Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2025

Loans and Allowance for Credit Losses

Loans and Allowance for Credit Losses

Note 4: Loans and Allowance for Credit Losses

The following table presents the components of the loan portfolio at June 30, 2025 and December 31, 2024:


		June 30,			December 31,
(dollars in thousands)		2025			2024
Commercial		$	549,259		$	497,662
Leases			44,817			44,291
Construction and Land Development			136,438			97,255
1-4 Family Construction			39,095			41,961
Real Estate Mortgage:
1-4 Family Mortgage			474,269			474,383
Multifamily			1,555,731			1,425,610
CRE Owner Occupied			192,837			191,248
CRE Nonowner Occupied			1,137,007			1,083,108
Total Real Estate Mortgage Loans			3,359,844			3,174,349
Consumer and Other			16,346			12,996
Total Loans, Gross			4,145,799			3,868,514
Allowance for Credit Losses			(55,765)			(52,277)
Net Deferred Loan Fees			(7,629)			(6,801)
Total Loans, Net		$	4,082,405		$	3,809,436

The following tables present the aging in past due loans and loans on nonaccrual status, with and without an ACL by loan segment, as of June 30, 2025 and December 31, 2024:


		Accruing Interest
					30-89 Days			90 Days or			Nonaccrual			Nonaccrual
(dollars in thousands)		Current			Past Due			More Past Due			with ACL			without ACL			Total
June 30, 2025
Commercial		$	548,964		$	110		$	—		$	185		$	—		$	549,259
Leases			44,783			—			—			34			—			44,817
Construction and Land Development			136,392			—			—			—			46			136,438
1-4 Family Construction			39,095			—			—			—			—			39,095
Real Estate Mortgage:
1-4 Family Mortgage			474,076			—			—			—			193			474,269
Multifamily			1,544,071			10,633			—			—			1,027			1,555,731
CRE Owner Occupied			191,088			1,749			—			—			—			192,837
CRE Nonowner Occupied			1,128,358			—			—			8,649			—			1,137,007
Consumer and Other			16,346			—			—			—			—			16,346
Totals		$	4,123,173		$	12,492		$	—		$	8,868		$	1,266		$	4,145,799


		Accruing Interest
					30-89 Days			90 Days or			Nonaccrual			Nonaccrual
(dollars in thousands)		Current			Past Due			More Past Due			with ACL			without ACL			Total
December 31, 2024
Commercial		$	497,432		$	59		$	—		$	171		$	—		$	497,662
Leases			44,257			—			—			34			—			44,291
Construction and Land Development			97,197			—			—			—			58			97,255
1-4 Family Construction			41,961			—			—			—			—			41,961
Real Estate Mortgage:
1-4 Family Mortgage			474,185			178			—			—			20			474,383
Multifamily			1,425,610			—			—			—			—			1,425,610
CRE Owner Occupied			190,197			1,051			—			—			—			191,248
CRE Nonowner Occupied			1,083,108			—			—			—			—			1,083,108
Consumer and Other			12,975			3			—			18			—			12,996
Totals		$	3,866,922		$	1,291		$	—		$	223		$	78		$	3,868,514

The Company aggregates loans into credit quality indicators based on relevant information about the ability of borrowers to service their debt by using internal reviews in which management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate, and the fair values of collateral securing the loans. The Company analyzes all loans individually to assign a risk rating, grouped into six major categories defined as follows:

Pass: A pass loan is a credit with no known or existing potential weaknesses deserving of management’s close attention.

Watch: Loans classified as watch have a credit where the borrower’s financial strength and performance has

been declining and may pose an elevated level of risk. Watch loans have been identified as having minor deterioration in loan quality or other credit weaknesses/circumstances meriting closer attention of management.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s

close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. This is a transitional rating and loans should not be classified as special mention for more than one year.

Substandard: Loans classified as substandard are not adequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Well defined weaknesses include a borrower’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time, or the failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss: Loans classified as loss are considered uncollectible and charged-off immediately.

