Loans and Allowance for Credit Losses

9 Months Ended

Sep. 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 September 30, 2026 and December 31, 2025:


		September 30,			December 31,
(dollars in thousands)		2026			2025
Commercial		$	627,569		$	547,245
Leases			41,854			43,407
Construction and Land Development			229,478			216,163
1-4 Family Construction			57,825			45,152
Real Estate Mortgage:
1-4 Family Mortgage			456,458			496,142
Multifamily			1,661,765			1,587,338
CRE Owner Occupied			191,664			189,754
CRE Nonowner Occupied			1,211,595			1,165,104
Total Real Estate Mortgage Loans			3,521,482			3,438,338
Consumer and Other			28,626			19,212
Total Loans, Gross			4,506,834			4,309,517
Allowance for Credit Losses			(57,819)			(56,443)
Net Deferred Loan Fees			(8,889)			(8,966)
Total Loans, Net		$	4,440,126		$	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 September 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
September 30, 2026
Commercial		$	627,569		$	—		$	—		$	—		$	—		$	627,569
Leases			41,854			—			—			—			—			41,854
Construction and Land Development			229,456			—			—			—			22			229,478
1-4 Family Construction			57,496			329			—			—			—			57,825
Real Estate Mortgage:
1-4 Family Mortgage			455,301			1,051			—			—			106			456,458
Multifamily			1,652,193			—			—			—			9,572			1,661,765
CRE Owner Occupied			191,664			—			—			—			—			191,664
CRE Nonowner Occupied			1,200,358			—			—			11,237			—			1,211,595
Total Real Estate Mortgage Loans			3,499,516			1,051			—			11,237			9,678			3,521,482
Consumer and Other			28,625			1			—			—			—			28,626
Totals		$	4,484,516		$	1,381		$	—		$	11,237		$	9,700		$	4,506,834


		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 September 30, 2026 and December 31, 2025:


		September 30, 2026
(dollars in thousands)		2026		2025		2024		2023		2022		Prior		Revolving		Total
Commercial
Pass	$	150,304	$	118,625	$	63,739	$	11,112	$	23,446	$	30,460	$	218,140	$	615,826
Watch/Special Mention		46		—		465		—		—		171		751		1,433
Substandard		—		—		115		—		10,195		—		—		10,310
Total Commercial		150,350		118,625		64,319		11,112		33,641		30,631		218,891		627,569
Current Period Gross Write-offs		—		639		—		—		—		—		—		639

Leases
Pass		11,642		12,689		7,579		5,641		2,958		1,345		—		41,854
Total Leases		11,642		12,689		7,579		5,641		2,958		1,345		—		41,854
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Construction and Land Development
Pass		69,564		141,932		7,705		—		184		—		10,071		229,456
Substandard		—		—		22		—		—		—		—		22
Total Construction and Land Development		69,564		141,932		7,727		—		184		—		10,071		229,478
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

1-4 Family Construction
Pass		24,301		5,985		645		—		—		182		26,712		57,825
Total 1-4 Family Construction		24,301		5,985		645		—		—		182		26,712		57,825
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Real Estate Mortgage:
1-4 Family Mortgage
Pass		61,135		71,939		45,411		36,309		75,774		78,089		85,425		454,082
Watch/Special Mention		190		506		—		—		352		—		—		1,048
Substandard		622		600		—		—		56		—		50		1,328
Total 1-4 Family Mortgage		61,947		73,045		45,411		36,309		76,182		78,089		85,475		456,458
Current Period Gross Write-offs		—		9		—		—		—		—		—		9

Multifamily
Pass		281,272		366,539		180,790		69,033		373,685		353,440		8,633		1,633,392
Watch/Special Mention		18,801		—		—		—		—		—		—		18,801
Substandard		1,463		—		—		—		8,109		—		—		9,572
Total Multifamily		301,536		366,539		180,790		69,033		381,794		353,440		8,633		1,661,765
Current Period Gross Write-offs		—		—		—		—		2,434		709		—		3,143

CRE Owner Occupied
Pass		26,031		19,259		20,137		21,781		51,160		45,326		2,314		186,008
Watch/Special Mention		2,325		—		—		—		—		—		—		2,325
Substandard		—		—		—		—		—		3,331		—		3,331
Total CRE Owner Occupied		28,356		19,259		20,137		21,781		51,160		48,657		2,314		191,664
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

CRE Nonowner Occupied
Pass		281,613		290,571		208,033		55,387		196,884		152,630		8,131		1,193,249
Substandard		7,193		10,263		890		—		—		—		—		18,346
Total CRE Nonowner Occupied		288,806		300,834		208,923		55,387		196,884		152,630		8,131		1,211,595
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Total Real Estate Mortgage Loans		680,645		759,677		455,261		182,510		706,020		632,816		104,553		3,521,482

Consumer and Other
Pass		1,348		3,197		131		232		138		240		23,340		28,626
Total Consumer and Other		1,348		3,197		131		232		138		240		23,340		28,626
Current Period Gross Write-offs		—		—		—		—		—		6		41		47

Total Period Gross Write-offs		—		648		—		—		2,434		715		41		3,838
Total Loans	$	937,850	$	1,042,105	$	535,662	$	199,495	$	742,941	$	665,214	$	383,567	$	4,506,834


