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Loans, Leases and Allowance | 3 Months Ended
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Mar. 31, 2026
Receivables [Abstract] |
Loans, Leases and Allowance | Loans, Leases and Allowance The following table shows the composition of the loan and lease portfolio at March 31, 2026 and December 31, 2025:
| March 31, 2026 |  | December 31, 2025
Commercial mortgage | $ | 414,875 |  |  | $ | 414,316 |
Commercial and industrial | 145,214 |  |  | 142,508 |
Construction and development | 74,318 |  |  | 71,705 |
Multi-family | 208,034 |  |  | 208,894 |
Residential mortgage | 166,257 |  |  | 171,063 |
Home equity lines of credit | 21,398 |  |  | 20,147 |
Direct financing leases | 142,979 |  |  | 145,806 |
Consumer | 18,179 |  |  | 19,280 |
| 1,191,254 |  |  | 1,193,719 |
Less |  |  |
Allowance for credit losses on loans and leases | 16,740 |  |  | 16,466 |
Deferred loan fees | 392 |  |  | 440 |
| $ | 1,174,122 |  |  | $ | 1,176,813 |
The Company rates all loans and leases by credit quality using the following designations: Grade 1 – Exceptional Exceptional loans and leases are top-quality loans to individuals whose financial credentials are well known to the Company. These loans and leases have excellent sources of repayment, are well documented and/or virtually free of risk (i.e., CD secured loans). Grade 2 – Quality Loans and Leases These loans and leases have excellent sources of repayment with no identifiable risk of collection, and they conform in all respects to Company policy and IDFI and FDIC regulations. Documentation exceptions are minimal or are in the process of being corrected and not of a type that could subsequently expose the Company to risk of loss. Grade 3 – Acceptable Loans This category is for “average” quality loans and leases. These loans and leases have adequate sources of repayment with little identifiable risk of collection and they conform to Company policy and IDFI/FDIC regulations. Grade 4 – Acceptable but Monitored Loans and leases in this category may have a greater than average risk due to financial weakness or uncertainty but do not appear to require classification as special mention or substandard loans. Loans and leases rated “4” need to be monitored on a regular basis to ascertain that the reasons for placing them in this category do not advance or worsen. Grade 5 – Special Mention Loans and leases in this category have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease or in the Company’s credit position at some future date. Special Mention loans and leases are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. This special mention rating is designed to identify a specific level of risk and concern about an asset’s quality. Although a special mention loan or lease has a higher probability of default than a pass rated loan or lease, its default is not imminent. Grade 6 – Substandard Loans and leases in this category are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans and leases so classified must 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. Substandard loans and leases have a high probability of payment default, or they have other well-defined weaknesses. Such loans and leases have a distinct potential for loss; however, an individual loan’s or lease’s potential for loss does not have to be distinct for the loan or lease to be rated substandard. The following are examples of situations that might cause a loan or lease to be graded a “6”: •Cash flow deficiencies (losses) jeopardize future loan or lease payments. •Sale of non-collateral assets has become a primary source of loan or lease repayment. •The relationship has deteriorated to the point that sale of collateral is now the Company’s primary source of repayment, unless this was the original source of loan or lease repayment. •The borrower is bankrupt or for any other reason future repayment is dependent on court action. Grade 7 – Doubtful A loan or lease classified as doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly questionable and improbable. A doubtful loan or lease has a high probability of total or substantial loss. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Because of high probability of loss, nonaccrual accounting treatment will be required for doubtful loans and leases. Grade 8 – Loss Loans and leases classified loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan or lease has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan or lease even though partial recovery may be effected in the future. No material changes have been made to the risk characteristics discussed above contained in the Company's 2025 Form 10-K. The following tables present the credit risk profile of the Company’s loan and lease portfolio based on rating category, payment activity, and origination year as of March 31, 2026 and December 31, 2025:
| 2026 |  | 2025 |  | 2024 |  | 2023 |  | 2022 |  | Prior |  | Revolving loans amortized cost basis |  | Total
As of March 31, 2026: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial mortgage |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 4,220 |  |  | $ | 66,928 |  |  | $ | 30,684 |  |  | $ | 41,649 |  |  | $ | 80,511 |  |  | $ | 136,857 |  |  | $ | 45,505 |  |  | $ | 406,354 |
Special Mention | 873 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 873 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 7,648 |  |  | — |  |  | 7,648 |
Total Commercial mortgage | 5,093 |  |  | 66,928 |  |  | 30,684 |  |  | 41,649 |  |  | 80,511 |  |  | 144,505 |  |  | 45,505 |  |  | 414,875 |
Current period gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 5,127 |  |  | 23,299 |  |  | 13,967 |  |  | 20,297 |  |  | 5,497 |  |  | 20,067 |  |  | 55,166 |  |  | 143,420 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | 137 |  |  | 29 |  |  | 1,628 |  |  | 1,794 |
Total Commercial and industrial | 5,127 |  |  | 23,299 |  |  | 13,967 |  |  | 20,297 |  |  | 5,634 |  |  | 20,096 |  |  | 56,794 |  |  | 145,214 |
Current period gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction and development |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 7,680 |  |  | 36,194 |  |  | 6,735 |  |  | 1,913 |  |  | 1,509 |  |  | 15,387 |  |  | — |  |  | 69,418 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,900 |  |  | — |  |  | 4,900 |
Total Construction and development | 7,680 |  |  | 36,194 |  |  | 6,735 |  |  | 1,913 |  |  | 1,509 |  |  | 20,287 |  |  | — |  |  | 74,318 |
Current period gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Multi-family |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 1,840 |  |  | 19,004 |  |  | 16,966 |  |  | 11,005 |  |  | 60,392 |  |  | 64,027 |  |  | 27,649 |  |  | 200,883 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | 2,362 |  |  | 4,789 |  |  | — |  |  | 7,151 |
Total Multi-family | 1,840 |  |  | 19,004 |  |  | 16,966 |  |  | 11,005 |  |  | 62,754 |  |  | 68,816 |  |  | 27,649 |  |  | 208,034 |
Current period gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Residential mortgage |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 2,852 |  |  | 21,079 |  |  | 13,536 |  |  | 29,155 |  |  | 24,279 |  |  | 69,537 |  |  | 4,077 |  |  | 164,515 |
Substandard | — |  |  | — |  |  | — |  |  | 107 |  |  | 46 |  |  | 1,589 |  |  | — |  |  | 1,742 |
Total Residential mortgage | 2,852 |  |  | 21,079 |  |  | 13,536 |  |  | 29,262 |  |  | 24,325 |  |  | 71,126 |  |  | 4,077 |  |  | 166,257 |
Current period gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 59 |  |  | 45 |  |  | — |  |  | 222 |  |  | — |  |  | 57 |  |  | 20,973 |  |  | 21,356 |
Special Mention | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 30 |  |  | 30 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 12 |  |  | 12 |
Total Home equity lines of credit | 59 |  |  | 45 |  |  | — |  |  | 222 |  |  | — |  |  | 57 |  |  | 21,015 |  |  | 21,398 |
Current period gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Direct financing leases |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 14,718 |  |  | 54,920 |  |  | 33,251 |  |  | 26,709 |  |  | 9,755 |  |  | 2,257 |  |  | — |  |  | 141,610 |
Substandard | — |  |  | 31 |  |  | 16 |  |  | 166 |  |  | 59 |  |  | 13 |  |  | — |  |  | 285 |
Doubtful | — |  |  | 76 |  |  | 239 |  |  | 530 |  |  | 220 |  |  | 19 |  |  | — |  |  | 1,084 |
