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LOANS AND ALLOWANCE FOR CREDIT LOSSES
 3 Months Ended
Mar. 31, 2025
Credit Loss [Abstract]  
LOANS AND ALLOWANCE FOR CREDIT LOSSES LOANS AND ALLOWANCE FOR CREDIT LOSSES
The composition of the loan portfolio, net of deferred origination fees and costs, is summarized as follows (in thousands):
March 31, 2025December 31, 2024
Commercial and industrial$295,732 $299,521 
Commercial mortgages:
Construction95,671 94,943 
Owner occupied commercial real estate155,027 142,279 
Non-owner occupied commercial real estate1,009,558 979,782 
Residential mortgages275,448 274,979 
Consumer loans:
Home equity lines and loans93,914 93,220 
Indirect consumer loans164,594 178,118 
Direct consumer loans7,692 8,577 
Total loans, net of deferred loan fees and costs2,097,636 2,071,419 
Allowance for credit losses(22,522)(21,388)
Loans, net$2,075,114 $2,050,031 
The Corporation's concentrations of credit risk by loan type are reflected in the preceding table. The concentrations of credit risk with standby letters of credit, committed lines of credit, and commitments to originate new loans generally follow the loan classifications in the table above.
Accrued interest receivable on loans totaled $7.9 million as of March 31, 2025 and $8.0 million as of December 31, 2024. Accrued interest receivable on loans is included in the accrued interest receivable and other assets line item on the Corporation's Consolidated Balance Sheets, and is excluded from the amortized cost basis of loans and estimate of the allowance for credit losses, as presented in this Note.
Owner occupied commercial real estate and non-owner occupied commercial real estate were previously presented as a combined loan category, commercial mortgages, other. Prior period information included in this Note has been disaggregated to reflect these standalone categories. The previously presented commercial mortgages, other loan category totaled $1.16 billion and $1.12 billion as of March 31, 2025 and December 31, 2024, respectively.
The following tables present the activity in the allowance for credit losses by portfolio segment for the three month periods ended March 31, 2025 and 2024 (in thousands):
Three Months Ended March 31, 2025
Allowance for credit lossesCommercial and IndustrialCommercial MortgagesResidential MortgagesConsumer LoansTotal
Beginning balance, January 1, 2025$4,520 $11,214 $2,259 $3,395 $21,388 
Charge-offs(5)— — (393)(398)
Recoveries4 1 5 126 136 
Net recoveries (charge-offs)(1)1 5 (267)(262)
Provision (1)
634 874 209 (321)1,396 
Ending balance, March 31, 2025
$5,153 $12,089 $2,473 $2,807 $22,522 
(1)Additional provision related to off-balance sheet exposure was a credit of $304 thousand for the three months ended March 31, 2025.
Three Months Ended March 31, 2024
Allowance for credit lossesCommercial and IndustrialCommercial MortgagesResidential MortgagesConsumer LoansTotal
Beginning balance, January 1, 2024$5,055 $12,026 $2,194 $3,242 $22,517 
Charge-offs— — (16)(351)(367)
Recoveries37 1 22 125 185 
Net recoveries (charge-offs)37 1 6 (226)(182)
Provision (1)
(576)(1,660)(138)510 (1,864)
Ending balance, March 31, 2024
$4,516 $10,367 $2,062 $3,526 $20,471 
(1)Additional provision related to off-balance sheet exposure was a credit of $176 thousand for the three months ended March 31, 2024.

The Corporation performs an annual update to the loss drivers used in modeling its estimate of the allowance for credit losses. Annual updates for the model were completed during the three month periods ended March 31, 2025 and 2024.

Unfunded Commitments
The allowance for credit losses on unfunded commitments is recognized as a liability, and included in the accrued interest payable and other liabilities line item on the Corporation's Consolidated Balance Sheets, with adjustments to the allowance recognized in the provision for credit losses on the Consolidated Statements of Income. The Corporation established an allowance for credit losses on unfunded commitments in conjunction with its adoption of ASC 326-Financial Instruments-Credit Losses.
The following table presents the activity in the allowance for credit losses on unfunded commitments for the three month periods ended March 31, 2025 and 2024 (in thousands):
For the Three Months Ended
Allowance for credit losses on unfunded commitments March 31, 2025March 31, 2024
Beginning balance $842 $919 
Provision for credit losses on unfunded commitments (304)(176)
Ending balance $538 $743 
The following table presents the provision for credit losses on loans and unfunded commitments for the three month periods ended March 31, 2025 and 2024 (in thousands):
For the Three Months Ended
Provision for credit lossesMarch 31, 2025March 31, 2024
Provision for credit losses on loans $1,396 $(1,864)
Provision for credit losses on unfunded commitments (304)(176)
Total provision for credit losses$1,092 $(2,040)