		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 nine months ended September 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 September 30, 2026
Commercial	$	6,046	$	(494)	$	—	$	91	$	5,643
Leases		296		16		—		—		312
Construction and Land Development		1,400		347		—		—		1,747
1-4 Family Construction		313		79		—		—		392
Real Estate Mortgage:
1-4 Family Mortgage		2,276		(136)		—		—		2,140
Multifamily		25,019		784		(2,434)		1		23,370
CRE Owner Occupied		1,033		3		—		—		1,036
CRE Nonowner Occupied		20,756		2,194		—		—		22,950
Total Real Estate Mortgage Loans		49,084		2,845		(2,434)		1		49,496
Consumer and Other		279		(43)		(8)		1		229
Total	$	57,418	$	2,750	$	(2,442)	$	93	$	57,819

Nine Months Ended September 30, 2026
Commercial	$	5,982	$	(257)	$	(639)	$	557	$	5,643
Leases		352		(40)		—		—		312
Construction and Land Development		1,687		60		—		—		1,747
1-4 Family Construction		316		76		—		—		392
Real Estate Mortgage:
1-4 Family Mortgage		2,475		(326)		(9)		—		2,140
Multifamily		23,775		2,737		(3,143)		1		23,370
CRE Owner Occupied		1,080		(44)		—		—		1,036
CRE Nonowner Occupied		20,595		2,355		—		—		22,950
Total Real Estate Mortgage Loans		47,925		4,722		(3,152)		1		49,496
Consumer and Other		181		89		(47)		6		229
Total	$	56,443	$	4,650	$	(3,838)	$	564	$	57,819


			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 September 30, 2025
Commercial	$	5,935	$	1,112	$	(254)	$	—	$	6,793
Leases		381		52		(15)		—		418
Construction and Land Development		1,104		176		—		—		1,280
1-4 Family Construction		278		16		—		—		294
Real Estate Mortgage:
1-4 Family Mortgage		2,413		19		—		—		2,432
Multifamily		23,921		(691)		—		—		23,230
CRE Owner Occupied		1,137		(25)		—		—		1,112
CRE Nonowner Occupied		20,443		207		—		—		20,650
Total Real Estate Mortgage Loans		47,914		(490)		—		—		47,424
Consumer and Other		153		34		(7)		1		181
Total	$	55,765	$	900	$	(276)	$	1	$	56,390

Nine Months Ended September 30, 2025
Commercial	$	5,630	$	1,416	$	(254)	$	1	$	6,793
Leases		368		65		(15)		—		418
Construction and Land Development		866		414		—		—		1,280
1-4 Family Construction		331		(37)		—		—		294
Real Estate Mortgage:
1-4 Family Mortgage		2,795		(363)		—		—		2,432
Multifamily		23,120		110		—		—		23,230
CRE Owner Occupied		1,290		(178)		—		—		1,112
CRE Nonowner Occupied		17,735		2,915		—		—		20,650
Total Real Estate Mortgage Loans		44,940		2,484		—		—		47,424
Consumer and Other		142		58		(25)		6		181
Total	$	52,277	$	4,400	$	(294)	$	7	$	56,390

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


	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
ACL at September 30, 2026
Commercial	$	182	$	5,461	$	5,643
Leases		—		312		312
Construction and Land Development		—		1,747		1,747
1-4 Family Construction		—		392		392
Real Estate Mortgage:
1-4 Family Mortgage		—		2,140		2,140
Multifamily		—		23,370		23,370
CRE Owner Occupied		—		1,036		1,036
CRE Nonowner Occupied		5,564		17,386		22,950
Total Real Estate Mortgage Loans		5,564		43,932		49,496
Consumer and Other		—		229		229
Total	$	5,746	$	52,073	$	57,819


	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 September 30, 2026
Commercial	$	10,310	$	617,259	$	627,569
Leases		—		41,854		41,854
Construction and Land Development		22		229,456		229,478
1-4 Family Construction		—		57,825		57,825
Real Estate Mortgage:
1-4 Family Mortgage		1,328		455,130		456,458
Multifamily		9,572		1,652,193		1,661,765
CRE Owner Occupied		3,331		188,333		191,664
CRE Nonowner Occupied		19,228		1,192,367		1,211,595
Total Real Estate Mortgage Loans		33,459		3,488,023		3,521,482
Consumer and Other		—		28,626		28,626
Total	$	43,791	$	4,463,043	$	4,506,834


	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 September 30, 2026 and December 31, 2025:


		Primary Type of Collateral
					Business									ACL
(dollars in thousands)		Real Estate			Assets			Other			Total			Allocation
September 30, 2026
Commercial		$	—		$	242		$	10,068		$	10,310		$	182
Construction and Land Development			22			—			—			22			—
Real Estate Mortgage:
1-4 Family Mortgage			1,328			—			—			1,328			—
Multifamily			9,572			—			—			9,572			—
CRE Owner Occupied			3,331			—			—			3,331			—
CRE Nonowner Occupied			19,228			—			—			19,228			5,564
Total Real Estate Mortgage Loans			33,459			—			—			33,459			5,564
Consumer and Other			—			—			—			—			—
Totals		$	33,481		$	242		$	10,068		$	43,791		$	5,746


		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 $12.7 million at both September 30, 2026 and December 31, 2025, and was excluded from the estimate of credit losses.

For both the three and nine months ended September 30, 2026, there were no loans modified to borrowers experiencing financial difficulty. For both the three and nine months ended September 30, 2025, the Company modified one commercial real estate (“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.