Concentrations of Credit. Most of the Company’s lending activity occurs within the states of Texas and Oklahoma. Commercial real estate loans, 1-4 family residential loans and construction, land development and other land loans made up 81.7% and 81.3% of the Company’s total loan portfolio, excluding Warehouse Purchase Program loans, at March 31, 2025 and December 31, 2024, respectively. As of March 31, 2025 and December 31, 2024, excluding Warehouse Purchase Program loans, there were no concentrations of loans related to any single industry in excess of 10% of total loans.

Related Party Loans. As of March 31, 2025 and December 31, 2024, loans outstanding to directors, officers and their affiliates totaled $257 thousand and $266 thousand, respectively. All transactions between the Company and such related parties are conducted in the ordinary course of business and made on the same terms and conditions as similar transactions with unaffiliated persons.

Nonperforming Assets and Nonaccrual and Past Due Loans. The Company has several procedures in place to assist it in maintaining the overall quality of its loan portfolio. The Company has established underwriting guidelines to be followed by its officers, including requiring appraisals on loans collateralized by real estate. The Company also monitors its delinquency levels for any negative or adverse trends. Nevertheless, the Company’s loan portfolio could become subject to increasing pressures from deteriorating borrower credit due to general economic conditions.

The Company generally places a loan on nonaccrual status and ceases accruing interest when the payment of principal or interest is delinquent for 90 days, or earlier in some cases; unless the loan is in the process of collection and the underlying collateral fully supports the carrying value of the loan. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period (at least six months) of repayment performance by the borrower.

With respect to potential problem loans, an evaluation of the borrower’s overall financial condition is made, together with an appraisal for loans collateralized by real estate, to determine the need, if any, for possible write-downs or appropriate additions to the allowance for credit losses.

An aging analysis of past due loans, segregated by category of loan, is presented below:


	March 31, 2025
	Loans Past Due and Still Accruing
	30-89 Days		90 or More Days		Total Past Due Loans		Nonaccrual Loans		Current Loans		Total Loans
	(Dollars in thousands)
Construction, land development and other land loans	$	30,468	$	—	$	30,468	$	833	$	2,813,781	$	2,845,082
Warehouse Purchase Program loans		—		—		—		—		1,057,893		1,057,893
Agriculture and agriculture real estate (includes farmland)		6,731		—		6,731		15,725		991,504		1,013,960
1-4 family (includes home equity) (1)		49,316		—		49,316		37,304		8,386,259		8,472,879
Commercial real estate (includes multi-family residential)		16,902		91		16,993		10,807		5,755,610		5,783,410
Commercial and industrial		14,169		—		14,169		8,609		2,402,747		2,425,525
Consumer and other		490		—		490		9		378,322		378,821
Total	$	118,076	$	91	$	118,167	$	73,287	$	21,786,116	$	21,977,570


	December 31, 2024
	Loans Past Due and Still Accruing
	30-89 Days		90 or More Days		Total Past Due Loans		Nonaccrual Loans		Current Loans		Total Loans
	(Dollars in thousands)
Construction, land development and other land loans	$	21,464	$	267	$	21,731	$	2,079	$	2,835,471	$	2,859,281
Warehouse Purchase Program loans		—		—		—		—		1,080,903		1,080,903
Agriculture and agriculture real estate (includes farmland)		4,554		575		5,129		2,634		1,025,783		1,033,546
1-4 family (includes home equity) (1)		49,391		—		49,391		42,048		8,396,150		8,487,589
Commercial real estate (includes multi-family residential)		15,692		—		15,692		18,455		5,766,838		5,800,985
Commercial and industrial		26,852		1,347		28,199		8,348		2,471,541		2,508,088
Consumer and other		478		—		478		83		378,256		378,817
Total	$	118,431	$	2,189	$	120,620	$	73,647	$	21,954,942	$	22,149,209

(1)

Includes $9.8 million and $10.7 million of residential mortgage loans held for sale at March 31, 2025 and December 31, 2024, respectively.