Total Direct financing leases | 14,718 |  |  | 55,027 |  |  | 33,506 |  |  | 27,405 |  |  | 10,034 |  |  | 2,289 |  |  | — |  |  | 142,979 |
Current period gross charge-offs | — |  |  | 14 |  |  | 120 |  |  | 304 |  |  | 37 |  |  | 63 |  |  | — |  |  | 538 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 1,203 |  |  | 5,550 |  |  | 4,150 |  |  | 3,331 |  |  | 2,553 |  |  | 1,340 |  |  | — |  |  | 18,127 |
Substandard | — |  |  | — |  |  | — |  |  | 21 |  |  | 19 |  |  | 12 |  |  | — |  |  | 52 |
Total Consumer | 1,203 |  |  | 5,550 |  |  | 4,150 |  |  | 3,352 |  |  | 2,572 |  |  | 1,352 |  |  | — |  |  | 18,179 |
Current period gross charge-offs | 7 |  |  | — |  |  | — |  |  | 4 |  |  | — |  |  | — |  |  | — |  |  | 11 |
Total Loans and Leases | $ | 38,572 |  |  | $ | 227,126 |  |  | $ | 119,544 |  |  | $ | 135,105 |  |  | $ | 187,339 |  |  | $ | 328,528 |  |  | $ | 155,040 |  |  | $ | 1,191,254 |
Total current period gross charge-offs | $ | 7 |  |  | $ | 14 |  |  | $ | 120 |  |  | $ | 308 |  |  | $ | 37 |  |  | $ | 63 |  |  | $ | — |  |  | $ | 549 |
| 2025 |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | Prior |  | Revolving loans amortized cost basis |  | Total
As of December 31, 2025: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial mortgage |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 65,746 |  |  | $ | 28,457 |  |  | $ | 43,078 |  |  | $ | 81,156 |  |  | $ | 38,485 |  |  | $ | 104,920 |  |  | $ | 44,820 |  |  | $ | 406,662 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | 7,654 |  |  | — |  |  | — |  |  | 7,654 |
Total Commercial mortgage | 65,746 |  |  | 28,457 |  |  | 43,078 |  |  | 81,156 |  |  | 46,139 |  |  | 104,920 |  |  | 44,820 |  |  | 414,316 |
Current period gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 24,361 |  |  | 14,524 |  |  | 21,342 |  |  | 6,601 |  |  | 9,148 |  |  | 11,218 |  |  | 53,505 |  |  | 140,699 |
Substandard | — |  |  | — |  |  | — |  |  | 173 |  |  | — |  |  | 30 |  |  | 1,606 |  |  | 1,809 |
Total Commercial and industrial | 24,361 |  |  | 14,524 |  |  | 21,342 |  |  | 6,774 |  |  | 9,148 |  |  | 11,248 |  |  | 55,111 |  |  | 142,508 |
Current period gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | 2 |  |  | — |  |  | — |  |  | 2 |
Construction and development |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 31,478 |  |  | 14,823 |  |  | 1,914 |  |  | 1,516 |  |  | 15,946 |  |  | 105 |  |  | — |  |  | 65,782 |
Special Mention | — |  |  | — |  |  | 429 |  |  | 594 |  |  | — |  |  | — |  |  | — |  |  | 1,023 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,900 |  |  | — |  |  | 4,900 |
Total Construction and development | 31,478 |  |  | 14,823 |  |  | 2,343 |  |  | 2,110 |  |  | 15,946 |  |  | 5,005 |  |  | — |  |  | 71,705 |
Current period gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Multi-family |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 19,060 |  |  | 16,545 |  |  | 10,946 |  |  | 62,286 |  |  | 46,369 |  |  | 20,269 |  |  | 26,246 |  |  | 201,721 |
Substandard | — |  |  | — |  |  | — |  |  | 2,362 |  |  | 1,355 |  |  | 3,456 |  |  | — |  |  | 7,173 |
Total Multi-family | 19,060 |  |  | 16,545 |  |  | 10,946 |  |  | 64,648 |  |  | 47,724 |  |  | 23,725 |  |  | 26,246 |  |  | 208,894 |
Current period gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Residential mortgage |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 25,873 |  |  | 14,224 |  |  | 29,613 |  |  | 24,979 |  |  | 25,038 |  |  | 46,869 |  |  | 2,944 |  |  | 169,540 |
Substandard | — |  |  | — |  |  | 234 |  |  | — |  |  | 446 |  |  | 843 |  |  | — |  |  | 1,523 |
Total Residential mortgage | 25,873 |  |  | 14,224 |  |  | 29,847 |  |  | 24,979 |  |  | 25,484 |  |  | 47,712 |  |  | 2,944 |  |  | 171,063 |
Current period gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 48 |  |  | — |  |  | 224 |  |  | — |  |  | 57 |  |  | — |  |  | 19,730 |  |  | 20,059 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 88 |  |  | 88 |
Total Home equity lines of credit | 48 |  |  | — |  |  | 224 |  |  | — |  |  | 57 |  |  | — |  |  | 19,818 |  |  | 20,147 |
Current period gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Direct financing leases |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 59,587 |  |  | 37,199 |  |  | 31,748 |  |  | 12,243 |  |  | 3,128 |  |  | 604 |  |  | — |  |  | 144,509 |
