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Allowance for Credit Losses

12 Months Ended

Dec. 31, 2024

5. Allowance for Credit Losses

The Company maintains the allowance for credit losses for loans and leases (the “ACL”) that is deducted from the amortized cost basis of loans and leases to present the net carrying value of loans and leases expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount of loans and leases. While management utilizes its best judgment and information available, the ultimate appropriateness of the ACL is dependent upon a variety of factors beyond our control, including the performance of our loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

The Company also maintains an estimated reserve for unfunded commitments on the consolidated balance sheets. The reserve for unfunded commitments is reduced in the period in which the off-balance sheet financial instruments expire, loan funding occurs, or is otherwise settled.

During the second quarter of 2024, the Company updated its methodology for one of its quantitative models to estimate the total ACL (inclusive of the allowance for credit losses for loans and leases and the reserve for unfunded commitments) by changing from a one-variable forward-looking macroeconomic outlook model to a multi-variable forward-looking macroeconomic outlook model. The impact of this update was a reduction to the total ACL of $9.0 million as of June 30, 2024. Additionally, the Company updated certain components of its qualitative adjustments, resulting in a $5.8 million increase to the total ACL as of June 30, 2024. The net impact of these updates was a net $3.2 million decrease to the total ACL as of June 30, 2024. During the fourth quarter of 2024, the Company also changed its framework for the single family residential portfolio to utilize a Loss Probability/Loss Severity framework (previously a Probability of Default/Loss Given Default framework). The impact of this change resulted in a $0.6 million decrease to the total ACL as of December 31, 2024. The Company’s methodology is more fully described in Note 1. Organization and Summary of Significant Accounting Policies.

Rollforward of the Allowance for Credit Losses

The following presents the activity in the ACL by class of loans and leases for the years ended December 31, 2024, 2023 and 2022:

Year Ended December 31, 2024

Commercial Lending

Residential Lending

Commercial

Home

and

Real

Lease

Residential

Equity

(dollars in thousands)

Industrial

Estate

Construction

Financing

Mortgage

Line

Consumer

Total

Allowance for credit losses:

Balance at beginning of year

14,956

43,944

10,392

1,754

36,880

11,728

36,879

156,533

Charge-offs

(3,615)

(400)

—

(18,002)

(22,017)

Recoveries

919

—

119

274

7,057

8,369

Provision

4,072

(2,920)

(1,822)

515

2,231

(1,797)

17,229

17,508

Balance at end of year

16,332

40,624

8,570

2,269

39,230

10,205

43,163

160,393


	Year Ended December 31, 2023
	Commercial Lending								Residential Lending
	Commercial		Commercial								Home
	and		Real				Lease		Residential		Equity
(dollars in thousands)	Industrial		Estate		Construction		Financing		Mortgage		Line		Consumer		Total
Allowance for credit losses:
Balance at beginning of year	$	14,564	$	43,810	$	5,843	$	1,551	$	35,175	$	8,296	$	34,661	$	143,900
Charge-offs		(3,482)		(2,500)		—		—		(122)		(292)		(17,110)		(23,506)
Recoveries		3,346		—		—		—		141		702		7,090		11,279
Provision		528		2,634		4,549		203		1,686		3,022		12,238		24,860
Balance at end of year	$	14,956	$	43,944	$	10,392	$	1,754	$	36,880	$	11,728	$	36,879	$	156,533


	Year Ended December 31, 2022
	Commercial Lending								Residential Lending
	Commercial		Commercial								Home
	and		Real				Lease		Residential		Equity
(dollars in thousands)	Industrial		Estate		Construction		Financing		Mortgage		Line		Consumer		Total
Allowance for credit losses:
Balance at beginning of year	$	20,080	$	42,951	$	9,773	$	1,659	$	34,364	$	5,642	$	42,793	$	157,262
Charge-offs		(2,012)		(750)		—		—		(103)		(1,175)		(16,848)		(20,888)
Recoveries		897		14		—		60		418		713		7,545		9,647
Provision		(4,401)		1,595		(3,930)		(168)		496		3,116		1,171		(2,121)
Balance at end of year	$	14,564	$	43,810	$	5,843	$	1,551	$	35,175	$	8,296	$	34,661	$	143,900

Rollforward of the Reserve for Unfunded Commitments

The following presents the activity in the Reserve for Unfunded Commitments for the years ended December 31, 2024, 2023 and 2022:

Year Ended December 31, 2024

Commercial Lending

Residential Lending

Commercial

Home

and

Real

Lease

Residential

Equity

(dollars in thousands)

Industrial

Estate

Construction

Financing

Mortgage

Line

Consumer

Total

Reserve for unfunded commitments:

