Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2026

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, 2026 and December 31, 2025:


		June 30,			December 31,
(dollars in thousands)		2026			2025
Commercial		$	591,034		$	547,245
Leases			41,802			43,407
Construction and Land Development			186,248			216,163
1-4 Family Construction			46,539			45,152
Real Estate Mortgage:
1-4 Family Mortgage			485,288			496,142
Multifamily			1,690,566			1,587,338
CRE Owner Occupied			191,153			189,754
CRE Nonowner Occupied			1,168,863			1,165,104
Total Real Estate Mortgage Loans			3,535,870			3,438,338
Consumer and Other			24,896			19,212
Total Loans, Gross			4,426,389			4,309,517
Allowance for Credit Losses			(57,418)			(56,443)
Net Deferred Loan Fees			(8,469)			(8,966)
Total Loans, Net		$	4,360,502		$	4,244,108

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, 2026 and December 31, 2025:


		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, 2026
Commercial		$	591,025		$	9		$	—		$	—		$	—		$	591,034
Leases			41,802			—			—			—			—			41,802
Construction and Land Development			186,222			—			—			—			26			186,248
1-4 Family Construction			46,539			—			—			—			—			46,539
Real Estate Mortgage:
1-4 Family Mortgage			484,390			842			—			—			56			485,288
Multifamily			1,678,448			—			—			12,118			—			1,690,566
CRE Owner Occupied			191,153			—			—			—			—			191,153
CRE Nonowner Occupied			1,160,214			—			—			8,649			—			1,168,863
Total Real Estate Mortgage Loans			3,514,205			842			—			20,767			56			3,535,870
Consumer and Other			24,077			20			—			799			—			24,896
Totals		$	4,403,870		$	871		$	—		$	21,566		$	82		$	4,426,389


		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, 2025
Commercial		$	546,499		$	746		$	—		$	—		$	—		$	547,245
Leases			43,407			—			—			—			—			43,407
Construction and Land Development			216,129			—			—			—			34			216,163
1-4 Family Construction			45,152			—			—			—			—			45,152
Real Estate Mortgage:
1-4 Family Mortgage			495,922			164			—			—			56			496,142
Multifamily			1,574,043			—			—			13,295			—			1,587,338
CRE Owner Occupied			189,754			—			—			—			—			189,754
CRE Nonowner Occupied			1,156,397			58			—			8,649			—			1,165,104
Total Real Estate Mortgage Loans			3,416,116			222			—			21,944			56			3,438,338
Consumer and Other			19,212			—			—			—			—			19,212
Totals		$	4,286,515		$	968		$	—		$	21,944		$	90		$	4,309,517

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 indicator by year of origination as of June 30, 2026 and December 31, 2025:


		June 30, 2026
(dollars in thousands)		2026		2025		2024		2023		2022		Prior		Revolving		Total
Commercial
Pass	$	121,749	$	120,683	$	66,006	$	14,144	$	25,218	$	31,357	$	199,619	$	578,776
Watch/Special Mention		480		—		477		—		—		120		751		1,828
Substandard		—		—		122		—		10,308		—		—		10,430
Total Commercial		122,229		120,683		66,605		14,144		35,526		31,477		200,370		591,034
Current Period Gross Write-offs		—		639		—		—		—		—		—		639

Leases
Pass		7,809		13,628		8,499		6,256		3,876		1,734		—		41,802
Total Leases		7,809		13,628		8,499		6,256		3,876		1,734		—		41,802
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Construction and Land Development
Pass		31,224		116,990		24,361		98		186		252		13,111		186,222
Substandard		—		—		26		—		—		—		—		26
Total Construction and Land Development		31,224		116,990		24,387		98		186		252		13,111		186,248
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