Substandard | — |  |  | 64 |  |  | 225 |  |  | 232 |  |  | 61 |  |  | — |  |  | — |  |  | 582 |
Doubtful | 40 |  |  | 212 |  |  | 392 |  |  | 38 |  |  | 33 |  |  | — |  |  | — |  |  | 715 |
Total Direct financing leases | 59,627 |  |  | 37,475 |  |  | 32,365 |  |  | 12,513 |  |  | 3,222 |  |  | 604 |  |  | — |  |  | 145,806 |
Current period gross charge-offs | 9 |  |  | 260 |  |  | 961 |  |  | 413 |  |  | 291 |  |  | 23 |  |  | — |  |  | 1,957 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 6,246 |  |  | 4,586 |  |  | 3,793 |  |  | 2,933 |  |  | 1,163 |  |  | 391 |  |  | 122 |  |  | 19,234 |
Substandard | — |  |  | — |  |  | 24 |  |  | — |  |  | 22 |  |  | — |  |  | — |  |  | 46 |
Total Consumer | 6,246 |  |  | 4,586 |  |  | 3,817 |  |  | 2,933 |  |  | 1,185 |  |  | 391 |  |  | 122 |  |  | 19,280 |
Current period gross charge-offs | 51 |  |  | 19 |  |  | 55 |  |  | 72 |  |  | 9 |  |  | 23 |  |  | — |  |  | 229 |
Total Loans and Leases | $ | 232,439 |  |  | $ | 130,634 |  |  | $ | 143,962 |  |  | $ | 195,113 |  |  | $ | 148,905 |  |  | $ | 193,605 |  |  | $ | 149,061 |  |  | $ | 1,193,719 |
Total current period gross charge-offs | $ | 60 |  |  | $ | 279 |  |  | $ | 1,016 |  |  | $ | 485 |  |  | $ | 302 |  |  | $ | 46 |  |  | $ | — |  |  | $ | 2,188 |
For the three months ended March 31, 2026 and December 31, 2025, the Company did not have any revolving loans convert to term loans. The following tables present the Company’s loan and lease portfolio aging analysis of the recorded investment in loans and leases as of March 31, 2026 and December 31, 2025:
| March 31, 2026
| Delinquent Loans and Leases |  | Current |  | Total Portfolio Loans and Leases |  | Total Loans and Leases > 90 Days Accruing
| 30-59 Days Past Due |  | 60-89 Days Past Due |  | 90 Days and Over |  | Total Past Due |  |  |
Commercial mortgage | $ | — |  |  | $ | 873 |  |  | $ | 7,435 |  |  | $ | 8,308 |  |  | $ | 406,567 |  |  | $ | 414,875 |  |  | $ | — |
Commercial and industrial | — |  |  | — |  |  | — |  |  | — |  |  | 145,214 |  |  | 145,214 |  |  | — |
Construction and development | — |  |  | — |  |  | 4,900 |  |  | 4,900 |  |  | 69,418 |  |  | 74,318 |  |  | — |
Multi-family | 3,458 |  |  | — |  |  | 2,362 |  |  | 5,820 |  |  | 202,214 |  |  | 208,034 |  |  | — |
Residential mortgage | 739 |  |  | 701 |  |  | 1,742 |  |  | 3,182 |  |  | 163,075 |  |  | 166,257 |  |  | 1,665 |
Home equity | 199 |  |  | 7 |  |  | 13 |  |  | 219 |  |  | 21,179 |  |  | 21,398 |  |  | 13 |
Direct financing leases | 149 |  |  | 62 |  |  | — |  |  | 211 |  |  | 142,768 |  |  | 142,979 |  |  | — |
Consumer | 30 |  |  | 79 |  |  | 52 |  |  | 161 |  |  | 18,018 |  |  | 18,179 |  |  | 52 |
Totals | $ | 4,575 |  |  | $ | 1,722 |  |  | $ | 16,504 |  |  | $ | 22,801 |  |  | $ | 1,168,453 |  |  | $ | 1,191,254 |  |  | $ | 1,730 |
| December 31, 2025
| Delinquent Loans and Leases |  | Current |  | Total Portfolio Loans and Leases |  | Total Loans and Leases > 90 Days Accruing
| 30-59 Days Past Due |  | 60-89 Days Past Due |  | 90 Days and Over |  | Total Past Due |  |  |
Commercial mortgage | $ | — |  |  | $ | — |  |  | $ | 7,435 |  |  | $ | 7,435 |  |  | $ | 406,881 |  |  | $ | 414,316 |  |  | $ | — |
Commercial and industrial | — |  |  | — |  |  | — |  |  | — |  |  | 142,508 |  |  | 142,508 |  |  | — |
Construction and development | — |  |  | — |  |  | 4,900 |  |  | 4,900 |  |  | 66,805 |  |  | 71,705 |  |  | — |
Multi-family | — |  |  | — |  |  | 2,362 |  |  | 2,362 |  |  | 206,532 |  |  | 208,894 |  |  | 2,362 |
Residential mortgage | 773 |  |  | 481 |  |  | 1,522 |  |  | 2,776 |  |  | 168,287 |  |  | 171,063 |  |  | 1,445 |
Home equity | 126 |  |  | 70 |  |  | 88 |  |  | 284 |  |  | 19,863 |  |  | 20,147 |  |  | 88 |
Direct financing leases | 511 |  |  | 296 |  |  | 299 |  |  | 1,106 |  |  | 144,700 |  |  | 145,806 |  |  | 299 |
Consumer | 148 |  |  | 50 |  |  | 46 |  |  | 244 |  |  | 19,036 |  |  | 19,280 |  |  | 46 |
Totals | $ | 1,558 |  |  | $ | 897 |  |  | $ | 16,652 |  |  | $ | 19,107 |  |  | $ | 1,174,612 |  |  | $ | 1,193,719 |  |  | $ | 4,240 |
