v3.26.1
Note 4 - Allowance for Credit Losses on Loans
 3 Months Ended
Mar. 31, 2026
Notes to Financial Statements  
Credit Loss, Financial Instrument [Text Block]

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES ON LOANS

 

Changes in the allowance for credit losses on loans during the periods presented were as follows:

 

  

Three Months Ended March 31,

 

(In thousands)

 

2026

  

2025

 

Balance, beginning of period

 $22,261  $18,679 

Provision for credit losses on loans

  1,433   - 

Charge-offs

  (3,171)  - 

Recoveries

  415   43 

Balance, end of period

 $20,938  $18,722

 

 

Accrued interest receivable related to loans totaled $8.7 million and $8.2 million at  March 31, 2026 and December 31, 2025, respectively, and was reported in accrued interest receivable and other assets on the consolidated statements of financial condition. Accrued interest receivable was excluded from the estimate of credit losses.

 

Allocation of the allowance for credit losses on loans by portfolio segment for the three months ended March 31, 2026 and 2025 are as follows:

 

  Commercial      Residential  Commercial         

(In thousands)

 

and Industrial

  

Construction

  

Real Estate

  

Real Estate

  

Consumer

  

Total

 

Balance, December 31, 2025

 $15,612  $1,972  $494  $4,150  $33  $22,261 

Provision for credit losses on loans

  1,000   261   36   167   (31)  1,433 

Charge-offs

  (3,171)  -   -   -   -   (3,171)

Recoveries

  415   -   -   -   -   415 

Balance, March 31, 2026

 $13,856  $2,233  $530  $4,317  $2  $20,938 
                         
  Commercial      Residential  Commercial         

(In thousands)

 and Industrial  Construction  Real Estate  Real Estate  Consumer  Total 

Balance, December 31, 2024

 $10,170  $3,005  $286  $5,207  $11  $18,679 

Provision for credit losses on loans

  776   (183)  81   (684)  10   - 

Charge-offs

  -   -   -   -   -   - 

Recoveries

  43   -   -   -   -   43 

Balance, March 31, 2025

 $10,989  $2,822  $367  $4,523  $21  $18,722 

 

The following table presents the amortized cost basis of loans on non-accrual status and loans past due over 89 days still accruing as of March 31, 2026 and December 31, 2025:

 

  

March 31, 2026

 
  

Non-accrual

  

Non-accrual

      

Loans Past

 
  Loans With No  Loans With  Total  Due over 89 
  Allowance for  Allowance for  Non-accrual  Days Still 

(In thousands)

 

Credit Losses

  

Credit Losses

  

Loans

  

Accruing

 

Commercial and industrial

 $-  $-  $-  $- 

Construction

  16,323   -   16,323   - 

Residential Real Estate

  -   -   -   - 

Commercial Real Estate

  -   -   -   - 

Consumer

  -   -   -   - 

Total

 $16,323  $-  $16,323  $- 

 

  

December 31, 2025

 
  

Non-accrual

  

Non-accrual

      

Loans Past

 
  Loans With No  Loans With  Total  Due over 89 
  Allowance for  Allowance for  Non-accrual  Days Still 

(In thousands)

 

Credit Losses

  

Credit Losses

  

Loans

  

Accruing

 

Commercial and industrial

 $-  $5,088  $5,088  $- 

Construction

  19,414   -   19,414   - 

Residential Real Estate

  -   -   -   - 

Commercial Real Estate

  -   -   -   - 

Consumer

  -   -   -   - 

Total

 $19,414  $5,088  $24,502  $- 

 

The following tables present the risk category and gross charge-offs by vintage year, which is the year of origination or most recent renewal, as of the date indicated.

