment and GDP as indicators of forecasted losses related to business lending and utilize both factors in an even weight for the calculation. The Company also considered delinquencies, risk rating changes, recent charge-off history and acquired loans as part of the review of estimated losses.

●

Business lending – real estate: The Company selected projected unemployment and commercial real estate values as indicators of forecasted losses related to commercial real estate loans and utilize both factors in an even weight for the calculation. The Company also considered the factors noted in business lending – non real estate.

●

Consumer mortgages and home equity: The Company selected projected unemployment and residential real estate values as indicators of forecasted losses related to mortgage lending and utilize both factors in an even weight for the calculation. In addition, current delinquencies, charge-offs and acquired loans were considered.

●

Consumer indirect: The Company selected projected unemployment and vehicle valuation indices as indicators of forecasted losses related to indirect lending and utilize both factors in an even weight for the calculation. In addition, current delinquencies, charge-offs and acquired loans were considered.

●

Consumer direct: The Company selected projected unemployment and inflation-adjusted household income as indicators of forecasted losses related to consumer direct lending and utilize both factors in an even weight for the calculation. In addition, current delinquencies, charge-offs and acquired loans were considered.

At March 31, 2024, loans with a carrying amount of approximately $4.44 billion were pledged for the availability to secure certain borrowings with the FHLB and FRB. There were $394.4 million of borrowings outstanding under these arrangements at March 31, 2024.

At March 31, 2024 and December 31, 2023, there were foreclosures in process of $5.2 million and $5.8 million, respectively.

During the three months ended March 31, 2024, the Company did not purchase any loans, while the Company sold $1.2 million of secondary market eligible residential consumer mortgage loans during the period.