The following table presents selected information on the composition of the Company’s loan portfolio as of the dates indicated:

* Includes net premiums and discounts on acquired loans and net deferred fees and costs on loans originated.

As of March 31, 2024, the outstanding principal balance and the carrying amount of acquired credit-deteriorated loans totaled $0.8 million, and $0.7 million, respectively. There were no valuation allowances for specifically identified impairment attributable to acquired credit-impaired loans at March 31, 2024.

There were $944 million and $566 million in residential and commercial mortgage loans pledged to FHLBNY to serve as collateral for potential borrowings as of March 31, 2024 and December 31, 2023, respectively.

The Company may also sell certain fixed rate residential mortgages to FNMA, FHLMC and FHLB while maintaining the servicing rights for those mortgages. At March 31, 2024 and December 31, 2023, the Company had loan servicing portfolio principal balances of $114 million and $113 million, respectively, upon which it earned servicing fees. In the three month period ended March 31, 2024, the Company sold $3.4 million of residential mortgages compared with $1.3 million in the three months ended March 31, 2023.

The fair value of the mortgage servicing rights for that portfolio was $1.1 million at each of March 31, 2024 and December 31, 2023. There were no residential mortgages held for sale at March 31, 2024 and December 31, 2023.

The Company monitors the credit risk in its loan portfolio by reviewing certain credit quality indicators (“CQI”). The primary CQI for the commercial mortgage and commercial and industrial portfolios is the individual loan’s credit risk rating. The following list provides a description of the credit risk ratings that are used internally by the Bank when assessing the adequacy of its allowance for credit losses:

“Special mention” and “substandard” loans are weaker credits with a higher risk of loss and are categorized as “criticized” assets.

The Company’s consumer loans, including residential mortgages and home equities, are not individually risk rated or reviewed in the Company’s loan review process. Unlike commercial customers, consumer loan customers are not required to provide the Company with updated financial information. Consumer loans also carry smaller balances. Given the lack of updated information after the initial underwriting of the loan and small size of individual loans, the Company uses delinquency status as the primary credit quality indicator for consumer loans. However, once a consumer loan is identified as impaired, it is individually evaluated for impairment.

The following tables summarize amortized cost of loans by year of origination and internally assigned credit grades:




(in thousands)	Term Loans Amortized Cost Basis by Origination Year
As of March 31, 2024	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Total
Commercial and industrial loans
Risk rating
Pass	$	14,680	$	22,780	$	37,089	$	19,383	$	11,442	$	11,929	$	82,532	$	199,835
Special Mention		-		947		2,516		2,666		820		1,337		13,567		21,853
Substandard		-		-		450		2		427		342		3,027		4,248
Doubtful/Loss		-		-		-		-		-		-		-		-
Total	$	14,680	$	23,727	$	40,055	$	22,051	$	12,689	$	13,608	$	99,126	$	225,936

Current period gross writeoffs	$	-	$	59	$	-	$	-	$	-	$	8	$	-	$	67

Commercial real estate mortgages*
Risk rating
Pass	$	14,168	$	144,191	$	194,358	$	157,281	$	95,303	$	322,479	$	-	$	927,780
Special Mention		-		-		4,008		393		-		14,727		-		19,128
Substandard		-		-		4,756		11,672		-		8,590		-		25,018
Doubtful/Loss		-		-		-		-		-		-		-		-
Total	$	14,168	$	144,191	$	203,122	$	169,346	$	95,303	$	345,796	$	-	$	971,926

Current period gross writeoffs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer and other
Payment performance
Performing	$	146	$	527	$	156	$	24	$	10	$	23	$	124	$	1,010
Nonperforming		-		-		-		-		-		-		-		-
Total	$	146	$	527	$	156	$	24	$	10	$	23	$	124	$	1,010

Current period gross writeoffs	$	31	$	3	$	-	$	-	$	-	$	-	$	-	$	34

Residential mortgages*
Payment performance
Performing	$	6,679	$	36,281	$	71,441	$	98,508	$	68,276	$	158,033	$	-	$	439,218
Nonperforming		-		365		263		571		129		3,523		-		4,851
Total	$	6,679	$	36,646	$	71,704	$	99,079	$	68,405	$	161,556	$	-	$	444,069

