Loans Receivable and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2025

Loans Receivable and Allowance for Credit Losses

Loans held for investment as of March 31, 2025 and December 31, 2024 are summarized as follows (in thousands):


	March 31, 2025		December 31, 2024
Mortgage loans:
Commercial	$	7,295,651	7,228,078
Multi-family	3,458,190		3,382,933
Construction	756,356		823,503
Residential	1,994,404		2,010,637
Total mortgage loans	13,504,601		13,445,151




Commercial loans	4,682,902		4,608,600
Consumer loans	613,453		613,819

Total gross loans	18,800,956		18,667,570
Premiums on purchased loans	1,337		1,338

Net deferred fees	(10,922)		(9,538)
Total loans held for investment	$	18,791,371	18,659,370

Accrued interest on loans totaled $79.3 million and $78.5 million as of March 31, 2025 and December 31, 2024, respectively, and is presented within total accrued interest receivable on the Consolidated Statements of Financial Condition.

The following tables summarize the aging of loans by portfolio segment and class of loans (in thousands):


	March 31, 2025
	30-59 Days		60-89 Days	Non-accrual	Recorded Investment > 90 days accruing	Total Past Due	Current	Total Loans Receivable	Non-accrual loans with no related allowance
Mortgage loans:
Commercial	$	13,696	196	42,931	—	56,823	7,238,828	7,295,651	35,753
Multi-family	7,433		—	7,294	—	14,727	3,443,463	3,458,190	7,294
Construction	—		—	18,929	—	18,929	737,427	756,356	18,930
Residential	6,905		5,009	5,246	—	17,160	1,977,244	1,994,404	5,246
Total mortgage loans	28,034		5,205	74,400	—	107,639	13,396,962	13,504,601	67,223
Commercial loans	12,422		2,849	23,580	—	38,851	4,644,051	4,682,902	18,570
Consumer loans	1,604		854	1,352	—	3,810	609,643	613,453	1,352
Total gross loans	$	42,060	8,908	99,332	—	150,300	18,650,656	18,800,956	87,145


	December 31, 2024
	30-59 Days		60-89 Days	Non-accrual	Recorded Investment > 90 days accruing	Total Past Due	Current	Total Loans Receivable	Non-accrual loans with no related allowance
Mortgage loans:
Commercial	$	8,538	3,954	20,883	—	33,375	7,194,703	7,228,078	13,575
Multi-family	—		—	7,498	—	7,498	3,375,435	3,382,933	7,498
Construction	—		—	13,246	—	13,246	810,257	823,503	13,246
Residential	6,388		5,049	4,535	—	15,972	1,994,665	2,010,637	4,535
Total mortgage loans	14,926		9,003	46,162	—	70,091	13,375,060	13,445,151	38,854
Commercial loans	4,248		2,377	24,243	—	30,868	4,577,732	4,608,600	15,164
Consumer loans	3,152		856	1,656	—	5,664	608,155	613,819	1,656
Total gross loans	$	22,326	12,236	72,061	—	106,623	18,560,947	18,667,570	55,674

The increase in accruing past due loans versus the trailing quarter was primarily attributable to two loans: a $10.5 million commercial real estate loan which is expected to be fully resolved in the second quarter through the completion of a pending note sale with no anticipated loss and a $7.4 million commercial real estate loan that is in the process of refinancing with the Bank.

As of March 31, 2025 and December 31, 2024, total non-accrual loans held for sale, which are not in the tables above, totaled $3.9 million and $2.4 million, respectively. Additionally, total past due loans held for sale, including non-accrual loans held for sale, totaled $5.8 million and $4.8 million, respectively. Included in loans receivable are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The principal amounts of these non-accrual loans were $103.2 million and $72.1 million as of March 31, 2025 and December 31, 2024, respectively. Included in non-accrual loans were $58.0 million and $24.6 million of loans which were less than 90 days past due as of March 31, 2025 and December 31, 2024, respectively. There were no loans 90 days or greater past due and still accruing interest as of March 31, 2025 and December 31, 2024.

The activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2025 and 2024 was as follows (in thousands):


Three months ended March 31,	Mortgage loans		Commercial loans	Consumer loans	Total
2025
Balance at beginning of period	$	144,587	43,642	5,203	193,432

Provision (benefit) charge to operations	(3,820)		4,175	(30)	325

Recoveries of loans previously charged-off	806		279	191	1,276
Loans charged-off	(890)		(2,195)	(178)	(3,263)
Balance at end of period	$	140,683	45,901	5,186	191,770

2024
Balance at beginning of period	$	73,407	31,475	2,318	107,200

Provision (benefit) charge to operations	(7,580)		7,924	(144)	200

Recoveries of loans previously charged-off	63		687	145	895
Loans charged-off	—		(1,794)	(72)	(1,866)
Balance at end of period	$	65,890	38,292	2,247	106,429

For the three months ended March 31, 2025, the Company recorded a $325,000 provision for credit losses on loans, compared to a $200,000 provision on loans for the same period in 2024. The increase in the provision for credit losses on loans was due to an increase in specific reserves on impaired credits. For the three months ended March 31, 2025, net charge-offs totaled $2.0 million.

The following table summarizes the Company's gross charge-offs recorded during the three months ended March 31, 2025 by year of origination (in thousands):


	2025		2024	2023	2022	2021	Prior to 2021	Total Loans

Mortgage loans:
Commercial	$	—	—	—	358	—	532	890



Total mortgage loans	—		—	—	358	—	532	890
Commercial loans	—		—	—	2,130	65	—	2,195
Consumer loans (1)	12		10	12	3	—	26	63
Total gross loans	$	12	10	12	2,491	65	558	3,148

(1) During the three months ended March 31, 2025, charge-offs on consumer overdraft accounts totaled $115,000, which are not included in the table above.

The Company defines a loan individually evaluated for impairment as a non-homogeneous loan greater than $1.0 million, for which, based on current information, it is not expected to collect all amounts due under the contractual terms of the loan agreement. As of March 31, 2025, there were 31 loans totaling $86.1 million, compared to 26 loans totaling $55.4 million as of December 31, 2024, that were individually evaluated for impairment.

A financial asset is considered collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of loans deemed collateral-dependent, the Company estimates expected credit losses based on the collateral’s fair value less any selling costs. A specific allocation of the allowance for credit losses is established for each collateral-dependent loan with a carrying balance greater than the collateral’s fair value, less estimated selling costs. In most cases, the Company records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less estimated selling costs. The Company uses third-party appraisals to determine the fair value of the underlying collateral in its analysis of collateral-dependent loans. A third-party appraisal is generally ordered as soon as a loan is designated as a collateral-dependent loan and updated annually, or more frequently if required. At each fiscal quarter end, if a loan is designated as collateral-dependent and the third-party appraisal has not yet been received, an evaluation of all available collateral is made using the best information available at the time, including rent rolls, borrower financial statements and tax returns, prior appraisals, management’s knowledge of the market and collateral, and internally prepared collateral valuations based upon market assumptions regarding vacancy and capitalization rates, each as and where applicable. Once the appraisal is received and reviewed, the specific reserves are adjusted to reflect the appraised value and evaluated for charge offs. The Company believes there have been no significant time lapses resulting from this process.

As of March 31, 2025 and December 31, 2024, the Company had collateral-dependent loans with fair values of $12.8 million and $11.0 million secured by commercial real estate, respectively.

Loan modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearance, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. In addition, management attempts to obtain additional collateral or guarantor support when modifying such loans. If the borrower has demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

The following illustrates the most common loan modifications by loan classes offered by the Company that are required to be disclosed pursuant to the requirements of ASU 2022-02:


Loan Classes						Modification types
Commercial						Term extension, interest rate reductions, payment delay, or combination thereof. These modifications extend the term of the loan, lower the payment amount, or otherwise delay payments during a defined period for the purpose of providing borrowers additional time to return to compliance with the original loan term.

Residential Mortgage/ Home Equity						Forbearance period greater than six months. These modifications require reduced or no payments during the forbearance period for the purpose of providing borrowers additional time to return to compliance with the original loan term, as well as term extension and rate adjustment. These modifications extend the term of the loan and provides for an adjustment to the interest rate, which reduces the monthly payment requirement.

Direct Installment						Term extension greater than three months. These modifications extend the term of the loan, which reduces the monthly payment requirement.