The following tables present loan balances classified by credit quality indicators by year of origination as of June 30, 2025 and December 31, 2024:


		June 30, 2025
(dollars in thousands)		2025			2024			2023			2022			2021			Prior			Revolving			Total
Commercial
Pass	$	94,932		$	90,764		$	33,893		$	60,918		$	18,079		$	29,436		$	206,495		$	534,517
Watch/Special Mention		95			—			—			—			—			14			1,801			1,910
Substandard		111			169			87			10,503			140			—			1,822			12,832
Total Commercial		95,138			90,933			33,980			71,421			18,219			29,450			210,118			549,259
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

Leases
Pass		9,171			13,263			10,404			7,689			2,563			1,693			—			44,783
Substandard		—			—			—			34			—			—			—			34
Total Leases		9,171			13,263			10,404			7,723			2,563			1,693			—			44,817
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

Construction and Land Development
Pass		51,171			64,100			1,937			7,779			456			—			10,949			136,392
Substandard		—			46			—			—			—			—			—			46
Total Construction and Land Development		51,171			64,146			1,937			7,779			456			—			10,949			136,438
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

1-4 Family Construction
Pass		11,846			17,077			229			997			188			—			8,758			39,095
Total 1-4 Family Construction		11,846			17,077			229			997			188			—			8,758			39,095
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

Real Estate Mortgage:
1-4 Family Mortgage
Pass		43,036			77,255			51,810			94,090			71,019			65,446			70,272			472,928
Substandard		636			—			239			—			—			318			148			1,341
Total 1-4 Family Mortgage		43,672			77,255			52,049			94,090			71,019			65,764			70,420			474,269
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

Multifamily
Pass		245,427			182,662			131,056			437,652			325,150			164,910			9,605			1,496,462
Watch/Special Mention		32,048			—			2,225			—			—			13,337			—			47,610
Substandard		—			—			424			11,235			—			—			—			11,659
Total Multifamily		277,475			182,662			133,705			448,887			325,150			178,247			9,605			1,555,731
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

CRE Owner Occupied
Pass		15,038			21,886			27,645			59,771			31,592			29,312			2,021			187,265
Watch/Special Mention		—			566			—			—			—			1,714			592			2,872
Substandard		153			—			797			—			1,750			—			—			2,700
Total CRE Owner Occupied		15,191			22,452			28,442			59,771			33,342			31,026			2,613			192,837
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

CRE Nonowner Occupied
Pass		196,059			338,013			93,708			233,083			128,766			125,413			4,701			1,119,743
Watch/Special Mention		—			—			—			—			—			890			—			890
Substandard		13,579			2,795			—			—			—			—			—			16,374
Total CRE Nonowner Occupied		209,638			340,808			93,708			233,083			128,766			126,303			4,701			1,137,007
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

Total Real Estate Mortgage Loans		545,976			623,177			307,904			835,831			558,277			401,340			87,339			3,359,844

Consumer and Other
Pass		3,097			283			478			381			73			1,137			10,897			16,346
Total Consumer and Other		3,097			283			478			381			73			1,137			10,897			16,346
Current Period Gross Write-offs		—			—			—			—			—			—			18			18

Total Period Gross Write-offs		—			—			—			—			—			—			18			18
Total Loans	$	716,399		$	808,879		$	354,932		$	924,132		$	579,776		$	433,620		$	328,061		$	4,145,799


		December 31, 2024
(dollars in thousands)		2024			2023			2022			2021			2020			Prior			Revolving			Total
Commercial
Pass	$	135,665		$	45,089		$	67,579		$	23,353		$	13,349		$	19,794		$	178,293		$	483,122
Watch/Special Mention		—			—			76			96			29			—			1,716			1,917
Substandard		110			44			10,491			—			65			—			1,913			12,623
Total Commercial		135,775			45,133			78,146			23,449			13,443			19,794			181,922			497,662
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