 

  

Term Loans Amortized Cost Basis by Origination Year

             
                          

Revolving

  

Revolving

     
                          Loans  Loans     
                          Amortized  Converted     

(In thousands)

 

2026

  

2025

  

2024

  

2023

  

2022

  

Prior

  

Cost Basis

  

to Term

  

Total

 

March 31, 2026

                                    

Commercial and industrial

                                    

Risk Rating

                                    

Pass

 $84,136  $245,673  $66,672  $39,444  $26,702  $19,026  $536,120  $4,617  $1,022,390 

Special Mention

  -   1,431   595   -   3,774   -   8,789   -   14,589 

Substandard

  1,964   -   -   1,252   475   -   14   -   3,705 

Substandard - Non-accrual

  -   -   -   -   -   -   -   -   - 

Total

 $86,100  $247,104  $67,267  $40,696  $30,951  $19,026  $544,923  $4,617  $1,040,684 

Gross charge-offs

 $-  $-  $-  $3,171  $-  $-  $-  $-  $3,171 
                                     

Construction

                                    

Risk Rating

                                    

Pass

 $7,044  $46,716  $71,465  $43,523  $6,295  $6,601  $-  $-  $181,644 

Special Mention

  -   -   -   -   -   2,305   -   -   2,305 

Substandard - Non-accrual

  -   -   -   -   -   16,323   -   -   16,323 

Total

 $7,044  $46,716  $71,465  $43,523  $6,295  $25,229  $-  $-  $200,272 

Gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $-  $- 
                                     

Residential Real Estate

                                    

Risk Rating

                                    

Pass

 $-  $3,724  $2,711  $4,308  $669  $2,704  $34,610  $-  $48,726 

Total

 $-  $3,724  $2,711  $4,308  $669  $2,704  $34,610  $-  $48,726 

Gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $-  $- 
                                     

Commercial Real Estate

                                    

Risk Rating

                                    

Pass

 $36,295  $160,746  $53,432  $152,196  $126,126  $326,351  $8,797  $-  $863,943 

Special Mention

  -   18,808   -   -   -   -   -   -   18,808 

Total

 $36,295  $179,554  $53,432  $152,196  $126,126  $326,351  $8,797  $-  $882,751 

Gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $-  $- 
                                     

Consumer

                                    

Risk Rating

                                    

Pass

 $-  $-  $-  $-  $-  $-  $413  $-  $413 

Total

 $-  $-  $-  $-  $-  $-  $413  $-  $413 

Gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $-  $- 
                                     

Total

                                    

Pass

 $127,475  $456,859  $194,280  $239,471  $159,792  $354,682  $579,940  $4,617  $2,117,116 

Special Mention

  -   20,239   595   -   3,774   2,305   8,789   -   35,702 

Substandard

  1,964   -   -   1,252   475   -   14   -   3,705 

Substandard - Non-accrual

  -   -   -   -   -   16,323   -   -   16,323 

Total

 $129,439  $477,098  $194,875  $240,723  $164,041  $373,310  $588,743  $4,617  $2,172,846 

 

  

Term Loans Amortized Cost Basis by Origination Year

             
                          

Revolving

  

Revolving

     
                          Loans  Loans     
                          Amortized  Converted     

(In thousands)

 

2025

  

2024

  

2023

  

2022

  

2021

  

Prior

  

Cost Basis

  

to Term

  

Total

 

December 31, 2025

                                    

Commercial and industrial

                                    

Risk Rating

                                    

Pass

 $273,105  $69,415  $46,268  $30,290  $15,579  $5,807  $586,324  $5,000  $1,031,788 

Special Mention

  1,016   -   -   3,522   -   -   6,305   -   10,843 

Substandard

  -   -   1,295   26   -   -   490   -   1,811 

Substandard - Non-accrual

  -   -   3,850   -   -   -   -   -   3,850 

Doubtful - Non-accrual

  -   -   1,238   -   -   -   -   -   1,238 

Total

 $274,121  $69,415  $52,651  $33,838  $15,579  $5,807  $593,119  $5,000  $1,049,530 

Gross charge-offs

 $1,523  $-  $-  $-  $-  $-  $-  $-  $1,523 
                                     

Construction

                                    

Risk Rating

                                    