The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2025 (in thousands):


	For the three months ended March 31, 2025
	Term Extension		Interest Rate Increase	Interest Rate Reduction and Term Extension	Total of loan modifications	% of Total Class of Loans and Leases

Mortgage loans:
Commercial	$	2,984	—	1,027	4,011	0.05	%



Total mortgage loans	2,984		—	1,027	4,011	0.03	%
Commercial loans	1,144		—	603	1,747	0.04	%

Total gross loans	$	4,128	—	1,630	5,758	0.03	%

The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2025 (in thousands):


	Weighted-Average Months of Term Extension	Weighted-Average Rate Increase (Decrease)
Mortgage loans:
Commercial	3	0.75	%



Total mortgage loans	3	0.75	%
Commercial loans	20	(0.25)	%

Total gross loans	14	0.08	%

There were no loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2025, that subsequently defaulted.

The following table presents the aging analysis of loan modifications made to borrowers experiencing financial difficulty during the twelve months ended March 31, 2025 (in thousands):


	Current		30-59 Days Past Due	60-89 Days Past Due	90 days or more Past Due	Non- Accrual	Total

Mortgage loans:
Commercial	$	9,847	—	—	—	—	9,847
Multi-family	747		—	—	89	402	1,238


Total mortgage loans	10,594		—	—	89	402	11,085
Commercial loans	1,747		313	—	—	1,153	3,213

Total gross loans	$	12,341	313	—	89	1,555	14,298

Loans acquired by the Company that experienced more-than-insignificant deterioration in credit quality after origination, are classified as PCD loans. As of March 31, 2025, the balance of PCD loans totaled $585.8 million with a related allowance for credit losses of $15.0 million. The balance of PCD loans as of December 31, 2024 was $620.4 million with a related allowance for credit losses of $15.2 million.

In connection with the Lakeland merger, the Company evaluated acquired loans for deterioration in credit quality based on any of, but not limited to, the following: (1) non-accrual status; (2) modifications for borrowers experiencing financial difficulty; (3) risk ratings of watch, special mention, substandard or doubtful; and (4) loans greater than 59 days past due. At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics.

Additionally for PCD loans, an allowance for credit losses was calculated using management's best estimate of projected losses over the remaining life of the loans. This represents the portion of the loan balances that has been deemed uncollectible based on the Company’s expectations of future cash flows for each respective PCD loan pool, given the outlook and forecasts inclusive of related fiscal and regulatory interventions. The expected lifetime losses were calculated using historical losses observed at the Bank, Lakeland and peer banks. A $17.2 million allowance for credit losses was recorded on PCD loans acquired from Lakeland. The interest rate fair value adjustment related to PCD loans will be substantially recognized as interest income on a level yield or straight line method over the expected life of the loans.

The table below is a summary of the PCD loans that were acquired from Lakeland as of the closing date (in thousands):


Gross amortized cost basis as of May 16, 2024	$	564,147
Charge-offs on PCD Loans at acquisition	(4,364)
Interest component of expected cash flows (accretable difference)	(33,365)

Allowance for credit losses on PCD loans	(17,188)
Net PCD loans	$	509,230

Management utilizes an internal nine-point risk rating system to summarize its loan portfolio into categories with similar risk characteristics. Loans deemed to be “acceptable quality” are rated 1 through 4, with a rating of 1 established for loans with minimal risk. Loans that are deemed to be of “questionable quality” are rated 5 (watch) or 6 (special mention). Loans with adverse classifications (substandard, doubtful or loss) are rated 7, 8 or 9, respectively. Commercial mortgage, commercial, multi-family and construction loans are rated individually, and each lending officer is responsible for risk rating loans in their portfolio. These risk ratings are then reviewed by the department manager and/or the Chief Lending Officer and by the Credit Department. The risk ratings are also reviewed periodically through loan review examinations which are currently performed by independent third-parties. Reports by the independent third-parties are presented to the Audit Committee of the Board of Directors.

The following table summarizes the Company's gross loans held for investment by year of origination and internally assigned credit grades as of March 31, 2025 and December 31, 2024 (in thousands):


	Gross Loans Held for Investment by Year of Origination as of March 31, 2025
	2025		2024	2023	2022	2021	Prior to 2021	Revolving Loans	Revolving loans to term loans	Total Loans
Commercial Mortgage
Special mention	$	—	—	3,185	20,698	48,125	56,524	4,436	—	132,968
Substandard	2,984		—	67	7,844	8,620	84,408	—	—	103,923
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	2,984		—	3,252	28,542	56,745	140,932	4,436	—	236,891
Pass/Watch	202,526		349,529	918,995	1,596,950	948,395	2,905,300	126,351	10,714	7,058,760

Total Commercial Mortgage	$	205,510	349,529	922,247	1,625,492	1,005,140	3,046,232	130,787	10,714	7,295,651

