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LOANS AND THE ALLOWANCE FOR CREDIT LOSSES
 9 Months Ended
Sep. 30, 2025
Receivables [Abstract]  
LOANS AND THE ALLOWANCE FOR CREDIT LOSSES LOANS AND THE ALLOWANCE FOR CREDIT LOSSES
The following presents a summary of the Company’s loans at amortized cost as of the dates noted:
(dollars in thousands)
September 30,
2025		December 31,
2024
Cash, Securities, and Other$159,182 $119,834 
Consumer and Other12,349 17,482 
Construction and Development229,852 314,481 
1-4 Family Residential1,045,105 962,901 
Non-Owner Occupied CRE724,741 611,239 
Owner Occupied CRE190,290 172,019 
Commercial and Industrial225,119 220,326 
Total(1)
2,586,638 2,418,282 
Allowance for credit losses(20,967)(18,330)
Total, net$2,565,671 $2,399,952 
Loans accounted for under the fair value option(2)
4,208 7,283 
Loans, net$2,569,879 $2,407,235 
______________________________________
(1)Total loans include net unamortized loan origination fees of $0.6 million and $0.3 million as of September 30, 2025 and December 31, 2024, respectively, and net unamortized discounts on loan purchased or acquired of $3.2 million and $3.5 million as of September 30, 2025 and December 31, 2024, respectively.
(2)Includes $4.3 million and $7.5 million of unpaid principal balance of loans held for investment measured at fair value as of September 30, 2025 and December 31, 2024, respectively. Includes fair value adjustments on loans held for investment accounted for under the fair value option. See Note 12 – Fair Value.
As of September 30, 2025 and December 31, 2024, total loans held for investment included $124.1 million and $164.3 million, respectively, of performing loans purchased through mergers or acquisitions.
As of September 30, 2025, the Company did not hold any Main Street Lending Program (MSLP) loans. As of December 31, 2024, the Company’s Commercial and Industrial loans included one MSLP loan with the net carrying amount of $1.7 million, or 0.8% of the total category.
The following presents, by class, an aging analysis of the amortized cost basis in loans past due as of the date noted (dollars in thousands):
September 30, 202530-59
Days
Past Due		60-89
Days
Past Due		90 or
More Days
Past Due		Total
Loans
Past Due		CurrentTotal
Amortized
Cost
Loans Accounted for Under the Fair Value Option(1)
Total Loans
Cash, Securities, and Other$— $— $1,704 $1,704 $157,478 $159,182 $— $159,182 
Consumer and Other— — — — 12,349 12,349 4,208 16,557 
Construction and Development— — — — 229,852 229,852 — 229,852 
1-4 Family Residential229 118 850 1,197 1,043,908 1,045,105 — 1,045,105 
Non-Owner Occupied CRE— — — — 724,741 724,741 — 724,741 
Owner Occupied CRE— — 1,045 1,045 189,245 190,290 — 190,290 
Commercial and Industrial4,809 101 10,457 15,367 209,752 225,119 — 225,119 
Total$5,038 $219 $14,056 $19,313 $2,567,325 $2,586,638 $4,208 $2,590,846 
December 31, 202430-59
Days
Past Due		60-89
Days
Past Due		90 or
More Days
Past Due		Total
Loans
Past Due		CurrentTotal Amortized Cost
Loans Accounted for Under the Fair Value Option(1)
Total Loans
Cash, Securities, and Other$— $— $1,704 $1,704 $118,130 $119,834 $— $119,834 
Consumer and Other— — — — 17,482 17,482 7,283 24,765 
Construction and Development— — — — 314,481 314,481 — 314,481 
1-4 Family Residential3,971 — — 3,971 958,930 962,901 — 962,901 
Non-Owner Occupied CRE— — — — 611,239 611,239 — 611,239 
Owner Occupied CRE350 — — 350 171,669 172,019 — 172,019 
Commercial and Industrial4,999 — 10,870 15,869 204,457 220,326 — 220,326 
Total$9,320 $— $12,574 $21,894 $2,396,388 $2,418,282 $7,283 $2,425,565 
______________________________________
(1)Refer to Note 12 – Fair Value for additional information on the measurement of loans accounted for under the fair value option.