Pass

 $42,573  $65,573  $46,201  $12,847  $6,005  $3,630  $-  $-  $176,829 

Substandard - Non-accrual

  -   -   -   3,091   16,323   -   -   -   19,414 

Total

 $42,573  $65,573  $46,201  $15,938  $22,328  $3,630  $-  $-  $196,243 

Gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $-  $- 
                                     

Residential Real Estate

                                    

Risk Rating

                                    

Pass

 $3,477  $2,663  $4,325  $673  $-  $2,724  $31,807  $-  $45,669 

Total

 $3,477  $2,663  $4,325  $673  $-  $2,724  $31,807  $-  $45,669 

Gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $-  $- 
                                     

Commercial Real Estate

                                    

Risk Rating

                                    

Pass

 $179,320  $56,045  $152,850  $128,199  $124,128  $206,499  $7,301  $-  $854,342 

Total

 $179,320  $56,045  $152,850  $128,199  $124,128  $206,499  $7,301  $-  $854,342 

Gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $-  $- 
                                     

Consumer

                                    

Risk Rating

                                    

Pass

 $-  $-  $-  $-  $-  $-  $2,655  $-  $2,655 

Total

 $-  $-  $-  $-  $-  $-  $2,655  $-  $2,655 

Gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $-  $- 
                                     

Total

                                    

Pass

 $498,475  $193,696  $249,644  $172,009  $145,712  $218,660  $628,087  $5,000  $2,111,283 

Special Mention

  1,016   -   -   3,522   -   -   6,305   -   10,843 

Substandard

  -   -   1,295   26   -   -   490   -   1,811 

Substandard - Non-accrual

  -   -   3,850   3,091   16,323   -   -   -   23,264 

Doubtful - Non-accrual

  -   -   1,238   -   -   -   -   -   1,238 

Total

 $499,491  $193,696  $256,027  $178,648  $162,035  $218,660  $634,882  $5,000  $2,148,439 

 

The Company monitors loans by past due status. The following tables present the aging of past due loans as of March 31, 2026 and December 31, 2025:

 

  

March 31, 2026

 
          

Greater than

      

Total Past

         
          

89 days and

      

Due and

         
  

30-59 Days

  

60-89 Days

  

Still

  

Non-accrual

  

Non-accrual

         

(In thousands)

 

Past Due

  

Past Due

  

Accruing

  

Loans

  

Loans

  

Current

  

Total

 

Commercial and industrial

 $32  $-  $-  $-  $32  $1,040,652  $1,040,684 

Construction

  -   -   -   16,323   16,323   183,949   200,272 

Residential Real Estate

  -   -   -   -   -   48,726   48,726 

Commercial Real Estate

  -   -   -   -   -   882,751   882,751 

Consumer

  -   -   -   -   -   413   413 

Total

 $32  $-  $-  $16,323  $16,355  $2,156,491  $2,172,846 

 

  

December 31, 2025

 
          

Greater than

      

Total Past

         
          

89 days and

      

Due and

         
  

30-59 Days

  

60-89 Days

  

Still

  

Non-accrual

  

Non-accrual

         

(In thousands)

 

Past Due

  

Past Due

  

Accruing

  

Loans

  

Loans

  

Current

  

Total

 

Commercial and industrial

 $-  $-  $-  $5,088  $5,088  $1,044,442  $1,049,530 

Construction

  -   -   -   19,414   19,414   176,829   196,243 

Residential Real Estate

  -   -   -   -   -   45,669   45,669 

Commercial Real Estate

  1,374   -   -   -   1,374   852,968   854,342 

Consumer

  -   -   -   -   -   2,655   2,655 

Total

 $1,374  $-  $-  $24,502  $25,876  $2,122,563  $2,148,439 

 

Loans that are deemed by management to no longer possess risk characteristics similar to other loans in the portfolio, or that have been identified as collateral-dependent, are evaluated individually for purposes of determining an appropriate lifetime allowance for credit losses. Loans deemed collateral-dependent require evaluation based on the estimated fair value of the underlying collateral, less estimated costs to sell. The following table presents outstanding loan balances of collateral-dependent loans by portfolio segment as of December 31, 2025.

