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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025.
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________.
COMMISSION FILE NUMBER 0-14703
NBT BANCORP INC.
(Exact name of registrant as specified in its charter)

Delaware |  | 16-1268674
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

52 South Broad Street, Norwich, New York 13815
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (607) 337-2265
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Stock, par value $0.01 per share |  | NBTB |  | The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company ☐ | Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 30, 2025, there were 47,257,723 shares outstanding of the Registrant’s Common Stock, $0.01 par value per share.

NBT BANCORP INC.
FORM 10-Q - Quarter Ended March 31, 2025
TABLE OF CONTENTS

PART I | FINANCIAL INFORMATION |
ITEM 1. | FINANCIAL STATEMENTS (Unaudited) |
| Consolidated Balance Sheets | 4
| Consolidated Statements of Income | 5
| Consolidated Statements of Comprehensive Income (Loss) | 6
| Consolidated Statements of Changes in Stockholders’ Equity | 7
| Consolidated Statements of Cash Flows | 8
| Notes to Unaudited Interim Consolidated Financial Statements | 10
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 30
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 43
ITEM 4. | CONTROLS AND PROCEDURES | 43
PART II | OTHER INFORMATION |
ITEM 1. | LEGAL PROCEEDINGS | 44
ITEM 1A. | RISK FACTORS | 44
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 44
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 44
ITEM 4. | MINE SAFETY DISCLOSURES | 44
ITEM 5. | OTHER INFORMATION | 44
ITEM 6. | EXHIBITS | 45
SIGNATURES |  | 46

2

Table of Contents
GLOSSARY OF ABBREVIATIONS AND ACRONYMS
When references to “NBT”, “we,” “our,” “us,” and “the Company” are made in this report, we mean NBT Bancorp Inc. and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, NBT Bancorp, Inc. When we refer to the “Bank” in this report, we mean our only bank subsidiary, NBT Bank, National Association, and its subsidiaries.
The acronyms and abbreviations identified below are used throughout this report, including the Notes to Unaudited Interim Consolidated Financial Statements. You may find it helpful to refer to this page as you read this report.

AFS | available for sale
AIR | accrued interest receivable
AOCI | accumulated other comprehensive income (loss)
ASC | Accounting Standards Codification
ASU | Accounting Standards Update
bp(s) | basis point(s)
C&I | commercial & industrial
CECL | current expected credit losses
CME | Chicago Mercantile Exchange Clearing House
CODM | chief operating decision maker
CRE | commercial real estate
EPS | earnings per share
Evans | Evans Bancorp, Inc.
Evans Bank | Evans Bank, National Association
FASB | Financial Accounting Standards Board
FDIC | Federal Deposit Insurance Corporation
FHLB | Federal Home Loan Bank
FOMC | Federal Open Market Committee
FRB | Federal Reserve Board
FTE | fully taxable equivalent
GAAP | generally accepted accounting principles in the United States of America
GDP | Gross Domestic Product
HTM | held to maturity
LGD | loss given default
MMDA | money market deposit accounts
NASDAQ | The NASDAQ Stock Market LLC
NIM | net interest margin
NOW | negotiable order of withdrawal
OCC | Office of the Comptroller of the Currency
OREO | other real estate owned
PCD | purchased credit deteriorated
PD | probability of default
SEC | U.S. Securities and Exchange Commission
SOFR | Secured Overnight Financing Rate

3

Table of Contents
ITEM 1. FINANCIAL STATEMENTS
NBT Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets (unaudited)

|  | March 31, |  |  | December 31, |
(In thousands, except share and per share data) |  | 2025 |  |  | 2024 |
Assets |  |  |  |  |  |
Cash and due from banks |  | $ | 216,698 |  |  | $ | 205,083 |
Short-term interest-bearing accounts |  |  | 37,385 |  |  |  | 78,973 |
Equity securities, at fair value |  |  | 41,561 |  |  |  | 42,372 |
Securities available for sale, at fair value |  |  | 1,704,677 |  |  |  | 1,574,664 |
Securities held to maturity (fair value $756,404 and $749,945, respectively) |  |  | 836,833 |  |  |  | 842,921 |
Federal Reserve and Federal Home Loan Bank stock |  |  | 32,117 |  |  |  | 33,957 |
Loans held for sale |  |  | 13,628 |  |  |  | 9,744 |
Loans |  |  | 9,980,267 |  |  |  | 9,969,910 |
Less allowance for loan losses |  |  | 117,000 |  |  |  | 116,000 |
Net loans |  | $ | 9,863,267 |  |  | $ | 9,853,910 |
Premises and equipment, net |  |  | 81,598 |  |  |  | 80,840 |
Goodwill |  |  | 362,663 |  |  |  | 362,663 |
Intangible assets, net |  |  | 34,249 |  |  |  | 36,360 |
Bank owned life insurance |  |  | 271,723 |  |  |  | 272,657 |
Other assets |  |  | 367,852 |  |  |  | 392,522 |
Total assets |  | $ | 13,864,251 |  |  | $ | 13,786,666 |
Liabilities |  |  |  |  |  |  |  |
Demand (noninterest bearing) |  | $ | 3,399,393 |  |  | $ | 3,446,068 |
Savings, NOW and money market |  |  | 6,858,372 |  |  |  | 6,658,188 |
Time |  |  | 1,450,746 |  |  |  | 1,442,505 |
Total deposits |  | $ | 11,708,511 |  |  | $ | 11,546,761 |
Short-term borrowings |  |  | 85,597 |  |  |  | 162,942 |
Long-term debt |  |  | 4,605 |  |  |  | 29,644 |
Subordinated debt, net |  |  | 121,579 |  |  |  | 121,201 |
Junior subordinated debt |  |  | 101,196 |  |  |  | 101,196 |
Other liabilities |  |  | 276,988 |  |  |  | 298,781 |
Total liabilities |  | $ | 12,298,476 |  |  | $ | 12,260,525 |
Stockholders’ equity |  |  |  |  |  |  |  |
Preferred stock, $0.01 par value, 2,500,000 shares authorized |  | $ | - |  |  | $ | - |
Common stock, $0.01 par value, 100,000,000 shares authorized; 53,974,492 shares issued |  |  | 540 |  |  |  | 540 |
Additional paid-in-capital |  |  | 740,865 |  |  |  | 742,810 |
Retained earnings |  |  | 1,120,887 |  |  |  | 1,100,209 |
Accumulated other comprehensive loss |  |  | (121,813 | ) |  |  | (142,098 | )
Common stock in treasury, at cost, 6,719,086 and 6,779,975 shares, respectively |  |  | (174,704 | ) |  |  | (175,320 | )
Total stockholders’ equity |  | $ | 1,565,775 |  |  | $ | 1,526,141 |
Total liabilities and stockholders’ equity |  | $ | 13,864,251 |  |  | $ | 13,786,666 |

See accompanying notes to unaudited interim consolidated financial statements.
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NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Income (unaudited)

|  | Three Months Ended March 31, |
(In thousands, except per share data) |  | 2025 |  |  | 2024 |
Interest, fee and dividend income |  |  |  |  |  |
Interest and fees on loans |  | $ | 138,052 |  |  | $ | 133,146 |
Securities available for sale |  |  | 10,262 |  |  |  | 7,124 |
Securities held to maturity |  |  | 4,914 |  |  |  | 5,303 |
Other |  |  | 1,176 |  |  |  | 1,364 |
Total interest, fee and dividend income |  | $ | 154,404 |  |  | $ | 146,937 |
Interest expense |  |  |  |  |  |  |  |
Deposits |  | $ | 42,588 |  |  | $ | 44,339 |
Short-term borrowings |  |  | 866 |  |  |  | 3,421 |
Long-term debt |  |  | 266 |  |  |  | 290 |
Subordinated debt |  |  | 1,822 |  |  |  | 1,800 |
Junior subordinated debt |  |  | 1,639 |  |  |  | 1,913 |
Total interest expense |  | $ | 47,181 |  |  | $ | 51,763 |
Net interest income |  | $ | 107,223 |  |  | $ | 95,174 |
Provision for loan losses |  |  | 7,554 |  |  |  | 5,579 |
Net interest income after provision for loan losses |  | $ | 99,669 |  |  | $ | 89,595 |
Noninterest income |  |  |  |  |  |  |  |
Service charges on deposit accounts |  | $ | 4,243 |  |  | $ | 4,117 |
Card services income |  |  | 5,317 |  |  |  | 5,195 |
Retirement plan administration fees |  |  | 15,858 |  |  |  | 14,287 |
Wealth management |  |  | 10,946 |  |  |  | 9,697 |
Insurance services |  |  | 4,761 |  |  |  | 4,388 |
Bank owned life insurance income |  |  | 3,397 |  |  |  | 2,352 |
Net securities (losses) gains |  |  | (104 | ) |  |  | 2,183 |
Other |  |  | 3,034 |  |  |  | 3,173 |
Total noninterest income |  | $ | 47,452 |  |  | $ | 45,392 |
Noninterest expense |  |  |  |  |  |  |  |
Salaries and employee benefits |  | $ | 60,694 |  |  | $ | 55,704 |
Technology and data services |  |  | 10,238 |  |  |  | 9,750 |
Occupancy |  |  | 9,027 |  |  |  | 8,098 |
Professional fees and outside services |  |  | 4,952 |  |  |  | 4,853 |
Office supplies and postage |  |  | 1,942 |  |  |  | 1,865 |
FDIC assessment |  |  | 1,694 |  |  |  | 1,735 |
Advertising |  |  | 1,138 |  |  |  | 812 |
Amortization of intangible assets |  |  | 2,111 |  |  |  | 2,168 |
Loan collection and other real estate owned, net |  |  | 659 |  |  |  | 553 |
Acquisition expenses |  |  | 1,221 |  |  |  | - |
Other |  |  | 6,224 |  |  |  | 6,235 |
Total noninterest expense |  | $ | 99,900 |  |  | $ | 91,773 |
Income before income tax expense |  | $ | 47,221 |  |  | $ | 43,214 |
Income tax expense |  |  | 10,476 |  |  |  | 9,391 |
Net income |  | $ | 36,745 |  |  | $ | 33,823 |
Earnings per share |  |  |  |  |  |  |  |
Basic |  | $ | 0.78 |  |  | $ | 0.72 |
Diluted |  | $ | 0.77 |  |  | $ | 0.71 |

See accompanying notes to unaudited interim consolidated financial statements.
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NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss) (unaudited)

|  | Three Months Ended March 31, |
(In thousands) |  | 2025 |  |  | 2024 |
Net income |  | $ | 36,745 |  |  | $ | 33,823 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |
Securities available for sale: |  |  |  |  |  |  |  |
Unrealized net holding gains (losses) arising during the period, gross |  | $ | 26,648 |  |  | $ | (5,292 | )
Tax effect |  |  | (6,662 | ) |  |  | 1,323 |
Unrealized net holding gains (losses) arising during the period, net |  | $ | 19,986 |  |  | $ | (3,969 | )
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, gross |  | $ | 75 |  |  | $ | 96 |
Tax effect |  |  | (19 | ) |  |  | (24 | )
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, net |  | $ | 56 |  |  | $ | 72 |
Total securities available for sale, net |  | $ | 20,042 |  |  | $ | (3,897 | )
Pension and other benefits: |  |  |  |  |  |  |  |
Amortization of prior service cost and actuarial losses, gross |  | $ | 324 |  |  | $ | 452 |
Tax effect |  |  | (81 | ) |  |  | (113 | )
Amortization of prior service cost and actuarial losses, net |  | $ | 243 |  |  | $ | 339 |
Total pension and other benefits, net |  | $ | 243 |  |  | $ | 339 |
Total other comprehensive income (loss) |  | $ | 20,285 |  |  | $ | (3,558 | )
Comprehensive income |  | $ | 57,030 |  |  | $ | 30,265 |

See accompanying notes to unaudited interim consolidated financial statements.
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NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

(In thousands, except share and per share data) |  | Common Stock |  |  | Additional Paid-in- Capital |  |  | Retained Earnings |  |  | Accumulated Other Comprehensive (Loss) Income |  |  | Common Stock in Treasury |  |  | Total |
Balance at December 31, 2024 |  | $ | 540 |  |  | $ | 742,810 |  |  | $ | 1,100,209 |  |  | $ | (142,098 | ) |  | $ | (175,320 | ) |  | $ | 1,526,141 |
Net income |  |  | - |  |  |  | - |  |  |  | 36,745 |  |  |  | - |  |  |  | - |  |  |  | 36,745 |
Cash dividends - $0.34 per share |  |  | - |  |  |  | - |  |  |  | (16,067 | ) |  |  | - |  |  |  | - |  |  |  | (16,067 | )
Net issuance of 60,889 shares to employee and other stock plans |  |  | - |  |  |  | (4,119 | ) |  |  | - |  |  |  | - |  |  |  | 616 |  |  |  | (3,503 | )
Stock-based compensation |  |  | - |  |  |  | 2,174 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,174 |
Other comprehensive income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 20,285 |  |  |  | - |  |  |  | 20,285 |
Balance at March 31, 2025 |  | $ | 540 |  |  | $ | 740,865 |  |  | $ | 1,120,887 |  |  | $ | (121,813 | ) |  | $ | (174,704 | ) |  | $ | 1,565,775 |
Balance at December 31, 2023 |  | $ | 540 |  |  | $ | 740,943 |  |  | $ | 1,021,831 |  |  | $ | (160,934 | ) |  | $ | (176,689 | ) |  | $ | 1,425,691 |
Net income |  |  | - |  |  |  | - |  |  |  | 33,823 |  |  |  | - |  |  |  | - |  |  |  | 33,823 |
Cash dividends - $0.32 per share |  |  | - |  |  |  | - |  |  |  | (15,091 | ) |  |  | - |  |  |  | - |  |  |  | (15,091 | )
Purchase of 1,900 treasury shares |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (63 | ) |  |  | (63 | )
Net issuance of 47,016 shares to employee and other stock plans |  |  | - |  |  |  | (2,435 | ) |  |  | - |  |  |  | - |  |  |  | 764 |  |  |  | (1,671 | )
Stock-based compensation |  |  | - |  |  |  | 2,284 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,284 |
Other comprehensive (loss) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,558 | ) |  |  | - |  |  |  | (3,558 | )
Balance at March 31, 2024 |  | $ | 540 |  |  | $ | 740,792 |  |  | $ | 1,040,563 |  |  | $ | (164,492 | ) |  | $ | (175,988 | ) |  | $ | 1,441,415 |

See accompanying notes to unaudited interim consolidated financial statements.
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NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)

|  | Three Months Ended March 31, |
(In thousands) |  | 2025 |  |  | 2024 |
Operating activities |  |  |  |  |  |
Net income |  | $ | 36,745 |  |  | $ | 33,823 |
Adjustments to reconcile net income to net cash provided by operating activities |  |  |  |  |  |  |  |
Provision for loan losses |  |  | 7,554 |  |  |  | 5,579 |
Depreciation and amortization of premises and equipment |  |  | 2,958 |  |  |  | 2,855 |
Net amortization on securities |  |  | 552 |  |  |  | 657 |
Amortization of intangible assets |  |  | 2,111 |  |  |  | 2,168 |
Amortization of operating lease right-of-use assets |  |  | 1,957 |  |  |  | 1,867 |
Excess tax benefit on stock-based compensation |  |  | (384 | ) |  |  | (116 | )
Stock-based compensation expense |  |  | 2,174 |  |  |  | 2,284 |
Bank owned life insurance income |  |  | (3,397 | ) |  |  | (2,352 | )
Amortization of subordinated debt issuance costs |  |  | 109 |  |  |  | 109 |
Proceeds from sale of loans held for sale |  |  | 83,400 |  |  |  | 27,075 |
Originations of loans held for sale |  |  | (87,851 | ) |  |  | (26,662 | )
Net gain on sale of loans held for sale |  |  | (141 | ) |  |  | (40 | )
Net securities losses (gains) |  |  | 104 |  |  |  | (2,183 | )
Net change in other assets and other liabilities |  |  | (3,886 | ) |  |  | (8,319 | )
Net cash provided by operating activities |  | $ | 42,005 |  |  | $ | 36,745 |
Investing activities |  |  |  |  |  |  |  |
Net cash used in acquisitions |  | $ | (1,550 | ) |  | $ | (743 | )
Securities available for sale: |  |  |  |  |  |  |  |
Proceeds from maturities, calls and principal paydowns |  |  | 36,025 |  |  |  | 26,542 |
Proceeds from sales |  |  | - |  |  |  | 2,284 |
Purchases |  |  | (139,534 | ) |  |  | (19,676 | )
Securities held to maturity: |  |  |  |  |  |  |  |
Proceeds from maturities, calls and principal paydowns |  |  | 24,713 |  |  |  | 21,143 |
Purchases |  |  | (18,958 | ) |  |  | (7,071 | )
Equity securities: |  |  |  |  |  |  |  |
Purchases |  |  | - |  |  |  | (7 | )
Other: |  |  |  |  |  |  |  |
Net increase in loans |  |  | (16,329 | ) |  |  | (42,308 | )
Proceeds from Federal Home Loan Bank stock redemption |  |  | 13,816 |  |  |  | 26,465 |
Purchases of Federal Home Loan Bank stock |  |  | (11,976 | ) |  |  | (17,940 | )
Proceeds from settlement of bank owned life insurance |  |  | 4,331 |  |  |  | 608 |
Purchases of premises and equipment, net |  |  | (3,701 | ) |  |  | (2,425 | )
Net cash used in investing activities |  | $ | (113,163 | ) |  | $ | (13,128 | )
Financing activities |  |  |  |  |  |  |  |
Net increase in deposits |  | $ | 161,750 |  |  | $ | 226,295 |
Net decrease in short-term borrowings |  |  | (77,345 | ) |  |  | (119,517 | )
Repayments of long-term debt |  |  | (25,039 | ) |  |  | (37 | )
Cash paid by employer for tax-withholding on stock issuance |  |  | (2,114 | ) |  |  | (1,301 | )
Purchase of treasury stock |  |  | - |  |  |  | (63 | )
Cash dividends |  |  | (16,067 | ) |  |  | (15,091 | )
Net cash provided by financing activities |  | $ | 41,185 |  |  | $ | 90,286 |
Net (decrease) increase in cash and cash equivalents |  | $ | (29,973 | ) |  | $ | 113,903 |
Cash and cash equivalents at beginning of period |  |  | 284,056 |  |  |  | 205,189 |
Cash and cash equivalents at end of period |  | $ | 254,083 |  |  | $ | 319,092 |

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NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited) (continued)

| Three Months Ended March 31, |
| 2025 |  | 2024 |
Supplemental disclosure of cash flow information |  |  |  |
Cash paid during the period for: |  |  |  |
Interest expense |  | $ | 49,543 |  |  | $ | 55,313 |
Income taxes paid, net of refunds |  |  | 1,800 |  |  |  | 3,500 |
Noncash investing activities: |  |  |  |  |  |  |  |
Loans transferred to other real estate owned |  | $ | 126 |  |  | $ | - |
Acquisitions: |  |  |  |  |  |  |  |
Fair value of assets acquired |  | $ | - |  |  | $ | 693 |

See accompanying notes to unaudited interim consolidated financial statements.
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NBT Bancorp Inc. and Subsidiaries
Notes to Unaudited Interim Consolidated Financial Statements
March 31, 2025

1. | Description of Business

NBT Bancorp Inc. is a registered financial holding company incorporated in the state of Delaware in 1986, with its principal headquarters located in Norwich, New York. The principal assets of NBT Bancorp Inc. consist of all of the outstanding shares of common stock of its subsidiaries, including: NBT Bank, National Association (the “Bank”), NBT Financial Services, Inc. (“NBT Financial”), NBT Holdings, Inc. (“NBT Holdings”), CNBF Capital Trust I, NBT Statutory Trust I, NBT Statutory Trust II, Alliance Financial Capital Trust I and Alliance Financial Capital Trust II (collectively, the “Trusts”). The principal sources of revenue for NBT Bancorp Inc. are the management fees and dividends it receives from the Bank, NBT Financial and NBT Holdings. Collectively, NBT Bancorp Inc. and its subsidiaries are referred to herein as (the “Company”).
The Company’s business, primarily conducted through the Bank, consists of providing commercial banking, retail banking and wealth management services primarily to customers in its market area, which includes upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine and central and northwestern Connecticut. The Company has been, and intends to continue to be, a community-oriented financial institution offering a variety of financial services. The Company’s business philosophy is to operate as a community bank with local decision-making, providing a broad array of banking and financial services to retail, commercial and municipal customers.