As of September 30, 2025, the Company had two loans within one credit relationship, totaling $1.0 million in the Owner Occupied CRE portfolio, which was more than 90 days delinquent and accruing interest. As of December 31, 2024, the Company did not have any loans more than 90 days delinquent and accruing interest.
Loan Modifications
GAAP requires that certain types of loan modifications to borrowers experiencing financial difficulty be reported and include the following; (i) principal forgiveness, (ii) interest rate reduction, (iii) other than insignificant payment delay, (iv) term extension, or (v) any combination of the foregoing.
There were no loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2025. During the three and nine months ended September 30, 2024, there were zero and one loan modification, respectively, made to borrowers experiencing financial difficulty.
The following presents the amortized cost basis as of September 30, 2024 of the loans modified to borrowers experiencing financial difficulty disaggregated by class of financing receivable and type of concession granted during the nine months ended September 30, 2024.
(dollars in thousands)Principal forgivenessInterest rate reduction
Term extension
Combination: term extension and principal forgivenessCombination: term extension and interest rate reductionTotal class of financing receivable
Commercial and Industrial$— $— $978 $— $— 0.4 %
Total$— $— $978 $— $— 
The following presents the financial effect by type of modification made to borrowers experiencing financial difficulty during the periods noted:
Nine Months Ended September 30, 2024
(dollars in thousands)Principal forgivenessWeighted average interest rate reductionWeighted average term extension
Commercial and Industrial$— — %5 months
There were no loans that experienced a default during the three and nine months ended September 30, 2025 or 2024, subsequent to being granted a modification in the preceding twelve months.
Non-Accrual Loans
The accrual of interest on loans is discontinued at the time the loan becomes 90 days or more delinquent unless the loan is well secured and in the process of collection or renewal due to maturity. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on non-accrual status or charged off if collection of interest or principal is considered doubtful. The following presents the amortized cost basis of loans on non-accrual status and loans past due over 89 days still accruing by class as of the dates noted:
As of September 30, 2025
(dollars in thousands)Non-accrual loans with
no ACL
Total non-accrual loans(1)
Loans past due over 89 days still accruing
Cash, Securities, and Other$1,704 $1,704 $— 
1-4 Family Residential850 850 — 
Owner Occupied CRE— — 1,045 
Commercial and Industrial1,152 15,591 — 
Total$3,706 $18,145 $1,045 
______________________________________
(1)As of September 30, 2025, the Company had an allowance of $3.9 million on non-accrual loans.
As of December 31, 2024
(dollars in thousands)Non-accrual loans with
no ACL
Total non-accrual loans(1)
Loans past due over 89 days still accruing
Cash, Securities, and Other$1,704 $1,704 $— 
Commercial and Industrial10,870 11,048 — 
Total$12,574 $12,752 $— 
______________________________________
(1)As of December 31, 2024, the Company had an allowance of $0.1 million on non-accrual loans.
The Company recognized no interest income on non-accrual loans during the three and nine month periods ended September 30, 2025 and 2024.
Collateral Dependent Loans
A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following presents the amortized cost basis of collateral-dependent loans, which are individually analyzed to determine expected credit losses, by class of loans as of the date noted:
As of September 30, 2025
(dollars in thousands)Secured by Real EstateSecured by Cash and
Securities		Secured by OtherTotal
Cash, Securities, and Other$— $1,704 $— $1,704 
1-4 Family Residential850 — — 850 
Owner Occupied CRE1,045 — — 1,045 
Commercial and Industrial— — 15,591 15,591 
Total$1,895 $1,704 $15,591 $19,190 
As of December 31, 2024
(dollars in thousands)Secured by Real EstateSecured by Cash and
Securities		Secured by OtherTotal
Cash, Securities, and Other$— $1,704 $— $1,704 
Commercial and Industrial— — 12,015 12,015 
Total$— $1,704 $12,015 $13,719 
Other Real Estate Owned
Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. They are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than on an annual basis. Appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between comparable sales and income data available. During the quarter ended March 31, 2025, the Company sold two OREO properties resulting in a net gain on sale of $0.5 million. As of September 30, 2025 and December 31, 2024, OREO properties had carrying amounts of $4.4 million and $35.9 million, respectively.