Multi-family
Special mention	$	—	—	1,425	—	—	16,022	—	—	17,447
Substandard	—		—	1,520	—	1,043	6,631	—	—	9,194
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	—		—	2,945	—	1,043	22,653	—	—	26,641
Pass/Watch	78,299		329,224	489,380	752,254	415,477	1,354,589	10,778	1,548	3,431,549
Total Multi-Family	$	78,299	329,224	492,325	752,254	416,520	1,377,242	10,778	1,548	3,458,190

Construction
Special mention	$	—	—	1,154	6,639	—	—	—	—	7,793
Substandard	—		—	12,158	—	6,772	—	—	—	18,930
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	—		—	13,312	6,639	6,772	—	—	—	26,723
Pass/Watch	10,446		136,029	296,508	193,387	91,561	1,702	—	—	729,633
Total Construction	$	10,446	136,029	309,820	200,026	98,333	1,702	—	—	756,356

Residential (1)
Special mention	$	—	553	1,196	722	—	2,690	—	—	5,161
Substandard	—		—	1,234	686	1,115	2,059	—	—	5,094
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	—		553	2,430	1,408	1,115	4,749	—	—	10,255
Pass/Watch	23,199		132,180	342,672	421,182	328,738	736,178	—	—	1,984,149
Total Residential	$	23,199	132,733	345,102	422,590	329,853	740,927	—	—	1,994,404

Total Mortgage
Special mention	$	—	553	6,960	28,059	48,125	75,236	4,436	—	163,369
Substandard	2,984		—	14,979	8,530	17,550	93,098	—	—	137,141
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—


	Gross Loans Held for Investment by Year of Origination as of March 31, 2025
	2025		2024	2023	2022	2021	Prior to 2021	Revolving Loans	Revolving loans to term loans	Total Loans
Total criticized and classified	2,984		553	21,939	36,589	65,675	168,334	4,436	—	300,510
Pass/Watch	314,470		946,962	2,047,555	2,963,773	1,784,171	4,997,769	137,129	12,262	13,204,091
Total Mortgage	$	317,454	947,515	2,069,494	3,000,362	1,849,846	5,166,103	141,565	12,262	13,504,601

Commercial
Special mention	$	179	2,298	7,096	11,296	20,247	44,172	16,016	3,385	104,689
Substandard	—		5,141	2,163	71,960	30,118	54,072	28,062	2,943	194,459
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	179		7,439	9,259	83,256	50,365	98,244	44,078	6,328	299,148
Pass/Watch	216,232		668,944	442,195	674,072	378,063	916,130	1,023,122	64,996	4,383,754
Total Commercial	$	216,411	676,383	451,454	757,328	428,428	1,014,374	1,067,200	71,324	4,682,902

Consumer (1)
Special mention	$	—	—	—	—	—	204	600	146	950
Substandard	—		—	—	—	9	245	854	1	1,109
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—

Total criticized and classified	—		—	—	—	9	449	1,454	147	2,059
Pass/Watch	11,171		35,468	42,655	56,512	39,132	84,960	326,954	14,542	611,394
Total Consumer	$	11,171	35,468	42,655	56,512	39,141	85,409	328,408	14,689	613,453

Total Loans
Special mention	$	179	2,851	14,056	39,355	68,372	119,612	21,052	3,531	269,008
Substandard	2,984		5,141	17,142	80,490	47,677	147,415	28,916	2,944	332,709
Doubtful	—		—	—	—	—	—	—	—	—

Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	3,163		7,992	31,198	119,845	116,049	267,027	49,968	6,475	601,717
Pass/Watch	541,873		1,651,374	2,532,405	3,694,357	2,201,366	5,998,859	1,487,205	91,800	18,199,239
Total Gross Loans	$	545,036	1,659,366	2,563,603	3,814,202	2,317,415	6,265,886	1,537,173	98,275	18,800,956

(1) For residential and consumer loans, the Company assigns internal credit grades based on the delinquency status of each loan.


