LOANS

6 Months Ended

Jun. 30, 2026

The following table presents total loans outstanding by portfolio class, as of June 30, 2026 and December 31, 2025:


(dollars in thousands)	June 30, 2026		December 31, 2025
Commercial:
Commercial	$	1,080,865	$	1,062,691
Commercial other	104,865		115,830
Commercial real estate:
Commercial real estate non-owner occupied	1,341,225		1,447,894
Commercial real estate owner occupied	511,347		444,443
Multi-family	382,981		383,377
Farmland	61,425		66,950
Construction and land development	243,840		286,140
Total commercial loans	3,726,548		3,807,325
Residential real estate:
Residential first lien	283,711		286,178
Other residential	63,953		63,445
Consumer:
Consumer	88,553		99,692
Consumer other	43,853		44,383
Lease financing	37,086		50,981
Total loans	$	4,243,704	$	4,352,004

Total loans included net deferred loan fees of $7.9 million and $8.2 million at June 30, 2026 and December 31, 2025, respectively, and unearned discounts of $3.1 million and $4.7 million within the lease financing portfolio at June 30, 2026 and December 31, 2025, respectively.

Classifications of Loan Portfolio

The Company monitors the performance of its loan portfolio, assesses the credit risk, and estimates its allowance for credit losses on loans using the segments set forth below.

Commercial—Loans to varying types of businesses, including municipalities, school districts and nonprofit organizations, for the purpose of supporting working capital, operational needs and term financing of equipment. Repayment of such loans is generally provided through operating cash flows of the business. Commercial loans are predominately secured by equipment, inventory, accounts receivable, and other sources of repayment.

Commercial real estate—Loans secured by real estate occupied by the borrower for ongoing operations, including loans to borrowers engaged in agricultural production, and non-owner occupied real estate leased to one or more tenants, including commercial office, industrial, special purpose, retail and multi-family residential real estate loans.

Construction and land development—Secured loans for the construction of business and residential properties. Real estate construction loans often convert to a real estate commercial loan at the completion of the construction period. Secured development loans are made to borrowers for the purpose of infrastructure improvements to vacant land to create finished marketable residential and commercial lots/land. Most land development loans are originated with the intention that the loans will be paid through the sale of developed lots/land by the developers within twelve months of the completion date. Interest reserves may be established on real estate construction loans.

Residential real estate—Loans secured by residential properties that generally do not qualify for secondary market sale; however, the risk to return and/or overall relationship are considered acceptable to the Company. This category also includes loans whereby consumers utilize equity in their personal residence, generally through a second mortgage, as collateral to secure the loan.

Consumer—Loans to consumers primarily for the purpose of home improvements or acquiring automobiles, recreational vehicles and boats. Consumer loans consist of relatively small amounts that are spread across many individual borrowers.

Lease financing—Our leasing business historically provided financing leases to varying types of businesses, nationwide, for purchases of business equipment. The financing is secured by a first priority interest in the financed assets and generally requires monthly payments. We ceased originating new equipment financing leases and loans effective September 30, 2025 and sold substantially all of our equipment finance portfolio during the fourth quarter of 2025.

Commercial, commercial real estate, and construction and land development loans are collectively referred to as the Company’s commercial loan portfolio, while residential real estate, consumer loans and lease financing receivables are collectively referred to as the Company’s other loan portfolio.

We have extended loans to certain of our directors, executive officers, principal shareholders and their affiliates. These loans were made in the ordinary course of business upon substantially the same terms as comparable transactions with non-insiders, including collateralization and interest rates prevailing at the time. The new loans, other additions, repayments and other reductions for the three and six months ended June 30, 2026 and 2025, are summarized as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2026		2025		2026		2025
Beginning balance	$	47,085	$	42,028	$	46,999	$	40,410
New loans and other additions	—		3,317		496		5,675
Repayments and other reductions	(8,297)		(859)		(8,707)		(1,599)
Ending balance	$	38,788	$	44,486	$	38,788	$	44,486

The following table represents, by loan portfolio segment, a summary of changes in the allowance for credit losses on loans for the three and six months ended June 30, 2026 and 2025:


	Commercial Loan Portfolio						Other Loan Portfolio
(dollars in thousands)	Commercial		Commercial real estate		Construction and land development		Residential real estate		Consumer		Lease financing		Total
Changes in allowance for credit losses on loans for the three months ended June 30, 2026:
Balances, March 31, 2026	$	24,577	$	27,653	$	2,568	$	6,203	$	4,203	$	2,671	$	67,875
Provision for credit losses on loans	1,976		6,120		(558)		(669)		100		140		7,109
Charge-offs	(3,564)		(8,829)		—		—		(549)		(334)		(13,276)
Recoveries	153		382		—		70		139		67		811
Balances, June 30, 2026	$	23,142	$	25,326	$	2,010	$	5,604	$	3,893	$	2,544	$	62,519

Changes in allowance for credit losses on loans for the six months ended June 30, 2026:
Balances, December 31, 2025	$	23,676	$	28,284	$	2,619	$	6,652	$	4,804	$	3,184	$	69,219
Provision for credit losses on loans	4,465		9,326		(574)		(1,128)		237		186		12,512
Charge-offs	(5,626)		(12,667)		(35)		(65)		(1,445)		(1,071)		(20,909)
Recoveries	627		383		—		145		297		245		1,697
Balances, June 30, 2026	$	23,142	$	25,326	$	2,010	$	5,604	$	3,893	$	2,544	$	62,519

Changes in allowance for credit losses on loans for the three months ended June 30, 2025:
Balances, March 31, 2025	$	33,554	$	39,069	$	3,021	$	7,874	$	5,935	$	15,723	$	105,176
Provision for credit losses on loans	5,773		10,186		(1,181)		(860)		296		3,155		17,369
Charge-offs	(6,161)		(22,453)		—		—		(884)		(3,886)		(33,384)
Recoveries	1,013		637		1,029		90		357		403		3,529
Balances, June 30, 2025	$	34,179	$	27,439	$	2,869	$	7,104	$	5,704	$	15,395	$	92,690

Changes in allowance for credit losses on loans for the six months ended June 30, 2025:
Balances, December 31, 2024	$	42,776	$	36,837	$	3,550	$	8,002	$	5,400	$	14,639	$	111,204
Provision for credit losses on loans	9,355		13,139		(1,711)		(934)		1,236		7,134		28,219
Charge-offs	(19,461)		(23,176)		—		(72)		(1,337)		(7,334)		(51,380)
Recoveries	1,509		639		1,030		108		405		956		4,647
Balances, June 30, 2025	$	34,179	$	27,439	$	2,869	$	7,104	$	5,704	$	15,395	$	92,690

The Company utilizes a combination of models which measure probability of default and loss given default in determining expected future credit losses.

The probability of default is the risk that the borrower will be unable or unwilling to repay its debt in full or on time. The risk of default is derived by analyzing the obligor’s capacity to repay the debt in accordance with contractual terms. Probability of default is generally associated with financial characteristics such as inadequate cash flow to service debt, declining revenues or operating margins, high leverage, declining or marginal liquidity, and the inability to successfully implement a business plan. In addition to these quantifiable factors, the borrower’s willingness to repay also must be evaluated.

The probability of default is forecasted, for most commercial and retail loans, using a regression model that determines the likelihood of default within the twelve month time horizon. The regression model uses forward-looking economic forecasts including variables such as gross domestic product, housing price index, and real disposable income to predict default rates.

The loss given default component is the percentage of defaulted loan balance that is ultimately charged off. As a method for estimating the allowance, a form of migration analysis is used that combines the estimated probability of loans experiencing default events and the losses ultimately associated with the loans experiencing those defaults. Multiplying one by the other gives the Company its loss rate, which is then applied to the loan portfolio balance to determine expected future losses.

Within the model, the loss given default approach produces segmented loss given default estimates using a loss curve methodology, which is based on historical net losses from charge-off and recovery information. The main principle of a loss curve model is that the loss follows a steady timing schedule based on how long the defaulted loan has been on the books.

The Company’s expected loss estimate is anchored in historical credit loss experience, with an emphasis on all available portfolio data. The Company’s historical look-back period includes January 2012 through the current period on a monthly basis. When historical credit loss experience is not sufficient for a specific portfolio, the Company may supplement its own portfolio data with external models or data.

Historical data is evaluated in multiple components of the expected credit loss, including a reasonable and supportable forecast and the post-reversion period of each loan segment. The historical experience is used to infer probability of default and loss given default in the reasonable and supportable forecast period. In the post-reversion period, long-term average loss rates are segmented by loan pool.

Qualitative reserves reflect management’s overall estimate of the extent to which current expected credit losses on collectively evaluated loans will differ from historical loss experience. The analysis takes into consideration other analytics performed within the organization, such as enterprise and concentration management, along with other credit-related analytics as deemed appropriate. Management attempts to quantify qualitative reserves whenever possible.

The Company segments the loan portfolio into pools based on the following risk characteristics: financial asset type, collateral type, loan characteristics, credit characteristics, outstanding loan balances, contractual terms and prepayment assumptions, industry of borrower and concentrations, historical or expected credit loss patterns, and reasonable and supportable forecast periods. Within the probability of default segmentation, credit metrics are identified to further segment the financial assets. The Company utilizes risk ratings for the commercial portfolios and days past due for the consumer and the lease financing portfolios.

The Company has defined five transitioning risk states for each asset pool within the expected credit loss model. The below table illustrates the transition matrix:


Risk state	Commercial loans risk rating	Consumer loans and equipment finance loans and leases days past due
1	0-5	0-14
2	6	15-29
3	7	30-59
4	8	60-89
Default	9+ and nonaccrual	90+ and nonaccrual

Expected Credit Losses

In calculating expected credit losses, the Company individually evaluates loans on nonaccrual status, loans past due 90 days or more and still accruing interest, and loans that do not share similar risk characteristics with other loans in the pool.

The following table presents the amortized cost basis of nonaccrual loans as of June 30, 2026 and December 31, 2025:


	June 30, 2026						December 31, 2025
(dollars in thousands)	Nonaccrual with allowance		Nonaccrual with no allowance		Total nonaccrual		Nonaccrual with allowance		Nonaccrual with no allowance		Total nonaccrual
Commercial:
Commercial	$	3,286	$	7,335	$	10,621	$	3,370	$	3,849	$	7,219
Commercial other	707		—		707		1,040		2,157		3,197
Commercial real estate:
Commercial real estate non-owner occupied	6,665		12,150		18,815		1,537		13,547		15,084
Commercial real estate owner occupied	2,037		10,172		12,209		3,455		8,684		12,139
Multi-family	—		6,650		6,650		14,336		2,112		16,448
Farmland	1,148		—		1,148		1,260		402		1,662
Construction and land development	—		1,588		1,588		155		—		155
Total commercial loans	13,843		37,895		51,738		25,153		30,751		55,904
Residential real estate:
Residential first lien	2,952		254		3,206		3,087		313		3,400
Other residential	592		—		592		426		—		426
Consumer:
Consumer	83		—		83		47		—		47

Lease financing	1,839		—		1,839		1,162		—		1,162
Total loans	$	19,309	$	38,149	$	57,458	$	29,875	$	31,064	$	60,939

There was no interest income recognized on nonaccrual loans during the three and six months ended June 30, 2026 and 2025 while the loans were in nonaccrual status.