The following tables present the balance in the allowance for credit losses by portfolio segment, as of March 31, 2025 and December 31, 2024 (in thousands):
 March 31, 2025
Allowance for credit lossesCommercial and IndustrialCommercial MortgagesResidential MortgagesConsumer LoansTotal
Ending allowance balance attributable to loans:
Individually analyzed$1,514 $140 $— $— $1,654 
Collectively analyzed3,639 11,949 2,473 2,807 20,868 
   Total ending allowance balance$5,153 $12,089 $2,473 $2,807 $22,522 
 December 31, 2024
Allowance for credit lossesCommercial and IndustrialCommercial MortgagesResidential MortgagesConsumer LoansTotals
Ending allowance balance attributable to loans:
Individually analyzed$1,446 $106 $— $— $1,552 
Collectively analyzed3,074 11,108 2,259 3,395 19,836 
Total ending allowance balance$4,520 $11,214 $2,259 $3,395 $21,388 

The following tables present the amortized cost basis of loans by portfolio segment, as of March 31, 2025 and December 31, 2024 (in thousands):
 March 31, 2025
Amortized cost basis of loans:Commercial and IndustrialCommercial MortgagesResidential MortgagesConsumer LoansTotal
Individually analyzed $1,676 $4,692 $— $— $6,368 
Collectively analyzed294,056 1,255,564 275,448 266,200 2,091,268 
   Total ending loans balance$295,732 $1,260,256 $275,448 $266,200 $2,097,636 

 December 31, 2024
Amortized cost basis of loans:Commercial and IndustrialCommercial MortgagesResidential MortgagesConsumer LoansTotal
Individually analyzed$1,512 $4,959 $— $— $6,471 
Collectively analyzed298,009 1,212,045 274,979 279,915 2,064,948 
Total ending loans balance$299,521 $1,217,004 $274,979 $279,915 $2,071,419 


Modifications to Loans Made to Borrowers Experiencing Financial Difficulty
The Corporation may occasionally make modifications to loans where the borrower is considered to be experiencing financial difficulty, and which may require disclosure in accordance with Financial Instruments-Credit Losses (Topic 326)-Troubled Debt Restructurings and Vintage Disclosures. Types of modifications considered under ASU 2022-02 include principal reductions, interest rate reductions, term extensions, significant payment delays, or a combination thereof.

There were no loan modifications made to borrowers experiencing financial difficulty in the three month periods ended March 31, 2025 and 2024.

There were no loans that experienced a payment default within twelve months of modification during the three month period ended March 31, 2025. During the three month period ended March 31, 2024, the Corporation had one loan, a commercial and industrial loan which was given a six month term extension during the three month period ended September 30, 2023, which experienced a payment default within twelve months of modification.

The Corporation monitors the performance of loans that have previously been modified under the guidance of ASU 2022-02 in order to gauge the effectiveness of modifications, and to determine the degree to which borrowers continue to demonstrate financial weakness following modification. The following tables present the performance of such loans that were modified in the twelve month periods preceding March 31, 2025 and March 31, 2024 (in thousands):
Twelve Months Ended March 31, 2025
Past Due Status of Modifications under ASU 2022-02:30-59 Days Past Due60-89 Days Past DueGreater Than 89 Days Past DueLoans Not Past Due Total
Commercial and industrial$— $— $— $367 $367 
Commercial mortgages:
Owner occupied commercial real estate— — — 374 374 
Residential mortgages— — — 436 436 
Total$— $— $— $1,177 $1,177 
Twelve Months Ended March 31, 2024
Past Due Status of Modifications under ASU 2022-02:30-59 Days Past Due60-89 Days Past DueGreater Than 89 Days Past DueLoans Not Past Due Total
Commercial and industrial$— $— $675 $129 $804 
Consumer loans:
Home equity lines and loans— — — 116 116 
Total$— $— $675 $245 $920 

During the three months ended March 31, 2024, a non-owner occupied commercial mortgage that was granted a payment delay during the three months ended June 30, 2023 executed an early payoff. The amortized basis of the loan prior to the payoff was $1.9 million.

