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Loans and Allowance for Credit Losses on Loans

3 Months Ended

Mar. 31, 2024

Loans and Allowance for Credit Losses on Loans

Loans and Allowance for Credit Losses on Loans

Note 4: Loans and Allowance for Credit Losses on Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the ACL-Loans, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

For loans at amortized cost, interest income is accrued based on the unpaid principal balance.

The Company has made a policy election to exclude accrued interest from the amortized cost basis of loans and reports accrued interest separately from the related loan balance in the unaudited condensed consolidated balance sheets. Accrued interest on loans totaled $60.2 million and $60.4 million at March 31, 2024 and December 31, 2023, respectively.

The Company also elected not to measure an allowance for credit losses for accrued interest receivables. The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past-due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest collected on these loans is applied to the principal balance until the loan can be returned to an accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

For all loan portfolio segments, the Company promptly charges off loans, or portions thereof, when available information confirms that specific loans are uncollectable based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations.

When cash payments for accrued interest are received on nonaccrual loans in each loan class, the Company records a reduction in principal on the balance of the loan. For loan modifications, interest income is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms.

The Company offers repurchase agreements to fund mortgage loans held for sale from closing until sale to an investor. Under a warehousing arrangement the Company funds a mortgage loan through secured financing. The warehousing arrangement is secured by the underlying mortgages and a combination of deposits, personal guarantees and advance rates. The Company typically holds the collateral until it is sent under a bailee arrangement instructing the investor to send proceeds to the Company. Typical investors are large financial institutions or government agencies. Interest earned from the time of funding to the time of sale is recognized as interest income as accrued. Warehouse fees are accrued as noninterest income.

Loan Portfolio Summary

Loans receivable at March 31, 2024 and December 31, 2023 include:


	March 31,		December 31,
	2024		2023

	(In thousands)

Mortgage warehouse repurchase agreements	$	1,142,994	$	752,468
Residential real estate⁽¹⁾		1,321,300		1,324,305
Multi-family financing		4,096,606		4,006,160
Healthcare financing		2,464,685		2,356,689
Commercial and commercial real estate⁽²⁾⁽³⁾		1,666,751		1,643,081
Agricultural production and real estate		65,977		103,150
Consumer and margin loans		7,912		13,700
		10,766,225		10,199,553
Less:
ACL-Loans		75,712		71,752

Loans Receivable	$	10,690,513	$	10,127,801

(1)

Includes $1.2 billion and $1.2 billion of All-in-One© first-lien home equity lines of credit at March 31, 2024 and December 31, 2023, respectively.

(2)

Includes $1.1 billion and $1.1 billion of revolving lines of credit collateralized primarily by single-family mortgage servicing rights as of March 31, 2024 and December 31, 2023, respectively.

(3)

Includes only $6.8 million and $8.4 million of non-owner occupied commercial real estate as of March 31, 2024 and December 31, 2023, respectively.

Risk characteristics applicable to each segment of the loan portfolio are described as follows.

Mortgage Warehouse Repurchase Agreements (MTG WHRA): Under its warehouse program, the Company provides warehouse financing arrangements to approved mortgage companies for their origination and sale of residential mortgage and multi-family loans. Loans secured by mortgages placed on existing one-to-four family dwellings may be originated or purchased and placed through each mortgage warehouse facility.

As a secured repurchase agreement, collateral pledged to the Company secures each individual mortgage until the mortgage company sells the loan in the secondary market. A traditional secured warehouse facility typically carries a base interest rate of the Federal Reserve’s Secured Overnight Financing Rate (“SOFR”), or mortgage note rate and a margin.

Risk is evident if there is a change in the fair value of mortgage loans originated by mortgage companies in warehouse, the sale of which is the expected source of repayment under a warehouse facility. However, the warehouse customers are required to hedge the change in value of these loans to mitigate the risk, typically through forward sales contracts.

Residential Real Estate Loans (RES RE): Real estate loans are secured by owner-occupied one-to-four family residences. Repayment of residential real estate loans is primarily dependent on the personal income and credit rating of the borrowers. First-lien HELOC mortgages included in this segment typically carried a base rate of 30-day LIBOR, plus a margin. With the sunset of LIBOR, loans have been transitioned to the One-Year Constant Maturity Treasury (“CMT”), plus a margin.