2. | Summary of Significant Accounting Policies

Basis of Presentation
The accompanying unaudited interim consolidated financial statements include the accounts of NBT Bancorp Inc. and its wholly-owned subsidiaries mentioned above. In the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods in accordance with U.S. generally accepted accounting principles (“GAAP”) and in accordance with the instructions for the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, the consolidated financial statements do not include all of the information and notes necessary for complete financial statements in conformity with GAAP. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2024 Annual Report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period. All material intercompany transactions have been eliminated in consolidation. Amounts previously reported in the consolidated financial statements are reclassified whenever necessary to conform to current period presentation. The Company has evaluated subsequent events for potential recognition and/or disclosure. Refer to Note 16 to the unaudited interim consolidated financial statements in this Quarterly Report on Form 10-Q for the subsequent event related to the Evans Bancorp, Inc. merger.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates and such differences could be material to the financial statements. Estimates associated with the allowance for credit losses are particularly susceptible to material change in the near term.

3. | Recent Accounting Pronouncements

Accounting Standards Issued Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures, in response to requests from investors, lenders, creditors and other allocators of capital for enhanced income tax disclosures to support capital allocation decisions. The ASU requires enhanced disclosures primarily related to existing rate reconciliation and income taxes paid information to help investors better assess how the Company’s operations and related tax risks and tax planning and operational opportunities affect the Company’s tax rate and prospects for future cash flows. The ASU 2023-09 improves the transparency of income tax disclosures. The amendments in this ASU are effective for the Company for annual periods beginning after December 15, 2024, and should be applied on a prospective basis. Retrospective application and early adoption are permitted. Aside from complying with the new disclosure requirements, the adoption is not expected to have a material impact on the consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, that addresses longstanding investor requests for more information regarding expenses included in the expense captions presented on the face of the income statement. The ASU will require a tabular disclosure that disaggregates certain income statement expenses including employee compensation, depreciation and intangible asset amortization. In January 2025, the FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which revises the effective date of ASU 2024-03. The ASU will become effective in the annual reporting periods beginning after December 15, 2026, and early adoption is permitted. Aside from complying with the new disclosure requirements, the adoption is not expected to have a material impact on the consolidated financial statements.
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4. | Acquisitions

Subsequent Period Acquisition of Evans Bancorp, Inc. (Unaudited)
On May 2, 2025, the Company completed the acquisition of Evans Bancorp, Inc. (“Evans”) through the merger of Evans with and into the Company, with the Company surviving the merger, with total consideration of approximately $222 million in stock. Evans, with assets of approximately $2.19 billion at December 31, 2024, was headquartered in Williamsville, New York. Its primary subsidiary, Evans Bank, National Association, was a federally-chartered national banking association operating 18 banking locations in Western New York. The acquisition of Evans is being accounted for as a business combination in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations” (“ASC 805”), using the acquisition method of accounting. Due to the close proximity of the acquisition date and the Company’s filing of its Quarterly Report on Form 10-Q for the three months ended March 31, 2025, the initial accounting for the business combination is incomplete. Accordingly, the Company is unable to disclose the preliminary allocation of consideration or other information required by ASC 805 at this time. The Company will include relevant disclosures as required in the second quarter of 2025.
The Company incurred acquisition expenses related to the Merger of $1.2 million for the three months ended March 31, 2025.
Other Acquisitions
In November 2024, the Company, through its subsidiary, NBT Bank, National Association, completed its acquisition of certain assets of PACO, Inc, a third-party administration business based in West Des Moines, Iowa for a total consideration of $3.3 million. As part of the acquisition the Company recorded goodwill of $0.7 million and $2.9 million contingent considerations recorded in other liabilities on the consolidated balance sheets as of December 31, 2024.
In July 2024, the Company, through its subsidiary, NBT Insurance Agency, LLC, a full-service insurance agency, completed the acquisition of substantially all of the assets of Karl W. Reynard, Inc. located in Stamford, NY for a total consideration of $1.2 million. Karl W. Reynard, Inc. was a long-established property and casualty agency offering personal and commercial lines. This strategic acquisition expands the presence of NBT Insurance Agency, LLC in the Catskills, where the agency and the Bank are well established. As part of the acquisition, the Company recorded goodwill of $0.2 million and a $1.0 million contingent consideration recorded in other liabilities on the consolidated balance sheets as of December 31, 2024.
The operating results of the acquired companies are included in the consolidated results after the date of acquisition.
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5. | Securities

The amortized cost, estimated fair value and unrealized gains (losses) of available for sale (“AFS”) securities are as follows:

(In thousands) |  | Amortized Cost |  |  | Unrealized Gains |  |  | Unrealized Losses |  |  | Estimated Fair Value |
As of March 31, 2025 |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury |  | $ | 108,965 |  |  | $ | 52 |  |  | $ | (4,790 | ) |  | $ | 104,227 |
Federal agency |  |  | 248,339 |  |  |  | - |  |  |  | (24,910 | ) |  |  | 223,429 |
State & municipal |  |  | 95,257 |  |  |  | - |  |  |  | (6,555 | ) |  |  | 88,702 |
Mortgage-backed: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government-sponsored enterprises |  |  | 449,327 |  |  |  | 338 |  |  |  | (34,432 | ) |  |  | 415,233 |
U.S. government agency securities |  |  | 92,529 |  |  |  | 207 |  |  |  | (4,892 | ) |  |  | 87,844 |
Collateralized mortgage obligations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government-sponsored enterprises |  |  | 603,719 |  |  |  | 821 |  |  |  | (36,555 | ) |  |  | 567,985 |
U.S. government agency securities |  |  | 196,036 |  |  |  | 82 |  |  |  | (24,645 | ) |  |  | 171,473 |
Corporate |  |  | 48,492 |  |  |  | - |  |  |  | (2,708 | ) |  |  | 45,784 |
Total AFS securities |  | $ | 1,842,664 |  |  | $ | 1,500 |  |  | $ | (139,487 | ) |  | $ | 1,704,677 |
As of December 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury |  | $ | 108,838 |  |  | $ | 59 |  |  | $ | (6,107 | ) |  | $ | 102,790 |
Federal agency |  |  | 248,348 |  |  |  | - |  |  |  | (29,831 | ) |  |  | 218,517 |
State & municipal |  |  | 95,457 |  |  |  | - |  |  |  | (7,967 | ) |  |  | 87,490 |
Mortgage-backed: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government-sponsored enterprises |  |  | 435,825 |  |  |  | 2 |  |  |  | (41,528 | ) |  |  | 394,299 |
U.S. government agency securities |  |  | 76,528 |  |  |  | 9 |  |  |  | (6,471 | ) |  |  | 70,066 |
Collateralized mortgage obligations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government-sponsored enterprises |  |  | 546,685 |  |  |  | 142 |  |  |  | (42,831 | ) |  |  | 503,996 |
U.S. government agency securities |  |  | 179,136 |  |  |  | 39 |  |  |  | (26,683 | ) |  |  | 152,492 |
Corporate |  |  | 48,482 |  |  |  | - |  |  |  | (3,468 | ) |  |  | 45,014 |
Total AFS securities |  | $ | 1,739,299 |  |  | $ | 251 |  |  | $ | (164,886 | ) |  | $ | 1,574,664 |

There was no allowance for credit losses on AFS securities as of March 31, 2025 and December 31, 2024.
During the three months ended March 31, 2025, there were no gains or losses reclassified out of accumulated other comprehensive income (loss) (“AOCI”) and into earnings. During the three months ended March 31, 2024, the Company sold an AFS corporate debt security from a subordinated debt investment issued by a financial institution that failed and was previously written-off and recognized a gain of $2.3 million into earnings in net securities (losses) gains in the unaudited interim consolidated statements of income.
The amortized cost, estimated fair value and unrealized gains (losses) of held to maturity (“HTM”) securities are as follows:

(In thousands) |  | Amortized Cost |  |  | Unrealized Gains |  |  | Unrealized Losses |  |  | Estimated Fair Value |
As of March 31, 2025 |  |  |  |  |  |  |  |  |  |  |  |
Federal agency |  | $ | 100,000 |  |  | $ | - |  |  | $ | (14,304 | ) |  | $ | 85,696 |
Mortgage-backed: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government-sponsored enterprises |  |  | 204,020 |  |  |  | - |  |  |  | (29,009 | ) |  |  | 175,011 |
U.S. government agency securities |  |  | 14,111 |  |  |  | 1 |  |  |  | (173 | ) |  |  | 13,939 |
Collateralized mortgage obligations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government-sponsored enterprises |  |  | 163,514 |  |  |  | 57 |  |  |  | (9,610 | ) |  |  | 153,961 |
U.S. government agency securities |  |  | 60,229 |  |  |  | - |  |  |  | (10,327 | ) |  |  | 49,902 |
State & municipal |  |  | 294,959 |  |  |  | 2 |  |  |  | (17,066 | ) |  |  | 277,895 |
Total HTM securities |  | $ | 836,833 |  |  | $ | 60 |  |  | $ | (80,489 | ) |  | $ | 756,404 |
As of December 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal agency |  | $ | 100,000 |  |  | $ | - |  |  | $ | (16,656 | ) |  | $ | 83,344 |
Mortgage-backed: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government-sponsored enterprises |  |  | 208,579 |  |  |  | - |  |  |  | (34,349 | ) |  |  | 174,230 |
U.S. government agency securities |  |  | 15,611 |  |  |  | 1 |  |  |  | (516 | ) |  |  | 15,096 |
Collateralized mortgage obligations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government-sponsored enterprises |  |  | 168,018 |  |  |  | - |  |  |  | (11,554 | ) |  |  | 156,464 |
U.S. government agency securities |  |  | 60,906 |  |  |  | - |  |  |  | (11,245 | ) |  |  | 49,661 |
State & municipal |  |  | 289,807 |  |  |  | 41 |  |  |  | (18,698 | ) |  |  | 271,150 |
Total HTM securities |  | $ | 842,921 |  |  | $ | 42 |  |  | $ | (93,018 | ) |  | $ | 749,945 |

At March 31, 2025 and December 31, 2024, all of the mortgaged-backed HTM securities were comprised of U.S. government agency and government-sponsored enterprises securities.
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The Company recorded no gains from calls on HTM securities for the three months ended March 31, 2025 and 2024.
AFS and HTM securities with amortized costs totaling $1.77 billion at March 31, 2025 and $1.60 billion at December 31, 2024, were pledged to secure public deposits and for other purposes required or permitted by law. Additionally, at March 31, 2025 and December 31, 2024, AFS and HTM securities with an amortized cost of $223.0 million and $234.2 million, respectively, were pledged as collateral for securities sold under repurchase agreements.
The following table sets forth information with regard to gains and (losses) on equity securities:

|  | Three Months Ended March 31, |
(In thousands) |  | 2025 |  |  | 2024 |
Net losses recognized on equity securities |  | $ | (104 | ) |  | $ | (101 | )
Less: Net losses recognized on equity securities sold during the period |  |  | - |  |  |  | - |
Unrealized losses recognized on equity securities still held |  | $ | (104 | ) |  | $ | (101 | )

As of March 31, 2025 and December 31, 2024, the carrying value of equity securities without readily determinable fair values was $1.0 million. The Company performed a qualitative assessment to determine whether the investments were impaired and identified no areas of credit concern as of March 31, 2025 and 2024. There were no impairments, or downward or upward adjustments recognized for equity securities without readily determinable fair values during the three months ended March 31, 2025 and 2024.
The following table sets forth information with regard to contractual maturities of debt securities at March 31, 2025:

(In thousands) |  | Amortized Cost |  |  | Estimated Fair Value |
AFS debt securities: |  |  |  |  |  |
Within one year |  | $ | 84,171 |  |  | $ | 82,763 |
From one to five years |  |  | 633,838 |  |  |  | 590,105 |
From five to ten years |  |  | 246,641 |  |  |  | 230,740 |
After ten years |  |  | 878,014 |  |  |  | 801,069 |
Total AFS debt securities |  | $ | 1,842,664 |  |  | $ | 1,704,677 |
HTM debt securities: |  |  |  |  |  |  |  |
Within one year |  | $ | 101,944 |  |  | $ | 101,895 |
From one to five years |  |  | 164,050 |  |  |  | 156,038 |
From five to ten years |  |  | 193,621 |  |  |  | 171,658 |
After ten years |  |  | 377,218 |  |  |  | 326,813 |
Total HTM debt securities |  | $ | 836,833 |  |  | $ | 756,404 |

Maturities of mortgage-backed, collateralized mortgage obligations and asset-backed securities are stated based on their estimated average lives. Actual maturities may differ from estimated average lives or contractual maturities because, in certain cases, borrowers have the right to call or prepay obligations with or without call or prepayment penalties.
Except for U.S. government securities and government-sponsored enterprises securities, there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders’ equity at March 31, 2025 and December 31, 2024.
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The following table sets forth information with regard to investment securities with unrealized losses, for which an allowance for credit losses has not been recorded, segregated according to the length of time the securities had been in a continuous unrealized loss position:

|  | Less Than 12 Months |  |  | 12 Months or Longer |  |  | Total |
(In thousands) |  | Fair Value |  |  | Unrealized Losses |  |  | Number of Positions |  |  | Fair Value |  |  | Unrealized Losses |  |  | Number of Positions |  |  | Fair Value |  |  | Unrealized Losses |  |  | Number of Positions |
As of March 31, 2025 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
AFS securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury |  | $ | - |  |  | $ | - |  |  |  | - |  |  | $ | 94,177 |  |  | $ | (4,790 | ) |  |  | 5 |  |  | $ | 94,177 |  |  | $ | (4,790 | ) |  |  | 5 |
Federal agency |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 223,429 |  |  |  | (24,910 | ) |  |  | 16 |  |  |  | 223,429 |  |  |  | (24,910 | ) |  |  | 16 |
State & municipal |  |  | 759 |  |  |  | (3 | ) |  |  | 1 |  |  |  | 87,943 |  |  |  | (6,552 | ) |  |  | 66 |  |  |  | 88,702 |  |  |  | (6,555 | ) |  |  | 67 |
Mortgage-backed |  |  | 60,880 |  |  |  | (455 | ) |  |  | 10 |  |  |  | 358,323 |  |  |  | (38,869 | ) |  |  | 148 |  |  |  | 419,203 |  |  |  | (39,324 | ) |  |  | 158 |
Collateralized mortgage obligations |  |  | 104,059 |  |  |  | (490 | ) |  |  | 12 |  |  |  | 476,660 |  |  |  | (60,710 | ) |  |  | 114 |  |  |  | 580,719 |  |  |  | (61,200 | ) |  |  | 126 |
Corporate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 45,784 |  |  |  | (2,708 | ) |  |  | 15 |  |  |  | 45,784 |  |  |  | (2,708 | ) |  |  | 15 |
Total securities with unrealized losses |  | $ | 165,698 |  |  | $ | (948 | ) |  |  | 23 |  |  | $ | 1,286,316 |  |  | $ | (138,539 | ) |  |  | 364 |  |  | $ | 1,452,014 |  |  | $ | (139,487 | ) |  |  | 387 |
HTM securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal agency |  | $ | - |  |  | $ | - |  |  |  | - |  |  | $ | 85,696 |  |  | $ | (14,304 | ) |  |  | 4 |  |  | $ | 85,696 |  |  | $ | (14,304 | ) |  |  | 4 |
Mortgage-backed |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 188,902 |  |  |  | (29,182 | ) |  |  | 34 |  |  |  | 188,902 |  |  |  | (29,182 | ) |  |  | 34 |
Collateralized mortgage obligation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 196,888 |  |  |  | (19,937 | ) |  |  | 52 |  |  |  | 196,888 |  |  |  | (19,937 | ) |  |  | 52 |
State & municipal |  |  | 11,651 |  |  |  | (130 | ) |  |  | 14 |  |  |  | 161,569 |  |  |  | (16,936 | ) |  |  | 176 |  |  |  | 173,220 |  |  |  | (17,066 | ) |  |  | 190 |
Total securities with unrealized losses |  | $ | 11,651 |  |  | $ | (130 | ) |  |  | 14 |  |  | $ | 633,055 |  |  | $ | (80,359 | ) |  |  | 266 |  |  | $ | 644,706 |  |  | $ | (80,489 | ) |  |  | 280 |
As of December 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
AFS securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury |  | $ | - |  |  | $ | - |  |  |  | - |  |  | $ | 92,737 |  |  | $ | (6,107 | ) |  |  | 5 |  |  | $ | 92,737 |  |  | $ | (6,107 | ) |  |  | 5 |
Federal agency |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 218,517 |  |  |  | (29,831 | ) |  |  | 16 |  |  |  | 218,517 |  |  |  | (29,831 | ) |  |  | 16 |
State & municipal |  |  | 759 |  |  |  | (4 | ) |  |  | 1 |  |  |  | 86,731 |  |  |  | (7,963 | ) |  |  | 66 |  |  |  | 87,490 |  |  |  | (7,967 | ) |  |  | 67 |
Mortgage-backed |  |  | 95,153 |  |  |  | (1,374 | ) |  |  | 16 |  |  |  | 368,589 |  |  |  | (46,625 | ) |  |  | 152 |  |  |  | 463,742 |  |  |  | (47,999 | ) |  |  | 168 |
Collateralized mortgage obligations |  |  | 98,494 |  |  |  | (1,128 | ) |  |  | 14 |  |  |  | 480,891 |  |  |  | (68,386 | ) |  |  | 116 |  |  |  | 579,385 |  |  |  | (69,514 | ) |  |  | 130 |
Corporate |  |  | 1,478 |  |  |  | (9 | ) |  |  | 1 |  |  |  | 43,536 |  |  |  | (3,459 | ) |  |  | 14 |  |  |  | 45,014 |  |  |  | (3,468 | ) |  |  | 15 |
Total securities with unrealized losses |  | $ | 195,884 |  |  | $ | (2,515 | ) |  |  | 32 |  |  | $ | 1,291,001 |  |  | $ | (162,371 | ) |  |  | 369 |  |  | $ | 1,486,885 |  |  | $ | (164,886 | ) |  |  | 401 |
HTM securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal agency |  | $ | - |  |  | $ | - |  |  |  | - |  |  | $ | 83,344 |  |  | $ | (16,656 | ) |  |  | 4 |  |  | $ | 83,344 |  |  | $ | (16,656 | ) |  |  | 4 |
Mortgage-backed |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 189,271 |  |  |  | (34,865 | ) |  |  | 34 |  |  |  | 189,271 |  |  |  | (34,865 | ) |  |  | 34 |
Collateralized mortgage obligations |  |  | 7,147 |  |  |  | (7 | ) |  |  | 1 |  |  |  | 198,978 |  |  |  | (22,792 | ) |  |  | 52 |  |  |  | 206,125 |  |  |  | (22,799 | ) |  |  | 53 |
State & municipal |  |  | 9,458 |  |  |  | (107 | ) |  |  | 12 |  |  |  | 168,945 |  |  |  | (18,591 | ) |  |  | 186 |  |  |  | 178,403 |  |  |  | (18,698 | ) |  |  | 198 |
Total securities with unrealized losses |  | $ | 16,605 |  |  | $ | (114 | ) |  |  | 13 |  |  | $ | 640,538 |  |  | $ | (92,904 | ) |  |  | 276 |  |  | $ | 657,143 |  |  | $ | (93,018 | ) |  |  | 289 |

The Company does not believe the AFS securities that were in an unrealized loss position as of March 31, 2025 and December 31, 2024, which consisted of 387 and 401 individual securities, respectively, represented a credit loss impairment. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. As of March 31, 2025 and December 31, 2024, the majority of the AFS securities in an unrealized loss position consisted of debt securities issued by U.S. government agencies or U.S. government-sponsored enterprises that carry the explicit and/or implicit guarantee of the U.S. government, which are widely recognized as “risk-free” and have a long history of zero credit losses. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. The Company does not intend to sell, nor is it more likely than not that the Company will be required to sell the securities before recovery of their amortized cost bases, which may be at maturity. The Company elected to exclude accrued interest receivable (“AIR”) from the amortized cost basis of debt securities. AIR on AFS debt securities totaled $4.5 million and $4.4 million at March 31, 2025 and December 31, 2024, respectively, and is excluded from the estimate of credit losses and reported in the other assets financial statement line.
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None of the Bank’s HTM debt securities were past due or on nonaccrual status as of March 31, 2025 and December 31, 2024. There was no accrued interest reversed against interest income for the three months ended March 31, 2025 or the year ended December 31, 2024 as all securities remained in accrual status. In addition, there were no collateral-dependent HTM debt securities as of March 31, 2025 and December 31, 2024. There was no allowance for credit losses on HTM securities as of March 31, 2025 and December 31, 2024. As of March 31, 2025 and December 31, 2024, 65% and 66%, respectively, of the Company’s HTM debt securities were issued by U.S. government agencies or U.S. government-sponsored enterprises with bond ratings of A to AAA. These securities carry the explicit and/or implicit guarantee of the U.S. government, which are widely recognized as “risk-free” and have a long history of zero credit losses. Therefore, the Company did not record an allowance for credit losses for these securities as of March 31, 2025 and December 31, 2024. The remaining HTM debt securities at March 31, 2025 and December 31, 2024 were comprised of state and municipal obligations with bond ratings of A to AAA excluding the $99.4 million of local municipal bonds which are not rated. Based on the Company’s current expected credit losses (“CECL”) methodology, the expected credit loss on the HTM municipal bond portfolio was deemed immaterial, therefore no allowance for credit loss was recorded as of March 31, 2025 and December 31, 2024. AIR on HTM debt securities totaled $4.8 million at March 31, 2025 and $4.4 million at December 31, 2024 and is excluded from the estimate of credit losses and reported in the other assets financial statement line.

