v3.26.1
Loans and Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2026
Receivables [Abstract]  
Loans and Allowance for Credit Losses Loans And Allowance For Credit Losses
The Company’s loan portfolio is segmented to enable management to monitor risk and performance. Real estate loans are further segregated into three classes. Residential mortgages include those secured by residential properties and include home equity loans, while commercial mortgages consist of loans to commercial borrowers secured by commercial real estate. Construction loans typically consist of loans to build commercial buildings and acquire and develop residential real estate. The commercial and industrial segment consists of loans to finance the activities of commercial customers. The consumer segment consists primarily of indirect auto loans as well as personal installment loans and personal or overdraft lines of credit. The other segments consists primarily of loans to municipal borrowers that are secured by improved property or other business asset.
Residential mortgage loans are typically longer-term loans and, therefore, generally present greater interest rate risk than the consumer and commercial loans. Under certain economic conditions, housing values may decline, which may increase the risk that the collateral values are not sufficient.
Commercial real estate loans generally present a higher level of credit risk than loans secured by residences. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income-producing properties, and the increased difficulty in evaluating and monitoring these types of loans. Furthermore, the repayment of commercial real estate loans is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced (for example, if leases are not obtained or renewed, a bankruptcy court modifies a lease term, or a major tenant is unable to fulfill its lease obligations), the borrower’s ability to repay the loan may be impaired.
Construction loans are originated to individuals to finance the construction of residential dwellings and are also originated for the construction of commercial properties, including hotels, apartment buildings, housing developments, and owner-occupied properties used for businesses. Construction loans generally provide for the payment of interest only during the construction phase, which is usually 12 to 18 months. At the end of the construction phase, the loan generally converts to a permanent residential or commercial mortgage loan. Construction loan risks include overfunding in comparison to the plans, untimely completion of work, and leasing and stabilization after project completion.
Commercial and industrial loans are generally secured by inventories, accounts receivable, and other business assets, which present collateral risk.
Consumer loans generally have higher interest rates and shorter terms than residential mortgage loans; however, they have additional credit risk due to the type of collateral securing the loan.
The following table presents the classifications of loans as of the dates indicated:
March 31, 2026December 31, 2025
(Dollars in Thousands)
Real Estate:
Residential
$330,761 $329,237 
Commercial
550,029 552,180 
Construction
51,394 45,419 
Commercial and Industrial
157,694 161,081 
Consumer
36,720 42,876 
Other
31,239 31,467 
Total Loans
1,157,837 1,162,260 
Allowance for Credit Losses(10,303)(10,116)
Loans, Net
$1,147,534 $1,152,144 
Included in total loans above are unamortized net deferred loan fees of $718,000 and $830,000 at March 31, 2026 and December 31, 2025, respectively.
The Company uses a nine-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first five categories are not considered criticized and are aggregated as “pass” rated. The criticized rating categories used by management generally follow bank regulatory definitions. The special mention category includes assets that are currently protected but are below average quality, resulting in an undue credit risk, but not to the point of justifying a substandard classification. Loans in the substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. Loans classified as doubtful have all the weaknesses inherent in loans classified as substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as loss are considered uncollectible and of such little value that continuance as an asset is not warranted.
The following tables present the Company’s loans by year of origination, loan segmentation, risk indicator summarized by the aggregate Pass and the criticized categories of Special Mention and Substandard and gross charge-offs for the three months ended March 31, 2026 and year ended December 31, 2025. The Company did not have any loans classified as Doubtful or Loss as of the dates indicated.
Classified Loans by Origination Year (as of March 31, 2026)