Multi-Family Financing (MF FIN): The Company specializes in originating multi-family financing that can be market rate or affordable. The portfolio includes loans for construction, acquisition, refinance, or permanent financing. Loans are typically secured by real estate mortgages, assignment of Low-Income Housing Tax Credits (“LIHTC”), and/or equity interest in the underlying properties. All loans are assessed and reviewed at a minimum based on borrower strength/experience, historical property performance, market trends, projected financial performance with regards to intended strategy, and source of repayment. Independent third-party reports are used to ensure legal conformity and support valuations of the assets. Exit strategies and sources of repayment are provided through the secondary market via governmental programs, strategic refinances, LIHTC equity installments, and cashflow from the properties. Repayment of these loans depends on the successful operation of a business or property and the borrower’s cash flows. Credit risk in these loans may be impacted by the creditworthiness of a borrower, property values and the local economy in the related market area. These loans are well-collateralized and underwritten to agency guidelines. Loans included in this segment typically carry a base rate of 30-day SOFR, that adjusts on a monthly basis, and a margin. The Company strategically focuses on loan classes that are government backed or can be sold in the secondary market.

Healthcare Financing (HC FIN): The healthcare financing portfolio includes customized loan products for independent living, assisted living, memory care and skilled nursing projects. A variety of loan products are available to accommodate rehabilitation, acquisition, and refinancing of healthcare properties. Credit risk in these loans are primarily driven by local demographics and the expertise of the operators of the facilities. Repayment of these loans may include permanent loans, sales of developed property or an interim loan commitment from the Company until permanent agency-eligible financing is obtained, as well as successful operation of a business or property and the borrower’s cash flows. These loans are well-collateralized and underwritten to agency guidelines. Loans included in this segment typically carry a base rate of 30-day SOFR, that adjusts on a monthly basis, and a margin. The Company strategically focuses on loan classes that are government backed or can be sold in the secondary market.

Commercial Lending and Commercial Real Estate Loans (CML & CRE): The commercial lending and commercial real estate portfolio includes loans to commercial customers for use in financing working capital needs, equipment purchases and expansions, as well as loans to commercial customers to finance land and improvements. It also includes lines of credit collateralized by servicing rights that are assessed for fair value quarterly at the Company’s request. The loans in this category are repaid primarily from the cash flow of a borrower’s principal business operation. Credit risk in these loans is driven by creditworthiness of a borrower and the economic conditions that impact the cash flow stability from business operations. Small Business Administration (“SBA”) loans are included in this category. Less than 1% of total commercial and commercial real estate loans are made up of non-owner occupied commercial real estate loans.

Agricultural Production and Real Estate Loans (AG & AGRE): Agricultural production loans are generally comprised of seasonal operating lines of credit to grain farmers to plant and harvest corn and soybeans and term loans to fund the purchase of equipment. The Company also offers long-term financing to purchase agricultural real estate. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry-developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop and other farm assets as considered necessary. The Company is approved to sell agricultural loans in the secondary market through the Federal Agricultural Mortgage Corporation and uses this relationship to manage interest rate risk within the portfolio. Agricultural real estate loans included in this segment are typically structured with a one-year adjustable rate mortgage (“ARM”), three-year ARM or five-year ARM CMT and a margin. Agriculture production, livestock, and equipment loans are structured with variable rates that are indexed to prime or fixed for terms not exceeding five years.

Consumer and Margin Loans (CON & MAR): Consumer loans are those loans secured by household assets. Margin loans are those loans secured by marketable securities. The term and maximum amount for these loans are determined by considering the purpose of the loan, the margin (advance percentage against value) in all collateral, the primary source of repayment, and the borrower’s other related cash flow.

ACL-Loans

The ACL-Loans is the Company’s estimate of current expected credit losses. Loans receivable is presented net of the allowance to reflect the principal balance expected to be collected over the contractual term of the loans. This life of loan allowance is established through a provision for credit losses included in net interest income as loans are recorded in the financial statements. The provision for a reporting period also reflects increases or decreases in the allowance related to changes in credit loss expectations. Actual credit losses are charged against the allowance when management believes the uncollectability of a loan balance, or a portion thereof, is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The ACL-Loans is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans considering relevant available information from internal and external sources, including historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. The allowance also incorporates reasonable and supportable forecasts. There have been no changes to the credit quality components used to assess risk during the three months ended March 31, 2024. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The level of the ACL is believed to be adequate to absorb innate expected future losses in the loan portfolio as of the measurement date.