Current period gross writeoffs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Home equities
Payment performance
Performing	$	926	$	7,343	$	2,668	$	559	$	556	$	2,541	$	63,723	$	78,316
Nonperforming		-		-		-		-		-		1		618		619
Total	$	926	$	7,343	$	2,668	$	559	$	556	$	2,542	$	64,341	$	78,935

Current period gross writeoffs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

*Includes construction loans
‎



(in thousands)	Term Loans Amortized Cost Basis by Origination Year
As of December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Commercial and industrial loans
Risk rating
Pass	$	24,338	$	42,967	$	21,614	$	12,174	$	5,686	$	6,539	$	86,459	$	199,777
Special Mention		10		1,955		2,739		510		268		1,867		11,705		19,054
Substandard		-		2		3		460		-		838		2,955		4,258
Doubtful/Loss		-		-		-		-		-		-		-		-
Total	$	24,348	$	44,924	$	24,356	$	13,144	$	5,954	$	9,244	$	101,119	$	223,089

Current period gross writeoffs	$	-	$	-	$	-	$	-	$	4	$	3	$	-	$	7

Commercial real estate mortgages*
Risk rating
Pass	$	132,525	$	194,197	$	169,943	$	95,264	$	66,243	$	263,628	$	-	$	921,800
Special Mention		-		6,634		397		861		9,988		8,094		-		25,974
Substandard		-		-		11,737		-		6,733		3,617		-		22,087
Doubtful/Loss		-		-		-		-		-		-		-		-
Total	$	132,525	$	200,831	$	182,077	$	96,125	$	82,964	$	275,339	$	-	$	969,861

Current period gross writeoffs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer and other
Payment performance
Performing	$	597	$	176	$	27	$	12	$	13	$	20	$	144	$	989
Nonperforming		-		-		-		-		-		-		-		-
Total	$	597	$	176	$	27	$	12	$	13	$	20	$	144	$	989

Current period gross writeoffs	$	145	$	18	$	1	$	-	$	-	$	1	$	-	$	165

Residential mortgages*
Payment performance
Performing	$	37,536	$	72,624	$	100,308	$	69,454	$	17,829	$	144,499	$	-	$	442,250
Nonperforming		156		270		576		351		204		3,044		-		4,601
Total	$	37,692	$	72,894	$	100,884	$	69,805	$	18,033	$	147,543	$	-	$	446,851

Current period gross writeoffs	$	-	$	-	$	-	$	1	$	-	$	-	$	-	$	1

Home equities
Payment performance
Performing	$	7,833	$	2,768	$	590	$	588	$	571	$	2,126	$	65,165	$	79,641
Nonperforming		-		-		-		-		-		1		514		515
Total	$	7,833	$	2,768	$	590	$	588	$	571	$	2,127	$	65,679	$	80,156

Current period gross writeoffs	$	-	$	-	$	-	$	-	$	-	$	25	$	-	$	25

*Includes construction loans

The amortized cost of criticized assets of $70 million included $13 million of loans in the Company’s hotel loan portfolio at March 31, 2024. At December 31, 2023 the amortized cost of criticized assets was $72 million including $19 million of loans in the Company’s hotel loan portfolio.

‎

Past Due Loans

The following tables provide an analysis of the age of the amortized cost of loans that are past due as of the dates indicated:



	March 31, 2024
	(in thousands)

		Current							Non-accruing		Total
		Balance	30-59 days		60-89 days		90+ days		Loans		Balance

Commercial and industrial	$	220,075	$	4,138	$	23	$	-	$	1,700	$	225,936
Residential real estate:
Residential		434,341		1,388		-		-		4,851		440,580
Construction		3,489		-		-		-		-		3,489
Commercial real estate:
Commercial		818,818		18,374		-		828		18,755		856,775
Construction		113,883		-		-		-		1,268		115,151
Home equities		77,239		920		157		-		619		78,935
Consumer and other		987		7		16		-		-		1,010
Total Loans	$	1,668,832	$	24,827	$	196	$	828	$	27,193	$	1,721,876



	December 31, 2023
	(in thousands)

		Current							Non-accruing		Total
		Balance	30-59 days		60-89 days		90+ days		Loans		Balance