Leases
Pass		15,128			12,684			9,736			4,057			1,504			1,148			—			44,257
Substandard		—			—			34			—			—			—			—			34
Total Leases		15,128			12,684			9,770			4,057			1,504			1,148			—			44,291
Current Period Gross Write-offs		—			—			—			—			11			—			—			11

Construction and Land Development
Pass		74,967			6,027			6,791			585			—			—			8,827			97,197
Substandard		58			—			—			—			—			—			—			58
Total Construction and Land Development		75,025			6,027			6,791			585			—			—			8,827			97,255
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

1-4 Family Construction
Pass		29,378			488			1,164			363			—			—			10,568			41,961
Total 1-4 Family Construction		29,378			488			1,164			363			—			—			10,568			41,961
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

Real Estate Mortgage:
1-4 Family Mortgage
Pass		89,561			58,054			102,627			77,293			55,936			18,289			71,097			472,857
Watch/Special Mention		298			196			—			—			324			—			—			818
Substandard		20			45			—			—			—			643			—			708
Total 1-4 Family Mortgage		89,879			58,295			102,627			77,293			56,260			18,932			71,097			474,383
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

Multifamily
Pass		219,162			133,916			486,854			336,859			161,626			57,679			6,624			1,402,720
Watch/Special Mention		9,953			2,245			10,692			—			—			—			—			22,890
Total Multifamily		229,115			136,161			497,546			336,859			161,626			57,679			6,624			1,425,610
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

CRE Owner Occupied
Pass		22,761			31,402			62,522			34,228			17,801			15,355			2,121			186,190
Watch/Special Mention		—			—			—			1,759			1,739			—			593			4,091
Substandard		—			967			—			—			—			—			—			967
Total CRE Owner Occupied		22,761			32,369			62,522			35,987			19,540			15,355			2,714			191,248
Current Period Gross Write-offs		—			—			—			—			—			—			—			—

CRE Nonowner Occupied
Pass		356,582			113,973			261,827			148,866			73,300			97,350			6,962			1,058,860
Watch/Special Mention		9,622			3,659			—			2,690			—			894			—			16,865
Substandard		7,261			122			—			—			—			—			—			7,383
Total CRE Nonowner Occupied		373,465			117,754			261,827			151,556			73,300			98,244			6,962			1,083,108
Current Period Gross Write-offs		1,236			—			—			—			—			—			—			1,236

Total Real Estate Mortgage Loans		715,220			344,579			924,522			601,695			310,726			190,210			87,397			3,174,349

Consumer and Other
Pass		921			3,061			498			157			1,301			5			7,035			12,978
Substandard		—			18			—			—			—			—			—			18
Total Consumer and Other		921			3,079			498			157			1,301			5			7,035			12,996
Current Period Gross Write-offs		17			—			—			—			—			—			2			19

Total Period Gross Write-offs		1,253			—			—			—			11			—			2			1,266
Total Loans	$	971,447		$	411,990		$	1,020,891		$	630,306		$	326,974		$	211,157		$	295,749		$	3,868,514

The following tables present the activity in the ACL, by segment, for the three and six months ended June 30, 2025 and 2024:


					Provision for
					(Recovery of)
					Credit Losses			Loans and			Recoveries			Total Ending
		Beginning			for Loans			Leases			of Loans			Allowance
(dollars in thousands)		Balance			and Leases			Charged-off			and Leases			Balance
Three Months Ended June 30, 2025
Commercial		$	5,847		$	87		$	—		$	1		$	5,935
Leases			365			16			—			—			381
Construction and Land Development			1,075			29			—			—			1,104
1-4 Family Construction			292			(14)			—			—			278
Real Estate Mortgage:
1-4 Family Mortgage			2,585			(172)			—			—			2,413
Multifamily			23,927			(6)			—			—			23,921
CRE Owner Occupied			1,226			(89)			—			—			1,137
CRE Nonowner Occupied			18,314			2,129			—			—			20,443
Total Real Estate Mortgage Loans			46,052			1,862			—			—			47,914
Consumer and Other			135			20			(6)			4			153
Total		$	53,766		$	2,000		$	(6)		$	5		$	55,765

