Loans

3 Months Ended

Mar. 31, 2025

Loans and Leases Receivable Disclosure [Abstract]

(4.) LOANS

The Company’s loan portfolio consisted of the following as of the dates indicated (in thousands):


	Principal Amount Outstanding		Net Deferred Loan (Fees) Costs			Loans, Net
March 31, 2025
Commercial business	$	708,698	$	403		$	709,101
Commercial mortgage–construction		567,981		(1,622	)		566,359
Commercial mortgage–multifamily		476,400		(533	)		475,867
Commercial mortgage–non-owner occupied		900,843		(1,164	)		899,679
Commercial mortgage–owner occupied		286,421		(30	)		286,391
Residential real estate loans		633,750		10,233			643,983
Residential real estate lines		71,562		3,207			74,769
Consumer indirect		826,730		26,446			853,176
Other consumer		44,024		(71	)		43,953
Total	$	4,516,409	$	36,869			4,553,278
Allowance for credit losses–loans							(48,964	)
Total loans, net						$	4,504,314
December 31, 2024
Commercial business	$	664,846	$	475		$	665,321
Commercial mortgage–construction		584,296		(1,677	)		582,619
Commercial mortgage–multifamily		471,499		(545	)		470,954
Commercial mortgage–non-owner occupied		859,079		(1,092	)		857,987
Commercial mortgage–owner occupied		288,042		(6	)		288,036
Residential real estate loans		639,466		10,740			650,206
Residential real estate lines		72,308		3,244			75,552
Consumer indirect		819,116		26,656			845,772
Other consumer		42,827		(70	)		42,757
Total	$	4,441,479	$	37,725			4,479,204
Allowance for credit losses–loans							(48,041	)
Total loans, net						$	4,431,163

Loans held for sale (not included above) were comprised entirely of residential real estate mortgages and totaled $387 thousand and $2.3 million as of March 31, 2025 and December 31, 2024, respectively.

The Company sells certain qualifying newly originated or refinanced residential real estate loans on the secondary market. Residential real estate loans serviced for others, which are not included in the consolidated statements of financial condition, amounted to $280.2 million and $280.8 million as of March 31, 2025 and December 31, 2024, respectively.

The Company elected to exclude AIR from the amortized cost basis of loans disclosed throughout this footnote. As of March 31, 2025, and December 31, 2024, AIR for loans totaled $20.7 million and $19.9 million, respectively, and is included in other assets on the Company’s consolidated statements of financial condition.

(4.) LOANS (Continued)

Past Due Loans Aging

The Company’s recorded investment, by loan class, in current and nonaccrual loans, as well as an analysis of accruing delinquent loans is set forth as of the dates indicated (in thousands):


	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Nonaccrual		Current		Total Loans		Nonaccrual with no specific allowance
March 31, 2025
Commercial business	$	373	$	199	$	—	$	572	$	5,672	$	702,454	$	708,698	$	356
Commercial mortgage–construction		2,329		—		—		2,329		19,684		545,968		567,981		19,460
Commercial mortgage–multifamily		219		—		—		219		—		476,181		476,400		—
Commercial mortgage–non-owner occupied		244		—		—		244		4,766		895,833		900,843		286
Commercial mortgage–owner occupied		—		—		—		—		349		286,072		286,421		349
Residential real estate loans		1,725		62		—		1,787		6,035		625,928		633,750		6,035
Residential real estate lines		96		85		—		181		316		71,065		71,562		316
Consumer indirect		5,257		1,662		—		6,919		2,917		816,894		826,730		2,917
Other consumer		289		149		36		474		243		43,307		44,024		243
Total loans, gross	$	10,532	$	2,157	$	36	$	12,725	$	39,982	$	4,463,702	$	4,516,409	$	29,962
December 31, 2024
Commercial business	$	293	$	9	$	8	$	310	$	5,609	$	658,927	$	664,846	$	427
Commercial mortgage–construction		-		2,285		-		2,285		20,280		561,731		584,296		19,460
Commercial mortgage–multifamily		-		-		-		-		-		471,499		471,499		-
Commercial mortgage–non-owner occupied		256		-		-		256		4,773		854,050		859,079		4,773
Commercial mortgage–owner occupied		-		-		-		-		354		287,688		288,042		354
Residential real estate loans		3,435		95		-		3,530		6,918		629,018		639,466		6,918
Residential real estate lines		370		47		-		417		253		71,638		72,308		253
Consumer indirect		12,734		2,219		-		14,953		3,157		801,006		819,116		3,157
Other consumer		109		135		35		279		19		42,529		42,827		19
Total loans, gross	$	17,197	$	4,790	$	43	$	22,030	$	41,363	$	4,378,086	$	4,441,479	$	35,361

There were $36 thousand and $35 thousand in consumer overdrafts which were past due greater than 90 days as of March 31, 2025 and December 31, 2024. Consumer overdrafts are overdrawn deposit accounts which have been reclassified as loans but by their terms do not accrue interest.