Collateral-Dependent Individually Analyzed Loans
As of March 31, 2025, the amortized cost basis of individually analyzed loans totaled $6.4 million, of which $5.0 million were considered collateral-dependent, and as of December 31, 2024, the amortized cost basis of individually analyzed loans totaled $6.5 million, of which $5.1 million were considered collateral-dependent. For collateral-dependent loans where the borrower is experiencing financial difficulty and repayment is likely to be substantially provided through the sale or operation of the collateral, the allowance for credit losses is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date.
Certain assets held as collateral may be exposed to future deterioration in fair value, particularly due to changes in real estate markets or usage. The Corporation closely monitors trends in real estate values throughout its market area to determine whether collateral values, after appropriate discounting, are likely to be sufficient to extinguish existing borrower indebtedness.
The following table presents the amortized cost basis and related allowance for credit loss of individually analyzed loans considered to be collateral-dependent as of March 31, 2025 and December 31, 2024 (in thousands):
March 31, 2025December 31, 2024
Amortized Cost BasisRelated AllowanceAmortized Cost BasisRelated Allowance
Commercial and industrial (3)
$320 $159 $130 $65 
Commercial mortgages:
Owner occupied commercial real estate (1) (2)
1,342 12 1,377 15 
Non-owner occupied commercial real estate (1) (2)
3,350 128 3,582 91 
Total$5,012 $299 $5,089 $171 
(1) Secured by commercial real estate
(2) Secured by residential real estate
(3) Secured by business assets
The following table presents the amortized cost basis of nonaccrual loans without an associated allocation in the allowance for credit losses, total nonaccrual loans, and loans past due greater than 90 days and still accruing, by class of loan as of March 31, 2025 and December 31, 2024 (in thousands):

Nonaccrual with No Allowance for Credit LossesNonaccrualLoans Past Due 90 Days or More and Still Accruing
March 31, 2025December 31, 2024March 31, 2025December 31, 2024March 31, 2025December 31, 2024
Commercial and industrial$74 $76 $1,697 $1,534 $24 $23 
Commercial mortgages:
Construction— — — — — — 
Owner occupied
commercial real estate		1,330 1,362 1,342 1,377 — — 
Non-owner occupied commercial real estate1,183 2,619 3,350 3,582 — — 
Residential mortgages1,697 1,372 1,697 1,372 — — 
Consumer loans:
Home equity lines and loans1,034 613 1,034 613 — — 
Indirect consumer loans712 474 712 474 — — 
Direct consumer loans49 2 49 2 — — 
Total$6,079 $6,518 $9,881 $8,954 $24 $23 

There was an immaterial amount of interest income recognized on nonaccrual loans for the three month periods ended March 31, 2025 and 2024. Payments received on nonaccrual loans are generally applied to principal using the cost recovery method.

The following tables present the aging of the amortized cost basis of loans as of March 31, 2025 and December 31, 2024 (in thousands):
March 31, 2025
 30 - 59 Days Past Due60 - 89 Days Past Due90 Days or More Past DueTotal Past DueLoans Not Past DueTotal
Commercial and industrial$854 $38 $914 $1,806 $293,926 $295,732 
Commercial mortgages: 
Construction2,159 — — 2,159 93,512 95,671 
Owner occupied
commercial real estate		425 — 96 521 154,506 155,027 
Non-owner occupied
commercial real estate		— — 3,181 3,181 1,006,377 1,009,558 
Residential mortgages2,769 — 337 3,106 272,342 275,448 
Consumer loans: 
Home equity lines and loans341 — 640 981 92,933 93,914 
Indirect consumer loans1,819 291 281 2,391 162,203 164,594 
Direct consumer loans8 6 15 29 7,663 7,692 
Total$8,375 $335 $5,464 $14,174 $2,083,462 $2,097,636 
December 31, 2024
 30 - 59 Days Past Due60 - 89 Days Past Due90 Days or More Past DueTotal Past DueLoans Not Past DueTotal
Commercial and industrial$140 $201 $702 $1,043 $298,478 $299,521 
Commercial mortgages: 
Construction— — — — 94,943 94,943 
Owner occupied
commercial real estate		82 — 96 178 142,101 142,279 
Non-owner occupied
commercial real estate		950 — 3,162 4,112 975,670 979,782 
Residential mortgages1,529 662 696 2,887 272,092 274,979 
Consumer loans: 
Home equity lines and loans231 — 364 595 92,625 93,220 
Indirect consumer loans2,101 719 235 3,055 175,063 178,118 
Direct consumer loans14 6 1 21 8,556 8,577 
Total$5,047 $1,588 $5,256 $11,891 $2,059,528 $2,071,419 






