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Allowance for Credit Losses and Credit Quality of Loans

12 Months Ended

Dec. 31, 2024

Allowance for Credit Losses and Credit Quality of Loans [Abstract]

Allowance for Credit Losses and Credit Quality of Loans

6.	Allowance for Credit Losses and Credit Quality of Loans

The allowance for credit losses totaled $116.0 million at December 31, 2024, compared to $114.4 million at December 31, 2023. The allowance for credit losses as a percentage of loans was 1.16% at December 31, 2024, compared to 1.19% at December 31, 2023.

The allowance for credit losses calculation incorporated a 6-quarter forecast period to account for forecast economic conditions under each scenario utilized in the measurement. For periods beyond the 6-quarter forecast, the model reverts to long-term economic conditions over a 4-quarter reversion period on a straight-line basis. The Company considers a baseline, upside and downside economic forecast in measuring the allowance.

The quantitative model as of December 31, 2024 incorporated a baseline economic outlook along with an alternative downside scenario sourced from a reputable third-party to accommodate other potential economic conditions in the model. At December 31, 2024, the weightings were 80% and 20% for the baseline and downside economic forecasts, respectively. The baseline outlook reflected a Northeast unemployment rate environment starting at 4.1% and increasing slightly during the forecast period to 4.2%. Northeast Gross Domestic Product (“GDP’s”) annualized growth (on a quarterly basis) is expected to start the first quarter of 2025 at approximately 3.8% before decreasing to a low of 2.6% in the third quarter of 2025 and then increasing to 3.9% by the end of the forecast period. Key assumptions in the baseline economic outlook included two 25 basis point federal funds rate cuts in 2025, quantitative tightening ending in early 2025, a post-election fiscal outlook with lower spending, lower taxes, and higher tariffs, and the economy currently being near full employment. The alternative downside scenario assumed deteriorated economic conditions from the baseline outlook. Under this scenario, Northeast unemployment increases to a peak of 7.5% in the first quarter of 2026. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2024. Additional qualitative adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools, considerations for inflation and recent trends in asset value indices. Additional monitoring for industry concentrations, loan growth and policy exceptions was also conducted.

The quantitative model as of December 31, 2023 incorporated a baseline economic outlook along with an alternative downside scenario sourced from a reputable third-party to accommodate other potential economic conditions in the model. At December 31, 2023, the weightings were 70% and 30% for the baseline and downside economic forecasts, respectively. The baseline outlook reflected an unemployment rate environment starting at 3.8% and increasing slightly during the forecast period to 4.1%. Northeast GDP’s annualized growth (on a quarterly basis) was expected to start the first quarter of 2024 at approximately 3.7% before decreasing to a low of 2.9% in the third quarter of 2024 and then increasing to 3.8% by the end of the forecast period. Other utilized economic variable forecasts are mixed compared to the prior year, with retail sales improving, business output mixed and housing starts down. Key assumptions in the baseline economic outlook included currently being in a full employment economy, continued tapering of the Federal Reserve balance sheet and the Federal Open Market Committee beginning to cut rates in the second quarter of 2024. The alternative downside scenario assumed deteriorated economic conditions from the baseline outlook. Under this scenario, Northeast unemployment increases to a peak of 7.0% in the first quarter of 2025. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2023. Additional qualitative adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools, considerations for inflation and recent trends in asset value indices. Additional monitoring for industry concentrations, loan growth and policy exceptions was also conducted.