The Company had $81.4 million in nonperforming assets at March 31, 2025 compared with $81.5 million at December 31, 2024. Nonperforming assets were 0.37% of total loans and other real estate at March 31, 2025 and December 31, 2024. The Company had $73.3 million in nonaccrual loans at March 31, 2025 compared with $73.6 million at December 31, 2024.

Acquired Loans. Acquired loans were preliminarily recorded at fair value based on a discounted cash flow valuation methodology that considers, among other things, interest rates, projected default rates, loss given default, and recovery rates. Projected default rates, loss given default, and recovery rates for purchased credit deteriorated (“PCD”) loans primarily impact the related allowance, as opposed to the fair value mark. During the valuation process, the Company identified PCD and Non-PCD loans in the acquired loan portfolios. Loans acquired with evidence of credit quality deterioration since origination as of the acquisition date were accounted for as PCD. PCD loan identification considers the following factors: payment history and past due status, debt service coverage, loan grading, collateral values and other factors that may indicate deterioration of credit quality as of the acquisition date when compared to the origination date. Non-PCD loan identification considers the following factors: account types, remaining terms, annual interest rates or coupons, current market rates, interest types, past delinquencies, timing of principal and interest payments, loan to value ratios, loss exposures and remaining balances. Accretion of purchased discounts on PCD and Non-PCD loans will be recognized based on payment structure and the contractual maturity of individual loans.

PCD Loans. The recorded investment in PCD loans included in the consolidated balance sheet and the related outstanding balance as of the dates indicated are presented in the table below. The outstanding balance represents the total amount owed as of March 31, 2025 and December 31, 2024.

Income recognition on PCD loans is subject to the timing and amount of future cash flows. PCD loans for which the Company is accruing interest income are not considered nonperforming or impaired. The PCD discount reflected above as of March 31, 2025, represents the amount of discount available to be recognized as income.

Non-PCD Loans. The recorded investment in Non-PCD loans included in the consolidated balance sheet and the related outstanding balance as of the dates indicated are presented in the table below. The outstanding balance represents the total amount owed as of March 31, 2025 and December 31, 2024.

Credit Quality Indicators. As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio and methodology for calculating the allowance for credit losses, management assigns and tracks loan grades to be used as credit quality indicators. The following is a general description of the loan grades used:

Grade 1—Credits in this category have risk potential that is virtually nonexistent. These loans may be secured by insured certificates of deposit, insured savings accounts, U.S. Government securities and highly rated municipal bonds.

Grade 2—Credits in this category are of the highest quality. These borrowers represent top rated companies and individuals with unquestionable financial standing with excellent global cash flow coverage, net worth, liquidity and collateral coverage.

Grade 3—Credits in this category are not immune from risk but are well protected by the collateral and paying capacity of the borrower. These loans may exhibit a minor unfavorable credit factor, but the overall credit is sufficiently strong to minimize the possibility of loss.

Grade 4—Credits in this category are considered to be of acceptable credit quality with moderately greater risk than Grade 3 and receiving closer monitoring. Loans in this category have sources of repayment that remain sufficient to preclude a larger than normal probability of default and secondary sources are likewise currently of sufficient quantity, quality, and liquidity to protect the Company against loss of principal and interest. These borrowers have specific risk factors, but the overall strength of the credit is acceptable based on other mitigating credit and/or collateral factors and can repay the debt in the normal course of business.

Grade 5—Credits in this category constitute an undue and unwarranted credit risk; however, the factors do not rise to a level of substandard. These credits have potential weaknesses and/or declining trends that, if not corrected, could expose the Company to risk at a future date. These loans are monitored on the Company’s internally-generated watch list and evaluated on a quarterly basis.

Grade 6—Credits in this category are considered “substandard” but “non-impaired” loans in accordance with regulatory guidelines. Loans in this category have well-defined weakness that, if not corrected, could make default of principal and interest possible. Loans in this category are still accruing interest and may be dependent upon secondary sources of repayment and/or collateral liquidation.

Grade 7—Credits in this category are deemed “substandard” and “impaired” pursuant to regulatory guidelines. As such, the Company has determined that it is probable that less than 100% of the contractual principal and interest will be collected. These loans are individually evaluated for a specific reserve and will typically have the accrual of interest stopped.