6. | Loans

A summary of loans, net of deferred fees and origination costs, by category(1) is as follows:

(In thousands) |  | March 31, 2025 |  |  | December 31, 2024 |
Commercial & industrial |  | $ | 1,436,990 |  |  | $ | 1,426,482 |
Commercial real estate |  |  | 3,890,115 |  |  |  | 3,876,698 |
Residential real estate |  |  | 2,127,588 |  |  |  | 2,142,249 |
Home equity |  |  | 331,400 |  |  |  | 334,268 |
Indirect auto |  |  | 1,309,084 |  |  |  | 1,273,253 |
Residential solar |  |  | 800,090 |  |  |  | 820,079 |
Other consumer |  |  | 85,000 |  |  |  | 96,881 |
Total loans |  | $ | 9,980,267 |  |  | $ | 9,969,910 |

(1) | Loans are summarized by business line which does not align to how the Company assesses credit risk in the allowance for credit losses under CECL.

Included in the above loans are net deferred loan origination (fees) costs totaling $(57.8) million and $(64.7) million at March 31, 2025 and December 31, 2024, respectively.

7. | Allowance for Credit Losses and Credit Quality of Loans

The allowance for credit losses totaled $117.0 million at March 31, 2025, compared to $116.0 million at December 31, 2024. The allowance for credit losses as a percentage of loans was 1.17% at March 31, 2025, compared to 1.16% at December 31, 2024.
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 March 31, 2025 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 March 31, 2025, the weightings were 75% and 25% for the baseline and downside economic forecasts, respectively. The baseline outlook reflected an economic environment where the unemployment rate increases from 4.1% to 4.4% during the forecast period. Northeast Gross Domestic Product (“GDP’s”) annualized growth (on a quarterly basis) is expected to start the second quarter of 2025 at approximately 5% and decrease to 3.9% before increasing to 4.1% by the end of the forecast period. Key assumptions in the baseline economic outlook included the Federal Reserve cutting rates with two 25 basis point cuts at the September and December meetings, the economy remaining at full employment and continued tapering of the Federal Reserve balance sheet. The alternative downside scenario assumed deteriorated economic conditions from the baseline outlook. Under this scenario, national unemployment rises from 4.1% in the first quarter of 2025 to a peak of 7.6% in the second quarter of 2026. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of March 31, 2025. Additional qualitative adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools and recent trends in asset value indices. Additional monitoring for industry concentrations, loan growth and policy exceptions was also conducted.
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During the quarter, the Company performed an annual update to its econometric, probability of default (“PD”)/ loss given default (“LGD”) models. Segment specific, multi-variate regression model inputs and assumptions were updated and recent period observed losses and behavior were incorporated into the models (“model refreshment”). The incorporation of recent observations did not have a material impact on most loan class segments except for the Auto class segment which resulted in an improvement in PD/LGD outcomes. The total allowance decreased by approximately 3% as of March 31, 2025 due to the model refreshment.
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 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.
There were no loans purchased with credit deterioration during the three months ended March 31, 2025 and the year ended December 31, 2024. During the three months ended March 31, 2025, the Company purchased $1.3 million of residential loans at a 6.6% premium with a $13 thousand allowance for credit losses recorded for these loans. 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.
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 March 31, 2025 and December 31, 2024 and with no estimated allowance for credit losses related to AIR as of March 31, 2025 and December 31, 2024 as it is excluded from amortized cost.
The following tables present the activity in the allowance for credit losses by our portfolio segments:

(In thousands) |  | Commercial Loans |  |  | Consumer Loans |  |  | Residential |  |  | Total |
Balance as of December 31, 2024 |  | $ | 45,453 |  |  | $ | 43,987 |  |  | $ | 26,560 |  |  | $ | 116,000 |
Charge-offs |  |  | (2,222 | ) |  |  | (5,876 | ) |  |  | (57 | ) |  |  | (8,155 | )
Recoveries |  |  | 107 |  |  |  | 1,406 |  |  |  | 88 |  |  |  | 1,601 |
Provision |  |  | 5,392 |  |  |  | 2,179 |  |  |  | (17 | ) |  |  | 7,554 |
Ending Balance as of March 31, 2025 |  | $ | 48,730 |  |  | $ | 41,696 |  |  | $ | 26,574 |  |  | $ | 117,000 |
Balance as of December 31, 2023 |  | $ | 45,903 |  |  | $ | 46,427 |  |  | $ | 22,070 |  |  | $ | 114,400 |
Charge-offs |  |  | (985 | ) |  |  | (5,581 | ) |  |  | (114 | ) |  |  | (6,680 | )
Recoveries |  |  | 198 |  |  |  | 1,651 |  |  |  | 152 |  |  |  | 2,001 |
Provision |  |  | (644 | ) |  |  | 4,922 |  |  |  | 1,301 |  |  |  | 5,579 |
Ending Balance as of March 31, 2024 |  | $ | 44,472 |  |  | $ | 47,419 |  |  | $ | 23,409 |  |  | $ | 115,300 |

The allowance for credit losses as of March 31, 2025 increased compared to the allowance estimates as of December 31, 2024 and March 31, 2024 primarily due to the deterioration in the economic forecast including the change in the forecast scenario and the change in forecast scenario weightings from 80% baseline and 20% downside to 75% baseline and 25% downside. The increases to the allowance for credit losses were partially offset by model refreshment and the shift in loan composition driven by other consumer and residential solar portfolios that are in a planned run-off status.
Individually Evaluated Loans
The threshold for evaluating classified, Commercial & Industrial (“C&I”) and Commercial Real Estate (“CRE”) loans risk graded substandard or doubtful, and nonperforming loans specifically evaluated for individual credit loss is $1.0 million. As of March 31, 2025, three relationships were identified for individual credit loss evaluation which had an amortized cost basis of $26.7 million. These relationships were in nonaccrual status with no allowance for credit loss. As of December 31, 2024, the same three relationships were identified for individual credit loss evaluation, had an amortized cost basis of $28.8 million and were in nonaccrual status with no allowance for credit loss.
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The decrease in the amortized cost basis on an individual relationship basis from December 31, 2024 to March 31, 2025 was primarily due to a partial charge-off of $2.1 million on one of the relationships to the estimated fair value that resulted from a new appraisal received in the first quarter of 2025.
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 March 31, 2025 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  | $ | 1,015 |  |  | $ | 145 |  |  | $ | - |  |  | $ | 1,160 |  |  | $ | 2,261 |  |  | $ | 1,434,275 |  |  | $ | 1,437,696 |
CRE |  |  | 4,194 |  |  |  | 322 |  |  |  | 690 |  |  |  | 5,206 |  |  |  | 28,325 |  |  |  | 3,670,612 |  |  |  | 3,704,143 |
Total commercial loans |  | $ | 5,209 |  |  | $ | 467 |  |  | $ | 690 |  |  | $ | 6,366 |  |  | $ | 30,586 |  |  | $ | 5,104,887 |  |  | $ | 5,141,839 |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Auto |  | $ | 9,863 |  |  | $ | 1,778 |  |  | $ | 972 |  |  | $ | 12,613 |  |  | $ | 1,925 |  |  | $ | 1,267,358 |  |  | $ | 1,281,896 |
Residential solar |  |  | 3,780 |  |  |  | 1,735 |  |  |  | 553 |  |  |  | 6,068 |  |  |  | 127 |  |  |  | 793,895 |  |  |  | 800,090 |
Other consumer |  |  | 1,425 |  |  |  | 683 |  |  |  | 381 |  |  |  | 2,489 |  |  |  | 218 |  |  |  | 97,594 |  |  |  | 100,301 |
Total consumer loans |  | $ | 15,068 |  |  | $ | 4,196 |  |  | $ | 1,906 |  |  | $ | 21,170 |  |  | $ | 2,270 |  |  | $ | 2,158,847 |  |  | $ | 2,182,287 |
Residential |  | $ | 3,733 |  |  | $ | 562 |  |  | $ | 266 |  |  | $ | 4,561 |  |  | $ | 11,973 |  |  | $ | 2,639,607 |  |  | $ | 2,656,141 |
Total loans |  | $ | 24,010 |  |  | $ | 5,225 |  |  | $ | 2,862 |  |  | $ | 32,097 |  |  | $ | 44,829 |  |  | $ | 9,903,341 |  |  | $ | 9,980,267 |

(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 |

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.
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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.
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The following tables illustrate the Company’s credit quality by loan class by vintage and includes gross charge-offs by loan class by vintage. Included in other consumer gross charge-offs for the three months ended March 31, 2025, the Company recorded $0.3 million in overdrawn deposit accounts reported as 2024 originations. 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.

(In thousands) |  | 2025 |  |  | 2024 |  |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | Prior |  |  | Revolving Loans Amortized Cost Basis |  |  | Revolving Loans Converted to Term |  |  | Total |
As of March 31, 2025 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By internally assigned grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 55,246 |  |  | $ | 231,494 |  |  | $ | 153,167 |  |  | $ | 167,191 |  |  | $ | 163,502 |  |  | $ | 203,561 |  |  | $ | 393,135 |  |  | $ | 4,780 |  |  | $ | 1,372,076 |
Special mention |  |  | - |  |  |  | 966 |  |  |  | 916 |  |  |  | 4,094 |  |  |  | 148 |  |  |  | 5,448 |  |  |  | 13,499 |  |  |  | - |  |  |  | 25,071 |
Substandard |  |  | 330 |  |  |  | 4,247 |  |  |  | 4,032 |  |  |  | 3,354 |  |  |  | 1,359 |  |  |  | 4,217 |  |  |  | 22,572 |  |  |  | 358 |  |  |  | 40,469 |
Doubtful |  |  | - |  |  |  | - |  |  |  | 67 |  |  |  | 2 |  |  |  | 9 |  |  |  | 2 |  |  |  | - |  |  |  | - |  |  |  | 80 |
Total C&I |  | $ | 55,576 |  |  | $ | 236,707 |  |  | $ | 158,182 |  |  | $ | 174,641 |  |  | $ | 165,018 |  |  | $ | 213,228 |  |  | $ | 429,206 |  |  | $ | 5,138 |  |  | $ | 1,437,696 |
Current-period gross charge-offs |  | $ | - |  |  | $ | - |  |  | $ | (45 | ) |  | $ | (5 | ) |  | $ | - |  |  | $ | (72 | ) |  | $ | - |  |  | $ | - |  |  | $ | (122 | )
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By internally assigned grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 67,722 |  |  | $ | 402,959 |  |  | $ | 365,237 |  |  | $ | 550,145 |  |  | $ | 515,537 |  |  | $ | 1,273,081 |  |  | $ | 293,804 |  |  | $ | 40,029 |  |  | $ | 3,508,514 |
Special mention |  |  | - |  |  |  | 3,632 |  |  |  | 9,924 |  |  |  | 26,372 |  |  |  | 7,485 |  |  |  | 34,190 |  |  |  | 1,897 |  |  |  | - |  |  |  | 83,500 |
Substandard |  |  | 657 |  |  |  | 2,671 |  |  |  | 6,051 |  |  |  | 19,130 |  |  |  | 18,007 |  |  |  | 63,798 |  |  |  | 1,519 |  |  |  | 296 |  |  |  | 112,129 |
Total CRE |  | $ | 68,379 |  |  | $ | 409,262 |  |  | $ | 381,212 |  |  | $ | 595,647 |  |  | $ | 541,029 |  |  | $ | 1,371,069 |  |  | $ | 297,220 |  |  | $ | 40,325 |  |  | $ | 3,704,143 |
Current-period gross charge-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | (2,100 | ) |  | $ | - |  |  | $ | - |  |  | $ | (2,100 | )
Auto |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By payment activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 176,401 |  |  | $ | 503,155 |  |  | $ | 290,000 |  |  | $ | 209,548 |  |  | $ | 75,676 |  |  | $ | 24,219 |  |  | $ | - |  |  | $ | - |  |  | $ | 1,278,999 |
Nonperforming |  |  | 57 |  |  |  | 898 |  |  |  | 830 |  |  |  | 621 |  |  |  | 360 |  |  |  | 131 |  |  |  | - |  |  |  | - |  |  |  | 2,897 |
Total auto |  | $ | 176,458 |  |  | $ | 504,053 |  |  | $ | 290,830 |  |  | $ | 210,169 |  |  | $ | 76,036 |  |  | $ | 24,350 |  |  | $ | - |  |  | $ | - |  |  | $ | 1,281,896 |
Current-period gross charge-offs |  | $ | - |  |  | $ | (311 | ) |  | $ | (391 | ) |  | $ | (540 | ) |  | $ | (273 | ) |  | $ | (89 | ) |  | $ | - |  |  | $ | - |  |  | $ | (1,604 | )
Residential solar |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By payment activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 2,802 |  |  | $ | 2,435 |  |  | $ | 117,592 |  |  | $ | 390,848 |  |  | $ | 163,034 |  |  | $ | 122,699 |  |  | $ | - |  |  | $ | - |  |  | $ | 799,410 |
Nonperforming |  |  | - |  |  |  | - |  |  |  | 68 |  |  |  | 392 |  |  |  | 150 |  |  |  | 70 |  |  |  | - |  |  |  | - |  |  |  | 680 |
Total residential solar |  | $ | 2,802 |  |  | $ | 2,435 |  |  | $ | 117,660 |  |  | $ | 391,240 |  |  | $ | 163,184 |  |  | $ | 122,769 |  |  | $ | - |  |  | $ | - |  |  | $ | 800,090 |
Current-period gross charge-offs |  | $ | - |  |  | $ | - |  |  | $ | (245 | ) |  | $ | (1,481 | ) |  | $ | (481 | ) |  | $ | (347 | ) |  | $ | - |  |  | $ | - |  |  | $ | (2,554 | )
Other consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By payment activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 5,761 |  |  | $ | 12,078 |  |  | $ | 5,837 |  |  | $ | 9,212 |  |  | $ | 22,565 |  |  | $ | 22,409 |  |  | $ | 21,819 |  |  | $ | 21 |  |  | $ | 99,702 |
Nonperforming |  |  | - |  |  |  | 22 |  |  |  | 20 |  |  |  | 102 |  |  |  | 169 |  |  |  | 265 |  |  |  | 7 |  |  |  | 14 |  |  |  | 599 |
Total other consumer |  | $ | 5,761 |  |  | $ | 12,100 |  |  | $ | 5,857 |  |  | $ | 9,314 |  |  | $ | 22,734 |  |  | $ | 22,674 |  |  | $ | 21,826 |  |  | $ | 35 |  |  | $ | 100,301 |
Current-period gross charge-offs |  | $ | - |  |  | $ | (307 | ) |  | $ | - |  |  | $ | (376 | ) |  | $ | (612 | ) |  | $ | (423 | ) |  | $ | - |  |  | $ | - |  |  | $ | (1,718 | )
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By payment activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 28,955 |  |  | $ | 189,982 |  |  | $ | 227,910 |  |  | $ | 363,471 |  |  | $ | 414,318 |  |  | $ | 1,141,607 |  |  | $ | 265,605 |  |  | $ | 12,054 |  |  | $ | 2,643,902 |
Nonperforming |  |  | - |  |  |  | 606 |  |  |  | 764 |  |  |  | 539 |  |  |  | 2,237 |  |  |  | 7,699 |  |  |  | - |  |  |  | 394 |  |  |  | 12,239 |
Total residential |  | $ | 28,955 |  |  | $ | 190,588 |  |  | $ | 228,674 |  |  | $ | 364,010 |  |  | $ | 416,555 |  |  | $ | 1,149,306 |  |  | $ | 265,605 |  |  | $ | 12,448 |  |  | $ | 2,656,141 |
Current-period gross charge-offs |  | $ | - |  |  | $ | (16 | ) |  | $ | (41 | ) |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | (57 | )
Total loans |  | $ | 337,931 |  |  | $ | 1,355,145 |  |  | $ | 1,182,415 |  |  | $ | 1,745,021 |  |  | $ | 1,384,556 |  |  | $ | 2,903,396 |  |  | $ | 1,013,857 |  |  | $ | 57,946 |  |  | $ | 9,980,267 |
Current-period gross charge-offs |  | $ | - |  |  | $ | (634 | ) |  | $ | (722 | ) |  | $ | (2,402 | ) |  | $ | (1,366 | ) |  | $ | (3,031 | ) |  | $ | - |  |  | $ | - |  |  | $ | (8,155 | )

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Table of Contents

(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 | )

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Allowance for Credit Losses on Off-Balance Sheet Credit Exposures
The allowance for credit losses on unfunded commitments totaled $4.5 million as of March 31, 2025, compared to $4.4 million as of December 31, 2024. The reserve for unfunded loan commitments was $0.1 million for the three months ended March 31, 2025, compared to $(0.5) million for the three months ended March 31, 2024 was recorded within other noninterest expense in the unaudited interim consolidated statements of income.
Loan Modifications to Borrowers Experiencing Financial Difficulties
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:

|  | Three Months Ended March 31, 2025 |
|  | Term Extension |
(Dollars in thousands) |  | Amortized Cost |  |  | % of Total Class of Financing Receivables |
Residential |  | $ | 789 |  |  |  | 0.030 | %
Total |  | $ | 789 |  |  |  |  |

|  | Three Months Ended March 31, 2024 |
|  | Term Extension |
(Dollars in thousands) |  | Amortized Cost |  |  | % of Total Class of Financing Receivables |
Residential |  | $ | 294 |  |  |  | 0.011 | %
Total |  | $ | 294 |  |  |  |  |

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

| Three Months Ended March 31, 2025
Loan Type | Term Extension
Residential | Added a weighted-average 5.2 years to the life of loans, which reduced monthly payment amounts for the borrowers.

| Three Months Ended March 31, 2024
Loan Type | Term Extension
Residential | Added a weighted-average 7.4 years to the life of loans, which reduced monthly payment amounts for the borrowers.