Six Months Ended June 30, 2025
Commercial		$	5,630		$	304		$	—		$	1		$	5,935
Leases			368			13			—			—			381
Construction and Land Development			866			238			—			—			1,104
1-4 Family Construction			331			(53)			—			—			278
Real Estate Mortgage:
1-4 Family Mortgage			2,795			(382)			—			—			2,413
Multifamily			23,120			801			—			—			23,921
CRE Owner Occupied			1,290			(153)			—			—			1,137
CRE Nonowner Occupied			17,735			2,708			—			—			20,443
Total Real Estate Mortgage Loans			44,940			2,974			—			—			47,914
Consumer and Other			142			24			(18)			5			153
Total		$	52,277		$	3,500		$	(18)		$	6		$	55,765


					Provision for
					(Recovery of)
					Credit Losses			Loans and			Recoveries			Total Ending
		Beginning			for Loans			Leases			of Loans			Allowance
(dollars in thousands)		Balance			and Leases			Charged-off			and Leases			Balance
Three Months Ended June 30, 2024
Commercial		$	5,607		$	409		$	—		$	2		$	6,018
Construction and Land Development			1,828			(608)			—			—			1,220
1-4 Family Construction			577			(55)			—			—			522
Real Estate Mortgage:
1-4 Family Mortgage			2,754			18			—			2			2,774
Multifamily			22,230			250			—			—			22,480
CRE Owner Occupied			1,235			23			—			—			1,258
CRE Nonowner Occupied			17,005			576			—			—			17,581
Total Real Estate Mortgage Loans			43,224			867			—			2			44,093
Consumer and Other			111			(13)			(10)			8			96
Total		$	51,347		$	600		$	(10)		$	12		$	51,949

Six Months Ended June 30, 2024
Commercial		$	5,398		$	615		$	—		$	5		$	6,018
Construction and Land Development			2,156			(936)			—			—			1,220
1-4 Family Construction			558			(36)			—			—			522
Real Estate Mortgage:
1-4 Family Mortgage			2,651			120			—			3			2,774
Multifamily			22,217			263			—			—			22,480
CRE Owner Occupied			1,184			74			—			—			1,258
CRE Nonowner Occupied			16,225			1,356			—			—			17,581
Total Real Estate Mortgage Loans			42,277			1,813			—			3			44,093
Consumer and Other			105			(6)			(12)			9			96
Total		$	50,494		$	1,450		$	(12)		$	17		$	51,949

The following tables present the balance in the ACL and the recorded investment in loans, by segment, as of June 30, 2025 and December 31, 2024:


		Individually			Collectively
		Evaluated for			Evaluated for
(dollars in thousands)		Credit Loss			Credit Loss			Total
ACL at June 30, 2025
Commercial		$	339		$	5,596		$	5,935
Leases			6			375			381
Construction and Land Development			—			1,104			1,104
1-4 Family Construction			—			278			278
Real Estate Mortgage:
1-4 Family Mortgage			—			2,413			2,413
Multifamily			296			23,625			23,921
CRE Owner Occupied			—			1,137			1,137
CRE Nonowner Occupied			2,889			17,554			20,443
Total Real Estate Mortgage Loans			3,185			44,729			47,914
Consumer and Other			—			153			153
Total		$	3,530		$	52,235		$	55,765


		Individually			Collectively
		Evaluated for			Evaluated for
(dollars in thousands)		Credit Loss			Credit Loss			Total
ACL at December 31, 2024
Commercial		$	133		$	5,497		$	5,630
Leases			6			362			368
Construction and Land Development			—			866			866
1-4 Family Construction			—			331			331
Real Estate Mortgage:
1-4 Family Mortgage			—			2,795			2,795
Multifamily			—			23,120			23,120
CRE Owner Occupied			—			1,290			1,290
CRE Nonowner Occupied			—			17,735			17,735
Total Real Estate Mortgage Loans			—			44,940			44,940
Consumer and Other			5			137			142
Total		$	144		$	52,133		$	52,277