Balance at beginning of year

9,116

1,787

8,048

—

16,589

35,605

Provision

(1,004)

(784)

(230)

—

(21)

(696)

(23)

(2,758)

Balance at end of year

8,112

1,003

7,818

—

15,893

32,847


	Year Ended December 31, 2023
	Commercial Lending								Residential Lending
	Commercial		Commercial								Home
	and		Real				Lease		Residential		Equity
(dollars in thousands)	Industrial		Estate		Construction		Financing		Mortgage		Line		Consumer		Total
Reserve for unfunded commitments:
Balance at beginning of year	$	7,811	$	2,004	$	7,470	$	—	$	30	$	16,483	$	37	$	33,835
Provision		1,305		(217)		578		—		(6)		106		4		1,770
Balance at end of year	$	9,116	$	1,787	$	8,048	$	—	$	24	$	16,589	$	41	$	35,605


	Year Ended December 31, 2022
	Commercial Lending								Residential Lending
	Commercial		Commercial								Home
	and		Real				Lease		Residential		Equity
(dollars in thousands)	Industrial		Estate		Construction		Financing		Mortgage		Line		Consumer		Total
Reserve for unfunded commitments:
Balance at beginning of year	$	8,615	$	2,114	$	8,963	$	—	$	15	$	10,546	$	69	$	30,322
Provision		(804)		(110)		(1,493)		—		15		5,937		(32)		3,513
Balance at end of year	$	7,811	$	2,004	$	7,470	$	—	$	30	$	16,483	$	37	$	33,835

Credit Quality Information

The Company performs an internal loan review and grading or scoring procedures on an ongoing basis. The review provides management with periodic information as to the quality of the loan portfolio and effectiveness of the Company’s lending policies and procedures. The objective of the loan review and grading or scoring procedures is to identify, in a timely manner, existing or emerging credit quality issues so that appropriate steps can be initiated to avoid or minimize future losses.

Loans and leases subject to grading primarily include: commercial and industrial loans, commercial real estate loans, construction loans and lease financing. Other loans subject to grading include installment loans to businesses or individuals for business and commercial purposes, overdraft lines of credit, commercial credit cards, and other credits as may be determined. Credit quality indicators for internally graded loans and leases are generally updated on an annual basis or on a quarterly basis for those loans and leases deemed to be of potentially higher risk.

An internal credit risk rating system is used to determine loan grade and is based on borrower credit risk and transactional risk. The loan grading process is a mechanism used to determine the risk of a particular borrower and is based on the following factors of a borrower: character, earnings and operating cash flow, asset and liability structure, debt capacity, management and controls, borrowing entity, and industry and operating environment.

Pass – “Pass” (uncriticized) loans and leases are not considered to carry greater than normal risk. The borrower has the apparent ability to satisfy obligations to the Company, and therefore no loss in ultimate collection is anticipated.

Special Mention – Loans and leases that have potential weaknesses that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for assets or in the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard – Loans and leases that are inadequately protected by the current financial condition and paying capacity of the obligor or by any collateral pledged. Loans and leases so classified must have a well-defined weakness or weaknesses that jeopardize the collection of the debt. They are characterized by the distinct possibility that the bank may sustain some loss if the deficiencies are not corrected.

Doubtful – Loans and leases that have weaknesses found in substandard borrowers with the added provision that the weaknesses make collection of debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss – Loans and leases classified as loss are considered uncollectible and of such little value that their continuance as an asset is not warranted. This classification does not mean that the loan or lease has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future.

Loans that are primarily monitored for credit quality using FICO scores include: residential mortgage loans, home equity lines and consumer loans. FICO scores are calculated primarily based on a consideration of payment history, the current amount of debt, the length of credit history available, a recent history of new sources of credit and the mix of credit type. FICO scores are updated on a monthly, quarterly or bi-annual basis, depending on the product type.

The amortized cost basis by year of origination and credit quality indicator of the Company's loans and leases as of December 31, 2024 was as follows:

Revolving

Loans

Converted

Term Loans

Revolving

to Term

Amortized Cost Basis by Origination Year

Loans

Amortized

(dollars in thousands)

2024

2023

2022

2021

2020

Prior

Cost Basis

Total

Commercial Lending

Commercial and Industrial

Risk rating:

Pass

163,980

73,554

185,433

249,532

17,775

256,119

1,118,075

14,336

2,078,804

Special Mention

808

2,385

1,209

300

1,322

41,520

—

47,612

Substandard

—

8,096

196

309

1,114

26,089

—

35,804

Other ⁽¹⁾

17,132

8,928

6,937

2,797

765

1,279

47,370

—

85,208

Total Commercial and Industrial

181,920

84,867

201,675

252,593

19,149

259,834

1,233,054

14,336

2,247,428

Current period gross charge-offs

—

578

335

105

221

2,376

—

3,615

Commercial Real Estate

Risk rating:

Pass

322,405

369,948

832,005

634,722

308,156

1,720,243

116,682

7,703

4,311,864

Special Mention

9,014

2,252

7,510

41,399

3,265

10,860

11,861

—

86,161

Substandard

—

54,952

1,002

—

9,732

148

—

65,834

Other ⁽¹⁾

—

133

—

133

Total Commercial Real Estate

331,419

372,200

894,467

677,123

311,421

1,740,968

128,691

7,703

4,463,992

Current period gross charge-offs

—

400

—

400

Construction

Risk rating:

Pass

91,583

198,382

332,000

186,682

41,596

13,824

14,972

—

879,039

Special Mention

—

155

—

155

Other ⁽¹⁾

12,482

9,688

10,861

1,561

1,199

2,644

697

—

39,132

Total Construction

104,065

208,070

342,861

188,243

42,795

16,623

15,669

—

918,326

Current period gross charge-offs

—

Lease Financing

Risk rating:

Pass

149,615

101,684

60,898

14,328

17,703

84,663

—

428,891

Special Mention

—

220

—

220

Substandard

4,657

565

317

—

5,539

Total Lease Financing

154,272

102,249

61,215

14,548

17,703

84,663

—

434,650

Current period gross charge-offs

—

Total Commercial Lending

771,676

767,386

1,500,218

1,132,507

391,068

2,102,088

1,377,414

22,039

8,064,396

Current period gross charge-offs

—

578

335

105

221

2,776

—

4,015

(continued)


															Revolving
															Loans
															Converted
	Term Loans												Revolving		to Term
	Amortized Cost Basis by Origination Year												Loans		Loans
(continued)													Amortized		Amortized
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		Cost Basis		Cost Basis		Total
Residential Lending
Residential Mortgage
FICO:
740 and greater	$	168,067	$	187,710	$	492,845	$	946,390	$	498,443	$	1,115,557	$	—	$	—	$	3,409,012
680 - 739		18,368		34,901		65,735		103,622		57,369		138,469		—		—		418,464
620 - 679		1,726		4,380		23,556		19,355		14,058		40,471		—		—		103,546
550 - 619		—		820		6,526		7,745		4,042		13,783		—		—		32,916
Less than 550		—		734		775		2,264		1,559		6,342		—		—		11,674
No Score ⁽³⁾		13,211		6,719		16,839		9,916		5,518		45,604		—		—		97,807
Other ⁽²⁾		9,456		12,404		16,564		14,311		10,769		28,812		2,419		—		94,735
Total Residential Mortgage		210,828		247,668		622,840		1,103,603		591,758		1,389,038		2,419		—		4,168,154
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Home Equity Line
FICO:
740 and greater		—		—		—		—		—		—		925,749		1,652		927,401
680 - 739		—		—		—		—		—		—		161,523		1,030		162,553
620 - 679		—		—		—		—		—		—		39,235		1,220		40,455
550 - 619		—		—		—		—		—		—		13,006		416		13,422
Less than 550		—		—		—		—		—		—		5,993		563		6,556
No Score ⁽³⁾		—		—		—		—		—		—		1,352		—		1,352
Total Home Equity Line		—		—		—		—		—		—		1,146,858		4,881		1,151,739
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Total Residential Lending	$	210,828	$	247,668	$	622,840	$	1,103,603	$	591,758	$	1,389,038	$	1,149,277	$	4,881	$	5,319,893
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer Lending
FICO:
740 and greater		92,329		65,738		84,007		44,192		14,607		6,897		101,938		106		409,814
680 - 739		68,371		46,533		44,504		21,829		7,652		5,278		86,935		509		281,611
620 - 679		30,618		17,728		19,942		10,252		4,195		4,152		50,544		775		138,206
550 - 619		6,108		6,768		9,312		5,702		2,574		3,106		15,641		778		49,989
Less than 550		2,012		3,950		5,572		3,594		1,591		1,830		5,311		593		24,453
No Score ⁽³⁾		1,881		106		38		—		7		9		38,932		176		41,149
Other ⁽²⁾		—		—		277		887		99		956		76,528		—		78,747
Total Consumer Lending	$	201,319	$	140,823	$	163,652	$	86,456	$	30,725	$	22,228	$	375,829	$	2,937	$	1,023,969
Current period gross charge-offs	$	732	$	2,055	$	2,606	$	1,388	$	676	$	2,685	$	7,168	$	692	$	18,002

Total Loans and Leases	$	1,183,823	$	1,155,877	$	2,286,710	$	2,322,566	$	1,013,551	$	3,513,354	$	2,902,520	$	29,857	$	14,408,258
Current period gross charge-offs	$	732	$	2,633	$	2,941	$	1,493	$	897	$	5,461	$	7,168	$	692	$	22,017

(1)	Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score (680 and above). As of December 31, 2024, the majority of the loans in this population were current.