Commercial and industrial	$	220,602	$	518	$	130	$	-	$	1,839	$	223,089
Residential real estate:
Residential		437,471		1,173		341		-		4,602		443,587
Construction		3,264		-		-		-		-		3,264
Commercial real estate:
Commercial		831,375		4,360		-		134		19,000		854,869
Construction		110,727		2,326		671		-		1,268		114,992
Home equities		77,080		1,906		655		-		515		80,156
Consumer and other		959		27		3		-		-		989
Total Loans	$	1,681,478	$	10,310	$	1,800	$	134	$	27,224	$	1,720,946

Allowance for Credit losses

ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments requires an allowance for credit losses to be deducted from the amortized cost basis of financial assets to present the net carrying value at the amount that is expected to be collected over the contractual term of the asset. In determining the allowance for credit losses, accruing loans with similar risk characteristics are generally evaluated collectively. The Company utilizes discounted cash flow models considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount to project principal balances over the remaining contractual lives of the loan portfolios and to determine estimated credit losses through a reasonable and supportable forecast period. The models have been statistically developed based on historical correlations of credit losses with prevailing economic metrics, including unemployment and gross domestic product. The Company utilizes a reasonable and supportable forecast period of one year. Subsequent to this forecast period the Company reverts, on a straight-line basis over a one-year period, to historical loss experience to inform its estimate of losses for the remaining contractual life of each portfolio. Model forecasts may be adjusted for inherent limitations of biases that have been identified through independent validation and back-testing of model performance to actual realized results. The Company also considered the impact of qualitative factors, including portfolio concentrations, changes in underwriting practices, imprecision in its economic forecasts, geopolitical conditions and other risk factors that might influence its loss estimation process.

The Company also estimates losses attributable to specific troubled credits identified through both normal and targeted credit review processes and includes all loans on nonaccrual status. The amounts of individually analyzed losses are determined through a loan-by-loan analysis. Such loss estimates are typically based on expected future cash flows, collateral values and other factors that may impact the borrower’s ability to pay. To the extent that those loans are collateral-dependent, they are evaluated based on recent estimations of the fair value of the loan’s collateral. In those cases where current appraisals may not yet be available, prior appraisals are utilized with adjustments, as deemed necessary, for estimates of subsequent declines in values as determined by line of business and/or loan workout personnel. Those adjustments are reviewed and assessed for reasonableness by the Company’s credit risk personnel. Accordingly, for real estate collateral securing larger nonaccrual commercial loans and commercial real estate loans, estimated collateral values are based

on current appraisals and estimates of value. For non-real estate loans, collateral is assigned a discounted estimated liquidation value and, depending on the nature of the collateral, is verified through field exams or other procedures. In assessing collateral, real estate and non-real estate values are reduced by an estimate of selling costs. Charge-offs are based on recent indications of value from external parties that are generally obtained shortly after a loan becomes nonaccrual. Loans to consumers that file for bankruptcy are generally charged-off to estimated net collateral value shortly after the Company is notified of such filings. When evaluating individual home equity loans and lines of credit for charge off and for purposes of estimating losses in determining the allowance for credit losses, the Company considers the required repayment of any first lien positions related to collateral property.

The following tables present the activity in the allowance for credit losses according to portfolio segment for the three month periods ended March 31, 2024 and 2023.



	Three months ended March 31, 2024
	(in thousands)
	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total

Allowance for credit losses:
Beginning balance	$	5,241	$	12,548	$	8	$	3,883	$	434	$	22,114
Charge-offs		(67)		-		(34)		-		-		(101)
Recoveries		2		-		3		3		-		8
Provision		139		(1)		32		177		(81)		266
Ending balance	$	5,315	$	12,547	$	9	$	4,063	$	353	$	22,287

*Includes construction loans



	Three months ended March 31, 2023
	(in thousands)
	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total

Allowance for credit losses:
Beginning balance	$	4,980	$	11,595	$	153	$	2,102	$	608	$	19,438
Adoption of new accounting standard		324		1,145		(147)		1,618		(205)		2,735
Beginning balance after
cumulative effect adjustment	$	5,304	$	12,740	$	6	$	3,720	$	403	$	22,173
Charge-offs		-		-		(30)		-		-		(30)
Recoveries		30		-		4		-		-		34
Provision		(67)		(186)		24		(342)		(83)		(654)
Ending balance	$	5,267	$	12,554	$	4	$	3,378	$	320	$	21,523

