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Allowance for Credit Losses and Credit Quality of Loans (Policies) | 3 Months Ended
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Mar. 31, 2025
Allowance for Credit Losses and Credit Quality of Loans [Abstract] |
Allowance for Credit Losses | 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. 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. 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.
Loan Modifications to Borrowers Experiencing Financial Difficulties | 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.

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- Definition Describes an entity's accounting policy and methodology for estimating its allowance for loan and lease losses, and its accounting policy for nonperforming loans. The description identifies the factors that influenced management of the entity in establishing the level of the allowance (for example, historical losses and existing economic conditions) and also may include discussion of the risk elements relevant to particular categories of receivables. The disclosure also may describe any liability the entity has recorded for off-balance sheet credit losses and may include the basis for determining each element of the allowance for loan and lease losses. The disclosure also could discuss the entity's policy for (1) placing loans on nonaccrual status (or discontinuing accrual of interest) and recording payments received on nonaccrual loans, and the policy for resuming accrual of interest, (2) charging-off uncollectible loans, and (3) determining past due or delinquency status (that is, whether past due status is based on how recently payments have been received or contractual terms). + References No definition available. + Details
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- Definition Disclosure of accounting policy for loan modifications to borrowers experiencing financial difficulties. + References No definition available. + Details
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