During the three months ended March 31, 2025, there were $59 thousand in Residential financing receivables with term extension modifications that had payment defaults during the period, that were modified to borrowers experiencing financial difficulty in the twelve months prior to the default. There were no financing receivables that had payment defaults during the three months ended March 31, 2024, that were modified to borrowers experiencing financial difficulty in the prior twelve months.
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 |
As of March 31, 2025 |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 1,891 |  |  | $ | 59 |  |  | $ | - |  |  | $ | - |
Total |  | $ | 1,891 |  |  | $ | 59 |  |  | $ | - |  |  | $ | - |

|  | Payment Status (Amortized Cost Basis) |
(In thousands) |  | Current |  |  | 31-60 Days Past Due |  |  | 61-90 Days Past Due |  |  | Greater than 90 Days Past Due |
As of March 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 863 |  |  | $ | - |  |  | $ | - |  |  | $ | 29 |
Total |  | $ | 863 |  |  | $ | - |  |  | $ | - |  |  | $ | 29 |

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8. | Short-Term Borrowings

In addition to the liquidity provided by balance sheet cash flows, liquidity must also be supplemented with additional sources such as credit lines from correspondent banks as well as borrowings from the Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank. Other funding alternatives may also be appropriate from time to time, including wholesale and retail repurchase agreements and brokered certificate of deposit accounts.
Information related to short-term borrowings is summarized as follows:

(In thousands) |  | March 31, 2025 |  |  | December 31, 2024 |
Securities sold under repurchase agreements |  | $ | 85,597 |  |  | $ | 146,942 |
Other short-term borrowings |  |  | - |  |  |  | 16,000 |
Total short-term borrowings |  | $ | 85,597 |  |  | $ | 162,942 |

See Note 5 for additional information regarding securities pledged as collateral for securities sold under the repurchase agreements.

9. | Defined Benefit Post-Retirement Plans

The Company has a qualified, noncontributory, defined benefit pension plan (the “Plan”) covering substantially all of its employees at March 31, 2025. Benefits paid from the Plan are based on age, years of service, compensation and social security benefits and are determined in accordance with defined formulas. The Company’s policy is to fund the Plan in accordance with Employee Retirement Income Security Act of 1974 standards. Assets of the Plan are invested in publicly traded stocks, bonds and mutual funds. In addition to the Plan, the Company provides supplemental employee retirement plans to certain current and former executives. These supplemental employee retirement plans and the Plan are collectively referred to herein as “Pension Benefits.”
In addition, the Company provides certain health care benefits for retired employees. Benefits were accrued over the employees’ active service period. Only employees that were employed by the Company on or before January 1, 2000 are eligible to receive post-retirement health care benefits. These post-retirement benefits are referred to herein as “Other Benefits.”
Accounting standards require an employer to: (1) recognize the overfunded or underfunded status of defined benefit post-retirement plans, which is measured as the difference between plan assets at fair value and the benefit obligation, as an asset or liability in its balance sheet; (2) recognize changes in that funded status in the year in which the changes occur through comprehensive income; and (3) measure the defined benefit plan assets and obligations as of the date of its year-end balance sheet.
The Company made no voluntary contributions to the Pension Benefits and Other Benefits plans during the three months ended March 31, 2025 and 2024.
The components of expense for Pension Benefits and Other Benefits are set forth below:

|  | Pension Benefits |  |  | Other Benefits |
|  | Three Months Ended March 31, |  |  | Three Months Ended March 31, |
(In thousands) |  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Components of net periodic cost (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | $ | 671 |  |  | $ | 514 |  |  | $ | 1 |  |  | $ | 1 |
Interest cost |  |  | 1,068 |  |  |  | 1,005 |  |  |  | 59 |  |  |  | 55 |
Expected return on plan assets |  |  | (2,045 | ) |  |  | (1,983 | ) |  |  | - |  |  |  | - |
Net amortization |  |  | 325 |  |  |  | 453 |  |  |  | (1 | ) |  |  | (1 | )
Total net periodic cost (benefit) |  | $ | 19 |  |  | $ | (11 | ) |  | $ | 59 |  |  | $ | 55 |

The service cost component of net periodic cost (benefit) is included in salaries and employee benefits and the interest cost, expected return on plan assets and net amortization components are included in other noninterest expense on the unaudited interim consolidated statements of income.
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10. | Earnings Per Share

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity (such as the Company’s dilutive restricted stock units and stock options).
The following is a reconciliation of basic and diluted EPS for the periods presented in the unaudited interim consolidated statements of income:

|  | Three Months Ended March 31, |
(In thousands, except per share data) |  | 2025 |  |  | 2024 |
Basic EPS: |  |  |  |  |  |
Weighted average common shares outstanding |  |  | 47,244 |  |  |  | 47,148 |
Net income available to common stockholders |  | $ | 36,745 |  |  | $ | 33,823 |
Basic EPS |  | $ | 0.78 |  |  | $ | 0.72 |
Diluted EPS: |  |  |  |  |  |  |  |
Weighted average common shares outstanding |  |  | 47,244 |  |  |  | 47,148 |
Dilutive effect of common stock options and restricted stock |  |  | 233 |  |  |  | 222 |
Weighted average common shares and common share equivalents |  |  | 47,477 |  |  |  | 47,370 |
Net income available to common stockholders |  | $ | 36,745 |  |  | $ | 33,823 |
Diluted EPS |  | $ | 0.77 |  |  | $ | 0.71 |

There was a nominal number of weighted average stock options outstanding for the three months ended March 31, 2025 and March 31, 2024, that were not considered in the calculation of diluted EPS since the stock options’ exercise prices were greater than the average market price during these periods.

11. | Reclassification Adjustments Out of Other Comprehensive Income (Loss)

The following table summarizes the reclassification adjustments out of AOCI:

Detail About AOCI Components |  | Amount Reclassified from AOCI |  | Affected Line Item in the Consolidated Statements of Comprehensive Income (Loss)
|  | Three Months Ended |  |
(In thousands) |  | March 31, 2025 |  |  | March 31, 2024 |  |
AFS securities: |  |  |  |  |  |  |
Amortization of unrealized gains related to securities transfer |  | $ | 75 |  |  | $ | 96 |  | Interest income
Tax effect |  | $ | (19 | ) |  | $ | (24 | ) | Income tax (benefit)
Net of tax |  | $ | 56 |  |  | $ | 72 |  |
Pension and other benefits: |  |  |  |  |  |  |  |  |
Amortization of net losses |  | $ | 321 |  |  | $ | 454 |  | Other noninterest expense
Amortization of prior service costs |  |  | 3 |  |  |  | (2 | ) | Other noninterest expense
Tax effect |  | $ | (81 | ) |  | $ | (113 | ) | Income tax (benefit)
Net of tax |  | $ | 243 |  |  | $ | 339 |  |
Total reclassifications, net of tax |  | $ | 299 |  |  | $ | 411 |  |

12. | Derivative Instruments and Hedging Activities

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate risk, primarily by managing the amount, sources and duration of its assets and liabilities and through the use of derivative instruments. Specifically, the Company may enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which is determined by interest rates. Generally, the Company may use derivative financial instruments to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments. Currently, the Company has interest rate derivatives resulting from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions.
Derivatives Not Designated as Hedging Instruments
The Company enters into interest rate swaps to facilitate customer transactions and meet their financing needs. These swaps are considered derivatives, but are not designated in hedging relationships. These instruments have interest rate and credit risk associated with them. To mitigate the interest rate risk, the Company enters into offsetting interest rate swaps with counterparties. The counterparty swaps are also considered derivatives and are also not designated in hedging relationships. Interest rate swaps are recorded within other assets or other liabilities on the consolidated balance sheets at their estimated fair value. Changes to the fair value of assets and liabilities arising from these derivatives are included, net, in other operating income in the consolidated statements of income.
The Company is subject to over-the-counter derivative clearing requirements, which require certain derivatives to be cleared through central clearing houses. Accordingly, the Company clears certain derivative transactions through the Chicago Mercantile Exchange Clearing House (“CME”). The CME requires the Company to post initial and variation margin payments to mitigate the risk of non-payment, the latter of which is received or paid daily based on the net asset or liability position of the contracts. A daily settlement occurs through the CME for changes in the fair value of centrally cleared derivatives. Not all of the derivatives are required to be cleared through the daily clearing agent. As a result, the total fair values of loan level derivative assets and liabilities recognized on the Company’s financial statements are not equal and offsetting.
As of March 31, 2025 and December 31, 2024, the Company had twenty one and twenty risk participation agreements, respectively, with financial institution counterparties for interest rate swaps related to participated loans. Risk participation agreements provide credit protection to the financial institution that originated the swap transaction should the borrower fail to perform on its obligation. The Company enters into both risk participation agreements in which it purchases credit protection from other financial institutions and those in which it provides credit protection to other financial institutions.
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The following table summarizes the derivatives outstanding:

(In thousands) |  | Notional Amount |  | Balance Sheet Location |  | Fair Value |  |  | Notional Amount |  | Balance Sheet Location |  | Fair Value |
As of March 31, 2025 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives |  | $ | 1,401,787 |  | Other assets |  | $ | 86,930 |  |  | $ | 1,401,787 |  | Other liabilities |  | $ | 86,823 |
Risk participation agreements |  |  | 98,600 |  | Other assets |  |  | 88 |  |  |  | 13,071 |  | Other liabilities |  |  | 3 |
Total derivatives not designated as hedging instruments |  |  |  |  |  |  | $ | 87,018 |  |  |  |  |  |  |  | $ | 86,826 |
Netting adjustments(1) |  |  |  |  |  |  |  | 19,734 |  |  |  |  |  |  |  |  | (84 | )
Net derivatives in the balance sheet |  |  |  |  |  |  | $ | 67,284 |  |  |  |  |  |  |  | $ | 86,910 |
Derivatives not offset on the balance sheet |  |  |  |  |  |  | $ | 5,322 |  |  |  |  |  |  |  | $ | 5,322 |
Cash collateral(2) |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  | - |
Net derivative amounts |  |  |  |  |  |  | $ | 61,962 |  |  |  |  |  |  |  | $ | 81,588 |
As of December 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives |  | $ | 1,374,800 |  | Other assets |  | $ | 104,377 |  |  | $ | 1,374,800 |  | Other liabilities |  | $ | 104,371 |
Risk participation agreements |  |  | 90,725 |  | Other assets |  |  | 62 |  |  |  | 18,811 |  | Other liabilities |  |  | 2 |
Total derivatives not designated as hedging instruments |  |  |  |  |  |  | $ | 104,439 |  |  |  |  |  |  |  | $ | 104,373 |
Netting adjustments(1) |  |  |  |  |  |  |  | 23,592 |  |  |  |  |  |  |  |  | (26 | )
Net derivatives in the balance sheet |  |  |  |  |  |  | $ | 80,847 |  |  |  |  |  |  |  | $ | 104,399 |
Derivatives not offset on the balance sheet |  |  |  |  |  |  | $ | 1,792 |  |  |  |  |  |  |  | $ | 1,792 |
Cash collateral(2) |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  | - |
Net derivative amounts |  |  |  |  |  |  | $ | 79,055 |  |  |  |  |  |  |  | $ | 102,607 |

(1) Netting adjustments represent the amounts recorded to convert derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance on the settle to market rules for cleared derivatives. The CME legally characterizes the variation margin posted between counterparties as settlements of the outstanding derivative contracts instead of cash collateral.
(2) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The other collateral consists of securities and is exchanged under bilateral collateral and master netting agreements that allow us to offset the net derivative position with the related collateral. The application of the other collateral cannot reduce the net derivative position below zero. Therefore, excess other collateral, if any, is not reflected above.
The following table indicates the gain or loss recognized in income on derivatives not designated as a hedging relationship:

|  | Three Months Ended March 31, |
(In thousands) |  | 2025 |  |  | 2024 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |
Increase in other income |  | $ | 21 |  |  | $ | 75 |

13. | Fair Value Measurements and Fair Value of Financial Instruments

GAAP states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value measurements are not adjusted for transaction costs. A fair value hierarchy exists within GAAP that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
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A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities, many other sovereign government obligations, liquid mortgage products, active listed equities and most money market securities. Such instruments are generally classified within Level 1 or Level 2 of the fair value hierarchy. The Company does not adjust the quoted prices for such instruments.
The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations or quotes from alternative pricing sources with reasonable levels of price transparency include most investment-grade and high-yield corporate bonds, less liquid mortgage products, less liquid agency securities, less liquid listed equities, state, municipal and provincial obligations and certain physical commodities. Such instruments are generally classified within Level 2 of the fair value hierarchy. Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices). Other investment securities are reported at fair value utilizing Level 1 and Level 2 inputs. The prices for Level 2 instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases and sales of investment securities. Prices obtained from these sources include prices derived from market quotations and matrix pricing. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Management reviews the methodologies used by its third-party providers in pricing the securities.
Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions. Valuations are adjusted to reflect illiquidity and/or non-transferability and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate will be used. Management’s best estimate consists of both internal and external support on certain Level 3 investments. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, offerings in the equity or debt markets and changes in financial ratios or cash flows.
The following tables set forth the Company’s financial assets and liabilities measured on a recurring basis that were accounted for at fair value. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

(In thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | March 31, 2025 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
AFS securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury |  | $ | 104,227 |  |  | $ | - |  |  | $ | - |  |  | $ | 104,227 |
Federal agency |  |  | - |  |  |  | 223,429 |  |  |  | - |  |  |  | 223,429 |
State & municipal |  |  | - |  |  |  | 88,702 |  |  |  | - |  |  |  | 88,702 |
Mortgage-backed |  |  | - |  |  |  | 503,077 |  |  |  | - |  |  |  | 503,077 |
Collateralized mortgage obligations |  |  | - |  |  |  | 739,458 |  |  |  | - |  |  |  | 739,458 |
Corporate |  |  | - |  |  |  | 45,784 |  |  |  | - |  |  |  | 45,784 |
Total AFS securities |  | $ | 104,227 |  |  | $ | 1,600,450 |  |  | $ | - |  |  | $ | 1,704,677 |
Equity securities |  |  | 40,561 |  |  |  | 1,000 |  |  |  | - |  |  |  | 41,561 |
Derivatives |  |  | - |  |  |  | 67,284 |  |  |  | - |  |  |  | 67,284 |
Total |  | $ | 144,788 |  |  | $ | 1,668,734 |  |  | $ | - |  |  | $ | 1,813,522 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives |  | $ | - |  |  | $ | 86,910 |  |  | $ | - |  |  | $ | 86,910 |
Total |  | $ | - |  |  | $ | 86,910 |  |  | $ | - |  |  | $ | 86,910 |

(In thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | December 31, 2024 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
AFS securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury |  | $ | 102,790 |  |  | $ | - |  |  | $ | - |  |  | $ | 102,790 |
Federal agency |  |  | - |  |  |  | 218,517 |  |  |  | - |  |  |  | 218,517 |
State & municipal |  |  | - |  |  |  | 87,490 |  |  |  | - |  |  |  | 87,490 |
Mortgage-backed |  |  | - |  |  |  | 464,365 |  |  |  | - |  |  |  | 464,365 |
Collateralized mortgage obligations |  |  | - |  |  |  | 656,488 |  |  |  | - |  |  |  | 656,488 |
Corporate |  |  | - |  |  |  | 45,014 |  |  |  | - |  |  |  | 45,014 |
Total AFS securities |  | $ | 102,790 |  |  | $ | 1,471,874 |  |  | $ | - |  |  | $ | 1,574,664 |
Equity securities |  |  | 41,372 |  |  |  | 1,000 |  |  |  | - |  |  |  | 42,372 |
Derivatives |  |  | - |  |  |  | 80,847 |  |  |  | - |  |  |  | 80,847 |
Total |  | $ | 144,162 |  |  | $ | 1,553,721 |  |  | $ | - |  |  | $ | 1,697,883 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives |  | $ | - |  |  | $ | 104,399 |  |  | $ | - |  |  | $ | 104,399 |
Total |  | $ | - |  |  | $ | 104,399 |  |  | $ | - |  |  | $ | 104,399 |

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GAAP requires disclosure of assets and liabilities measured and recorded at fair value on a non-recurring basis such as goodwill, loans held for sale, other real estate owned, collateral-dependent loans individually evaluated for expected credit losses and HTM securities. Loans with fair value of $26.7 million as of March 31, 2025 were individually evaluated for expected credit losses where the amortized cost was adjusted to fair value. Loans with fair value of $28.8 million as of December 31, 2024 were individually evaluated for expected credit losses where the amortized cost was adjusted to fair value. The Company uses the fair value of underlying collateral, less costs to sell, to estimate the allowance for credit losses for individually evaluated collateral dependent loans. The appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses ranging from 10% to 50%. Based on the valuation techniques used, the fair value measurements for collateral dependent individually evaluated loans are classified as Level 3.
The following table sets forth information with regard to estimated fair values of financial instruments. This table excludes financial instruments for which the carrying amount approximates fair value. Financial instruments for which the fair value approximates carrying value include cash and cash equivalents, AFS securities, equity securities, AIR, non-maturity deposits, short-term borrowings, accrued interest payable and derivatives.

|  |  |  |  | March 31, 2025 |  |  | December 31, 2024 |
(In thousands) |  | Fair Value Hierarchy |  |  | Carrying Amount |  |  | Estimated Fair Value |  |  | Carrying Amount |  |  | Estimated Fair Value |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
HTM securities |  |  | 2 |  |  | $ | 836,833 |  |  | $ | 756,404 |  |  | $ | 842,921 |  |  | $ | 749,945 |
Net loans |  |  | 3 |  |  |  | 9,876,895 |  |  |  | 9,567,818 |  |  |  | 9,863,654 |  |  |  | 9,458,786 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Time deposits |  |  | 2 |  |  | $ | 1,450,746 |  |  | $ | 1,440,657 |  |  | $ | 1,442,505 |  |  | $ | 1,431,942 |
Long-term debt |  |  | 2 |  |  |  | 4,605 |  |  |  | 4,444 |  |  |  | 29,644 |  |  |  | 29,439 |
Subordinated debt |  |  | 1 |  |  |  | 121,669 |  |  |  | 118,994 |  |  |  | 121,401 |  |  |  | 118,693 |
Junior subordinated debt |  |  | 2 |  |  |  | 101,196 |  |  |  | 104,031 |  |  |  | 101,196 |  |  |  | 105,763 |

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, the Company has a substantial wealth operation that contributes net fee income annually. The wealth management operation is not considered a financial instrument and its value has not been incorporated into the fair value estimates. Other significant assets and liabilities include the benefits resulting from the low-cost funding of deposit liabilities as compared to the cost of borrowing funds in the market and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimate of fair value.
HTM Securities
The fair value of the Company’s HTM securities is primarily measured using information from a third-party pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.
Net Loans
Net loans include portfolio loans and loans held for sale. Loans were first segregated by type and then further segmented into fixed and variable rate and loan quality categories. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments, and those expected future cash flows also includes credit risk, illiquidity risk and other market factors to calculate the exit price fair value in accordance with ASC 820.
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Time Deposits
The fair value of time deposits was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments. The fair values of the Company’s time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.
Long-Term Debt
The fair value of long-term debt was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments.
Subordinated Debt
The fair value of subordinated debt has been measured using the observable market price as of the period reported.
Junior Subordinated Debt
The fair value of junior subordinated debt has been estimated using a discounted cash flow analysis.