		Individually			Collectively
		Evaluated for			Evaluated for
(dollars in thousands)		Credit Loss			Credit Loss			Total
Loans at June 30, 2025
Commercial		$	14,152		$	535,107		$	549,259
Leases			34			44,783			44,817
Construction and Land Development			46			136,392			136,438
1-4 Family Construction			—			39,095			39,095
Real Estate Mortgage:
1-4 Family Mortgage			1,341			472,928			474,269
Multifamily			11,659			1,544,072			1,555,731
CRE Owner Occupied			3,292			189,545			192,837
CRE Nonowner Occupied			17,264			1,119,743			1,137,007
Total Real Estate Mortgage Loans			33,556			3,326,288			3,359,844
Consumer and Other			—			16,346			16,346
Total		$	47,788		$	4,098,011		$	4,145,799


		Individually			Collectively
		Evaluated for			Evaluated for
(dollars in thousands)		Credit Loss			Credit Loss			Total
Loans at December 31, 2024
Commercial		$	14,045		$	483,617		$	497,662
Leases			34			44,257			44,291
Construction and Land Development			58			97,197			97,255
1-4 Family Construction			—			41,961			41,961
Real Estate Mortgage:
1-4 Family Mortgage			708			473,675			474,383
Multifamily			—			1,425,610			1,425,610
CRE Owner Occupied			1,558			189,690			191,248
CRE Nonowner Occupied			8,278			1,074,830			1,083,108
Total Real Estate Mortgage Loans			10,544			3,163,805			3,174,349
Consumer and Other			18			12,978			12,996
Total		$	24,699		$	3,843,815		$	3,868,514

The following tables present the amortized cost basis of collateral dependent loans by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans, as of June 30, 2025 and December 31, 2024:


		Primary Type of Collateral
					Business									ACL
(dollars in thousands)		Real Estate			Assets			Other			Total			Allocation
June 30, 2025
Commercial		$	—		$	3,704		$	10,448		$	14,152		$	339
Leases			—			—			34			34			6
Construction and Land Development			46			—			—			46			—
Real Estate Mortgage:
1-4 Family Mortgage			1,341			—			—			1,341			—
Multifamily			11,659			—			—			11,659			296
CRE Owner Occupied			3,292			—			—			3,292			—
CRE Nonowner Occupied			17,264			—			—			17,264			2,889
Totals		$	33,602		$	3,704		$	10,482		$	47,788		$	3,530


		Primary Type of Collateral
					Business									ACL
(dollars in thousands)		Real Estate			Assets			Other			Total			Allocation
December 31, 2024
Commercial		$	—		$	3,688		$	10,357		$	14,045		$	133
Leases			—			—			34			34			6
Construction and Land Development			58			—			—			58			—
Real Estate Mortgage:
1-4 Family Mortgage			708			—			—			708			—
CRE Owner Occupied			1,558			—			—			1,558			—
CRE Nonowner Occupied			8,278			—			—			8,278			—
Consumer and Other			—			—			18			18			5
Totals		$	10,602		$	3,688		$	10,409		$	24,699		$	144

Accrued interest receivable on loans, which is recorded within accrued interest on the balance sheet, totaled $11.6 million and $11.4 million at June 30, 2025 and December 31, 2024, respectively, and was excluded from the estimate of credit losses.

For the three and six months ended June 30, 2025, the Company modified one commercial real estate, or CRE, nonowner occupied loan, with an outstanding balance of $8.6 million, for a borrower experiencing financial difficulty by granting a 3-year extension of the loan at a below market rate. For the three and six months ended June 30, 2024, there were no loans modified to borrowers experiencing financial difficulty.