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Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2025
Receivables [Abstract]  
Allowance for Credit Losses Allowance for Credit Losses
 
Management reviews the appropriateness of the allowance for credit losses ("allowance" or "ACL") on a regular basis. Management considers the accounting policy relating to the allowance to be a critical accounting policy, given the inherent uncertainty in evaluating the levels of the allowance required to cover credit losses in the portfolio and the material effect that assumptions could have on the Company’s results of operations. The Company has developed a methodology to measure the amount of estimated credit loss exposure inherent in the loan portfolio to assure that an appropriate allowance is maintained. The Company’s methodology is based upon guidance provided in SEC Staff Accounting Bulletin No. 119, Measurement of Credit Losses on Financial Instruments ("CECL"), and Financial Instruments - Credit Losses and ASC Topic 326, Financial Instruments - Credit Losses.

The Company uses a Discounted Cash Flow ("DCF") method to estimate expected credit losses for all loan segments excluding the leasing segment. For each of these loan segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, recovery lag, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on internal historical data.

The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default. This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers. For all loans utilizing the DCF method, management utilizes forecasts of national unemployment and a one year percentage change in national gross domestic product as loss drivers in the model.

For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over eight quarters on a straight-line basis. Management leverages economic projections from a reputable and independent third-party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts, and scenario weightings, are also considered by management when developing the forecast metrics.
Due to the size and characteristics of the leasing portfolio, the Company uses the remaining life method, using the historical loss rate of the commercial and industrial segment, to determine the allowance for credit losses.

The combination of adjustments for credit expectations and timing expectations produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce a net present value of expected cash flows ("NPV"). An ACL is established for the difference between the NPV and amortized cost basis.

Since the methodology is based upon historical experience and trends, current conditions, and reasonable and supportable forecasts, as well as management’s judgment, factors may arise that result in different estimates. While management’s evaluation of the allowance as of March 31, 2025, considers the allowance to be appropriate, under different conditions or assumptions, the Company would need to increase or decrease the allowance. In addition, various federal and State regulatory agencies, as part of their examination process, review the Company's allowance and may require the Company to recognize additions to the allowance based on their judgements and information available to them at the time of their examinations.

Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans, and commercial letters of credit. The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancellable, through a charge to credit loss expense for off-balance sheet credit exposures included in provision for credit loss expense in the Company's consolidated statements of income.

The following table details activity in the allowance for credit losses on loans and leases for the three months ended March 31, 2025 and 2024. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

Three Months Ended March 31, 2025
(In thousands)Commercial
& Industrial		Commercial
Real Estate		Residential
Real Estate		Consumer
and Other		Finance
Leases		Total
Allowance for credit losses:
Beginning balance$7,684 $35,837 $11,345 $1,568 $62 $56,496 
Charge-offs(185)0 0 (779)0 (964)
Recoveries42 2 27 160 0 231 
Provision (credit) for credit loss expense1,077 3,469 170 548 (4)5,260 
Ending Balance$8,618 $39,308 $11,542 $1,497 $58 $61,023 
 
Three Months Ended March 31, 2024
(In thousands)Commercial
& Industrial		Commercial
Real Estate		Residential
Real Estate		Consumer
and Other		Finance
Leases		Total
Allowance for credit losses:
Beginning balance$6,667 $31,581 $11,700 $1,557 $79 $51,584 
Charge-offs0 0 0 (445)0 (445)
Recoveries7 2 120 88 0 217 
Provision (credit) for credit loss expense912 (116)(639)196 (5)348 
Ending Balance$7,586 $31,467 $11,181 $1,396 $74 $51,704 
 
The following table details activity in the liabilities for off-balance sheet credit exposures for the three months ended March 31, 2025 and 2024:

(In thousands)20252024
Liabilities for off-balance sheet credit exposures at beginning of period$1,463 $2,270 
Provision for credit loss expense related to off-balance sheet credit exposures27 506 
Liabilities for off-balance sheet credit exposures at end of period$1,490 $2,776 

The following table presents the amortized cost basis of collateral-dependent loans, which are individually evaluated to determine expected credit losses, and the related allowance for credit losses allocated to these loans:

March 31, 2025
(In thousands)Real EstateBusiness AssetsOtherTotalACL Allocation
Commercial and Industrial$510 $0 $0 $510 $250 
Commercial Real Estate50,420 0 0 50,420 6,364 
Total Loans and Leases$50,930 $0 $0 $50,930 $6,614 

