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LOANS AND ALLOWANCE FOR CREDIT LOSSES

12 Months Ended

Dec. 31, 2024

LOANS AND ALLOWANCE FOR CREDIT LOSSES

NOTE D: LOANS AND ALLOWANCE FOR CREDIT LOSSES

The segments of the Company’s loan portfolio at December 31 are summarized as follows:


(000’s omitted)	2024		2023
CRE - multifamily	$	724,114	$	619,794
CRE – owner occupied		864,783		752,774
CRE – non-owner occupied		1,775,099		1,711,198
Commercial & industrial and other business loans		1,141,182		1,000,630
Consumer mortgage		3,489,780		3,285,018
Consumer indirect		1,767,655		1,703,440
Consumer direct		192,327		185,229
Home equity		477,425		446,515
Gross loans, including deferred origination costs		10,432,365		9,704,598
Allowance for credit losses		(79,114)		(66,669)
Loans, net of allowance for credit losses	$	10,353,251	$	9,637,929

The Company had approximately $84.1 million and $81.6 million of net deferred loan origination costs included in gross loans as of December 31, 2024 and 2023, respectively.

Certain directors and executive officers of the Company, as well as associates of such persons, are loan customers. Loans to these individuals were made in the ordinary course of business under normal credit terms and do not have more than a normal risk of collection. Following is a summary of the aggregate amount of such loans during 2024 and 2023.


(000’s omitted)	2024		2023
Balance at beginning of year	$	11,692	$	12,373
New loans		0		1,372
Payments		(1,157)		(2,053)
Balance at end of year	$	10,535	$	11,692

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


	Past Due		90+ Days Past
(000’s omitted)	30 – 89		Due and				Total
December 31, 2024	Days		Still Accruing		Nonaccrual		Past Due		Current		Total Loans
CRE – multifamily	$	184	$	0	$	12,316	$	12,500	$	711,614	$	724,114
CRE – owner occupied		690		0		7,695		8,385		856,398		864,783
CRE – non-owner occupied		447		0		11,826		12,273		1,762,826		1,775,099
Commercial & industrial and other business loans		2,832		0		8,122		10,954		1,130,228		1,141,182
Consumer mortgage		24,928		5,288		24,389		54,605		3,435,175		3,489,780
Consumer indirect		22,379		1,227		0		23,606		1,744,049		1,767,655
Consumer direct		1,747		106		0		1,853		190,474		192,327
Home equity		2,739		379		2,039		5,157		472,268		477,425
Total	$	55,946	$	7,000	$	66,387	$	129,333	$	10,303,032	$	10,432,365


	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

An immaterial amount of interest income on nonaccrual loans was recognized during the years ended December 31, 2024 or 2023. For the years ended December 31, 2024 and 2023, an immaterial amount of accrued interest was written off on nonaccrual loans by reversing interest income. Approximately $1.8 million of interest income on loans that returned to accrual status in 2024 was recognized for the year ended December 31, 2024.

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”. Business lending loans under $250,000 are assigned either a “pass” or “substandard” risk rating. 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 December 31, 2024 and 2023.


													Revolving		Revolving
													Loans		Loans
(000’s omitted)	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted to
December 31, 2024	2024		2023		2022		2021		2020		Prior		Cost Basis		Term		Total
CRE – multifamily:
Risk rating
Pass	$	24,631	$	101,868	$	141,997	$	50,421	$	16,827	$	134,788	$	63,401	$	146,565	$	680,498
Special mention		0		0		0		0		0		1,865		1,500		14,030		17,395
Substandard		0		0		7,232		1,580		60		4,639		641		9,293		23,445
Doubtful		0		0		0		0		0		0		0		2,776		2,776
Total CRE – multifamily	$	24,631	$	101,868	$	149,229	$	52,001	$	16,887	$	141,292	$	65,542	$	172,664	$	724,114
Current period gross charge-offs⁽¹⁾	$	0	$	0	$	0	$	62	$	0	$	0	$	0	$	0	$	62

CRE – owner occupied:
Risk rating
Pass	$	101,325	$	50,104	$	76,554	$	52,518	$	36,798	$	233,701	$	68,794	$	171,660	$	791,454
Special mention		744		4,726		2,076		1,474		1,407		4,679		430		23,107		38,643
Substandard		0		1,792		7,565		978		2,123		15,137		1,112		5,979		34,686
Doubtful		0		0		0		0		0		0		0		0		0
Total CRE – owner occupied	$	102,069	$	56,622	$	86,195	$	54,970	$	40,328	$	253,517	$	70,336	$	200,746	$	864,783
Current period gross charge-offs⁽¹⁾	$	0	$	806	$	0	$	0	$	0	$	0	$	0	$	0	$	806