	Gross Loans Held for Investment by Year of Origination as of December 31, 2024
	2024		2023	2022	2021	2020	Prior to 2020	Revolving Loans	Revolving loans to term loans	Total Loans
Commercial Mortgage
Special mention	$	262	4,377	10,150	9,127	14,569	69,525	4,461	—	112,471
Substandard	3,044		73	10,952	—	21,051	50,870	—	—	85,990
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—


	Gross Loans Held for Investment by Year of Origination as of December 31, 2024
	2024		2023	2022	2021	2020	Prior to 2020	Revolving Loans	Revolving loans to term loans	Total Loans
Total criticized and classified	3,306		4,450	21,102	9,127	35,620	120,395	4,461	—	198,461
Pass/Watch	417,991		904,924	1,623,911	997,658	884,295	2,063,646	126,297	10,895	7,029,617
Total Commercial Mortgage	$	421,297	909,374	1,645,013	1,006,785	919,915	2,184,041	130,758	10,895	7,228,078

Multi-family
Special mention	$	—	—	—	—	—	16,472	—	—	16,472
Substandard	—		1,560	—	1,043	—	5,439	—	—	8,042
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	—		1,560	—	1,043	—	21,911	—	—	24,514
Pass/Watch	363,254		478,184	701,811	460,979	460,161	882,291	10,181	1,558	3,358,419
Total Multi-Family	$	363,254	479,744	701,811	462,022	460,161	904,202	10,181	1,558	3,382,933

Construction
Special mention	$	—	1,064	—	—	—	—	—	—	1,064
Substandard	—		—	—	12,346	—	—	—	—	12,346
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	—		1,064	—	12,346	—	—	—	—	13,410
Pass/Watch	104,009		309,034	260,190	110,100	24,017	2,743	—	—	810,093
Total Construction	$	104,009	310,098	260,190	122,446	24,017	2,743	—	—	823,503

Residential (1)
Special mention	$	403	1,356	344	—	—	2,836	—	—	4,939
Substandard	—		764	689	1,119	—	1,963	—	—	4,535
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	403		2,120	1,033	1,119	—	4,799	—	—	9,474
Pass/Watch	140,382		348,493	428,269	333,150	276,703	474,166	—	—	2,001,163
Total Residential	$	140,785	350,613	429,302	334,269	276,703	478,965	—	—	2,010,637

Total Mortgage
Special mention	$	665	6,797	10,494	9,127	14,569	88,833	4,461	—	134,946
Substandard	3,044		2,397	11,641	14,508	21,051	58,272	—	—	110,913
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	3,709		9,194	22,135	23,635	35,620	147,105	4,461	—	245,859
Pass/Watch	1,025,636		2,040,635	3,014,181	1,901,887	1,645,176	3,422,846	136,478	12,453	13,199,292
Total Mortgage	$	1,029,345	2,049,829	3,036,316	1,925,522	1,680,796	3,569,951	140,939	12,453	13,445,151


	Gross Loans Held for Investment by Year of Origination as of December 31, 2024
	2024		2023	2022	2021	2020	Prior to 2020	Revolving Loans	Revolving loans to term loans	Total Loans

Commercial
Special mention	$	298	2,612	3,084	5,804	9,493	26,924	20,030	4,761	73,006
Substandard	6,887		5,023	62,028	28,208	23,130	21,170	31,787	1,746	179,979
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	7,185		7,635	65,112	34,012	32,623	48,094	51,817	6,507	252,985
Pass/Watch	747,299		427,445	697,899	390,770	256,421	678,154	1,089,408	68,219	4,355,615
Total Commercial	$	754,484	435,080	763,011	424,782	289,044	726,248	1,141,225	74,726	4,608,600

Consumer (1)
Special mention	$	—	—	3	—	124	109	725	—	961
Substandard	—		95	—	9	—	321	950	—	1,375
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	—		95	3	9	124	430	1,675	—	2,336
Pass/Watch	31,975		45,605	59,669	40,080	9,433	83,728	327,107	13,886	611,483
Total Consumer	$	31,975	45,700	59,672	40,089	9,557	84,158	328,782	13,886	613,819

Total Loans
Special mention	$	963	9,409	13,581	14,931	24,186	115,866	25,216	4,761	208,913
Substandard	9,931		7,515	73,669	42,725	44,181	79,763	32,737	1,746	292,267
Doubtful	—		—	—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—	—
Total criticized and classified	10,894		16,924	87,250	57,656	68,367	195,629	57,953	6,507	501,180
Pass/Watch	1,804,910		2,513,685	3,771,749	2,332,737	1,911,030	4,184,728	1,552,993	94,558	18,166,390
Total Gross Loans	$	1,815,804	2,530,609	3,858,999	2,390,393	1,979,397	4,380,357	1,610,946	101,065	18,667,570

(1) For residential and consumer loans, the Company assigns internal credit grades based on the delinquency status of each loan.