December 31, 2024
(In thousands)Real EstateBusiness AssetsOtherTotalACL Allocation
Commercial and Industrial$610 $0 $0 $610 $0 
Commercial Real Estate31,051 0 0 31,051 1,712 
Total Loans and Leases$31,661 $0 $0 $31,661 $1,712 

Loan Modifications to Borrowers Experiencing Financial Difficulty

When the Company modifies loans to borrowers experiencing financial difficulty, the modifications may include interest rate reductions, principal or interest forgiveness, forbearances, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral.
The following table shows the amortized cost basis as of March 31, 2025 and December 31, 2024 of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of concession granted:

March 31, 2025
(In thousands)Term ExtensionInterest Rate ReductionPayment Delay and Term ExtensionTerm Extension and Interest Rate ReductionPayment DelayTotal% of Total Class of Loans and Leases
Commercial and Industrial
Commercial and industrial other$8 $453 $0 $94 $22 $577 0.07 %
Subtotal commercial and industrial8 453 0 94 22 577 0.06 %
Commercial Real Estate
Commercial real estate other0 2,957 0 0 391 3,348 0.12 %
Subtotal commercial real estate0 2,957 0 0 391 3,348 0.10 %
Residential
Home equity0 0 0 38 0 38 0.02 %
Mortgages0 0 0 111 643 754 0.06 %
Subtotal residential0 0 0 149 643 792 0.05 %
Consumer
Consumer and other22 0 0 0 0 22 0.02 %
Subtotal consumer22 0 0 0 0 22 0.02 %
Total loans and leases$30 $3,410 $0 $243 $1,056 $4,739 0.08 %

December 31, 2024
(In thousands)Term ExtensionInterest Rate ReductionPayment Delay and Term ExtensionTerm Extension and Interest Rate ReductionPayment DelayTotal% of Total Class of Loans and Leases
Commercial and Industrial
Commercial and industrial other$10 $463 $0 $110 $45 $628 0.07 %
Subtotal commercial and industrial10 463 0 110 45 628 0.07 %
Commercial Real Estate
Commercial real estate other0 2,990 0 0 394 3,384 0.12 %
Subtotal commercial real estate0 2,990 0 0 394 3,384 0.10 %
Residential
Home equity0 0 0 40 0 40 0.02 %
Mortgages0 0 0 112 548 660 0.05 %
Subtotal residential0 0 0 152 548 700 0.04 %
Consumer
Consumer and other22 0 0 0 0 22 0.02 %
Subtotal consumer22 0 0 0 0 22 0.02 %
Total loans and leases$32 $3,453 $0 $262 $987 $4,734 0.08 %

There were no loan modifications made to borrowers experiencing financial difficulty that had defaulted as of March 31, 2025 and December 31, 2024.
The following table shows the aging analysis of loan modifications made to borrowers experiencing financial difficulty as of March 31, 2025 and December 31, 2024:

March 31, 2025Payment Status (Amortized Cost Basis)
(In thousands)Current30-59 Days Past Due60-89 Days Past Due90+ Days Past DueNon-AccrualTotal
Commercial and Industrial
Commercial and industrial other$569 $0 $0 $0 $8 $577 
Subtotal commercial and industrial569 0 0 0 8 577 
Commercial Real Estate
Commercial real estate other3,348 0 0 0 0 3,348 
Subtotal commercial real estate3,348 0 0 0 0 3,348 
Residential Real Estate
Home equity0 0 0 0 38 38 
Mortgages265 0 0 0 489 754 
Subtotal residential real estate265 0 0 0 527 792 
Consumer and Other
Consumer and other0 0 0 0 22 22 
Subtotal consumer and other0 0 0 0 22 22 
Total$4,182 $0 $0 $0 $557 $4,739 

December 31, 2024Payment Status (Amortized Cost Basis)
(In thousands)Current30-59 Days Past Due60-89 Days Past Due90+ Days Past DueNon-AccrualTotal
Commercial and Industrial
Commercial and industrial other$618 $0 $0 $0 $10 $628 
Subtotal commercial and industrial618 0 0 0 10 628 
Commercial Real Estate
Commercial real estate other3,384 0 0 0 0 3,384 
Subtotal commercial real estate3,384 0 0 0 0 3,384 
Residential Real Estate
Home equity0 0 0 0 40 40 
Mortgages154 0 112 0 394 660 
Subtotal residential real estate154 0 112 0 434 700 
Consumer and Other
Consumer and other0 0 0 0 22 22 
Subtotal consumer and other0 0 0 0 22 22 
Total$4,156 $0 $112 $0 $466 $4,734 
The following tables present credit quality indicators by total loans on an amortized cost basis by origination year as of March 31, 2025 and December 31, 2024:

March 31, 2025
(In thousands)20252024202320222021PriorRevolving Loans Amortized Cost BasisRevolving Loans Converted to TermTotal Loans
Commercial and Industrial - Other:
Pass$51,511 $139,937 $104,517 $87,715 $51,230 $162,874 $273,078 $2,139 $873,001 
Special Mention0 246 221 137 111 394 150 0 1,259 
Substandard0 405 19 28 532 618 1,096 193 2,891 
Total Commercial and Industrial - Other$51,511 $140,588 $104,757 $87,880 $51,873 $163,886 $274,324 $2,332 $877,151 
Current-period gross writeoffs$0 $80 $67 $38 $0 $0 $0 $0 $185 
Commercial and Industrial - Agriculture:
Pass$3,163 $12,935 $25,938 $9,331 $1,988 $7,353 $32,514 $398 $93,620 
Special Mention0 0 0 0 31 0 0 0 31 
Substandard0 0 0 0 0 37 0 0 37 
Total Commercial and Industrial - Agriculture$3,163 $12,935 $25,938 $9,331 $2,019 $7,390 $32,514 $398 $93,688 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Commercial Real Estate
Pass$73,427 $337,823 $275,679 $343,991 $351,697 $1,329,497 $19,042 $7,217 $2,738,373 
Special Mention0 0 0 1,494 593 31,215 0 0 33,302 
Substandard0 731 934 1,474 3,464 48,077 927 0 55,607 
Total Commercial Real Estate$73,427 $338,554 $276,613 $346,959 $355,754 $1,408,789 $19,969 $7,217 $2,827,282 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Commercial Real Estate - Agriculture:
Pass$8,210 $24,501 $12,020 $36,942 $21,068 $113,053 $5,068 $449 $221,311 
Special Mention0 0 0 0 0 198 0 0 198 
Substandard0 0 0 0 0 143 0 0 143 
Total Commercial Real Estate - Agriculture$8,210 $24,501 $12,020 $36,942 $21,068 $113,394 $5,068 $449 $221,652 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Commercial Real Estate - Construction
Pass$0 $17,426 $12,839 $20,366 $25,431 $2,674 $277,534 $3,666 $359,936 
Special Mention0 0 0 0 0 0 0 0 0 
Substandard0 0 0 0 0 0 17,302 0 17,302 
Total Commercial Real Estate - Construction$0 $17,426 $12,839 $20,366 $25,431 $2,674 $294,836 $3,666 $377,238 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
(In thousands)20252024202320222021PriorRevolving Loans Amortized Cost BasisRevolving Loans Converted to TermTotal Loans
Residential - Home Equity
Performing$210 $15,711 $3,185 $2,891 $956 $15,931 $162,186 $944 $202,014 
Nonperforming0 0 0 0 0 659 2,839 0 3,498 
Total Residential - Home Equity$210 $15,711 $3,185 $2,891 $956 $16,590 $165,025 $944 $205,512 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Residential - Mortgages
Performing$21,477 $109,306 $129,055 $169,732 $234,890 $688,337 $0 $0 $1,352,797 
Nonperforming0 0 693 709 828 11,414 0 0 13,644 
Total Residential - Mortgages$21,477 $109,306 $129,748 $170,441 $235,718 $699,751 $0 $0 $1,366,441 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Consumer - Direct
Performing$25,307 $14,881 $15,761 $9,403 $8,361 $14,402 $2,391 $0 $90,506 
Nonperforming0 0 3 12 0 86 14 0 115 
Total Consumer - Direct$25,307 $14,881 $15,764 $9,415 $8,361 $14,488 $2,405 $0 $90,621 
Current-period gross writeoffs$722 $3 $0 $13 $17 $20 $0 $0 $775 
Consumer - Indirect
Performing$0 $0 $0 $0 $42 $110 $0 $0 $152 
Nonperforming0 0 0 0 0 4 0 0 4 
Total Consumer - Indirect$0 $0 $0 $0 $42 $114 $0 $0 $156 
Current-period gross writeoffs$0 $0 $0 $0 $0 $4 $0 $0 $4 
December 31, 2024
(In thousands)20242023202220212020PriorRevolving Loans Amortized Cost BasisRevolving Loans Converted to TermTotal Loans
Commercial and Industrial - Other:
Pass$164,809 $114,591 $60,984 $54,087 $19,311 $144,785 $256,621 $35,968 $851,156 
Special Mention334 288 174 808 144 375 157 0 2,280 
Substandard425 0 41 43 4 608 1,011 0 2,132 
Total Commercial and Industrial - Other$165,568 $114,879 $61,199 $54,938 $19,459 $145,768 $257,789 $35,968 $855,568 
Current-period gross writeoffs$0 $15 $30 $44 $21 $432 $0 $0 $542 
Commercial and Industrial - Agriculture:
Pass$15,686 $23,823 $9,893 $2,233 $1,660 $11,304 $42,438 $2,895 $109,932 
Special Mention0 0 0 34 0 0 0 0 34 
Substandard0 0 0 0 41 0 0 0 41 
Total Commercial and Industrial - Agriculture$15,686 $23,823 $9,893 $2,267 $1,701 $11,304 $42,438 $2,895 $110,007 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Commercial Real Estate
Pass$331,943 $242,564 $324,510 $355,090 $277,220 $1,088,575 $50,632 $16,958 $2,687,492 
Special Mention0 0 1,499 599 15,205 12,637 4,452 0 34,392 
Substandard731 973 1,474 2,561 1,840 45,856 985 0 54,420 
Total Commercial Real Estate$332,674 $243,537 $327,483 $358,250 $294,265 $1,147,068 $56,069 $16,958 $2,776,304 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Commercial Real Estate - Agriculture:
Pass$23,754 $11,594 $37,398 $21,510 $19,853 $96,967 $4,169 $1,950 $217,195 
Special Mention0 0 0 0 0 217 0 0 217 
Substandard0 0 0 0 0 170 0 0 170 
Total Commercial Real Estate - Agriculture$23,754 $11,594 $37,398 $21,510 $19,853 $97,354 $4,169 $1,950 $217,582 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Commercial Real Estate - Construction
Pass$13,160 $744 $682 $5,003 $1,986 $802 $293,479 $52,675 $368,531 
Special Mention0 0 0 0 0 0 0 0 0 
Substandard0 0 0 0 0 0 17,400 0 17,400 
Total Commercial Real Estate - Construction$13,160 $744 $682 $5,003 $1,986 $802 $310,879 $52,675 $385,931 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
 