Collateral Dependent Financial Assets

A collateral dependent financial asset is a loan that relies solely on the operation or sale of the collateral for repayment. In evaluating the overall risk associated with a loan, the Company considers character, overall financial condition and resources, and payment record of the borrower; the prospects for support from any financially responsible guarantors; and the nature and degree of protection provided by the cash flow and value of any underlying collateral. However, as other sources of repayment become inadequate over time, the significance of the collateral’s value increases and the loan may become collateral dependent.

The table below presents the amortized cost basis of collateral dependent loans by loan class, for borrowers experiencing financial difficulty, as of June 30, 2026 and December 31, 2025:


	Type of Collateral
(dollars in thousands)	Real Estate		Blanket Lien		Equipment		Total
June 30, 2026
Commercial:
Commercial	$	3,688	$	5,021	$	680	$	9,389
Commercial other	—		65		—		65
Commercial real estate:
Non-owner occupied	18,111		—		—		18,111
Owner occupied	9,485		1,595		—		11,080
Multi-family	6,650		—		—		6,650
Farmland	—		—		—		—
Construction and land development	1,588		—		—		1,588
Residential real estate:
Residential first lien	667		—		—		667
Other residential	147		—		—		147

Total collateral dependent loans	$	40,336	$	6,681	$	680	$	47,697

December 31, 2025
Commercial:
Commercial	$	—	$	3,850	$	—	$	3,850
Commercial other	—		2,157		—		2,157
Commercial real estate:
Non-owner occupied	13,951		—		—		13,951
Owner occupied	8,576		1,595		—		10,171
Multi-family	16,448		—		—		16,448
Farmland	—		401		—		401
Construction and land development	—		—		—		—




Total collateral dependent loans	$	38,975	$	8,003	$	—	$	46,978

The aging status of the recorded investment in loans by class as of June 30, 2026 was as follows:


	Accruing loans
(dollars in thousands)	Current		30-59 days past due		60-89 days past due		Past due 90 days or more		Total past due		Nonaccrual		Total
Commercial:
Commercial	$	1,068,240	$	2,004	$	—	$	—	$	2,004	$	10,621	$	1,080,865
Commercial other	95,430		3,566		2,356		2,806		8,728		707		104,865
Commercial real estate:
Commercial real estate non-owner occupied	1,322,338		—		72		—		72		18,815		1,341,225
Commercial real estate owner occupied	498,624		313		201		—		514		12,209		511,347
Multi-family	376,331		—		—		—		—		6,650		382,981
Farmland	60,095		182		—		—		182		1,148		61,425
Construction and land development	242,252		—		—		—		—		1,588		243,840
Total commercial loans	3,663,310		6,065		2,629		2,806		11,500		51,738		3,726,548
Residential real estate:
Residential first lien	279,699		20		171		615		806		3,206		283,711
Other residential	62,952		120		289		—		409		592		63,953
Consumer:
Consumer	88,289		160		21		—		181		83		88,553
Consumer other	43,306		404		143		—		547		—		43,853
Lease financing	34,285		239		723		—		962		1,839		37,086
Total loans	$	4,171,841	$	7,008	$	3,976	$	3,421	$	14,405	$	57,458	$	4,243,704

The aging status of the recorded investment in loans by class as of December 31, 2025 was as follows:


	Accruing loans
(dollars in thousands)	Current		30-59 days past due		60-89 days past due		Past due 90 days or more		Total past due		Nonaccrual		Total
Commercial:
Commercial	$	1,053,096	$	2,035	$	341	$	—	$	2,376	$	7,219	$	1,062,691
Commercial other	101,686		4,113		2,325		4,509		10,947		3,197		115,830
Commercial real estate:
Commercial real estate non-owner occupied	1,432,637		173		—		—		173		15,084		1,447,894
Commercial real estate owner occupied	430,972		701		631		—		1,332		12,139		444,443
Multi-family	366,929		—		—		—		—		16,448		383,377
Farmland	65,267		21		—		—		21		1,662		66,950
Construction and land development	282,169		3,718		98		—		3,816		155		286,140
Total commercial loans	3,732,756		10,761		3,395		4,509		18,665		55,904		3,807,325
Residential real estate:
Residential first lien	282,320		22		401		35		458		3,400		286,178
Other residential	62,459		450		110		—		560		426		63,445
Consumer:
Consumer	99,474		153		18		—		171		47		99,692
Consumer other	43,618		320		445		—		765		—		44,383
Lease financing	48,815		945		59		—		1,004		1,162		50,981
Total loans	$	4,269,442	$	12,651	$	4,428	$	4,544	$	21,623	$	60,939	$	4,352,004

Loan Restructurings

The Company may offer various types of concessions when a borrower is experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows including principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications. Commercial loans modified in a loan restructuring often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor is often requested.

Loans modified in a loan restructuring for the Company may have the financial effect of increasing the specific allowance associated with the loan. An allowance for loans that have been modified in a loan restructuring is measured based on the probability of default and loss given default model, the loan's observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates.

Commercial and consumer loans modified in a loan restructuring are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a loan restructuring subsequently default, the Company evaluates the loan for possible further loss. The allowance may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.

The following table presents, by loan portfolio segment, a summary of loan restructurings for the three and six months ended June 30, 2026 and 2025:


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
(dollars in thousands)	Balance		Count	Balance		Count	Balance		Count	Balance		Count
Commercial:
Commercial	$	4,539	2	$	94	1	$	4,539	2	$	1,068	2
Commercial other	—		—	561		2	—		—	861		4
Commercial real estate:
Commercial real estate non-owner occupied	7,795		1	—		—	7,795		1	—		—
Commercial real estate owner occupied	—		—	201		1	—		—	201		1
Multi-family	5,113		1	—		—	5,113		1	—		—
Farmland	—		—	267		1	99		1	267		1
Construction and land development	—		—	—		—	9,000		1	—		—
Total commercial loans	17,447		4	1,123		5	26,546		6	2,397		8
Residential real estate:
Residential first lien	—		—	—		—	37		1	146		3
Other residential	—		—	—		—	—		—	10		1




Total loan restructurings	$	17,447	4	$	1,123	5	$	26,583	7	$	2,553	12

The following tables present a summary of loan restructurings, by loan portfolio segment and type of restructuring, for the three and six months ended June 30, 2026:


	Three Months Ended June 30, 2026
(dollars in thousands)	Payment Deferral ($)		Term Extension ($)		Total Modifications ($)		Total Class of Financing Receivable (%)
Commercial:
Commercial	$	2,089	$	2,450	$	4,539	0.42	%

Commercial real estate:
Commercial real estate non-owner occupied	—		7,795		7,795		0.58

Multi-family	5,113		—		5,113		1.34


Total commercial loans	$	7,202	$	10,245	$	17,447	0.47	%







Total	$	7,202	$	10,245	$	17,447	0.41	%


	Six Months Ended June 30, 2026
(dollars in thousands)	Payment Deferral ($)		Term Extension ($)		Total Modifications ($)		Total Class of Financing Receivable (%)
Commercial:
Commercial	$	2,089	$	2,450	$	4,539	0.42	%

Commercial real estate:
Commercial real estate non-owner occupied	—		7,795		7,795		0.58

Multi-family	5,113		—		5,113		1.34
Farmland	—		99		99		0.16
Construction & land development	—		9,000		9,000		3.69
Total commercial loans	$	7,202	$	19,344	$	26,546	0.71	%
Residential real estate:
Residential first lien	—		37		37		0.01





Total	$	7,202	$	19,381	$	26,583	0.63	%

The following tables present a summary of loan restructurings, by loan portfolio segment and type of restructuring, for the three and six months ended June 30, 2025:


	Three Months Ended June 30, 2025
(dollars in thousands)	Term Extension ($)		Interest Rate Reduction ($)		Interest Rate Reduction / Payment Deferral ($)		Payment Deferral / Term Extension ($)		Total Modifications ($)		Total Class of Financing Receivable (%)
Commercial:
Commercial	$	94	$	—	$	—	$	—	$	94	0.01	%
Commercial other	—		—		—		561		561		0.48
Commercial real estate:

Commercial real estate owner occupied	—		—		201		—		201		0.05

Farmland	—		—		—		267		267		0.40

Total commercial loans	$	94	$	—	$	201	$	828	$	1,123	0.03	%







Total	$	94	$	—	$	201	$	828	$	1,123	0.03	%


	Six Months Ended June 30, 2025
(dollars in thousands)	Term Extension ($)		Interest Rate Reduction ($)		Interest Rate Reduction / Payment Deferral ($)		Payment Deferral / Term Extension ($)		Total Modifications ($)		Total Class of Financing Receivable (%)
Commercial
Commercial	$	1,068	$	—	$	—	$	—	$	1,068	0.10	%
Commercial other	—		300		—		561		861		0.74
Commercial real estate:

Commercial real estate owner occupied	—		—		201		—		201		0.05

Farmland	—		—		—		267		267		0.40

Total commercial loans	$	1,068	$	300	$	201	$	828	$	2,397	0.06	%
Residential real estate:
Residential first lien	146		—		—		—		146		0.05
Other residential	10		—		—		—		10		0.02




Total	$	1,224	$	300	$	201	$	828	$	2,553	0.06	%

The Company has not committed to lend any additional amounts to the borrowers that have been granted a loan modification.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts. The following table presents the performance of such loans that have been modified in the last twelve months as of June 30, 2026:


(dollars in thousands)	30-59 days past due		60-89 days past due		Past due 90 days or more		Total past due		Current		Total
Commercial:
Commercial	$	—	$	—	$	—	$	—	$	12,498	$	12,498

Commercial real estate:
Commercial real estate non-owner occupied	7,976		—		—		7,976		19,658		27,634

Multi-family	—		—		—		—		5,113		5,113
Farmland	—		—		—		—		99		99
Construction and land development	1,589		—		—		1,589		9,000		10,589
Total commercial loans	9,565		—		—		9,565		46,368		55,933
Residential real estate:
Residential first lien	—		—		—		—		75		75





Total loan restructurings	$	9,565	$	—	$	—	$	9,565	$	46,443	$	56,008

The following table presents the performance of such loans that have been modified in the last twelve months as of June 30, 2025:


(dollars in thousands)	30-59 days past due		60-89 days past due		Past due 90 days or more		Total past due		Current		Total
Commercial:
Commercial	$	—	$	—	$	77	$	77	$	1,393	$	1,470
Commercial other	—		—		15		15		1,113		1,128
Commercial real estate:
Commercial real estate non-owner occupied	—		—		4,456		4,456		21,422		25,878
Commercial real estate owner occupied	201		—		—		201		6,038		6,239

Farmland	—		—		—		—		267		267
Construction and land development	—		—		—		—		1,571		1,571
Total commercial loans	201		—		4,548		4,749		31,804		36,553
Residential real estate:
Residential first lien	133		10		—		143		329		472
Other residential	—		—		—		—		10		10
Consumer:
Consumer	—		—		—		—		15		15

Lease financing	—		668		139		807		188		995
Total loan restructurings	$	334	$	678	$	4,687	$	5,699	$	32,346	$	38,045

Credit Quality Monitoring

The Company maintains loan policies and credit underwriting standards as part of the process of managing credit risk. These standards include making loans generally within the Company’s four geographic regions. In addition, our specialty finance division does nationwide bridge lending for FHA and HUD developments and originates loans for multifamily, assisted and senior living and multi-use properties. Our equipment leasing business historically provided financing to business customers across the country.

The Company has a loan approval process involving underwriting and individual and group loan approval authorities to consider credit quality and loss exposure at loan origination. The loans in the Company’s commercial loan portfolio are risk rated based on the grading system set forth below. All loan authority is based on the aggregate credit to a borrower and its related entities.

Loans in the commercial loan portfolio tend to be larger and more complex than those in the other loan portfolio, and therefore, are subject to more intensive monitoring. All loans in the commercial loan portfolio have an assigned relationship manager, and most borrowers provide periodic financial and operating information that allows the relationship managers to stay abreast of credit quality during the life of the loans. The risk ratings of loans in the commercial loan portfolio are reassessed at least annually, with loans below an acceptable risk rating reassessed more frequently and reviewed by various individuals within the Company at least quarterly.

The Company’s consumer loan portfolio is primarily comprised of both secured and unsecured loans that are relatively small and are evaluated at origination on a centralized basis against standardized underwriting criteria. The ongoing measurement of credit quality of the consumer loan portfolio is largely done on an exception basis. If payments are made on schedule, as agreed, then no further monitoring is performed. However, if delinquency occurs, the delinquent loans are turned over to the Company’s Consumer Collections Group for resolution. Credit quality for the entire consumer loan portfolio is measured by the periodic delinquency rate, nonaccrual amounts and actual losses incurred.

The Company maintains a centralized independent loan review function that monitors the approval process and ongoing asset quality of the loan portfolio, including the accuracy of loan grades. The Company also maintains an independent appraisal review function that participates in the review of all appraisals obtained by the Company.

Credit Quality Indicators

The Company uses a ten grade risk rating system to monitor the ongoing credit quality of its commercial loan portfolio. These loan grades rank the credit quality of a borrower by measuring liquidity, debt capacity, and coverage and payment behavior as shown in the borrower’s financial statements. The risk grades also measure the quality of the borrower’s management and the repayment support offered by any guarantors.

The Company considers all loans with Risk Grades 1 - 6 as acceptable credit risks and structures and manages such relationships accordingly. Periodic financial and operating data combined with regular loan officer interactions are deemed adequate to monitor borrower performance. Loans with Risk Grades of 7 are considered "watch credits" categorized as special mention and the frequency of loan officer contact and receipt of financial data is increased to stay abreast of borrower performance. Loans with Risk Grades of 8 - 10 are considered problematic and require special care. Risk Grade 8 is categorized as substandard, 9 as substandard - nonaccrual and 10 as doubtful. Further, loans with Risk Grades of 7 - 10 are managed regularly through a number of processes, procedures and committees, including oversight by a loan administration committee comprised of executive and senior management of the Company, which includes highly structured reporting of financial and operating data, intensive loan officer intervention and strategies to exit, as well as potential management by the Company's Special Assets Group. Loans not graded in the commercial loan portfolio are monitored by aging status and payment activity.

As discussed previously in Loan Restructurings, the Company does provide various types of concessions when a borrower is experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows. Modified loans with terms at least as favorable to the lender as the terms for other customers with similar collection risks and with terms that are more than minor compared to the original terms are treated as a new loan to the borrower.

The following tables present the recorded investment of the commercial loan portfolio by risk category as of June 30, 2026 and December 31, 2025:


			June 30, 2026
			Term Loans Amortized Cost Basis by Origination Year
(dollars in thousands)			2026		2025		2024		2023		2022		Prior		Revolving loans		Total
Commercial	Commercial	Acceptable credit quality	$	89,556	$	390,474	$	89,173	$	26,230	$	11,622	$	51,819	$	398,219	$	1,057,093
		Special mention	—		—		—		5,229		—		—		75		5,304
		Substandard	4,539		31		—		10		165		1,370		1,732		7,847
		Substandard – nonaccrual	—		—		67		993		4,200		4,663		698		10,621
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	—		—		—		—		—		—		—		—
		Subtotal	94,095		390,505		89,240		32,462		15,987		57,852		400,724		1,080,865

	Commercial other	Acceptable credit quality	1,090		3,416		1,389		994		2,887		735		92,702		103,213
		Special mention	—		1		—		54		19		54		590		718
		Substandard	—		—		—		204		—		—		23		227
		Substandard – nonaccrual	—		—		—		349		189		70		99		707
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	—		—		—		—		—		—		—		—
		Subtotal	1,090		3,417		1,389		1,601		3,095		859		93,414		104,865

Commercial real estate	Non-owner occupied	Acceptable credit quality	159,092		273,985		194,281		101,724		285,221		242,034		12,339		1,268,676
		Special mention	—		3,035		—		—		—		12,303		—		15,338
		Substandard	14,490		331		19		—		8,037		15,519		—		38,396
		Substandard – nonaccrual	—		82		13,226		—		59		5,448		—		18,815
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	—		—		—		—		—		—		—		—
		Subtotal	173,582		277,433		207,526		101,724		293,317		275,304		12,339		1,341,225

	Owner occupied	Acceptable credit quality	83,156		117,811		81,412		34,439		84,646		94,188		1,708		497,360
		Special mention	—		—		215		—		—		610		—		825
		Substandard	203		—		275		—		—		475		—		953
		Substandard – nonaccrual	—		909		184		—		9,635		1,177		304		12,209
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	—		—		—		—		—		—		—		—
		Subtotal	83,359		118,720		82,086		34,439		94,281		96,450		2,012		511,347

	Multi-family	Acceptable credit quality	47,929		77,939		20,762		10,122		140,445		38,674		760		336,631
		Special mention	—		1,200		—		7,490		9,000		—		—		17,690
		Substandard	5,113		—		—		—		16,867		30		—		22,010
		Substandard – nonaccrual	—		—		—		—		6,650		—		—		6,650
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	—		—		—		—		—		—		—		—
		Subtotal	53,042		79,139		20,762		17,612		172,962		38,704		760		382,981

	Farmland	Acceptable credit quality	4,701		15,950		1,564		6,354		3,085		25,228		591		57,473
		Special mention	984		—		—		—		—		92		—		1,076
		Substandard	1,293		358		—		—		—		77		—		1,728
		Substandard – nonaccrual	—		—		—		—		—		1,100		48		1,148
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	—		—		—		—		—		—		—		—
		Subtotal	6,978		16,308		1,564		6,354		3,085		26,497		639		61,425

Construction and land development		Acceptable credit quality	30,667		104,545		36,468		641		17,681		27,416		17,684		235,102
		Special mention	—		—		—		—		—		—		—		—
		Substandard	—		—		—		—		—		70		—		70
		Substandard – nonaccrual	—		—		1,588		—		—		—		—		1,588
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	1,890		4,208		486		282		147		67		—		7,080
		Subtotal	32,557		108,753		38,542		923		17,828		27,553		17,684		243,840

Total		Acceptable credit quality	416,191		984,120		425,049		180,504		545,587		480,094		524,003		3,555,548
		Special mention	984		4,236		215		12,773		9,019		13,059		665		40,951
		Substandard	25,638		720		294		214		25,069		17,541		1,755		71,231
		Substandard – nonaccrual	—		991		15,065		1,342		20,733		12,458		1,149		51,738
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	1,890		4,208		486		282		147		67		—		7,080
Total commercial loans			$	444,703	$	994,275	$	441,109	$	195,115	$	600,555	$	523,219	$	527,572	$	3,726,548


			December 31, 2025
			Term Loans Amortized Cost Basis by Origination Year
(dollars in thousands)			2025		2024		2023		2022		2021		Prior		Revolving loans		Total
Commercial	Commercial	Acceptable credit quality	$	430,303	$	90,583	$	68,878	$	13,508	$	25,150	$	37,678	$	369,376	$	1,035,476
		Special mention	647		1,442		5,229		—		—		21		—		7,339
		Substandard	37		—		2,556		216		4,099		1,181		4,568		12,657
		Substandard – nonaccrual	—		70		996		4,200		426		818		709		7,219
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	—		—		—		—		—		—		—		—
		Subtotal	430,987		92,095		77,659		17,924		29,675		39,698		374,653		1,062,691

	Commercial other	Acceptable credit quality	4,966		1,732		1,735		6,396		693		312		94,573		110,407
		Special mention	201		—		64		209		—		8		663		1,145
		Substandard	—		—		26		—		—		63		992		1,081
		Substandard – nonaccrual	—		—		500		79		311		311		1,996		3,197
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	—		—		—		—		—		—		—		—
		Subtotal	5,167		1,732		2,325		6,684		1,004		694		98,224		115,830

Commercial real estate	Non-owner occupied	Acceptable credit quality	317,256		253,999		121,375		327,996		187,171		132,080		12,556		1,352,433
		Special mention	104		7,630		3,113		2,780		12,508		3,600		—		29,735
		Substandard	342		8,088		—		10,254		—		31,958		—		50,642
		Substandard – nonaccrual	—		9,178		—		59		—		5,847		—		15,084
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	—		—		—		—		—		—		—		—
		Subtotal	317,702		278,895		124,488		341,089		199,679		173,485		12,556		1,447,894

	Owner occupied	Acceptable credit quality	92,863		82,708		39,146		86,498		66,979		59,816		835		428,845
		Special mention	—		841		—		—		—		630		—		1,471
		Substandard	287		358		—		—		18		1,325		—		1,988
		Substandard – nonaccrual	909		184		—		9,643		264		835		304		12,139
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	—		—		—		—		—		—		—		—
		Subtotal	94,059		84,091		39,146		96,141		67,261		62,606		1,139		444,443

	Multi-family	Acceptable credit quality	102,138		30,280		10,233		150,482		38,456		4,473		1,101		337,163
		Special mention	—		—		7,562		17,045		—		—		—		24,607
		Substandard	—		—		—		—		5,124		35		—		5,159
		Substandard – nonaccrual	—		—		—		16,448		—		—		—		16,448
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	—		—		—		—		—		—		—		—
		Subtotal	102,138		30,280		17,795		183,975		43,580		4,508		1,101		383,377

	Farmland	Acceptable credit quality	19,081		1,906		6,858		3,415		6,418		23,454		775		61,907
		Special mention	—		—		—		—		827		94		—		921
		Substandard	958		—		1,210		—		12		280		—		2,460
		Substandard – nonaccrual	246		—		—		—		267		1,101		48		1,662
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	—		—		—		—		—		—		—		—
		Subtotal	20,285		1,906		8,068		3,415		7,524		24,929		823		66,950

Construction and land development		Acceptable credit quality	122,570		78,267		11,000		26,771		16,363		359		14,402		269,732
		Special mention	942		—		—		9,000		—		—		—		9,942
		Substandard	—		1,588		—		—		77		—		—		1,665
		Substandard – nonaccrual	—		155		—		—		—		—		—		155
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	3,292		774		306		255		—		19		—		4,646
		Subtotal	126,804		80,784		11,306		36,026		16,440		378		14,402		286,140

Total		Acceptable credit quality	1,089,177		539,475		259,225		615,066		341,230		258,172		493,618		3,595,963
		Special mention	1,894		9,913		15,968		29,034		13,335		4,353		663		75,160
		Substandard	1,624		10,034		3,792		10,470		9,330		34,842		5,560		75,652
		Substandard – nonaccrual	1,155		9,587		1,496		30,429		1,268		8,912		3,057		55,904
		Doubtful	—		—		—		—		—		—		—		—
		Not graded	3,292		774		306		255		—		19		—		4,646
Total commercial loans			$	1,097,142	$	569,783	$	280,787	$	685,254	$	365,163	$	306,298	$	502,898	$	3,807,325

The following table presents the gross charge-offs by class of loan and year of origination on the commercial loan portfolio for the three and six months ended June 30, 2026 and 2025:


		Term Loans by Origination Year
(dollars in thousands)		2026		2025		2024		2023		2022		Prior		Revolving Loans		Total
For the three months ended June 30, 2026
Commercial	Commercial	$	—	$	—	$	—	$	—	$	—	$	238	$	—	$	238
	Commercial other	3		6		8		87		604		15		2,603		3,326
Commercial real estate	Non-owner occupied	—		—		—		—		—		240		—		240

	Multi-family	—		—		—		—		8,589		—		—		8,589

Construction and land development		—		—		—		—		—		—		—		—
Total gross commercial charge-offs		$	3	$	6	$	8	$	87	$	9,193	$	493	$	2,603	$	12,393



For the six months ended June 30, 2026
Commercial	Commercial	$	—	$	—	$	—	$	—	$	—	$	238	$	—	$	238
	Commercial Other	3		28		12		108		619		18		4,600		5,388
Commercial Real Estate	Non-owner occupied	—		—		—		—		—		2,950		—		2,950

	Multi-family	—		—		—		—		9,717		—		—		9,717

Construction and land development		—		—		35		—		—		—		—		35
Total gross commercial charge-offs		$	3	$	28	$	47	$	108	$	10,336	$	3,206	$	4,600	$	18,328


		Term Loans by Origination Year
(dollars in thousands)		2025		2024		2023		2022		2021		Prior		Revolving Loans		Total
For the three months ended June 30, 2025
Commercial	Commercial	$	—	$	—	$	—	$	—	$	—	$	88	$	—	$	88
	Commercial other	—		14		243		915		179		39		4,683		6,073
Commercial real estate	Non-owner occupied	—		—		—		7,782		—		5,743		—		13,525
	Owner occupied	—		—		—		5,847		—		—		—		5,847
	Multi-family	—		—		—		2,354		—		727		—		3,081


Total gross commercial charge-offs		$	—	$	14	$	243	$	16,898	$	179	$	6,597	$	4,683	$	28,614



For the six months ended June 30, 2025
Commercial	Commercial	$	—	$	—	$	—	$	—	$	—	$	152	$	—	$	152
	Commercial Other	—		56		1,035		1,930		406		117		15,765		19,309
Commercial Real Estate	Non-owner occupied	—		—		—		7,782		—		5,743		—		13,525
	Owner occupied	—		—		—		5,847		—		—		—		5,847
	Multi-family	—		—		—		2,354		—		1,450		—		3,804


Total gross commercial charge-offs		$	—	$	56	$	1,035	$	17,913	$	406	$	7,462	$	15,765	$	42,637

The Company evaluates the credit quality of its other loan portfolios, which includes residential real estate, consumer and leases, based primarily on the aging status of the loan and payment activity. Accordingly, loans on nonaccrual status and loans past due 90 days or more and still accruing interest are considered to be nonperforming for purposes of credit quality evaluation. The following tables present the recorded investment of our other loan portfolio based on the credit risk profile of loans that are performing and loans that are nonperforming as of June 30, 2026 and December 31, 2025:


			June 30, 2026
			Term Loans Amortized Cost Basis by Origination Year
(dollars in thousands)			2026		2025		2024		2023		2022		Prior		Revolving Loans		Total
Residential real estate	Residential first lien	Performing	$	12,262	$	6,495	$	27,158	$	36,393	$	58,039	$	139,453	$	90	$	279,890
		Nonperforming	—		22		—		469		697		2,633		—		3,821
		Subtotal	12,262		6,517		27,158		36,862		58,736		142,086		90		283,711

	Other residential	Performing	493		2,868		1,810		1,146		431		1,340		55,273		63,361
		Nonperforming	—		—		—		—		—		93		499		592
		Subtotal	493		2,868		1,810		1,146		431		1,433		55,772		63,953

Consumer	Consumer	Performing	5,121		28,348		12,870		11,872		9,585		19,701		973		88,470
		Nonperforming	—		—		55		18		—		9		1		83
		Subtotal	5,121		28,348		12,925		11,890		9,585		19,710		974		88,553

	Consumer other	Performing	—		—		—		292		28,677		10,444		4,440		43,853
		Nonperforming	—		—		—		—		—		—		—		—
		Subtotal	—		—		—		292		28,677		10,444		4,440		43,853

Leases financing		Performing	255		4,178		6,276		9,315		12,129		3,094		—		35,247
		Nonperforming	—		—		218		734		624		263		—		1,839
		Subtotal	255		4,178		6,494		10,049		12,753		3,357		—		37,086

Total		Performing	18,131		41,889		48,114		59,018		108,861		174,032		60,776		510,821
		Nonperforming	—		22		273		1,221		1,321		2,998		500		6,335
Total other loans			$	18,131	$	41,911	$	48,387	$	60,239	$	110,182	$	177,030	$	61,276	$	517,156


			December 31, 2025
			Term Loans Amortized Cost Basis by Origination Year
(dollars in thousands)			2025		2024		2023		2022		2021		Prior		Revolving loans		Total
Residential real estate	Residential first lien	Performing	$	8,254	$	28,464	$	37,936	$	60,875	$	29,331	$	117,847	$	35	$	282,742
		Nonperforming	25		—		475		239		296		2,401		—		3,436
		Subtotal	8,279		28,464		38,411		61,114		29,627		120,248		35		286,178

	Other residential	Performing	3,104		2,092		1,761		642		194		1,441		53,786		63,020
		Nonperforming	—		—		—		—		—		93		332		425
		Subtotal	3,104		2,092		1,761		642		194		1,534		54,118		63,445

Consumer	Consumer	Performing	33,113		16,117		14,210		11,576		18,018		5,571		1,040		99,645
		Nonperforming	—		3		23		4		—		16		1		47
		Subtotal	33,113		16,120		14,233		11,580		18,018		5,587		1,041		99,692

	Consumer other	Performing	—		—		326		30,970		5,874		7,213		—		44,383
		Nonperforming	—		—		—		—		—		—		—		—
		Subtotal	—		—		326		30,970		5,874		7,213		—		44,383

Leases financing		Performing	5,664		7,833		12,837		17,399		4,533		1,553		—		49,819
		Nonperforming	—		442		60		327		321		12		—		1,162
		Subtotal	5,664		8,275		12,897		17,726		4,854		1,565		—		50,981

Total
		Performing	50,135		54,506		67,070		121,462		57,950		133,625		54,861		539,609
		Nonperforming	25		445		558		570		617		2,522		333		5,070
Total other loans			$	50,160	$	54,951	$	67,628	$	122,032	$	58,567	$	136,147	$	55,194	$	544,679

The following table presents the gross charge-offs by class of loan and year of origination on the other loan portfolio for the three and six months ended June 30, 2026 and 2025:


		Term Loans by Origination Year
(dollars in thousands)		2026		2025		2024		2023		2022		Prior		Revolving Loans		Total
For the three months ended June 30, 2026
Residential real estate	Residential first lien	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
	Other residential	—		—		—		—		—		—		—		—
Consumer	Consumer	—		9		15		3		—		—		4		31
	Consumer other	29		63		16		6		186		218		—		518
Lease financing		—		—		—		217		109		8		—		334
Total gross other charge-offs		$	29	$	72	$	31	$	226	$	295	$	226	$	4	$	883



For the six months ended June 30, 2026
Residential real estate	Residential first lien	$	—	$	—	$	—	$	—	$	59	$	—	$	—	$	59
	Other residential	—		—		—		—		—		—		6		6
Consumer	Consumer	—		10		27		31		2		1		5		76
	Consumer other	30		147		34		34		651		473		—		1,369
Lease financing		—		—		284		241		277		269		—		1,071
Total gross other charge-offs		$	30	$	157	$	345	$	306	$	989	$	743	$	11	$	2,581


		Term Loans by Origination Year
(dollars in thousands)		2025		2024		2023		2022		2021		Prior		Revolving Loans		Total
For the three months ended June 30, 2025
Residential real estate	Residential first lien	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
	Other residential	—		—		—		—		—		—		—		—
Consumer	Consumer	—		29		7		—		—		—		9		45
	Consumer other	22		27		33		269		124		364		—		839
Lease financing		—		324		1,712		1,187		184		479		—		3,886
Total gross other charge-offs		$	22	$	380	$	1,752	$	1,456	$	308	$	843	$	9	$	4,770



For the six months ended June 30, 2025
Residential real estate	Residential first lien	$	—	$	—	$	—	$	—	$	—	$	27	$	—	$	27
	Other residential	—		—		—		25		—		1		19		45
Consumer	Consumer	—		30		12		2		—		1		13		58
	Consumer other	26		79		50		284		129		711		—		1,279
Lease financing		—		467		3,418		2,418		393		638		—		7,334
Total gross other charge-offs		$	26	$	576	$	3,480	$	2,729	$	522	$	1,378	$	32	$	8,743