14. | Commitments and Contingencies

The Company is a party to certain financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, unused lines of credit, standby letters of credit and certain agricultural real estate loans sold to investors with recourse, with the sold portion having a government guarantee that is assignable back to the Company upon repurchase of the loan in the event of default. The Company’s exposure to credit loss in the event of nonperformance by the other party to the commitments to extend credit, unused lines of credit, standby letters of credit and loans sold with recourse is represented by the contractual amount of those instruments. The credit risk associated with commitments to extend credit and standby and commercial letters of credit is essentially the same as that involved with extending loans to customers and is subject to normal credit policies. Collateral may be obtained based on management’s assessment of the customer’s creditworthiness. Commitments to extend credit and unused lines of credit totaled $2.79 billion at March 31, 2025 and $2.84 billion at December 31, 2024.
Since many loan commitments, standby letters of credit and guarantees and indemnification contracts expire without being funded in whole or in part, the contract amounts are not necessarily indicative of future cash flows. The Company does not issue any guarantees that would require liability-recognition or disclosure, other than its standby letters of credit.
The Company guarantees the obligations or performance of customers by issuing standby letters of credit to third-parties. These standby letters of credit are generally issued in support of third-party debt, such as corporate debt issuances, industrial revenue bonds and municipal securities. The risk involved in issuing standby letters of credit is essentially the same as the credit risk involved in extending loan facilities to customers and letters of credit are subject to the same credit origination, portfolio maintenance and management procedures in effect to monitor other credit and off-balance sheet products. Typically, these instruments have one year expirations with an option to renew upon annual review; therefore, the total amounts do not necessarily represent future cash requirements. Standby letters of credit totaled $56.2 million at March 31, 2025 and $50.8 million at December 31, 2024. As of March 31, 2025 and December 31, 2024, the fair value of the Company’s standby letters of credit was not significant.
In the normal course of business there are various outstanding legal proceedings. If legal costs are deemed material by management, the Company accrues for the estimated loss from a loss contingency if the information available indicates that it is probable that a liability had been incurred at the date of the financial statements and the amount of loss can be reasonably estimated.
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15. | Segment Reporting

Historically, the Company has operated as a single reportable segment, providing a full range of banking services to retail and commercial customers. However, in accordance with ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, and as the Bank has grown, management reassessed its operating segment structure to enhance transparency in how financial performance is evaluated and resources are allocated by the chief operating decision maker (“CODM”). The updated guidance enhances disclosures by requiring more detailed information on segment profitability and certain key performance metrics used by management. Segments are components of an enterprise that are regularly evaluated by the CODM to allocate resources and assess performance. The Company’s CODM is its Chief Executive Officer.
As a result of this reassessment, beginning with the fiscal year ended December 31, 2024, the Company has determined that it now operates through two reportable segments:
Banking – Provides commercial banking, retail banking, and wealth management services primarily to customers in its market area, offering a broad array of banking and financial services to retail, commercial, and municipal customers. Included in Banking are the revenue and expenses from the wealth management business and the parent holding company. The parent company’s principal activities include the direct and indirect ownership of banking and non-banking subsidiaries, as well as the issuance of debt and equity. The parent company’s principal sources of revenue are the management fees and dividends it receives from its subsidiaries. Banking also includes corporate shared service costs such as the majority of equity compensation expense, as well as other general and administrative shared services costs including pension, retirement plan and supplemental retirement plan costs. Currently there is no allocation of these costs to other operating segments.
Retirement Plan Administration – Includes retirement plan and health savings account recordkeeping and administration, investment management, third-party administration, and actuarial services.
Our CODM reviews actual net income versus budgeted net income to assess segment performance and to make decisions about allocating capital and personnel to the segments. The CODM regularly receives expense information at a level consistent with that disclosed in the Company’s consolidated statements of income.
Reported segments and their financial information are not necessarily comparable to similar information reported by other financial institutions. Additionally, due to interrelationships among the various segments, the information presented is not indicative of how the segments would perform as independent entities. Changes in management structure, allocation methodologies, or procedures may result in future revisions to previously reported segment financial data.
For the three months ended March 31, 2024, the Company only disclosed one reportable segment, as operations were assessed on a consolidated basis. Accordingly, prior year segment data has been retrospectively adjusted to conform to the current period presentation. The Company will continue to evaluate its segment disclosures in accordance with ASU 2023-07 and make necessary adjustments as business operations evolve.
Information about reportable segments and reconciliation of the information to the consolidated financial statements follows:

|  | Three Months Ended March 31, 2025 |
(In thousands) |  | Banking |  |  | Retirement Plan Administration |  |  | All Other(1) |  |  | Consolidated |
Net interest income |  | $ | 107,205 |  |  | $ | 18 |  |  | $ | - |  |  | $ | 107,223 |
Provision for loan losses |  |  | 7,554 |  |  |  | - |  |  |  | - |  |  |  | 7,554 |
Net interest income after provision for loan losses |  | $ | 99,651 |  |  | $ | 18 |  |  | $ | - |  |  | $ | 99,669 |
Noninterest income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service charges on deposit accounts |  | $ | 4,243 |  |  | $ | - |  |  | $ | - |  |  | $ | 4,243 |
Card services income |  |  | 5,317 |  |  |  | - |  |  |  | - |  |  |  | 5,317 |
Retirement plan administration fees |  |  | - |  |  |  | 16,256 |  |  |  | (398 | ) |  |  | 15,858 |
Wealth management |  |  | 10,337 |  |  |  | 598 |  |  |  | 11 |  |  |  | 10,946 |
Insurance services |  |  | - |  |  |  | - |  |  |  | 4,761 |  |  |  | 4,761 |
Bank owned life insurance income |  |  | 3,397 |  |  |  | - |  |  |  | - |  |  |  | 3,397 |
Net securities (losses) gains |  |  | (104 | ) |  |  | - |  |  |  | - |  |  |  | (104 | )
Other |  |  | 5,613 |  |  |  | 155 |  |  |  | (2,734 | ) |  |  | 3,034 |
Total noninterest income |  | $ | 28,803 |  |  | $ | 17,009 |  |  | $ | 1,640 |  |  | $ | 47,452 |
Noninterest expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  | $ | 49,548 |  |  | $ | 8,454 |  |  | $ | 2,692 |  |  | $ | 60,694 |
Technology and data services |  |  | 9,801 |  |  |  | 270 |  |  |  | 167 |  |  |  | 10,238 |
Occupancy |  |  | 8,692 |  |  |  | 268 |  |  |  | 67 |  |  |  | 9,027 |
Professional fees and outside services |  |  | 4,815 |  |  |  | 504 |  |  |  | (367 | ) |  |  | 4,952 |
Office supplies and postage |  |  | 1,881 |  |  |  | 47 |  |  |  | 14 |  |  |  | 1,942 |
FDIC assessment |  |  | 1,694 |  |  |  | - |  |  |  | - |  |  |  | 1,694 |
Advertising |  |  | 1,118 |  |  |  | 19 |  |  |  | 1 |  |  |  | 1,138 |
Amortization of intangible assets |  |  | 1,508 |  |  |  | 544 |  |  |  | 59 |  |  |  | 2,111 |
Loan collection and other real estate owned, net |  |  | 659 |  |  |  | - |  |  |  | - |  |  |  | 659 |
Acquisition expenses |  |  | 1,221 |  |  |  | - |  |  |  | - |  |  |  | 1,221 |
Other |  |  | 8,540 |  |  |  | 234 |  |  |  | (2,550 | ) |  |  | 6,224 |
Total noninterest expense |  | $ | 89,477 |  |  | $ | 10,340 |  |  | $ | 83 |  |  | $ | 99,900 |
Income before income tax expense |  | $ | 38,977 |  |  | $ | 6,687 |  |  | $ | 1,557 |  |  | $ | 47,221 |
Income tax expense |  |  | 9,051 |  |  |  | 1,425 |  |  |  | - |  |  |  | 10,476 |
Net income |  | $ | 29,926 |  |  | $ | 5,262 |  |  | $ | 1,557 |  |  | $ | 36,745 |
Goodwill |  | $ | 324,250 |  |  | $ | 23,877 |  |  | $ | 14,536 |  |  | $ | 362,663 |
Intangible assets, net |  |  | 26,045 |  |  |  | 6,989 |  |  |  | 1,215 |  |  |  | 34,249 |
Total assets |  |  | 15,591,557 |  |  |  | 54,925 |  |  |  | (1,782,231 | ) |  |  | 13,864,251 |

(1) Included in All Other is the revenue and expenses from certain other non-bank subsidiaries of the parent, including the insurance subsidiary, along with eliminating amounts that do not meet the definition of an operating segment.
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|  | Three Months Ended March 31, 2024 |
(In thousands) |  | Banking |  |  | Retirement Plan Administration |  |  | All Other(1) |  |  | Consolidated |
Net interest income |  | $ | 95,157 |  |  | $ | 17 |  |  | $ | - |  |  | $ | 95,174 |
Provision for loan losses |  |  | 5,579 |  |  |  | - |  |  |  | - |  |  |  | 5,579 |
Net interest income after provision for loan losses |  | $ | 89,578 |  |  | $ | 17 |  |  | $ | - |  |  | $ | 89,595 |
Noninterest income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service charges on deposit accounts |  | $ | 4,117 |  |  | $ | - |  |  | $ | - |  |  | $ | 4,117 |
Card services income |  |  | 5,195 |  |  |  | - |  |  |  | - |  |  |  | 5,195 |
Retirement plan administration fees |  |  | - |  |  |  | 14,656 |  |  |  | (369 | ) |  |  | 14,287 |
Wealth management |  |  | 9,187 |  |  |  | 497 |  |  |  | 13 |  |  |  | 9,697 |
Insurance services |  |  | 1 |  |  |  | - |  |  |  | 4,387 |  |  |  | 4,388 |
Bank owned life insurance income |  |  | 2,352 |  |  |  | - |  |  |  | - |  |  |  | 2,352 |
Net securities gains (losses) |  |  | 2,183 |  |  |  | - |  |  |  | - |  |  |  | 2,183 |
Other |  |  | 5,806 |  |  |  | 133 |  |  |  | (2,766 | ) |  |  | 3,173 |
Total noninterest income |  | $ | 28,841 |  |  | $ | 15,286 |  |  | $ | 1,265 |  |  | $ | 45,392 |
Noninterest expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  | $ | 45,125 |  |  | $ | 7,893 |  |  | $ | 2,686 |  |  | $ | 55,704 |
Technology and data services |  |  | 9,280 |  |  |  | 302 |  |  |  | 168 |  |  |  | 9,750 |
Occupancy |  |  | 7,758 |  |  |  | 283 |  |  |  | 57 |  |  |  | 8,098 |
Professional fees and outside services |  |  | 4,724 |  |  |  | 469 |  |  |  | (340 | ) |  |  | 4,853 |
Office supplies and postage |  |  | 1,758 |  |  |  | 92 |  |  |  | 15 |  |  |  | 1,865 |
FDIC assessment |  |  | 1,735 |  |  |  | - |  |  |  | - |  |  |  | 1,735 |
Advertising |  |  | 796 |  |  |  | 15 |  |  |  | 1 |  |  |  | 812 |
Amortization of intangible assets |  |  | 1,682 |  |  |  | 468 |  |  |  | 18 |  |  |  | 2,168 |
Loan collection and other real estate owned, net |  |  | 553 |  |  |  | - |  |  |  | - |  |  |  | 553 |
Acquisition expenses |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other |  |  | 8,526 |  |  |  | 278 |  |  |  | (2,569 | ) |  |  | 6,235 |
Total noninterest expense |  | $ | 81,937 |  |  | $ | 9,800 |  |  | $ | 36 |  |  | $ | 91,773 |
Income before income tax expense |  | $ | 36,482 |  |  | $ | 5,503 |  |  | $ | 1,229 |  |  | $ | 43,214 |
Income tax expense |  |  | 8,054 |  |  |  | 1,211 |  |  |  | 126 |  |  |  | 9,391 |
Net income |  | $ | 28,428 |  |  | $ | 4,292 |  |  | $ | 1,103 |  |  | $ | 33,823 |
Goodwill |  | $ | 324,250 |  |  | $ | 23,224 |  |  | $ | 14,377 |  |  | $ | 361,851 |
Intangible assets, net |  |  | 32,290 |  |  |  | 6,339 |  |  |  | 339 |  |  |  | 38,968 |
Total assets |  |  | 15,050,010 |  |  |  | 39,221 |  |  |  | (1,650,032 | ) |  |  | 13,439,199 |

(1) Included in All Other is the revenue and expenses from certain other non-bank subsidiaries of the parent, including the insurance subsidiary, along with eliminating amounts that do not meet the definition of an operating segment.

16. | Subsequent Event

As noted in Note 4, on May 2, 2025, the Company completed the acquisition of Evans, with total consideration of approximately $222 million in stock. The acquisition of Evans is being accounted for as a business combination in accordance with ASC 805, using the acquisition method of accounting. Due to the close proximity of the acquisition date and the Company’s filing of its Quarterly Report on Form 10-Q for the three months ended March 31, 2025, the initial accounting for the business combination is incomplete. Accordingly, the Company is unable to disclose the preliminary allocation of consideration or other information required by ASC 805 at this time. The Company will include relevant disclosures as required in the second quarter of 2025.
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NBT BANCORP INC. AND SUBSIDIARIES

ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The purpose of this discussion and analysis is to provide a concise description of the consolidated financial condition and results of operations of NBT Bancorp Inc. (“NBT”) and its wholly-owned subsidiaries, including NBT Bank, National Association (the “Bank”), NBT Financial Services, Inc. (“NBT Financial”) and NBT Holdings, Inc. (“NBT Holdings”) (collectively referred to herein as the “Company”). When references to “NBT,” “we,” “our,” “us,” and “the Company” are made in this report, we mean NBT Bancorp Inc. and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, NBT Bancorp Inc. When we refer to the “Bank” in this report, we mean our only bank subsidiary, NBT Bank, National Association, and its subsidiaries. This discussion will focus on results of operations, financial condition, capital resources and asset/liability management. Reference should be made to the Company’s consolidated financial statements and footnotes thereto included in this Form 10‑Q as well as to the Company’s Annual Report on Form 10‑K for the year ended December 31, 2024 for an understanding of the following discussion and analysis. Operating results for the three month period ending March 31, 2025 are not necessarily indicative of the results of the full year ending December 31, 2025 or any future period.
Forward-Looking Statements
Certain statements in this filing and future filings by the Company with the SEC, in the Company’s press releases or other public or stockholder communications or in oral statements made with the approval of an authorized executive officer, contain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of phrases such as “anticipate,” “believe,” “expect,” “forecasts,” “projects,” “will,” “can,” “would,” “should,” “could,” “may,” or other similar terms. There are a number of factors, many of which are beyond the Company’s control, that could cause actual results to differ materially from those contemplated by the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) local, regional, national and international economic conditions, including actual or potential stress in the banking industry, and the impact they may have on the Company and its customers, and the Company’s assessment of that impact; (2) changes in the level of nonperforming assets and charge-offs; (3) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (4) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the FRB and international trade disputes (including threatened or implemented tariffs imposed by the U.S. and threatened or implemented tariffs imposed by foreign countries in retaliation); (5) inflation, interest rate, securities market and monetary fluctuations; (6) political instability; (7) acts of war, including international military conflicts, or terrorism; (8) the timely development and acceptance of new products and services and the perceived overall value of these products and services by users; (9) changes in consumer spending, borrowing and saving habits; (10) changes in the financial performance and/or condition of the Company’s borrowers; (11) technological changes; (12) acquisition and integration of acquired businesses; (13) the possibility that NBT may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all or to successfully integrate Evans operations and those of NBT; (14) the ability to increase market share and control expenses; (15) changes in the competitive environment among financial holding companies; (16) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company and its subsidiaries must comply, including those under the Dodd-Frank Act, and the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018; (17) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the FASB and other accounting standard setters; (18) changes in the Company’s organization, compensation and benefit plans; (19) the costs and effects of legal and regulatory developments, including the resolution of legal proceedings or regulatory or other governmental inquiries, and the results of regulatory examinations or reviews; (20) greater than expected costs or difficulties related to the integration of new products and lines of business; and (21) the Company’s success at managing the risks involved in the foregoing items.
The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made, and advises readers that various factors, including, but not limited to, those described above and other factors discussed in the Company’s annual and quarterly reports previously filed with the SEC, could affect the Company’s financial performance and could cause the Company’s actual results or circumstances for future periods to differ materially from those anticipated or projected.
Unless required by law, the Company does not undertake, and specifically disclaims any obligations to, publicly release any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
Non-GAAP Measures
This Quarterly Report on Form 10-Q contains financial information determined by methods other than in accordance with GAAP. Where non-GAAP disclosures are used in this Form 10-Q, the comparable GAAP measure, as well as a reconciliation to the comparable GAAP measure, is provided in the accompanying tables. Management believes that these non-GAAP measures provide useful information that is important to an understanding of the results of the Company’s core business as well as provide information standard in the financial institution industry. Non-GAAP measures should not be considered a substitute for financial measures determined in accordance with GAAP and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Amounts previously reported in the consolidated financial statements are reclassified whenever necessary to conform to current period presentation.
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Critical Accounting Estimates
SEC guidance requires disclosure of “critical accounting estimates.” The SEC defines “critical accounting estimates” as those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant. The Company follows financial accounting and reporting policies that are in accordance with GAAP. The more significant of these policies are summarized in Note 1 to the consolidated financial statements presented in our 2024 Annual Report on Form 10-K. Refer to Note 3 to the unaudited interim consolidated financial statements in this Quarterly Report on Form 10-Q for recently adopted accounting standards. The allowance for credit losses and unfunded commitments policies are deemed to meet the SEC’s definition of a critical accounting estimate.
Allowance for Credit Losses and Unfunded Commitments
The allowance for credit losses consists of the allowance for credit losses and the allowance for losses on unfunded commitments. The measurement of CECL on financial instruments requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses under the CECL methodology is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, the Company considers forecasts about future economic conditions that are reasonable and supportable. The allowance for credit losses for loans, as reported in our consolidated statements of financial condition, is adjusted by an expense for credit losses, which is recognized in earnings, and reduced by the charge-off of loan amounts, net of recoveries. The allowance for losses on unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. However, a liability is not recognized for commitments unconditionally cancellable by the Company. The allowance for losses on unfunded commitments is determined by estimating future draws and applying the expected loss rates on those draws.
Management of the Company considers the accounting policy relating to the allowance for credit losses to be a critical accounting estimate given the uncertainty in evaluating the level of the allowance required to cover management’s estimate of all expected credit losses over the expected contractual life of our loan portfolio. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the allowance for credit losses in those future periods. While management’s current evaluation of the allowance for credit losses indicates that the allowance is appropriate, the allowance may need to be increased under adversely different conditions or assumptions. The impact of utilizing the CECL methodology to calculate the reserve for credit losses will be significantly influenced by the composition, characteristics and quality of our loan portfolio, as well as the prevailing economic conditions and forecasts utilized. Material changes to these and other relevant factors may result in greater volatility to the reserve for credit losses, and therefore, greater volatility to our reported earnings.
One of the most significant judgments involved in estimating the Company’s allowance for credit losses relates to the macroeconomic forecasts used to estimate expected credit losses over the forecast period. As of March 31, 2025, the quantitative model 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 March 31, 2025, the weightings were 75% and 25% for the baseline and downside economic forecasts, respectively. The baseline outlook reflected an economic environment where the unemployment rate increases from 4.1% to 4.4% during the forecast period. Northeast GDP’s annualized growth (on a quarterly basis) is expected to start the second quarter of 2025 at approximately 5% and decrease to 3.9% before increasing to 4.1% by the end of the forecast period. Key assumptions in the baseline economic outlook included the Federal Reserve cutting rates with two 25 basis point cuts at the September and December meetings, the economy remaining at full employment and continued tapering of the Federal Reserve balance sheet. The alternative downside scenario assumed deteriorated economic conditions from the baseline outlook. Under this scenario, national unemployment rises from 4.1% in the first quarter of 2025 to a peak of 7.6% in the second quarter of 2026. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of March 31, 2025. Additional qualitative adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools and recent trends in asset value indices. Additional monitoring for industry concentrations, loan growth and policy exceptions was also conducted.
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To demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of March 31, 2025, the Company attributed the change in scenario weightings to the change in the allowance for credit losses, with a 10% decrease to the downside scenario and a 10% increase to the baseline scenario causing a 4% decrease in the overall estimated allowance for credit losses. To further demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of March 31, 2025, the Company increased the downside scenario to 100% which resulted in a 30% increase in the overall estimated allowance for credit losses.
The Company’s policies on the CECL methodology for allowance for credit losses are disclosed in Note 1 to the consolidated financial statements presented in our 2024 Annual Report on Form 10-K. All accounting policies are important and as such, the Company encourages the reader to review each of the policies included in Note 1 to the consolidated financial statements presented in our 2024 Annual Report on Form 10-K to obtain a better understanding of how the Company’s financial performance is reported. Refer to Note 3 to the unaudited interim consolidated financial statements in this Quarterly Report on Form 10-Q for recently adopted accounting standards.
Evans Bancorp, Inc. Merger
On May 2, 2025, the Company completed the acquisition of Evans, through the merger of Evans with and into the Company, with the Company surviving the merger, with total consideration of approximately $222 million in stock. Evans, with assets of approximately $2.19 billion at December 31, 2024, was headquartered in Williamsville, New York. Its primary subsidiary, Evans Bank, was a federally-chartered national banking association operating 18 banking locations in Western New York. The acquisition of Evans is being accounted for as a business combination in accordance with ASC 805, “Business Combinations” (“ASC 805”), using the acquisition method of accounting. Due to the close proximity of the acquisition date and the Company’s filing of its Quarterly Report on Form 10-Q for the three months ended March 31, 2025, the initial accounting for the business combination is incomplete. Accordingly, the Company is unable to disclose the preliminary allocation of consideration or other information required by ASC 805 at this time. The Company will include relevant disclosures as required in the second quarter of 2025.
The Company incurred acquisition expenses related to the Merger of $1.2 million for the three months ended March 31, 2025.
Executive Summary
Significant factors management reviews to evaluate the Company’s operating results and financial condition include, but are not limited to, net income and EPS, return on average assets and equity, NIM, noninterest income, operating expenses, asset quality indicators, loan and deposit growth, capital management, liquidity and interest rate sensitivity, enhancements to customer products and services, technology advancements, market share and peer comparisons.
Net income for the three months ended March 31, 2025 was $36.7 million, up $0.7 million from the fourth quarter of 2024 and up $2.9 million from the first quarter of 2024. Diluted earnings per share were $0.77 for the three months ended March 31, 2025, up $0.01 from the fourth quarter of 2024 and up $0.06 from the first quarter of 2024.
Operating net income(1), a non-GAAP measure, was $37.8 million, or $0.80 per diluted common share, for the three months ended March 31, 2025, compared to $0.77 per diluted common share for the fourth quarter of 2024 and $0.68 per diluted common share for the first quarter of 2024.
In the first quarter of 2024, the Company sold an AFS corporate debt security from a subordinated debt investment issued by a financial institution that failed and was previously written-off and recognized a gain of $2.3 million.
The following information should be considered in connection with the Company’s results for the three months ended March 31, 2025:

| ● | Net interest income for the three months ended March 31, 2025 was $107.2 million, up $1.1 million, or 1.1%, from the fourth quarter of 2024 and up $12.0 million, or 12.7%, from the first quarter of 2024.

| ● | The Company recorded a provision for loan losses of $7.6 million for the three months ended March 31, 2025, compared to $2.2 million in the fourth quarter of 2024 and $5.6 million in the first quarter of 2024.

| ● | Excluding securities gains (losses), noninterest income represented 31% of total revenues and was $47.6 million for the three months ended March 31, 2025, up $5.4 million, or 12.7%, from the fourth quarter of 2024 and up $4.3 million, or 10.1%, from the first quarter of 2024.

| ● | Noninterest expense, excluding acquisition expenses, was down $1.1 million, or 1.1%, from the fourth quarter of 2024 and was up $6.9 million, or 7.5%, from the first quarter of 2024.

| ● | Period end total loans were $9.98 billion, up $10.4 million, or 0.4% annualized, from December 31, 2024.

| ● | Credit quality metrics including net charge-offs to average loans were 0.27%, annualized, and allowance for loan losses to total loans was 1.17%.

| ● | Period end total deposits were $11.71 billion, up $161.8 million, or 1.4%, from December 31, 2024. The loan to deposit ratio was 85.2% as of March 31, 2025 and 86.3% as of December 31, 2024.

