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Note 5 - Loans and the Allowance for Credit Losses

12 Months Ended

Dec. 31, 2024

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 5– Loans and the Allowance for Credit Losses

Loans Receivable: The following table sets forth the composition of the Company’s loan portfolio segments, net of deferred fees, as of December 31, 2024 and December 31, 2023:

	2024			2023
	(dollars in thousands)
Commercial	$	1,532,730		$	1,578,730
Commercial real estate		5,880,679			5,895,545
Commercial construction		616,246			620,496
Residential real estate		249,691			256,041
Consumer		1,136			1,029
Gross loans		8,280,482			8,351,841
Net deferred fees		(5,672	)		(6,696	)
Loans receivable	$	8,274,810		$	8,345,145

At both December 31, 2024 and December 31, 2023, loan balances of approximately $5.8 billion, were pledged to secure borrowings from the FHLB of New York and the Federal Reserve Bank of New York. During 2023, the Company took actions to increase its secured borrowing access and increase levels of off-balance sheet liquidity and as such increased the amount of loans pledged to each of these borrowing facilities.

	•	The repayment of commercial loans is generally dependent on the creditworthiness and cash flow of borrowers, and if applicable, guarantors, which may be negatively impacted by adverse economic conditions. While the majority of these loans are secured, collateral type, marketing, coverage, valuation and monitoring is not as uniform as in other portfolio classes and recovery from liquidation of such collateral may be subject to greater variability.

	•	Payment on commercial real estate is driven principally by operating results of the managed properties or underlying business and secondarily by the sale or refinance of such properties. Both primary and secondary sources of repayment, and value of the properties in liquidation, may be affected to a greater extent by adverse conditions in the real estate market or the economy in general.

	•	Properties underlying construction, land and land development loans often do not generate sufficient cash flows to service debt and thus repayment is subject to the ability of the borrower and, if applicable, guarantors, to complete development or construction of the property and carry the project, often for extended periods of time. As a result, the performance of these loans is contingent upon future events whose probability at the time of origination is uncertain.

	•	The ability of borrowers to service debt in the residential and consumer loan portfolios is generally subject to personal income which may be impacted by general economic conditions, such as increased unemployment levels. These loans are predominately collateralized by first and/or second liens on single family properties. If a borrower cannot maintain the loan, the Company’s ability to recover against the collateral in sufficient amount and in a timely manner may be significantly influenced by market, legal and regulatory conditions.

	•	The Company considers loan classes and loan segments to be one and the same.

Loans Held-For-Sale: The following table presents loans held-for-sale by loan segment as of December 31, 2024 and December 31, 2023:

	2024		2023
	(dollars in thousands)
Residential real estate	$	743	$	-

Loans Receivable on Nonaccrual Status - The following tables present the amortized cost basis of loans on nonaccrual status by loan segment as of December 31, 2024 and 2023:

	December 31, 2024
	Nonaccrual loans with ACL		Nonaccrual loans without ACL		Total Nonaccrual loans
	(dollars in thousands)
Commercial	$	1,744	$	14,487	$	16,231
Commercial real estate		3,822		32,664		36,486
Commercial construction		-		2,204		2,204
Residential real estate		333		2,056		2,389
Total	$	5,899	$	51,411	$	57,310

	December 31, 2023
	Nonaccrual loans with ACL		Nonaccrual loans without ACL		Total Nonaccrual loans
	(dollars in thousands)
Commercial	$	1,763	$	11,064	$	12,827
Commercial real estate		8,013		28,179		36,192
Residential real estate		1,033		2,472		3,505
Total	$	10,809	$	41,715	$	52,524

Nonaccrual loans include loans that are collectively evaluated and individually analyzed.

Credit Quality Indicators – The Company continuously monitors the credit quality of its loans receivable. In addition to its internal monitoring, the Company utilizes the services of a third-party loan review firm to periodically validate the credit quality of its loans receivable on a sample basis. Credit quality is monitored by reviewing certain credit quality indicators. Assets classified as “Pass” are deemed to possess average to superior credit quality, requiring no more than normal attention. Assets classified as “Special Mention” have generally acceptable credit quality yet possess higher risk characteristics/circumstances than satisfactory assets. Such conditions include strained liquidity, slow pay, stale financial statements, or other conditions that require more stringent attention from the lending staff. These conditions, if not corrected, may weaken the loan quality or inadequately protect the Company’s credit position at some future date. Assets are classified as “Substandard” if the asset has a well-defined weakness that requires management’s attention to a greater degree than for loans classified as special mention. Such weakness, if left uncorrected, could possibly result in the compromised ability of the loan to perform to contractual requirements. An asset is classified as “Doubtful” if it is inadequately protected by the net worth and/or paying capacity of the obligor or of the collateral, if any, that secures the obligation. Assets classified as doubtful include assets for which there is a “distinct possibility” that a degree of loss will occur if the inadequacies are not corrected.

