v3.26.1
LOANS AND CREDIT QUALITY
 6 Months Ended
Jun. 30, 2026
Jun. 30, 2025
Receivables [Abstract]    
LOANS AND CREDIT QUALITY
Loan Modifications for Borrowers Experiencing Financial Difficulty

The Company did not execute any material loan modifications for borrowers experiencing financial difficulty, either individually or in the aggregate, during the three months ended June 30, 2026 and 2025, or during the six months ended June 30, 2025.

In the first quarter of 2026, the Company executed one loan modification for a borrower experiencing financial difficulty. The modification consisted of a term extension on a commercial and industrial loan with an amortized cost basis of $1.0 million at the time of modification. The modified loan represented 0.16% of commercial and industrial loans as of June 30, 2026. The financial effect of the modification for the term extension was not material.

The Company did not grant any concessions involving principal forgiveness or interest rate reductions during the three and six months ended June 30, 2026 and 2025.

As of June 30, 2026, the modified loan remained current and was performing in accordance with its modified terms. No payment defaults were recorded during the period ended June 30, 2026 related to loans modified for borrowers experiencing financial difficulty within the preceding twelve months.

When the Company determines that a modified loan, or a portion thereof, is uncollectible, the loan is charged off. The amortized cost basis of the loan is reduced by the amount charged off, with a corresponding reduction to the allowance for credit losses.
(dollars in thousands)Gross Charge-Offs by Year of Origination
Six Months Ended June 30, 202620262025202420232022PriorTotal
Commercial and industrial$— $276 $684 $214 $114 $1,121 $2,409 
Real estate:
Residential mortgage— — — 9 14 — 23 
Consumer5 499 740 349 1,830 1,161 4,584 
Gross charge-offs$5 $775 $1,424 $572 $1,958 $2,282 $7,016 
(dollars in thousands)Amortized Cost of Term Loans by Year of OriginationAmortized Cost of Revolving Loans
December 31, 202520252024202320222021PriorTotal
Commercial and industrial:
Risk Rating
Pass$63,780 $166,412 $34,598 $56,913 $47,935 $115,991 $103,393 $589,022 
Special Mention— 660 1,869 — — — — 2,529 
Substandard— 1,056 805 — 103 480 597 3,041 
Subtotal63,780 168,128 37,272 56,913 48,038 116,471 103,990 594,592 
Construction:
Risk Rating
Pass57,887 24,133 24,091 48,970 17,741 40,369 — 213,191 
Subtotal57,887 24,133 24,091 48,970 17,741 40,369 — 213,191 
Residential mortgage:
Risk Rating
Pass95,400 72,780 79,382 237,379 556,527 786,487 — 1,827,955 
Substandard— — 246 2,263 405 8,322 — 11,236 
Subtotal95,400 72,780 79,628 239,642 556,932 794,809 — 1,839,191 
Home equity:
Risk Rating
Pass416 988 10,944 25,112 15,989 31,915 511,625 596,989 
Substandard— — 1,185 — — 1,423 485 3,093 
Subtotal416 988 12,129 25,112 15,989 33,338 512,110 600,082 
Commercial mortgage:
Risk Rating
Pass204,072 146,975 92,107 204,149 210,061 681,060 5,771 1,544,195 
Special Mention— — 593 — — 471 — 1,064 
Substandard— 32,987 2,200 5,978 2,194 5,815 — 49,174 
Subtotal204,072 179,962 94,900 210,127 212,255 687,346 5,771 1,594,433 
Consumer:
Risk Rating
Pass81,799 85,641 54,227 97,994 71,458 17,527 37,944 446,590 
Substandard95 101 81 109 148 483 — 1,017 
Subtotal81,894 85,742 54,308 98,103 71,606 18,010 37,944 447,607 
Total$503,449 $531,733 $302,328 $678,867 $922,561 $1,690,343 $659,815 $5,289,096 
(dollars in thousands)Gross Charge-Offs by Year of Origination
Six Months Ended June 30, 202520252024202320222021PriorTotal
Commercial and industrial$— $2,140 $145 $188 $140 $825 $3,438 
Consumer— 501 512 2,986 1,234 608 5,841 
Gross charge-offs$— $2,641 $657 $3,174 $1,374 $1,433 $9,279 
3. LOANS AND CREDIT QUALITY

