Loans and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2025

The following table shows a summary of the balances of loans as of the dates indicated (dollars in thousands):


	March 31, 2025		December 31, 2024
Residential	$	2,669,498	$	2,699,890
Commercial	900		8,013
MPP	2,468,212		1,710,820
Total loans	5,138,610		4,418,723
Less:
Allowance for credit losses	12,315		11,190
Net deferred loan (cost)/fees	(8,560)		(9,031)
Net loans	$	5,134,855	$	4,416,564

The residential mortgage loan portfolio includes $174.3 million and $173.0 million of loans measured at fair value on March 31, 2025 and December 31, 2024, respectively.

Activity in the allowance for credit losses for the three months ended March 31, 2025 is summarized as follows (dollars in thousands):


	Three Months Ended March 31, 2025
	Residential		Commercial		MPP		Unallocated		Total
Beginning balance	$	10,468	$	32	$	684	$	6	$	11,190
Charge-offs	(311)		—		—		—		(311)
Recoveries	48		4		—		—		52
Provision (benefit)	1,116		(32)		303		(3)		1,384
Ending balance	$	11,321	$	4	$	987	$	3	$	12,315

Activity in the allowance for loan losses for the three months ended March 31, 2024 is summarized as follows (dollars in thousands):


	Three Months Ended March 31, 2024
	Residential		Commercial		MPP		Unallocated		Total
Beginning balance	$	11,742	$	51	$	458	$	44	$	12,295
Charge-offs	(434)		—		—		—		(434)
Recoveries	428		15		—		—		443
Provision (benefit)	352		(58)		76		(39)		331
Ending balance	$	12,088	$	8	$	534	$	5	$	12,635

Nonaccrual Loans

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing in the held for investment portfolio, excluding those loans carried at fair value, as of March 31, 2025 (dollars in thousands):


	March 31, 2025
	Nonaccrual with No Allowance		Nonaccrual with Allowance		Total Nonaccrual		Over 90 days Accruing		Total
Residential:
Construction and land development	$	2,770	$	1,283	$	4,053	$	2,430	$	6,483
Home equity lines of credit	10,024		1,906		11,930		289		12,219
Closed end, first liens	36,306		13,056		49,362		5,190		54,552
Closed end, second liens	456		1,121		1,577		608		2,185

Total	$	49,556	$	17,366	$	66,922	$	8,517	$	75,439


	December 31, 2024
	Nonaccrual with No Allowance		Nonaccrual with Allowance		Total Nonaccrual		Over 90 days Accruing		Total
Residential:
Construction and land development	$	2,583	$	1,650	$	4,233	$	—	$	4,233
Home equity lines of credit	8,420		2,387		10,807		200		11,007
Closed end, first liens	36,192		11,514		47,706		4,020		51,726
Closed end, second liens	287		1,247		1,534		31		1,565
Total	$	47,482	$	16,798	$	64,280	$	4,251	$	68,531

The Bank has not recognized any material interest income on nonaccrual loans during the three months ended March 31, 2025 or 2024.

Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the sale of the collateral and the borrower is experiencing financial difficulty. The allowance is calculated on an individual loan basis of the shortfall between the fair value of the loan’s collateral, which is adjusted for selling costs, and the loan’s amortized cost. If the fair value of the collateral exceeds the loan’s amortized cost, no allowance is necessary.

The amortized cost of collateral dependent loans by class as of March 31, 2025 and December 31, 2024 was as follows (dollars in thousands):


	March 31, 2025
	Collateral Type
	Real Estate		Other		Allowance Allocated
Residential:
Construction and land development	$	3,005	$	—	$	93
Home equity lines of credit	10,736		—		69
Closed end, first liens	45,867		—		301
Closed end, second liens	629		—		114

Total	$	60,237	$	—	$	577


	December 31, 2024
	Collateral Type
	Real Estate		Other		Allowance Allocated
Residential:
Construction and land development	$	3,066	$	—	$	4
Home equity lines of credit	9,748		—		40
Closed end, first liens	45,340		—		341
Closed end, second liens	469		—		114
Commercial	118		$	—	—
Total	$	58,741	$	—	$	499

Age Analysis of Loans

The following tables detail the age analysis of loans, excluding those loans carried at fair value, at March 31, 2025 and December 31, 2024 (dollars in thousands):


	March 31, 2025
	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans
Residential:
Construction and land development	$	5,048	$	5,040	$	5,434	$	15,522	$	182,374	$	197,896
Home equity lines of credit	5,986		3,320		6,963		16,269		723,096		739,365
Closed end, first liens	21,493		8,220		35,270		64,983		1,420,717		1,485,700
Closed end, second liens	3,770		347		1,076		5,193		75,555		80,748
Commercial	—		74		119		193		707		900
MPP	—		—		—		—		2,468,212		2,468,212
Total	$	36,297	$	17,001	$	48,862	$	102,160	$	4,870,661	$	4,972,821


	December 31, 2024
	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans
Residential:
Construction and land development	$	3,321	$	847	$	2,935	$	7,103	$	209,853	$	216,956
Home equity lines of credit	4,161		1,826		8,639		14,626		696,541		711,167
Closed end, first liens	26,555		6,412		33,766		66,733		1,459,810		1,526,543
Closed end, second liens	716		667		435		1,818		79,478		81,296
Commercial	79		—		118		197		7,816		8,013
MPP	—		—		—		—		1,710,820		1,710,820
Total	$	34,832	$	9,752	$	45,893	$	90,477	$	4,164,318	$	4,254,795

Modifications to Borrowers Experiencing Financial Difficulty

On occasion, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extensions, interest rate reductions, or payment delays. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. In some cases, the Company provides multiple types of concessions on one loan.

During the three months ended March 31, 2025, there were $2.6 million in loans that were both experiencing financial difficulty and modified during the period: 8 closed end, first liens, for $2.3 million and 1 home equity line of credit for $249,000. These loans were a combination of term extensions and interest rate reductions and were on nonaccrual status at time of modification. During the three months ended March 31, 2024, there were $2.2 million in loans that were both experiencing financial difficulty and modified during the period: 5 closed end, first lien loans for $2.2 million. These loans were a combination of term extension and interest rate reduction. During the three months ended March 31, 2025, all closed end, first liens loans and home equity line of credits were on nonaccrual status at time of modification. There were no material modifications to borrowers experiencing financial difficulty within the previous twelve months that became 30 days or more past due during the three months ended March 31, 2025 and 2024.

Credit Quality Indicators

The Company categorized each loan into credit risk categories based on current financial information, overall debt service coverage, comparison against industry averages, collateral coverage, historical payment experience, and current economic trends. Residential real estate is evaluated for credit risk based on performing or non-performing classification. The Company uses the following definitions for credit risk ratings:

Performing

Residential real estate credits not covered by the non-performing definition below.

Non-performing

Residential real estate loans classified as non-performing are generally loans on nonaccrual status.

Pass

Commercial credits not covered by the definitions below are pass credits, which are not considered to be adversely rated.

Special Mention

Loans classified as special mention, or watch credits, have a potential weakness or weaknesses 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 institution’s credit position at some future date.

Substandard

Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution may sustain some loss if the deficiencies are not corrected.

The following table reflects amortized cost basis of loans and year to date charge-offs (excluding those loans carried at fair value) as of March 31, 2025 based on year of origination (dollars in thousands):