CRE – non-owner occupied:
Risk rating
Pass	$	98,845	$	120,244	$	193,914	$	115,990	$	86,279	$	296,787	$	418,515	$	230,482	$	1,561,056
Special mention		2,007		377		50,868		1,264		259		20,210		20,960		23,600		119,545
Substandard		0		10,887		284		1,846		351		13,023		23,816		43,425		93,632
Doubtful		0		0		0		866		0		0		0		0		866
Total CRE – non-owner occupied	$	100,852	$	131,508	$	245,066	$	119,966	$	86,889	$	330,020	$	463,291	$	297,507	$	1,775,099
Current period gross charge-offs⁽¹⁾	$	0	$	412	$	0	$	0	$	0	$	77	$	0	$	554	$	1,043

Commercial & industrial and other business loans:
Risk rating
Pass	$	267,499	$	67,503	$	92,315	$	69,456	$	24,072	$	88,204	$	390,217	$	56,971	$	1,056,237
Special mention		6,078		445		1,673		1,022		2		1,889		12,468		7,608		31,185
Substandard		1,575		16,588		3,743		1,458		397		3,261		20,842		5,896		53,760
Doubtful		0		0		0		0		0		0		0		0		0
Total commercial & industrial and other business loans	$	275,152	$	84,536	$	97,731	$	71,936	$	24,471	$	93,354	$	423,527	$	70,475	$	1,141,182
Current period gross charge-offs⁽¹⁾	$	0	$	64	$	119	$	114	$	0	$	23	$	924	$	2	$	1,246

Total business lending:
Risk rating
Pass	$	492,300	$	339,719	$	504,780	$	288,385	$	163,976	$	753,480	$	940,927	$	605,678	$	4,089,245
Special mention		8,829		5,548		54,617		3,760		1,668		28,643		35,358		68,345		206,768
Substandard		1,575		29,267		18,824		5,862		2,931		36,060		46,411		64,593		205,523
Doubtful		0		0		0		866		0		0		0		2,776		3,642
Total business lending	$	502,704	$	374,534	$	578,221	$	298,873	$	168,575	$	818,183	$	1,022,696	$	741,392	$	4,505,178
Current period gross charge-offs⁽¹⁾	$	0	$	1,282	$	119	$	176	$	0	$	100	$	924	$	556	$	3,157

⁽¹⁾ For the year ended December 31, 2024



													Revolving		Revolving
													Loans		Loans
(000’s omitted)	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted to
December 31, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		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⁽¹⁾	$	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⁽¹⁾	$	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⁽¹⁾	$	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⁽¹⁾	$	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⁽¹⁾	$	0	$	160	$	0	$	0	$	0	$	36	$	588	$	0	$	784

⁽¹⁾ For the year ended December 31, 2023

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 December 31, 2024 and 2023:


	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													Loans		Loans
(000’s omitted)													Amortized		Converted to
December 31, 2024	2024		2023		2022		2021		2020		Prior		Cost Basis		Term		Total
Consumer mortgage:
FICO AB⁽¹⁾
Performing	$	312,040	$	327,737	$	325,563	$	418,887	$	182,058	$	665,652	$	2,501	$	124,134	$	2,358,572
Nonperforming		0		0		669		748		521		4,476		0		0		6,414
Total FICO AB		312,040		327,737		326,232		419,635		182,579		670,128		2,501		124,134		2,364,986
FICO CDE⁽²⁾
Performing		149,322		139,294		138,007		151,769		93,797		352,517		33,678		43,147		1,101,531
Nonperforming		564		1,815		3,932		1,483		2,076		12,282		0		1,111		23,263
Total FICO CDE		149,886		141,109		141,939		153,252		95,873		364,799		33,678		44,258		1,124,794
Total consumer mortgage	$	461,926	$	468,846	$	468,171	$	572,887	$	278,452		1,034,927	$	36,179	$	168,392	$	3,489,780
Current period gross charge-offs⁽³⁾	$	0	$	141	$	30	$	1	$	20	$	192	$	0	$	0	$	384

Consumer indirect:
Performing	$	656,284	$	492,192	$	380,652	$	153,977	$	32,812	$	50,511	$	0	$	0	$	1,766,428
Nonperforming		118		461		453		141		34		20		0		0		1,227
Total consumer indirect	$	656,402	$	492,653	$	381,105	$	154,118	$	32,846	$	50,531	$	0	$	0	$	1,767,655
Current period gross charge-offs⁽³⁾	$	1,468	$	3,039	$	3,789	$	1,592	$	499	$	1,220	$	0	$	0	$	11,607

