Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2026

Loans and Allowance for Credit Losses

Loans and Allowance for Credit Losses

3. Loans and Allowance for Credit Losses

A summary of the Company’s loan portfolio is as follows:


		June 30,			December 31,
		2026			2025
Commercial real estate loans:
Non-residential		$	417,065		$	417,808
Multi-family			99,582			107,938
Construction			6,462			8,982
Commercial and industrial loans			87,165			91,526
Residential real estate loans			106,824			100,086
Consumer loans:
Indirect automobile			188,112			213,802
Home equity			11,947			12,290
Other consumer			5,816			5,733
Total gross loans			922,973			958,165
Dealer reserves			3,199			3,573
Allowance for credit losses			(7,695)			(8,353)
Total net loans		$	918,477		$	953,385

The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans:


		June 30, 2026
											Greater Than
					30-59 Days			60-89 Days			90 Days Past			Total Loans
		Current			Past Due			Past Due			Due			Receivable			Non-accrual
Commercial real estate:
Non-residential		$	415,365		$	—		$	16		$	1,684		$	417,065		$	1,684
Multifamily			99,582			—			—			—			99,582			—
Construction			6,462			—			—			—			6,462			—
Commercial and industrial			86,892			36			227			10			87,165			10
Residential real estate			106,130			325			—			369			106,824			1,176
Consumer:
Indirect automobile			181,600			5,126			979			407			188,112			506
Home equity			11,771			164			—			12			11,947			12
Other consumer			5,659			154			3			—			5,816			—
Total		$	913,461		$	5,805		$	1,225		$	2,482		$	922,973		$	3,388


		December 31, 2025
											Greater Than
					30-59 Days			60-89 Days			90 Days Past			Total Loans
		Current			Past Due			Past Due			Due			Receivable			Non-accrual
Commercial real estate:
Non-residential		$	415,286		$	837		$	17		$	1,668		$	417,808		$	1,668
Multifamily			107,938			—			—			—			107,938			—
Construction			8,982			—			—			—			8,982			—
Commercial and industrial			91,241			263			—			22			91,526			22
Residential real estate			98,355			1,157			184			390			100,086			1,255
Consumer:
Indirect automobile			204,192			7,831			1,072			707			213,802			740
Home equity			12,075			170			45			—			12,290			—
Other consumer			5,561			134			23			15			5,733			15
Total		$	943,630		$	10,392		$	1,341		$	2,802		$	958,165		$	3,700

All of our non-accrual loans are individually analyzed for credit loss. The Company has one individually analyzed home equity loan of $98 that was accruing interest at June 30, 2026.

The following table presents the Company’s amortized cost basis of non-accrual loans for which there is no related ACL:


	June 30, 2026				December 31, 2025
Commercial real estate:
Non-residential	$		1,684		$		1,668
Commercial and industrial			—				22
Residential real estate			1,176				1,255
Consumer:
Indirect automobile			97				110
Home equity			12				—
Total	$		2,969		$		3,055

The following table presents the Company’s amortized cost basis of only those non-accrual loans with a related ACL:


		June 30, 2026						December 31, 2025
		Non-accrual loans			Related ACL			Non-accrual loans			Related ACL
Commercial and industrial		$	10		$	10		$	—		$	—
Consumer:
Indirect automobile			409			146			630			226
Other consumer			—			7			15			14
Total		$	419		$	163		$	645		$	240

During the six months ended June 30, 2026, $34 in accrued interest was reversed for non-accrual loans. The total accrued interest receivable associated with loans totaled $3,819 and $4,168 at June 30, 2026 and December 31, 2025, respectively, and was reported in accrued interest receivable on the consolidated statements of financial condition.

Residential mortgage and consumer loans secured by residential real estate properties in formal foreclosure proceedings totaled $58 at June 30, 2026 and $0 at December 31, 2025.

