The Company’s loan portfolio consisted of the following as of the dates indicated (in thousands):


	Principal Amount Outstanding		Net Deferred Loan (Fees) Costs			Loans, Net
June 30, 2026
Commercial business	$	767,524	$	1,025		$	768,549
Commercial mortgage–construction		560,063		(2,027	)		558,036
Commercial mortgage–multifamily		565,622		(595	)		565,027
Commercial mortgage–non-owner occupied		972,358		(1,392	)		970,966
Commercial mortgage–owner occupied		347,852		(46	)		347,806
Residential real estate loans		654,339		8,243			662,582
Residential real estate lines		72,848		3,251			76,099
Consumer indirect		747,885		23,241			771,126
Other consumer		32,689		85			32,774
Total	$	4,721,180	$	31,785			4,752,965
Allowance for credit losses–loans							(47,497	)
Total loans, net						$	4,705,468
December 31, 2025
Commercial business	$	737,578	$	729		$	738,307
Commercial mortgage–construction		491,035		(2,477	)		488,558
Commercial mortgage–multifamily		589,437		(705	)		588,732
Commercial mortgage–non-owner occupied		943,514		(1,295	)		942,219
Commercial mortgage–owner occupied		322,782		(6	)		322,776
Residential real estate loans		648,188		8,813			657,001
Residential real estate lines		71,928		3,193			75,121
Consumer indirect		782,802		24,508			807,310
Other consumer		37,746		96			37,842
Total	$	4,625,010	$	32,856			4,657,866
Allowance for credit losses–loans							(47,386	)
Total loans, net						$	4,610,480

Loans held for sale (not included above) were comprised entirely of residential real estate mortgages and totaled $2.5 million and $3.4 million as of June 30, 2026 and December 31, 2025, respectively.

The Company sells certain qualifying newly originated or refinanced residential real estate loans on the secondary market. Residential real estate loans serviced for others, which are not included in the consolidated statements of financial condition, amounted to $302.1 million and $293.3 million as of June 30, 2026 and December 31, 2025, respectively.

The Company elected to exclude AIR from the amortized cost basis of loans disclosed throughout this footnote. As of June 30, 2026, and December 31, 2025, AIR for loans totaled $21.5 million and $21.3 million, respectively, is included in other assets on the Company’s consolidated statements of financial condition.

The Company’s recorded investment, by loan class, in current and nonaccrual loans, as well as an analysis of accruing delinquent loans is set forth as of the dates indicated (in thousands):


	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Nonaccrual		Current		Total Loans		Nonaccrual with no specific allowance
June 30, 2026
Commercial business	$	395	$	4,449	$	670	$	5,514	$	7,007	$	755,003	$	767,524	$	6,431
Commercial mortgage–construction		—		2,549		—		2,549		20,520		536,994		560,063		20,520
Commercial mortgage–multifamily		2,278		—		—		2,278		540		562,804		565,622		540
Commercial mortgage–non-owner occupied		874		—		—		874		—		971,484		972,358		—
Commercial mortgage–owner occupied		—		—		—		—		981		346,871		347,852		446
Residential real estate loans		3,563		47		—		3,610		6,974		643,755		654,339		6,974
Residential real estate lines		141		99		—		240		412		72,196		72,848		412
Consumer indirect		10,684		2,747		—		13,431		1,772		732,682		747,885		1,772
Other consumer		359		676		—		1,035		131		31,523		32,689		131
Total loans, gross	$	18,294	$	10,567	$	670	$	29,531	$	38,337	$	4,653,312	$	4,721,180	$	37,226
December 31, 2025
Commercial business	$	294	$	163	$	670	$	1,127	$	4,039	$	732,412	$	737,578	$	528
Commercial mortgage–construction		—		2,463		—		2,463		20,321		468,251		491,035		20,321
Commercial mortgage–multifamily		3,278		—		—		3,278		540		585,619		589,437		540
Commercial mortgage–non-owner occupied		—		—		—		—		—		943,514		943,514		—
Commercial mortgage–owner occupied		—		—		—		—		1,095		321,687		322,782		1,095
Residential real estate loans		3,274		161		—		3,435		6,443		638,310		648,188		6,443
Residential real estate lines		421		—		—		421		374		71,133		71,928		374
Consumer indirect		14,124		2,135		—		16,259		2,155		764,388		782,802		2,155
Other consumer		1,296		198		—		1,494		118		36,134		37,746		118
Total loans, gross	$	22,687	$	5,120	$	670	$	28,477	$	35,085	$	4,561,448	$	4,625,010	$	31,574

There were no consumer overdrafts which were past due greater than 90 days as of June 30, 2026 and December 31, 2025. Consumer overdrafts are overdrawn deposit accounts which have been reclassified as loans but by their terms do not accrue interest.