(1) | Non-GAAP measure - Refer to non-GAAP reconciliation below.

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Results of Operations
The following table sets forth certain financial highlights:

|  | Three Months Ended |
|  | March 31, 2025 |  |  | December 31, 2024 |  |  | March 31, 2024 |
Performance: |  |  |  |  |  |  |  |  |
Diluted earnings per share |  | $ | 0.77 |  |  | $ | 0.76 |  |  | $ | 0.71 |
Return on average assets(2) |  |  | 1.08 | % |  |  | 1.04 | % |  |  | 1.02 | %
Return on average equity(2) |  |  | 9.68 | % |  |  | 9.44 | % |  |  | 9.52 | %
Return on average tangible common equity(1)(2) |  |  | 13.63 | % |  |  | 13.36 | % |  |  | 13.87 | %
Net interest margin, (FTE)(1)(2) |  |  | 3.44 | % |  |  | 3.34 | % |  |  | 3.14 | %
Capital: |  |  |  |  |  |  |  |  |  |  |  |
Equity to assets |  |  | 11.29 | % |  |  | 11.07 | % |  |  | 10.73 | %
Tangible equity ratio(1) |  |  | 8.68 | % |  |  | 8.42 | % |  |  | 7.98 | %
Book value per share |  | $ | 33.13 |  |  | $ | 32.34 |  |  | $ | 30.57 |
Tangible book value per share(1) |  | $ | 24.74 |  |  | $ | 23.88 |  |  | $ | 22.07 |
Leverage ratio |  |  | 10.39 | % |  |  | 10.24 | % |  |  | 10.09 | %
Common equity tier 1 capital ratio |  |  | 12.12 | % |  |  | 11.93 | % |  |  | 11.68 | %
Tier 1 capital ratio |  |  | 13.02 | % |  |  | 12.83 | % |  |  | 12.61 | %
Total risk-based capital ratio |  |  | 15.24 | % |  |  | 15.03 | % |  |  | 14.87 | %

(1) | Non-GAAP measure - Refer to non-GAAP reconciliation below.

(2) | Annualized.

The following tables provide non-GAAP reconciliations:

|  | Three Months Ended |
(In thousands, except per share data) |  | March 31, 2025 |  |  | December 31, 2024 |  |  | March 31, 2024 |
Return on average tangible common equity: |  |  |  |  |  |  |  |  |
Net income |  | $ | 36,745 |  |  | $ | 36,005 |  |  | $ | 33,823 |
Amortization of intangible assets (net of tax) |  |  | 1,583 |  |  |  | 1,560 |  |  |  | 1,626 |
Net income, excluding intangible amortization |  | $ | 38,328 |  |  | $ | 37,565 |  |  | $ | 35,449 |
Average stockholders’ equity |  | $ | 1,538,798 |  |  | $ | 1,517,788 |  |  | $ | 1,429,602 |
Less: average goodwill and other intangibles |  |  | 398,233 |  |  |  | 399,139 |  |  |  | 401,756 |
Average tangible common equity |  | $ | 1,140,565 |  |  | $ | 1,118,649 |  |  | $ | 1,027,846 |
Return on average tangible common equity(2) |  |  | 13.63 | % |  |  | 13.36 | % |  |  | 13.87 | %
Tangible equity ratio: |  |  |  |  |  |  |  |  |  |  |  |
Stockholders’ equity |  | $ | 1,565,775 |  |  | $ | 1,526,141 |  |  | $ | 1,441,415 |
Intangibles |  |  | 396,912 |  |  |  | 399,023 |  |  |  | 400,819 |
Assets |  | $ | 13,864,251 |  |  | $ | 13,786,666 |  |  | $ | 13,439,199 |
Tangible equity ratio |  |  | 8.68 | % |  |  | 8.42 | % |  |  | 7.98 | %
Tangible book value per share: |  |  |  |  |  |  |  |  |  |  |  |
Stockholders’ equity |  | $ | 1,565,775 |  |  | $ | 1,526,141 |  |  | $ | 1,441,415 |
Intangibles |  |  | 396,912 |  |  |  | 399,023 |  |  |  | 400,819 |
Tangible equity |  | $ | 1,168,863 |  |  | $ | 1,127,118 |  |  | $ | 1,040,596 |
Diluted common shares outstanding |  |  | 47,255 |  |  |  | 47,195 |  |  |  | 47,155 |
Tangible book value per share |  | $ | 24.74 |  |  | $ | 23.88 |  |  | $ | 22.07 |
Operating net income: |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 36,745 |  |  | $ | 36,005 |  |  | $ | 33,823 |
Acquisition expenses |  |  | 1,221 |  |  |  | 988 |  |  |  | - |
Securities losses (gains) |  |  | 104 |  |  |  | (222 | ) |  |  | (2,183 | )
Adjustments to net income |  | $ | 1,325 |  |  | $ | 766 |  |  | $ | (2,183 | )
Adjustments to net income (net of tax) |  | $ | 1,020 |  |  | $ | 604 |  |  | $ | (1,703 | )
Operating net income |  | $ | 37,765 |  |  | $ | 36,609 |  |  | $ | 32,120 |
Operating diluted earnings per share |  | $ | 0.80 |  |  | $ | 0.77 |  |  | $ | 0.68 |
FTE adjustment |  |  |  |  |  |  |  |  |  |  |  |
Net interest income |  | $ | 107,223 |  |  | $ | 106,105 |  |  | $ | 95,174 |
FTE adjustment |  |  | 636 |  |  |  | 619 |  |  |  | 658 |
Net interest income (FTE) |  | $ | 107,859 |  |  | $ | 106,724 |  |  | $ | 95,832 |
Average earnings assets |  | $ | 12,701,136 |  |  | $ | 12,704,655 |  |  | $ | 12,273,657 |
Net interest margin (FTE)(2) |  |  | 3.44 | % |  |  | 3.34 | % |  |  | 3.14 | %

(2) | Annualized.

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Net Interest Income
Net interest income is the difference between the interest and dividend income earned on interest-earning assets, primarily loans and securities and the interest expense paid on interest-bearing liabilities, primarily deposits and borrowings. Net interest income is affected by the interest rate spread, the difference between the yield on interest-earning assets and cost of interest-bearing liabilities, as well as the volumes of such assets and liabilities. Net interest income is one of the key determining factors in a financial institution’s performance as it is the principal source of earnings.
Net interest income was $107.2 million for the first quarter of 2025, up $1.1 million, or 1.1%, from the previous quarter. FTE NIM was 3.44% for the three months ended March 31, 2025, an increase of 10 bps from the previous quarter. Interest income decreased $3.3 million, or 2.1%, as the yield on average interest-earning assets decreased 1 bp from the prior quarter to 4.95%, while average interest-earning assets of $12.70 billion decreased $3.5 million from the prior quarter. The decrease in interest income was primarily due to lower yields on loans and short-term interest-bearing accounts from the two 25 bps federal funds rate decreases in the fourth quarter of 2024, as well as two fewer days in the first quarter of 2025 compared to the fourth quarter of 2024. The decrease was partially offset by an increase in interest income on securities due to higher average balances and yields. Interest expense decreased $4.5 million, or 8.6%, as the cost of interest-bearing liabilities decreased 17 bps to 2.23% for the three months ended March 31, 2025 as compared to the prior quarter, primarily due to a 17 bps decrease in interest-bearing deposit costs. Included in net interest income was $2.2 million of acquisition-related net accretion for the three months ended March 31, 2025 and $2.6 million of acquisition-related net accretion for the three months ended December 31, 2024.
Net interest income was $107.2 million for the first quarter of 2025, up $12.0 million, or 12.7%, from the first quarter of 2024. FTE NIM was 3.44% for the three months ended March 31, 2025, an increase of 30 bps from the first quarter of 2024. Interest income increased $7.4 million, or 5.0%, as the yield on average interest-earning assets increased 11 bps from the same period in 2024 to 4.95%, while average interest-earning assets increased $427.5 million, or 3.5%, from the first quarter of 2024, primarily due to organic loan growth and an increase in securities. Interest expense decreased $4.6 million, or 8.9%, as the cost of interest-bearing liabilities decreased 29 bps to 2.23% for the three months ended March 31, 2025, primarily due to a 21 bps decrease in interest-bearing deposit costs, a $511.7 million increase in interest-bearing deposits and lower average balances of short-term borrowings. Included in net interest income was $2.2 million of acquisition-related net accretion for the three months ended March 31, 2025 and $2.5 million of acquisition-related net accretion for the three months ended March 31, 2024.
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Average Balances and Net Interest Income
The following table includes the condensed consolidated average balance sheet, an analysis of interest income/expense and average yield/rate for each major category of earning assets and interest-bearing liabilities on a taxable equivalent basis.

Three Months Ended |  | March 31, 2025 |  |  | December 31, 2024 |  |  | March 31, 2024 |
(Dollars in thousands) |  | Average Balance |  |  | Interest |  |  | Yield/ Rates |  |  | Average Balance |  |  | Interest |  |  | Yield/ Rates |  |  | Average Balance |  |  | Interest |  |  | Yield/ Rates |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-term interest-bearing accounts |  | $ | 63,198 |  |  | $ | 703 |  |  |  | 4.51 | % |  | $ | 184,988 |  |  | $ | 2,449 |  |  |  | 5.27 | % |  | $ | 47,972 |  |  | $ | 534 |  |  |  | 4.48 | %
Securities taxable(1) |  |  | 2,402,772 |  |  |  | 13,631 |  |  |  | 2.30 | % |  |  | 2,317,034 |  |  |  | 12,252 |  |  |  | 2.10 | % |  |  | 2,278,029 |  |  |  | 10,806 |  |  |  | 1.91 | %
Securities tax-exempt(1) (3) |  |  | 220,210 |  |  |  | 1,956 |  |  |  | 3.60 | % |  |  | 211,493 |  |  |  | 1,838 |  |  |  | 3.46 | % |  |  | 230,468 |  |  |  | 2,052 |  |  |  | 3.58 | %
FRB and FHLB stock |  |  | 33,469 |  |  |  | 473 |  |  |  | 5.73 | % |  |  | 33,261 |  |  |  | 481 |  |  |  | 5.75 | % |  |  | 42,296 |  |  |  | 830 |  |  |  | 7.89 | %
Loans(2) (3) |  |  | 9,981,487 |  |  |  | 138,277 |  |  |  | 5.62 | % |  |  | 9,957,879 |  |  |  | 141,336 |  |  |  | 5.65 | % |  |  | 9,674,892 |  |  |  | 133,373 |  |  |  | 5.54 | %
Total interest-earning assets |  | $ | 12,701,136 |  |  | $ | 155,040 |  |  |  | 4.95 | % |  | $ | 12,704,655 |  |  | $ | 158,356 |  |  |  | 4.96 | % |  | $ | 12,273,657 |  |  | $ | 147,595 |  |  |  | 4.84 | %
Other assets |  |  | 1,088,069 |  |  |  |  |  |  |  |  |  |  |  | 1,093,419 |  |  |  |  |  |  |  |  |  |  |  | 1,055,386 |  |  |  |  |  |  |  |  |
Total assets |  | $ | 13,789,205 |  |  |  |  |  |  |  |  |  |  | $ | 13,798,074 |  |  |  |  |  |  |  |  |  |  | $ | 13,329,043 |  |  |  |  |  |  |  |  |
Liabilities and stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market deposit accounts |  | $ | 3,496,552 |  |  | $ | 26,198 |  |  |  | 3.04 | % |  | $ | 3,504,937 |  |  | $ | 28,797 |  |  |  | 3.27 | % |  | $ | 3,129,160 |  |  | $ | 27,734 |  |  |  | 3.56 | %
NOW deposit accounts |  |  | 1,682,265 |  |  |  | 3,494 |  |  |  | 0.84 | % |  |  | 1,664,960 |  |  |  | 3,812 |  |  |  | 0.91 | % |  |  | 1,600,288 |  |  |  | 2,994 |  |  |  | 0.75 | %
Savings deposits |  |  | 1,571,673 |  |  |  | 187 |  |  |  | 0.05 | % |  |  | 1,561,703 |  |  |  | 193 |  |  |  | 0.05 | % |  |  | 1,607,659 |  |  |  | 171 |  |  |  | 0.04 | %
Time deposits |  |  | 1,450,846 |  |  |  | 12,709 |  |  |  | 3.55 | % |  |  | 1,446,798 |  |  |  | 14,013 |  |  |  | 3.85 | % |  |  | 1,352,559 |  |  |  | 13,440 |  |  |  | 4.00 | %
Total interest-bearing deposits |  | $ | 8,201,336 |  |  | $ | 42,588 |  |  |  | 2.11 | % |  | $ | 8,178,398 |  |  | $ | 46,815 |  |  |  | 2.28 | % |  | $ | 7,689,666 |  |  | $ | 44,339 |  |  |  | 2.32 | %
Federal funds purchased |  |  | 2,278 |  |  |  | 25 |  |  |  | 4.45 | % |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 19,769 |  |  |  | 272 |  |  |  | 5.53 | %
Repurchase agreements |  |  | 107,496 |  |  |  | 761 |  |  |  | 2.87 | % |  |  | 116,408 |  |  |  | 916 |  |  |  | 3.13 | % |  |  | 82,419 |  |  |  | 317 |  |  |  | 1.55 | %
Short-term borrowings |  |  | 7,033 |  |  |  | 80 |  |  |  | 4.61 | % |  |  | 174 |  |  |  | 2 |  |  |  | 4.57 | % |  |  | 213,390 |  |  |  | 2,832 |  |  |  | 5.34 | %
Long-term debt |  |  | 27,674 |  |  |  | 266 |  |  |  | 3.90 | % |  |  | 29,657 |  |  |  | 293 |  |  |  | 3.93 | % |  |  | 29,772 |  |  |  | 290 |  |  |  | 3.92 | %
Subordinated debt, net |  |  | 121,331 |  |  |  | 1,822 |  |  |  | 6.09 | % |  |  | 120,967 |  |  |  | 1,816 |  |  |  | 5.97 | % |  |  | 119,873 |  |  |  | 1,800 |  |  |  | 6.04 | %
Junior subordinated debt |  |  | 101,196 |  |  |  | 1,639 |  |  |  | 6.57 | % |  |  | 101,196 |  |  |  | 1,790 |  |  |  | 7.04 | % |  |  | 101,196 |  |  |  | 1,913 |  |  |  | 7.60 | %
Total interest-bearing liabilities |  | $ | 8,568,344 |  |  | $ | 47,181 |  |  |  | 2.23 | % |  | $ | 8,546,800 |  |  | $ | 51,632 |  |  |  | 2.40 | % |  | $ | 8,256,085 |  |  | $ | 51,763 |  |  |  | 2.52 | %
Demand deposits |  |  | 3,385,080 |  |  |  |  |  |  |  |  |  |  |  | 3,438,194 |  |  |  |  |  |  |  |  |  |  |  | 3,356,607 |  |  |  |  |  |  |  |  |
Other liabilities |  |  | 296,983 |  |  |  |  |  |  |  |  |  |  |  | 295,292 |  |  |  |  |  |  |  |  |  |  |  | 286,749 |  |  |  |  |  |  |  |  |
Stockholders’ equity |  |  | 1,538,798 |  |  |  |  |  |  |  |  |  |  |  | 1,517,788 |  |  |  |  |  |  |  |  |  |  |  | 1,429,602 |  |  |  |  |  |  |  |  |
Total liabilities and stockholders’ equity |  | $ | 13,789,205 |  |  |  |  |  |  |  |  |  |  | $ | 13,798,074 |  |  |  |  |  |  |  |  |  |  | $ | 13,329,043 |  |  |  |  |  |  |  |  |
Net interest income (FTE) |  |  |  |  |  | $ | 107,859 |  |  |  |  |  |  |  |  |  |  | $ | 106,724 |  |  |  |  |  |  |  |  |  |  | $ | 95,832 |  |  |  |  |
Interest rate spread |  |  |  |  |  |  |  |  |  |  | 2.72 | % |  |  |  |  |  |  |  |  |  |  | 2.56 | % |  |  |  |  |  |  |  |  |  |  | 2.32 | %
Net interest margin (FTE) |  |  |  |  |  |  |  |  |  |  | 3.44 | % |  |  |  |  |  |  |  |  |  |  | 3.34 | % |  |  |  |  |  |  |  |  |  |  | 3.14 | %
Taxable equivalent adjustment |  |  |  |  |  | $ | 636 |  |  |  |  |  |  |  |  |  |  | $ | 619 |  |  |  |  |  |  |  |  |  |  | $ | 658 |  |  |  |  |
Net interest income |  |  |  |  |  | $ | 107,223 |  |  |  |  |  |  |  |  |  |  | $ | 106,105 |  |  |  |  |  |  |  |  |  |  | $ | 95,174 |  |  |  |  |

(1) Securities are shown at average amortized cost.
(2) For purposes of these computations, nonaccrual loans and loans held for sale are included in the average loan balances outstanding.
(3) Interest income for tax-exempt securities and loans have been adjusted to an FTE basis using the statutory Federal income tax rate of 21%.
The following table presents changes in interest income and interest expense attributable to changes in volume (change in average balance multiplied by prior year rate), changes in rate (change in rate multiplied by prior year volume) and the net change in net interest income. The net change attributable to the combined impact of volume and rate has been allocated to each in proportion to the absolute dollar amounts of change.