Allowance for Credit Losses on Loans
The ACL on loans is measured on the loan’s amortized cost basis, excluding interest receivable. Interest receivable excluded at September 30, 2025 and December 31, 2024 was $11.1 million and $9.8 million, respectively, presented in Accrued interest receivable on the Condensed Consolidated Balance Sheets. Refer to Note 1 – Organization and Summary of Significant Accounting Policies for additional information related to the Company’s methodology on estimated credit losses.
The ACL represents management’s best estimate of current expected credit losses (CECL) on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans’ contractual terms, adjusted for expected prepayments when appropriate. Our quantitative discounted cash flow models use economic forecasts including; housing price index (HPI), gross domestic product (GDP), and national unemployment.
Allocation of a portion of the ACL to one category of loans does not preclude its availability to absorb losses in other categories. The following presents the activity in the ACL by portfolio segment during the periods presented:
(dollars in thousands)Cash,
Securities
and Other		Consumer
and
Other		Construction
and
Development		1-4
Family
Residential		Non-Owner
Occupied
CRE		Owner
Occupied
CRE		Commercial
and
Industrial		Total
Changes in ACL for the three months ended September 30, 2025
Beginning balance$1,150 $158 $3,651 $5,544 $4,323 $737 $3,431 $18,994 
(Release) provision for credit losses
(13)27 (1,487)254 (384)(12)3,847 2,232 
Charge-offs— — — — — — (430)(430)
Recoveries— 1 — 6 — — 164 171 
Ending balance$1,137 $186 $2,164 $5,804 $3,939 $725 $7,012 $20,967 
Changes in ACL for the nine months ended September 30, 2025
Beginning balance$410 $185 $5,184 $5,200 $4,340 $654 $2,357 $18,330 
Provision (release) for credit losses
727 (23)(3,020)591 (401)71 6,173 4,118 
Charge-offs— — — — — — (1,690)(1,690)
Recoveries— 24 — 13 — — 172 209 
Ending balance$1,137 $186 $2,164 $5,804 $3,939 $725 $7,012 $20,967 
(dollars in thousands)Cash,
Securities
and Other		Consumer
and
Other		Construction
and
Development		1-4
Family
Residential		Non-Owner
Occupied
CRE		Owner
Occupied
CRE		Commercial
and
Industrial		Total
Changes in ACL for the three months ended September 30, 2024
Beginning balance$375 $75 $7,596 $4,310 $2,203 $973 $11,787 $27,319 
Provision (release) for credit losses26 62 (2,262)1,014 2,139 (282)99 796 
Charge-offs— (4)— — — — (9,336)(9,340)
Recoveries— 4 — 1 — — 16 21 
Ending balance$401 $137 $5,334 $5,325 $4,342 $691 $2,566 $18,796 
Changes in ACL for the nine months ended September 30, 2024
Beginning balance$961 $124 $7,945 $4,370 $2,325 $1,034 $7,172 $23,931 
(Release) provision for credit losses(560)16 (2,611)948 2,017 (343)4,708 4,175 
Charge-offs— (30)— — — — (9,336)(9,366)
Recoveries— 27 — 7 — — 22 56 
Ending balance$401 $137 $5,334 $5,325 $4,342 $691 $2,566 $18,796 
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans by credit risk on a quarterly basis. The Company uses the following definitions for risk ratings:
Special Mention: Loans classified as special mention have a potential weakness or borrowing relationships that require more than the usual amount of management attention. Adverse industry conditions, deteriorating financial conditions, declining trends, management problems, documentation deficiencies, or other similar weaknesses may be evident. Ability to meet current payment schedules may be questionable, even though interest and principal are still being paid as agreed. The asset has potential weaknesses that may result in deteriorating repayment prospects if left uncorrected. Loans in this risk grade are not considered adversely classified.
