XML 26 R14.htm IDEA: XBRL DOCUMENT v3.25.1
Allowance For Credit Losses
3 Months Ended
Mar. 31, 2025
Receivables [Abstract]  
Allowance For Credit Losses Allowance for Credit Losses
 
The following tables summarize the activity in the allowance for credit losses, by portfolio loan classification, for the three months ended March 31, 2025 and 2024 (in thousands).  The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments.
Beginning BalanceCharge-offsRecoveriesProvision for (recovery of) credit lossesEnding Balance
Three months ended March 31, 2025
Commercial and industrial$4,541 $(30)$37 $213 $4,761 
   1-4 Family1,366  27 27 1,420 
   Hotels2,355 (220) (5)2,130 
   Multi-family1,390   19 1,409 
   Non Residential Non-Owner Occupied3,001  3 152 3,156 
   Non Residential Owner Occupied1,725   55 1,780 
Commercial real estate9,837 (220)30 248 9,895 
Residential real estate5,731  1 (312)5,420 
Home equity643 (1)4 (53)593 
Consumer381 (129)9 26 287 
DDA overdrafts789 (379)425 (122)713 
$21,922 $(759)$506 $ $21,669 
Beginning BalanceCharge-offsRecoveriesProvision for (recovery of) credit lossesEnding Balance
Three months ended March 31, 2024
Commercial and industrial$4,474 $(306)$25 $82 $4,275 
  1-4 Family1,402 (31)11 12 $1,394 
  Hotels2,211 — — 46 $2,257 
  Multi-family1,002 — — (3)$999 
  Non Residential Non-Owner Occupied4,077 — — (65)$4,012 
  Non Residential Owner Occupied2,453 — — (32)$2,421 
Commercial real estate11,145 (31)11 (42)$11,083 
Residential real estate5,398 (19)49 (291)$5,137 
Home equity490 (27)35 $507 
Consumer269 (115)98 174 $426 
DDA Overdrafts969 (356)407 (138)$882 
$22,745 $(854)$599 $(180)$22,310 

Management systematically monitors the loan portfolio and the appropriateness of the allowance for credit losses on a quarterly basis to provide for expected losses inherent in the portfolio. Management assesses the risk in each loan type based on historical trends, the general economic environment of its local markets, individual loan performance and other relevant factors. The Company's estimate of future economic conditions utilized in its provision estimate is primarily dependent on expected unemployment ranges over a two-year period. Beyond two years, a straight line reversion to historical average loss rates is applied over the life of the loan pool in the migration methodology. The vintage methodology applies future average loss rates based on net losses in historical periods where the unemployment rate was within the forecasted range.
Individual credits in excess of $1 million are selected at least annually for detailed loan reviews, which are utilized by management to assess the risk in the portfolio and the appropriateness of the allowance.

Non-Performing Loans

Interest income on loans is accrued and credited to operations based upon the principal amount outstanding, using methods that generally result in level rates of return.  Loan origination fees, and certain direct costs, are deferred and amortized as an adjustment to the yield over the term of the loan.  The accrual of interest generally is discontinued when a loan becomes 90 days past due as to principal or interest for all loan types.  However, any loan may be placed on non-accrual status if the Company receives information that indicates a borrower is unable to meet the contractual terms of its respective loan agreement. Other indicators considered for placing a loan on non-accrual status include the borrower’s involvement in bankruptcies, foreclosures, repossessions, litigation and any other situation resulting in doubt as to whether full collection of contractual principal and interest is attainable.  When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and interest accrued in prior years is charged to the allowance for credit losses.  Management may elect to continue the accrual of interest when the net realizable value of collateral exceeds the principal balance and related accrued interest, and the loan is in the process of collection.