(In thousands)20242023202220212020PriorRevolving Loans Amortized Cost BasisRevolving Loans Converted to TermTotal Loans
Residential - Home Equity
Performing$15,181 $3,106 $2,383 $1,053 $784 $12,993 $163,202 $2,603 $201,305 
Nonperforming0 0 0 0 0 594 2,295 0 2,889 
Total Residential - Home Equity$15,181 $3,106 $2,383 $1,053 $784 $13,587 $165,497 $2,603 $204,194 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Residential - Mortgages
Performing$106,698 $130,463 $172,310 $239,307 $204,310 $500,169 $0 $0 $1,353,257 
Nonperforming0 707 612 737 948 10,385 0 0 13,389 
Total Residential - Mortgages$106,698 $131,170 $172,922 $240,044 $205,258 $510,554 $0 $0 $1,366,646 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Consumer - Direct
Performing$40,812 $18,082 $10,022 $9,109 $3,953 $11,485 $2,575 $0 $96,038 
Nonperforming0 4 24 8 4 77 8 0 125 
Total Consumer - Direct$40,812 $18,086 $10,046 $9,117 $3,957 $11,562 $2,583 $0 $96,163 
Current-period gross writeoffs$2,272 $15 $11 $32 $10 $229 $0 $0 $2,569 
Consumer - Indirect
Performing$0 $0 $0 $52 $23 $141 $0 $0 $216 
Nonperforming0 0 0 0 0 13 0 0 13 
Total Consumer - Indirect$0 $0 $0 $52 $23 $154 $0 $0 $229 
Current-period gross writeoffs$0 $0 $0 $0 $0 $29 $0 $0 $29