ACL for Loans

3 Months Ended

Mar. 31, 2025

There have been no material changes to the Company's ACL for loans methodology, underwriting practices, or credit risk management system used to estimate credit loss exposure as described in the 2024 Annual Report on Form 10-K.

See Note 4, "Credit Risk Management and ACL for Loans," to the Company's audited consolidated financial statements contained in the 2024 Annual Report on Form 10-K and Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," under the subheading "Accounting Policies/Critical Accounting Estimates," of the Company's 2024 Annual Report on Form 10-K.

The credit risk management function of the Company evaluates a wide variety of factors, as early detection of credit issues is critical to minimizing credit losses. Accordingly, management regularly monitors internal credit quality indicators such as, the risk classification of loans, past due and non-accrual loans, individually evaluated loans, loan modifications, and the level of foreclosure activity, among other items. These credit quality indicators are outlined below.

Risk ratings and adversely classified loans

The Company's loan risk rating system classifies loans depending on risk of loss characteristics. Adversely classified ratings for loans determined to be of weaker credit range from "special mention," for loans that may need additional monitoring, to the more severe adverse classifications of "substandard," "doubtful," and "loss" based on criteria established under applicable banking regulations.

The following tables present the amortized cost basis of the Company's loan portfolio risk ratings within portfolio classifications, by origination date, or revolving status as of the dates indicated:


	At or for the three months ended March 31, 2025
	Term Loans by Origination Year
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Revolving Loans		Revolving Loans Converted to Term		Total
Commercial real estate owner-occupied
Pass	$	17,654	$	48,618	$	128,484	$	103,792	$	83,168	$	310,432	$	7,440	$	—	$	699,588
Special mention	—		—		128		—		—		6,119		—		—		6,247
Substandard	—		—		—		1,205		417		1,188		—		—		2,810


Total commercial real estate owner-occupied	17,654		48,618		128,612		104,997		83,585		317,739		7,440		—		708,645

Current period charge-offs	—		—		—		—		—		—		—		—		—

Commercial real estate non owner-occupied
Pass	34,391		157,713		146,074		315,407		295,690		658,812		1,302		—		1,609,389
Special mention	—		—		1,622		15,351		—		—		—		—		16,973
Substandard	—		—		—		218		—		2,814		—		—		3,032


Total commercial real estate non owner-occupied	34,391		157,713		147,696		330,976		295,690		661,626		1,302		—		1,629,394

Current period charge-offs	—		—		—		—		16		—		—		—		16











Commercial and industrial
Pass	22,157		81,534		56,157		36,109		30,778		69,420		179,095		1,489		476,739
Special mention	—		—		—		—		—		440		641		19		1,100
Substandard	—		—		452		3,242		279		719		201		433		5,326


Total commercial and industrial	22,157		81,534		56,609		39,351		31,057		70,579		179,937		1,941		483,165

Current period charge-offs	—		—		15		6		1		113		—		—		135

Commercial construction
Pass	14,454		160,181		221,178		97,988		91,848		26,685		34,311		—		646,645
Special mention	—		—		—		—		—		3,108		—		—		3,108
Substandard	—		—		564		14,619		—		—		—		—		15,183


Total commercial construction	14,454		160,181		221,742		112,607		91,848		29,793		34,311		—		664,936

Current period charge-offs	—		—		—		—		—		—		—		—		—




Residential mortgages
Pass	11,023		81,658		78,834		100,730		63,159		112,946		—		—		448,350

Substandard	—		—		—		—		1,031		1,075		—		—		2,106

Total residential mortgages	11,023		81,658		78,834		100,730		64,190		114,021		—		—		450,456

Current period charge-offs	—		—		—		—		—		—		—		—		—

Home equity
Pass	860		620		451		778		520		3,556		97,680		1,038		105,503

Substandard	—		—		—		—		148		128		—		—		276

Total home equity	860		620		451		778		668		3,684		97,680		1,038		105,779

Current period charge-offs	—		—		—		—		—		—		—		—		—

Consumer
Pass	789		1,853		1,879		1,111		885		747		—		—		7,264

Substandard	—		—		—		3		—		—		—		—		3

Total consumer	789		1,853		1,879		1,114		885		747		—		—		7,267

Current period charge-offs	50		—		—		—		—		3		—		—		53

Total loans	$	101,328	$	532,177	$	635,823	$	690,553	$	567,923	$	1,198,189	$	320,670	$	2,979	$	4,049,642

Total current period charge-offs	$	50	$	—	$	15	$	6	$	17	$	116	$	—	$	—	$	204


	At or for the year ended December 31, 2024
	Term Loans by Origination Year
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans		Revolving Loans Converted to Term		Total
Commercial real estate owner-occupied
Pass	$	49,097	$	126,723	$	101,658	$	83,937	$	49,526	$	277,331	$	7,312	$	—	$	695,584
Special mention	—		130		—		—		—		6,546		—		—		6,676
Substandard	—		—		1,228		423		—		723		—		—		2,374