The Company transfers a portion of its originated commercial real estate loans to participating lenders. The amounts transferred have been accounted for as sales and are therefore not included in the Company’s accompanying statements of financial condition. The Company and participating lenders share ratably in any gains or losses that may result from a loan’s performance under its contractual terms. The Company continues to service the loans on behalf of the participating lenders and, as such, collects cash payments from the borrowers, remits payments to participating lenders and disburses required escrow funds to relevant parties. At June 30, 2026 and December 31, 2025, the Company was servicing loans for participants aggregating $51,784 and $52,240, respectively.

The Company also services certain loans that it has sold to third parties. The aggregate balances of loans serviced for others were $240,518 and $250,311 as of June 30, 2026 and December 31, 2025, respectively. Included in these are loans serviced for the Federal Home Loan Mortgage Corporation with recourse provisions, whereby the Company is obligated to bear all costs when a default, including foreclosure, occurs. At June 30, 2026 and December 31, 2025, the maximum contingent liability associated with loans sold with recourse was $470 and $473, respectively, which is not recorded in the consolidated financial statements. Losses are borne in priority order by the borrower, private mortgage insurance and the Company. As of June 30, 2026, the Company has not repurchased any loans or incurred any losses under these recourse provisions.

The balances of capitalized servicing rights included in other assets at June 30, 2026 and December 31, 2025 were $1,094 and $1,262, respectively. Fair value exceeds carrying value, and thus, no impairment charges related to servicing rights were recognized during the six months ended June 30, 2026 or the year ended December 31, 2025.

Activity in the Company’s ACL for loans for the three and six months ended June 30, 2026 is summarized in the tables below:


		Three months ended June 30, 2026
		Balance at									Provision for			Balance at
		beginning of									(credit to)			end of
		period			Charge-offs			Recoveries			credit losses			period
Commercial real estate:
Non-residential		$	3,064		$	—		$	—		$	58		$	3,122
Multifamily			463			—			—			(43)			420
Construction			—			—			—			—			—
Commercial and industrial			737			(1)			—			(161)			575
Residential real estate			742			—			—			40			782
Consumer:
Indirect automobile			2,721			(495)			380			35			2,641
Home equity			87			—			—			—			87
Other consumer			74			(9)			22			(19)			68
Total		$	7,888		$	(505)		$	402		$	(90)		$	7,695

		Six months ended June 30, 2026
		Balance at									(Credit to)			Balance at
		beginning of									provision for			end of
		period			Charge-offs			Recoveries			credit losses			period
Commercial real estate:
Non-residential		$	3,142		$	—		$	—		$	(20)		$	3,122
Multifamily			490			—			—			(70)			420
Commercial and industrial			762			(1)			11			(197)			575
Residential real estate			739			—			—			43			782
Consumer:
Indirect automobile			3,050			(1,363)			714			240			2,641
Home equity			90			—			—			(3)			87
Other consumer			80			(40)			29			(1)			68
Total		$	8,353		$	(1,404)		$	754		$	(8)		$	7,695

Activity in the Company’s ACL for loans for the three and six months ended June 30, 2025 is summarized in the tables below.


		Three months ended June 30, 2025
		Balance at									Provision for			Balance at
		beginning of									(credit to)			end of
		period			Charge-offs			Recoveries			credit losses			period
Commercial real estate:
Non-residential		$	2,717		$	—		$	—		$	60		$	2,777
Multifamily			332			—			—			1			333
Construction			—			—			—			—			—
Commercial and industrial			673			—			—			(25)			648
Residential real estate			612			—			—			110			722
Consumer:
Indirect automobile			3,911			(476)			408			(267)			3,576
Home equity			87			—			—			1			88
Other consumer			74			(31)			8			36			87
Total		$	8,406		$	(507)		$	416		$	(84)		$	8,231