The following table presents loans by class, excluding loans held for sale, net of deferred fees and costs as of the dates presented:

(dollars in thousands)June 30, 2026December 31, 2025
Commercial and industrial$590,404 $594,592 
Construction211,007 213,191 
Residential mortgage1,815,342 1,839,191 
Home equity577,283 600,082 
Commercial mortgage1,686,361 1,594,433 
Consumer427,925 447,607 
Loans, net of deferred fees and costs$5,308,322 $5,289,096 

Interest income on loans is accrued at the contractual rate of interest based on the unpaid principal balance. The Company has elected to not measure an estimate of credit losses on accrued interest receivable, as any uncollectible accrued interest receivable is written off in a timely manner. Accrued interest receivable on loans is reported together with accrued interest receivable on investment securities and other assets in the consolidated balance sheets. As of June 30, 2026 and December 31, 2025, accrued interest receivable on loans totaled $17.6 million and $18.3 million, respectively.

The Company did not transfer any loans to the held for sale category during the three and six months ended June 30, 2026 and 2025 and did not sell any loans originally held for investment during the three and six months ended June 30, 2026 and 2025.
Purchased Loans

The following table presents loan purchase activity by class at the time of purchase for the periods presented. None of the purchased loans were classified as purchased credit deteriorated ("PCD"), and there were no loans categorized as PCD during the periods presented.

(dollars in thousands)Three Months Ended June 30,Six Months Ended June 30,
Purchases of U.S. Mainland Consumer - Dealer:2026202520262025
Outstanding balance$23,183 $32,787 $38,655 $64,227 
Premium341 1,000 664 1,236 
Purchase price$23,524 $33,787 $39,319 $65,463 
Collateral-Dependent Loans

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. These loans are individually evaluated to determine
expected credit losses. The following tables present the amortized cost basis of collateral-dependent loans by class and the related ACL allocated to these loans as of the dates presented:

June 30, 2026December 31, 2025
(dollars in thousands)Secured by 1-4 Family Residential PropertiesAllocated ACLSecured by 1-4 Family Residential PropertiesAllocated ACL
Residential mortgage$9,268 $— $10,572 $— 
Home equity5,619 — 2,608 — 
Total$14,887 $— $13,180 $— 

Other Real Estate Owned and Foreclosure Proceedings

As of June 30, 2026, the $0.9 million balance of other real estate owned includes a residential real estate property recorded as a result of foreclosure. As of December 31, 2025, the Company did not own a foreclosed property. The Company did not sell a foreclosed property during the three and six months ended June 30, 2026 and 2025.

The Company had $8.7 million and $10.3 million of residential mortgage and home equity loans collateralized by residential real estate properties that were in the process of foreclosure as of June 30, 2026 and December 31, 2025, respectively. The Company did not have any commercial real estate loans in the process of foreclosure as of June 30, 2026 and December 31, 2025.
Nonaccrual and Past Due Loans

For all loan types, the delinquency status is determined based on the number of days full payments required by the contractual terms of the loan are past due. The following tables present by class, the aging of the recorded investment in past due loans as of the dates presented. The following tables also present the amortized cost of loans on nonaccrual status for which there was no related ACL as of the dates presented:

(dollars in thousands)Accruing Loans 30 - 59 Days Past DueAccruing Loans 60 - 89 Days Past DueAccruing Loans 90 Days or More Past DueNonaccrual LoansTotal Past Due and NonaccrualLoans Not Past DueTotal LoansNonaccrual Loans With No ACL
June 30, 2026
Commercial and industrial$1,212 $317 $— $192 $1,721 $588,683 $590,404 $— 
Construction— — — — — 211,007 211,007 — 
Residential mortgage45 1,983 — 9,268 11,296 1,804,046 1,815,342 9,268 
Home equity488 1,011 — 5,619 7,118 570,165 577,283 5,619 
Commercial mortgage881 383 — — 1,264 1,685,097 1,686,361 — 
Consumer3,322 1,203 286 543 5,354 422,571 427,925 — 
Total$5,948 $4,897 $286 $15,622 $26,753 $5,281,569 $5,308,322 $14,887 