Grade 8—Credits in this category include “doubtful” loans in accordance with regulatory guidance. Such loans are no longer accruing interest and factors indicate a loss is imminent. These loans are also deemed “impaired.” While a specific reserve may be in place while the loan and collateral are being evaluated, these loans are typically charged down to an amount the Company estimates is collectible.

Grade 9—Credits in this category are deemed a “loss” in accordance with regulatory guidelines and have been charged off or charged down. The Company may continue collection efforts and may have partial recovery in the future.

The following tables present loans by risk grade, by category of loan and year of origination/renewal at March 31, 2025.


	Term Loans
	Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(Dollars in thousands)

Construction, Land Development and Other Land Loans
Grade 1	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Grade 2		—		—		672		145		—		13		—		—		830
Grade 3		151,175		656,718		401,854		467,856		173,816		123,319		97,929		—		2,072,667
Grade 4		10,137		109,448		174,759		197,912		82,223		19,303		23,539		18,718		636,039
Grade 5		928		4,626		13		—		7,420		5,316		5,200		—		23,503
Grade 6		—		7,800		—		—		149		642		—		—		8,591
Grade 7		—		—		—		—		—		13		—		—		13
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		2,477		20,944		13,443		36,999		5,858		3,431		20,287		—		103,439
Total	$	164,717	$	799,536	$	590,741	$	702,912	$	269,466	$	152,037	$	146,955	$	18,718	$	2,845,082

Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Agriculture and Agriculture Real Estate (includes Farmland)
Grade 1	$	1,721	$	2,192	$	355	$	31	$	10	$	3	$	9,069	$	192	$	13,573
Grade 2		—		—		9		45		—		568		—		—		622
Grade 3		53,111		115,215		76,058		171,650		82,868		130,218		146,691		165		775,976
Grade 4		14,993		38,458		14,098		23,317		27,570		13,411		37,077		28		168,952
Grade 5		1,012		—		57		147		676		1,094		—		—		2,986
Grade 6		—		—		—		2,806		—		671		—		—		3,477
Grade 7		—		108		—		1,544		8		331		—		—		1,991
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		524		16,751		20		16,612		1,445		5,437		5,594		—		46,383
Total	$	71,361	$	172,724	$	90,597	$	216,152	$	112,577	$	151,733	$	198,431	$	385	$	1,013,960

Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

1-4 Family (includes Home Equity) (1)
Grade 1	$	85	$	—	$	71	$	141	$	—	$	107	$	—	$	—	$	404
Grade 2		—		—		512		1,092		143		2,145		—		—		3,892
Grade 3		103,328		522,235		1,544,528		2,181,515		1,851,108		1,944,350		104,648		4,441		8,256,153
Grade 4		1,905		15,395		19,164		19,102		30,565		69,106		2,774		—		158,011
Grade 5		133		—		683		1,846		—		2,920		76		—		5,658
Grade 6		—		133		231		410		204		3,615		—		—		4,593
Grade 7		—		—		4,744		11,262		6,474		14,523		95		—		37,098
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		48		33		1,663		3,118		281		1,927		—		—		7,070
Total	$	105,499	$	537,796	$	1,571,596	$	2,218,486	$	1,888,775	$	2,038,693	$	107,593	$	4,441	$	8,472,879

Current-period gross write-offs	$	—	$	—	$	239	$	329	$	30	$	17	$	442	$	—	$	1,057


	Term Loans
	Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(Dollars in thousands)

Commercial Real Estate (includes Multi-Family Residential)
Grade 1	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Grade 2		—		—		—		1,761		—		1,041		6,721		—		9,523
Grade 3		88,688		313,249		392,507		895,780		762,177		1,148,674		59,275		1,855		3,662,205
Grade 4		11,203		55,086		108,977		396,266		240,063		692,061		5,648		500		1,509,804
Grade 5		—		26,059		1,039		19,897		5,889		182,724		—		—		235,608
Grade 6		4,742		29,197		4,981		5,017		1,415		82,058		—		—		127,410
Grade 7		—		146		38		1,594		3,859		986		—		—		6,623
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		33,121		36,932		16,224		58,080		42,515		45,365		—		—		232,237
Total	$	137,754	$	460,669	$	523,766	$	1,378,395	$	1,055,918	$	2,152,909	$	71,644	$	2,355	$	5,783,410