(2)	Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating. As of December 31, 2024, the majority of the loans in this population were current.

(3)	No FICO scores are primarily related to loans and leases extended to non-residents. Loans and leases of this nature are primarily secured by collateral and/or are closely monitored for performance.

The amortized cost basis by year of origination and credit quality indicator of the Company's loans and leases as of December 31, 2023 was as follows:


															Revolving
															Loans
															Converted
	Term Loans												Revolving		to Term
	Amortized Cost Basis by Origination Year												Loans		Loans
													Amortized		Amortized
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Cost Basis		Cost Basis		Total
Commercial Lending
Commercial and Industrial
Risk rating:
Pass	$	85,839	$	273,663	$	346,024	$	32,753	$	146,893	$	141,681	$	971,065	$	1,823	$	1,999,741
Special Mention		1		44,069		80		653		1,032		1,290		22,807		14		69,946
Substandard		—		342		230		677		1,686		829		8,330		—		12,094
Other ⁽¹⁾		15,978		11,598		4,814		2,370		1,702		1,125		45,981		—		83,568
Total Commercial and Industrial		101,818		329,672		351,148		36,453		151,313		144,925		1,048,183		1,837		2,165,349
Current period gross charge-offs		130		70		75		87		168		2,952		—		—		3,482

Commercial Real Estate
Risk rating:
Pass		346,369		872,783		676,362		337,529		523,446		1,414,613		74,238		1,350		4,246,690
Special Mention		2,307		7,618		41,320		1,359		13,550		11,998		819		—		78,971
Substandard		205		5,079		2,003		—		2,953		2,545		1,655		—		14,440
Other ⁽¹⁾		—		—		—		—		—		142		—		—		142
Total Commercial Real Estate		348,881		885,480		719,685		338,888		539,949		1,429,298		76,712		1,350		4,340,243
Current period gross charge-offs		—		—		—		—		2,500		—		—		—		2,500

Construction
Risk rating:
Pass		156,432		269,623		265,674		60,057		63,018		27,847		6,070		—		848,721
Special Mention		—		—		—		—		189		665		—		—		854
Other ⁽¹⁾		12,728		21,036		8,250		2,143		2,031		3,820		709		—		50,717
Total Construction		169,160		290,659		273,924		62,200		65,238		32,332		6,779		—		900,292
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Lease Financing
Risk rating:
Pass		145,914		82,833		18,680		31,791		30,299		68,520		—		—		378,037
Special Mention		56		137		414		35		—		—		—		—		642
Substandard		712		416		—		—		2		—		—		—		1,130
Total Lease Financing		146,682		83,386		19,094		31,826		30,301		68,520		—		—		379,809
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Total Commercial Lending	$	766,541	$	1,589,197	$	1,363,851	$	469,367	$	786,801	$	1,675,075	$	1,131,674	$	3,187	$	7,785,693
Current period gross charge-offs	$	130	$	70	$	75	$	87	$	2,668	$	2,952	$	—	$	—	$	5,982

(continued)


															Revolving
															Loans
															Converted
	Term Loans												Revolving		to Term
	Amortized Cost Basis by Origination Year												Loans		Loans
(continued)													Amortized		Amortized
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Cost Basis		Cost Basis		Total
Residential Lending
Residential Mortgage
FICO:
740 and greater	$	211,598	$	529,296	$	999,522	$	529,881	$	227,058	$	987,251	$	—	$	—	$	3,484,606
680 - 739		36,975		67,205		117,337		68,122		33,148		130,387		—		—		453,174
620 - 679		3,544		16,395		19,184		12,811		4,096		38,987		—		—		95,017
550 - 619		1,305		6,521		1,917		2,492		398		11,679		—		—		24,312
Less than 550		—		—		2,909		2,017		582		6,439		—		—		11,947
No Score ⁽³⁾		9,137		19,311		11,492		6,043		9,679		51,109		—		—		106,771
Other ⁽²⁾		15,802		17,528		17,432		12,534		8,599		25,513		10,080		—		107,488
Total Residential Mortgage		278,361		656,256		1,169,793		633,900		283,560		1,251,365		10,080		—		4,283,315
Current period gross charge-offs		—		—		—		—		—		122		—		—		122