Interest income on nonaccrual loans, if recognized, is recorded using the cash basis method of accounting. There was no interest income recognized on nonaccrual loans during the three and six months ended June 30, 2026 and 2025. Estimated interest income of $169 thousand and $423 thousand for the three months ended June 30, 2026 and 2025, respectively, and $694 thousand and $627 thousand for the six months ended June 30, 2026 and 2025, respectively, would have been recorded if all such loans had been accruing interest according to their original contractual terms.

Loans may be modified when it is determined that a borrower is experiencing financial difficulty. Loan modifications may include principal forgiveness, interest rate reduction, an other-than-insignificant payment delay, and term extensions, or a combination of these concessions.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that have been modified in the twelve months ended June 30, 2026 (in thousands):

Management has determined that specific commercial loans on nonaccrual status, all loans that have had their terms restructured when a borrower is experiencing financial difficulty, and other loans deemed appropriate by management where repayment is expected to be provided substantially through the operation or sale of the collateral to be collateral dependent loans. The following table presents the amortized cost basis of collateral dependent loans by collateral type as of June 30, 2026 and December 31, 2025 (in thousands):

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 such as the fair value of collateral. The Company analyzes commercial business and commercial mortgage loans individually by classifying the loans as to credit risk. Commercial loans are generally evaluated annually depending on the size of the relationship, unless the credit quality of a loan deteriorates to a level of “special mention” or below, when the loan is evaluated quarterly. For pass-rated loans (risk rating 1-4), interim reviews may take place if circumstances of the borrower or industry warrant a more frequent review. The Company uses the following definitions for risk ratings:

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Due to the high probability of loss, nonaccrual accounting is required for all assets listed as doubtful.

Loans that do not meet the criteria above that are analyzed individually as part of the process described above are considered “uncriticized” or pass-rated loans and are included in groups of homogeneous loans with similar risk and loss characteristics.

The following tables set forth the Company’s commercial loan portfolio, categorized by internally assigned asset classification, as of the dates indicated (in thousands):


	Term Loans Amortized Cost Basis by Origination Year
	2026		2025		2024		2023		2022		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
June 30, 2026
Commercial business:
Uncriticized	$	75,926	$	129,821	$	79,882	$	50,962	$	28,598	$	49,850	$	331,080	$	—	$	746,119
Special mention		1,088		22		2,225		1,946		—		395		6,150		—		11,826
Substandard		—		29		500		255		—		164		2,345		—		3,293
Doubtful		—		—		107		—		166		172		6,866		—		7,311
Total	$	77,014	$	129,872	$	82,714	$	53,163	$	28,764	$	50,581	$	346,441	$	—	$	768,549
Current period gross charge-offs	$	—	$	—	$	114	$	—	$	2,934	$	—	$	—	$	—	$	3,048

Commercial mortgage–construction
Uncriticized	$	18,221	$	179,520	$	95,346	$	138,718	$	93,643	$	12	$	—	$	—	$	525,460
Special mention		—		—		—		—		—		2,549		—		—		2,549
Substandard		—		—		—		6,240		3,267		—		—		—		9,507
Doubtful		—		—		—		—		—		20,520		—		—		20,520
Total	$	18,221	$	179,520	$	95,346	$	144,958	$	96,910	$	23,081	$	—	$	—	$	558,036
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial mortgage–multifamily
Uncriticized	$	23,170	$	77,514	$	25,145	$	104,424	$	120,629	$	201,931	$	—	$	—	$	552,813
Special mention		—		—		—		—		—		6,823		—		—		6,823
Substandard		—		—		—		—		4,176		675		—		—		4,851
Doubtful		—		—		—		—		—		540		—		—		540
Total	$	23,170	$	77,514	$	25,145	$	104,424	$	124,805	$	209,969	$	—	$	—	$	565,027
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial mortgage–non-owner occupied
Uncriticized	$	60,956	$	170,487	$	89,022	$	58,740	$	241,850	$	324,186	$	—	$	—	$	945,242
Special mention		—		—		—		—		—		7,971		—		—		7,971
Substandard		—		4,445		—		13,159		—		149		—		—		17,753
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	60,956	$	174,932	$	89,022	$	71,899	$	241,850	$	332,306	$	—	$	—	$	970,966
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial mortgage–owner occupied
Uncriticized	$	45,017	$	34,340	$	73,163	$	20,009	$	55,434	$	117,888	$	—	$	—	$	345,851
Special mention		—		—		—		—		—		408		—		—		408
Substandard		—		371		—		—		—		195		—		—		566
Doubtful		—		—		—		—		—		981		—		—		981
Total	$	45,017	$	34,711	$	73,163	$	20,009	$	55,434	$	119,472	$	—	$	—	$	347,806
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(4.) LOANS (Continued)