The quantitative model as of December 31, 2022 incorporated a baseline economic outlook along with an alternative downside scenario sourced from a reputable third-party to accommodate other potential economic conditions in the model. At December 31, 2022, the weightings were 50% and 50% for the baseline and downside economic forecasts, respectively. The baseline outlook reflected an unemployment rate environment initially around pre-coronavirus (“COVID-19”) levels levels at 3.9% that increases slightly during the forecast period to 4.0%. Northeast GDP’s annualized growth (on a quarterly basis) was expected to start the first quarter of 2023 at approximately 3.9% and hovering around 4.6% by the end of the forecast period. Other utilized economic variables have generally deteriorated in their respective forecasts, with retail sales and housing starts forecasts declining from the prior year. Key assumptions in the baseline economic outlook included a full employment economy being realized in the near future, continued tapering of the Federal Reserve balance sheet, an increasing yield on ten-year treasury securities and a gradual decline in global oil prices. The alternative downside scenario assumed deteriorated economic and pandemic related conditions from the baseline outlook. Under this scenario, Northeast unemployment rises from 3.9% in the fourth quarter of 2022 to a peak of 6.9% in the first quarter of 2024. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2022. Additional qualitative adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools, considerations for inflation and recent trends in asset value indices. Additional monitoring for industry concentrations, loan growth and policy exceptions was also conducted.

There were no loans purchased with credit deterioration during the year ended December 31, 2024. There were $219.5 million of PCD loans acquired from Salisbury during the year ended December 31, 2023, which resulted in an allowance for credit losses at acquisition of $5.8 million. During 2024, the Company purchased $3.0 million of residential loans at a 7.0% premium with a $31 thousand allowance for credit losses recorded for these loans. During 2023, the Company purchased $3.8 million of residential loans at a 7.0% premium with a $31 thousand allowance for credit losses recorded for these loans.

The Company made a policy election to report AIR in the other assets line item on the consolidated balance sheets. AIR on loans totaled $34.8 million at December 31, 2024 and $34.1 million at December 31, 2023 and with no estimated allowance for credit losses related to AIR at December 31, 2024 and 2023 as it is excluded from amortized cost.

The Company’s January 1, 2023 adoption of ASU 2022-02, Financial Instruments - CECL Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures resulted in an insignificant change to its methodology for estimating the allowance for credit losses on TDRs. The ASU eliminated the guidance on TDRs and requires an evaluation on all loan modifications to determine if they result in a new loan or a continuation of the existing loan. The decrease in allowance for credit loss on TDR loans relating to the adoption of ASU 2022-02 was $0.6 million.

The following tables present the activity in the allowance for credit losses by our portfolio segment:

(In thousands)	Commercial Loans			Consumer Loans			Residential			Total
Balance as of December 31, 2023	$	45,903		$	46,427		$	22,070		$	114,400
Charge-offs		(5,042	)		(20,475	)		(211	)		(25,728	)
Recoveries		839			6,467			415			7,721
Provision		3,753			11,568			4,286			19,607
Ending Balance as of December 31, 2024	$	45,453		$	43,987		$	26,560		$	116,000

Balance as of January 1, 2023 (after adoption of ASU 2022-02)	$	34,662		$	50,951		$	14,539		$	100,152
Allowance for credit loss on PCD acquired loans		5,300			19			453			5,772
Charge-offs		(4,154	)		(22,107	)		(517	)		(26,778	)
Recoveries		3,625			5,859			496			9,980
Provision		6,470			11,705			7,099			25,274
Ending Balance as of December 31, 2023	$	45,903		$	46,427		$	22,070		$	114,400

Balance as of December 31, 2021	$	28,941		$	44,253		$	18,806		$	92,000
Charge-offs		(1,870	)		(16,140	)		(633	)		(18,643	)
Recoveries		2,430			7,014			852			10,296
Provision		5,221			15,824			(3,898	)		17,147
Ending Balance as of December 31, 2022	$	34,722		$	50,951		$	15,127		$	100,800

The allowance for credit losses as of December 31, 2024 increased compared to the allowance estimates as of December 31, 2023 primarily due to providing for current year loan growth, the slowing of prepayment speed assumptions, including the changes in prepayment model assumptions. These increases to the allowance for credit losses were partially offset by the change in forecast scenario weightings from 70% baseline and 30% downside to 80% baseline and 20% downside, and the shift in loan composition driven by other consumer and residential solar portfolios that are in a planned run-off status. The increase in the allowance for credit losses from December 31, 2022 to December 31, 2023 was primarily due to the recording of $14.5 million of allowance for acquired Salisbury loans as of the acquisition date, which included both the $8.8 million of non-PCD allowance recognized through the provision for loan losses and the $5.8 million of PCD allowance reclassified from loans. The increase in the allowance for credit losses from December 31, 2021 to December 31, 2022 was primarily due to an increase in loan balances and a modest deterioration in the economic forecast.