Home Equity Line
FICO:
740 and greater		—		—		—		—		—		—		964,932		1,511		966,443
680 - 739		—		—		—		—		—		—		151,716		1,920		153,636
620 - 679		—		—		—		—		—		—		36,541		1,189		37,730
550 - 619		—		—		—		—		—		—		9,896		1,012		10,908
Less than 550		—		—		—		—		—		—		4,488		100		4,588
No Score ⁽³⁾		—		—		—		—		—		—		1,283		—		1,283
Total Home Equity Line		—		—		—		—		—		—		1,168,856		5,732		1,174,588
Current period gross charge-offs		—		—		—		—		—		—		273		19		292

Total Residential Lending	$	278,361	$	656,256	$	1,169,793	$	633,900	$	283,560	$	1,251,365	$	1,178,936	$	5,732	$	5,457,903
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	122	$	273	$	19	$	414

Consumer Lending
FICO:
740 and greater		92,117		128,358		76,148		33,507		21,819		8,970		123,592		155		484,666
680 - 739		68,865		71,031		37,925		17,116		13,270		5,690		76,645		401		290,943
620 - 679		28,533		29,229		16,919		7,843		7,972		4,624		35,210		781		131,111
550 - 619		4,996		10,859		7,760		4,917		4,651		2,986		13,223		925		50,317
Less than 550		1,790		6,370		4,842		2,796		2,905		2,040		5,222		455		26,420
No Score ⁽³⁾		1,545		229		—		—		1		10		42,933		136		44,854
Other ⁽²⁾		361		368		982		335		1,059		1		78,484		—		81,590
Total Consumer Lending	$	198,207	$	246,444	$	144,576	$	66,514	$	51,677	$	24,321	$	375,309	$	2,853	$	1,109,901
Current period gross charge-offs	$	639	$	2,400	$	2,135	$	1,142	$	1,816	$	2,622	$	5,790	$	566	$	17,110

Total Loans and Leases	$	1,243,109	$	2,491,897	$	2,678,220	$	1,169,781	$	1,122,038	$	2,950,761	$	2,685,919	$	11,772	$	14,353,497
Current period gross charge-offs	$	769	$	2,470	$	2,210	$	1,229	$	4,484	$	5,696	$	6,063	$	585	$	23,506

(1)	Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score (680 and above). As of December 31, 2023, the majority of the loans in this population were current.

(2)	Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating. As of December 31, 2023, the majority of the loans in this population were current.

(3)	No FICO scores are primarily related to loans and leases extended to non-residents. Loans and leases of this nature are primarily secured by collateral and/or are closely monitored for performance.

There were no loans and leases graded as Loss as of December 31, 2024 and 2023.

Past-Due Status

The Company continually updates its aging analysis for loans and leases to monitor the migration of loans and leases into past due categories. The Company considers loans and leases that are delinquent for 30 days or more to be past due. As of December 31, 2024 and 2023, the aging analysis of the amortized cost basis of the Company’s past due loans and leases was as follows:

December 31, 2024

Past Due

Loans and

Greater

Leases Past

Than or

Due 90 Days

30-59

60-89

Equal to

or More and

Days

90 Days

Total

Total Loans

Still Accruing

(dollars in thousands)

Past Due

Current

and Leases

Interest

Commercial and industrial

1,481

563

1,595

3,639

2,243,789

2,247,428

1,432

Commercial real estate

—

153

4,463,839

4,463,992

—

Construction

434

1,179

536

2,149

916,177

918,326

536

Lease financing

—

434,650

—

Residential mortgage

19,971

7,478

9,392

36,841

4,131,313

4,168,154

1,317

Home equity line

5,647

972

3,945

10,564

1,141,175

1,151,739

—

Consumer

17,591

3,946

2,734

24,271

999,698

1,023,969

2,734

Total

45,124

14,138

18,355

77,617

14,330,641

14,408,258

6,019


	December 31, 2023
	Past Due												Loans and
					Greater								Leases Past
					Than or								Due 90 Days
	30-59		60-89		Equal to								or More and
	Days		Days		90 Days		Total				Total Loans		Still Accruing
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		and Leases		Interest
Commercial and industrial	$	2,611	$	349	$	1,464	$	4,424	$	2,160,925	$	2,165,349	$	494
Commercial real estate		—		196		300		496		4,339,747		4,340,243		300
Construction		25,191		—		—		25,191		875,101		900,292		—
Lease financing		—		—		—		—		379,809		379,809		—
Residential mortgage		5,244		1,475		4,720		11,439		4,271,876		4,283,315		—
Home equity line		5,940		624		3,550		10,114		1,164,474		1,174,588		—
Consumer		23,259		3,897		2,702		29,858		1,080,043		1,109,901		2,702
Total	$	62,245	$	6,541	$	12,736	$	81,522	$	14,271,975	$	14,353,497	$	3,496

Nonaccrual Loans and Leases

The Company generally places a loan or lease on nonaccrual status when management believes that collection of principal or interest has become doubtful or when a loan or lease becomes 90 days past due as to principal or interest, unless it is well secured and in the process of collection. The Company charges off a loan or lease when facts indicate that the loan or lease is considered uncollectible.