1-4 Family Construction
Pass		11,792		14,366		765		—		—		184		19,432		46,539
Total 1-4 Family Construction		11,792		14,366		765		—		—		184		19,432		46,539
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Real Estate Mortgage:
1-4 Family Mortgage
Pass		40,556		82,885		64,506		38,586		79,684		92,228		85,315		483,760
Watch/Special Mention		200		—		—		—		—		—		—		200
Substandard		623		649		—		—		56		—		—		1,328
Total 1-4 Family Mortgage		41,379		83,534		64,506		38,586		79,740		92,228		85,315		485,288
Current Period Gross Write-offs		—		9		—		—		—		—		—		9

Multifamily
Pass		234,700		400,253		188,417		73,209		376,051		368,791		10,538		1,651,959
Watch/Special Mention		26,489		—		—		—		—		—		—		26,489
Substandard		1,456		—		—		—		10,645		17		—		12,118
Total Multifamily		262,645		400,253		188,417		73,209		386,696		368,808		10,538		1,690,566
Current Period Gross Write-offs		—		—		—		—		—		709		—		709

CRE Owner Occupied
Pass		13,497		20,503		20,349		21,981		51,509		50,397		2,382		180,618
Watch/Special Mention		—		—		—		1,481		5,699		—		—		7,180
Substandard		—		—		—		—		—		3,355		—		3,355
Total CRE Owner Occupied		13,497		20,503		20,349		23,462		57,208		53,752		2,382		191,153
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

CRE Nonowner Occupied
Pass		163,255		307,687		223,014		63,844		198,761		186,271		7,627		1,150,459
Watch/Special Mention		—		2,582		—		—		—		—		—		2,582
Substandard		2,805		12,124		893		—		—		—		—		15,822
Total CRE Nonowner Occupied		166,060		322,393		223,907		63,844		198,761		186,271		7,627		1,168,863
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Total Real Estate Mortgage Loans		483,581		826,683		497,179		199,101		722,405		701,059		105,862		3,535,870

Consumer and Other
Pass		631		2,591		152		254		154		244		19,871		23,897
Watch/Special Mention		—		—		—		—		—		—		190		190
Substandard		—		—		—		—		—		799		10		809
Total Consumer and Other		631		2,591		152		254		154		1,043		20,071		24,896
Current Period Gross Write-offs		—		—		—		—		—		4		35		39

Total Period Gross Write-offs		—		648		—		—		—		713		35		1,396
Total Loans	$	657,266	$	1,094,941	$	597,587	$	219,853	$	762,147	$	735,749	$	358,846	$	4,426,389


		December 31, 2025
(dollars in thousands)		2025		2024		2023		2022		2021		Prior		Revolving		Total
Commercial
Pass	$	163,333	$	83,059	$	17,582	$	28,653	$	14,774	$	25,668	$	201,739	$	534,808
Watch/Special Mention		—		—		584		165		—		—		1,234		1,983
Substandard		—		135		—		10,313		6		—		—		10,454
Total Commercial		163,333		83,194		18,166		39,131		14,780		25,668		202,973		547,245
Current Period Gross Write-offs		21		—		1,239		58		186		—		—		1,504

Leases
Pass		15,721		11,057		8,412		5,390		1,749		1,078		—		43,407
Total Leases		15,721		11,057		8,412		5,390		1,749		1,078		—		43,407
Current Period Gross Write-offs		—		—		—		15		—		—		—		15

Construction and Land Development
Pass		158,592		42,019		1,598		222		412		—		13,286		216,129
Substandard		—		34		—		—		—		—		—		34
Total Construction and Land Development		158,592		42,053		1,598		222		412		—		13,286		216,163
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

1-4 Family Construction
Pass		29,621		2,910		—		196		186		—		12,239		45,152
Total 1-4 Family Construction		29,621		2,910		—		196		186		—		12,239		45,152
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Real Estate Mortgage:
1-4 Family Mortgage
Pass		98,718		68,467		43,294		85,577		66,080		47,581		85,425		495,142
Substandard		944		—		—		56		—		—		—		1,000
Total 1-4 Family Mortgage		99,662		68,467		43,294		85,633		66,080		47,581		85,425		496,142
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Multifamily
Pass		440,012		166,790		77,979		405,405		304,191		124,609		10,647		1,529,633
Watch/Special Mention		31,728		—		2,201		—		—		—		—		33,929
Substandard		13,296		—		—		10,480		—		—		—		23,776
Total Multifamily		485,036		166,790		80,180		415,885		304,191		124,609		10,647		1,587,338
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

