Loans and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2026

Loans and Allowance for Credit Losses

Loans and Allowance for Credit Losses

3.    Loans and Allowance for Credit Losses

A summary of the Company’s loan portfolio is as follows:

	March 31,		December 31,
	2026		2025
Commercial real estate loans:
Non-residential	$	417,373	$	417,808
Multi-family		107,090		107,938
Construction		8,856		8,982
Commercial and industrial loans		92,969		91,526
Residential real estate loans		100,966		100,086
Consumer loans:
Indirect automobile		196,426		213,802
Home equity		11,950		12,290
Other consumer		5,748		5,733
Total gross loans		941,378		958,165
Dealer reserves		3,261		3,573
Allowance for credit losses		(7,888)		(8,353)
Total net loans	$	936,751	$	953,385

The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans:

	March 31, 2026
							Greater Than
			30-59 Days		60-89 Days		90 Days Past		Total Loans
	Current		Past Due		Past Due		Due		Receivable		Non-accrual
Commercial real estate:
Non-residential	$	412,789	$	2,900	$	—	$	1,684	$	417,373	$	1,684
Multifamily		107,090		—		—		—		107,090		—
Construction		8,856		—		—		—		8,856		—
Commercial and industrial		92,137		601		231		—		92,969		—
Residential real estate		99,758		645		183		380		100,966		1,217
Consumer:
Indirect automobile		189,797		5,462		649		518		196,426		544
Home equity		11,829		108		—		13		11,950		13
Other consumer		5,532		196		13		7		5,748		7
Total	$	927,788	$	9,912	$	1,076	$	2,602	$	941,378	$	3,465

	December 31, 2025
							Greater Than
			30-59 Days		60-89 Days		90 Days Past		Total Loans
	Current		Past Due		Past Due		Due		Receivable		Non-accrual
Commercial real estate:
Non-residential	$	415,286	$	837	$	17	$	1,668	$	417,808	$	1,668
Multifamily		107,938		—		—		—		107,938		—
Construction		8,982		—		—		—		8,982		—
Commercial and industrial		91,241		263		—		22		91,526		22
Residential real estate		98,355		1,157		184		390		100,086		1,255
Consumer:
Indirect automobile		204,192		7,831		1,072		707		213,802		740
Home equity		12,075		170		45		—		12,290		—
Other consumer		5,561		134		23		15		5,733		15
Total	$	943,630	$	10,392	$	1,341	$	2,802	$	958,165	$	3,700

All of our non-accrual loans are individually analyzed for credit loss. The Company has one individually analyzed home equity loan of $98 that was accruing interest at March 31, 2026.

The following table presents the Company’s amortized cost basis of non-accrual loans for which there is no related ACL:

	March 31, 2026		December 31, 2025
Commercial real estate:
Non-residential	$	1,684	$	1,668
Commercial and industrial		—		22
Residential real estate		1,217		1,255
Consumer:
Indirect automobile		145		110
Home equity		13		—
Total	$	3,059	$	3,055

The following table presents the Company’s amortized cost basis of only those non-accrual loans with a related ACL:

	March 31, 2026				December 31, 2025
	Non-accrual loans		Related ACL		Non-accrual loans		Related ACL
Consumer:
Indirect automobile	$	399	$	129	$	630	$	226
Other consumer		7		7		15		14
Total	$	406	$	136	$	645	$	240

During the three months ended March 31, 2026, $23 in accrued interest was reversed for non-accrual loans. Total accrued interest receivable associated with loans totaled $3,960 and $4,168 at March 31, 2026 and December 31, 2025, respectively, and was reported in accrued interest receivable on the consolidated statements of financial condition.

There were no  residential mortgage or consumer loans secured by residential real estate properties for which formal foreclosure proceedings were in process at March 31, 2026 or December 31, 2025.

The Company transfers a portion of its originated commercial real estate loans to participating lenders. The amounts transferred have been accounted for as sales and are therefore not included in the Company’s accompanying statements of financial condition. The Company and participating lenders share ratably in any gains or losses that may result from a loan’s performance under its contractual terms. The Company continues to service the loans on behalf of the participating lenders and, as such, collects cash payments from the borrowers, remits payments to participating lenders and disburses required escrow funds to relevant parties. At March 31, 2026 and December 31, 2025, the Company was servicing loans for participants aggregating $52,016 and $52,240, respectively.