		Six months ended June 30, 2025
		Balance at									Provision for			Balance at
		beginning of									(credit to)			end of
		period			Charge-offs			Recoveries			credit losses			period
Commercial real estate:
Non-residential		$	2,675		$	—		$	—		$	102		$	2,777
Multifamily			313			—			—			20			333
Commercial and industrial			684			(175)			3			136			648
Residential real estate			575			—			—			147			722
Consumer:
Indirect automobile			4,133			(1,260)			834			(131)			3,576
Home equity			84			—			—			4			88
Other consumer			75			(31)			28			15			87
Total		$	8,539		$	(1,466)		$	865		$	293		$	8,231

The Company has also recorded an ACL for unfunded commitments, which was recorded in other liabilities. The provision for unfunded commitments is recorded within the provision for credit losses on the Company’s income statement. Activity in the Company’s ACL for unfunded commitments for the three and six months ended June 30, 2026 is summarized in the tables below.


		Three months ended June 30, 2026
		Balance at			Provision for			Balance at
		beginning of			(credit to)			end of
		period			credit losses			period
Commercial real estate:
Non-residential		$	19		$	82		$	101
Commercial and industrial			100			—			100
Residential real estate			3			(2)			1
Consumer:
Home equity			17			—			17
Other consumer			2			(1)			1
Total		$	141		$	79		$	220


		Six months ended June 30, 2026
		Balance at			Provision for			Balance at
		beginning of			(credit to)			end of
		period			credit losses			period
Commercial real estate:
Non-residential		$	19		$	82		$	101
Commercial and industrial			111			(11)			100
Residential real estate			3			(2)			1
Consumer:
Home equity			17			—			17
Other consumer			2			(1)			1
Total		$	152		$	68		$	220

Activity in the Company’s ACL for unfunded commitments for the three and six months ended June 30, 2025 is summarized in the tables below.


		Three months ended June 30, 2025
		Balance at			(Credit to)			Balance at
		beginning of			provision for			end of
		period			credit losses			period
Commercial real estate:
Non-residential		$	92		$	(19)		$	73
Commercial and industrial			103			4			107
Residential real estate			5			(2)			3
Consumer:
Home equity			18			—			18
Other consumer			2			—			2
Total		$	220		$	(17)		$	203


		Six months ended June 30, 2025
		Balance at			(Credit to)			Balance at
		beginning of			provision for			end of
		period			credit losses			period
Commercial real estate:
Non-residential		$	119		$	(46)		$	73
Commercial and industrial			104			3			107
Residential real estate			1			2			3
Consumer:
Home equity			18			—			18
Other consumer			2			—			2
Total		$	244		$	(41)		$	203

The following table summarizes the (credit to) provision for credit losses for the three and six months ended June 30, 2026 and 2025:


		Three Months Ended June 30,						Six Months Ended June 30,
		2026			2025			2026			2025
(Credit to) provision for credit losses - loans		$	(90)		$	(84)		$	(8)		$	293
Provision for (credit to) credit losses - unfunded commitments			79			(17)			68			(41)
(Credit to) provision for credit losses		$	(11)		$	(101)		$	60		$	252

In the normal course of business, the Company grants loans to officers, directors and other related parties. Balances and activity of such loans during the periods presented were not material.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, multifamily, construction and commercial loans. To assist in the review process, the Company engages an independent third-party to review a significant portion of loans within these segments. Consumer loans are rated as performing or non-performing based on payment status in accordance with regulatory retail credit guidance. Management uses the results of these reviews as part of its annual review process. In addition, management utilizes delinquency reports, the watch list and other loan reports to monitor credit quality of other loan segments.

Credit Quality Indicators. 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. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on all loans at origination and is updated on a quarterly basis for loans risk rated Watch, Special Mention, Substandard, or Doubtful.

The Company uses the following definitions for risk ratings:

Watch – Loans classified as watch exhibit weaknesses that require more than usual monitoring. Issues may include deteriorating financial condition, payments made after due date but within 30 days, adverse industry conditions or management problems.

Special Mention – Loans classified as special mention exhibit signs of further deterioration but still generally make payments within 30 days. This is a transitional rating and loans should typically not be rated Special Mention for more than 12 months.

