v3.26.1
Allowance for Credit Losses
 6 Months Ended
Jun. 30, 2026
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]  
Allowance for Credit Losses Allowance for Credit Losses
Allowance for Loan and Lease Losses
The allowance for credit losses is established for current expected credit losses on the Company’s loan and lease portfolios utilizing guidance in ASC Topic 326. The determination of the allowance requires significant judgment to estimate credit losses measured on a collective pool basis when similar risk characteristics exist, and for loans evaluated individually. In determining the allowance, the Company estimates expected future losses for the loan’s entire contractual term adjusted for expected payments when appropriate. The allowance estimate considers relevant available information, from internal and external sources, relating to the historical loss experience, current conditions, and reasonable and supportable forecasts for the Company’s outstanding loan and lease balances. The allowance is an estimation that reflects management’s evaluation of expected losses related to the Company’s financial assets measured at amortized cost. To ensure the allowance is maintained at an adequate level, a detailed analysis is performed on a quarterly basis and an appropriate provision is made to adjust the allowance.
The Company categorizes its loan portfolios into nine segments based on similar risk characteristics. Loans within each segment are collectively evaluated using either: 1) a cohort cumulative loss rate methodology (“cohort”) or, 2) the probability of default (“PD”)/loss given default (“LGD”) methodology (PD/LGD).

The following table shows the changes in the allowance for loan and lease losses, segregated by portfolio segment, for the three months ended June 30, 2026, and 2025.
(Dollars in thousands)Commercial and
agricultural		Renewable energyAuto and
light truck		Medium 
and
heavy duty 
truck		AircraftConstruction
equipment		Commercial
real estate		Residential
real estate
and home
equity		ConsumerTotal
June 30, 2026         
Balance, beginning of period$23,027 $12,942 $18,938 $6,101 $36,797 $28,736 $26,734 $9,419 $2,204 $164,898 
Charge-offs597 — 13 — — 225 354 116 287 1,592 
Recoveries441 — 501 — — 4 29 7 88 1,070 
Net charge-offs (recoveries)156 — (488)— — 221 325 109 199 522 
Provision (recovery of provision)1,014 509 (118)(48)(1,679)1,433 285 454 128 1,978 
Balance, end of period$23,885 $13,451 $19,308 $6,053 $35,118 $29,948 $26,694 $9,764 $2,133 $166,354 
June 30, 2025         
Balance, beginning of period$21,912 $8,865 $18,657 $6,884 $36,832 $28,721 $24,973 $8,438 $2,188 $157,470 
Charge-offs439 — 1,500 — 485 335 1 29 276 3,065 
Recoveries519 — 364 — 206 16 18 2 70 1,195 
Net charge-offs (recoveries)(80)— 1,136 — 279 319 (17)27 206 1,870 
Provision (recovery of provision)2,347 1,179 3,344 (362)153 673 12 355 183 7,884 
Balance, end of period$24,339 $10,044 $20,865 $6,522 $36,706 $29,075 $25,002 $8,766 $2,165 $163,484 
The following table shows the changes in the allowance for loan and lease losses, segregated by portfolio segment, for the six months ended June 30, 2026, and 2025.
(Dollars in thousands)Commercial and
agricultural		Renewable energyAuto and
light truck		Medium
and
heavy duty
truck		AircraftConstruction
equipment		Commercial
real estate		Residential
real estate
and home
equity		ConsumerTotal
June 30, 2026         
Balance, beginning of period$21,983 $11,833 $21,653 $6,295 $35,843 $27,529 $25,396 $9,076 $2,238 $161,846 
Charge-offs752 — 3,767 — — 1,124 354 126 641 6,764 
Recoveries997 — 973 — — 4 77 71 162 2,284 
Net charge-offs (recoveries)(245)— 2,794 — — 1,120 277 55 479 4,480 
Provision (recovery of provision)1,657 1,618 449 (242)(725)3,539 1,575 743 374 8,988 
Balance, end of period$23,885 $13,451 $19,308 $6,053 $35,118 $29,948 $26,694 $9,764 $2,133 $166,354 
June 30, 2025         
Balance, beginning of period$21,316 $8,562 $18,437 $7,292 $36,663 $28,258 $24,821 $7,976 $2,215 $155,540 
Charge-offs854 — 1,840 — 485 1,017 6 35 752 4,989 
Recoveries801 — 1,254 — 415 297 21 18 131 2,937 
Net charge-offs (recoveries)53 — 586 — 70 720 (15)17 621 2,052 
Provision (recovery of provision)3,076 1,482 3,014 (770)113 1,537 166 807 571 9,996 
Balance, end of period$24,339 $10,044 $20,865 $6,522 $36,706 $29,075 $25,002 $8,766 $2,165 $163,484 
The increase in the allowance for credit losses as compared to the prior quarter primarily reflects higher loan balances during the period. The forecast was maintained as the prior quarter’s assumptions continue to be applicable to the forward outlook. Consensus forecasts for GDP growth remain generally resilient, although overall economic uncertainty is elevated. The Company’s forecast assumes current geopolitical unrest may persist longer than current market expectations, contributing to commodity price volatility, firming inflationary expectations and a higher-for-longer interest rate environment. Ongoing risks include domestic trade instability, softness in labor markets, increasing consumer financial stress, and generally subdued consumer confidence.

Loan balances increased during the quarter while special attention loans, which are reserved at higher rates, declined. Historical loss rates decreased slightly, as charge-off activity during the period was modest. Lower charge-off activity, coupled with a change in loan mix during the period towards lower reserved pools, led to a decline in the overall allowance as a percentage of total loans and leases. Additionally, the Company modestly reduced certain qualitative adjustments as the corresponding quantitative loss rates sufficiently reflect current risk characteristics.

Economic Outlook
As of June 30, 2026, the most significant economic factor impacting the Company’s loan portfolios is heightened geopolitical uncertainty. Risks associated with geopolitical tensions raise the potential for energy price volatility, supply disruptions, and broader economic impacts. The breadth of hiring across industry segments improved slightly during the quarter but overall labor conditions remain soft. The Company continues to monitor the impact of tariff policies, uncertainty surrounding policy implementation, and heightened instability across the Company’s markets. Consumer stress indicators remain elevated and consumer confidence remains subdued. The Company is attentive to the potential impact of these conditions on small business borrowers, whose ability to manage operating expenses may be challenged by elevated interest rates and energy costs, increased input costs, and a higher overall cost of capital. Restrictive trade policies, volatile energy prices, and supply disruptions increase the potential for volatility in asset prices which collateralize the Company’s loans.
The Bank remains cognizant of geopolitical and energy market risks despite the recent retreat in crude oil prices. The potential for renewed supply disruptions, infrastructure damage, shipping interruptions, or further escalation in regional conflict remains elevated and no durable framework for lasting regional stability in the Middle East has emerged. Prolonged instability may contribute to renewed volatility in energy markets, upward pressure on inflation, tighter financial conditions, and slower economic growth. Consistent with this outlook, we view the overall operating environment as fragile and economic growth remains uneven.
The Company’s reasonable and supportable forecast incorporates the anticipated global and domestic economic impacts of these factors, along with other key macroeconomic variables, including projected changes in GDP and unemployment rates that may affect the financial condition of the Company’s clients. The forecast reflects a continued weighting toward downside risks over the two-year forecast horizon, with inflation expected to remain elevated for an extended period and a return to the Federal Reserve’s long-term 2% target will be protracted. Although the Company’s current loss estimates consider geopolitical and economic risk, due to the level of uncertainty associated with these and other risk factors, the complexity of the current environment, and the potential for future changes in the forecast, the Company’s future loss estimates may vary considerably from the June 30, 2026, assumptions.
Liability for Credit Losses on Unfunded Loan Commitments
The liability for credit losses inherent in unfunded loan commitments is included in Accrued Expenses and Other Liabilities on the Consolidated Statements of Financial Condition. The following table shows the changes in the liability for credit losses on unfunded loan commitments.
Three Months Ended
June 30,		Six Months Ended
June 30,
(Dollars in thousands)2026202520262025
Balance, beginning of period$9,297 $8,138 $9,035 $6,985 
(Recovery of provision) provision(439)(194)(177)959 
Balance, end of period$8,858 $7,944 $8,858 $7,944