Individually Evaluated Loans

The threshold for evaluating classified, commercial and CRE loans risk graded substandard or doubtful, and nonperforming loans individually evaluated for credit loss is $1.0 million. As of December 31, 2024, three relationships were identified for individual credit loss evaluation which had an amortized cost basis of $28.8 million, with no allowance for credit loss. As of December 31, 2023, two of the three same relationships were identified for individual credit loss evaluation which had an amortized cost basis of $17.3 million, with no allowance for credit loss.

The increase in the amortized cost basis on an individual relationship basis from December 31, 2023 to December 31, 2024 was primarily due to the addition of one new individually evaluated relationship with an amortized cost basis of $14.0 million. This increase was partially offset by $2.2 million of charge-offs experienced during the year on the other two individually evaluated relationships.

As of December 31, 2024 and 2023, there were $28.8 million and $17.3 million, respectively, of loans in nonaccrual status that were individually evaluated for expected credit loss without an allowance for credit losses.

The following table sets forth information with regard to past due and nonperforming loans by loan segment:

(In thousands)	31-60 Days Past Due Accruing		61-90 Days Past Due Accruing		Greater Than 90 Days Past Due Accruing		Total Past Due Accruing		Nonaccrual		Current		Recorded Total Loans
As of December 31, 2024
Commercial loans:
C&I	$	398	$	452	$	-	$	850	$	2,116	$	1,427,247	$	1,430,213
CRE		698		191		-		889		30,028		3,665,223		3,696,140
Total commercial loans	$	1,096	$	643	$	-	$	1,739	$	32,144	$	5,092,470	$	5,126,353
Consumer loans:
Auto	$	11,527	$	2,047	$	900	$	14,474	$	2,054	$	1,228,378	$	1,244,906
Residential solar		4,066		1,991		1,599		7,656		212		812,211		820,079
Other consumer		1,552		985		888		3,425		263		105,529		109,217
Total consumer loans	$	17,145	$	5,023	$	3,387	$	25,555	$	2,529	$	2,146,118	$	2,174,202
Residential	$	3,360	$	467	$	2,411	$	6,238	$	11,146	$	2,651,971	$	2,669,355
Total loans	$	21,601	$	6,133	$	5,798	$	33,532	$	45,819	$	9,890,559	$	9,969,910

(In thousands)	31-60 Days Past Due Accruing		61-90 Days Past Due Accruing		Greater Than 90 Days Past Due Accruing		Total Past Due Accruing		Nonaccrual		Current		Recorded Total Loans
As of December 31, 2023
Commercial loans:
C&I	$	414	$	33	$	1	$	448	$	3,441	$	1,393,616	$	1,397,505
CRE		803		835		-		1,638		18,126		3,413,984		3,433,748
Total commercial loans	$	1,217	$	868	$	1	$	2,086	$	21,567	$	4,807,600	$	4,831,253
Consumer loans:
Auto	$	10,115	$	2,011	$	1,067	$	13,193	$	2,106	$	1,084,143	$	1,099,442
Residential solar		3,074		1,301		915		5,290		245		912,220		917,755
Other consumer		2,343		1,811		1,124		5,278		215		164,867		170,360
Total consumer loans	$	15,532	$	5,123	$	3,106	$	23,761	$	2,566	$	2,161,230	$	2,187,557
Residential	$	3,836	$	399	$	554	$	4,789	$	10,080	$	2,617,034	$	2,631,903
Total loans	$	20,585	$	6,390	$	3,661	$	30,636	$	34,213	$	9,585,864	$	9,650,713

Credit Quality Indicators

The Company has developed an internal loan grading system to evaluate and quantify the Company’s loan portfolio with respect to quality and risk, focusing on, among other things, borrower’s financial strength, experience and depth of borrower’s management, primary and secondary sources of repayment, payment history, nature of the business and industry outlook. The internal grading system enables the Company to monitor the quality of the entire loan portfolio on a consistent basis and provide management with an early warning system, which facilitates recognition and response to problem loans and potential problem loans.