Substandard – Loans classified as substandard possess weaknesses that jeopardize the ultimate collection of the principal and interest outstanding. These loans exhibit continued financial losses, ongoing delinquency, overall poor financial condition, and/or insufficient collateral. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as non-performing have all the weaknesses of substandard loans, and have deteriorated to the level that there is a high probability of substantial loss.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered Pass rated loans.

The following table presents the credit risk profile of the Company’s loan portfolio (excluding loans in process) based on rating category, as well as gross write-offs for the six months ended June 30, 2026, and by fiscal year of origination as of June 30, 2026.


																				Revolving
		Loans by Origination Year																		Loans
		2026			2025			2024			2023			2022			Prior			Amortized Cost			Total
Commercial construction
Pass		$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Watch			801			923			4,738			-			-			-			-			6,462
Total commercial construction			801			923			4,738			-			-			-			-			6,462

Commercial non-residential
Pass		$	18,605		$	52,456		$	42,907		$	31,049		$	33,521		$	90,807		$	-		$	269,345
Watch			498			16,444			16,334			14,799			21,123			48,998			-			118,196
Special mention			-			-			-			22,885			2,279			-			-			25,164
Substandard			-			-			-			-			2,304			2,056			-			4,360
Total commercial non-residential			19,103			68,900			59,241			68,733			59,227			141,861			-			417,065

Multifamily
Pass		$	-		$	10,892		$	733		$	582		$	17,708		$	27,584		$	-		$	57,499
Watch			-			989			5,600			10,197			10,616			14,681			-			42,083
Total multifamily			-			11,881			6,333			10,779			28,324			42,265			-			99,582

Residential
Performing		$	11,224		$	20,226		$	14,316		$	24,350		$	19,639		$	15,893		$	-		$	105,648
Non-performing			-			-			-			-			284			892			-			1,176
Total residential			11,224			20,226			14,316			24,350			19,923			16,785			-			106,824

Commercial and industrial
Pass		$	4,504		$	6,027		$	4,823		$	4,721		$	12,826		$	4,552		$	12,519		$	49,972
Watch			2,028			6,805			4,266			1,183			2,367			842			19,159			36,650
Special mention			-			-			82			46			-			-			374			502
Substandard			-			-			-			-			-			-			41			41
Total commercial and industrial			6,532			12,832			9,171			5,950			15,193			5,394			32,093			87,165
Current-period gross write-offs						-			-			-			-			1			-			1

Indirect automobile
Performing		$	28,678		$	38,401		$	31,219		$	35,684		$	40,254		$	13,370		$	-		$	187,606
Non-performing			-			75			113			77			113			128			-			506
Total indirect automobile			28,678			38,476			31,332			35,761			40,367			13,498			-			188,112
Current-period gross write-offs			-			142			342			447			275			157			-			1,363

Home equity
Performing		$	127		$	665		$	201		$	-		$	-		$	2,865		$	8,077		$	11,935
Non-performing			-			-			-			-			-			12			-			12
Total home equity			127			665			201			-			-			2,877			8,077			11,947

Other consumer
Performing		$	1,801		$	1,445		$	1,101		$	658		$	541		$	66		$	204		$	5,816
Total other consumer			1,801			1,445			1,101			658			541			66			204			5,816
Current-period gross write-offs			-			-			19			9			11			1			-			40

Total Loans
Pass/performing		$	64,939		$	130,112		$	95,300		$	97,044		$	124,489		$	155,137		$	20,800		$	687,821
Watch			3,327			25,161			30,938			26,179			34,106			64,521			19,159			203,391
Special mention			-			-			82			22,931			2,279			-			374			25,666
Substandard			-			-			-			-			2,304			2,056			41			4,401
Non-performing			-			75			113			77			397			1,032			-			1,694
Total Loans		$	68,266		$	155,348		$	126,433		$	146,231		$	163,575		$	222,746		$	40,374		$	922,973
Total Current-period gross write-offs		$	-		$	142		$	361		$	456		$	286		$	159		$	-		$	1,404

The following table presents the credit risk profile of the Company’s loan portfolio (excluding loans in process) based on rating category, as well as gross write-offs for the year ended December 31, 2025, and by fiscal year of origination as of December 31, 2025.