The Company also services certain loans that it has sold to third parties. The aggregate balances of loans serviced for others were $245,469 and $250,311 as of March 31, 2026 and December 31, 2025, respectively. Included in these are loans serviced for the Federal Home Loan Mortgage Corporation with recourse provisions, whereby the Company is obligated to bear all costs when a default, including foreclosure, occurs. At March 31, 2026 and December 31, 2025, the maximum contingent liability associated with loans sold with recourse was $472 and $473, respectively, which is not recorded in the consolidated financial statements. Losses are borne in priority order by the borrower, private mortgage insurance and the Company. As of March 31, 2026, the Company has not repurchased any loans or incurred any losses under these recourse provisions.

The balances of capitalized servicing rights included in other assets at March 31, 2026 and December 31, 2025 were $1,179 and $1,262, respectively. Fair value exceeds carrying value, and thus, no impairment charges related to servicing rights were recognized during the three months ended March 31, 2026 or the year ended December 31, 2025.

Activity in the Company’s ACL for loans for the three months ended March 31, 2026 is summarized in the table below:

	Three months ended March 31, 2026
	Balance at						(Reversal of)		Balance at
	beginning of						provision for		end of
	period		Charge-offs		Recoveries		credit losses		period
Commercial real estate:
Non-residential	$	3,142	$	—	$	—	$	(78)	$	3,064
Multifamily		490		—		—		(27)		463
Construction		—		—		—		—		—
Commercial and industrial		762		—		11		(36)		737
Residential real estate		739		—		—		3		742
Consumer:
Indirect automobile		3,050		(868)		334		205		2,721
Home equity		90		—		—		(3)		87
Other consumer		80		(31)		7		18		74
Total	$	8,353	$	(899)	$	352	$	82	$	7,888

Activity in the Company’s ACL for loans for the three months ended March 31, 2025 is summarized in the tables below.

	Three months ended March 31, 2025
	Balance at						Provision for		Balance at
	beginning of						(reversal of)		end of
	period		Charge-offs		Recoveries		credit losses		period
Commercial real estate:
Non-residential	$	2,675	$	—	$	—	$	42	$	2,717
Multifamily		313		—		—		19		332
Construction		—		—		—				—
Commercial and industrial		684		(175)		3		161		673
Residential real estate		575		—		—		37		612
Consumer:
Indirect automobile		4,133		(784)		426		136		3,911
Home equity		84		—		—		3		87
Other consumer		75		—		20		(21)		74
Total	$	8,539	$	(959)	$	449	$	377	$	8,406

The Company has also recorded an ACL for unfunded commitments, which was recorded in other liabilities. The provision for unfunded commitments is recorded within the provision for credit losses on the Company’s income statement. Activity in the Company’s ACL for unfunded commitments for the three months ended March 31, 2026 and 2025 is summarized in the tables below.

	Three months ended March 31, 2026
	Balance at		(Reversal of)		Balance at
	beginning of		provision for		end of
	period		credit losses		period
Commercial real estate:
Non-residential	$	19	$	—	$	19
Commercial and industrial		111		(11)		100
Residential real estate		3		—		3
Consumer:
Home equity		17		—		17
Other consumer		2		—		2
Total	$	152	$	(11)	$	141

	Three months ended March 31, 2025
	Balance at		(Reversal of)		Balance at
	beginning of		provision for		end of
	period		credit losses		period
Commercial real estate:
Non-residential	$	119	$	(27)	$	92
Commercial and industrial		104		(1)		103
Residential real estate		1		4		5
Consumer:
Home equity		18		—		18
Other consumer		2		—		2
Total	$	244	$	(24)	$	220

The following table summarizes the provision for credit losses for the three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026		2025
Provision for credit losses - loans	$	82	$	377
(Reversal of) provision for credit losses - unfunded commitments		(11)		(24)
Provision for credit losses	$	71	$	353

In the normal course of business, the Company grants loans to officers, directors and other related parties. Balances and activity of such loans during the periods presented were not material.  