Commercial Grading System

For C&I and CRE loans, the Company uses a grading system that relies on quantifiable and measurable characteristics when available. This includes comparison of financial strength to available industry averages, comparison of transaction factors (loan terms and conditions) to loan policy and comparison of credit history to stated repayment terms and industry averages. Some grading factors are necessarily more subjective such as economic and industry factors, regulatory environment and management. C&I and CRE loans are graded Doubtful, Substandard, Special Mention and Pass.

Doubtful

A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as a loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral and refinancing. Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new information. Nonaccrual treatment is required for Doubtful assets because of the high probability of loss.

Substandard

Substandard loans have a high probability of payment default or they have other well-defined weaknesses. They require more intensive supervision by bank management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity or marginal capitalization. Repayment may depend on collateral or other credit risk mitigants. For some Substandard loans, the likelihood of full collection of interest and principal may be in doubt and those loans should be placed on nonaccrual. Although Substandard assets in the aggregate will have a distinct potential for loss, an individual asset’s loss potential does not have to be distinct for the asset to be rated Substandard.

Special Mention

Special Mention loans have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position at some future date. These loans pose elevated risk, but their weakness does not yet justify a Substandard classification. Borrowers may be experiencing adverse operating trends (i.e., declining revenues or margins) or may be struggling with an ill-proportioned balance sheet (i.e., increasing inventory without an increase in sales, high leverage and/or tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a Special Mention rating. Although a Special Mention loan has a higher PD than a Pass asset, its default is not imminent.

Pass

Loans graded as Pass encompass all loans not graded as Doubtful, Substandard or Special Mention. Pass loans are in compliance with loan covenants and payments are generally made as agreed. Pass loans range from superior quality to fair quality. Pass loans also include any portion of a government guaranteed loan, including Paycheck Protection Program loans.

Consumer and Residential Grading System

Consumer and Residential loans are graded as either Nonperforming or Performing.

Nonperforming

Nonperforming loans are loans that are (1) over 90 days past due and interest is still accruing or (2) on nonaccrual status.

Performing

All loans not meeting any of the above criteria are considered Performing.

The following tables illustrate the Company’s credit quality by loan class by vintage and includes gross charge-offs by vintage. Included in other consumer gross charge-offs for the year ended December 31, 2024, the Company recorded $0.2 million in overdrawn deposit accounts reported as 2023 originations and $0.7 million in overdrawn deposit accounts reported as 2024 originations. Included in other consumer gross charge-offs for the year ended December 31, 2023, the Company recorded $0.2 million in overdrawn deposit accounts reported as 2022 originations and $0.8 million in overdrawn deposit accounts reported as 2023 originations.