We evaluate whether a modification, extension or renewal of a loan is a current period origination in accordance with GAAP. Generally, loans up for renewal are subject to a full credit evaluation before the renewal is granted and such loans are considered current period originations for purpose of the table below. As of December 31, 2024, our loans based on year of origination and risk designation and gross charge-offs are as follows (dollars in thousands):

	Term loans amortized cost basis by origination year
													Revolving		Total
	2024		2023		2022		2021		2020		Prior		Loans		Gross Loans
Commercial
Pass	$	67,298	$	157,067	$	194,602	$	237,065	$	29,717	$	111,841	$	678,206	$	1,475,796
Special mention		1,908		-		2,817		2,538		1,643		6,209		17,491		32,606
Substandard		-		3,019		3,705		217		-		15,844		1,543		24,328
Doubtful		-		-		-		-		-		-		-		-
Total Commercial	$	69,206	$	160,086	$	201,124	$	239,820	$	31,360	$	133,894	$	697,240	$	1,532,730
YTD gross charge-offs	$	-	$	-	$	1,003	$	49	$	-	$	316	$	1,918	$	3,286

Commercial real estate
Pass	$	408,314	$	268,533	$	1,424,209	$	1,510,087	$	339,553	$	1,357,858	$	415,286	$	5,723,840
Special mention		-		-		53,642		-		-		59,719		-		113,361
Substandard		-		-		3,822		1,846		1,752		36,058		-		43,478
Doubtful		-		-		-		-		-		-		-		-
Total Commercial real estate	$	408,314	$	268,533	$	1,481,673	$	1,511,933	$	341,305	$	1,453,635	$	415,286	$	5,880,679
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	10,416	$	-	$	10,416

Commercial construction
Pass	$	15,390	$	-	$	2,137	$	8,995	$	6,518	$	-	$	581,002	$	614,042
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		2,204		2,204
Doubtful		-		-		-		-		-		-		-		-
Total Commercial construction	$	15,390	$	-	$	2,137	$	8,995	$	6,518	$	-	$	583,206	$	616,246
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Residential real estate
Pass	$	17,763	$	14,542	$	39,197	$	21,925	$	17,339	$	96,657	$	36,471	$	243,894
Special mention		-		-		-		-		-		635		2,773		3,408
Substandard		-		-		633		-		1,157		364		235		2,389
Doubtful		-		-		-		-		-		-		-		-
Total Residential real estate	$	17,763	$	14,542	$	39,830	$	21,925	$	18,496	$	97,656	$	39,479	$	249,691
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer
Pass	$	1,015	$	24	$	1	$	-	$	-	$	-	$	96	$	1,136
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Consumer	$	1,015	$	24	$	1	$	-	$	-	$	-	$	96	$	1,136
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total
Pass	$	509,780	$	440,166	$	1,660,146	$	1,778,072	$	393,127	$	1,566,356	$	1,711,061	$	8,058,708
Special mention		1,908		-		56,459		2,538		1,643		66,563		20,264		149,375
Substandard		-		3,019		8,160		2,063		2,909		52,266		3,982		72,399
Doubtful		-		-		-		-		-		-		-		-
Grand Total	$	511,688	$	443,185	$	1,724,765	$	1,782,673	$	397,679	$	1,685,185	$	1,735,307	$	8,280,482
YTD gross charge-offs	$	-	$	-	$	1,003	$	49	$	-	$	10,732	$	1,918	$	13,702

As of December 31, 2023, our loans based on year of origination and risk designation and gross charge-offs are as follows (dollars in thousands):