The amortized cost basis of loans and leases on nonaccrual status as of December 31, 2024 and 2023 and the amortized cost basis of loans and leases on nonaccrual status with no allowance for credit losses as of December 31, 2024 and 2023 were as follows:


	December 31, 2024
	Nonaccrual
	Loans
	and Leases
	With No		Nonaccrual
	Allowance		Loans
(dollars in thousands)	for Credit Losses		and Leases
Commercial and industrial	$	—	$	329
Commercial real estate		—		411
Residential mortgage		4,495		12,768
Home equity line		501		7,171
Total Nonaccrual Loans and Leases	$	4,996	$	20,679


	December 31, 2023
	Nonaccrual
	Loans
	and Leases
	With No		Nonaccrual
	Allowance		Loans
(dollars in thousands)	for Credit Losses		and Leases
Commercial and industrial	$	—	$	970
Commercial real estate		2,685		2,953
Residential mortgage		2,667		7,620
Home equity line		1,163		7,052
Total Nonaccrual Loans and Leases	$	6,515	$	18,595

During the years ended December 31, 2024, 2023 and 2022, the Company recognized interest income of $1.1 million, $0.6 million and $0.4 million, respectively, on nonaccrual loans and leases. Furthermore, for the years ended December 31, 2024, 2023 and 2022, the amount of accrued interest receivables written off by reversing interest income was $1.1 million, $1.0 million and $0.9 million, respectively.

Collateral-Dependent Loans and Leases

Collateral-dependent loans and leases are those for which repayment (on the basis of the Company’s assessment as of the reporting date) is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. As of December 31, 2024 and 2023, the amortized cost basis of collateral-dependent loans was $39.1 million and $11.1 million, respectively. As of December 31, 2024, these loans were primarily collateralized by residential real estate property and borrower assets and the fair value of collateral on substantially all collateral-dependent loans were significantly in excess of their amortized cost basis. As of December 31, 2023, these loans were primarily collateralized by residential real estate property and the fair value of collateral on substantially all collateral-dependent loans were significantly in excess of their amortized cost basis.

Loan Modifications to Borrowers Experiencing Financial Difficulty

Commercial and industrial loans with a borrower experiencing financial difficulty may be modified through interest rate reductions, term extensions, and converting revolving credit lines to term loans. Modifications of commercial real estate and construction loans with a borrower experiencing financial difficulty may involve reducing the interest rate for the remaining term of the loan or extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk. Modifications of construction loans with a borrower experiencing financial difficulty may also involve extending the interest-only payment period. Interest continues to accrue on the missed payments and as a result, the effective yield on the loan remains unchanged. Modifications of residential real estate loans with a borrower experiencing financial difficulty may be comprised of loans where monthly payments are lowered to accommodate the borrowers’ financial needs for a period of time, including extended interest-only periods and reamortization of the balance. Modifications of consumer loans with a borrower experiencing financial difficulty may involve interest rate reductions and term extensions.

Loans modified with a borrower experiencing financial difficulty, whether in default or not, may already be on nonaccrual status and in some cases, partial charge-offs may have already been taken against the outstanding loan balance. Loans modified with a borrower experiencing financial difficulty are evaluated for impairment. As a result, this may have a financial effect of impacting the specific ACL associated with the loan. An ACL for impaired commercial loans, including commercial real estate and construction loans, is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or if the loan is collateral-dependent, the estimated fair value of the collateral, less any selling costs. An ACL for impaired residential real estate loans is measured based on the estimated fair value of the collateral, less any selling costs. Management exercises significant judgment in developing these estimates.

The following tables present, by class of financing receivable and type of modification granted, the amortized cost basis as of December 31, 2024 and 2023, related to loans modified to borrowers experiencing financial difficulty during the years ended December 31, 2024 and 2023, respectively:


		Interest Rate Reduction
		Year Ended December 31,				Year Ended December 31,
		2024				2023
		Amortized	% of Total Class			Amortized	% of Total Class
(dollars in thousands)		Cost Basis⁽¹⁾	of Financing Receivable			Cost Basis⁽¹⁾	of Financing Receivable
Commercial real estate	$	—	—	%	$	5	n/m	%
Consumer		1,485	0.15			1,161	0.10
Total	$	1,485	0.01	%	$	1,166	0.01	%

n/m – Represents less than 0.01% of total class of financing receivable.

(1)	The amortized cost basis reflects all partial paydowns and charge-offs since the modification date and do not include loans modified to borrowers experiencing financial difficulty that have been fully paid off, charged off, or foreclosed upon by the end of the year.


		Term Extension
		Year Ended December 31,				Year Ended December 31,
		2024				2023
		Amortized	% of Total Class			Amortized	% of Total Class
(dollars in thousands)		Cost Basis⁽¹⁾	of Financing Receivable			Cost Basis⁽¹⁾	of Financing Receivable
Commercial and industrial	$	456	0.02	%	$	524	0.02	%
Commercial real estate		1,861	0.04			3,114	0.07
Construction		—	—			665	0.07
Residential mortgage		1,057	0.03			1,410	0.03
Consumer		263	0.03			135	0.01
Total	$	3,637	0.03	%	$	5,848	0.04	%

(1)	The amortized cost basis reflects all partial paydowns and charge-offs since the modification date and do not include loans modified to borrowers experiencing financial difficulty that have been fully paid off, charged off, or foreclosed upon by the end of the year.

Other-Than-Insignificant Payment Delay

Year Ended December 31,

2024

2023

Amortized

% of Total Class

Amortized

% of Total Class

(dollars in thousands)

Cost Basis⁽¹⁾

of Financing Receivable

Cost Basis⁽¹⁾

of Financing Receivable

Residential mortgage

1,966

0.05

—

Total

1,966

0.01

—

(1)	The amortized cost basis reflects all partial paydowns and charge-offs since the modification date and do not include loans modified to borrowers experiencing financial difficulty that have been fully paid off, charged off, or foreclosed upon by the end of the year.

The following tables describe, by class of financing receivable and type of modification granted, the financial effect of the modifications made to borrowers experiencing financial difficulty during the years ended December 31, 2024 and 2023, respectively:


	Interest Rate Reduction
	Financial Effect
	Year Ended December 31, 2024	Year Ended December 31, 2023
Commercial real estate	—	Reduced weighted-average contractual interest rate by 0.75%.
Consumer	Reduced weighted-average contractual interest rate by 13.47%.	Reduced weighted-average contractual interest rate by 13.01%.


	Term Extension
	Financial Effect
	Year Ended December 31, 2024	Year Ended December 31, 2023
Commercial and industrial	Added a weighted-average 3.6 years to the life of loans.	Added a weighted-average 2.1 years to the life of loans.
Commercial real estate	Added a weighted-average 0.8 years to the life of loans.	Added a weighted-average 2.1 years to the life of loans.
Construction	—	Added a weighted-average 1.0 years to the life of loans.
Residential mortgage	Added a weighted-average 0.8 years to the life of loans.	Added a weighted-average 2.1 years to the life of loans.
Consumer	Added a weighted-average 4.7 years to the life of loans.	Added a weighted-average 3.8 years to the life of loans.


	Other-Than-Insignificant Payment Delay
	Financial Effect
	Year Ended December 31, 2024	Year Ended December 31, 2023
Residential mortgage	Deferred a weighted-average of $342 thousand in loan payments.	—

The following table presents, by class of financing receivable and type of modification granted, the amortized cost basis, as of December 31, 2024 and 2023, of loans that had a payment default during the years ended December 31, 2024 and 2023, respectively, and were modified in the 12 months before default to borrowers experiencing financial difficulty. The Company is reporting these defaulted loans based on a payment default definition of 30 days past due:


	Amortized Cost Basis of Modified Loans That Subsequently Defaulted⁽¹⁾
	Year Ended December 31, 2024				Year Ended December 31, 2023
(dollars in thousands)	Interest Rate Reduction		Term Extension		Interest Rate Reduction		Term Extension
Commercial and industrial	$	—	$	121	$	—	$	—
Residential mortgage		—		316		—		—
Consumer		807		26		318		6
Total	$	807	$	463	$	318	$	6

(1)	The amortized cost basis reflects all partial paydowns and charge-offs since the modification date and do not include loans modified to borrowers experiencing financial difficulty that have been fully paid off, charged off, or foreclosed upon by the end of the year.