Current-period gross write-offs	$	—	$	—	$	304	$	33	$	—	$	—	$	50	$	—	$	387

Commercial and Industrial
Grade 1	$	10,679	$	34,427	$	5,381	$	1,533	$	2,487	$	744	$	51,928	$	35	$	107,214
Grade 2		—		1,776		653		6,913		1,750		1,596		18,103		—		30,791
Grade 3		81,549		296,992		188,260		156,883		104,983		221,829		819,558		34,564		1,904,618
Grade 4		3,940		52,437		34,210		28,168		6,322		25,010		82,965		1,109		234,161
Grade 5		127		5,277		159		18,791		676		2,331		42,929		36		70,326
Grade 6		75		1,405		3,379		3,392		482		209		30,205		14		39,161
Grade 7		—		842		3,759		376		106		196		1,799		—		7,078
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		89		2,256		802		9,290		877		1,982		16,880		—		32,176
Total	$	96,459	$	395,412	$	236,603	$	225,346	$	117,683	$	253,897	$	1,064,367	$	35,758	$	2,425,525

Current-period gross write-offs	$	—	$	—	$	50	$	198	$	83	$	66	$	545	$	—	$	942

Consumer and Other
Grade 1	$	8,476	$	19,319	$	4,631	$	1,835	$	973	$	324	$	2,014	$	—	$	37,572
Grade 2		—		110,058		10,598		13,882		—		1,760		82		—		136,380
Grade 3		27,348		24,701		22,779		29,878		17,467		12,943		38,643		—		173,759
Grade 4		—		605		1,363		45		920		16,572		11,469		—		30,974
Grade 5		—		—		—		—		—		—		107		—		107
Grade 6		—		—		—		—		—		—		—		—		—
Grade 7		—		—		—		4		—		—		—		—		4
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		—		—		—		—		17		6		2		—		25
Total	$	35,824	$	154,683	$	39,371	$	45,644	$	19,377	$	31,605	$	52,317	$	—	$	378,821

Current-period gross write-offs	$	1,174	$	37	$	54	$	17	$	—	$	242	$	28	$	5	$	1,557


	Term Loans
	Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(Dollars in thousands)

Warehouse Purchase Program
Grade 1	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Grade 2		—		—		—		—		—		—		—		—		—
Grade 3		1,057,893		—		—		—		—		—		—		—		1,057,893
Grade 4		—		—		—		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—		—		—		—
Grade 6		—		—		—		—		—		—		—		—		—
Grade 7		—		—		—		—		—		—		—		—		—
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		—		—		—		—		—		—		—		—		—
Total	$	1,057,893	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1,057,893

Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total
Grade 1	$	20,961	$	55,938	$	10,438	$	3,540	$	3,470	$	1,178	$	63,011	$	227	$	158,763
Grade 2		—		111,834		12,444		23,838		1,893		7,123		24,906		—		182,038
Grade 3		1,563,092		1,929,110		2,625,986		3,903,562		2,992,419		3,581,333		1,266,744		41,025		17,903,271
Grade 4		42,178		271,429		352,571		664,810		387,663		835,463		163,472		20,355		2,737,941
Grade 5		2,200		35,962		1,951		40,681		14,661		194,385		48,312		36		338,188
Grade 6		4,817		38,535		8,591		11,625		2,250		87,195		30,205		14		183,232
Grade 7		—		1,096		8,541		14,780		10,447		16,049		1,894		—		52,807
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		36,259		76,916		32,152		124,099		50,993		58,148		42,763		—		421,330
Total	$	1,669,507	$	2,520,820	$	3,052,674	$	4,786,935	$	3,463,796	$	4,780,874	$	1,641,307	$	61,657	$	21,977,570

Current-period gross write-offs	$	1,174	$	37	$	647	$	577	$	113	$	325	$	1,065	$	5	$	3,943

(1)

Includes $9.8 million of residential mortgage loans held for sale at March 31, 2025.

