During the three and six months ended June 30, 2025, the Company recorded a reversal of expected credit losses of $780,000 and $2.5 million, respectively, primarily attributable to improvements in the modeled credit risk of the Company's loan portfolio and loan payoffs, offset by a general worsening in macroeconomic factors.

At both June 30, 2025 and December 31, 2024, the Company individually evaluated one mezzanine loan for impairment. The loan was collateralized by an office building in the Northeast region and had a principal balance of $4.7 million at both June 30, 2025 and December 31, 2024. The Company fully reserved this loan in the fourth quarter of 2022, and it continues to be fully reserved at June 30, 2025. The loan entered payment default in February 2023 and has been placed on nonaccrual status.

CRE loans are collateralized by a diversified mix of real estate properties and are assessed for credit quality based on the collective evaluation of several factors, including but not limited to: collateral performance relative to underwritten plan, time since origination, current implied and/or re-underwritten loan-to-collateral value ("LTV") ratios, loan structure and exit plan. Depending on the loan’s performance against these various factors, loans are rated on a scale from 1 to 5, with loans rated 1 representing loans with the highest credit quality and loans rated 5 representing loans with the lowest credit quality. Loans are typically rated a 2 at origination. The factors evaluated provide general criteria to monitor credit migration in the Company’s loan portfolio; as such, a loan’s rating may improve or worsen, depending on new information received.

The criteria set forth below should be used as general guidelines and, therefore, not every loan will have all of the characteristics described in each category below.




Risk Rating		Risk Characteristics

1		• Property performance has surpassed underwritten expectations.
		• Occupancy is stabilized, the property has had a history of consistently high occupancy, and the property has a diverse and high-quality tenant mix.

2		• Property performance is consistent with underwritten expectations and covenants and performance criteria are being met or exceeded.
		• Occupancy is stabilized, near stabilized or is on track with underwriting.

3		• Property performance lags behind underwritten expectations.
		• Occupancy is not stabilized and the property has some tenancy rollover.

4		• Property performance significantly lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers.
		• Occupancy is not stabilized and the property has a large amount of tenancy rollover.

5		• Property performance is significantly worse than underwritten expectations. The loan is not in compliance with loan covenants and performance criteria and may be in default. Expected sale proceeds would not be sufficient to pay off the loan at maturity.
		• The property has a material vacancy rate and significant rollover of remaining tenants.
		• An updated appraisal is required upon designation and updated on an as-needed basis.

All CRE loans are evaluated for any credit deterioration by debt asset management and certain finance personnel on at least a quarterly basis. Mezzanine loans may experience greater credit risks due to their nature as subordinated investments.

For the purpose of calculating the quarterly provision for credit losses under CECL, the Company pools CRE loans based on the underlying collateral property type and utilizes a probability of default and loss given default methodology for approximately one year after which it immediately reverts to a historical mean loss ratio.

Credit risk profiles of CRE loans at amortized cost were as follows (in thousands, except amounts in the footnote):


	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Total (1)
At June 30, 2025:
Whole loans	$	28,102	$	461,352	$	442,551	$	435,016	$	5,614	$	1,372,635
Mezzanine loans		—		14,663		—		—		4,700		19,363
Total	$	28,102	$	476,015	$	442,551	$	435,016	$	10,314	$	1,391,998


At December 31, 2024:
Whole loans	$	27,869	$	565,968	$	503,125	$	380,116	$	5,614	$	1,482,692
Mezzanine loan		—		—		—		—		4,700		4,700
Total	$	27,869	$	565,968	$	503,125	$	380,116	$	10,314	$	1,487,392

(1)

The total amortized cost of CRE loans excluded accrued interest receivable of $19.1 million and $14.6 million at June 30, 2025 and December 31, 2024, respectively.

Credit risk profiles of CRE loans by origination year at amortized cost were as follows (in thousands, except amounts in the footnotes):


	2025 (1)		2024 (2)		2023		2022			2021		Prior		Total (3)
At June 30, 2025:
Whole loans: (4)
Rating 1	$	—	$	—	$	—	$	—		$	28,102	$	—	$	28,102
Rating 2		24,624		20,591		48,998		—			297,576		69,563		461,352
Rating 3		—		—		—		217,557			213,982		11,012		442,551
Rating 4		78,079		84,988		15,838		169,685			41,537		44,889		435,016
Rating 5		—		—		—		—			—		5,614		5,614
Total whole loans		102,703		105,579		64,836		387,242			581,197		131,078		1,372,635
Mezzanine loans:
Rating 2		14,663		—		—		—			—		—		14,663
Rating 5		—		—		—		—			—		4,700		4,700
Total mezzanine loans		14,663		—		—		—			—		4,700		19,363
Total loans	$	117,366	$	105,579	$	64,836	$	387,242		$	581,197	$	135,778	$	1,391,998
Current Period Gross Write-Offs	$	—	$	—	$	—	$	—		$	—	$	—	$	—