	Term loans amortized cost basis by origination year												Revolving		Total
	2023		2022		2021		2020		2019		Prior		Loans		Gross Loans
Commercial
Pass	$	178,582	$	252,151	$	265,705	$	38,909	$	13,726	$	112,145	$	684,779	$	1,545,997
Special mention		-		10,620		-		-		562		3,417		3,199		17,798
Substandard		250		439		241		1		612		11,695		1,697		14,935
Doubtful		-		-		-		-		-		-		-		-
Total Commercial	$	178,832	$	263,210	$	265,946	$	38,910	$	14,900	$	127,257	$	689,675	$	1,578,730
YTD gross charge-offs	$	54	$	3,397	$	-	$	-	$	280	$	11,094	$	63	$	14,888

Commercial real estate
Pass	$	248,660	$	1,561,841	$	1,585,109	$	352,445	$	353,391	$	1,232,240	$	497,588	$	5,831,274
Special mention		-		-		-		-		-		24,202		-		24,202
Substandard		-		-		1,888		-		1,255		20,141		16,785		40,069
Doubtful		-		-		-		-		-		-		-		-
Total Commercial real estate	$	248,660	$	1,561,841	$	1,586,997	$	352,445	$	354,646	$	1,276,583	$	514,373	$	5,895,545
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	2,142	$	-	$	2,142

Commercial construction
Pass	$	582	$	5,463	$	15,645	$	6,236	$	-	$	-	$	583,870	$	611,796
Special mention		-		-		-		-		-		-		8,700		8,700
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Commercial construction	$	582	$	5,463	$	15,645	$	6,236	$	-	$	-	$	592,570	$	620,496
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Residential real estate
Pass	$	15,455	$	42,830	$	21,987	$	21,704	$	19,896	$	91,114	$	36,082	$	249,068
Special mention		-		-		-		-		-		651		2,817		3,468
Substandard		-		-		555		-		-		2,144		806		3,505
Doubtful		-		-		-		-		-		-		-		-
Total Residential real estate	$	15,455	$	42,830	$	22,542	$	21,704	$	19,896	$	93,909	$	39,705	$	256,041
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	18	$	18

Consumer
Pass	$	849	$	83	$	-	$	5	$	-	$	-	$	92	$	1,029
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Consumer	$	849	$	83	$	-	$	5	$	-	$	-	$	92	$	1,029
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	1	$	1

Total
Pass	$	444,128	$	1,862,368	$	1,888,446	$	419,299	$	387,013	$	1,435,499	$	1,802,411	$	8,239,164
Special mention		-		10,620		-		-		562		28,270		14,716		54,168
Substandard		250		439		2,684		1		1,867		33,980		19,288		58,509
Doubtful		-		-		-		-		-		-		-		-
Grand Total	$	444,378	$	1,873,427	$	1,891,130	$	419,300	$	389,442	$	1,497,749	$	1,836,415	$	8,351,841
YTD gross charge-offs	$	54	$	3,397	$	-	$	-	$	280	$	13,236	$	82	$	17,049

Collateral-dependent Loans - The following tables present the amortized cost basis of collateral-dependent loans by loan segment as of December 31, 2024 and 2023:

	December 31, 2024
	Real Estate		Other		Total
	(dollars in thousands)
Commercial	$	2,308	$	9,222	$	11,530
Commercial real estate		36,486		-		36,486
Commercial construction		2,204		-		2,204
Residential real estate		2,056		-		2,056
Total	$	43,054	$	9,222	$	52,276

	December 31, 2023
	Real Estate		Other		Total
	(dollars in thousands)
Commercial	$	4,949	$	10,387	$	15,336
Commercial real estate		39,986		-		39,986
Commercial construction		8,700		-		8,700
Residential real estate		5,941		-		5,941
Total	$	59,576	$	10,387	$	69,963

Aging Analysis – The following tables present the aging of the amortized cost in past-due loans by loan segment as of December 31, 2024 and December 31, 2023 (dollars in thousands):

	December 31, 2024
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due and Still Accruing		Nonaccrual		Total Past Due and Nonaccrual		Current		Gross Loans
Commercial	$	1,340	$	-	$	-	$	16,231	$	17,571	$	1,515,159	$	1,532,730
Commercial real estate		-		-		-		36,486		36,486		5,844,193		5,880,679
Commercial construction		-		-		-		2,204		2,204		614,042		616,246
Residential real estate		1,991		-		-		2,389		4,380		245,311		249,691
Consumer		-		-		-		-		-		1,136		1,136
Total	$	3,331	$	-	$	-	$	57,310	$	60,641	$	8,219,841	$	8,280,482