CRE Owner Occupied
Pass		22,102		20,740		23,532		52,754		28,295		26,910		1,932		176,265
Watch/Special Mention		—		—		1,510		5,823		432		2,171		1,842		11,778
Substandard		—		—		—		—		1,711		—		—		1,711
Total CRE Owner Occupied		22,102		20,740		25,042		58,577		30,438		29,081		3,774		189,754
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

CRE Nonowner Occupied
Pass		367,117		252,912		70,464		216,814		123,618		113,955		4,110		1,148,990
Watch/Special Mention		—		—		—		—		—		—		133		133
Substandard		15,080		901		—		—		—		—		—		15,981
Total CRE Nonowner Occupied		382,197		253,813		70,464		216,814		123,618		113,955		4,243		1,165,104
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Total Real Estate Mortgage Loans		988,997		509,810		218,980		776,909		524,327		315,226		104,089		3,438,338

Consumer and Other
Pass		3,046		198		306		269		44		1,074		14,275		19,212
Substandard		—		—		—		—		—		—		—		—
Total Consumer and Other		3,046		198		306		269		44		1,074		14,275		19,212
Current Period Gross Write-offs		—		—		4		—		—		—		30		34

Total Period Gross Write-offs		21		—		1,243		73		186		—		30		1,553
Total Loans	$	1,359,310	$	649,222	$	247,462	$	822,117	$	541,498	$	343,046	$	346,862	$	4,309,517

The following tables present the activity in the ACL, by segment, for the three and six months ended June 30, 2026 and 2025:


			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, 2026
Commercial	$	6,395	$	(677)	$	—	$	328	$	6,046
Leases		305		(9)		—		—		296
Construction and Land Development		1,696		(296)		—		—		1,400
1-4 Family Construction		355		(42)		—		—		313
Real Estate Mortgage:
1-4 Family Mortgage		2,385		(100)		(9)		—		2,276
Multifamily		24,140		1,588		(709)		—		25,019
CRE Owner Occupied		1,065		(32)		—		—		1,033
CRE Nonowner Occupied		20,677		79		—		—		20,756
Total Real Estate Mortgage Loans		48,267		1,535		(718)		—		49,084
Consumer and Other		259		39		(20)		1		279
Total	$	57,277	$	550	$	(738)	$	329	$	57,418

Six Months Ended June 30, 2026
Commercial	$	5,982	$	237	$	(639)	$	466	$	6,046
Leases		352		(56)		—		—		296
Construction and Land Development		1,687		(287)		—		—		1,400
1-4 Family Construction		316		(3)		—		—		313
Real Estate Mortgage:
1-4 Family Mortgage		2,475		(190)		(9)		—		2,276
Multifamily		23,775		1,953		(709)		—		25,019
CRE Owner Occupied		1,080		(47)		—		—		1,033
CRE Nonowner Occupied		20,595		161		—		—		20,756
Total Real Estate Mortgage Loans		47,925		1,877		(718)		—		49,084
Consumer and Other		181		132		(39)		5		279
Total	$	56,443	$	1,900	$	(1,396)	$	471	$	57,418


			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

The following tables present the balance in the ACL and the recorded investment in loans, by segment, as of June 30, 2026 and December 31, 2025:


	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
ACL at June 30, 2026
Commercial	$	189	$	5,857	$	6,046
Leases		—		296		296
Construction and Land Development		—		1,400		1,400
1-4 Family Construction		—		313		313
Real Estate Mortgage:
1-4 Family Mortgage		—		2,276		2,276
Multifamily		995		24,024		25,019
CRE Owner Occupied		—		1,033		1,033
CRE Nonowner Occupied		4,019		16,737		20,756
Total Real Estate Mortgage Loans		5,014		44,070		49,084
Consumer and Other		80		199		279
Total	$	5,283	$	52,135	$	57,418