 

  

Collateral Type

 
  

Real

  

Business

  

Accounts

             

(In thousands)

 

Property

  

Assets

  

Receivable

  

Equipment

  

Other

  

Total

 

March 31, 2026

                        

Commercial and industrial

 $-  $-  $-  $-  $-  $- 

Construction

  16,323   -   -   -   -   16,323 

Residential Real Estate

  -   -   -   -   -   - 

Commercial Real Estate

  -   -   -   -   -   - 

Consumer

  -   -   -   -   -   - 

Total

 $16,323  $-  $-  $-  $-  $16,323 
                         

December 31, 2025

                        

Commercial and industrial

 $-  $-  $-  $-  $3,850   3,850 

Construction

  19,414   -   -   -   -   19,414 

Residential Real Estate

  -   -   -   -   -   - 

Commercial Real Estate

  -   -   -   -   -   - 

Consumer

  -   -   -   -   -   - 

Total

 $19,414  $-  $-  $-  $3,850  $23,264 

 

Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate reduction. In some cases, the Company provides multiple types of concessions on one loan.

 

The following tables present the amortized cost basis of loans at March 31, 2026 and March 31, 2025, that were both experiencing financial difficulty and were modified during the three months ended March 31, 2026 and 2025, by portfolio segment and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each segment of financing receivable is also presented below:

 

              

Interest

  

Principal

         
              

Rate

  

Forgiveness,

         
              

Reduction,

  

Interest Rate

         
      

Payment

  

Interest Rate

  

Payment

  

Reduction,

         
      

Delay

  

Reduction

  

Delay

  

Payment

         
      

and/or

  

and/or

  

and/or

  

Delay and

         
  

Term

  

Term

  

Payment

  

Term

  

Term

      

% of

 

(In thousands)

 

Extension

  

Extension

  

Delay

  

Extension

  

Extension

  

Total

  

Total Class

 

Three Months Ended March 31, 2026

                            

Commercial and industrial

 $6,156  $-  $-  $-  $-  $6,156   0.59%

Construction

  -   -   -   -   -   -   - 

Residential Real Estate

  -   -   -   -   -   -   - 

Commercial Real Estate

  -   -   -   -   -   -   - 

Consumer

  -   -   -   -   -   -   - 

Total

 $6,156  $-  $-  $-  $-  $6,156   0.28%
                             

Three Months Ended March 31, 2025

                            

Commercial and industrial

 $5,375  $-  $-  $-  $-  $5,375   0.67%

Construction

  -   -   -   -   -   -   - 

Residential Real Estate

  -   -   -   -   -   -   - 

Commercial Real Estate

  -   -   -   -   -   -   - 

Consumer

  -   -   -   -   -   -   - 

Total

 $5,375  $-  $-  $-  $-  $5,375   0.29%

 

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three months ended March 31, 2026 and 2025:

 

          

Weighted

 
      

Weighted

  

Average

 
      

Average

  

Term

 
  

Principal

  

Interest Rate

  

Extension

 
  

Forgiveness ($)

  

Reduction (%)

  

(Months)

 

Three Months Ended March 31, 2026

            

Commercial and industrial

  -   -   11.1 

Construction

  -   -   - 

Residential Real Estate

  -   -   - 

Commercial Real Estate

  -   -   - 

Consumer

  -   -   - 

Total

  -   -   11.1 
             
             

Three Months Ended March 31, 2025

            

Commercial and industrial

  -   -   5.2 

Construction

  -   -   - 

Residential Real Estate

  -   -   - 

Commercial Real Estate

  -   -   - 

Consumer

  -   -   - 

Total

  -   -   5.2 

 

The Company had $434 thousand and $106 thousand in commitments to lend additional amounts to the borrowers included in the previous tables for the three months ended March 31, 2026 and 2025, respectively. There were no loans to borrowers experiencing financial difficulty, which had been modified within the prior 12 months, with a payment default during the three months ended March 31, 2026 or the three months ended March 31, 2025.