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LOANS AND THE ALLOWANCE FOR CREDIT LOSSES
 3 Months Ended
Mar. 31, 2026
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)
March 31,
2026		December 31,
2025
Cash, securities, and other$164,117 $164,726 
Consumer and other20,078 19,596 
Construction and development194,582 189,081 
1-4 family residential1,073,029 1,033,665 
Non-owner occupied CRE777,057 809,875 
Owner occupied CRE211,198 204,078 
Commercial and industrial248,006 225,281 
Total(1)
2,688,067 2,646,302 
Portfolio layer method basis adjustment for hedged portfolio(420)939 
Allowance for credit losses(20,801)(21,441)
Total, net$2,666,846 $2,625,800 
Loans accounted for under the fair value option(2)
2,468 3,182 
Loans, net$2,669,314 $2,628,982 
______________________________________
(1)Total loans include net unamortized loan origination fees of $0.6 million and $0.4 million as of March 31, 2026 and December 31, 2025, respectively, and net unamortized discounts on loan purchased or acquired of $2.8 million and $2.9 million as of March 31, 2026 and December 31, 2025, respectively.
(2)Includes $2.5 million and $3.2 million of unpaid principal balance of loans held for investment measured at fair value as of March 31, 2026 and December 31, 2025, respectively. Includes fair value adjustments on loans held for investment accounted for under the fair value option. See Note 12 – Fair Value.
As of March 31, 2026 and December 31, 2025, total loans held for investment included $116.3 million and $121.3 million, respectively, of performing loans purchased through mergers or acquisitions.
The following presents, by class, an aging analysis of the amortized cost basis in loans past due as of the date noted (dollars in thousands):
March 31, 202630-59
Days
Past Due		60-89
Days
Past Due		90 or
More Days
Past Due		Total
Loans
Past Due		CurrentTotal
Amortized
Cost
Loans Accounted for Under the Fair Value Option(1)
Total Loans
Cash, securities, and other$— $— $1,704 $1,704 $162,413 $164,117 $— $164,117 
Consumer and other20 123 — 143 19,935 20,078 2,468 22,546 
Construction and development— — — — 194,582 194,582 — 194,582 
1-4 family residential1,542 1,005 — 2,547 1,070,482 1,073,029 — 1,073,029 
Non-owner occupied CRE— — 6,752 6,752 770,305 777,057 — 777,057 
Owner occupied CRE— — — — 211,198 211,198 — 211,198 
Commercial and industrial179 — 13,671 13,850 234,156 248,006 — 248,006 
Total$1,741 $1,128 $22,127 $24,996 $2,663,071 $2,688,067 $2,468 $2,690,535 
December 31, 202530-59
Days
Past Due		60-89
Days
Past Due		90 or
More Days
Past Due		Total
Loans
Past Due		CurrentTotal Amortized Cost
Loans Accounted for Under the Fair Value Option(1)
Total Loans
Cash, securities, and other$— $— $1,704 $1,704 $163,022 $164,726 $— $164,726 
Consumer and other— — — — 19,596 19,596 3,182 22,778 
Construction and development— — — — 189,081 189,081 — 189,081 
1-4 family residential417 — — 417 1,033,248 1,033,665 — 1,033,665 
Non-owner occupied CRE— — — — 809,875 809,875 — 809,875 
Owner occupied CRE— — — — 204,078 204,078 — 204,078 
Commercial and industrial2,267 — 14,683 16,950 208,331 225,281 — 225,281 
Total$2,684 $— $16,387 $19,071 $2,627,231 $2,646,302 $3,182 $2,649,484 
______________________________________
(1)Refer to Note 12 – Fair Value for additional information on the measurement of loans accounted for under the fair value option.
Loan Modifications
GAAP requires that certain types of loan modifications to borrowers experiencing financial difficulty be reported and include the following: (i) principal forgiveness, (ii) interest rate reduction, (iii) other than insignificant payment delay, (iv) term extension, or (v) any combination of the foregoing.
The following presents the amortized cost basis as of March 31, 2026 of the loans modified to borrowers experiencing financial difficulty disaggregated by class of financing receivable and type of concession granted during the three months ended March 31, 2026.
(dollars in thousands)Principal forgivenessInterest rate reductionTerm extensionTotal class of financing receivable
Commercial and industrial$— $— $5,424 2.2 %
Total$— $— $5,424 
The following presents the financial effect by type of modification made to borrowers experiencing financial difficulty during the periods noted:
Three Months Ended March 31, 2026
(dollars in thousands)Principal forgivenessWeighted average interest rate reductionWeighted average term extension
Commercial and industrial$— — %5 years
There were no loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2025. There were no loans that experienced a default during the three months ended March 31, 2026 or 2025, subsequent to being granted a modification in the preceding twelve months. Default is determined at 90 days or more past due, charge-off, or foreclosure.