																				Revolving
		Loans by Origination Year																		Loans
		2025			2024			2023			2022			2021			Prior			Amortized Cost			Total
Commercial construction
Pass		$	2,037		$	-		$	-		$	-		$	-		$	-		$	-		$	2,037
Watch			775			6,170			-			-			-			-			-			6,945
Total commercial construction			2,812			6,170			-			-			-			-			-			8,982

Commercial non-residential
Pass		$	63,489		$	44,835		$	36,178		$	34,652		$	25,438		$	74,392		$	-		$	278,984
Watch			16,602			11,894			10,164			23,344			3,343			46,157			-			111,504
Special mention			-			-			22,921			-			-			-			-			22,921
Substandard			-			-			-			2,315			-			2,084			-			4,399
Total commercial non-residential			80,091			56,729			69,263			60,311			28,781			122,633			-			417,808
Current-period gross write-offs			-			-			-			629			-			-			-			629

Multifamily
Pass		$	10,986		$	738		$	590		$	18,086		$	27,949		$	7,063		$	-		$	65,412
Watch			996			5,627			10,210			10,756			5,514			9,423			-			42,526
Total multifamily			11,982			6,365			10,800			28,842			33,463			16,486			-			107,938

Residential
Performing		$	21,114		$	14,402		$	25,795		$	20,184		$	1,720		$	15,616		$	-		$	98,831
Non-performing			-			-			-			292			-			963			-			1,255
Total residential			21,114			14,402			25,795			20,476			1,720			16,579			-			100,086

Commercial and industrial
Pass		$	8,011		$	6,937		$	6,533		$	14,284		$	5,559		$	512		$	18,818		$	60,654
Watch			6,305			3,014			783			4,689			190			939			14,186			30,106
Special mention			-			-			-			455			-			-			250			705
Substandard			-			-			-			-			22			-			39			61
Total commercial and industrial			14,316			9,951			7,316			19,428			5,771			1,451			33,293			91,526
Current-period gross write-offs						11			151			8			-			165			-			335

Indirect automobile
Performing		$	44,776		$	38,583		$	47,088		$	58,044		$	19,391		$	5,180		$	-		$	213,062
Non-performing			41			104			120			320			87			68			-			740
Total indirect automobile			44,817			38,687			47,208			58,364			19,478			5,248			-			213,802
Current-period gross write-offs			86			428			500			1,026			463			129			-			2,632

Home equity
Performing		$	680		$	206		$	-		$	-		$	-		$	3,213		$	8,191		$	12,290
Total home equity			680			206			-			-			-			3,213			8,191			12,290

Other consumer
Performing		$	1,987		$	1,483		$	975		$	907		$	139		$	7		$	220		$	5,718
Non-performing			-			5			10			-			-			-			-			15
Total other consumer			1,987			1,488			985			907			139			7			220			5,733
Current-period gross write-offs			33			18			15			24			-			-			-			90

Total Loans
Pass/performing		$	153,080		$	107,184		$	117,159		$	146,157		$	80,196		$	105,983		$	27,229		$	736,988
Watch			24,678			26,705			21,157			38,789			9,047			56,519			14,186			191,081
Special mention			-			-			22,921			455			-			-			250			23,626
Substandard			-			-			-			2,315			22			2,084			39			4,460
Non-performing			41			109			130			612			87			1,031			-			2,010
Total Loans		$	177,799		$	133,998		$	161,367		$	188,328		$	89,352		$	165,617		$	41,704		$	958,165
Total Current-period gross write-offs		$	119		$	457		$	666		$	1,687		$	463		$	294		$	-		$	3,686