	December 31, 2023
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due and Still Accruing		Nonaccrual		Total Past Due and Nonaccrual		Current		Gross Loans
Commercial	$	555	$	-	$	-	$	12,827	$	13,382	$	1,565,348	$	1,578,730
Commercial real estate		527		-		-		36,192		36,719		5,858,826		5,895,545
Commercial construction		-		23,600		-		-		23,600		596,896		620,496
Residential real estate		275		226		-		3,505		4,006		252,035		256,041
Consumer		-		-		-		-		-		1,029		1,029
Total	$	1,357	$	23,826	$	-	$	52,524	$	77,707	$	8,274,134	$	8,351,841

The following tables detail the amount of gross loans that are individually analyzed, collectively evaluated, and loans acquired with deteriorated quality, and the related portion of the allowance for credit losses for loans that are allocated to each loan portfolio segment.

	December 31, 2024
	Commercial		Commercial real estate		Commercial construction		Residential real estate		Consumer		Total
	(dollars in thousands)
Allowance for credit losses - loans
Individually analyzed	$	326	$	909	$	-	$	-	$	-	$	1,235
Collectively evaluated		17,740		53,868		5,064		4,561		5		81,238
Acquired with deteriorated credit quality		212		-		-		-		-		212
Total	$	18,278	$	54,777	$	5,064	$	4,561	$	5	$	82,685
Gross loans
Individually analyzed	$	15,751	$	36,486	$	2,204	$	2,056	$	-	$	56,497
Collectively evaluated		1,516,557		5,844,193		614,042		247,635		1,136		8,223,563
Acquired with deteriorated credit quality		422		-		-		-		-		422
Total	$	1,532,730	$	5,880,679	$	616,246	$	249,691	$	1,136	$	8,280,482

	December 31, 2023
	Commercial		Commercial real estate		Commercial construction		Residential real estate		Consumer		Total
	(dollars in thousands)
Allowance for credit losses - loans
Individually analyzed	$	-	$	941	$	-	$	-	$	-	$	941
Collectively evaluated		20,215		51,337		4,739		4,320		5		80,616
Acquired with deteriorated credit quality		417		-		-		-		-		417
Total	$	20,632	$	52,278	$	4,739	$	4,320	$	5	$	81,974
Gross loans
Individually analyzed	$	15,336	$	39,986	$	8,700	$	5,941	$	-	$	69,963
Collectively evaluated		1,562,910		5,855,559		611,796		250,100		1,029		8,281,394
Acquired with deteriorated credit quality		484		-		-		-		-		484
Total	$	1,578,730	$	5,895,545	$	620,496	$	256,041	$	1,029	$	8,351,841

A summary of the activity in the allowance for credit losses for loans by loan segment is as follows:

	Commercial			Commercial real estate			Commercial construction		Residential real estate		Consumer		Total
	(dollars in thousands)
Balance as of January 1, 2024	$	20,632		$	52,278		$	4,739	$	4,320	$	5	$	81,974
Charge-offs		(3,286	)		(10,416	)		-		-		-		(13,702	)
Recoveries		392			31			-		6		-		429
Provision for credit losses		540			12,884			325		235		-		13,984
Balance as of December 31, 2024	$	18,278		$	54,777		$	5,064	$	4,561	$	5	$	82,685

	Commercial			Commercial real estate			Commercial construction		Residential real estate			Consumer			Total
	(dollars in thousands)
Balance as of January 1, 2023	$	28,903		$	53,742		$	3,718	$	4,143		$	7		$	90,513
Charge-offs		(14,888	)		(2,142	)		-		(18	)		(1	)		(17,049	)
Recoveries		10			-			-		68			8			86
Provision for (reversal) of credit losses		6,607			678			1,021		127			(9	)		8,424
Balance as of December 31, 2023	$	20,632		$	52,278		$	4,739	$	4,320		$	5		$	81,974

	Commercial			Commercial real estate			Commercial construction		Residential real estate			Consumer			Total
	(dollars in thousands)
Balance as of January 1, 2022	$	25,969		$	45,589		$	3,580	$	3,628		$	7		$	78,773
Charge-offs		(2,612	)		(2,819	)		-		(9	)		(3	)		(5,443	)
Recoveries		54			-			-		63			-			117
Provision for credit losses		5,492			10,972			138		461			3			17,066
Balance as of December 31, 2022	$	28,903		$	53,742		$	3,718	$	4,143		$	7		$	90,513

Loan Modifications to Borrowers Experiencing Financial Difficulty:

The following table presents the amortized cost basis to borrowers experiencing financial difficulty that were modified during the last 12 months. The modification percentage represents the total modified loans as compared to the total gross loan balances as of December 31, 2024.

