XML 30 R13.htm IDEA: XBRL DOCUMENT v3.25.0.1
Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2024
Receivables [Abstract]  
Allowance for Credit Losses Allowance for Credit Losses
 
Management reviews the appropriateness of the 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 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 rates 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 December 31, 2024 considers the allowance to be appropriate, under adversely 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 judgments 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 expense in the Company's consolidated statements of income.
Changes in the allowance for credit losses for the years ended December 31, 2024, 2023 and 2022 are summarized as follows:

Allowance for Credit Losses - Loans and Leases
(In thousands)202420232022
Total allowance at beginning of year $51,584 $45,934 $42,843 
Impact of adopting ASU 2022-020 64 0 
Provision for credit loss expense7,418 4,865 2,499 
Recoveries on loans and leases634 1,820 1,798 
Charge-offs on loans and leases(3,140)(1,099)(1,206)
Total allowance at end of year$56,496 $51,584 $45,934 

Allowance for Credit Losses - Off-Balance Sheet Credit Exposures

(In thousands)202420232022
Liabilities for off-balance sheet credit exposures at beginning of period$2,270 $2,796 $2,506 
(Credit) provision for credit loss expense related to off-balance sheet credit exposures(807)(526)290 
Liabilities for off-balance sheet credit exposures at end of period$1,463 $2,270 $2,796 

The following tables detail activity in the allowance for credit losses for loans for the years ended December 31, 2024 and 2023. The allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
 
December 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-offs(293)(249)0 (2,598)0 (3,140)
Recoveries40 7 135 452 0 634 
Provision (credit) for credit loss expense1,270 4,498 (490)2,157 (17)7,418 
Ending Balance$7,684 $35,837 $11,345 $1,568 $62 $56,496 
 
December 31, 2023
(In thousands)Commercial
& Industrial		Commercial
Real Estate		Residential
Real Estate		Consumer
and Other		Finance
Leases		Total
Allowance for credit losses:
Beginning balance$6,039 $27,287 $11,154 $1,358 $96 $45,934 
Impact of adopting ASU 2022-022 16 46 0 0 64 
Charge-offs(34)0 (20)(1,045)0 (1,099)
Recoveries87 1,292 186 255 0 1,820 
Provision (credit) for credit loss expense573 2,986 334 989 (17)4,865 
Ending Balance$6,667 $31,581 $11,700 $1,557 $79 $51,584 
The following tables present 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 as of December 31, 2024 and 2023:

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 

December 31, 2023
(In thousands)Real EstateBusiness AssetsOtherTotalACL Allocation
Commercial and Industrial$2,035 $0 $0 $2,035 $0 
Commercial Real Estate42,333 0 0 42,333 1,082 
Total Loans and Leases$44,368 $0 $0 $44,368 $1,082 

Loan Modifications to Borrowers Experiencing Financial Difficulty

The Company adopted ASU 2022-02 effective January 1, 2023. This standard eliminated the previous troubled debt restructuring accounting model and replaced it with guidance and disclosure requirements for identifying modifications to loans to borrowers experiencing financial difficulty. Modifications to borrowers experiencing financial difficulty 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 tables show the amortized cost basis at December 31, 2024 and 2023 of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of concession granted:

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 %
December 31, 2023
(In thousands)Term ExtensionInterest Rate ReductionPayment Delay and Term ExtensionTerm Extension and Interest Rate ReductionPayment DelayTotal% of Total Class of Loans and Leases
Commercial Real Estate
Commercial real estate other0 3,114 0 0 0 3,114 0.12 %
Subtotal commercial real estate0 3,114 0 0 0 3,114 0.10 %
Residential
Mortgages0 0 0 0 402 402 0.03 %
Subtotal residential0 0 0 0 402 402 0.03 %
Consumer
Consumer and other21 0 0 0 0 21 0.02 %
Subtotal consumer21 0 0 0 0 21 0.02 %
Total loans and leases$21 $3,114 $0 $0 $402 $3,537 0.06 %
The following tables show the aging analysis of loan modifications made to borrowers experiencing financial difficulty as of December 31, 2024 and 2023:
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 
December 31, 2023Payment Status (Amortized Cost Basis)
(In thousands)Current30-59 Days Past Due60-89 Days Past Due90+ Days Past DueNon-AccrualTotal
Commercial Real Estate
Commercial real estate other$3,114 $0 $0 $0 $0 $3,114 
Subtotal commercial real estate3,114 0 0 0 0 3,114 
Residential Real Estate
Mortgages158 0 0 0 244 402 
Subtotal residential real estate158 0 0 0 244 402 
Consumer and Other
Consumer and other0 0 0 0 21 21 
Subtotal consumer and other0 0 0 0 21 21 
Total$3,272 $0 $0 $0 $265 $3,537 
The following tables present credit quality indicators by total loans on an amortized cost basis by origination year, and current year gross writeoffs as of December 31, 2024 and 2023:

December 31, 2024
(In thousands)20242023202220212020PriorRevolving Loans Amortized Cost BasisRevolving Loans Converted to TermTotal Loans
Commercial and Industrial - Other:
Internal risk grade:
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 
December 31, 2023
(In thousands)20232022202120202019PriorRevolving Loans Amortized Cost BasisRevolving Loans Converted to TermTotal Loans
Commercial and Industrial - Other:
Pass$130,993 $92,335 $68,294 $28,377 $33,618 $141,758 $212,349 $5,063 $712,787 
Special Mention915 196 222 242 79 1,287 682 0 3,623 
Substandard0 46 78 329 18 2,833 2,580 0 5,884 
Total Commercial and Industrial - Other$131,908 $92,577 $68,594 $28,948 $33,715 $145,878 $215,611 $5,063 $722,294 
Current-period gross writeoffs$6 $0 $0 $0 $0 $29 $0 $0 $35 
Commercial and Industrial - Agriculture:
Pass$24,924 $11,935 $3,341 $3,114 $3,268 $16,759 $36,728 $1,030 $101,099 
Special Mention0 0 47 0 0 0 0 0 47 
Substandard0 0 0 56 0 8 1 0 65 
Total Commercial and Industrial - Agriculture$24,924 $11,935 $3,388 $3,170 $3,268 $16,767 $36,729 $1,030 $101,211 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Commercial Real Estate
Pass$246,016 $317,583 $365,975 $292,960 $272,722 $921,201 $34,346 $24,949 $2,475,752 
Special Mention0 632 0 17,133 11,422 16,100 0 0 45,287 
Substandard0 15,300 2,128 0 2,059 45,709 1,356 0 66,552 
Total Commercial Real Estate$246,016 $333,515 $368,103 $310,093 $286,203 $983,010 $35,702 $24,949 $2,587,591 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Commercial Real Estate - Agriculture:
Pass$14,668 $37,256 $22,813 $21,001 $23,794 $93,890 $257 $6,364 $220,043 
Special Mention0 0 0 0 378 1,033 0 0 1,411 
Substandard0 0 0 0 170 46 0 0 216 
Total Commercial Real Estate - Agriculture$14,668 $37,256 $22,813 $21,001 $24,342 $94,969 $257 $6,364 $221,670 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Commercial Real Estate - Construction
Pass$9,265 $2,793 $8,068 $2,501 $357 $596 $274,224 $5,602 $303,406 
Special Mention0 0 0 0 0 0 0 0 0 
Substandard0 0 0 0 0 0 0 0 0 
Total Commercial Real Estate - Construction$9,265 $2,793 $8,068 $2,501 $357 $596 $274,224 $5,602 $303,406 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
(In thousands)20232022202120202019PriorRevolving Loans Amortized Cost BasisRevolving Loans Converted to TermTotal Loans
Residential - Home Equity
Performing$2,378 $2,237 $890 $529 $832 $8,178 $164,205 $5,837 $185,086 
Nonperforming0 0 0 0 0 337 2,893 0 3,230 
Total Residential - Home Equity$2,378 $2,237 $890 $529 $832 $8,515 $167,098 $5,837 $188,316 
Current-period gross writeoffs$0 $0 $0 $0 $0 $20 $0 $0 $20 
Residential - Mortgages
Performing$131,004 $186,401 $256,127 $221,945 $109,594 $456,167 $0 $0 $1,361,238 
Nonperforming0 393 329 986 883 9,446 0 0 12,037 
Total Residential - Mortgages$131,004 $186,794 $256,456 $222,931 $110,477 $465,613 $0 $0 $1,373,275 
Current-period gross writeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Consumer - Direct
Performing$50,295 $13,327 $11,316 $5,157 $4,037 $9,857 $2,723 $0 $96,712 
Nonperforming2 0 0 0 70 157 1 0 230 
Total Consumer - Direct$50,297 $13,327 $11,316 $5,157 $4,107 $10,014 $2,724 $0 $96,942 
Current-period gross writeoffs$801 $29 $16 $21 $83 $28 $0 $0 $978 
Consumer - Indirect
Performing$0 $0 $97 $68 $402 $234 $0 $0 $801 
Nonperforming0 0 0 0 30 10 0 0 40 
Total Consumer - Indirect$0 $0 $97 $68 $432 $244 $0 $0 $841 
Current-period gross writeoffs$0 $0 $0 $0 $53 $14 $0 $0 $67