Performance of the loans that are modified to borrowers experiencing financial difficulty is monitored to understand the effectiveness of the Company’s modification efforts. As of December 31, 2024 and 2023, the aging analysis of the amortized cost basis of the performance of loans that have been modified in the last 12 months related to borrowers experiencing financial difficulty was as follows:

December 31, 2024

Past Due

Greater Than

or Equal to

30-59 Days

60-89 Days

90 Days

Total

(dollars in thousands)

Past Due

Current

Total

Commercial and industrial

—

456

Commercial real estate

—

1,861

Residential mortgage

—

316

2,707

3,023

Consumer

120

269

104

493

1,255

1,748

Total

120

269

420

809

6,279

7,088


		December 31, 2023
		Past Due
						Greater Than
						or Equal to
		30-59 Days		60-89 Days		90 Days		Total
(dollars in thousands)		Past Due		Past Due		Past Due		Past Due		Current		Total
Commercial and industrial	$	—	$	—	$	—	$	—	$	524	$	524
Commercial real estate		—		—		—		—		3,119		3,119
Construction		—		—		—		—		665		665
Residential mortgage		—		—		—		—		1,410		1,410
Consumer		107		70		15		192		1,104		1,296
Total	$	107	$	70	$	15	$	192	$	6,822	$	7,014

The Company had commitments to extend credit, standby letters of credit, and commercial letters of credit totaling $6.0 billion and $6.5 billion as of December 31, 2024 and 2023, respectively. Of the $6.0 billion at December 31, 2024, there were no commitments to lend additional funds to borrowers experiencing financial difficulty for which the Company had modified the terms of the loans in the form of an interest rate reduction, term extension or other-than-insignificant payment delay during the year ended December 31, 2024. Of the $6.5 billion at December 31, 2023, there were commitments of $5.0 million to lend additional funds to borrowers experiencing financial difficulty for which the Company had modified the terms of the loans in the form of an interest rate reduction or a term extension during the year ended December 31, 2023.

Troubled Debt Restructuring Disclosures Prior to Adoption of ASU No. 2022-02

Prior to the adoption of ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures, the Company accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulty as a troubled debt restructuring (“TDR”). On January 1, 2023, the Company adopted ASU No. 2022-02, which eliminated TDR accounting prospectively for all restructurings occurring on or after January 1, 2023. Loans that were restructured in a TDR prior to the adoption of ASU No. 2022-02 will continue to be accounted for under the historical TDR accounting until the loan is paid off or subsequently modified. The disclosures below related to TDRs for prior periods are presented in accordance with Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors.

Commercial and industrial loans modified in a TDR may have involved temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Modifications of commercial real estate and construction loans in a TDR may have involved reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Modifications of construction loans in a TDR may have also involved extending the interest-only payment period. Interest continued to accrue on the missed payments and as a result, the effective yield on the loan remained unchanged. Residential real estate loans modified in a TDR may have been comprised of loans where monthly payments were lowered to accommodate the borrowers’ financial needs for a period of time, including extended interest-only periods and reamortization of the balance. Modifications of consumer loans in a TDR may have involved temporary or permanent reduced payments, temporary interest-only payments and below-market interest rates.

Loans modified in a TDR may have already been on nonaccrual status and in some cases, partial charge-offs may have already been taken against the outstanding loan balance. Loans modified in a TDR were evaluated for impairment. As a result, this may have had a financial effect of impacting the specific ACL associated with the loan. An ACL for impaired commercial loans, including commercial real estate and construction loans, that had been modified in a TDR was measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or if the loan was collateral-dependent, the estimated fair value of the collateral, less any selling costs. An ACL for impaired residential real estate loans that had been modified in a TDR was measured based on the estimated fair value of the collateral, less any selling costs. Management exercised significant judgment in developing these estimates.

The following presents, by class, information related to loans modified in a TDR during the year ended December 31, 2022, presented in accordance with Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors:


	Year Ended December 31, 2022
	Number of	Recorded		Related
(dollars in thousands)	Contracts⁽¹⁾	Investment⁽²⁾		ACL
Commercial and industrial	5	$	205	$	17
Residential mortgage	1		247		31
Consumer	258		2,173		443
Total	264	$	2,625	$	491

(1)	The number of contracts does not include TDRs that have been fully paid off, charged off or foreclosed upon by the end of the year.

(2)	The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off or foreclosed upon by the end of the year.

The above loans were modified in a TDR through an extension of maturity dates, reduced payments, or below-market interest rates.

The following table presents, by class, loans modified in TDRs that have defaulted during the year ended December 31, 2022 within 12 months of their permanent modification date for the year indicated, presented in accordance with Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors. The Company was reporting these defaulted TDRs based on a payment default definition of 30 days past due:



	Year Ended December 31, 2022
	Number of	Recorded
(dollars in thousands)	Contracts⁽¹⁾	Investment⁽²⁾
Commercial and industrial	2	$	541
Consumer	213		2,623
Total	215	$	3,164

(1)	The number of contracts does not include TDRs that have been fully paid off, charged off or foreclosed upon by the end of the year.

(2)	The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off or foreclosed upon by the end of the year.

Foreclosed Property

As of both December 31, 2024 and 2023, there were no residential real estate properties held from foreclosed residential mortgage loans.