Allowance for Credit Losses on Loans. The allowance for credit losses is adjusted through charges to earnings in the form of a provision for credit losses. Management has established an allowance for credit losses which it believes is adequate to cover the expected losses in the Company’s loan portfolio as of March 31, 2025. The amount of the allowance for credit losses on loans is affected by the following: (1) charge-offs of loans that occur when loans are deemed uncollectible and decrease the allowance, (2) recoveries on loans previously charged off that increase the allowance, (3) provisions for credit losses charged to earnings that increase the allowance, and (4) provision releases returned to earnings that decrease the allowance. Based on an evaluation of the loan portfolio and consideration of the factors listed below, management presents a quarterly review of the allowance for credit losses to the Bank’s Board of Directors, indicating any change in the allowance since the last review and any recommendations as to adjustments in the allowance. Although management believes it uses the best information available to make determinations with respect to the allowance for credit losses, future adjustments may be necessary if economic conditions or borrower performance differ from the assumptions used in making the initial determinations.

The Company’s allowance for credit losses on loans consists of two components: (1) a specific valuation allowance based on expected losses on specifically identified loans and (2) a general valuation allowance based on historical lifetime loan loss experience, current economic conditions, reasonable and supportable forecasted economic conditions and other qualitative risk factors both internal and external to the Company.

In setting the specific valuation allowance, the Company follows a loan review program to evaluate the credit risk in the total loan portfolio and assigns risk grades to each loan. Through this loan review process, the Company maintains an internal list of impaired loans, which along with the delinquency list of loans, helps management assess the overall quality of the loan portfolio and the adequacy of the allowance for credit losses. All loans that have been identified as impaired are reviewed on a quarterly basis in order to determine whether a specific reserve is required. For certain impaired loans, the Company allocates a specific loan loss reserve primarily based on the value of the collateral securing the impaired loan in accordance with CECL. The specific reserves are determined on an individual loan basis. Loans for which specific reserves are provided are excluded from the general valuation allowance described below.

In connection with this review of the loan portfolio, the Company considers risk elements attributable to particular loan types or categories in assessing the quality of individual loans. Some of the risk elements include:

In addition, for each category, the Company considers secondary sources of income and the financial strength and credit history of the borrower and any guarantors.

In determining the amount of the general valuation allowance, management considers factors such as historical lifetime loan loss experience, concentration risk of specific loan types, the volume, growth and composition of the Company’s loan portfolio, current economic conditions and reasonable and supportable forecasted economic conditions that may affect borrower ability to pay and the value of collateral, the evaluation of the Company’s loan portfolio through its internal loan review process, other qualitative risk factors both internal and external to the Company and other relevant factors in accordance with CECL. Historical lifetime loan loss experience is determined by utilizing an open-pool (“cumulative loss rate”) methodology. Adjustments to the historical lifetime loan loss experience are made for differences in current loan pool risk characteristics such as portfolio concentrations, delinquency, non-accrual, and watch list levels, as well as changes in current and forecasted economic conditions such as unemployment rates, property and collateral values, and other indices relating to economic activity. The utilization of reasonable and supportable forecasts includes an immediate reversion to lifetime historical loss rates. Based on a review of these factors for each loan type, the Company applies an estimated percentage to the outstanding balance of each loan type, excluding any loan that has a specific reserve. Allocation of a portion of the allowance to one category of loans does not preclude its availability to cover expected losses in other categories.

The following table details activity in the allowance for credit losses on loans by category of loan for the three months ended March 31, 2025 and 2024.