Credit Quality Indicators

The Corporation establishes a risk rating at origination for all commercial loans. The primary factors considered in assigning risk ratings include, but are not limited to: historic and future debt service coverage, collateral position, operating performance, liquidity, leverage, payment history, management ability, and the customer’s industry. Commercial relationship managers monitor all loans in their respective portfolios for any changes in the borrower’s ability to service its debt and affirm the risk ratings for the loans at least annually.

For retail loans, which include residential mortgages, indirect and direct consumer loans, and home equity lines and loans, once a loan is properly approved and closed, the Corporation evaluates credit quality based upon loan repayment. Retail loans that have been modified subject to ASU 2022-02, but are otherwise performing, are assigned a risk rating of Special Mention, as defined below. Retail loans are not rated until they become 90 days past due, or are modified under ASU 2022-02.

The Corporation uses the risk rating system to identify criticized and classified loans. Commercial relationships within the criticized and classified risk ratings are analyzed quarterly.  The Corporation uses the following definitions for criticized and classified loans (which are consistent with regulatory guidelines):

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 the institution’s credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capability 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 institution 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.

Commercial loans not meeting the criteria above to be considered criticized or classified, are considered to be pass rated loans. Loans listed as not rated, are included in groups of homogeneous loans performing under terms of the loan notes.
Based on the analyses performed as of March 31, 2025, the amortized cost basis of loans by class, risk category, and vintage, as well as gross charge-offs by class and vintage for the three month period ended March 31, 2025, were as follows (in thousands):