Substandard: Substandard loans are considered "classified" and are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loans in this category may be placed on non-accrual status and may individually be analyzed.
Doubtful: Loans graded Doubtful are considered "classified" and have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable. However, the amount of certainty of eventual loss is not known because of specific pending factors.
Loans accounted for under the fair value option are not rated.
The following tables present the amortized cost basis of loans by credit quality indicator, by class of financing receivable, and year of origination for term loans as of September 30, 2025 and December 31, 2024. For revolving lines of credit that converted to term loans, if the conversion involved a credit decision, such loans are included in the origination year in which the credit decision was made (dollars in thousands):
Term Loans Amortized Cost by Origination Year
September 30, 202520252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
Cash, Securities, and Other
Pass$48,326 $1,355 $4,422 $3,533 $9,734 $15,028 $75,080 $157,478 
Special mention— — — — — — — — 
Substandard— — — — — — 1,704 1,704 
Doubtful— — — — — — — — 
Total Cash, Securities, and Other$48,326 $1,355 $4,422 $3,533 $9,734 $15,028 $76,784 $159,182 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Consumer and Other
Pass$— $203 $— $1,230 $316 $725 $9,875 $12,349 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Not rated(1)
— 1 — 3,722 414 71 — 4,208 
Total Consumer and Other$— $204 $— $4,952 $730 $796 $9,875 $16,557 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Construction and Development
Pass$19,870 $51,593 $62,671 $66,470 $917 $9,575 $4,266 $215,362 
Special mention— — — 13,506 — — — 13,506 
Substandard— 463 521 — — — — 984 
Doubtful— — — — — — — — 
Total Construction and Development$19,870 $52,056 $63,192 $79,976 $917 $9,575 $4,266 $229,852 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Term Loans Amortized Cost by Origination Year
September 30, 202520252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
1-4 Family Residential
Pass$172,634 $59,927 $76,148 $330,292 $115,237 $155,255 $131,438 $1,040,931 
Special mention— — — 1,369 — 1,429 118 2,916 
Substandard— — — — 850 — 408 1,258 
Doubtful— — — — — — — — 
Total 1-4 Family Residential$172,634 $59,927 $76,148 $331,661 $116,087 $156,684 $131,964 $1,045,105 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Non-Owner Occupied CRE
Pass$68,423 $49,001 $52,548 $291,071 $74,081 $113,429 $30,726 $679,279 
Special mention— — — — — — — — 
Substandard— 3,224 — 22,705 19,533 — — 45,462 
Doubtful— — — — — — — — 
Total Non-Owner Occupied CRE$68,423 $52,225 $52,548 $313,776 $93,614 $113,429 $30,726 $724,741 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Owner Occupied CRE
Pass$25,407 $4,126 $3,009 $37,778 $40,520 $76,501 $1,904 $189,245 
Special mention— — — — — — — — 
Substandard— — — 1,045 — — — 1,045 
Doubtful— — — — — — — — 
Total Owner Occupied CRE$25,407 $4,126 $3,009 $38,823 $40,520 $76,501 $1,904 $190,290 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Commercial and Industrial
Pass$42,610 $20,468 $3,427 $24,835 $8,941 $32,823 $60,691 $193,795 
Special mention— — — — — — — — 
Substandard— — 5,067 8,281 1,803 11,249 4,924 31,324 
Doubtful— — — — — — — — 
Total Commercial and Industrial$42,610 $20,468 $8,494 $33,116 $10,744 $44,072 $65,615 $225,119 
Current year-to-date gross charge-offs$— $— $— $1,096 $— $594 $— $1,690 
Total pass$377,270 $186,673 $202,225 $755,209 $249,746 $403,336 $313,980 $2,488,439 
Total special mention— — — 14,875 — 1,429 118 16,422 
Total substandard— 3,687 5,588 32,031 22,186 11,249 7,036 81,777 
Total doubtful— — — — — — — — 
Total not rated— 1 — 3,722 414 71 — 4,208 
Total$377,270 $190,361 $207,813 $805,837 $272,346 $416,085 $321,134 $2,590,846 
______________________________________
(1)Includes loans held for investment measured at fair value as of September 30, 2025. Includes fair value adjustments on loans held for investment accounted for under the fair value option.