Total commercial real estate	49,097		126,853		102,886		84,360		49,526		284,600		7,312		—		704,634

Current period charge-offs	—		—		—		—		—		—		—		—		—

Commercial real estate non owner-occupied
Pass	154,004		141,723		292,192		287,506		147,374		520,370		827		300		1,544,296
Special mention	—		—		15,448		—		—		—		—		—		15,448
Substandard	—		—		218		340		445		2,454		—		—		3,457


Total commercial real estate non owner-occupied	154,004		141,723		307,858		287,846		147,819		522,824		827		300		1,563,201

Current period charge-offs	—		—		—		—		—		—		—		—		—











Commercial and industrial
Pass	81,891		60,997		39,791		32,536		20,325		50,476		182,184		5,924		474,124
Special mention	—		—		—		—		203		258		270		—		731
Substandard	—		17		3,248		691		—		504		303		203		4,966


Total commercial and industrial	81,891		61,014		43,039		33,227		20,528		51,238		182,757		6,127		479,821

Current period charge-offs	12		44		—		196		—		267		—		—		519

Commercial construction
Pass	138,845		229,116		127,493		106,452		9,517		21,582		32,325		—		665,330

Substandard	—		—		14,639		—		—		—		—		—		14,639


Total commercial construction	138,845		229,116		142,132		106,452		9,517		21,582		32,325		—		679,969

Current period charge-offs	—		—		—		—		—		—		—		—		—

Residential mortgages
Pass	79,540		79,929		101,910		64,219		44,149		71,188		—		—		440,935

Substandard	—		—		—		1,042		—		1,119		—		—		2,161


Total residential mortgages	79,540		79,929		101,910		65,261		44,149		72,307		—		—		443,096

Current period charge-offs	—		—		—		—		—		—		—		—		—

Home equity
Pass	623		454		783		528		433		2,033		97,217		1,507		103,578

Substandard	—		—		—		—		—		83		—		197		280


Total home equity	623		454		783		528		433		2,116		97,217		1,704		103,858

Current period charge-offs	—		—		—		—		—		—		—		—		—

Consumer
Pass	3,211		2,014		1,209		982		461		442		—		—		8,319




Total consumer	3,211		2,014		1,209		982		461		442		—		—		8,319

Current period charge-offs	94		3		1		—		—		1		—		—		99

Total loans	$	507,211	$	641,103	$	699,817	$	578,656	$	272,433	$	955,109	$	320,438	$	8,131	$	3,982,898

Total current period charge-offs	$	106	$	47	$	1	$	196	$	—	$	268	$	—	$	—	$	618

The total amortized cost basis of adversely classified loans amounted to $56.2 million, or 1.39% of total loans, at March 31, 2025, and $50.7 million, or 1.27% of total loans, at December 31, 2024.

Past due and non-accrual loans

The following tables present an age analysis of past due loans by portfolio classification as of the dates indicated:


	Balance at March 31, 2025
(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due Loans(1)		Current Loans(1)		Total Loans
Commercial real estate owner-occupied	$	699	$	—	$	565	$	1,264	$	707,381	$	708,645
Commercial real estate non owner-occupied	447		—		1,118		1,565		1,627,829		1,629,394

Commercial and industrial	2,211		391		5,045		7,647		475,518		483,165
Commercial construction	2,799		6,780		563		10,142		654,794		664,936

Residential mortgages	1,518		—		1,212		2,730		447,726		450,456
Home equity	241		—		—		241		105,538		105,779
Consumer	51		2		5		58		7,209		7,267
Total loans	$	7,966	$	7,173	$	8,508	$	23,647	$	4,025,995	$	4,049,642


	Balance at December 31, 2024
(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due Loans(1)		Current Loans(1)		Total Loans
Commercial real estate owner-occupied	$	1,333	$	—	$	522	$	1,855	$	702,779	$	704,634
Commercial real estate non owner-occupied	1,856		366		2,665		4,887		1,558,314		1,563,201

Commercial and industrial	1,319		69		3,702		5,090		474,731		479,821
Commercial construction	1,688		2,484		7,905		12,077		667,892		679,969

Residential mortgages	690		940		—		1,630		441,466		443,096
Home equity	467		133		—		600		103,258		103,858
Consumer	34		3		—		37		8,282		8,319
Total loans	$	7,387	$	3,995	$	14,794	$	26,176	$	3,956,722	$	3,982,898

_______________________________________

(1)The loan balances in the tables above include loans designated as non-accrual despite their payment due status. Loans designated as non-accrual are presented below.