	Term Loans Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
December 31, 2025
Commercial business:
Uncriticized	$	157,771	$	89,340	$	69,005	$	37,834	$	33,956	$	24,534	$	301,296	$	—	$	713,736
Special mention		13		2,332		2,672		—		2		458		6,651		—		12,128
Substandard		—		12		341		7		—		162		8,005		—		8,527
Doubtful		—		164		—		3,101		—		172		479		—		3,916
Total	$	157,784	$	91,848	$	72,018	$	40,942	$	33,958	$	25,326	$	316,431	$	—	$	738,307
Current period gross charge-offs	$	—	$	75	$	2	$	1,994	$	35	$	200	$	—	$	—	$	2,306

Commercial mortgage–construction
Uncriticized	$	85,790	$	108,496	$	150,093	$	103,864	$	—	$	8,024	$	—	$	—	$	456,267
Special mention		—		—		6,240		3,267		2,463		—		—		—		11,970
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		20,321		—		—		—		20,321
Total	$	85,790	$	108,496	$	156,333	$	107,131	$	22,784	$	8,024	$	—	$	—	$	488,558
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial mortgage–multifamily
Uncriticized	$	77,817	$	22,987	$	105,464	$	122,718	$	145,614	$	97,115	$	—	$	—	$	571,715
Special mention		—		—		—		174		4,546		6,823		—		—		11,543
Substandard		—		—		—		4,194		—		740		—		—		4,934
Doubtful		—		—		—		—		—		540		—		—		540
Total	$	77,817	$	22,987	$	105,464	$	127,086	$	150,160	$	105,218	$	—	$	—	$	588,732
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial mortgage–non-owner occupied
Uncriticized	$	174,659	$	83,946	$	68,768	$	245,352	$	77,161	$	271,621	$	—	$	—	$	921,507
Special mention		—		—		—		—		—		7,484		—		—		7,484
Substandard		—		—		12,994		—		—		234		—		—		13,228
Doubtful		—		—		—		—		—		—		—		—		-
Total	$	174,659	$	83,946	$	81,762	$	245,352	$	77,161	$	279,339	$	—	$	—	$	942,219
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	597	$	—	$	—	$	597

Commercial mortgage–owner occupied
Uncriticized	$	34,767	$	72,521	$	23,552	$	57,572	$	37,269	$	95,052	$	—	$	—	$	320,733
Special mention		—		—		—		—		—		—		—		—		-
Substandard		—		—		—		—		199		749		—		—		948
Doubtful		—		—		—		—		—		1,095		—		—		1,095
Total	$	34,767	$	72,521	$	23,552	$	57,572	$	37,468	$	96,896	$	—	$	—	$	322,776
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

The Company utilizes payment status as a means of identifying and reporting problem and potential problem retail loans. The Company considers nonaccrual loans and loans past due greater than 90 days and still accruing interest to be non-performing. The following tables set forth the Company’s retail loan portfolio, categorized by performance status, as of the dates indicated (in thousands):


	Term Loans Amortized Cost Basis by Origination Year
	2026		2025		2024		2023		2022		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
June 30, 2026
Residential real estate loans:
Performing	$	31,837	$	65,312	$	53,682	$	97,390	$	68,197	$	339,190	$	—	$	—	$	655,608
Nonperforming		380		476		471		575		585		4,487		—		—		6,974
Total	$	32,217	$	65,788	$	54,153	$	97,965	$	68,782	$	343,677	$	—	$	—	$	662,582
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	20	$	—	$	—	$	20