Term Loans Amortized Cost by Origination Year
December 31, 202420242023202220212020PriorRevolving Loans Amortized Cost BasisTotal
Cash, Securities, and Other
Pass$11,564 $6,123 $3,649 $13,157 $5,143 $13,912 $64,582 $118,130 
Special mention— — — — — — — — 
Substandard— — — — — — 1,704 1,704 
Doubtful— — — — — — — — 
Total Cash, Securities, and Other$11,564 $6,123 $3,649 $13,157 $5,143 $13,912 $66,286 $119,834 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Consumer and Other
Pass$3,587 $4 $1,518 $355 $380 $548 $11,090 $17,482 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Not rated(1)
1 — 6,215 940 71 56 — 7,283 
Total Consumer and Other$3,588 $4 $7,733 $1,295 $451 $604 $11,090 $24,765 
Current year-to-date gross charge-offs$— $1 $— $— $10 $39 $— $50 
Construction and Development
Pass$48,872 $58,224 $191,874 $992 $9,395 $— $839 $310,196 
Special mention— — — — — — — — 
Substandard469 3,816 — — — — — 4,285 
Doubtful— — — — — — — — 
Total Construction and Development$49,341 $62,040 $191,874 $992 $9,395 $— $839 $314,481 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
1-4 Family Residential
Pass$98,612 $89,537 $351,026 $126,116 $104,427 $63,930 $129,253 $962,901 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total 1-4 Family Residential$98,612 $89,537 $351,026 $126,116 $104,427 $63,930 $129,253 $962,901 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Non-Owner Occupied CRE
Pass$48,445 $42,527 $260,055 $101,067 $70,896 $57,676 $30,573 $611,239 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total Non-Owner Occupied CRE$48,445 $42,527 $260,055 $101,067 $70,896 $57,676 $30,573 $611,239 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Owner Occupied CRE
Pass$4,177 $3,126 $44,034 $41,663 $29,402 $45,640 $1,531 $169,573 
Special mention— — — — — — — — 
Substandard— — 2,096 — — — 350 2,446 
Doubtful— — — — — — — — 
Total Owner Occupied CRE$4,177 $3,126 $46,130 $41,663 $29,402 $45,640 $1,881 $172,019 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Commercial and Industrial
Pass$21,922 $9,741 $58,160 $11,324 $5,435 $27,237 $58,665 $192,484 
Special mention— 456 685 — — — 7,979 9,120 
Substandard967 178 1,988 — 4,422 10,871 296 18,722 
Doubtful— — — — — — — — 
Total Commercial and Industrial$22,889 $10,375 $60,833 $11,324 $9,857 $38,108 $66,940 $220,326 
Current year-to-date gross charge-offs$— $1,202 $16 $6,935 $1,199 $— $— $9,352 
Term Loans Amortized Cost by Origination Year
December 31, 202420242023202220212020PriorRevolving Loans Amortized Cost BasisTotal
Total pass$237,179 $209,282 $910,316 $294,674 $225,078 $208,943 $296,533 $2,382,005 
Total special mention— 456 685 — — — 7,979 9,120 
Total substandard1,436 3,994 4,084 — 4,422 10,871 2,350 27,157 
Total doubtful— — — — — — — — 
Total not rated1 — 6,215 940 71 56 — 7,283 
Total$238,616 $213,732 $921,300 $295,614 $229,571 $219,870 $306,862 $2,425,565 
______________________________________
(1)Includes loans held for investment measured at fair value as of December 31, 2024. Includes fair value adjustments on loans held for investment accounted for under the fair value option.