At March 31, 2025 and December 31, 2024, all loans past due 90 days or more were carried as non-accrual, however, not all non-accrual loans were 90 days or more past due in their payments. Loans that were less than 90 days past due where reasonable doubt existed as to the full and timely collection of interest or principal have also been designated as non-accrual, despite their payment due status.

The following tables present the amortized cost of non-accrual loans by portfolio classification as of the dates indicated:


	Balance at March 31, 2025
(Dollars in thousands)	Total Non-accrual Loans		Non-accrual Loans without a Specific Reserve		Non-accrual Loans with a Specific Reserve		Related Specific Reserve
Commercial real estate owner-occupied	$	2,810	$	2,810	$	—	$	—
Commercial real estate non owner-occupied	3,032		2,132		900		340

Commercial and industrial	5,321		744		4,577		1,969
Commercial construction	15,183		8,403		6,780		3,355

Residential mortgages	1,877		1,877		—		—
Home equity	253		253		—		—
Consumer	3		—		3		3
Total loans	$	28,479	$	16,219	$	12,260	$	5,667


	Balance at December 31, 2024
(Dollars in thousands)	Total Non-accrual Loans		Non-accrual Loans without a Specific Reserve		Non-accrual Loans with a Specific Reserve		Related Specific Reserve
Commercial real estate owner-occupied	$	2,374	$	2,374	$	—	$	—
Commercial real estate non owner-occupied	3,457		2,532		925		185

Commercial and industrial	4,029		714		3,315		2,398
Commercial construction	14,639		—		14,639		3,649

Residential mortgages	1,931		1,931		—		—
Home equity	257		257		—		—
Consumer	—		—		—		—
Total loans	$	26,687	$	7,808	$	18,879	$	6,232

The ratio of non-accrual loans to total loans amounted to 0.70% and 0.67% at March 31, 2025 and December 31, 2024, respectively.

At March 31, 2025 and December 31, 2024, additional funding commitments for non-accrual loans were immaterial.

Collateral dependent loans

The total recorded investment in collateral dependent loans amounted to $28.7 million at March 31, 2025 compared to $26.9 million at December 31, 2024. As of March 31, 2025, accruing collateral dependent loans amounted to $434 thousand, while non-accrual collateral dependent loans amounted to $28.3 million. As of December 31, 2024, accruing collateral dependent loans amounted to $438 thousand, while non-accrual collateral dependent loans amounted to $26.5 million.

The following tables present the recorded investment in collateral dependent loans and the related specific allowance by portfolio allocation as of the dates indicated:


	Balance at March 31, 2025
(Dollars in thousands)	Unpaid Contractual Principal Balance		Total Recorded Investment in Collateral Dependent Loans		Recorded Investment without a Specific Reserve		Recorded Investment with a Specific Reserve		Related Specific Reserve
Commercial real estate owner-occupied	$	3,351	$	2,811	$	2,811	$	—	$	—
Commercial real estate non owner-occupied	3,634		3,032		2,133		899		340

Commercial and industrial	6,411		5,311		950		4,361		1,753
Commercial construction	15,433		15,183		8,403		6,780		3,355

Residential mortgages	2,244		2,105		2,105		—		—
Home equity	301		253		253		—		—
Consumer	—		—		—		—		—
Total	$	31,374	$	28,695	$	16,655	$	12,040	$	5,448


	Balance at December 31, 2024
(Dollars in thousands)	Unpaid Contractual Principal Balance		Total Recorded Investment in Collateral Dependent Loans		Recorded Investment without a Specific Reserve		Recorded Investment with a Specific Reserve		Related Specific Reserve
Commercial real estate owner-occupied	$	2,921	$	2,374	$	2,374	$	—	$	—
Commercial real estate non owner-occupied	4,368		3,457		2,532		925		185

Commercial and industrial	5,507		4,184		921		3,263		2,346
Commercial construction	14,824		14,639		—		14,639		3,649

Residential mortgages	2,347		2,161		2,161		—		—
Home equity	145		108		108		—		—
Consumer	—		—		—		—		—
Total	$	30,112	$	26,923	$	8,096	$	18,827	$	6,180

At March 31, 2025 and December 31, 2024, additional funding commitments for collateral dependent loans were immaterial.

Loan modifications to borrowers experiencing financial difficulty

The Company works with loan customers experiencing financial difficulty and may enter into loan modifications to the extent deemed to be necessary or appropriate while attempting to achieve the best mutual outcome given the individual financial circumstances and future prospects of the borrower. An assessment of whether a borrower is experiencing financial difficulty is made on the date of the modification. Modifications made for borrowers experiencing financial difficulty may be concessions in the form of principal forgiveness, interest rate reductions, payment deferrals of principal, interest or both, or term extensions, or some combination thereof. When a debt has been previously modified, the Company considers the cumulative effect of modifications made within the prior twelve-month period before the current modification, when determining whether or not a delay in payment resulting from the current modification is insignificant.