	2024 (2)		2023		2022		2021			2020		Prior		Total (3)
At December 31, 2024:
Whole loans: (4)
Rating 1	$	—	$	—	$	—	$	27,869		$	—	$	—	$	27,869
Rating 2		19,023		48,106		46,416		382,195			56,284		13,944		565,968
Rating 3		—		—		249,907		242,155			—		11,063		503,125
Rating 4		80,672		15,811		85,004		153,740			—		44,889		380,116
Rating 5		—		—		—		—			—		5,614		5,614
Total whole loans		99,695		63,917		381,327		805,959			56,284		75,510		1,482,692
Mezzanine loan (rating 5)		—		—		—		—			—		4,700		4,700
Total	$	99,695	$	63,917	$	381,327	$	805,959		$	56,284	$	80,210	$	1,487,392
Current Period Gross Write-Offs	$	—	$	—	$	—	$	(700	)	$	—	$	—	$	(700	)

(1)

Includes one novated CRE whole loan that resulted from a loan workout.

(2)

Includes two novated CRE whole loans that resulted from loan workouts.

(3)

The total amortized cost of CRE whole loans excluded accrued interest receivable of $19.1 million and $14.6 million at June 30, 2025 and December 31, 2024, respectively.

(4)

Acquired CRE whole loans are grouped within each loan’s year of origination.

The Company has one additional mezzanine loan that was included in other assets held for sale, and that loan had no carrying value at both June 30, 2025 and December 31, 2024.

The following table presents the CRE loan portfolio aging analysis at the dates indicated for CRE loans at amortized cost (in thousands, except amounts in footnotes):


	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable (1)		Total Loans > 90 Days and Accruing (2)
At June 30, 2025:
Whole loans	$	10,300	$	24,410	$	80,871	$	115,581	$	1,257,054	$	1,372,635	$	75,257
Mezzanine loans (3)		—		—		4,700		4,700		14,663		19,363		—
Total	$	10,300	$	24,410	$	85,571	$	120,281	$	1,271,717	$	1,391,998	$	75,257

At December 31, 2024:
Whole loans	$	—	$	70,760	$	5,614	$	76,374	$	1,406,318	$	1,482,692	$	—
Mezzanine loan (3)		—		—		4,700		4,700		—		4,700		—
Total	$	—	$	70,760	$	10,314	$	81,074	$	1,406,318	$	1,487,392	$	—

(1)

The total amortized cost of CRE whole loans excluded accrued interest receivable of $19.1 million and $14.6 million at June 30, 2025 and December 31, 2024, respectively.

(2)

During the three and six months ended June 30, 2025, the Company recognized interest income of $1.5 million and $3.0 million, respectively, on two CRE whole loans with a principal payment past due greater than 90 days at June 30, 2025.

(3)

Includes one loan, with a total amortized cost of $4.7 million, that was fully reserved at both June 30, 2025 and December 31, 2024.

At June 30, 2025 and December 31, 2024, the Company had five and two CRE whole loans, with total amortized costs of $115.6 million and $76.4 million, respectively, and one mezzanine loan, with a total amortized cost of $4.7 million, in payment default.

During the three months ended June 30, 2025 and 2024, the Company did not recognize interest income on CRE loans that were placed on nonaccrual status. During the six months ended June 30, 2025, the Company did not recognize interest income on CRE loans that were placed on nonaccrual status. During the six months ended June 30, 2024, the Company recognized interest income of $134,000 on one CRE whole loan that was placed on nonaccrual status.

The Company is required to disclose modifications where it determined the borrower is experiencing financial difficulty and modified the agreement to: (i) forgive principal, (ii) reduce the interest rate, (iii) cause an other-than-insignificant payment delay, (iv) extend the loan term, or (v) any combination thereof.

During the six months ended June 30, 2025, the Company did not enter into any loan modifications for borrowers that were experiencing financial difficulty.

During the six months ended June 30, 2024, the Company entered into the following three loan modifications that required disclosure:

These loans were performing in accordance with the modified contractual terms as of June 30, 2025. At June 30, 2025, two of these loans, with a total amortized cost of $124.8 million, had a risk rating of "4" and the other loan, with an amortized cost of $45.4 million, had a risk rating of "3". Loans with a risk rating of "3" and "4" are included in the determination of the Company's general CECL reserves.