Interest income on nonaccrual loans, if recognized, is recorded using the cash basis method of accounting. There was no interest income recognized on nonaccrual loans during the three months ended March 31, 2025 and 2024. Estimated interest income of $204 thousand and $748 thousand for the three months ended March 31, 2025 and 2024, respectively, would have been recorded if all such loans had been accruing interest according to their original contractual terms.

Loan Modifications for Borrowers Experiencing Financial Difficulty

Loans may be modified when it is determined that a borrower is experiencing financial difficulty. Loan modifications may include principal forgiveness, interest rate reduction, an other-than-insignificant payment delay, and term extensions, or a combination of these concessions.

(4.) LOANS (Continued)

The following table presents the amortized cost basis of loans modified to borrowers experiencing financial difficulty, disaggregated by loan class and type of concession granted as of March 31, 2025 (in thousands):


	Term Extension
	Amortized Cost Basis		% of Total Loans
Loan Type
Commercial business	$	—		0.0	%
Commercial mortgage–construction		—		0.0	%
Commercial mortgage–multifamily		—		0.0	%
Commercial mortgage–non-owner occupied		—		0.0	%
Commercial mortgage–owner occupied		—		0.0	%
Residential real estate loans		2,069		0.1	%
Residential real estate lines		—		0.0	%
Consumer indirect		—		0.0	%
Other consumer		—		0.0	%
Total	$	2,069		0.1	%

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


Term Extension
Loan Type		Financial Effect
Residential real estate loans		Added a weighted average 10.0 years to the life of the loan, which reduced the monthly payment amount for the borrower.

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 depicts the performance of loans that have been modified in the three months ended March 31, 2025 (in thousands):


	Payment Status (Amortized Cost Basis)
	Current		30-89 Days Past Due		90+ Days Past Due
Loan Type
Commercial business	$	—	$	—	$	—
Commercial mortgage–construction		—		—		—
Commercial mortgage–multifamily		—		—		—
Commercial mortgage–non-owner occupied		—		—		—
Commercial mortgage–owner occupied		—		—		—
Residential real estate loans		1,131		220		718
Residential real estate lines		—		—		—
Consumer indirect		—		—		—
Other consumer		—		—		—
Total	$	1,131	$	220	$	718

(4.) LOANS (Continued)

Collateral Dependent Loans

Management has determined that specific commercial loans on nonaccrual status, all loans that have had their terms restructured when a borrower is experiencing financial difficulty, and other loans deemed appropriate by management where repayment is expected to be provided substantially through the operation or sale of the collateral to be collateral dependent loans. The following table presents the amortized cost basis of collateral dependent loans by collateral type as of March 31, 2025 and December 31, 2024 (in thousands):


	Collateral type
	Business assets		Real property		Total		Specific Reserve

March 31, 2025
Commercial business	$	5,995	$	9,000	$	14,995	$	2,188
Commercial mortgage–construction		—		15,684		15,684		224
Commercial mortgage–multifamily		—		—		—		—
Commercial mortgage–non-owner occupied		—		17,759		17,759		1,259
Commercial mortgage–owner occupied		—		702		702		—
Total	$	5,995	$	43,145	$	49,140	$	3,671

December 31, 2024
Commercial business	$	5,860	$	5,000	$	10,860	$	2,073
Commercial mortgage–construction		—		29,792		29,792		820
Commercial mortgage–multifamily		—		—		—		—
Commercial mortgage–non-owner occupied		—		17,767		17,767		—
Commercial mortgage–owner occupied		—		720		720		—
Total	$	5,860	$	53,279	$	59,139	$	2,893

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors such as the fair value of collateral. The Company analyzes commercial business and commercial mortgage loans individually by classifying the loans as to credit risk. Risk ratings are updated any time the situation warrants. The Company uses the following definitions for risk ratings:

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Due to the high probability of loss, non-accrual accounting is required for all assets listed as doubtful.

Loans that do not meet the criteria above that are analyzed individually as part of the process described above are considered “uncriticized” or pass-rated loans and are included in groups of homogeneous loans with similar risk and loss characteristics.