	2025		2024		2023		2022		2021		Prior		Revolving Loans Amortized Cost Basis		Total
Construction and land development:
Performing	$	1,070	$	14,350	$	52,278	$	66,996	$	36,379	$	22,770	$	—	$	193,843
Nonperforming	—		—		1,479		2,242		181		151		—		4,053
Total	1,070		14,350		53,757		69,238		36,560		22,921		—		197,896
Gross charge-offs	—		—		—		—		—		—		—		—
Home equity lines of credit:
Performing	—		—		—		—		—		—		727,435		727,435
Nonperforming	—		—		—		—		—		—		11,930		11,930
Total	—		—		—		—		—		—		739,365		739,365
Gross charge-offs	—		—		40		—		—		—		—		40
First liens, closed end loans:
Performing	3,504		30,195		89,364		1,048,008		153,044		112,223		—		1,436,338
Nonperforming	—		2,244		5,776		31,038		3,004		7,300		—		49,362
Total	3,504		32,439		95,140		1,079,046		156,048		119,523		—		1,485,700
Gross charge-offs	—		—		—		221		—		—		—		221
Second liens, closed end loans:
Performing	1,068		5,088		15,016		33,535		8,406		16,058		—		79,171
Nonperforming	—		—		705		559		58		255		—		1,577
Total	1,068		5,088		15,721		34,094		8,464		16,313		—		80,748
Gross charge-offs	—		—		50		—		—		—		—		50
Commercial: Risk Rating
Pass	—		—		—		—		—		591		234		825
Special mention	—		—		—		—		—		75		—		75
Total	—		—		—		—		—		666		234		900
Gross charge-offs	—		—		—		—		—		—		—		—
MPP: Risk Rating
Pass	—		—		—		—		—		—		2,468,212		2,468,212
Special mention	—		—		—		—		—		—		—		—
Total	—		—		—		—		—		—		2,468,212		2,468,212
Gross charge-offs	—		—		—		—		—		—		—		—
Grand total	$	5,642	$	51,877	$	164,618	$	1,182,378	$	201,072	$	159,423	$	3,207,811	$	4,972,821
Grand total gross charge-offs	$	—	$	—	$	90	$	221	$	—	$	—	$	—	$	311

There were no revolving loans converted to term loans during the three months ended March 31, 2025.

The following table reflects amortized cost basis of loans and full year charge-offs as of December 31, 2024 based on year of origination (dollars in thousands):


	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Total
Construction and land development
Performing	$	15,270	$	64,713	$	70,314	$	38,369	$	13,447	$	10,610	$	—	$	212,723
Nonperforming	—		1,893		2,012		181		—		147		—		4,233
Total	15,270		66,606		72,326		38,550		13,447		10,757		—		216,956
Gross charge-offs	—		268		638		—		—		—		—		906
Home equity lines of credit:
Performing	—		—		—		—		—		—		700,360		700,360
Nonperforming	—		—		—		—		—		—		10,807		10,807
Total	—		—		—		—		—		—		711,167		711,167
Gross charge-offs	—		126		598		486		—		8		—		1,218
First liens, closed end loans:
Performing	55,893		95,908		1,055,560		157,222		42,292		71,962		—		1,478,837
Nonperforming	839		5,274		30,919		3,286		2,855		4,533		—		47,706
Total	56,732		101,182		1,086,479		160,508		45,147		76,495		—		1,526,543
Gross charge-offs	—		22		73		—		16		59		—		170
Second liens, closed end loans:
Performing	5,235		15,683		32,903		8,492		8,503		8,946		—		79,762
Nonperforming	—		681		541		59		—		253		—		1,534
Total	5,235		16,364		33,444		8,551		8,503		9,199		—		81,296
Gross charge-offs	—		152		147		—		—		—		—		299
Commercial: Risk Rating
Pass	—		—		—		—		—		618		7,308		7,926
Special mention	—		—		—		—		—		87		—		87
Total	—		—		—		—		—		705		7,308		8,013
Gross charge-offs	—		—		—		—		—		—		—		—
MPP: Risk Rating
Pass	—		—		—		—		—		—		1,710,820		1,710,820
Special mention	—		—		—		—		—		—		—		—
Total	—		—		—		—		—		—		1,710,820		1,710,820
Gross charge-offs	—		—		—		—		—		—		—		—
Grand total	$	77,237	$	184,152	$	1,192,249	$	207,609	$	67,097	$	97,156	$	2,429,295	$	4,254,795
Grand total gross charge-offs	$	—	$	568	$	1,456	$	486	$	16	$	67	$	—	$	2,593

There were no revolving loans converted to term loans during 2024.