The ACL-Loans consists of individually evaluated loans and pooled loan components. The Company’s primary portfolio segmentation is by loans with similar risk characteristics. Loans risk graded substandard and worse are individually evaluated for expected credit losses. For individually evaluated loans that are collateral dependent, the Company may use the fair value of the collateral, less estimated costs to sell, as a practical expedient as of the reporting date to determine the carrying amount of an asset and the allowance for credit losses, as applicable. A loan is considered to be collateral dependent when repayment is expected to be provided substantially through the operation or the sale of the collateral when the borrower is experiencing financial difficulty as of the reporting date.

To calculate the ACL-Loans risk graded pass through special mention, the portfolio is segmented by loans with similar risk characteristics.

Loan Portfolio Segment		ACL-Loans Methodology

Mortgage warehouse repurchase agreements		Remaining Life Method
Residential real estate loans		Discounted Cash Flow
Multi-family financing		Discounted Cash Flow
Healthcare financing		Discounted Cash Flow
Commercial and commercial real estate		Discounted Cash Flow
Agricultural production and real estate		Remaining Life Method
Consumer and margin loans		Remaining Life Method

Loan characteristics used in determining the segmentation included the underlying collateral, type or purpose of the loan, and expected credit loss patterns. The initial estimate of expected credit losses for each segment is based on historical credit loss experience and management’s judgement. Given the Company’s modest historical credit loss experience, peer and industry data was incorporated into the measurement. Expected life of loan credit losses are quantified using discounted cash flows and remaining life methodologies.

Model results are supplemented by qualitative adjustments for risk factors relevant in assessing the expected credit losses within the portfolio segments. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor.

The models utilized and the applicable qualitative adjustments require assumptions and management judgement that can be subjective in nature. The above measurement approach is also used to estimate the expected credit losses associated with unfunded loan commitments, which also incorporates expected utilization rates.

The following table presents, by loan portfolio segment, the activity in the ACL-Loans for the three months ended March 31, 2024 and 2023:


	For the Three Months Ended March 31, 2024
	MTG WHRA		RES RE		MF FIN		HC FIN		CML & CRE		AG & AGRE		CON & MAR		TOTAL

	(In thousands)
ACL-Loans
Balance, beginning of period	$	2,070	$	7,323	$	26,874	$	22,454	$	12,243	$	619	$	169	$	71,752
FMBI's ACL for loans sold		—		(55)		(186)		(2)		(92)		(246)		(12)		(593)
Provision for credit losses		952		(363)		1,976		2,135		763		77		(63)		5,477
Loans charged to the allowance		—		—		—		—		(925)		—		—		(925)
Recoveries of loans previously charged-off		—		—		—		—		1		—		—		1
Balance, end of period	$	3,022	$	6,905	$	28,664	$	24,587	$	11,990	$	450	$	94	$	75,712


	For the Three Months Ended March 31, 2023
	MTG WHRA		RES RE		MF FIN		HC FIN		CML & CRE		AG & AGRE		CON & MAR		TOTAL

	(In thousands)
ACL-Loans
Balance, beginning of period	$	1,249	$	7,029	$	16,781	$	9,882	$	8,326	$	565	$	182	$	44,014
Provision for credit losses		415		349		3,070		1,871		2,149		(22)		(15)		7,817
Loans charged to the allowance		—		—		—		—		—		—		—		—
Recoveries of loans previously charged-off		—		—		—		—		7		—		—		7
Balance, end of period	$	1,664	$	7,378	$	19,851	$	11,753	$	10,482	$	543	$	167	$	51,838

The Company recorded a total provision for credit losses of $4.7 million for the three months ended March 31, 2024. The $4.7 million total provision for credit losses consisted of $4.9 million for the ACL-Loans as shown above and $(0.2) million for the ACL-Off-Balance Sheet Credit Exposures (“OBCE’s”). The $4.9 million total provision for ACL-Loans reflected an elimination of $593,000 from the sale of FMBI branches in January 2024.

The Company recorded a total provision for credit losses of $6.9 million for the three months ended March 31, 2023. The $6.9 million total provision for credit losses consisted of $7.8 million for the ACL-Loans as shown above and $(0.9) million for the ACL-OBCE’s.