20262025202420232022PriorRevolving Loans Amortized Cost BasisTotal
(Dollars in Thousands)
Real Estate:
Residential
Pass$15,603 $18,479 $15,060 $28,507 $42,478 $185,828 $19,691 $325,646 
Special Mention— 356 — — 1,529 1 — 1,886 
Substandard— 427 — 2,113 73 616 — 3,229 
Total15,603 19,262 15,060 30,620 44,080 186,445 19,691 330,761 
Commercial
Pass13,602 97,337 65,662 52,300 68,475 229,772 3,849 530,997 
Special Mention— 621 5,493 — — 12,493 — 18,607 
Substandard— 200 — — — 225 — 425 
Total13,602 98,158 71,155 52,300 68,475 242,490 3,849 550,029 
Construction
Pass3,623 15,336 9,799 7,362 7,441 7,021 — 50,582 
Special Mention— — — — — — — — 
Substandard— — — 812 — — — 812 
Total3,623 15,336 9,799 8,174 7,441 7,021 — 51,394 
Commercial and Industrial
Pass8,759 39,221 21,165 17,681 5,850 12,063 51,010 155,749 
Special Mention— — — — — 110 — 110 
Substandard— 1,704 131 — — — — 1,835 
Total8,759 40,925 21,296 17,681 5,850 12,173 51,010 157,694 
Consumer
Pass209 620 342 4,866 14,338 7,926 8,330 36,631 
Special Mention— — — — — — — — 
Substandard— — — — — 89 — 89 
Total209 620 342 4,866 14,338 8,015 8,330 36,720 
Other
Pass62 99 105 3,835 21,670 4,350 1,118 31,239 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Total62 99 105 3,835 21,670 4,350 1,118 31,239 
Total Loans$41,858 $174,400 $117,757 $117,476 $161,854 $460,494 $83,998 $1,157,837 
Real Estate:
Residential$— $— $— $— $— $— $— $— 
Commercial— — — — — — — — 
Construction— — — — — — — — 
Total Real Estate— — — — — — — — 
Commercial and Industrial
— — — — — — — — 
Consumer— — 9 22 60 38 18 147 
Other— — — — — — — — 
Total Gross Charge Offs— — 9 22 60 38 18 147 
Classified Loans by Origination Year (as of December 31, 2025)
20252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
(Dollars in Thousands)
Real Estate:
Residential
Pass$18,321 $15,378 $29,290 $43,086 $38,637 $156,386 $23,082 $324,180 
Special Mention785 — — 1,541 — — — 2,326 
Substandard— — 2,139 — — 592 — 2,731 
Total19,106 15,378 31,429 44,627 38,637 156,978 23,082 329,237 
Commercial
Pass98,535 69,669 55,379 69,488 74,487 164,948 2,126 534,632 
Special Mention824 5,513 519 — 7,466 1,169 — 15,491 
Substandard— 1,962 — — — 95 — 2,057 
Total99,359 77,144 55,898 69,488 81,953 166,212 2,126 552,180 
Construction
Pass11,170 12,220 6,807 7,446 — 7,022 — 44,665 
Special Mention— — — — — — — — 
Substandard— — 754 — — — — 754 
Total11,170 12,220 7,561 7,446 — 7,022 — 45,419 
Commercial and Industrial
Pass40,139 22,131 20,315 6,442 2,670 10,182 56,820 158,699 
Special Mention1,780 139 — — — 163 300 2,382 
Substandard— — — — — — — — 
Total41,919 22,270 20,315 6,442 2,670 10,345 57,120 161,081 
Consumer
Pass688 411 5,635 17,322 7,047 3,229 8,437 42,769 
Special Mention— — — — — — — — 
Substandard— — — — 25 82 — 107 
Total688 411 5,635 17,322 7,072 3,311 8,437 42,876 
Other
Pass103 120 3,837 21,837 — 4,452 1,118 31,467 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Total103 120 3,837 21,837 — 4,452 1,118 31,467 
Total Loans$172,345 $127,543 $124,675 $167,162 $130,332 $348,320 $91,883 $1,162,260 
Real Estate:
Residential$25 $— $— $— $— $— $— $25 
Commercial— — — 19 — — — 19 
Construction— — — — — — — — 
Total Real Estate$25 — — 19 — — — 44 
Commercial and Industrial
218 — — — — 5 — 223 
Consumer— 4 19 95 23 97 64 302 
Other— — — — — — — — 
Total Gross Charge Offs$243 $4 $19 $114 $23 $102 $64 $569 
The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of the dates indicated:
March 31, 2026
Loans
Current
30-59
Days
Past Due
60-89
Days
Past Due
90 Days
Or More
Past Due
Total
Past Due
Non-
Accrual
Total
Loans
(Dollars in Thousands)
Real Estate:
Residential
$325,687 $2,155 $189 $— $2,344 $2,730 $330,761 
Commercial
549,690 244 — — 244 95 550,029 
Construction
50,979 — — — — 415 51,394 
Commercial and Industrial
157,694 — — — — — 157,694 
Consumer
36,300 325 6 — 331 89 36,720 
Other
31,239 — — — — — 31,239 
Total Loans
$1,151,589 $2,724 $195 $— $2,919 $3,329 $1,157,837 
December 31, 2025
Loans
Current
30-59
Days
Past Due
60-89
Days
Past Due
90 Days
Or More
Past Due
Total
Past Due
Non-
Accrual
Total
Loans
(Dollars in Thousands)
Real Estate:
Residential
$322,628 $3,434 $444 $— $3,878 $2,731 $329,237 
Commercial
549,990 — 133 — 133 2,057 552,180 
Construction
45,004 — — — — 415 45,419 
Commercial and Industrial
161,081 — — — — — 161,081 
Consumer
42,142 539 88 — 627 107 42,876 
Other
31,467 — — — — — 31,467 
Total Loans
$1,152,312 $3,973 $665 $— $4,638 $5,310 $1,162,260 
Additional interest income that would have been recorded if the loans that were nonaccrual at March 31, 2026 were current was $27,000 for the three months ended March 31, 2026, and $52,000 for the three months ended March 31, 2025.
The following table sets forth the amounts for amortized cost basis of loans on nonaccrual status, loans past due 90 days still accruing, and categories of nonperforming assets at the dates indicated.