	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
ACL at December 31, 2025
Commercial	$	134	$	5,848	$	5,982
Leases		—		352		352
Construction and Land Development		—		1,687		1,687
1-4 Family Construction		—		316		316
Real Estate Mortgage:
1-4 Family Mortgage		—		2,475		2,475
Multifamily		789		22,986		23,775
CRE Owner Occupied		—		1,080		1,080
CRE Nonowner Occupied		2,889		17,706		20,595
Total Real Estate Mortgage Loans		3,678		44,247		47,925
Consumer and Other		—		181		181
Total	$	3,812	$	52,631	$	56,443


	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
Loans at June 30, 2026
Commercial	$	10,430	$	580,604	$	591,034
Leases		—		41,802		41,802
Construction and Land Development		26		186,222		186,248
1-4 Family Construction		—		46,539		46,539
Real Estate Mortgage:
1-4 Family Mortgage		1,328		483,960		485,288
Multifamily		12,118		1,678,448		1,690,566
CRE Owner Occupied		3,355		187,798		191,153
CRE Nonowner Occupied		15,822		1,153,041		1,168,863
Total Real Estate Mortgage Loans		32,623		3,503,247		3,535,870
Consumer and Other		809		24,087		24,896
Total	$	43,888	$	4,382,501	$	4,426,389


	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
Loans at December 31, 2025
Commercial	$	10,527	$	536,718	$	547,245
Leases		—		43,407		43,407
Construction and Land Development		34		216,129		216,163
1-4 Family Construction		—		45,152		45,152
Real Estate Mortgage:
1-4 Family Mortgage		1,000		495,142		496,142
Multifamily		23,776		1,563,562		1,587,338
CRE Owner Occupied		3,553		186,201		189,754
CRE Nonowner Occupied		16,867		1,148,237		1,165,104
Total Real Estate Mortgage Loans		45,196		3,393,142		3,438,338
Consumer and Other		—		19,212		19,212
Total	$	55,757	$	4,253,760	$	4,309,517

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, 2026 and December 31, 2025:


		Primary Type of Collateral
					Business									ACL
(dollars in thousands)		Real Estate			Assets			Other			Total			Allocation
June 30, 2026
Commercial		$	—		$	252		$	10,178		$	10,430		$	189
Construction and Land Development			26			—			—			26			—
Real Estate Mortgage:
1-4 Family Mortgage			1,328			—			—			1,328			—
Multifamily			12,118			—			—			12,118			995
CRE Owner Occupied			3,355			—			—			3,355			—
CRE Nonowner Occupied			15,822			—			—			15,822			4,019
Total Real Estate Mortgage Loans			32,623			—			—			32,623			5,014
Consumer and Other			—			—			809			809			80
Totals		$	32,649		$	252		$	10,987		$	43,888		$	5,283


		Primary Type of Collateral
					Business									ACL
(dollars in thousands)		Real Estate			Assets			Other			Total			Allocation
December 31, 2025
Commercial		$	72		$	159		$	10,296		$	10,527		$	134
Construction and Land Development			34			—			—			34			—
Real Estate Mortgage:
1-4 Family Mortgage			1,000			—			—			1,000			—
Multifamily			23,776			—			—			23,776			789
CRE Owner Occupied			3,553			—			—			3,553			—
CRE Nonowner Occupied			16,867			—			—			16,867			2,889
Total Real Estate Mortgage Loans			45,196			—			—			45,196			3,678
Totals		$	45,302		$	159		$	10,296		$	55,757		$	3,812

Accrued interest receivable on loans, which is recorded within accrued interest on the balance sheet, totaled $12.2 million and $12.7 million at June 30, 2026 and December 31, 2025, respectively, and was excluded from the estimate of credit losses.

For the three and six months ended June 30, 2026, there were no loans modified to borrowers experiencing financial difficulty. 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.