(In thousands)	2024			2023			2022			2021			2020			Prior			Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of December 31, 2024
C&I
By internally assigned grade:
Pass	$	255,824		$	166,780		$	180,095		$	177,839		$	118,826		$	101,755		$	349,443	$	3,588	$	1,354,150
Special mention		272			3,265			3,461			1,639			307			1,008			22,582		4,374		36,908
Substandard		2,419			3,895			2,183			1,555			173			3,878			23,231		1,751		39,085
Doubtful		-			67			2			1			-			-			-		-		70
Total C&I	$	258,515		$	174,007		$	185,741		$	181,034		$	119,306		$	106,641		$	395,256	$	9,713	$	1,430,213
Current-period gross charge-offs	$	-		$	(99	)	$	(1,063	)	$	(162	)	$	-		$	(1,352	)	$	-	$	-	$	(2,676	)
CRE
By internally assigned grade:
Pass	$	414,835		$	352,834		$	550,682		$	514,134		$	414,737		$	912,693		$	314,574	$	45,940	$	3,520,429
Special mention		2,573			14,406			23,747			7,440			4,310			16,888			2,044		1,222		72,630
Substandard		-			1,743			19,182			18,111			2,362			61,029			654		-		103,081
Total CRE	$	417,408		$	368,983		$	593,611		$	539,685		$	421,409		$	990,610		$	317,272	$	47,162	$	3,696,140
Current-period gross charge-offs	$	-		$	-		$	-		$	(2,366	)	$	-		$	-		$	-	$	-	$	(2,366	)
Auto
By payment activity:
Performing	$	557,817		$	321,545		$	238,232		$	90,143		$	19,931		$	14,284		$	-	$	-	$	1,241,952
Nonperforming		594			983			710			459			107			101			-		-		2,954
Total auto	$	558,411		$	322,528		$	238,942		$	90,602		$	20,038		$	14,385		$	-	$	-	$	1,244,906
Current-period gross charge-offs	$	(141	)	$	(1,478	)	$	(1,610	)	$	(837	)	$	(116	)	$	(347	)	$	-	$	-	$	(4,529	)
Residential solar
By payment activity:
Performing	$	4,381		$	121,755		$	398,030		$	166,018		$	56,612		$	71,472		$	-	$	-	$	818,268
Nonperforming		-			213			869			488			80			161			-		-		1,811
Total residential solar	$	4,381		$	121,968		$	398,899		$	166,506		$	56,692		$	71,633		$	-	$	-	$	820,079
Current-period gross charge-offs	$	-		$	(530	)	$	(4,441	)	$	(716	)	$	(201	)	$	(694	)	$	-	$	-	$	(6,582	)
Other consumer
By payment activity:
Performing	$	16,426		$	6,685		$	11,792		$	27,045		$	10,718		$	15,881		$	19,507	$	12	$	108,066
Nonperforming		12			43			207			433			209			202			15		30		1,151
Total other consumer	$	16,438		$	6,728		$	11,999		$	27,478		$	10,927		$	16,083		$	19,522	$	42	$	109,217
Current-period gross charge-offs	$	(735	)	$	(330	)	$	(2,080	)	$	(4,271	)	$	(1,036	)	$	(912	)	$	-	$	-	$	(9,364	)
Residential
By payment activity:
Performing	$	188,657		$	222,593		$	369,473		$	419,053		$	246,867		$	924,869		$	265,351	$	18,935	$	2,655,798
Nonperforming		580			765			766			2,507			160			8,779			-		-		13,557
Total residential	$	189,237		$	223,358		$	370,239		$	421,560		$	247,027		$	933,648		$	265,351	$	18,935	$	2,669,355
Current-period gross charge-offs	$	-		$	(34	)	$	-		$	-		$	-		$	(177	)	$	-	$	-	$	(211	)
Total loans	$	1,444,390		$	1,217,572		$	1,799,431		$	1,426,865		$	875,399		$	2,133,000		$	997,401	$	75,852	$	9,969,910
Current-period gross charge-offs	$	(876	)	$	(2,471	)	$	(9,194	)	$	(8,352	)	$	(1,353	)	$	(3,482	)	$	-	$	-	$	(25,728	)