Residential real estate lines:
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	73,388	$	2,299	$	75,687
Nonperforming		—		—		—		—		—		—		412		—		412
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	73,800	$	2,299	$	76,099
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	30	$	—	$	30

Consumer indirect:
Performing	$	134,858	$	243,007	$	129,633	$	95,454	$	104,176	$	62,226	$	—	$	—	$	769,354
Nonperforming		127		196		203		345		508		393		—		—		1,772
Total	$	134,985	$	243,203	$	129,836	$	95,799	$	104,684	$	62,619	$	—	$	—	$	771,126
Current period gross charge-offs	$	2	$	1,223	$	1,190	$	1,338	$	1,947	$	1,820	$	—	$	—	$	7,520

Other consumer:
Performing	$	2,474	$	3,398	$	3,711	$	19,174	$	798	$	296	$	2,792	$	—	$	32,643
Nonperforming		—		8		97		4		8		—		14		—		131
Total	$	2,474	$	3,406	$	3,808	$	19,178	$	806	$	296	$	2,806	$	—	$	32,774
Current period gross charge-offs	$	173	$	32	$	51	$	227	$	26	$	2	$	14	$	—	$	525


	Term Loans Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
December 31, 2025
Residential real estate loans:
Performing	$	61,803	$	56,511	$	102,504	$	70,501	$	68,202	$	291,037	$	—	$	—	$	650,558
Nonperforming		155		483		998		699		877		3,231		—		—		6,443
Total	$	61,958	$	56,994	$	103,502	$	71,200	$	69,079	$	294,268	$	—	$	—	$	657,001
Current period gross charge-offs	$	—	$	—	$	19	$	—	$	130	$	19	$	—	$	—	$	168

Residential real estate lines:
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	73,953	$	794	$	74,747
Nonperforming		—		—		—		—		—		—		374		-		374
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	74,327	$	794	$	75,121
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	27	$	27

Consumer indirect:
Performing	$	283,761	$	158,129	$	121,885	$	142,171	$	78,858	$	20,351	$	—	$	—	$	805,155
Nonperforming		315		354		366		439		516		165		—		—		2,155
Total	$	284,076	$	158,483	$	122,251	$	142,610	$	79,374	$	20,516	$	—	$	—	$	807,310
Current period gross charge-offs	$	645	$	2,375	$	3,645	$	5,390	$	3,603	$	1,652	$	—	$	—	$	17,310

Other consumer:
Performing	$	6,760	$	4,819	$	22,110	$	1,211	$	225	$	384	$	2,215	$	—	$	37,724
Nonperforming		21		9		75		10		—		—		3		—		118
Total	$	6,781	$	4,828	$	22,185	$	1,221	$	225	$	384	$	2,218	$	—	$	37,842
Current period gross charge-offs	$	376	$	206	$	693	$	47	$	15	$	11	$	44	$	—	$	1,392

The following table sets forth the changes in the allowance for credit losses – loans for the three and six months ended June 30, 2026 and 2025 (in thousands):


				Commercial Mortgage												Residential Real Estate
	Commercial Business			Construction			Multi- family			Non-Owner Occupied			Owner Occupied			Loans			Lines			Consumer Indirect			Other Consumer			Total
Three months ended June 30, 2026
Beginning balance	$	7,015		$	4,753		$	2,773		$	12,226		$	2,786		$	3,939		$	767		$	10,152		$	250		$	44,661
Charge-offs		—			—			—			—			—			—			(30	)		(3,184	)		(201	)		(3,415	)
Recoveries		23			—			—			1			—			—			—			2,044			50			2,118
Provision (benefit)		373			330			(156	)		267			1,270			(183	)		(109	)		2,148			193			4,133
Ending balance	$	7,411		$	5,083		$	2,617		$	12,494		$	4,056		$	3,756		$	628		$	11,160		$	292		$	47,497