(4.) LOANS (Continued)

The following tables set forth the Company’s commercial loan portfolio, categorized by internally assigned asset classification, as of the dates indicated (in thousands):


	Term Loans Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
March 31, 2025
Commercial business:
Uncriticized	$	41,526	$	114,920	$	94,666	$	59,338	$	42,342	$	38,381	$	285,253	$	—	$	676,426
Special mention		10		2,218		4,922		277		49		1,574		8,926		—		17,976
Substandard		—		161		844		17		17		173		7,872		—		9,084
Doubtful		—		—		—		5,040		21		172		382		—		5,615
Total	$	41,536	$	117,299	$	100,432	$	64,672	$	42,429	$	40,300	$	302,433	$	—	$	709,101
Current period gross write-offs	$	—	$	—	$	—	$	—	$	14	$	125	$	—	$	—	$	139

Commercial mortgage–construction
Uncriticized	$	5,782	$	60,520	$	190,361	$	281,659	$	—	$	6,023	$	—	$	—	$	544,345
Special mention		—		—		—		—		2,330		—		—		—		2,330
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		224		—		19,460		—		—		—		19,684
Total	$	5,782	$	60,520	$	190,585	$	281,659	$	21,790	$	6,023	$	—	$	—	$	566,359
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial mortgage–multifamily
Uncriticized	$	5,980	$	27,096	$	105,706	$	49,177	$	142,693	$	127,014	$	—	$	—	$	457,666
Special mention		—		—		—		4,321		—		12,990		—		—		17,311
Substandard		—		—		—		—		—		890		—		—		890
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	5,980	$	27,096	$	105,706	$	53,498	$	142,693	$	140,894	$	—	$	—	$	475,867
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial mortgage–non-owner occupied
Uncriticized	$	44,766	$	84,099	$	66,078	$	250,161	$	98,249	$	325,955	$	—	$	—	$	869,308
Special mention		—		—		—		—		4,655		7,750		—		—		12,405
Substandard		—		—		12,994		—		206		—		—		—		13,200
Doubtful		—		—		—		286		—		4,480		—		—		4,766
Total	$	44,766	$	84,099	$	79,072	$	250,447	$	103,110	$	338,185	$	—	$	—	$	899,679
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial mortgage–owner occupied
Uncriticized	$	837	$	68,016	$	40,585	$	47,957	$	33,607	$	92,262	$	—	$	—	$	283,264
Special mention		—		—		—		448		—		1,211		—		—		1,659
Substandard		—		—		—		219		—		900		—		—		1,119
Doubtful		—		—		—		—		—		349		—		—		349
Total	$	837	$	68,016	$	40,585	$	48,624	$	33,607	$	94,722	$	—	$	—	$	286,391
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(4.) LOANS (Continued)


	Term Loans Amortized Cost Basis by Origination Year
	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
December 31, 2024
Commercial business:
Uncriticized	$	121,094	$	90,618	$	69,669	$	43,566	$	20,745	$	19,409	$	267,186	$	-	$	632,287
Special mention		2,218		4,814		297		57		8		1,678		9,297		-		18,369
Substandard		169		937		20		19		22		184		7,789		-		9,140
Doubtful		-		-		5,039		21		-		172		293		-		5,525
Total	$	123,481	$	96,369	$	75,025	$	43,663	$	20,775	$	21,443	$	284,565	$	-	$	665,321
Current period gross write-offs	$	-	$	5	$	-	$	20	$	-	$	274	$	-	$	-	$	299

Commercial mortgage–construction
Uncriticized	$	52,470	$	175,559	$	311,182	$	3,753	$	341	$	6,516	$	-	$	-	$	549,821
Special mention		-		-		722		2,284		-		-		-		-		3,006
Substandard		-		-		-		-		-		9,512		-		-		9,512
Doubtful		-		820		-		19,460		-		-		-		-		20,280
Total	$	52,470	$	176,379	$	311,904	$	25,497	$	341	$	16,028	$	-	$	-	$	582,619
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial mortgage–multifamily
Uncriticized	$	26,339	$	105,838	$	43,924	$	143,994	$	65,206	$	67,715	$	-	$	-	$	453,016
Special mention		-		-		3,625		-		6,825		6,234		-		-		16,684
Substandard		-		-		-		-		463		791		-		-		1,254
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	26,339	$	105,838	$	47,549	$	143,994	$	72,494	$	74,740	$	-	$	-	$	470,954
Current period gross write-offs	$	-	$	-	$	-	$	13	$	-	$	-	$	-	$	-	$	13