The following table presents information on the Company’s nonaccrual loans and leases at March 31, 2026 and December 31, 2025:
| March 31, 2026 |  | December 31, 2025
| Nonaccrual loans and leases |  | Nonaccrual loans and leases without an allowance for credit losses |  | Nonaccrual loans and leases |  | Nonaccrual loans and leases without an allowance for credit losses
Commercial mortgage | $ | 7,436 |  |  | $ | 6,732 |  |  | $ | 7,435 |  |  | $ | 6,732 |
Commercial and industrial | 29 |  |  | — |  |  | 30 |  |  | — |
Construction and development | 4,900 |  |  | — |  |  | 4,900 |  |  | — |
Multi-family | 2,362 |  |  | 2,362 |  |  | — |  |  | — |
Residential mortgage | 76 |  |  | 76 |  |  | 76 |  |  | 76 |
Direct financing leases | 1,084 |  |  | 1,084 |  |  | 715 |  |  | 715 |
Total nonaccrual loans and leases | $ | 15,887 |  |  | $ | 10,254 |  |  | $ | 13,156 |  |  | $ | 7,523 |
During the three months ended March 31, 2026, the Company recognized $1,000 of interest income on nonaccrual loans and leases, compared to $3,000 for the three months ended December 31, 2025. The following tables present the Company's amortized cost basis of collateral dependent loans, and their respective collateral type, which are individually analyzed to determine expected credit losses as of March 31, 2026 and December 31, 2025:
| March 31, 2026
| Commercial Real Estate |  | Multi-family Housing |  | Residential Real Estate |  | Home Equity Line of Credit |  | Other |  | Total |  | Allowance on Collateral Dependent Loans
Commercial mortgage | $ | 8,309 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 8,309 |  |  | $ | 460 |
Commercial and industrial | — |  |  | — |  |  | — |  |  | — |  |  | 1,628 |  |  | 1,628 |  |  | — |
Construction and development | 4,900 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,900 |  |  | 1,750 |
Multi-family | — |  |  | 7,151 |  |  | — |  |  | — |  |  | — |  |  | 7,151 |  |  | 250 |
Residential mortgage | — |  |  | — |  |  | 240 |  |  | — |  |  | — |  |  | 240 |  |  | — |
Home equity | — |  |  | — |  |  | — |  |  | 30 |  |  | — |  |  | 30 |  |  | — |
Total | $ | 13,209 |  |  | $ | 7,151 |  |  | $ | 240 |  |  | $ | 30 |  |  | $ | 1,628 |  |  | $ | 22,258 |  |  | $ | 2,460 |
| December 31, 2025
| Commercial Real Estate |  | Multi-family Housing |  | Residential Real Estate |  | Other |  | Total |  | Allowance on Collateral Dependent Loans
Commercial mortgage | $ | 7,435 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 7,435 |  |  | $ | 150 |
Commercial and industrial | — |  |  | — |  |  | — |  |  | 1,607 |  |  | 1,607 |  |  | — |
Construction and development | 5,923 |  |  | — |  |  | — |  |  | — |  |  | 5,923 |  |  | 1,750 |
Multi-family | — |  |  | 7,174 |  |  | — |  |  | — |  |  | 7,174 |  |  | 250 |
Residential mortgage | — |  |  | — |  |  | 124 |  |  | — |  |  | 124 |  |  | — |
Total | $ | 13,358 |  |  | $ | 7,174 |  |  | $ | 124 |  |  | $ | 1,607 |  |  | $ | 22,263 |  |  | $ | 2,150 |
Loan/Lease Modification Disclosures under ASU 2022-02 In certain situations, the Company may modify the terms of a loan or lease to a borrower experiencing financial difficulty. These modifications may include payment delays, term extensions, or interest-rate reductions. In some cases, combinations of modifications may be made to the same loan or lease. If a determination is made that a modified loan or lease has been deemed uncollectible, the loan or lease (or portion of the loan or lease) is charged-off, reducing the amortized cost basis of the loan or lease and adjusting the allowance for credit losses. During the three months ended March 31, 2026 and 2025, the Company had no new modifications to borrowers experiencing financial difficulty. There were no modified loans or leases that had a payment default during the three months ended March 31, 2026 or 2025, and that were modified in the twelve months prior to that default by borrowers experiencing financial difficulty. Other Real Estate Owned Other real estate owned is included in other assets on the Condensed Consolidated Balance Sheets. There was $56,000 of other real estate owned, consisting of foreclosed residential real estate properties, at both March 31, 2026 and December 31, 2025. At March 31, 2026 and December 31, 2025, the recorded investment in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process w as $1,055,000 a nd $923,000, respectively. Direct Financing Leases The following lists the components of the net investment in direct financing leases:
| March 31, 2026 |  | December 31, 2025
Total minimum lease payments to be received | $ | 163,342 |  |  | $ | 166,565 |
Initial direct costs | 9,192 |  |  | 9,422 |
| 172,534 |  |  | 175,987 |
Less: Unearned income | (29,555) |  |  | (30,181) |
Net investment in direct finance leases | $ | 142,979 |  |  | $ | 145,806 |
The following table summarizes the future minimum lease payments receivable subsequent to March 31, 2026:
Remainder of 2026 | $ | 49,542 |
2027 | 51,705 |
2028 | 35,090 |
2029 | 19,014 |
2030 | 7,302 |
Thereafter | 689 |
| $ | 163,342 |
Allowance for Credit Losses on Loans and Leases The allowance for credit losses on loans and leases is established for current expected credit losses on the Company's loan and lease portfolios in accordance with ASC Topic 326. This requires significant judgment to estimate credit losses measured on a collective pool basis when similar risk characteristics exist, and for loans evaluated individually. The Company estimates expected future losses for the loan's entire contractual term, taking into account expected payments when appropriate. The allowance is an estimation based on management's evaluation of expected losses related to the Company's financial assets measured at amortized cost. It considers relevant available information from internal and external sources relating to the historical loss experience, current conditions and reasonable and supportable forecasts for the Company's outstanding loan and lease balances. The Company utilizes a cash flow ("CF") analysis method of estimating expected losses, which relies on key inputs and assumptions. Significant factors affecting the calculation are the segmenting of loans and leases based upon similar risk characteristics, applied loss rates based upon reasonable and supportable forecasts, and contractual term adjustments, including prepayment and curtailment adjustments. To ensure the allowance is maintained at an adequate level, a detailed analysis is performed on a quarterly basis, with an appropriate provision made to adjust the allowance. The Company has elected to exclude accrued interest receivable from the calculation of the allowance for credit losses, as it is the Company's policy to write off accrued interest in a timely manner as it is deemed uncollectible by reversing interest income. The Company categorizes its loan portfolios into eight segments, as discussed above, based on similar risk characteristics. Loans within each segment are collectively evaluated using either a CF methodology or remaining life methodology. When estimating for credit loss, the Company forecasts the first four quarters of the credit loss estimate and reverts to a long-run average of each considered factor. The Company developed its reasonable and supportable forecasts using economic data, such as national gross domestic product ("GDP") and unemployment rate. Qualitative adjustments are applied to each collectively segmented pool to appropriately capture differences in current or expected qualitative risk characteristics. When evaluating the estimation for expected credit losses, the Company evaluates these qualitative adjustments for any changes in: •lending policies, procedures, and strategies, •the nature and volume of the loan and lease portfolio, •international, national, regional, and local conditions, •the experience, depth, and ability of lending management, •the volume and severity of past due loans, •the quality of the loan review system, •the underlying collateral, •concentration risk, and •the effect of other external factors. The following tables summarize changes in the allowance for credit losses by segment for the three months ended March 31, 2026 and 2025, respectively:
| Balances, December 31, 2025 |  | Provision for (reversal of) credit losses |  | Charge-offs |  | Recoveries |  | Balances, March 31, 2026
Commercial mortgage | $ | 4,575 |  |  | $ | 238 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,813 |