	Construction, Land Development and Other Land Loans			Agriculture and Agriculture Real Estate (includes Farmland)			1-4 Family (includes Home Equity)			Commercial Real Estate (includes Multi-Family Residential)			Commercial and Industrial			Consumer and Other			Total
	(Dollars in thousands)
Allowance for credit losses on loans:
Three Months Ended
Balance December 31, 2024	$	77,984		$	27,693		$	80,735		$	92,147		$	65,500		$	7,746		$	351,805
Provision for credit losses on loans		2,440			(1,596	)		4,211			(1,662	)		(4,996	)		1,603			—
Charge-offs		—			—			(1,057	)		(387	)		(942	)		(1,557	)		(3,943	)
Recoveries		156			—			6			209			612			256			1,239
Net (charge-offs) recoveries		156			—			(1,051	)		(178	)		(330	)		(1,301	)		(2,704	)
Balance March 31, 2025	$	80,580		$	26,097		$	83,895		$	90,307		$	60,174		$	8,048		$	349,101

Allowance for credit losses on loans:
Three Months Ended
Balance December 31, 2023	$	87,775		$	11,380		$	77,652		$	88,664		$	59,832		$	7,059		$	332,362
Provision for credit losses on loans		(5,619	)		1,270			2,469			(1,468	)		2,067			1,281			—
Charge-offs		—			(121	)		(461	)		—			(1,360	)		(1,659	)		(3,601	)
Recoveries		2			98			4			17			1,077			260			1,458
Net (charge-offs) recoveries		2			(23	)		(457	)		17			(283	)		(1,399	)		(2,143	)
Balance March 31, 2024	$	82,158		$	12,627		$	79,664		$	87,213		$	61,616		$	6,941		$	330,219

The allowance for credit losses on loans as of March 31, 2025 totaled $349.1 million or 1.59% of total loans, including acquired loans with discounts, a decrease of $2.7 million or 0.8% compared to the allowance for credit losses on loans totaling $351.8 million or 1.59% of total loans, including acquired loans with discounts, as of December 31, 2024. There was no provision for credit losses for the three months ended March 31, 2025 and 2024.

Net charge-offs were $2.7 million for the three months ended March 31, 2025 compared to net charge-offs of $2.1 million for the three months ended March 31, 2024. For the first quarter of 2025, $8.3 million of reserves on resolved PCD loans without any related charge-offs were released to the general reserve.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures. The allowance for credit losses on off-balance sheet credit exposures estimates expected credit losses over the contractual period in which there is exposure to credit risk via a contractual obligation to extend credit, except when an obligation is unconditionally cancellable by the Company. The allowance is adjusted by provisions for credit losses charged to earnings that increase the allowance, or by provision releases returned to earnings that decrease the allowance. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on the commitments expected to fund. The estimate of commitments expected to fund is affected by historical analysis of utilization rates. The expected credit loss rates applied to the commitments expected to fund are affected by the general valuation allowance utilized for outstanding balances with the same underlying assumptions and drivers. As of March 31, 2025 and December 31, 2024, the Company had $37.6 million in allowance for credit losses on off-balance sheet credit exposures. The allowance for credit losses on off-balance sheet credit exposures is a separate line item on the Company’s consolidated balance sheet. As of March 31, 2025, the Company had $1.60 billion in commitments expected to fund.

Loan Modifications Made to Borrowers Experiencing Financial Difficulty. The Company evaluates all restructurings, including restructurings for borrowers experiencing financial difficulty, to determine whether they result in a new loan or a continuation of an existing loan. In accordance with CECL, the Company only establishes a specific reserve for modifications to borrowers experiencing financial difficulty when the loan is identified as impaired. The effect of most modifications of loans made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance. The Company adjusts the terms of loans for certain borrowers when it believes such changes will help its customers manage their loan obligations and increase the collectability of the loans.

Modifications of loans made to borrowers experiencing financial difficulty may include but are not limited to changes in committed loan amount, interest rate, amortization, note maturity, borrower, guarantor, collateral, forbearance, forgiveness of principal or interest, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. The approval of modifications of loans for borrowers experiencing financial difficulty is handled on a case-by-case basis.

The financial effects of the modifications of loans made to borrowers experiencing financial difficulty were not significant during the three months ended March 31, 2025 and 2024. Furthermore, such modifications did not significantly impact the Company’s determination of the allowance for credit losses during those periods.

The Company did not have any loans made to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2025 and 2024 that subsequently defaulted and were modified in the twelve months prior to default. Payment default is defined as movement to nonperforming status, foreclosure or charge-off, whichever occurs first.