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, multifamily, construction and commercial loans. To assist in the review process, the Company engages an independent third-party to review a significant portion of loans within these segments.  Consumer loans are rated as performing or non-performing based on payment status in accordance with regulatory retail credit guidance. Management uses the results of these reviews as part of its annual review process.  In addition, management utilizes delinquency reports, the watch list and other loan reports to monitor credit quality of other loan segments.  

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. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on all loans at origination and is updated on a quarterly basis for loans risk rated Watch, Special Mention, Substandard, or Doubtful.

The Company uses the following definitions for risk ratings:

Watch – Loans classified as watch exhibit weaknesses that require more than usual monitoring. Issues may include deteriorating financial condition, payments made after due date but within 30 days, adverse industry conditions or management problems.

Special Mention – Loans classified as special mention exhibit signs of further deterioration but still generally make payments within 30 days. This is a transitional rating and loans should typically not be rated Special Mention for more than 12 months.

Substandard – Loans classified as substandard possess weaknesses that jeopardize the ultimate collection of the principal and interest outstanding. These loans exhibit continued financial losses, ongoing delinquency, overall poor financial condition, and/or insufficient collateral. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as non-performing have all the weaknesses of substandard loans, and have deteriorated to the level that there is a high probability of substantial loss.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered Pass rated loans.

The following table presents the credit risk profile of the Company’s loan portfolio (excluding loans in process) based on rating category, as well as gross write-offs for the three months ended March 31, 2026, and by fiscal year of origination as of March 31, 2026.

													Revolving
	Loans by Origination Year												Loans
	2026		2025		2024		2023		2022		Prior		Amortized Cost		Total
Commercial construction
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Watch		463		775		7,618		-		-		-		-		8,856
Total commercial construction		463		775		7,618		-		-		-		-		8,856
Commercial non-residential
Pass	$	3,609	$	65,309	$	43,144	$	31,199	$	34,249	$	96,481	$	-	$	273,991
Watch		500		16,524		13,296		14,889		21,236		47,665		-		114,110
Special mention		-		-		-		22,910		1,979		-		-		24,889
Substandard		-		-		-		-		2,308		2,075		-		4,383
Total commercial non-residential		4,109		81,833		56,440		68,998		59,772		146,221		-		417,373
Multifamily
Pass	$	-	$	10,941	$	735	$	586	$	17,787	$	34,737	$	-	$	64,786
Watch		-		993		5,614		10,203		10,686		14,808		-		42,304
Total multifamily		-		11,934		6,349		10,789		28,473		49,545		-		107,090
Residential
Performing	$	3,802	$	20,324	$	14,416	$	24,921	$	19,906	$	16,380	$	-	$	99,749
Non-performing		-		-		-		-		289		928		-		1,217
Total residential		3,802		20,324		14,416		24,921		20,195		17,308		-		100,966
Commercial and industrial
Pass	$	2,435	$	7,483	$	6,123	$	5,772	$	13,558	$	4,930	$	18,318	$	58,619
Watch		978		6,098		3,022		754		1,932		970		14,727		28,481
Special mention		-		-		-		273		2,935		-		2,619		5,827
Substandard		-		-		-		-		-		-		42		42
Total commercial and industrial		3,413		13,581		9,145		6,799		18,425		5,900		35,706		92,969
Indirect automobile
Performing	$	10,671	$	41,512	$	34,965	$	41,300	$	48,919	$	18,515	$	-	$	195,882
Non-performing		-		39		81		111		189		124		-		544
Total indirect automobile		10,671		41,551		35,046		41,411		49,108		18,639		-		196,426
Current-period gross write-offs		-		87		170		341		166		104		-		868
Home equity
Performing	$	128	$	672	$	204	$	-	$	-	$	2,965	$	7,968	$	11,937
Non-performing		-		-		-		-		-		13		-		13
Total home equity		128		672		204		-		-		2,978		7,968		11,950
Other consumer
Performing	$	1,029	$	1,648	$	1,255	$	802	$	689	$	104	$	214	$	5,741
Non-performing		-		-		7		-		-		-		-		7
Total other consumer		1,029		1,648		1,262		802		689		104		214		5,748
Current-period gross write-offs		-		-		11		9		11		-		-		31
Total Loans
Pass/performing	$	21,674	$	147,889	$	100,842	$	104,580	$	135,108	$	174,112	$	26,500	$	710,705
Watch		1,941		24,390		29,550		25,846		33,854		63,443		14,727		193,751
Special mention		0		-		0		23,183		4,914		0		2,619		30,716
Substandard		-		-		-		-		2,308		2,075		42		4,425
Non-performing		-		39		88		111		478		1,065		-		1,781
Total Loans	$	23,615	$	172,318	$	130,480	$	153,720	$	176,662	$	240,695	$	43,888	$	941,378
Total Current-period gross write-offs	$	0	$	87	$	181	$	350	$	177	$	104	$	-	$	899