(In thousands)	2023			2022			2021			2020			2019			Prior			Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of December 31, 2023
C&I
By internally assigned grade:
Pass	$	229,249		$	270,796		$	241,993		$	158,051		$	74,469		$	63,826		$	299,248	$	2,923	$	1,340,555
Special mention		420			1,672			277			3,524			87			1,854			19,489		-		27,323
Substandard		1,496			2,461			1,609			282			2,266			5,632			14,266		1,607		29,619
Doubtful		-			1			2			-			4			1			-		-		8
Total C&I	$	231,165		$	274,930		$	243,881		$	161,857		$	76,826		$	71,313		$	333,003	$	4,530	$	1,397,505
Current-period gross charge-offs	$	(24	)	$	(3,021	)	$	(5	)	$	(86	)	$	-		$	(600	)	$	-	$	-	$	(3,736	)
CRE
By internally assigned grade:
Pass	$	353,161		$	518,201		$	561,897		$	452,110		$	327,804		$	739,189		$	294,039	$	33,705	$	3,280,106
Special mention		3,577			4,472			10,711			7,055			9,967			39,460			2,970		-		78,212
Substandard		370			731			21,807			1,146			2,996			37,418			10,962		-		75,430
Total CRE	$	357,108		$	523,404		$	594,415		$	460,311		$	340,767		$	816,067		$	307,971	$	33,705	$	3,433,748
Current-period gross charge-offs	$	-		$	-		$	-		$	-		$	(114	)	$	(304	)	$	-	$	-	$	(418	)
Auto
By payment activity:
Performing	$	474,369		$	363,516		$	157,251		$	42,644		$	45,406		$	13,071		$	12	$	-	$	1,096,269
Nonperforming		532			1,241			830			190			306			74			-		-		3,173
Total auto	$	474,901		$	364,757		$	158,081		$	42,834		$	45,712		$	13,145		$	12	$	-	$	1,099,442
Current-period gross charge-offs	$	(102	)	$	(1,183	)	$	(1,066	)	$	(340	)	$	(301	)	$	(295	)	$	-	$	-	$	(3,287	)
Residential solar
By payment activity:
Performing	$	155,425		$	430,855		$	178,839		$	65,382		$	46,554		$	39,540		$	-	$	-	$	916,595
Nonperforming		-			837			205			18			47			53			-		-		1,160
Total residential solar	$	155,425		$	431,692		$	179,044		$	65,400		$	46,601		$	39,593		$	-	$	-	$	917,755
Current-period gross charge-offs	$	(150	)	$	(1,930	)	$	(923	)	$	(45	)	$	(558	)	$	(345	)	$	-	$	-	$	(3,951	)
Other consumer
By payment activity:
Performing	$	13,089		$	27,394		$	57,876		$	21,087		$	14,548		$	15,964		$	19,042	$	21	$	169,021
Nonperforming		-			244			685			144			56			161			4		45		1,339
Total other consumer	$	13,089		$	27,638		$	58,561		$	21,231		$	14,604		$	16,125		$	19,046	$	66	$	170,360
Current-period gross charge-offs	$	(885	)	$	(3,744	)	$	(7,511	)	$	(1,329	)	$	(832	)	$	(568	)	$	-	$	-	$	(14,869	)
Residential
By payment activity:
Performing	$	212,799		$	366,860		$	453,206		$	267,845		$	167,860		$	876,563		$	260,836	$	15,300	$	2,621,269
Nonperforming		134			430			1,121			385			591			7,460			-		513		10,634
Total residential	$	212,933		$	367,290		$	454,327		$	268,230		$	168,451		$	884,023		$	260,836	$	15,813	$	2,631,903
Current-period gross charge-offs	$	-		$	-		$	(81	)	$	(30	)	$	-		$	(406	)	$	-	$	-	$	(517	)
Total loans	$	1,444,621		$	1,989,711		$	1,688,309		$	1,019,863		$	692,961		$	1,840,266		$	920,868	$	54,114	$	9,650,713
Current-period gross charge-offs	$	(1,161	)	$	(9,878	)	$	(9,586	)	$	(1,830	)	$	(1,805	)	$	(2,518	)	$	-	$	-	$	(26,778	)

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The allowance for losses on unfunded commitments totaled $4.4 million as of December 31, 2024, compared to $5.1 million as of December 31, 2023.

The reserve for unfunded loan commitments was ($0.7) million for the year ended December 31, 2024, compared to less than $0.1 million for the years ended December 31, 2023 and 2022. Included in the reserve for unfunded loan commitments for the year ended December 31, 2023, was $0.8 million of acquisition-related provision for unfunded loan commitments due to the Salisbury acquisition.