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:
March 31, 2026
(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 $— 
Non-owner occupied CRE— — 6,752 
Commercial and industrial— 14,607 — 
Total$1,704 $16,311 $6,752 
______________________________________
(1)As of March 31, 2026, the Company had an allowance of $2.6 million on non-accrual loans.
December 31, 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 $— 
Commercial and industrial790 14,855 — 
Total$2,494 $16,559 $— 
______________________________________
(1)As of December 31, 2025, the Company had an allowance of $3.3 million on non-accrual loans.
The Company recognized no interest income on non-accrual loans during the three month periods ended March 31, 2026 and 2025. The Company reversed no interest income on non-accrual loans during the three month periods ended March 31, 2026 and 2025, respectively.
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:
March 31, 2026
(dollars in thousands)Secured by Cash and
Securities		Secured by OtherTotal
Cash, securities, and other$1,704 $— $1,704 
Commercial and industrial— 14,607 14,607 
Total$1,704 $14,607 $16,311 
December 31, 2025
(dollars in thousands)Secured by Cash and
Securities		Secured by OtherTotal
Cash, securities, and other$1,704 $— $1,704 
Commercial and industrial— 14,855 14,855 
Total$1,704 $14,855 $16,559 
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 for differences between comparable sales and income data available. During the year ended December 31, 2025, the Company sold two OREO properties resulting in a net gain on sale of $0.5 million. During the three months ended March 31, 2026, the Company’s last remaining OREO property was sold for a nominal loss. As of March 31, 2026 and December 31, 2025, OREO properties had carrying amounts of $0.0 million and $3.0 million, respectively. As of March 31, 2026 and December 31, 2025, there were no loans secured by real estate in the process of foreclosure.
Allowance for Credit Losses on Loans
The ACL for loans is measured on the loan’s amortized cost basis, excluding interest receivable. Interest receivable excluded at March 31, 2026 and December 31, 2025 was $10.6 million and $10.4 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) for 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 DCF 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 March 31, 2026
Beginning balance$1,150 $138 $2,210 $5,846 $4,359 $846 $6,892 $21,441 
(Release) provision for credit losses(103)14 (12)183 (209)7 (540)(660)
Charge-offs— — — — — — — — 
Recoveries— — — — — — 20 20 
Ending balance$1,047 $152 $2,198 $6,029 $4,150 $853 $6,372 $20,801 
(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 March 31, 2025
Beginning balance$410 $185 $5,184 $5,200 $4,340 $654 $2,357 $18,330 
(Release) provision for credit losses(19)(54)(885)117 (30)261 802 192 
Charge-offs— — — — — — (594)(594)
Recoveries— 20 — 4 — — 4 28 
Ending balance$391 $151 $4,299 $5,321 $4,310 $915 $2,569 $17,956 
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 presents the amortized cost basis of loans by credit quality indicator, by class of financing receivable, and year of origination for term loans as of March 31, 2026 and December 31, 2025. 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. If revolving lines of credit converted to term loans without a credit decision, such lines of credit are included in the “Revolving lines of credit converted to term” column in the following table (dollars in thousands):
Term Loans Amortized Cost by Origination Year
March 31, 202620262025202420232022PriorRevolving Loans Amortized Cost BasisTotal
Cash, securities, and other
Pass$54 $49,569 $2,206 $1,593 $3,729 $21,952 $83,310 $162,413 
Special mention— — — — — — — — 
Substandard— — — — — — 1,704 1,704 
Doubtful— — — — — — — — 
Total Cash, securities, and other$54 $49,569 $2,206 $1,593 $3,729 $21,952 $85,014 $164,117 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Consumer and other
Pass$124 $67 $275 $— $493 $318 $18,801 $20,078 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Not rated(1)
— — 1 — 2,275 192 — 2,468 
Total Consumer and other$124 $67 $276 $— $2,768 $510 $18,801 $22,546 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Construction and development
Pass$6,058 $38,108 $44,679 $46,647 $23,113 $6,978 $16,199 $181,782 
Special mention— — — — 12,292 — — 12,292 
Substandard— — — 508 — — — 508 
Doubtful— — — — — — — — 
Total Construction and development$6,058 $38,108 $44,679 $47,155 $35,405 $6,978 $16,199 $194,582 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Term Loans Amortized Cost by Origination Year
March 31, 202620262025202420232022PriorRevolving Loans Amortized Cost BasisTotal
1-4 family residential
Pass$87,970 $174,995 $54,278 $55,893 $312,999 $260,538 $124,853 $1,071,526 
Special mention— — — — — 1,412 90 1,502 