Consumer direct:
Performing	$	84,114	$	49,126	$	30,424	$	12,534	$	3,374	$	5,527	$	7,122	$	0	$	192,221
Nonperforming		22		21		2		17		0		8		36		0		106
Total consumer direct	$	84,136	$	49,147	$	30,426	$	12,551	$	3,374	$	5,535	$	7,158	$	0	$	192,327
Current period gross charge-offs⁽³⁾	$	176	$	1,072	$	664	$	389	$	74	$	118	$	251	$	0	$	2,744

Home equity:
Performing	$	68,249	$	53,612	$	54,754	$	53,466	$	26,456	$	56,072	$	137,448	$	24,950	$	475,007
Nonperforming		32		234		225		43		282		534		850		218		2,418
Total home equity	$	68,281	$	53,846	$	54,979	$	53,509	$	26,738	$	56,606	$	138,298	$	25,168	$	477,425
Current period gross charge-offs⁽³⁾	$	0	$	0	$	23	$	0	$	8	$	41	$	92	$	0	$	164

⁽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.

⁽³⁾ For the year ended December 31, 2024


	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													Loans		Loans
(000’s omitted)													Amortized		Converted to
December 31, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		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⁽³⁾	$	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⁽³⁾	$	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⁽³⁾	$	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⁽³⁾	$	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.

⁽³⁾ For the year ended December 31, 2023

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. If management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for estimated selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty and the loan is expected to be repaid substantially through the operation or sale of the collateral. The collateral for individually assessed CRE non - owner occupied loans consists of office property associated with one customer. Individually assessed CRE multifamily loans consists of a rental apartment property associated with one customer. A summary of individually assessed business lending loans as of December 31, 2024 and 2023 follows:


	December 31, 2024						December 31, 2023
					Specifically						Specifically
	Carrying		Contractual		Allocated		Carrying		Contractual		Allocated
(000’s omitted)	Balance		Balance		Allowance		Balance		Balance		Allowance
Loans with allowance allocation:
CRE – multifamily	$	12,068	$	12,068	$	2,764	$	0	$	0	$	0
CRE – non-owner occupied		10,075		10,270		864		3,484		3,484		470
Total	$	22,143	$	22,338	$	3,628	$	3,484	$	3,484	$	470

Loans without allowance allocation:
CRE – owner occupied	$	7,554	$	8,360	$	0	$	1,551	$	1,551	$	0
CRE – non-owner occupied		1,592		2,606		0		13,999		14,014		0
Commercial & industrial and other business loans		7,672		7,672		0		200		200		0
Total	$	16,818	$	18,638	$	0	$	15,750	$	15,765	$	0

The average carrying balance of individually assessed loans was $42.5 million and $20.2 million for the years ended December 31, 2024 and 2023, respectively. An immaterial amount of interest income was recognized on individually assessed loans for the years ended December 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 December 31, 2024 and 2023 that were both experiencing financial difficulty and modified during the years ended December 31, 2024 and 2023, 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.


	Year Ended December 31, 2024						Year Ended December 31, 2023
			Other		Total Class of				Other		Total Class of
	Term		Payment		Financing		Term		Payment		Financing
(000s omitted except for percentages)	Extension		Delay		Receivable		Extension		Delay		Receivable
CRE - owner occupied	$	1,504	$	0	0.17	%	$	1,367	$	0	0.18	%
CRE - non-owner occupied		3,191		17,942	1.19	%		700		0	0.04	%
Commercial & industrial and other business loans		3,907		0	0.34	%		0		0	0.00	%
Consumer mortgage		370		0	0.01	%		281		0	0.01	%
Home equity		23		0	0.00	%		31		0	0.01	%
Total	$	8,995	$	17,942	0.26	%	$	2,379	$	0	0.02	%

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 at December 31, 2024 of such loans that have been modified in the past twelve months.