Commercial and industrial | 1,812 |  |  | (14) |  |  | — |  |  | 10 |  |  | 1,808 |
Construction and development | 2,298 |  |  | 165 |  |  | — |  |  | — |  |  | 2,463 |
Multi-family | 2,336 |  |  | (9) |  |  | — |  |  | — |  |  | 2,327 |
Residential mortgage | 1,833 |  |  | (47) |  |  | — |  |  | 1 |  |  | 1,787 |
Home equity | 189 |  |  | 11 |  |  | — |  |  | — |  |  | 200 |
Direct financing leases | 3,075 |  |  | 292 |  |  | (538) |  |  | 177 |  |  | 3,006 |
Consumer | 348 |  |  | (15) |  |  | (11) |  |  | 14 |  |  | 336 |
Total | $ | 16,466 |  |  | $ | 621 |  |  | $ | (549) |  |  | $ | 202 |  |  | $ | 16,740 |
| Balances, December 31, 2024 |  | Provision for (reversal of) credit losses |  | Charge-offs |  | Recoveries |  | Balances, March 31, 2025
Commercial mortgage | $ | 4,486 |  |  | $ | 248 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,734 |
Commercial and industrial | 1,483 |  |  | 138 |  |  | — |  |  | 2 |  |  | 1,623 |
Construction and development | 2,243 |  |  | (242) |  |  | — |  |  | — |  |  | 2,001 |
Multi-family | 2,660 |  |  | 147 |  |  | — |  |  | — |  |  | 2,807 |
Residential mortgage | 1,910 |  |  | (29) |  |  | — |  |  | 20 |  |  | 1,901 |
Home equity | 184 |  |  | 12 |  |  | — |  |  | — |  |  | 196 |
Direct financing leases | 2,469 |  |  | 409 |  |  | (518) |  |  | 107 |  |  | 2,467 |
Consumer | 356 |  |  | — |  |  | (40) |  |  | 33 |  |  | 349 |
Total | $ | 15,791 |  |  | $ | 683 |  |  | $ | (558) |  |  | $ | 162 |  |  | $ | 16,078 |
During the first quarter of 2026, the allowance for credit losses on loans and leases increased from $16.5 million at December 31, 2025, to $16.7 million at March 31, 2026. The increase was attributable to provisions for credit losses totaling $621,000 during the three months ended March 31, 2026, partially offset by net charge-offs of $347,000. Set forth below is a segment analysis of the loan and lease portfolio reflecting the change in the allowance for each segment, due to the change in the amount of each segment. •Commercial Mortgage – Allowance increased as additional reserves were placed on individually evaluated loans. •Commercial & Industrial – Allowance decreased despite a $2.7 million increase in balances, reflecting changes in portfolio composition as longer term loans paid off. •Construction & Development – Allowance increased in line with loan balances increasing by $2.6 million. •Multi-Family – Allowance decreased as longer term loans paid off and portfolio balances decreased $860,000. •Home Equity - Allowance increased as loan balances increased $1.3 million. •Residential Mortgage, Direct Financing Leases, and Consumer – Allowances decreased in line with lower portfolio balances and stable credit trends. Our commercial loan portfolio, consisting of commercial and multi-family real estate loans, commercial and industrial loans, and construction loans, represented 70.7% and 70.2% of our portfolio as of March 31, 2026 and December 31, 2025, respectively. The allowance for credit losses on loans and leases allocated to the commercial loan portfolio represented 68.2% and 66.9% of our total allowance at March 31, 2026 and December 31, 2025, respectively. Economic Outlook Due to the future-focused nature of the calculation for the allowance for credit losses, management must make significant assumptions. Estimating an appropriate allowance requires management to use relevant forward-looking information drawn from reasonable and supportable forecasts. Economic factors are a consequential part of these forecasts, and as such are evaluated periodically for developments that may impact the Company's allowance for credit losses and loan and lease portfolio. As of March 31, 2026, several key economic factors continue to influence the Company's loan and lease portfolio. Persistent inflation, slowing economic growth, and labor market uncertainty are contributing to a more challenging operating environment for many borrowers. In addition, geopolitical tensions and tariff-related risks are creating potential disruptions in supply chains and increased input costs for certain industries. These conditions may continue to affect borrower performance and credit demand in