Substandard— — — — — — 1 1 
Doubtful— — — — — — — — 
Total 1-4 family residential$87,970 $174,995 $54,278 $55,893 $312,999 $261,950 $124,944 $1,073,029 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Non-Owner occupied CRE
Pass$12,614 $116,533 $62,143 $50,621 $271,496 $178,408 $16,596 $708,411 
Special mention— — — — — — — — 
Substandard— — 3,702 22,898 22,727 19,319 — 68,646 
Doubtful— — — — — — — — 
Total Non-Owner occupied CRE$12,614 $116,533 $65,845 $73,519 $294,223 $197,727 $16,596 $777,057 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Owner occupied CRE
Pass$9,024 $45,888 $4,083 $2,898 $36,171 $111,975 $1,159 $211,198 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total Owner occupied CRE$9,024 $45,888 $4,083 $2,898 $36,171 $111,975 $1,159 $211,198 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Commercial and industrial
Pass$8,195 $42,601 $22,268 $3,771 $21,033 $44,544 $78,016 $220,428 
Special mention— — — — — — — — 
Substandard1,241 — — 4,618 6,701 10,732 4,286 27,578 
Doubtful— — — — — — — — 
Total Commercial and industrial$9,436 $42,601 $22,268 $8,389 $27,734 $55,276 $82,302 $248,006 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Total pass$124,039 $467,761 $189,932 $161,423 $669,034 $624,713 $338,934 $2,575,836 
Total special mention— — — — 12,292 1,412 90 13,794 
Total substandard1,241 — 3,702 28,024 29,428 30,051 5,991 98,437 
Total doubtful— — — — — — — — 
Total not rated(1)
— — 1 — 2,275 192 — 2,468 
Total$125,280 $467,761 $193,635 $189,447 $713,029 $656,368 $345,015 $2,690,535 
______________________________________
(1)Includes loans held for investment measured at fair value as of March 31, 2026. 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, 202520252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
Cash, securities, and other
Pass$49,565 $1,347 $1,805 $3,506 $9,260 $13,255 $84,284 $163,022 
Special mention— — — — — — — — 
Substandard— — — — — — 1,704 1,704 
Doubtful— — — — — — — — 
Total Cash, securities, and other$49,565 $1,347 $1,805 $3,506 $9,260 $13,255 $85,988 $164,726 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Consumer and other
Pass$212 $275 $— $765 $302 $512 $17,480 $19,546 
Special mention— — — — — — — — 
Substandard— — — — — — 50 50 
Doubtful— — — — — — — — 
Not rated(1)
— 1 — 2,874 268 39 — 3,182 
Total Consumer and other$212 $276 $— $3,639 $570 $551 $17,530 $22,778 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Construction and development
Pass$38,696 $53,248 $45,026 $23,589 $891 $9,560 $4,970 $175,980 
Special mention— — — 12,124 — — — 12,124 
Substandard— 461 516 — — — — 977 
Doubtful— — — — — — — — 
Total Construction and development$38,696 $53,709 $45,542 $35,713 $891 $9,560 $4,970 $189,081 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
1-4 family residential
Pass$220,541 $52,322 $61,879 $318,753 $113,011 $152,134 $112,114 $1,030,754 
Special mention— — — 1,370 — 1,421 118 2,909 
Substandard— — — — — — 2 2 
Doubtful— — — — — — — — 
Total 1-4 family residential$220,541 $52,322 $61,879 $320,123 $113,011 $153,555 $112,234 $1,033,665 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Non-Owner occupied CRE
Pass$119,685 $59,473 $50,166 $296,138 $72,242 $112,279 $31,170 $741,153 
Special mention— — — — — — — — 
Substandard— 3,706 22,872 22,716 19,428 — — 68,722 
Doubtful— — — — — — — — 
Total Non-Owner occupied CRE$119,685 $63,179 $73,038 $318,854 $91,670 $112,279 $31,170 $809,875 
Current year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Owner occupied CRE
Pass$46,082 $4,105 $2,926 $36,535 $39,613 $73,657 $1,160 $204,078 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total Owner occupied CRE$46,082 $4,105 $2,926 $36,535 $39,613 $73,657 $1,160 $204,078 
Current year-to-date gross charge-offs$— $— $— $111 $— $— $— $111 
Commercial and industrial
Pass$45,718 $22,601 $3,948 $22,911 $8,573 $35,145 $58,429 $197,325 
Special mention— — — — — — — — 
Substandard— — 5,025 6,874 1,762 9,857 4,438 27,956 
Doubtful— — — — — — — — 
Total Commercial and industrial$45,718 $22,601 $8,973 $29,785 $10,335 $45,002 $62,867 $225,281 
Current year-to-date gross charge-offs$— $— $— $1,403 $— $628 $— $2,031 
Term Loans Amortized Cost by Origination Year
December 31, 202520252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
Total pass$520,499 $193,371 $165,750 $702,197 $243,892 $396,542 $309,607 $2,531,858 
Total special mention— — — 13,494 — 1,421 118 15,033 
Total substandard— 4,167 28,413 29,590 21,190 9,857 6,194 99,411 
Total doubtful— — — — — — — — 
Total not rated(1)
— 1 — 2,874 268 39 — 3,182 
Total$520,499 $197,539 $194,163 $748,155 $265,350 $407,859 $315,919 $2,649,484 
______________________________________
(1)Includes loans held for investment measured at fair value as of December 31, 2025. Includes fair value adjustments on loans held for investment accounted for under the fair value option.