					90+ Days Past
			Past Due 30 –		Due and Still
(000s omitted)	Current		89 Days		Accruing		Non-Accrual		Total
CRE - owner occupied	$	1,504	$	0	$	0	$	0	$	1,504
CRE - non-owner occupied		21,133		0		0		0		21,133
Commercial & industrial and other business loans		91		0		0		3,816		3,907
Consumer mortgage		73		0		0		297		370
Home equity		0		0		0		23		23
Total	$	22,801	$	0	$	0	$	4,136	$	26,937

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the year ended December 31, 2024 and 2023:


	Year Ended		Year Ended
	December 31, 2024		December 31, 2023
	Weighted-Average	Weighted-Average	Weighted-Average
	Term Extension	Other Payment Delay	Term Extension
	(Years)	(Years)	(Years)
CRE - owner occupied	2.3	0.0	10.0
CRE - non-owner occupied	1.0	0.7	5.0
Commercial & industrial and other business loans	0.3	0.0	0.0
Consumer mortgage	7.6	0.0	5.2
Home equity	1.8	0.0	9.9
Total	1.2	0.7	8.0

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

Allowance for Credit Losses

The following presents by loan segment the activity in the allowance for credit losses during 2024, 2023 and 2022:


	Year Ended December 31, 2024
	Beginning		Charge-						Ending
(000’s omitted)	balance		offs		Recoveries		Provision		balance
Business lending	$	26,854	$	(3,157)	$	425	$	13,079	$	37,201
Consumer mortgage		15,333		(384)		43		25		15,017
Consumer indirect		18,585		(11,607)		6,508		7,409		20,895
Consumer direct		3,269		(2,744)		958		1,970		3,453
Home equity		1,628		(164)		13		71		1,548
Unallocated		1,000		0		0		0		1,000
Allowance for credit losses – loans		66,669		(18,056)		7,947		22,554		79,114
Liabilities for off-balance-sheet credit exposures		913		0		0		219		1,132
Total allowance for credit losses	$	67,582	$	(18,056)	$	7,947	$	22,773	$	80,246


	Year Ended December 31, 2023
	Beginning		Charge-						Ending
(000’s omitted)	balance		offs		Recoveries		Provision		balance
Business lending	$	23,297	$	(784)	$	523	$	3,818	$	26,854
Consumer mortgage		14,343		(669)		48		1,611		15,333
Consumer indirect		17,852		(9,352)		5,719		4,366		18,585
Consumer direct		2,973		(2,009)		826		1,479		3,269
Home equity		1,594		(119)		14		139		1,628
Unallocated		1,000		0		0		0		1,000
Allowance for credit losses – loans		61,059		(12,933)		7,130		11,413		66,669
Liabilities for off-balance-sheet credit exposures		1,123		0		0		(210)		913
Total allowance for credit losses	$	62,182	$	(12,933)	$	7,130	$	11,203	$	67,582


	Year Ended December 31, 2022
							PCD
	Beginning						Allowance at				Ending
(000’s omitted)	balance		Charge-offs		Recoveries		Acquisition		Provision		balance
Business lending	$	22,995	$	(824)	$	1,374	$	71	$	(319)	$	23,297
Consumer mortgage		10,017		(313)		62		0		4,577		14,343
Consumer indirect		11,737		(7,986)		4,756		0		9,345		17,852
Consumer direct		2,306		(1,252)		772		0		1,147		2,973
Home equity		1,814		(86)		163		0		(297)		1,594
Unallocated		1,000		0		0		0		0		1,000
Allowance for credit losses – loans		49,869		(10,461)		7,127		71		14,453		61,059
Liabilities for off-balance-sheet credit exposures		803		0		0		0		320		1,123
Total allowance for credit losses	$	50,672	$	(10,461)	$	7,127	$	71	$	14,773	$	62,182

The allowance for credit losses increased to $79.1 million at December 31, 2024 compared to $66.7 million at December 31, 2023, driven by organic loan growth, slight degradation in certain asset quality metrics, and relatively stable economic forecasts.

Accrued interest receivable on loans, included in accrued interest and fees receivable in the consolidated statements of condition, totaled $33.2 million and $31.2 million at December 31, 2024 and 2023, respectively, and is excluded from the estimate of credit losses and amortized cost basis of loans.

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. To address changes and trends in current period credit metrics, qualitative 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 December 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. For office specific properties, the Company selected projected office specific commercial real estate values and vacancy rates 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 December 31, 2024, loans with a carrying amount of approximately $6.72 billion were pledged for the availability to secure certain borrowings with the FHLB and FRB. There were $610.0 million of borrowings outstanding under these arrangements at December 31, 2024.

At December 31, 2024 and 2023, the carrying amount of residential real estate property in the process of foreclosure was $6.3 million and $5.8 million, respectively.

During the years ended December 31, 2024 and 2023, the Company did not purchase any loans, while the Company sold $58.8 million and $6.1 million, respectively, of secondary market eligible residential consumer mortgage loans. During the year ended December 31, 2024, the Company sold $1.3 million of commercial loans. The Company did not sell any commercial loans during the year ended December 31, 2023.