Generally for all loan classes, interest income during the period the loan is non-performing is recorded on a cash basis after recovery of principal is reasonably assured.  Cash payments received on nonperforming loans are typically applied directly against the outstanding principal balance until the loan is fully repaid.  Generally, loans are restored to accrual status when the obligation is brought current, the borrower has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

The following table presents the amortized cost basis of loans on non-accrual status and loans past due over 90 days still accruing as of March 31, 2025 (in thousands):

Non-accrual With NoNon-accrual WithLoans Past Due
Allowance forAllowance forOver 90 Days
Credit LossesCredit LossesStill Accruing
Commercial & Industrial$539 $2,242 $ 
   1-4 Family 83  
   Hotels1,794   
   Multi-family   
   Non Residential Non-Owner Occupied 314  
   Non Residential Owner Occupied5,888 1,613  
Commercial Real Estate7,682 2,010  
Residential Real Estate 3,226  
Home Equity 269 26 
Consumer   
Total$8,221 $7,747 $26 
The following table presents the amortized cost basis of loans on non-accrual status and loans past due over 90 days still accruing as of December 31, 2024 (in thousands):

Non-accrual With NoNon-accrual WithLoans Past Due
Allowance forAllowance forOver 90 Days
Credit LossesCredit LossesStill Accruing
Commercial & Industrial$590 $2,571 $— 
   1-4 Family— 134 — 
   Hotels— — — 
   Multi-family— — — 
   Non Residential Non-Owner Occupied— 346 — 
   Non Residential Owner Occupied6,012 1,341 — 
Commercial Real Estate6,012 1,821 — 
Residential Real Estate— 2,823 156 
Home Equity— 212 26 
Consumer— — — 
Total$6,602 $7,427 $182 

The Company recognized no interest income on non-accrual loans during each of the three months ended March 31, 2025 and 2024.

As of March 31, 2025, the company had one commercial and industrial loan, one hotel loan, and three owner occupied commercial real estate loans that were considered individually evaluated collateral-dependent loans totaling $8.2 million. The company had one commercial and industrial and three owner occupied commercial real estate individually evaluated collateral dependent loans recorded at $6.6 million as of December 31, 2024. Changes in the fair value of the collateral for collateral-dependent loans are reported as a provision for credit loss or a recovery of credit loss in the period of change.

Generally, all loan types are considered past due when the contractual terms of a loan are not met and the borrower is 30 days or more past due on a payment.  Furthermore, residential and home equity loans are generally subject to charge-off when the loan becomes 120 days past due, depending on the estimated fair value of the collateral less cost to dispose, versus the outstanding loan balance.  Commercial loans are generally charged off when the loan becomes 120 days past due.  Open-end consumer loans are generally charged off when the loan becomes 90 days past due.
The following tables present the aging of the amortized cost basis in past-due loans as of March 31, 2025 and December 31, 2024 by class of loan (in thousands):
March 31, 2025
30-5960-8990+TotalCurrentNon-Total
Past DuePast DuePast DuePast DueLoansaccrualLoans
Commercial and industrial$4 $ $ $4 $420,480 $2,781 $423,265 
   1-4 Family    195,558 83 195,641 
   Hotels    370,964 1,794 372,758 
   Multi-family152   152 215,394  215,546 
   Non Residential Non-Owner Occupied    742,009 314 742,323 
   Non Residential Owner Occupied130 194  324 224,907 7,501 232,732 
Commercial real estate282 194  476 1,748,832 9,692 1,759,000 
Residential real estate4,858 1,078  5,936 1,832,689 3,226 1,841,851 
Home Equity807 59 26 892 202,092 269 203,253 
Consumer8 1  9 54,661  54,670 
Overdrafts210 4  214 3,571  3,785 
Total$6,169 $1,336 $26 $7,531 $4,262,325 $15,968 $4,285,824 

December 31, 2024
30-5960-8990+TotalCurrentNon-Total
Past DuePast DuePast DuePast DueLoansaccrualLoans
Commercial and industrial$— $— $— $— $416,677 $3,161 $419,838 
   1-4 Family106 — — 106 197,018 134 197,258 
   Hotels— — — — 389,660 — 389,660 
   Multi-family— — — — 240,943 — 240,943 
   Non Residential Non-Owner Occupied— — — — 706,919 346 707,265 
   Non Residential Owner Occupied134 — — 134 226,010 7,353 233,497 
Commercial real estate240 — — 240 1,760,550 7,833 1,768,623 
Residential real estate6,014 842 156 7,012 1,813,775 2,823 1,823,610 
Home Equity687 189 26 902 198,078 212 199,192 
Consumer145 128 — 273 57,543 — 57,816 
Overdrafts384 — 391 5,306 — 5,697 
Total$7,470 $1,166 $182 $8,818 $4,251,929 $14,029 $4,274,776 