(dollars in thousands)Accruing Loans 30 - 59 Days Past DueAccruing Loans 60 - 89 Days Past DueAccruing Loans 90 Days or More Past DueNonaccrual LoansTotal Past Due and NonaccrualLoans Not Past DueTotal LoansNonaccrual Loans With No ACL
December 31, 2025
Commercial and industrial$461 $218 $— $591 $1,270 $593,322 $594,592 $— 
Construction— — — — — 213,191 213,191 — 
Residential mortgage6,399 2,030 664 10,572 19,665 1,819,526 1,839,191 10,572 
Home equity1,029 809 485 2,608 4,931 595,151 600,082 2,608 
Commercial mortgage— — — — — 1,594,433 1,594,433 — 
Consumer3,357 1,312 403 615 5,687 441,920 447,607 — 
Total$11,246 $4,369 $1,552 $14,386 $31,553 $5,257,543 $5,289,096 $13,180 
Credit Quality Indicators

The Company categorizes loans into risk ratings based on the evaluation of the borrower's ability to meet debt obligations such as: current financial information, historical payment experience, credit documentation, publicly available information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans by credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed regularly on an ongoing basis. For more information about the Company's credit quality indicators, refer to Note 3 - Loans and Credit Quality included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

The following tables present the amortized cost basis, net of deferred fees and costs, of the Company's loans by class, credit quality indicator and origination year as of the dates presented. Revolving loans converted to term as of and during the periods presented were not material to total loans. In addition, the following tables present gross charge-offs of loans by origination year during the periods presented.
(dollars in thousands)Amortized Cost of Term Loans by Year of OriginationAmortized Cost of Revolving Loans
June 30, 202620262025202420232022PriorTotal
Commercial and industrial:
Risk Rating
Pass$40,635 $45,706 $156,380 $27,412 $51,322 $140,025 $114,166 $575,646 
Special Mention1,773 — 1,342 — — — — 3,115 
Substandard1,934 1,430 2,071 3,471 972 1,618 147 11,643 
Subtotal44,342 47,136 159,793 30,883 52,294 141,643 114,313 590,404 
Construction:
Risk Rating
Pass313 92,646 38,826 11,392 14,965 20,858 — 179,000 
Substandard— — — — — 32,007 — 32,007 
Subtotal313 92,646 38,826 11,392 14,965 52,865 — 211,007 
Residential mortgage:
Risk Rating
Pass78,222 86,858 53,832 72,787 227,931 1,286,444 — 1,806,074 
Substandard— — — 233 660 8,375 — 9,268 
Subtotal78,222 86,858 53,832 73,020 228,591 1,294,819 — 1,815,342 
Home equity:
Risk Rating
Pass44 447 1,323 9,183 23,960 44,192 492,515 571,664 
Substandard— — — 1,185 — — 4,434 5,619 
Subtotal44 447 1,323 10,368 23,960 44,192 496,949 577,283 
Commercial mortgage:
Risk Rating
Pass171,902 195,011 124,390 91,746 202,073 839,762 — 1,624,884 
Special Mention— — 2,018 — — 3,955 — 5,973 
Substandard— — 35,420 2,178 5,884 12,022 — 55,504 
Subtotal171,902 195,011 161,828 93,924 207,957 855,739 — 1,686,361 
Consumer:
Risk Rating
Pass24,328 100,288 75,356 40,552 74,114 71,962 40,495 427,095 
Substandard— 67 115 94 — 405 149 830 
Subtotal24,328 100,355 75,471 40,646 74,114 72,367 40,644 427,925 
Total$319,151 $522,453 $491,073 $260,233 $601,881 $2,461,625 $651,906 $5,308,322