Loan Modifications to Borrowers Experiencing Financial Difficulties

The Company’s January 1, 2023 adoption of ASU 2022-02 eliminates the recognition and measurement of TDRs. Upon adoption of this guidance, the Company no longer recognizes an allowance for credit losses for the economic concession granted to a borrower for changes in the timing and amount of contractual cash flows when a loan is restructured. The adoption of ASU 2022-02 resulted in a change to reporting for loan modifications to borrowers experiencing financial difficulties. With the adoption of ASU 2022-02 these modifications required enhanced reporting on the type of modifications granted and the financial magnitude of the concessions granted.

When the Company modifies a loan with financial difficulty, such modifications generally include one or a combination of the following: an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a change in scheduled payment amount; or principal forgiveness.

The following table shows the amortized cost basis at the end of the reporting period of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of concession granted:

	Year Ended December 31, 2024
	Interest Rate Reduction				Term Extension					Combination - Term Extension and Interest Rate Reduction
(Dollars in thousands)	Amortized Cost		% of Total Class of Financing Receivables		Amortized Cost		% of Total Class of Financing Receivables			Amortized Cost		% of Total Class of Financing Receivables
Residential	$	-		-	$	1,200		0.045	%	$	282		0.011	%
Total	$	-			$	1,200				$	282

	Year Ended December 31, 2023
	Interest Rate Reduction						Term Extension						Combination - Term Extension and Interest Rate Reduction
(Dollars in thousands)	Amortized Cost			% of Total Class of Financing Receivables			Amortized Cost			% of Total Class of Financing Receivables			Amortized Cost			% of Total Class of Financing Receivables
Residential		$	174		0.007	%		$	311		0.012	%		$	160		0.006	%
Total		$	174					$	311					$	160

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulties:

	Year Ended December 31, 2024
Loan Type	Term Extension	Interest Rate Reduction
Residential	Added a weighted-average 8 years to the life of loans, which reduced monthly payment amounts for the borrowers.	Interest rates were reduced by an average of 0.6%

	Year Ended December 31, 2023
Loan Type	Term Extension	Interest Rate Reduction
Residential	Added a weighted-average 12 years to the life of loans, which reduced monthly payment amounts for the borrowers.	Interest rates were reduced by an average of 1.5%

There were no financing receivables that had payment defaults during the year ended December 31, 2024 that were modified to borrowers experiencing financial difficulty modified in the twelve months prior to that default. There were $31 thousand of Residential financing receivables with interest rate reductions and $124 thousand of Residential financing receivables with Term Extensions that had payment defaults during the year ended December 31, 2023 that were modified to borrowers experiencing financial difficulty modified in the prior twelve months to that default.

The following table depicts the performance of loans that have been modified to borrowers experiencing financial difficulty that were modified in the prior twelve months:

	Payment Status (Amortized Cost Basis)
(In thousands)	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due
Year Ended December 31, 2024
Residential	$	1,369	$	-	$	-	$	113
Total	$	1,369	$	-	$	-	$	113

	Payment Status (Amortized Cost Basis)
(In thousands)	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due
Year Ended December 31, 2023
Residential	$	490	$	124	$	-	$	31
Total	$	490	$	124	$	-	$	31

Troubled Debt Restructuring

Prior to the adoption of ASU 2022-02 on January 1, 2023, the Company accounted for loan modifications to borrowers experiencing financial difficulty when concessions were granted as TDRs. The following tables are disclosures related to TDRs in prior periods.

The following tables illustrate the recorded investment and number of modifications designated as TDRs, including the recorded investment in the loans prior to a modification and the recorded investment in the loans after restructuring:

	Year Ended December 31, 2022
(Dollars in thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Residential		10	$	829	$	928
Total TDRs		10	$	829	$	928

The following table illustrates the recorded investment and number of modifications for TDRs where a concession has been made and subsequently defaulted during the year:

	Year Ended December 31, 2022
(Dollars in thousands)	Number of Contracts		Recorded Investment
Commercial loans:
C&I		1	$	320
Total commercial loans		1	$	320
Consumer loans:
Auto		2	$	20
Total consumer loans		2	$	20
Residential		50	$	3,387
Total TDRs		53	$	3,727