Commercial mortgage–non-owner occupied
Uncriticized	$	83,677	$	66,338	$	245,618	$	99,175	$	82,368	$	250,316	$	-	$	-	$	827,492
Special mention		-		-		-		4,691		-		7,829		-		-		12,520
Substandard		-		12,994		-		208		-		-		-		-		13,202
Doubtful		-		-		293		-		-		4,480		-		-		4,773
Total	$	83,677	$	79,332	$	245,911	$	104,074	$	82,368	$	262,625	$	-	$	-	$	857,987
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial mortgage–owner occupied
Uncriticized	$	67,060	$	41,274	$	48,517	$	34,049	$	43,528	$	50,967	$	-	$	-	$	285,395
Special mention		-		-		451		-		126		1,110		-		-		1,687
Substandard		-		-		224		-		366		10		-		-		600
Doubtful		-		-		-		-		-		354		-		-		354
Total	$	67,060	$	41,274	$	49,192	$	34,049	$	44,020	$	52,441	$	-	$	-	$	288,036
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

(4.) LOANS (Continued)

The Company utilizes payment status as a means of identifying and reporting problem and potential problem retail loans. The Company considers nonaccrual loans and loans past due greater than 90 days and still accruing interest to be non-performing. The following tables set forth the Company’s retail loan portfolio, categorized by performance status, as of the dates indicated (in thousands):


	Term Loans Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
March 31, 2025
Residential real estate loans:
Performing	$	7,278	$	55,394	$	109,236	$	74,207	$	72,467	$	319,366	$	—	$	—	$	637,948
Nonperforming		—		—		456		440		1,265		3,874		—		—		6,035
Total	$	7,278	$	55,394	$	109,692	$	74,647	$	73,732	$	323,240	$	—	$	—	$	643,983
Current period gross write-offs	$	—	$	—	$	—	$	—	$	49	$	16	$	—	$	—	$	65

Residential real estate lines:
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	70,401	$	4,052	$	74,453
Nonperforming		—		—		—		—		—		—		139		177		316
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	70,540	$	4,229	$	74,769
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer indirect:
Performing	$	91,991	$	203,478	$	168,101	$	210,863	$	129,711	$	46,115	$	—	$	—	$	850,259
Nonperforming		—		282		757		713		762		403		—		—		2,917
Total	$	91,991	$	203,760	$	168,858	$	211,576	$	130,473	$	46,518	$	—	$	—	$	853,176
Current period gross write-offs	$	—	$	534	$	971	$	1,887	$	957	$	479	$	—	$	—	$	4,828

Other consumer:
Performing	$	4,842	$	6,389	$	26,678	$	2,006	$	591	$	387	$	2,781	$	—	$	43,674
Nonperforming		—		7		225		—		—		2		45		—		279
Total	$	4,842	$	6,396	$	26,903	$	2,006	$	591	$	389	$	2,826	$	—	$	43,953
Current period gross write-offs	$	—	$	106	$	73	$	13	$	6	$	5	$	9	$	—	$	212

(4.) LOANS (Continued)


	Term Loans Amortized Cost Basis by Origination Year
	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
December 31, 2024
Residential real estate loans:
Performing	$	54,345	$	110,882	$	75,264	$	73,754	$	99,943	$	229,100	$	-	$	-	$	643,288
Nonperforming		-		658		625		1,410		1,436		2,789		-		-		6,918
Total	$	54,345	$	111,540	$	75,889	$	75,164	$	101,379	$	231,889	$	-	$	-	$	650,206
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	109	$	-	$	-	$	109

Residential real estate lines:
Performing	$	-	$	-	$	-	$	-	$	-	$	-	$	71,059	$	4,240	$	75,299
Nonperforming		-		-		-		-		-		-		74		179		253
Total	$	-	$	-	$	-	$	-	$	-	$	-	$	71,133	$	4,419	$	75,552
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer indirect:
Performing	$	215,964	$	183,917	$	235,262	$	149,499	$	41,773	$	16,200	$	-	$	-	$	842,615
Nonperforming		262		482		1,130		694		351		238		-		-		3,157
Total	$	216,226	$	184,399	$	236,392	$	150,193	$	42,124	$	16,438	$	-	$	-	$	845,772
Current period gross write-offs	$	361	$	4,814	$	5,964	$	4,621	$	1,708	$	1,511	$	-	$	-	$	18,979