Six months ended June 30, 2026
Beginning balance	$	9,568		$	4,425		$	3,316		$	10,494		$	3,380		$	3,511		$	778		$	11,554		$	360		$	47,386
Charge-offs		(3,048	)		—			—			—			—			(20	)		(30	)		(7,520	)		(526	)		(11,144	)
Recoveries		81			—			—			2			1			1			3			4,531			148			4,767
Provision (benefit)		810			658			(699	)		1,998			675			264			(123	)		2,595			310			6,488
Ending balance	$	7,411		$	5,083		$	2,617		$	12,494		$	4,056		$	3,756		$	628		$	11,160		$	292		$	47,497

				Commercial Mortgage												Residential Real Estate
	Commercial Business			Construction			Multi- family			Non-Owner Occupied			Owner Occupied			Loans			Lines			Consumer Indirect			Other Consumer			Total
Three months ended June 30, 2025
Beginning balance	$	7,621		$	5,312		$	4,110		$	9,709		$	4,013		$	4,862		$	949		$	11,798		$	590		$	48,964
Charge-offs		(1,936	)		—			—			(597	)		—			(97	)		(27	)		(4,149	)		(541	)		(7,347	)
Recoveries		33			—			—			1			1			5			—			3,207			50			3,297
Provision (benefit)		3,278			(798	)		(180	)		(245	)		(927	)		(132	)		47			927			407			2,377
Ending balance	$	8,996		$	4,514		$	3,930		$	8,868		$	3,087		$	4,638		$	969		$	11,783		$	506		$	47,291

Six months ended June 30, 2025
Beginning balance		8,665			6,824			3,458			7,330			4,183			3,596			793			12,705			487			48,041
Charge-offs		(2,075	)		—			—			(597	)		—			(162	)		(27	)		(8,977	)		(753	)		(12,591	)
Recoveries		115			—			—			2			2			29			—			5,886			138			6,172
Provision (benefit)		2,291			(2,310	)		472			2,133			(1,098	)		1,175			203			2,169			634			5,669
Ending balance	$	8,996		$	4,514		$	3,930		$	8,868		$	3,087		$	4,638		$	969		$	11,783		$	506		$	47,291

The increase in the provision for credit losses - loans for both the three and six months ended June 30, 2026 compared to the comparable period in 2025 was driven by a combination of factors, including the impact of an increase in loans outstanding and higher qualitative factors, partially offset by a decrease in loss rate for pooled loans and fluctuations.

Loans are pooled based on their homogeneous risk characteristics. The Company has divided its loan portfolio into segments, as the loans within each segment have similar characteristics related to loan purpose, tenor, amortization, repayment source, payment frequency, collateral and recourse.

Commercial business loans primarily consist of loans to small to mid-sized businesses in our market area in a diverse range of industries. These loans are typically associated with higher credit risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. Further, the collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value. The credit risk related to commercial loans is largely influenced by general economic conditions, including inflation, and the resulting impact on a borrower’s operations or on the value of underlying collateral, if any.

Commercial mortgage loans generally have larger balances and involve a greater degree of risk than residential mortgage loans, potentially resulting in higher losses on an individual customer basis. Loan repayment is often dependent on the successful operation and management of the properties, as well as on the collateral securing the loan. Economic events, inflation, or conditions in the real estate market could have an adverse impact on the cash flows generated by properties securing the Company’s commercial real estate loans and on the value of such properties, influencing the ability of the tenants to pay rent on these properties. The Company further disaggregated the commercial mortgage loans into the following categories: construction, multifamily, non-owner occupied, and owner occupied based on the risk characteristics of the loans and the Company’s methodology for monitoring and assessing credit risk.

Residential real estate loans (comprised of conventional mortgages and home equity loans) and residential real estate lines of credit (comprised of home equity lines of credit) are generally made based on the borrower’s ability to make repayment from his or her employment and other income but are secured by real property whose value tends to be more easily ascertainable. Credit risk for these types of loans is generally influenced by general economic conditions, the characteristics of individual borrowers, and the nature of the loan collateral.

Consumer indirect and other consumer loans may entail greater credit risk than residential mortgage loans and home equities, particularly in the case of other consumer loans which are primarily unsecured or, in the case of some loans, secured by depreciable assets such as solar panels, and in the case of indirect consumer loans, secured by depreciable assets such as automobiles. In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance. In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by inflation and adverse personal circumstances such as job loss, illness or personal bankruptcy, including the heightened risk that such circumstances may arise as a result of inflation. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.