March 31, 2026
Nonaccrual With No ACLNonaccrual With ACLLoans Past Due 90 Days Still AccruingTotal Nonperforming Assets
(Dollars in Thousands)
Nonaccrual Loans:
Real Estate:
Residential
$1,613 $1,117 $— $2,730 
Commercial
95 — — 95 
Construction— 415 — 415 
Consumer
89 — — 89 
Total Nonaccrual Loans
$1,797 $1,532 $— 3,329 
Other Real Estate Owned
— 
Total Nonperforming Assets
$3,329 
December 31, 2025
Nonaccrual With No ACLNonaccrual With ACLLoans Past Due 90 Days Still AccruingTotal Nonperforming Assets
(Dollars in Thousands)
Nonaccrual Loans:
Real Estate:
Residential
$2,210 $521 $— $2,731 
Commercial
2,057 — — 2,057 
Construction131 284 — 415 
Consumer
107 — — 107 
Total Nonaccrual Loans
$4,505 $805 $— 5,310 
Other Real Estate Owned
— 
Total Nonperforming Assets
$5,310 
No interest income on nonaccrual loans was recognized during the three months ended March 31, 2026 and March 31, 2025.
All modifications and refinancing, including those with borrowers that are experiencing financial difficulty are subject to the modification guidance in ASC 310-20. Loan modifications could meet the definition of a new loan if certain terms of the loan are modified to the benefit of the lender and the modification to the terms of the loan are more than minor. Both of these criteria have to be met to define the modification as a new loan. If a loan modification meets the criteria of new loan, then the new loan should include the remaining net investment in the original loan, additional funds advanced, fees received, and direct loan origination costs with the refinancing or restructuring. Additionally, the effective interest rate should be recalculated based on the amortized cost basis of the new loan and a reassessment of contractual cash flow.
For the three months ended March 31, 2026 and March 31, 2025, there were no new loan modifications to borrowers experiencing financial difficulty.
The recorded investment of residential real estate loans for which formal foreclosure proceedings were in process according to applicable requirements of the local jurisdiction was $662,000 and $892,000 at March 31, 2026 and December 31, 2025, respectively.
The activity in the ACL - Loans is summarized below by primary segments for the periods indicated:
Real
Estate
Residential
Real
Estate
Commercial
Real
Estate
Construction
Commercial
and
Industrial
Consumer
Other
Total
(Dollars in Thousands)
December 31, 2025$2,526 $3,153 $1,205 $2,562 $450 $220 $10,116 
Charge-offs
— — — — (147)— (147)
Recoveries
— — — 36 70 — 106 
(Recovery) Provision for Credit Losses - Loans(24)80 112 9 49 2 228 
March 31, 2026$2,502 $3,233 $1,317 $2,607 $422 $222 $10,303 
Real
Estate
Residential		Real
Estate
Commercial		Real
Estate
Construction		Commercial
and
Industrial		ConsumerOtherTotal
(Dollars in Thousands)
December 31, 2024$2,926 $3,103 $1,264 $1,584 $687 $241 $9,805 
Charge-offs— — — — (135)— (135)
Recoveries1 — — 43 37 — 81 
(Recovery) Provision for Credit Losses - Loans(31)25 (37)121 (3)(7)68 
March 31, 2025$2,896 $3,128 $1,227 $1,748 $586 $234 $9,819 
Loans that do not share risk characteristics are evaluated on an individual basis. For loans that are individually evaluated and collateral dependent, financial loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL - Loans is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. As of March 31, 2026, there were $1.9 million of loans that required specific valuation allowances of $331,000. This included residential real estate loans for $1.1 million with a valuation allowance of $94,000, a construction loan for $414,000 with a valuation allowance of $154,000, and commercial and industrial loans for $323,000 with a valuation allowance of $83,000. As of December 31, 2025, there were $970,000 of loans that required specific valuation allowances of $165,000. This included residential real estate loans for $556,000 with a valuation allowance of $35,000, and a construction real estate loan for $414,000 with a valuation allowance of $130,000.
The following tables present the amortized cost basis of collateral-dependent loans by class of loans as of the dates indicated.
March 31, 2026
Primary Type of Collateral
Real Estate
Business Assets
Total
(Dollars in thousands)
Real Estate:
Residential$2,801 $— $2,801 
Commercial469 200 669 
Construction812 — 812 
Commercial and Industrial— 623 623 
Consumer— — — 
Other— — — 
Total Loans$4,082 $823 $4,905 
December 31, 2025
Primary Type of Collateral
Real Estate
(Dollars in thousands)
Real Estate:
Residential$2,326 
Commercial2,306 
Construction754 
Commercial and Industrial— 
Consumer— 
Other— 
Total Loans$5,386 
The Company’s ACL on unfunded commitments is recognized as a liability (accrued interest payable and other liabilities on the Consolidated Statement of Financial Condition), with adjustments to the reserve recognized in provision for credit losses -
unfunded commitments on the Consolidated Statement of Income. The Company’s activity in the ACL on unfunded commitments for the periods indicated was as follows:
Allowance for Credit Losses
(Dollars in Thousands)
Balance at December 31, 2025
$746 
Provision for Credit Losses - Unfunded Commitments13 
Balance at March 31, 2026$759 
Allowance for Credit Losses
(Dollars in Thousands)
Balance at December 31, 2024$691 
Recovery for Credit Losses - Unfunded Commitments(108)
Balance at March 31, 2025$583