Three Months Ended March 31, |  | Increase (Decrease) 2025 over 2024 |
(In thousands) |  | Volume |  |  | Rate |  |  | Total |
Short-term interest-bearing accounts |  | $ | 165 |  |  | $ | 4 |  |  | $ | 169 |
Securities taxable |  |  | 593 |  |  |  | 2,232 |  |  |  | 2,825 |
Securities tax-exempt |  |  | (106 | ) |  |  | 10 |  |  |  | (96 | )
FRB and FHLB stock |  |  | (154 | ) |  |  | (203 | ) |  |  | (357 | )
Loans |  |  | 3,453 |  |  |  | 1,451 |  |  |  | 4,904 |
Total FTE interest income |  | $ | 3,951 |  |  | $ | 3,494 |  |  | $ | 7,445 |
Money market deposit accounts |  | $ | 2,916 |  |  | $ | (4,452 | ) |  | $ | (1,536 | )
NOW deposit accounts |  |  | 150 |  |  |  | 350 |  |  |  | 500 |
Savings deposits |  |  | (4 | ) |  |  | 20 |  |  |  | 16 |
Time deposits |  |  | 882 |  |  |  | (1,613 | ) |  |  | (731 | )
Federal funds purchased |  |  | (202 | ) |  |  | (45 | ) |  |  | (247 | )
Repurchase agreements |  |  | 116 |  |  |  | 328 |  |  |  | 444 |
Short-term borrowings |  |  | (2,413 | ) |  |  | (339 | ) |  |  | (2,752 | )
Long-term debt |  |  | (22 | ) |  |  | (2 | ) |  |  | (24 | )
Subordinated debt, net |  |  | 13 |  |  |  | 9 |  |  |  | 22 |
Junior subordinated debt |  |  | - |  |  |  | (274 | ) |  |  | (274 | )
Total FTE interest expense |  | $ | 1,436 |  |  | $ | (6,018 | ) |  | $ | (4,582 | )
Change in FTE net interest income |  | $ | 2,515 |  |  | $ | 9,512 |  |  | $ | 12,027 |

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Noninterest Income
Noninterest income is a significant source of revenue for the Company and an important factor in the Company’s results of operations. The following table sets forth information by category of noninterest income for the periods indicated:

|  | Three Months Ended |
(In thousands) |  | March 31, 2025 |  |  | December 31, 2024 |  |  | March 31, 2024 |
Service charges on deposit accounts |  | $ | 4,243 |  |  | $ | 4,411 |  |  | $ | 4,117 |
Card services income |  |  | 5,317 |  |  |  | 5,652 |  |  |  | 5,195 |
Retirement plan administration fees |  |  | 15,858 |  |  |  | 12,924 |  |  |  | 14,287 |
Wealth management |  |  | 10,946 |  |  |  | 10,842 |  |  |  | 9,697 |
Insurance services |  |  | 4,761 |  |  |  | 3,883 |  |  |  | 4,388 |
Bank owned life insurance income |  |  | 3,397 |  |  |  | 2,271 |  |  |  | 2,352 |
Net securities (losses) gains |  |  | (104 | ) |  |  | 222 |  |  |  | 2,183 |
Other |  |  | 3,034 |  |  |  | 2,221 |  |  |  | 3,173 |
Total noninterest income |  | $ | 47,452 |  |  | $ | 42,426 |  |  | $ | 45,392 |

Noninterest income for the three months ended March 31, 2025 was $47.5 million, up $5.0 million, or 11.8%, from the prior quarter and up $2.1 million, or 4.5%, from the first quarter of 2024. Excluding net securities gains (losses), noninterest income for the three months ended March 31, 2025 was $47.6 million, up $5.4 million, or 12.7%, from the prior quarter and up $4.3 million, or 10.1%, from the first quarter of 2024. The increase from the prior quarter was primarily driven by an increase in retirement plan administration fees, insurance services and bank owned life insurance income. The increase in retirement plan administration fees from the prior quarter was primarily due to higher seasonal activity-based fees in the first quarter, organic growth and the additional revenue from the acquisition of a small third party administrator (“TPA”) in the fourth quarter of 2024. Insurance services increased from the prior quarter due to organic growth, higher levels of policy renewals and first quarter seasonality. Bank owned life insurance income increased from the prior quarter due to a $1.3 million gain recognized from a claim. The increase from the first quarter of 2024 was driven by an increase in retirement plan administration fees, wealth management fees and bank owned life insurance income. The increase in retirement plan administration fees from the first quarter of 2024 was driven by the additional revenues from new customer plans, the TPA acquisition and higher market values of assets under administration. Wealth management fees increased from the first quarter of 2024 driven by performance and growth in new customer accounts. Bank owned life insurance income increased from the first quarter of 2024 due to a $1.3 million gain recognized from a claim.
Noninterest Expense
Noninterest expenses are also an important factor in the Company’s results of operations. The following table sets forth the major components of noninterest expense for the periods indicated:

|  | Three Months Ended |
(In thousands) |  | March 31, 2025 |  |  | December 31, 2024 |  |  | March 31, 2024 |
Salaries and employee benefits |  | $ | 60,694 |  |  | $ | 61,749 |  |  | $ | 55,704 |
Technology and data services |  |  | 10,238 |  |  |  | 10,220 |  |  |  | 9,750 |
Occupancy |  |  | 9,027 |  |  |  | 7,786 |  |  |  | 8,098 |
Professional fees and outside services |  |  | 4,952 |  |  |  | 4,843 |  |  |  | 4,853 |
Office supplies and postage |  |  | 1,942 |  |  |  | 2,100 |  |  |  | 1,865 |
FDIC assessment |  |  | 1,694 |  |  |  | 1,548 |  |  |  | 1,735 |
Advertising |  |  | 1,138 |  |  |  | 990 |  |  |  | 812 |
Amortization of intangible assets |  |  | 2,111 |  |  |  | 2,080 |  |  |  | 2,168 |
Loan collection and other real estate owned, net |  |  | 659 |  |  |  | 677 |  |  |  | 553 |
Acquisition expenses |  |  | 1,221 |  |  |  | 988 |  |  |  | - |
Other |  |  | 6,224 |  |  |  | 7,794 |  |  |  | 6,235 |
Total noninterest expense |  | $ | 99,900 |  |  | $ | 100,775 |  |  | $ | 91,773 |

Noninterest expense for the three months ended March 31, 2025 was $99.9 million, down $0.9 million, or 0.9%, from the prior quarter and up $8.1 million, or 8.9%, from the first quarter of 2024. Excluding acquisition expenses, noninterest expense for the three months ended March 31, 2025 was $98.7 million, down $1.1 million, or 1.1%, from the prior quarter and up $6.9 million, or 7.5%, from the first quarter of 2024. The decrease from the prior quarter was driven by lower salaries and employee benefits due to lower medical and other benefit costs, lower levels of incentive compensation and lower salaries due to two fewer payroll days in the quarter, partially offset by seasonally higher payroll taxes and stock-based compensation expenses. In addition, other expenses decreased $1.6 million due primarily to timing of expenses and Company initiatives in the fourth quarter of 2024. These costs were partially offset by the increase in occupancy costs which was driven by seasonal maintenance and utilities costs. The increase from the first quarter of 2024 was driven by higher salaries and employee benefits driven by merit pay increases which were effective annually in March, an increase in employees supporting growth in our markets and higher medical and other benefit costs. In addition, occupancy costs increased $0.9 million primarily due to higher seasonal maintenance and utilities given the harsher winter and higher facilities costs related to new banking locations.
Income Taxes
Income tax expense for the three months ended March 31, 2025 was $10.5 million, up $0.9 million from the prior quarter and up $1.1 million from the first quarter of 2024. The effective tax rate was 22.2% for the first quarter of 2025 compared to 20.9% for the prior quarter and 21.7% for the first quarter of 2024. The increase in the effective tax rate from the prior quarter and the first quarter of 2024 was due to a lower level of tax-exempt income as a percentage of total taxable income.
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ANALYSIS OF FINANCIAL CONDITION
Securities
Total securities increased $123.1 million, or 5.0%, from December 31, 2024 to March 31, 2025. The securities portfolio represented 18.6% of total assets as of March 31, 2025 as compared to 17.8% of total assets as of December 31, 2024.
The following table details the composition of securities AFS, securities HTM and equity securities for the periods indicated:

|  | March 31, 2025 |  |  | December 31, 2024 |
Mortgage-backed securities: |  |  |  |  |  |
With maturities 15 years or less |  |  | 13 | % |  |  | 14 | %
With maturities greater than 15 years |  |  | 8 | % |  |  | 8 | %
Collateral mortgage obligations |  |  | 40 | % |  |  | 39 | %
Municipal securities |  |  | 15 | % |  |  | 15 | %
U.S. agency notes |  |  | 20 | % |  |  | 20 | %
Corporate |  |  | 2 | % |  |  | 2 | %
Equity securities |  |  | 2 | % |  |  | 2 | %
Total |  |  | 100 | % |  |  | 100 | %

The Company’s mortgage-backed securities, U.S. agency notes and collateralized mortgage obligations are all guaranteed by Fannie Mae, Freddie Mac, FHLB, Federal Farm Credit Banks or Ginnie Mae (“GNMA”). GNMA securities are considered similar in credit quality to U.S. Treasury securities, as they are backed by the full faith and credit of the U.S. government. Currently, there are no subprime mortgages in our investment portfolio.
Loans
A summary of the loan portfolio by major categories(1), net of deferred fees and origination costs, for the periods indicated is as follows:

(In thousands) |  | March 31, 2025 |  |  | December 31, 2024 |
Commercial & industrial |  | $ | 1,436,990 |  |  | $ | 1,426,482 |
Commercial real estate |  |  | 3,890,115 |  |  |  | 3,876,698 |
Residential real estate |  |  | 2,127,588 |  |  |  | 2,142,249 |
Home equity |  |  | 331,400 |  |  |  | 334,268 |
Indirect auto |  |  | 1,309,084 |  |  |  | 1,273,253 |
Residential solar |  |  | 800,090 |  |  |  | 820,079 |
Other consumer |  |  | 85,000 |  |  |  | 96,881 |
Total loans |  | $ | 9,980,267 |  |  | $ | 9,969,910 |

(1) Loans are summarized by business line which do not align to how the Company assesses credit risk in the allowance for credit losses under CECL.
Total loans were $9.98 billion and $9.97 billion at March 31, 2025 and December 31, 2024, respectively. Excluding the other consumer and residential solar portfolios that are in a planned run-off status, period end loans increased $40.5 million, or 1.8% annualized. C&I loans increased $10.5 million to $1.44 billion; CRE loans increased $13.4 million to $3.89 billion; and total consumer loans decreased $13.6 million to $4.65 billion. Total loans represent approximately 72.0% of assets as of March 31, 2025, as compared to 72.3% as of December 31, 2024.
Loans in the C&I and CRE portfolios consist primarily of loans extended to small and medium-sized entities. The Company offers a variety of loan products tailored to meet the needs of commercial customers including term loans, time notes and lines of credit. Such loans are made available to businesses for working capital needs such as inventory and receivables, business expansion, equipment purchases, livestock purchases and seasonal crop expenses. These loans are typically collateralized by business assets such as equipment, accounts receivable and perishable agricultural products, which are inherently subject to industry price volatility. The Company extends CRE loans to support real estate transactions, including acquisitions, refinancings, expansions and property improvements to both commercial and agricultural properties. These loans are secured by liens on real estate assets, covering a spectrum of properties including apartments, commercial structures, healthcare facilities and others, whether occupied by owners or non-owners. Risks associated with the CRE portfolio pertain to the borrowers’ ability to meet interest and principal payments over the life of the loan, as well as their ability to secure financing upon the loan’s maturity. The Company has a risk management framework that includes rigorous underwriting standards, targeted portfolio stress testing, interest rate sensitivities on commercial borrowers and comprehensive credit risk monitoring mechanisms. The Company remains vigilant in monitoring market trends, economic indicators and regulatory developments to promptly adapt our risk management strategies as needed.
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Within the CRE portfolio, approximately 81% comprises Non-Owner Occupied CRE, with the remaining 19% being Owner-Occupied CRE. Non-Owner Occupied CRE includes diverse sectors across the Company’s markets such as residential rental properties (43%) and office spaces (17%), along with retail, manufacturing, mixed use, hotels and others. Notably, office CRE loans account for 5% of the total outstanding loans, predominantly serving suburban medical and professional tenants across suburban and small urban markets. These loans carry an average size of $1.9 million, with 9% maturing over the next two years. As of March 31, 2025 and December 31, 2024, the total CRE construction and development loans amounted to $316.4 million and $314.8 million, respectively.
Allowance for Credit Losses, Provision for Loan Losses and Nonperforming Assets
Management considers the accounting policy relating to the allowance for credit losses to be a critical estimate given the degree of judgment exercised in evaluating the level of the allowance required to estimate expected credit losses over the expected contractual life of our loan portfolio and the material effect that such judgments can have on the consolidated results of operations.
The CECL methodology requires an estimate of the credit losses expected over the life of a loan (or pool of loans). The allowance for credit losses is a valuation account that is deducted from, or added to, the loans’ amortized cost basis to present the net, lifetime amount expected to be collected on the loans. Loan losses are charged off against the allowance when management believes a loan balance is confirmed to be uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.
Required additions or reductions to the allowance for credit losses are made periodically by charges or credits to the provision for loan losses. These are necessary to maintain the allowance at a level which management believes is reasonably reflective of the overall loss expected over the contractual life of the loan portfolio, adjusted for expected prepayments and curtailments. While management uses available information to recognize losses on loans, additions or reductions to the allowance may fluctuate from one reporting period to another. These fluctuations are reflective of changes in risk associated with portfolio content and/or changes in management’s assessment of any or all of the determining factors discussed above. Management considers the allowance for credit losses to be appropriate based on evaluation and analysis of the loan portfolio.
Management estimates the allowance for credit losses using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Company historical loss experience was supplemented with peer information when there was insufficient loss data for the Company. Significant management judgment is required at each point in the measurement process.
The allowance for credit losses is measured on a collective (pool) basis, with both a quantitative and qualitative analysis that is applied on a quarterly basis, when similar risk characteristics exist. The respective quantitative allowance for each segment is measured using an econometric, discounted PD and LGD modeling methodology in which distinct, segment-specific multi-variate regression models are applied to multiple, probabilistically weighted external economic forecasts. Under the discounted cash flows methodology, expected credit losses are estimated over the effective life of the loans by measuring the difference between the net present value of modeled cash flows and amortized cost basis. After quantitative considerations, management applies additional qualitative adjustments so that the allowance for credit loss is reflective of the estimate of lifetime losses that exist in the loan portfolio as of the balance sheet date.
Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. Upon adoption of CECL, management revised the manner in which loans were pooled for similar risk characteristics. Management developed segments for estimating loss based on type of borrower and collateral which is generally based upon federal call report segmentation and have been combined or subsegmented as needed to ensure loans of similar risk profiles are appropriately pooled.
During the quarter, the Company performed an annual update to its econometric, PD/LGD models. Segment specific, multi-variate regression model inputs and assumptions were updated and recent period observed losses and behavior were incorporated into the models (“model refreshment”). The incorporation of recent observations did not have a material impact on most loan class segments except for the Auto class segment which resulted in an improvement in PD/LGD outcomes. The total allowance decreased by approximately 3% as of March 31, 2025 due to the model refreshment.
Additional information about our Allowance for Credit Losses is included in Note 7 to the unaudited interim consolidated financial statements in this Quarterly Report on Form 10-Q as well as in the “Critical Accounting Estimates” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations. The Company’s management considers the allowance for credit losses to be appropriate based on evaluation and analysis of the loan portfolio.
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The allowance for credit losses totaled $117.0 million at March 31, 2025, compared to $116.0 million at December 31, 2024. The allowance for credit losses as a percentage of loans was 1.17% at March 31, 2025, compared to 1.16% at December 31, 2024. The allowance for credit losses as of March 31, 2025 increased compared to the allowance estimates as of December 31, 2024 primarily due to deterioration in the economic forecast including the change in the forecast scenario and the change in forecast scenario weightings from 80% baseline and 20% downside to 75% baseline and 25% downside. The increase to the allowance for credit losses were partially offset by model refreshment and the shift in loan composition driven by other consumer and residential solar portfolios that are in a planned run-off status.
The allowance for credit losses was 245.33% of nonperforming loans at March 31, 2025, compared to 224.73% at December 31, 2024. The allowance for credit losses was 260.99% of nonaccrual loans at March 31, 2025, compared to 253.17% of nonaccrual loans at December 31, 2024. The increase in the coverage of the allowance to nonperforming and nonaccrual loans from December 31, 2024 to March 31, 2025 largely relates to the increase in allowance primarily due to deterioration in economic conditions during the quarter and the $2.1 million charge-off on a nonperforming relationship that is individually evaluated for purposes of the allowance for credit losses.
The provision for loan losses was $7.6 million for the three months ended March 31, 2025, compared to $2.2 million in the prior quarter and $5.6 million for the same period in the prior year. Provision expense increased from the prior quarter due to an increase in net charge-offs and an increase in the March 31, 2025 allowance due primarily to a deterioration in economic forecasts. The increase in provision expense from March 31, 2024, was driven largely due to higher net charge-offs and a deterioration in economic forecasts. Net charge-offs totaled $6.6 million during the three months ended March 31, 2025, compared to net charge-offs of $5.7 million during the fourth quarter of 2024 and $4.7 in the first quarter of 2024. Net charge-offs to average loans were 27 bps for the three months ended March 31, 2025, compared to 23 bps for the fourth quarter of 2024 and 19 bps for the three months ended March 31, 2024.
As of March 31, 2025, the unfunded commitment reserve totaled $4.5 million, compared to $4.4 million as of December 31, 2024.
Nonperforming assets consist of nonaccrual loans, loans over 90 days past due and still accruing, troubled loans modifications, OREO and nonperforming securities. Loans are generally placed on nonaccrual when principal or interest payments become 90 days past due, unless the loan is well secured and in the process of collection. Loans may also be placed on nonaccrual when circumstances indicate that the borrower may be unable to meet the contractual principal or interest payments. 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. OREO represents property acquired through foreclosure and is valued at the lower of the carrying amount or fair value, less any estimated disposal costs.

|  | March 31, 2025 |  |  | December 31, 2024 |
(Dollars in thousands) |  | Amount |  |  | % |  |  | Amount |  |  | % |
Nonaccrual loans: |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 30,586 |  |  |  | 68 | % |  | $ | 32,144 |  |  |  | 70 | %
Residential |  |  | 10,919 |  |  |  | 24 | % |  |  | 10,464 |  |  |  | 23 | %
Consumer |  |  | 2,270 |  |  |  | 5 | % |  |  | 2,529 |  |  |  | 6 | %
Troubled loan modifications |  |  | 1,054 |  |  |  | 2 | % |  |  | 682 |  |  |  | 1 | %
Total nonaccrual loans |  | $ | 44,829 |  |  |  | 99 | % |  | $ | 45,819 |  |  |  | 100 | %
Loans over 90 days past due and still accruing: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 690 |  |  |  | 24 | % |  | $ | - |  |  |  | - |
Residential |  |  | 266 |  |  |  | 9 | % |  |  | 2,411 |  |  |  | 42 | %
Consumer |  |  | 1,906 |  |  |  | 67 | % |  |  | 3,387 |  |  |  | 58 | %
Total loans over 90 days past due and still accruing |  | $ | 2,862 |  |  |  | 100 | % |  | $ | 5,798 |  |  |  | 100 | %
Total nonperforming loans |  | $ | 47,691 |  |  |  |  |  |  | $ | 51,617 |  |  |  |  |
OREO |  |  | 308 |  |  |  |  |  |  |  | 182 |  |  |  |  |
Total nonperforming assets |  | $ | 47,999 |  |  |  |  |  |  | $ | 51,799 |  |  |  |  |
Total nonaccrual loans to total loans |  |  | 0.45 | % |  |  |  |  |  |  | 0.46 | % |  |  |  |
Total nonperforming loans to total loans |  |  | 0.48 | % |  |  |  |  |  |  | 0.52 | % |  |  |  |
Total nonperforming assets to total assets |  |  | 0.35 | % |  |  |  |  |  |  | 0.38 | % |  |  |  |
Total allowance for loan losses to total nonperforming loans |  |  | 245.33 | % |  |  |  |  |  |  | 224.73 | % |  |  |  |
Total allowance for loan losses to nonaccrual loans |  |  | 260.99 | % |  |  |  |  |  |  | 253.17 | % |  |  |  |