* Includes construction loans

‎

The following tables present the allowance for credit losses and recorded investment on loans by segment as of March 31, 2024 and December 31, 2023:



	March 31, 2024
	(in thousands)
	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for credit
losses:
Ending balance:

Individually evaluated for impairment		53		719		-		13		-		785

Collectively evaluated for impairment		5,262		11,828		9		4,050		353		21,502
Total	$	5,315	$	12,547	$	9	$	4,063	$	353	$	22,287

Loans:
Ending balance:

Individually evaluated for impairment		2,107		22,810		-		5,356		906		31,179

Collectively evaluated for impairment		223,840		949,166		776		438,808		79,214		1,691,804
Total	$	225,947	$	971,976	$	776	$	444,164	$	80,120	$	1,722,983

* Includes construction loans



	December 31, 2023
	(in thousands)
	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for credit
losses:
Ending balance:

Individually evaluated for impairment		36		719		-		-		-		755

Collectively evaluated for impairment		5,205		11,829		8		3,883		434		21,359
Total	$	5,241	$	12,548	$	8	$	3,883	$	434	$	22,114

Loans:
Ending balance:

Individually evaluated for impairment		1,869		23,044		-		5,146		761		30,820

Collectively evaluated for impairment		221,231		946,144		1,066		441,897		80,651		1,690,989
Total	$	223,100	$	969,188	$	1,066	$	447,043	$	81,412	$	1,721,809

* Includes construction loans

The Company’s reserve for off-balance sheet credit exposures was not material at March 31, 2024 and December 31, 2023.

‎

Nonaccrual Loans

The following tables provide amortized costs, at the class level, for nonaccrual loans as of the dates indicated:


							Three Months Ended
	March 31, 2024						March 31, 2024
	Amortized Cost with Allowance		Amortized Cost without Allowance		Total		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	66	$	1,634	$	1,700	$	-
Residential real estate:
Residential		160		4,691		4,851		3
Construction		-		-		-		-
Commercial real estate:
Commercial		6,569		12,186		18,755		-
Construction		1,268		-		1,268		-
Home equities		-		619		619		2
Consumer and other		-		-		-		-
Total nonaccrual loans	$	8,063	$	19,130	$	27,193	$	5


							Three Months Ended
	March 31, 2023						March 31, 2023
	Amortized Cost with Allowance		Amortized Cost without Allowance		Total		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	-	$	2,520	$	2,520	$	-
Residential real estate:
Residential		151		3,720		3,871		8
Construction		-		-		-		-
Commercial real estate:
Commercial		-		6,561		6,561		-
Construction		1,301		7,265		8,566		-
Home equities		29		418		447		-
Consumer and other		-		-		-		-
Total nonaccrual loans	$	1,481	$	20,484	$	21,965	$	8

Collateral-dependent loans are loans that we expect the repayment to be provided substantially through the operation or sale of the collateral of the loan and we have determined that the borrower is experiencing financial difficulty. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for selling costs. As of March 31, 2024 and December 31, 2023, there were $27 million of collateral-dependent loans, secured mainly by real estate and equipment. There have been no significant changes to the collateral that secures the collateral-dependent assets.

‎

The amendments in ASU 2022-02 eliminated the recognition and measurement of troubled debt restructurings and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty.

The table below details the amortized cost of gross loans held for investment made to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2024 and March 31,2023:

The financial impacts of the residential mortgage modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2024 was a maturity extension of six months. Residential mortgage loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2023 were maturity extensions ranging from 159 months to 164 months.

The company has not committed to lend any additional amounts to the borrowers included in the previous table.

As of March 31, 2024 and March 31, 2023, the Company did not have any loans made to borrowers experiencing financial difficulty that were modified during the first three months of 2024 and 2023 that subsequently defaulted. Payment default is defined as movement to nonperforming status, foreclosure or charge-off, whichever occurs first.

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 payment status of all loans modified to borrowers experiencing financial difficulties were current during the first three months of 2024 and 2023.