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).



(Dollars in thousands)	Commercial and agricultural		Renewable energy		Auto and light truck		Medium and heavy duty truck		Aircraft		Construction equipment		Commercial real estate		Residential real estate and home equity		Consumer		Total
September 30, 2026
Balance, beginning of period	$	23,885	$	13,451	$	19,308	$	6,053	$	35,118	$	29,948	$	26,694	$	9,764	$	2,133	$	166,354
Charge-offs	766		—		—		—		—		68		—		—		336		1,170
Recoveries	105		—		523		—		—		112		29		3		69		841
Net charge-offs (recoveries)	661		—		(523)		—		—		(44)		(29)		(3)		267		329
(Recovery of provision) provision	(682)		1,013		(2,144)		584		1,164		(800)		1,816		(32)		216		1,135
Balance, end of period	$	22,542	$	14,464	$	17,687	$	6,637	$	36,282	$	29,192	$	28,539	$	9,735	$	2,082	$	167,160

September 30, 2025
Balance, beginning of period	$	24,339	$	10,044	$	20,865	$	6,522	$	36,706	$	29,075	$	25,002	$	8,766	$	2,165	$	163,484
Charge-offs	1,269		—		526		—		—		390		4		14		277		2,480
Recoveries	92		—		253		—		150		10		38		1		61		605
Net charge-offs (recoveries)	1,177		—		273		—		(150)		380		(34)		13		216		1,875
(Recovery of provision) provision	(1,730)		583		404		180		(619)		681		(174)		175		321		(179)
Balance, end of period	$	21,432	$	10,627	$	20,996	$	6,702	$	36,237	$	29,376	$	24,862	$	8,928	$	2,270	$	161,430


(Dollars in thousands)	Commercial and agricultural		Renewable energy		Auto and light truck		Medium and heavy duty truck		Aircraft		Construction equipment		Commercial real estate		Residential real estate and home equity		Consumer		Total
September 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-offs	1,518		—		3,767		—		—		1,192		354		126		977		7,934
Recoveries	1,102		—		1,496		—		—		116		106		74		231		3,125
Net charge-offs (recoveries)	416		—		2,271		—		—		1,076		248		52		746		4,809
Provision (recovery of provision)	975		2,631		(1,695)		342		439		2,739		3,391		711		590		10,123
Balance, end of period	$	22,542	$	14,464	$	17,687	$	6,637	$	36,282	$	29,192	$	28,539	$	9,735	$	2,082	$	167,160

September 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-offs	2,123		—		2,366		—		485		1,407		10		49		1,029		7,469
Recoveries	893		—		1,507		—		565		307		59		19		192		3,542
Net charge-offs (recoveries)	1,230		—		859		—		(80)		1,100		(49)		30		837		3,927
Provision (recovery of provision)	1,346		2,065		3,418		(590)		(506)		2,218		(8)		982		892		9,817
Balance, end of period	$	21,432	$	10,627	$	20,996	$	6,702	$	36,237	$	29,376	$	24,862	$	8,928	$	2,270	$	161,430

The increase in the allowance for credit losses as compared to the prior quarter primarily reflects higher loan balances during the period along with grade migration of an existing special attention account in the commercial real estate portfolio to a higher reserved pool. These factors were largely offset by an overall decline in higher reserved special attention balances and modest reductions in qualitative adjustment factors in the Company’s auto and light truck, construction equipment, and medium and heavy duty truck portfolios reflecting improving credit quality trends. A recovery of provision was recognized in the auto and light truck portfolio during the quarter, reflecting the factors mentioned above along with a decline in individually evaluated reserves resulting from additional collateral support.

During the quarter, the Company’s economic forecast was updated to reflect improved near-term expectations for the GDP growth outlook and stabilizing labor market conditions, while shifting a portion of forecasted risk later in the forecast horizon in anticipation of lagging effects from inflationary pressures, elevated interest rates, more restrictive monetary policy, commodity price volatility, and persistent consumer financial stress. The forecast does not represent a reduction in the Company’s assessment of overall macroeconomic risk but rather a change in the forward timing of expected risk. Consensus forecasts for GDP growth remain generally resilient; however, overall economic uncertainty continues to be 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, increasing consumer financial stress, and subdued consumer sentiment.

Loan balances increased during the quarter while special attention loans, which carry higher reserve requirements, declined. Historical loss rates declined across most portfolios as charge-off activity was modest. As a result of lower charge-offs, improving credit quality trends, and modest reductions in qualitative adjustment factors, the allowance as a percentage of total loans and leases declined during the period.

As of September 30, 2026, heightened geopolitical uncertainty remains a significant economic factor impacting the Company’s loan portfolios. Risks associated with geopolitical tensions raise the potential for energy price volatility, supply disruptions, and broader economic impacts. 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 sentiment measures have softened. 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 may contribute to volatility in certain asset values which collateralize the Company’s loans.

The Company remains cognizant of geopolitical and energy market risks. The potential for renewed supply disruptions, infrastructure damage, shipping interruptions, or further escalation in regional conflict remains elevated. The timing and durability of a framework for lasting regional stability in the Middle East remains uncertain. 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, the overall operating environment remains vulnerable to adverse economic and geopolitical developments.

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 may 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 September 30, 2026, assumptions.

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 September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2026		2025		2026		2025
Balance, beginning of period	$	8,858	$	7,944	$	9,035	$	6,985


(Recovery of provision) provision	(232)		1,075		(409)		2,034
Balance, end of period	$	8,626	$	9,019	$	8,626	$	9,019