The following table presents the credit risk profile of the Company’s loan portfolio (excluding loans in process) based on rating category, as well as gross write-offs for the year ended December 31, 2025, and by fiscal year of origination as of December 31, 2025.

													Revolving
	Loans by Origination Year												Loans
	2025		2024		2023		2022		2021		Prior		Amortized Cost		Total
Commercial construction
Pass	$	2,037	$	-	$	-	$	-	$	-	$	-	$	-	$	2,037
Watch		775		6,170		-		-		-		-		-		6,945
Total commercial construction		2,812		6,170		-		-		-		-		-		8,982
Commercial non-residential
Pass	$	63,489	$	44,835	$	36,178	$	34,652	$	25,438	$	74,392	$	-	$	278,984
Watch		16,602		11,894		10,164		23,344		3,343		46,157		-		111,504
Special mention		-		-		22,921		-		-		-		-		22,921
Substandard		-		-		-		2,315		-		2,084		-		4,399
Total commercial non-residential		80,091		56,729		69,263		60,311		28,781		122,633		-		417,808
Current-period gross write-offs		-		-		-		629		-		-		-		629
Multifamily
Pass	$	10,986	$	738	$	590	$	18,086	$	27,949	$	7,063	$	-	$	65,412
Watch		996		5,627		10,210		10,756		5,514		9,423		-		42,526
Total multifamily		11,982		6,365		10,800		28,842		33,463		16,486		-		107,938
Residential
Performing	$	21,114	$	14,402	$	25,795	$	20,184	$	1,720	$	15,616	$	-	$	98,831
Non-performing		-		-		-		292		-		963		-		1,255
Total residential		21,114		14,402		25,795		20,476		1,720		16,579		-		100,086
Commercial and industrial
Pass	$	8,011	$	6,937	$	6,533	$	14,284	$	5,559	$	512	$	18,818	$	60,654
Watch		6,305		3,014		783		4,689		190		939		14,186		30,106
Special mention		-		-		-		455		-		-		250		705
Substandard		-		-		-		-		22		-		39		61
Total commercial and industrial		14,316		9,951		7,316		19,428		5,771		1,451		33,293		91,526
Current-period gross write-offs				11		151		8		-		165		-		335
Indirect automobile
Performing	$	44,776	$	38,583	$	47,088	$	58,044	$	19,391	$	5,180	$	-	$	213,062
Non-performing		41		104		120		320		87		68		-		740
Total indirect automobile		44,817		38,687		47,208		58,364		19,478		5,248		-		213,802
Current-period gross write-offs		86		428		500		1,026		463		129		-		2,632
Home equity
Performing	$	680	$	206	$	-	$	-	$	-	$	3,213	$	8,191	$	12,290
Total home equity		680		206		-		-		-		3,213		8,191		12,290
Other consumer
Performing	$	1,987	$	1,483	$	975	$	907	$	139	$	7	$	220	$	5,718
Non-performing		-		5		10		-		-		-		-		15
Total other consumer		1,987		1,488		985		907		139		7		220		5,733
Current-period gross write-offs		33		18		15		24		-		-		-		90
Total Loans
Pass/performing	$	153,080	$	107,184	$	117,159	$	146,157	$	80,196	$	105,983	$	27,229	$	736,988
Watch		24,678		26,705		21,157		38,789		9,047		56,519		14,186		191,081
Special mention		0		-		22,921		455		0		0		250		23,626
Substandard		-		-		-		2,315		22		2,084		39		4,460
Non-performing		41		109		130		612		87		1,031		-		2,010
Total Loans	$	177,799	$	133,998	$	161,367	$	188,328	$	89,352	$	165,617	$	41,704	$	958,165
Total Current-period gross write-offs	$	119	$	457	$	666	$	1,687	$	463	$	294	$	-	$	3,686