Allowance for Credit and Loan Losses

3 Months Ended

Mar. 31, 2025

The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31, 2025
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	30,953	$	2,715	$	—	$	18,312	$	51,980
Credit loss expense (recovery)	1,640		405		—		(502)		1,543
Charge-offs	(7)		(2)		—		(1,453)		(1,462)
Recoveries	54		49		—		490		593
Balance, end of period	$	32,640	$	3,167	$	—	$	16,847	$	52,654


	Three Months Ended March 31, 2024
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	29,736	$	2,503	$	481	$	17,309	$	50,029
Credit loss expense (recovery)	606		147		178		(262)		669
Charge-offs	114		(1)		—		(823)		(710)
Recoveries	58		6		—		335		399
Balance, end of period	$	30,514	$	2,655	$	659	$	16,559	$	50,387

The accrued interest receivable on our loan receivables is excluded from the allowance for credit loss estimate and is included in interest receivable on our consolidated balance sheets. As of March 31, 2025 and December 31, 2024, the accrued interest on our loan portfolio was $25.1 million and 25.6 million, respectively.

The Company utilized the Cumulative Loss Rate method in determining expected future credit losses. The loss rate method measures the amount of loan charge–offs, net of recoveries, (“loan losses”) recognized over the life of a closed pool and compares those loan losses to the outstanding loan balance of that pool as of a specific point in time (“pool date”).

To estimate a CECL loss rate for the pool, management first identifies the loan losses recognized between the pool date and the reporting date for the pool and determines which loan losses were related to loans outstanding at the pool date. The loss rate method then divides the loan losses recognized on loans outstanding as of the pool date by the outstanding loan balance as of the pool date.

The Company’s expected loss estimate is anchored in historical credit loss experience, with an emphasis on all available portfolio data. The Company’s historical look–back period includes January 2009 through the current period, on a monthly basis. When historical credit loss experience is not sufficient for a specific portfolio, the Company may supplement its own portfolio data with external models or data. The Company supplemented data for 2009 and 2010 with the use of adjusted Uniform Bank Performance Report peer group data.

Qualitative reserves reflect management’s overall estimate of the extent to which current expected credit losses on collectively evaluated loans will differ from historical loss experience. The analysis takes into consideration other analytics performed within the organization, such as enterprise and concentration management, along with other credit–related analytics as deemed appropriate. Management attempts to quantify qualitative reserves whenever possible.

The Company’s CECL estimate applies to a forecast that incorporates macroeconomic trends and other environmental factors. Management utilized Moody's economic forecast scenarios including both National and Regional econometrics, as well as management judgment, as the basis for the forecast period. The historical loss rate was utilized as the base rate,

and qualitative adjustments were utilized to reflect the forecast and other relevant factors.

The Company segments the loan portfolio into pools based on the following risk characteristics: financial asset type, loan purpose, collateral type, loan characteristics, credit characteristics, outstanding loan balances, contractual terms and prepayment assumptions, industry of the borrower and concentrations, and historical or expected credit loss patterns.

Liability for Commitments to Extend Credit and Standby Letters of Credit

The following tables represent, by loan portfolio segment, a summary of changes in the activity in the liability for commitments to extend credit and standby letters of credit (please see note 14):


	Three Month Ended
	March 31, 2025							45382	March 31, 2024
		Balance, beginning of period		Credit loss expense (reversal)		Ending balance			Balance, beginning of period		Credit loss expense (reversal)		Ending balance
Commercial		$	1,385	$	(253)	$	1,132		$	—	$	—	$	—
Real Estate		61		11		72			64		(18)		46
Mortgage Warehouse		—		—		—			—		—		—
Consumer		703		93		796			551		153		704
Total		$	2,149	$	(149)	$	2,000		$	615	$	135	$	750