Total nonperforming assets were $48.0 million at March 31, 2025, compared to $51.8 million at December 31, 2024. Nonperforming loans at March 31, 2025 were $47.7 million or 0.48% of total loans, compared with $51.6 million or 0.52% of total loans at December 31, 2024. The decrease in nonperforming assets from December 31, 2024 to March 31, 2025 was attributable to the previously mentioned $2.1 million charge-off in the first quarter of 2025 on an individually evaluated CRE relationship in which NBT is a participant. This relationship is being actively managed and its current carrying value is supported by recent appraised values. Total nonaccrual loans were $44.8 million or 0.45% of total loans at March 31, 2025, compared to $45.8 million or 0.46% of total loans at December 31, 2024. Past due loans as a percentage of total loans was 0.32% at March 31, 2025, down from 0.34% at December 31, 2024.
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In addition to nonperforming loans discussed above, the Company has also identified approximately $125.2 million in potential problem loans at March 31, 2025 as compared to $116.1 million at December 31, 2024. Potential problem loans are loans that are currently performing, with a possibility of loss if weaknesses are not corrected. Such loans may need to be disclosed as nonperforming at some time in the future. Potential problem loans are classified by the Company’s loan rating system as “substandard.” Potential problem loans have increased to more normalized levels and the increase primarily relates to a few CRE relationships reflecting changing conditions in certain CRE markets including construction delays, rising costs and delays in leasing up spaces. The increase in potential problem loans from December 31, 2024, is primarily due to the net migration of $8.8 million in commercial loan balances to substandard. Management cannot predict the extent to which economic conditions may worsen or other factors, which may impact borrowers and the potential problem loans. Accordingly, there can be no assurance that other loans will not become over 90 days past due, be placed on nonaccrual, become troubled loans modifications or require increased allowance coverage and provision for loan losses. To mitigate this risk the Company maintains a diversified loan portfolio, has no significant concentration in any particular industry and originates loans primarily within its footprint.
Deposits
Total deposits were $11.71 billion at March 31, 2025, up $161.8 million, or 1.4%, from December 31, 2024. As of March 31, 2025 there were $294.7 million of brokered time deposits, down from $295.8 million as of December 31, 2024. The Company continues to experience some incremental migration from noninterest bearing and low interest checking and savings accounts into higher cost money market and time deposit instruments. The increase in deposits was primarily due to the inflow of seasonal municipal deposits during the first quarter of 2025. The Company’s composition of total deposits is diverse and granular with over 561,000 accounts with an average per account balance of $20,834 as of March 31, 2025. As of March 31, 2025 and December 31, 2024 the estimated amounts of uninsured deposits based on the same methodologies and assumptions used for the bank regulatory reporting were $4.85 billion and $4.73 billion, respectively. Total average deposits increased $540.1 million, or 4.9%, from the same period last year.
Borrowed Funds
The Company’s borrowed funds consist of short-term borrowings and long-term debt. Short-term borrowings totaled $85.6 million at March 31, 2025 compared to $162.9 million at December 31, 2024. Long-term debt was $4.6 million at March 31, 2025, compared to $29.6 million at December 31, 2024. The decrease in long-term debt was due to a maturity of a $25.0 million borrowing that matured in the first quarter of 2025.
For more information about the Company’s borrowing capacity and liquidity position, see “Liquidity Risk” below.
Subordinated Debt
On June 23, 2020, the Company issued $100.0 million of 5.00% fixed-to-floating rate subordinated notes due 2030. The subordinated notes, which qualify as Tier 2 capital, bear interest at an annual rate of 5.00%, payable semi-annually in arrears commencing on January 1, 2021, and a floating rate of interest equivalent to the three-month SOFR plus a spread of 4.85%, payable quarterly in arrears commencing on October 1, 2025. The subordinated debt issuance cost of $2.2 million is being amortized on a straight-line basis into interest expense over five years. The Company repurchased $2.0 million of the subordinated notes in 2022 at a discount of $0.1 million.
Subordinated notes assumed in connection with the Salisbury acquisition included $25.0 million of 3.50% fixed-to-floating rate subordinated notes due 2031. The subordinated notes, which qualify as Tier 2 capital, bear interest at an annual rate of 3.50%, payable quarterly in arrears commencing on June 30, 2021, and a floating rate of interest equivalent to the three-month SOFR plus a spread of 2.80%, payable quarterly in arrears commencing on June 30, 2026. As of the acquisition date, the fair value discount was $3.0 million, which is being amortized into interest expense over the expected call or maturity date.
As of March 31, 2025 and December 31, 2024 the subordinated debt net of unamortized issuance costs and fair value discount was $121.6 million and $121.2 million, respectively.
Capital Resources
Stockholders’ equity of $1.57 billion represented 11.29% of total assets at March 31, 2025 compared with $1.53 billion, or 11.07% of total assets, as of December 31, 2024. Stockholders’ equity increased $39.6 million from December 31, 2024 driven by net income of $36.7 million for the three months ended March 31, 2025 and a $20.3 million decrease in accumulated other comprehensive loss, partially offset by dividends declared of $16.1 million.
The Company did not purchase shares of its common stock during the three months ended March 31, 2025. Under its share repurchase program, the Company may repurchase shares of its common stock from time to time to mitigate the potential dilutive effects of stock-based incentive plans and other potential uses of common stock for corporate purposes. As of March 31, 2025, there were 1,992,400 shares available for repurchase under this program authorized on December 18, 2023, which is set to expire on December 31, 2025.
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As the capital ratios in the following table indicate, the Company remained “well capitalized” at March 31, 2025 under applicable bank regulatory requirements. Capital measurements are well in excess of regulatory minimum guidelines and meet the requirements to be considered well capitalized for all periods presented. To be considered well capitalized, tier 1 leverage, common equity tier 1 capital, tier 1 capital and total risk-based capital ratios must be 5%, 6.5%, 8% and 10%, respectively.

Capital Measurements |  | March 31, 2025 |  |  | December 31, 2024 |
Tier 1 leverage ratio |  |  | 10.39 | % |  |  | 10.24 | %
Common equity tier 1 capital ratio |  |  | 12.12 | % |  |  | 11.93 | %
Tier 1 capital ratio |  |  | 13.02 | % |  |  | 12.83 | %
Total risk-based capital ratio |  |  | 15.24 | % |  |  | 15.03 | %
Cash dividends as a percentage of net income |  |  | 43.73 | % |  |  | 44.27 | %
Per common share: |  |  |  |  |  |  |  |
Book value |  | $ | 33.13 |  |  | $ | 32.34 |
Tangible book value(1) |  | $ | 24.74 |  |  | $ | 23.88 |
Tangible equity ratio(2) |  |  | 8.68 | % |  |  | 8.42 | %

(1) Stockholders’ equity less goodwill and intangible assets divided by common shares outstanding.
(2) Non-GAAP measure - Stockholders’ equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets.
In March 2020, the OCC, the Board of Governors of the Federal Reserve System and the FDIC announced an interim final rule to delay the estimated impact on regulatory capital stemming from the implementation of CECL. Under the modified CECL transition provision, the regulatory capital impact of the January 1, 2020 CECL adoption date adjustment to the allowance for credit losses (after-tax) has been deferred and will phase into regulatory capital at 25% per year commencing January 1, 2022. For the ongoing impact of CECL, the Company was allowed to defer the regulatory capital impact of the allowance for credit losses in an amount equal to 25% of the change in the allowance for credit losses (pre-tax) recognized through earnings for each period between January 1, 2020 and December 31, 2021. The cumulative adjustment to the allowance for credit losses between January 1, 2020 and December 31, 2021, will also phase into regulatory capital at 25% per year commencing January 1, 2022. The Company adopted the capital transition relief over the permissible five-year period.
Liquidity and Interest Rate Sensitivity Management
Market Risk
Interest rate risk is the most significant market risk affecting the Company. Other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of the Company’s business activities or are immaterial to the results of operations.
Interest rate risk is defined as an exposure to a movement in interest rates that could have an adverse effect on the Company’s net interest income. Net interest income is susceptible to interest rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than earning assets. When interest-bearing liabilities mature or reprice more quickly than earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income. Similarly, when earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net interest income.
To manage the Company’s exposure to changes in interest rates, management monitors the Company’s interest rate risk. Management’s Asset Liability Committee (“ALCO”) meets monthly to review the Company’s interest rate risk position and profitability and to recommend strategies for consideration by the Board of Directors (the “Board”). Management also reviews loan and deposit pricing and the Company’s securities portfolio, formulates investment and funding strategies and oversees the timing and implementation of transactions to assure attainment of the Board’s objectives in the most effective manner. Notwithstanding the Company’s interest rate risk management activities, the potential for changing interest rates is an uncertainty that can have an adverse effect on net income.
In managing the Company’s asset/liability position, the Board and management aim to manage the Company’s interest rate risk while minimizing NIM compression. At times, depending on the level of general interest rates, the relationship between long and short-term interest rates, market conditions and competitive factors, the Board and management may determine to increase the Company’s interest rate risk position somewhat in order to increase its NIM. The Company’s results of operations and net portfolio values remain vulnerable to changes in interest rates and fluctuations in the difference between long and short-term interest rates.
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The primary tool utilized by the ALCO to manage interest rate risk is earnings at risk modeling (interest rate sensitivity analysis). Information, such as principal balance, interest rate, maturity date, cash flows, next repricing date (if needed) and current rates are uploaded into the model to create an ending balance sheet. In addition, the ALCO makes certain assumptions regarding prepayment speeds for loans and mortgage related investment securities along with any optionality within the deposits and borrowings. The model is first run under an assumption of a flat rate scenario (e.g., no change in current interest rates) with a static balance sheet. Six additional models are run in which gradual increases of 300 bps, 200 bps and 100 bps, and gradual decreases of 100 bps, 200 bps and 300 bps takes place over a 12-month period with a static balance sheet. Under these scenarios, assets subject to prepayments are adjusted to account for faster or slower prepayment assumptions. Any investment securities or borrowings that have callable options embedded in them are handled accordingly based on the interest rate scenario. The resulting changes in net interest income are then measured against the flat rate scenario. The Company also runs other interest rate scenarios to highlight potential interest rate risk.
The Company’s Interest Rate Sensitivity has remained in a near neutral position. In the declining rate scenarios, net interest income is projected to modestly decrease when compared to the forecasted net interest income in the flat rate scenario through the simulation period. The decrease in net interest income is a result of earning assets repricing and rolling over at lower yields at a faster pace than interest-bearing liabilities decline and/or reach their floors. In the rising rate scenarios, net interest income is near neutral, impacted by slowing prepayments speeds and increased deposit reactivity; the magnitude of potential impact on earnings may be affected by the ability to lag deposit repricing on NOW, savings, MMDA and time accounts. Net interest income for the next twelve months in the +300/+200/+100/-100/-200/-300 bps scenarios, as described above, is within the internal policy risk limits of not more than a 5.0% reduction in net interest income in the +100/-100 bps scenarios, of not more than a 7.5% reduction in net interest income in the +200/-200 bps scenarios and of not more than a 12.0% reduction in net interest income in the +300/-300 bps scenarios. The following table summarizes the percentage change in net interest income in the rising and declining rate scenarios over a 12-month period from the forecasted net interest income in the flat rate scenario using the March 31, 2025 balance sheet position:

Interest Rate Sensitivity Analysis |
Change in interest rates | Percent change in
(in bps) | net interest income
+300 | (0.60)%
+200 | (0.02)%
+100 | 0.29%
-100 | (0.29)%
-200 | (0.10)%
-300 | 0.04%

The Company anticipates that the trajectory of net interest income will continue to depend significantly on the timing and path of short to mid-term interest rates which are heavily driven by inflationary pressures and FOMC monetary policy. Post-pandemic, inflationary pressures have resulted in a higher overall yield curve with federal funds increases of 425 bps in 2022 with an additional 100 bps of increases in 2023. However, the tightening cycle ended in September of 2024, when the FRB lowered the federal funds rate by 50 bps, followed by consecutive 25 bps reductions in November and December of 2024 for a total of 100 bps of federal funds rate reductions by the end of 2024. While deposit rates increased meaningfully in 2023 and continued to increase in early 2024 in conjunction with elevated short-term interest rates, the recent federal funds rate reductions have provided the catalyst for the Company to begin reducing deposit rates. The Company continues to focus on managing deposit expense in an environment of still elevated but declining short-term interest rates while allowing assets to reprice upward in relation to existing portfolio asset yields.
Liquidity Risk
Liquidity risk arises from the possibility that the Company may not be able to satisfy current or future financial commitments or may become unduly reliant on alternate funding sources. The objective of liquidity management is to ensure the Company can fund balance sheet growth, meet the cash flow requirements of depositors wanting to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs. ALCO is responsible for liquidity management and has developed guidelines, which cover all assets and liabilities, as well as off-balance sheet items that are potential sources or uses of liquidity. Liquidity policies must also provide the flexibility to implement appropriate strategies, along with regular monitoring of liquidity and testing of the contingent liquidity plan. Requirements change as loans grow, deposits and securities mature and payments on borrowings are made. Liquidity management includes a focus on interest rate sensitivity management with a goal of avoiding widely fluctuating net interest margins through periods of changing economic conditions. Loan repayments and maturing investment securities are a relatively predictable source of funds. However, deposit flows, calls of investment securities and prepayments of loans and mortgage-related securities are strongly influenced by interest rates, the housing market, general and local economic conditions, and competition in the marketplace. Management continually monitors marketplace trends to identify patterns that might improve the predictability of the timing of deposit flows or asset prepayments.
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The primary liquidity measurement the Company utilizes is called “Basic Surplus,” which captures the adequacy of its access to reliable sources of cash relative to the stability of its funding mix of average liabilities. This approach recognizes the importance of balancing levels of cash flow liquidity from short and long-term securities with the availability of dependable borrowing sources, which can be accessed when necessary. At March 31, 2025, the Company’s Basic Surplus measurement was 16.9% of total assets, or $2.34 billion, as compared to the December 31, 2024 Basic Surplus of 17.0%, or $2.34 billion, and was above the Company’s minimum of 5% (calculated at $693.2 million and $689.3 million of period end total assets as of March 31, 2025 and December 31, 2024, respectively) set forth in its liquidity policies.
At March 31, 2025 and December 31, 2024, FHLB advances outstanding totaled $4.6 million and $45.6 million, respectively. At March 31, 2025 and December 31, 2024, the Bank had $204.0 million and $199.0 million, respectively, of collateral encumbered by municipal letters of credit. The Bank is a member of the FHLB system and had additional borrowing capacity from the FHLB of approximately $1.70 billion at March 31, 2025 and $1.71 billion at December 31, 2024. In addition, unpledged securities could have been used to increase borrowing capacity at the FHLB by an additional $1.01 billion and $957.3 million at March 31, 2025 and December 31, 2024, respectively, or used to collateralize other borrowings, such as repurchase agreements. The Company also has the ability to issue brokered time deposits and to borrow against established borrowing facilities with other banks (federal funds), which could provide additional liquidity of $2.02 billion at March 31, 2025 and $2.01 billion at December 31, 2024. In addition, the Bank has a “Borrower-in-Custody” program with the FRB with the addition of the ability to pledge automobile and residential solar loans as collateral. At March 31, 2025 and December 31, 2024, the Bank had the capacity to borrow $1.16 billion and $1.13 billion, respectively, from this program. The Company’s internal policies authorize borrowing up to 25% of assets. Under this policy, remaining available borrowing capacity totaled $3.44 billion at March 31, 2025 and $3.38 billion at December 31, 2024.
This Basic Surplus approach enables the Company to appropriately manage liquidity from both operational and contingency perspectives. By tempering the need for cash flow liquidity with reliable borrowing facilities, the Company is able to operate with a more fully invested and, therefore, higher interest income generating securities portfolio. The makeup and term structure of the securities portfolio is, in part, impacted by the overall interest rate sensitivity of the balance sheet. Investment decisions and deposit pricing strategies are impacted by the liquidity position. The Company considers its Basic Surplus position to be strong. However, certain events may adversely impact the Company’s liquidity position in 2025. While short-term interest rates have declined, they remain elevated relative to recent history, which could result in deposit declines as depositors have alternative opportunities for yield on their excess funds. In the current economic environment, draws against lines of credit could drive asset growth higher. Disruptions in wholesale funding markets could spark increased competition for deposits. These scenarios could lead to a decrease in the Company’s Basic Surplus measure below the minimum policy level of 5%. Note, enhanced liquidity monitoring was put in place to quickly respond to the changing environment during the pandemic including increasing the frequency of monitoring and adding additional sources of liquidity. While the pandemic has come to an end, this enhanced monitoring continues as elevated interest rates and the bank failures of 2023 have led to a deposit decline in the banking system and increased volatility to liquidity risk.
At March 31, 2025, a portion of the Company’s loans and securities were pledged as collateral on borrowings. Therefore, once on-balance sheet liquidity is reduced, future growth of earning assets will depend upon the Company’s ability to obtain additional funding, through growth of core deposits and collateral management and may require further use of brokered time deposits or other higher cost borrowing arrangements.
The Company’s primary source of funds is dividends from its subsidiaries. Various laws and regulations restrict the ability of banks to pay dividends to their stockholders. Generally, the payment of dividends by the Company in the future as well as the payment of interest on the capital securities will require the generation of sufficient future earnings by its subsidiaries.
Certain restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends. The approval of the OCC is required to pay dividends when a bank fails to meet certain minimum regulatory capital standards or when such dividends are in excess of a subsidiary bank’s earnings retained in the current year plus retained net profits for the preceding two years as specified in applicable OCC regulations. At March 31, 2025, approximately $70.2 million of the total stockholders’ equity of the Bank was available for payment of dividends to the Company without approval by the OCC. The Bank’s ability to pay dividends also is subject to the Bank being in compliance with regulatory capital requirements. The Bank is currently in compliance with these requirements. Under the State of Delaware General Corporation Law, the Company may declare and pay dividends either out of accumulated net retained earnings or capital surplus.

ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information called for by Item 3 is contained in the Liquidity and Interest Rate Sensitivity Management section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 4. | CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2025, the Company’s disclosure controls and procedures were effective.
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PART II OTHER INFORMATION

ITEM 1. | LEGAL PROCEEDINGS

There are no material legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of their property is subject.

ITEM 1A. | RISK FACTORS

There are no material changes to the risk factors as previously discussed in Part I, Item 1A. of our 2024 Annual Report on Form 10-K.

ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) | Not applicable

(b) | Not applicable

(c) | None

ITEM 3. | DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. | MINE SAFETY DISCLOSURES

None

ITEM 5. | OTHER INFORMATION

During the three months ended March 31, 2025, there were no Rule 10b5-1 plans or non-Rule 10b5-1 trading arrangements adopted, modified or terminated by any director or officer of the Company.
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ITEM 6. | EXHIBITS

3.1 | Restated Certificate of Incorporation of NBT Bancorp Inc. as amended through July 1, 2015 (filed as Exhibit 3.1 to Registrant’s Form 10-Q, filed on August 10, 2015 and incorporated herein by reference).
3.2 | Amended and Restated Bylaws of NBT Bancorp Inc. effective May 22, 2018 (filed as Exhibit 3.1 to Registrant’s Form 8-K, filed on May 23, 2018 and incorporated herein by reference).
3.3 | Certificate of Designation of the Series A Junior Participating Preferred Stock (filed as Exhibit A to Exhibit 4.1 of the Registrant’s Form 8-K, filed on November 18, 2004 and incorporated herein by reference).
10.1 | Amendment to NBT Bancorp Inc. Supplemental Executive Retirement Plan Supplemental Retirement Agreement for Scott A. Kingsley, dated March 24, 2025, between NBT Bancorp Inc. and Scott A. Kingsley (filed as Exhibit 10.1 to Registrant’s Form 8-K, filed on March 24, 2025, and incorporated herein by reference).*
31.1 | Certification by the Chief Executive Officer pursuant to Rules 13(a)-14(a)/15(d)-14(e) of the Securities and Exchange Act of 1934.
31.2 | Certification by the Chief Financial Officer pursuant to Rules 13(a)-14(a)/15(d)-14(e) of the Securities and Exchange Act of 1934.
32.1 | Certification by the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH | Inline XBRL Taxonomy Extension Schema Document.
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* | Management contract or compensatory plan or arrangement.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, this 9th day of May 2025.

| NBT BANCORP INC. |
By: | /s/ Annette L. Burns |
| Annette L. Burns |
| Chief Financial Officer |

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