Other consumer:
Performing	$	7,482	$	28,777	$	2,316	$	729	$	281	$	242	$	2,876	$	-	$	42,703
Nonperforming		3		2		1		6		1		-		41		-		54
Total	$	7,485	$	28,779	$	2,317	$	735	$	282	$	242	$	2,917	$	-	$	42,757
Current period gross write-offs	$	527	$	129	$	124	$	33	$	27	$	11	$	92	$	-	$	943

(4.) LOANS (Continued)

Allowance for Credit Losses–Loans

The following table sets forth the changes in the allowance for credit losses – loans for the three months ended March 31, 2025 and 2024 (in thousands):


				Commercial Mortgage												Residential Real Estate
	Commercial Business			Construction			Multi- family			Non-Owner Occupied			Owner Occupied			Loans			Lines		Consumer Indirect			Other Consumer			Total
Three months ended March 31, 2025
Allowance for credit losses–loans:
Beginning balance	$	8,665		$	6,824		$	3,458		$	7,330		$	4,183		$	3,596		$	793	$	12,705		$	487		$	48,041
Charge-offs		(139	)		—			—			—			—			(65	)		—		(4,828	)		(212	)		(5,244	)
Recoveries		82			—			—			1			1			24			—		2,679			88			2,875
(Benefit) provision		(987	)		(1,512	)		652			2,378			(171	)		1,307			156		1,242			227			3,292
Ending balance	$	7,621		$	5,312		$	4,110		$	9,709		$	4,013		$	4,862		$	949	$	11,798		$	590		$	48,964

				Commercial Mortgage												Residential Real Estate
	Commercial Business			Construction			Multi- family			Non-Owner Occupied			Owner Occupied			Loans			Lines		Consumer Indirect			Other Consumer			Total
Three months ended March 31, 2024
Allowance for credit losses–loans:
Beginning balance	$	13,102		$	3,710		$	4,009		$	6,074		$	2,065		$	5,286		$	764	$	14,099		$	1,973		$	51,082
Charge-offs		(17	)		—			—			—			—			(8	)		—		(6,217	)		(269	)		(6,511	)
Recoveries		54			—			—			1			—			4			—		3,244			87			3,390
Provision		(148	)		(117	)		(850	)		(529	)		(250	)		(652	)		30		(1,272	)		(1,098	)		(4,886	)
Ending balance	$	12,991		$	3,593		$	3,159		$	5,546		$	1,815		$	4,630		$	794	$	9,854		$	693		$	43,075

Risk Characteristics

Loans are pooled based on their homogeneous risk characteristics. The Company has divided its loan portfolio into segments, as the loans within each segment have similar characteristics related to loan purpose, tenor, amortization, repayment source, payment frequency, collateral and recourse.

Commercial business loans primarily consist of loans to small to mid-sized businesses in our market area in a diverse range of industries. These loans are typically associated with higher credit risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. Further, the collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value. The credit risk related to commercial loans is largely influenced by general economic conditions, including inflation, and the resulting impact on a borrower’s operations or on the value of underlying collateral, if any.

Commercial mortgage loans generally have larger balances and involve a greater degree of risk than residential mortgage loans, potentially resulting in higher losses on an individual customer basis. Loan repayment is often dependent on the successful operation and management of the properties, as well as on the collateral securing the loan. Economic events, inflation or conditions in the real estate market could have an adverse impact on the cash flows generated by properties securing the Company’s commercial real estate loans and on the value of such properties, influencing the ability of the tenants to pay rent on these properties. The Company further disaggregated the commercial mortgage loans into the following categories: construction, multifamily, non-owner occupied, and owner occupied based on the risk characteristics of the loans and the Company’s methodology for monitoring and assessing credit risk.

Residential real estate loans (comprised of conventional mortgages and home equity loans) and residential real estate lines of credit (comprised of home equity lines of credit) are generally made based on the borrower’s ability to make repayment from his or her employment and other income but are secured by real property whose value tends to be more easily ascertainable. Credit risk for these types of loans is generally influenced by general economic conditions, the characteristics of individual borrowers, and the nature of the loan collateral.

(4.) LOANS (Continued)

Consumer indirect and other consumer loans may entail greater credit risk than residential mortgage loans and home equities, particularly in the case of other consumer loans which are primarily unsecured or, in the case of some BaaS loans, secured by depreciable assets such as solar panels, and in the case of indirect consumer loans, secured by depreciable assets such as automobiles. In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance. In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by inflation and adverse personal circumstances such as job loss, illness or personal bankruptcy, including the heightened risk that such circumstances may arise as a result of inflation. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.