The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty by type of concession granted during the period indicated:



		Three months ended
		March 31, 2025
(Dollars in thousands)	Payment Deferrals			Term Extensions			Total	% of Loan Class Total

Commercial real estate non owner-occupied		$	1,352		$	1,622		$	2,974	0.18	%





Total		$	1,352		$	1,622		$	2,974	0.07	%

The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the period indicated:

Three months ended

March 31, 2025

Weighted Average Payment Deferrals

Weighted-Average Term Extensions

Commercial real estate non owner-occupied

3 months

4 months

During the three months ended March 31, 2024, there were no loan modifications made to borrowers experiencing financial difficulty.

The Company closely monitors the performance of loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance status of loans that were modified within the preceding twelve months to borrowers experiencing financial difficulty, as of periods indicated:


	Balance at March 31, 2025
(Dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due
Commercial real estate owner-occupied	$	—	$	—	$	—	$	—	$	—
Commercial real estate non owner-occupied	2,974		—		—		—		—
Commercial and industrial	1,640		—		—		—		—
Commercial construction	7,840		—		—		—		—
Residential mortgages	—		—		—		—		—
Home equity	23		—		—		—		—
Consumer	—		—		—		—		—
Total	$	12,477	$	—	$	—	$	—	$	—


	Balance at March 31, 2024
(Dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due
Commercial real estate owner-occupied	$	—	$	—	$	—	$	—	$	—
Commercial real estate non owner-occupied	—		—		—		—		—
Commercial and industrial	—		—		—		143		143
Commercial construction	—		—		—		—		—
Residential mortgages	31		—		—		—		—
Home equity	—		—		—		—		—
Consumer	—		—		—		—		—
Total	$	31	$	—	$	—	$	143	$	143

During each of the three month periods ended March 31, 2025 and March 31, 2024, there were no subsequent defaults on loans that had been modified within the preceding twelve months for borrowers experiencing financial difficulty.

At March 31, 2025 and March 31, 2024, additional funding commitments to borrowers experiencing financial difficulty who were party to a loan modification were immaterial.

ACL for loans and provision for credit loss activity

The following table presents changes in the provision for credit losses on loans and unfunded commitments during the periods indicated:


	Three months ended
(Dollars in thousands)	March 31, 2025		March 31, 2024
Provision for credit losses on loans - collectively evaluated	$	685	$	417
Provision for credit losses on loans - individually evaluated	(565)		1,451
Provision for credit losses on loans	120		1,868

Provision for unfunded commitments	211		(1,246)

Provision for credit losses	$	331	$	622

ACL for loans

The ACL for loans amounted to $64.0 million and $63.5 million at March 31, 2025 and December 31, 2024, respectively. The ACL for loans to total loans ratio was 1.58% and 1.59% at March 31, 2025 and December 31, 2024, respectively.

The following tables present changes in the ACL for loans by portfolio classification, during the three-month periods indicated:


(Dollars in thousands)	Commercial Real Estate Owner-Occupied		Commercial Real Estate Non Owner-Occupied		Commercial and Industrial		Commercial Construction		Residential Mortgage		Home Equity		Consumer		Total
Beginning Balance at December 31, 2024	$	10,813	$	27,774	$	9,940	$	11,765	$	2,205	$	746	$	255	$	63,498
Provision for credit losses on loans	57		1,352		(848)		(484)		37		13		(7)		120
Recoveries	—		—		601		—		—		—		27		628
Less: Charge-offs	—		16		135		—		—		—		53		204
Ending Balance at March 31, 2025	$	10,870	$	29,110	$	9,558	$	11,281	$	2,242	$	759	$	222	$	64,042


(Dollars in thousands)	Commercial Real Estate Owner-Occupied		Commercial Real Estate Non Owner-Occupied		Commercial and Industrial		Commercial Construction		Residential Mortgage		Home Equity		Consumer		Total
Beginning Balance at December 31, 2023	$	10,454	$	27,620	$	11,089	$	6,787	$	2,152	$	579	$	314	$	58,995
Provision for credit losses on loans	25		1,201		(639)		1,429		(80)		(46)		(22)		1,868
Recoveries	—		—		68		—		—		2		2		72
Less: Charge-offs	—		—		185		—		—		—		9		194
Ending Balance at March 31, 2024	$	10,479	$	28,821	$	10,333	$	8,216	$	2,072	$	535	$	285	$	60,741

Reserve for unfunded commitments

The Company's reserve for unfunded commitments amounted to $4.6 million at March 31, 2025 and $4.4 million at December 31, 2024.

Management believes that the Company's ACL for loans and reserve for unfunded commitments were adequate as of March 31, 2025.

Other real estate owned

The Company carried no OREO at March 31, 2025 and December 31, 2024.

At March 31, 2025 and December 31, 2024, the Company had no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdictions.