v3.26.1
Note 4 - Allowance for Credit Losses on Loans
 6 Months Ended
Jun. 30, 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 June 30,

  

Six Months Ended June 30,

 

(In thousands)

 

2026

  

2025

  

2026

  

2025

 

Balance, beginning of period

 $20,938  $18,722  $22,261  $18,679 

Provision for credit losses on loans

  2,461   891   3,894   891 

Charge-offs

  (1,901)  -   (5,072)  - 

Recoveries

  3   11   418   54 

Balance, end of period

 $21,501  $19,624  $21,501  $19,624 

 

Accrued interest receivable related to loans totaled $8.7 million and $8.2 million as of  June 30, 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 and six months ended June 30, 2026 and 2025 are as follows:

 

  For the Three Months Ended June 30, 
  2026 
  Commercial      Residential  Commercial         

(In thousands)

 

and Industrial

  

Construction

  

Real Estate

  

Real Estate

  

Consumer

  

Total

 

Balance, March 31, 2026

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

Provision for credit losses on loans (1)

  763   1,202   (93)  589   -   2,461 

Charge-offs

  (26)  (1,875)  -   -   -   (1,901)

Recoveries

  3   -   -   -   -   3 

Balance, June 30, 2026

 $14,596  $1,560  $437  $4,906  $2  $21,501 
                         
  2025 
  Commercial      Residential  Commercial         

(In thousands)

 and Industrial  Construction  Real Estate  Real Estate  Consumer  Total 

Balance, March 31, 2025

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

Provision for credit losses on loans (1)

  1,058   (288)  (14)  131   4   891 

Charge-offs

  -   -   -   -   -   - 

Recoveries

  11   -   -   -   -   11 

Balance, June 30, 2025

 $12,058  $2,534  $353  $4,654  $25  $19,624 

 

  

For the Six Months Ended June 30,

 
  

2026

 
  

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)

  1,763   1,463   (57)  756   (31)  3,894 

Charge-offs

  (3,197)  (1,875)  -   -   -   (5,072)

Recoveries

  418   -   -   -   -   418 

Balance, June 30, 2026

 $14,596  $1,560  $437  $4,906  $2  $21,501 
                         
  

2025

 
  

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 (1)

  1,834   (471)  67   (553)  14   891 

Charge-offs

  -   -   -   -   -   - 

Recoveries

  54   -   -   -   -   54 

Balance, June 30, 2025

 $12,058  $2,534  $353  $4,654  $25  $19,624 

 

(1) Excludes provision for unfunded commitments of $328 thousand and $340 thousand for the three and six months ended June 30, 2026, respectively, and $34 thousand and $34 thousand for the three and six months ended June 30, 2025, respectively.

 

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 June 30, 2026 and December 31, 2025:

 

  

June 30, 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

  14,448   -   14,448   - 

Residential Real Estate

  -   -   -   - 

Commercial Real Estate

  -   -   -   - 

Consumer

  -   -   -   - 

Total

 $14,448  $-  $14,448  $- 

 

  

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

 

June 30, 2026

                                    

Commercial and industrial

                                    

Risk Rating

                                    

Pass

 $129,558  $225,923  $65,111  $31,788  $23,798  $12,370  $600,806  $-  $1,089,354 

Special Mention

  -   1,316   559   -   4,167   -   9,323   -   15,365 

Substandard

  1,964   -   -   1,222   413   -   3,292   -   6,891 

Substandard - Non-accrual

  -   -   -   -   -   -   -   -   - 

Total

 $131,522  $227,239  $65,670  $33,010  $28,378  $12,370  $613,421  $-  $1,111,610 

Gross charge-offs

 $-  $-  $-  $3,197  $-  $-  $-  $-  $3,197 
                                     

Construction

                                    

Risk Rating

                                    

Pass

 $25,572  $42,535  $44,193  $23,687  $6,297  $3,582  $-  $-  $145,866 

Special Mention

  -   -   1,500   -   -   2,386   -   -   3,886 

Substandard - Non-accrual

  -   -   -   -   -   14,448   -   -   14,448 

Total

 $25,572  $42,535  $45,693  $23,687  $6,297  $20,416  $-  $-  $164,200 

Gross charge-offs

 $-  $-  $-  $-  $-  $1,875  $-  $-  $1,875 
                                     

Residential Real Estate

                                    

Risk Rating

                                    

Pass

 $-  $3,969  $-  $4,291  $666  $2,685  $26,396  $-  $38,007 

Total

 $-  $3,969  $-  $4,291  $666  $2,685  $26,396  $-  $38,007 

Gross charge-offs

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

Commercial Real Estate

                                    

Risk Rating

                                    

Pass

 $90,578  $161,208  $52,145  $145,512  $123,597  $296,049  $12,007  $-  $881,096 

Special Mention

  -   18,819   -   -   -   10,017   -   -   28,836 

Total

 $90,578  $180,027  $52,145  $145,512  $123,597  $306,066  $12,007  $-  $909,932 

Gross charge-offs

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

Consumer

                                    

Risk Rating

                                    

Pass

 $-  $-  $-  $-  $-  $-  $370  $-  $370 

Total

 $-  $-  $-  $-  $-  $-  $370  $-  $370 

Gross charge-offs

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

Total

                                    

Pass

 $245,708  $433,635  $161,449  $205,278  $154,358  $314,686  $639,579  $-  $2,154,693 

Special Mention

  -   20,135   2,059   -   4,167   12,403   9,323   -   48,087 

Substandard

  1,964   -   -   1,222   413   -   3,292   -   6,891 

Substandard - Non-accrual

  -   -   -   -   -   14,448   -   -   14,448 

Total

 $247,672  $453,770  $163,508  $206,500  $158,938  $341,537  $652,194  $-  $2,224,119 

 

  

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 

 

During the six months ended June 30, 2026, loans risk rated as special mention increased $37.2 million. The increase is primarily due to a non-owner-occupied real estate relationship with 3 loans totaling $29.0 million with very low LTVs.

 

The Company monitors loans by past due status. The following tables present the aging of past due loans as of June 30, 2026 and December 31, 2025:

 

  

June 30, 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

 $-  $-  $-  $-  $-  $1,111,610  $1,111,610 

Construction

  -   1,500   -   14,448   15,948   148,252   164,200 

Residential Real Estate

  -   -   -   -   -   38,007   38,007 

Commercial Real Estate

  -   -   -   -   -   909,932   909,932 

Consumer

  -   -   -   -   -   370   370 

Total

 $-  $1,500  $-  $14,448  $15,948  $2,208,171  $2,224,119 

 

  

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  June 30, 2026 and  December 31, 2025.

 

  

Collateral Type

 
  

Real

  

Business

  

Accounts

             

(In thousands)

 

Property

  

Assets

  

Receivable

  

Equipment

  

Other

  

Total

 

June 30, 2026

                        

Commercial and industrial

 $-  $-  $-  $-  $-  $- 

Construction

  14,448   -   -   -   -   14,448 

Residential Real Estate

  -   -   -   -   -   - 

Commercial Real Estate

  -   -   -   -   -   - 

Consumer

  -   -   -   -   -   - 

Total

 $14,448  $-  $-  $-  $-  $14,448 
                         

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 as of  June 30, 2026 and June 30, 2025, that were both experiencing financial difficulty and were modified during the three and six months ended June 30, 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 June 30, 2026

                            

Commercial and industrial

 $1,221  $4,167  $-  $-  $-  $5,388   0.48%

Construction

  -   -   -   -   -   -   - 

Residential Real Estate

  -   -   -   -   -   -   - 

Commercial Real Estate

  -   -   -   -   -   -   - 

Consumer

  -   -   -   -   -   -   - 

Total

 $1,221  $4,167  $-  $-  $-  $5,388   0.24%
                             

Six Months Ended June 30, 2026

                            

Commercial and industrial

 $7,266  $4,167  $-  $-  $-  $11,433   1.03%

Construction

  2,385   -   -   -   -   2,385   1.45%

Residential Real Estate

  -   -   -   -   -   -   - 

Commercial Real Estate

  -   -   -   -   -   -   - 

Consumer

  -   -   -   -   -   -   - 

Total

 $9,651  $4,167  $-  $-  $-  $13,818   0.62%
                             

Three Months Ended June 30, 2025

                            

Commercial and industrial

 $-  $-  $-  $-  $-  $-   - 

Construction

  4,509   -   -   -   -   4,509   2.19 

Residential Real Estate

  -   -   -   -   -   -   - 

Commercial Real Estate

  -   -   -   -   -   -   - 

Consumer

  -   -   -   -   -   -   - 

Total

 $4,509  $-  $-  $-  $-  $4,509   0.24%
                             

Six Months Ended June 30, 2025

                            

Commercial and industrial

 $2,295  $-  $-  $-  $-  $2,295   0.27%

Construction

  28,276   -   -   -   -   28,276   13.76 

Residential Real Estate

  -   -   -   -   -   -   - 

Commercial Real Estate

  -   -   -   -   -   -   - 

Consumer

  -   -   -   -   -   -   - 

Total

 $30,571  $-  $-  $-  $-  $30,571   1.60%

 

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three and six months ended June 30, 2026 and 2025:

 

              

Weighted

 
          

Weighted

  

Average

 
          

Average

  

Term

 
  

Principal

  

Payment

  

Interest Rate

  

Extension

 

(In thousands)

 

Forgiveness ($)

  

Delays ($) (1)

  

Reduction (%)

  

(Months)

 

Three Months Ended June 30, 2026

                

Commercial and industrial

  -   567   -   1.0 

Construction

  -   -   -   - 

Residential Real Estate

  -   -   -   - 

Commercial Real Estate

  -   -   -   - 

Consumer

  -   -   -   - 

Total

  -   567   -   1.0 
                 

Six Months Ended June 30, 2026

                

Commercial and industrial

  -   567   -   10.1 

Construction

  -   -   -   6.0 

Residential Real Estate

  -   -   -   - 

Commercial Real Estate

  -   -   -   - 

Consumer

  -   -   -   - 

Total

  -   567   -   9.0 
                 

Three Months Ended June 30, 2025

                

Commercial and industrial

  -   -   -   - 

Construction

  -   -   -   3.0 

Residential Real Estate

  -   -   -   - 

Commercial Real Estate

  -   -   -   - 

Consumer

  -   -   -   - 

Total

  -   -   -   3.0 
                 

Six Months Ended June 30, 2025

                

Commercial and industrial

  -   -   -   - 

Construction

  -   -   -   2.4 

Residential Real Estate

  -   -   -   - 

Commercial Real Estate

  -   -   -   - 

Consumer

  -   -   -   - 

Total

  -   -   -   2.4 
(1) Represents delayed repayment of contractual principal while maintaining the original maturity date and contractual interest rate.

 

Commitments to lend additional funds to borrowers included in the previous tables totaled $734 thousand and $0 at  June 30, 2026 and 2025, respectively. There were no loans to borrowers experiencing financial difficulty, which had been modified in the prior 12 months, with a payment default during the six months ended June 30, 2026 or 2025.