Loan Restructurings

The Company evaluates all loan restructurings in accordance with ASU No. 2022-02 for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications. Therefore, the disclosures related to loan restructurings are only for modifications that directly affect cash flows. As of December 31, 2024 and March 31, 2025, the Company had one loan considered to be restructured with a total balance of $0.2 million and $0.1 million, respectively.
A loan that is considered a restructured loan may be subject to the individually evaluated loan analysis, otherwise, the restructured loan will remain in the appropriate segment in the Allowance for Credit Losses model and associated reserves will be adjusted based on changes in the discounted cash flows resulting from the modification of the restructured loan.

Credit Quality Indicators
 
All commercial loans within the portfolio are subject to internal risk rating.  All non-commercial loans are evaluated based on payment history.  The Company’s internal risk ratings for commercial loans are:  Exceptional, Good, Acceptable, Pass/Watch, Special Mention, Substandard and Doubtful.  Each internal risk rating is defined in the loan policy using the following criteria:  balance sheet yields; ratios and leverage; cash flow spread and coverage; prior history; capability of management; market position/industry; potential impact of changing economic, legal, regulatory or environmental conditions; purpose; structure; collateral support; and guarantor support.  Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process.  Based on an individual loan’s risk grade, estimated loss percentages are applied to the outstanding balance of the loan to determine the amount of expected loss.
 
The Company categorizes loans into risk categories based on relevant information regarding the customer’s debt service ability, capacity and overall collateral position, along with other economic trends and historical payment performance.  The risk rating for each credit is updated when the Company receives current financial information, the loan is reviewed by the Company’s internal loan review and credit administration departments, or the loan becomes delinquent or impaired.  The risk grades are updated a minimum of annually for loans rated Exceptional, Good, Acceptable, or Pass/Watch.  Loans rated Special Mention, Substandard or Doubtful are reviewed at least quarterly.  The Company uses the following definitions for its risk ratings:

Risk RatingDescription
Pass Ratings:
(a) ExceptionalLoans classified as exceptional are secured with liquid collateral conforming to the internal loan policy.  Loans rated within this category pose minimal risk of loss to the bank.
(b) GoodLoans classified as good have similar characteristics that include a strong balance sheet, satisfactory debt service coverage ratios, strong management and/or guarantors, and little exposure to economic cycles. Loans in this category generally have a low chance of loss to the bank.
(c) AcceptableLoans classified as acceptable have acceptable liquidity levels, adequate debt service coverage ratios, experienced management, and have average exposure to economic cycles.  Loans within this category generally have a low risk of loss to the bank.
(d) Pass/watchLoans classified as pass/watch have erratic levels of leverage and/or liquidity, cash flow is volatile and the borrower is subject to moderate economic risk.  A borrower in this category poses a low to moderate risk of loss to the bank.
Special mentionLoans classified as special mention have a potential weakness(es) that deserves management’s close attention.  The potential weakness could result in deterioration of the loan repayment or the bank’s credit position at some future date.  A loan rated in this category poses a moderate loss risk to the bank.
SubstandardLoans classified as substandard reflect a customer with a well-defined weakness that jeopardizes the liquidation of the debt.  Loans in this category have the possibility that the bank will sustain some loss if the deficiencies are not corrected and the bank’s collateral value is weakened by the financial deterioration of the borrower.
DoubtfulLoans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that make collection of the full contract amount highly improbable.  Loans rated in this category are most likely to cause the bank to have a loss due to a collateral shortfall or a negative capital position.
Based on the most recent analysis performed, the risk category of loans by class of loans at March 31, 2025 and December 31, 2024 is as follows (in thousands), with the loans acquired from Citizens categorized by their origination date:

Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
March 31, 2025
20252024202320222021PriorCost BasisTotal
Commercial and industrial
Pass$7,097 $62,974 $60,033 $24,661 $60,277 $55,300 $119,002 $389,344 
Special mention 60 4     64 
Substandard 903 449 1,633 450 4,272 26,150 33,857 
Total$7,097 $63,937 $60,486 $26,294 $60,727 $59,572 $145,152 $423,265 
YTD Gross Charge-offs$ $30 $ $ $ $ $ $30 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
December 31, 2024
20242023202220212020PriorCost BasisTotal
Commercial and industrial
Pass$65,161 $63,650 $26,201 $62,445 $36,440 $21,148 $109,869 $384,914 
Special mention60 — — — — — 65 
Substandard1,134 452 1,926 548 2,449 2,051 26,299 34,859 
Total$66,355 $64,107 $28,127 $62,993 $38,889 $23,199 $136,168 $419,838 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
March 31, 2025
20252024202320222021PriorCost BasisTotal
Commercial real estate -
1-4 Family
Pass$5,325 $38,658 $25,594 $37,914 $27,123 $46,657 $9,872 $191,143 
Special mention   527  703  1,230 
Substandard   1,650 409 1,209  3,268 
Total$5,325 $38,658 $25,594 $40,091 $27,532 $48,569 $9,872 $195,641 
YTD Gross Charge-offs$ $ $ $ $ $ $ $ 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
December 31, 2024
20242023202220212020PriorCost BasisTotal
Commercial real estate -
1-4 Family
Pass$39,992 $28,545 $38,562 $27,846 $18,218 $29,102 $10,011 $192,276 
Special mention— — 180 — 842 613 — 1,635 
Substandard— — 1,688 411 312 936 — 3,347 
Total$39,992 $28,545 $40,430 $28,257 $19,372 $30,651 $10,011 $197,258 

Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
March 31, 2025
20252024202320222021PriorCost BasisTotal
Commercial real estate -
Hotels
Pass$ $46,793 $48,536 $77,271 $30,548 $145,023 $ $348,171 
Special mention        
Substandard     24,587  24,587 
Total$ $46,793 $48,536 $77,271 $30,548 $169,610 $ $372,758 
YTD Gross Charge-offs$ $ $ $ $ $220 $ $220 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
December 31, 2024
20242023202220212020PriorCost BasisTotal
Commercial real estate -
Hotels
Pass$46,980 $48,278 $78,225 $31,161 $6,742 $152,896 $288 $364,570 
Special mention— — — — — — — — 
Substandard— — — — — 25,090 — 25,090 
Total$46,980 $48,278 $78,225 $31,161 $6,742 $177,986 $288 $389,660 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
March 31, 2025
20252024202320222021PriorCost BasisTotal
Commercial real estate -
Multi-family
Pass$18,437 $48,863 $7,080 $18,078 $18,977 $100,882 $2,234 $214,551 
Special mention        
Substandard   540 455   995 
Total$18,437 $48,863 $7,080 $18,618 $19,432 $100,882 $2,234 $215,546 
YTD Gross Charge-offs$ $ $ $ $ $ $ $ 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
December 31, 2024
20242023202220212020PriorCost BasisTotal
Commercial real estate -
Multi-family
Pass$73,914 $6,939 $18,191 $19,174 $56,587 $63,314 $1,825 $239,944 
Special mention— — — — — — — — 
Substandard— — 542 457 — — — 999 
Total$73,914 $6,939 $18,733 $19,631 $56,587 $63,314 $1,825 $240,943 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
March 31, 2025
20252024202320222021PriorCost BasisTotal
Commercial real estate -
Non Residential Non-Owner Occupied
Pass$39,330 $79,414 $108,472 $114,636 $90,664 $261,947 $19,561 $714,024 
Special mention   543 89 24,457  25,089 
Substandard 71   138 3,001  3,210 
Total$39,330 $79,485 $108,472 $115,179 $90,891 $289,405 $19,561 $742,323 
YTD Gross Charge-offs$ $ $ $ $ $ $ $ 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
December 31, 2024
20242023202220212020PriorCost BasisTotal
Commercial real estate -
Non Residential Non-Owner Occupied
Pass$76,051 $110,212 $115,753 $92,783 $53,513 $213,886 $16,284 $678,482 
Special mention— — 839 92 486 24,108 — 25,525 
Substandard73 15 — 139 — 3,031 — 3,258 
Total$76,124 $110,227 $116,592 $93,014 $53,999 $241,025 $16,284 $707,265 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
March 31, 2025
20252024202320222021PriorCost BasisTotal
Commercial real estate -
Non Residential Owner Occupied
Pass$8,531 $22,485 $43,541 $28,267 $35,762 $68,974 $4,481 $212,041 
Special mention     2,012  2,012 
Substandard 464 4,006 826 1,925 11,116 342 18,679 
Total$8,531 $22,949 $47,547 $29,093 $37,687 $82,102 $4,823 $232,732 
YTD Gross Charge-offs$ $ $ $ $ $ $ $ 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
December 31, 2024
20242023202220212020PriorCost BasisTotal
Commercial real estate -
Non Residential Owner Occupied
Pass$23,376 $45,011 $28,830 $38,061 $15,154 $58,846 $3,938 $213,216 
Special mention— — — — — 2,029 — 2,029 
Substandard— 3,713 842 1,950 1,167 10,221 359 18,252 
Total$23,376 $48,724 $29,672 $40,011 $16,321 $71,096 $4,297 $233,497 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
March 31, 2025
20252024202320222021PriorCost BasisTotal
Commercial real estate -
Total
Pass$71,622 $236,214 $233,224 $276,166 $203,074 $623,482 $36,149 $1,679,931 
Special mention   1,070 89 27,173  28,332 
Substandard 535 4,006 3,016 2,926 39,912 342 50,737 
Total$71,622 $236,749 $237,230 $280,252 $206,089 $690,567 $36,491 $1,759,000 
YTD Gross Charge-offs$ $ $ $ $ $220 $ $220 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
December 31, 2024
20242023202220212020PriorCost BasisTotal
Commercial real estate -
Total
Pass$260,313 $238,984 $279,562 $209,025 $150,213 $518,042 $32,346 $1,688,485 
Special mention— — 1,019 92 1,327 26,751 — 29,189 
Substandard73 3,728 3,073 2,958 1,479 39,279 359 50,949 
Total$260,386 $242,712 $283,654 $212,075 $153,019 $584,072 $32,705 $1,768,623 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
March 31, 2025
20252024202320222021PriorCost BasisTotal
Residential real estate
Performing$56,385 $223,578 $205,431 $348,429 $277,880 $658,455 $68,467 $1,838,625 
Non-performing 176  121 762 1,797 370 3,226 
Total$56,385 $223,754 $205,431 $348,550 $278,642 $660,252 $68,837 $1,841,851 
YTD Gross Charge-offs$ $ $ $ $ $ $ $ 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
December 31, 2024
20242023202220212020PriorCost BasisTotal
Residential real estate
Performing$230,045 $209,641 $355,495 $283,509 $223,004 $451,144 $67,949 $1,820,787 
Non-performing$179 $91 $44 $628 $— $1,521 $360 $2,823 
Total$230,224 $209,732 $355,539 $284,137 $223,004 $452,665 $68,309 $1,823,610 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
March 31, 2025
20252024202320222021PriorCost BasisTotal
Home equity
Performing$4,732 $31,181 $24,174 $10,572 $4,924 $8,752 $118,649 $202,984 
Non-performing      269 269 
Total$4,732 $31,181 $24,174 $10,572 $4,924 $8,752 $118,918 $203,253 
YTD Gross Charge-offs$ $ $ $ $ $ $1 $1 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
December 31, 2024
20242023202220212020PriorCost BasisTotal
Home equity
Performing$31,751 $25,164 $11,344 $5,232 $2,832 $7,346 $115,311 $198,980 
Non-performing— — — — — — 212 212 
Total$31,751 $25,164 $11,344 $5,232 $2,832 $7,346 $115,523 $199,192 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
March 31, 2025
20252024202320222021PriorCost BasisTotal
Consumer
Performing$4,125 $15,164 $18,907 $10,255 $1,996 $2,188 $2,035 $54,670 
Non-performing        
Total$4,125 $15,164 $18,907 $10,255 $1,996 $2,188 $2,035 $54,670 
YTD Gross Charge-offs$ $15 $13 $83 $ $15 $3 $129 
Revolving
Term LoansLoans
Amortized Cost Basis by Origination Year and Risk LevelAmortized
December 31, 2024
20242023202220212020PriorCost BasisTotal
Consumer
Performing$17,621 $21,062 $11,628 $2,374 $1,456 $1,180 $2,495 $57,816 
Non-performing— — — — — — — — 
Total$17,621 $21,062 $11,628 $2,374 $1,456 $1,180 $2,495 $57,816