Term Loans Amortized Cost by Origination YearRevolving Loans Amortized CostRevolving Loans Converted to TermTotal
20252024202320222021Prior
Commercial & industrial
Pass$13,238 $39,353 $30,511 $33,249 $15,512 $29,362 $106,238 $2,427 $269,890 
Special mention— 664 429 4,112 450 7,801 7,124 2,650 23,230 
Substandard — 367 — 4 730 — 520 309 1,930 
Doubtful— 21 — — — 661 — — 682 
Total13,238 40,405 30,940 37,365 16,692 37,824 113,882 5,386 295,732 
Gross charge-offs — — — — — — 5 — 5 
Construction
Pass5,033 21,401 39,868 18,406 8,996 1,484 483 — 95,671 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Total5,033 21,401 39,868 18,406 8,996 1,484 483 — 95,671 
Gross charge-offs— — — — — — — — — 
Owner occupied commercial real estate
Pass 13,848 23,872 20,294 24,369 20,101 38,794 896 51 142,225 
Special mention— — 2,802 2,220 692 2,771 2,000 — 10,485 
Substandard— — 96 841 317 1,051 — — 2,305 
Doubtful— — — — — 12 — — 12 
Total13,848 23,872 23,192 27,430 21,110 42,628 2,896 51 155,027 
Gross charge-offs— — — — — — — — — 
Non-owner occupied commercial real estate
Pass33,419 101,231 111,244 263,465 140,798 321,071 7,366 764 979,358 
Special mention— — 3,586 7,225 7,690 7,734 — — 26,235 
Substandard— — 2,167 142 — 1,656 — — 3,965 
Doubtful— — — — — — — — — 
Total33,419 101,231 116,997 270,832 148,488 330,461 7,366 764 1,009,558 
Gross charge-offs— — — — — — — — — 
Residential mortgages
Not rated5,205 23,364 20,232 54,173 54,150 116,497 — — 273,621 
Substandard — — — 85 625 1,117 — — 1,827 
Total 5,205 23,364 20,232 54,258 54,775 117,614 — — 275,448 
Gross charge-offs— — — — — — — — — 
Home equity lines and loans
Not rated3,099 13,445 10,074 12,938 4,668 12,109 35,303 1,130 92,766 
Special mention— — — 114 — — — — 114 
Substandard — — 23 176 — 190 96 549 1,034 
Total3,099 13,445 10,097 13,228 4,668 12,299 35,399 1,679 93,914 
Gross charge-offs— — — — — — — — — 
Indirect consumer
Not rated4,918 35,199 47,215 59,984 11,299 5,243 — — 163,858 
Substandard — 102 292 232 58 52 — — 736 
Total4,918 35,301 47,507 60,216 11,357 5,295 — — 164,594 
Gross charge-offs— 57 178 82 34 28 — — 379 
Direct consumer
Not rated494 2,064 1,346 1,181 192 226 2,157 7 7,667 
Substandard— — 7 — — — 10 8 25 
Total 494 2,064 1,353 1,181 192 226 2,167 15 7,692 
Gross charge-offs— — 8 — 3 1 2 — 14 
Total loans $79,254 $261,083 $290,186 $482,916 $266,278 $547,831 $162,193 $7,895 $2,097,636 
Total gross charge-offs$— $57 $186 $82 $37 $29 $7 $— $398 
Based on the analyses performed as of December 31, 2024, the amortized cost basis of loans by class, risk category, and vintage, as well as gross charge-offs by class and vintage for the year ended December 31, 2024, were as follows (in thousands):
Term Loans Amortized Cost by Origination YearRevolving Loans Amortized CostRevolving Loans Converted to TermTotal
20242023202220212020Prior
Commercial & industrial
Pass$44,130 $32,157 $34,862 $16,787 $8,326 $27,452 $108,819 $1,380 $273,913 
Special mention810 262 3,933 — 4,390 3,673 10,203 62 23,333 
Substandard 99 — 8 733 30 — 379 318 1,567 
Doubtful21 — — — — 687 — — 708 
Total45,060 32,419 38,803 17,520 12,746 31,812 119,401 1,760 299,521 
Gross charge-offs — 84 200 6 — — 12 — 302 
Construction
Pass19,344 46,954 17,568 9,058 — 1,536 483 — 94,943 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Total19,344 46,954 17,568 9,058 — 1,536 483 — 94,943 
Gross charge-offs— — — — — — — — — 
Owner occupied commercial real estate
Pass 23,196 23,185 26,945 20,979 9,513 31,222 97 55 135,192 
Special mention— 370 — 109 — 2,206 2,000 — 4,685 
Substandard— 96 863 321 — 1,107 — — 2,387 
Doubtful— — — — — 15 — — 15 
Total23,196 23,651 27,808 21,409 9,513 34,550 2,097 55 142,279 
Gross charge-offs— — — — — — — — — 
Non-owner occupied commercial real estate
Pass97,155 109,354 267,280 141,864 97,828 233,084 6,696 777 954,038 
Special mention— — 5,935 7,793 — 7,833 — — 21,561 
Substandard— 2,148 146 — 1,014 875 — — 4,183 
Doubtful— — — — — — — — — 
Total97,155 111,502 273,361 149,657 98,842 241,792 6,696 777 979,782 
Gross charge-offs— — — — — — — — — 
Residential mortgages
Not rated21,574 20,257 55,321 55,152 64,471 56,708 — — 273,483 
Substandard — — 85 771 220 420 — — 1,496 
Total 21,574 20,257 55,406 55,923 64,691 57,128 — — 274,979 
Gross charge-offs— — — — — 21 — — 21 
Home equity lines and loans
Not rated13,833 10,657 14,094 4,879 2,503 10,259 35,015 1,252 92,492 
Special mention— — 115 — — — — — 115 
Substandard — 24 63 — — 195 116 215 613 
Total13,833 10,681 14,272 4,879 2,503 10,454 35,131 1,467 93,220 
Gross charge-offs— — 1 — — 11 1 — 13 
Indirect consumer
Not rated37,746 52,480 67,237 13,266 4,194 2,726 — — 177,649 
Substandard 75 157 107 79 11 40 — — 469 
Total37,821 52,637 67,344 13,345 4,205 2,766 — — 178,118 
Gross charge-offs47 517 525 161 99 116 — — 1,465 
Direct consumer
Not rated2,420 1,681 1,454 275 41 225 2,455 14 8,565 
Substandard— — — — — — 10 2 12 
Total 2,420 1,681 1,454 275 41 225 2,465 16 8,577 
Gross charge-offs5 21 20 14 — 4 8 — 72 
Total loans $260,403 $299,782 $496,016 $272,066 $192,541 $380,263 $166,273 $4,075 $2,071,419 
Total gross charge-offs$52 $622 $746 $181 $99 $152 $21 $— $1,873