	Amortized Cost Basis at Time of Modification
	Term Extension		Payment Deferral		Interest Rate Reduction		Payment Reduction		Total		Gross Loans at December 31, 2024		Modification % (Modified Loans/Gross Loans)
December 31, 2024
(dollars in thousands)
Commercial	$	17,641	$	126	$	-	$	333	$	18,100	$	1,532,730		1.18	%
Commercial real estate		-		-		63,804		-		63,804		5,880,679		1.08
Residential real estate		1,413		-		-		-		1,413		249,691		0.57
Total	$	19,054	$	126	$	63,804	$	333	$	83,317	$	7,663,100		1.09	%

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the last 12 months.

	Weighted Average Term Extension (Months)		Weighted Average Payment Deferral (Months)		Weighted Average Interest Rate Reduction			Weighted Average Payment Reduction
December 31, 2024
(dollars in thousands)
Commercial		6		3		-	%	$	6
Commercial real estate		-		-		0.8			-
Residential real estate		136		-		-			-
Total		142		3		0.8	%	$	6

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of such loans that have been modified in the last 12 months.

	Current		30-89 Days Past Due		90 Days or Greater Past Due
December 31, 2024
(dollars in thousands)
Commercial	$	18,100	$	-	$	-
Commercial real estate		63,804		-		-
Residential real estate		1,413		-		-
Total	$	83,317	$	-	$	-

	Amortized Cost Basis at Time of Modification
	Term Extension		Payment Deferral		Interest Rate Reduction		Payment Reduction		Total		Gross Loans at December 31, 2023		Modification % (Modified Loans/Gross Loans)
December 31, 2023
(dollars in thousands)
Commercial	$	34	$	10,283	$	-	$	-	$	10,317	$	1,578,730		0.65	%
Commercial real estate		209		-		7,272		-		7,481		5,895,545		0.13
Total	$	243	$	10,283	$	7,272	$	-	$	17,798	$	7,474,275		0.24	%

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the last 12 months.

	Weighted Average Term Extension (Months)		Weighted Average Payment Deferral (Months)		Weighted Average Interest Rate Reduction			Weighted Average Payment Reduction
December 31, 2023
(dollars in thousands)
Commercial		36		6		-	%	$	-
Commercial real estate		180		-		1.9			-
Total		216		6		1.9	%	$	-

	Current		30-89 Days Past Due		90 Days or Greater Past Due
December 31, 2023
(dollars in thousands)
Commercial	$	10,317	$	-	$	-
Commercial real estate		7,481		-		-
Total	$	17,798	$	-	$	-

There were no loans to borrowers experiencing financial difficulty that had a payment default during the year ended December 31, 2024 and December 31, 2023 and were modified in the twelve months prior to that default. Upon the Company’s determination that a modified loan (or portion of the loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged-off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

Allowance for Credit Losses for Unfunded Commitments

The Company has recorded an ACL for unfunded credit commitments, which is recorded in other liabilities. The provision is recorded within the provision for credit losses on the Company’s Consolidated Statement of Income. The following table presents the allowance for credit losses for unfunded commitments for the year ended December 31, 2024 and 2023 (dollars in thousands):

	2024			2023
Balance at beginning of period	$	2,811		$	3,035
Reversal of credit losses - unfunded commitments		(184	)		(224	)
Balance at end of period	$	2,627		$	2,811

Components of (Reversal of) Provision for Credit Losses

The following table summarizes the provision for (reversal of) provision for credit losses for the year ended December 31, 2024 and 2023 (dollars in thousands):


	2024			2023
Provision for credit losses – loans	$	13,984		$	8,424
Reversal of credit losses - unfunded commitments		(184	)		(224	)
Provision for credit losses – total	$	13,800		$	8,200