the near term. Despite these challenges, the Company's overall credit quality remains stable, supported by conservative underwriting standards and ongoing portfolio monitoring. Management continues to evaluate macroeconomic assumptions used in the allowance for credit losses model to ensure they reflect current and expected economic conditions. The Company remains focused on its three strategic growth markets: Columbus, Ohio, Cincinnati/Dayton/Springfield, Ohio, and Indianapolis, Indiana. These markets continue to exhibit above-average population and employment growth, strong commercial activity, and resilient real estate fundamentals relative to broader economic trends. The Company's loan growth in these markets continues to be concentrated in commercial real estate lending, consistent with its strategic focus and relationship-based lending model. Forecasts for these markets are summarized below: •Columbus, Ohio – The Columbus MSA continues to experience steady economic conditions, driven by growth in healthcare and state government employment. Job creation in professional and design services indicates high activity in engineering and related consulting, and the housing market's high demand is supported by long-term population growth and regional investments. Despite the positive momentum, the market faces challenges such as persistent inflationary pressures, affordability constraints, and labor shortages across multiple industries. •Cincinnati/Dayton/Springfield, Ohio – The Cincinnati/Dayton/Springfield MSA is projected to experience moderate economic growth during 2026. Cincinnati leads the region in employment and GDP gains, supported by manufacturing, construction, and technology investments. Dayton is experiencing economic growth in manufacturing, aerospace, and defense alongside a tightening industrial real estate market. The region is experiencing continued growth supported by increased investment and declining industrial vacancy rates; labor demand remains stable. Ongoing labor market constraints, particularly in skilled trades and technology fields, persist. The region’s connection with Columbus as part of Ohio’s emerging Silicon Corridor enhances opportunities for investment, workforce development, and regional competitiveness. •Indianapolis, Indiana – The Indianapolis MSA continues to demonstrate moderate growth driven by investment in pharmaceutical manufacturing and ongoing urban revitalization initiatives. Downtown capital projects totaling approximately $6 billion are underway; the READI 2.0 program commits funding toward improving quality of life and infrastructure in the region. Inflation and tariff-related impacts on manufacturing present ongoing challenges; however, the region remains well positioned relative to peer metros due to its diversified and innovation-driven economy. The overall economic outlook remains complex and uncertain, creating a challenging environment requiring continued vigilance and adaptability. Potential economic volatility could materially affect the Company’s loan and lease portfolio, including the allowance for credit losses. As a result, the Company expects that future estimates may fluctuate throughout the remainder of 2026. Allowance for Credit Losses on Unfunded Commitments The allowance for credit losses on unfunded commitments is included in other liabilities on the Condensed Consolidated Balance Sheets. The estimate of expected losses on unfunded commitments is calculated based on the loss rate for the loan or lease segment in which the loan or lease commitments would be classified if funded, adjusted for the estimate of funding probability. Adjustments to the allowance, either additional provisions or reversals, are recorded in the provision for (reversal of) credit losses in the Condensed Consolidated Statements of Income. The following table details activity in the allowance for credit losses on unfunded commitments during the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31,
| 2026 |  | 2025
Beginning balance | $ | 328 |  |  | $ | 558 |
Provision for credit losses | 72 |  |  | 48 |
Ending balance | $ | 400 |  |  | $ | 606 |

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