The following table presents, by loan portfolio segment, the activity in the ACL-Loans for the twelve months ended December 31, 2023:


	For the Year Ended December 31, 2023
	MTG WHRA		RES RE		MF FIN		HC FIN		CML & CRE		AG & AGRE		CON & MAR		TOTAL

	(In thousands)
ACL-Loans
Balance, beginning of period	$	1,249	$	7,029	$	16,781	$	9,882	$	8,326	$	565	$	182	$	44,014
Provision for credit losses		821		328		18,493		12,572		5,232		54		(12)		37,488
Loans charged to the allowance		—		(34)		(8,400)		—		(1,356)		—		(1)		(9,791)
Recoveries of loans previously charged-off		—		—		—		—		41		—		—		41
Balance, end of period	$	2,070	$	7,323	$	26,874	$	22,454	$	12,243	$	619	$	169	$	71,752

The below table presents the amortized cost basis and ACL-Loans allocated for collateral dependent loans, which are individually evaluated to determine expected credit losses as of March 31, 2024 and December 31, 2023:


	March 31, 2024
	Real Estate		Accounts Receivable / Equipment		Other		Total		ACL-Loans Allocation

	(In thousands)
RES RE	$	1,272	$	—	$	—	$	1,272	$	8
MF FIN		53,200		—		—		53,200		581
HC FIN		63,283		—		—		63,283		5,652
CML & CRE		168		2,628		2,657		5,453		1,780
AG & AGRE		147		—		—		147		1
CON & MAR		—		—		—		—		—
Total collateral dependent loans	$	118,070	$	2,628	$	2,657	$	123,355	$	8,022

There were no significant changes to the types of collateral securing the Company’s collateral dependent loans compared to December 31, 2023.


	December 31, 2023
	Real Estate		Accounts Receivable / Equipment		Other		Total		ACL-Loans Allocation

	(In thousands)
RES RE	$	1,557	$	—	$	3	$	1,560	$	21
MF FIN		46,575		—		—		46,575		521
HC FIN		73,909		—		—		73,909		6,289
CML & CRE		146		3,603		2,684		6,433		1,132
AG & AGRE		147		—		—		147		1
CON & MAR		—		—		3		3		—
Total collateral dependent loans	$	122,334	$	3,603	$	2,690	$	128,627	$	7,964

Internal Risk Categories

The Company evaluates the loan risk grading system definitions and ACL-Loans methodology on an ongoing basis. As of December 31, 2023, the Company created a newly defined special mention risk rating category to be consistent with industry practices. Loans with a Watch classification are now included in the Pass risk rating category as of December 31, 2023. This updated policy was approved by the Company’s Management Committee, to be effective as of December 31, 2023 on a prospective basis.

In adherence with policy, the Company uses the following internal risk grading categories and definitions for loans since December 31, 2023:

Pass - Loans that are considered to be of acceptable credit quality, and not classified as Special Mention, Substandard or Doubtful. Also included are loans classified as watch loans, which represent loans that remain sound and collectible but contain elevated risk that requires management’s attention.

Special Mention – Loans classified as special mention have potential weaknesses that deserve management’s attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special mention loans are not adversely classified and do

not warrant adverse classification. Loans with questions or concerns regarding collateral, adverse market conditions impacting future performance, and declining financial trends would be considered for special mention.

Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. When a loan in the form of a line of credit is downgraded to substandard, it is evaluated for impairment and future draws under the line of credit require the approval of an officer of Senior Credit Officer or above.

Doubtful - Loans classified as doubtful 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 existing facts, conditions, and values, highly questionable and improbable.

The following tables present the credit risk profile of the Company’s loan portfolio based on internal risk rating category as of March 31, 2024 and December 31, 2023:


	March 31, 2024
	2024		2023		2022		2021		2020		Prior		Revolving Loans		TOTAL

	(In thousands)
MTG WHRA
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	1,142,994	$	1,142,994
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	1,142,994	$	1,142,994
Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
RES RE
Pass	$	1,780	$	32,353	$	9,793	$	6,175	$	21,315	$	7,400	$	1,240,994	$	1,319,810
Special Mention		—		—		—		—		—		218		—		218
Substandard		—		—		—		—		—		—		1,272		1,272
Total	$	1,780	$	32,353	$	9,793	$	6,175	$	21,315	$	7,618	$	1,242,266	$	1,321,300
Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
MF FIN
Pass	$	298,730	$	957,019	$	734,071	$	114,353	$	9,070	$	34,587	$	1,731,470	$	3,879,300
Special Mention		8,000		96,900		28,559		8,400		—		1,470		20,777		164,106
Substandard		—		11,667		28,360		6,534		—		—		6,639		53,200
Total	$	306,730	$	1,065,586	$	790,990	$	129,287	$	9,070	$	36,057	$	1,758,886	$	4,096,606
Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
HC FIN
Pass	$	258,604	$	626,388	$	936,880	$	98,815	$	—	$	14,459	$	398,904	$	2,334,050
Special Mention		24,319		20,900		9,502		—		—		—		12,631		67,352
Substandard		—		25,600		—		28,783		—		—		8,900		63,283
Total	$	282,923	$	672,888	$	946,382	$	127,598	$	—	$	14,459	$	420,435	$	2,464,685
Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CML & CRE
Pass	$	4,469	$	54,002	$	116,479	$	71,824	$	19,203	$	34,169	$	1,360,706	$	1,660,852
Special Mention		—		—		—		289		157		—		—		446
Substandard		—		—		92		776		850		60		3,675		5,453
Total	$	4,469	$	54,002	$	116,571	$	72,889	$	20,210	$	34,229	$	1,364,381	$	1,666,751
Charge-offs	$	—	$	—	$	—	$	925	$	—	$	—	$	—	$	925
AG & AGRE
Pass	$	7,833	$	7,875	$	5,103	$	2,722	$	8,566	$	15,515	$	18,216	$	65,830
Substandard		—		—		—		—		—		147		—		147
Total	$	7,833	$	7,875	$	5,103	$	2,722	$	8,566	$	15,662	$	18,216	$	65,977
Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CON & MAR
Pass	$	—	$	109	$	28	$	25	$	2	$	4,268	$	3,480	$	7,912
Total	$	—	$	109	$	28	$	25	$	2	$	4,268	$	3,480	$	7,912
Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total Pass	$	571,416	$	1,677,746	$	1,802,354	$	293,914	$	58,156	$	110,398	$	5,896,764	$	10,410,748
Total Special Mention	$	32,319	$	117,800	$	38,061	$	8,689	$	157	$	1,688	$	33,408	$	232,122
Total Substandard	$	—	$	37,267	$	28,452	$	36,093	$	850	$	207	$	20,486	$	123,355
Total Doubtful	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total Loans	$	603,735	$	1,832,813	$	1,868,867	$	338,696	$	59,163	$	112,293	$	5,950,658	$	10,766,225
Total Charge-offs	$	—	$	—	$	—	$	925	$	—	$	—	$	—	$	925


	December 31, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Loans		TOTAL

	(In thousands)
MTG WHRA
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	752,468	$	752,468
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	752,468	$	752,468
Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
RES RE
Pass	$	31,011	$	10,086	$	6,573	$	22,725	$	3,298	$	9,340	$	1,239,161	$	1,322,194
Special Mention		—		—		—		—		59		492		—		551
Substandard		—		—		—		—		—		288		1,272		1,560
Total	$	31,011	$	10,086	$	6,573	$	22,725	$	3,357	$	10,120	$	1,240,433	$	1,324,305
Charge-offs	$	—	$	—	$	—	$	—	$	—	$	21	$	13	$	34
MF FIN
Pass	$	1,094,698	$	762,448	$	208,343	$	77,340	$	29,764	$	8,455	$	1,646,445	$	3,827,493
Special Mention		94,973		3,189		8,400		—		—		1,477		24,052		132,091
Substandard		11,682		28,360		6,534		—		—		—		—		46,576
Total	$	1,201,353	$	793,997	$	223,277	$	77,340	$	29,764	$	9,932	$	1,670,497	$	4,006,160
Charge-offs	$	—	$	8,400	$	—	$	—	$	—	$	—	$	—	$	8,400
HC FIN
Pass	$	752,591	$	996,273	$	110,197	$	—	$	14,563	$	—	$	351,110	$	2,224,734
Special Mention		35,869		9,520		—		—		—		—		12,658		58,047
Substandard		25,600		10,625		28,783		—		—		—		8,900		73,908
Total	$	814,060	$	1,016,418	$	138,980	$	—	$	14,563	$	—	$	372,668	$	2,356,689
Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CML & CRE
Pass	$	51,110	$	119,386	$	77,316	$	21,154	$	21,088	$	17,066	$	1,328,980	$	1,636,100
Special Mention		—		—		292		172		—		84		—		548
Substandard		—		70		1,701		878		62		—		3,672		6,383
Doubtful		—		—		—		—		—		50		—		50
Total	$	51,110	$	119,456	$	79,309	$	22,204	$	21,150	$	17,200	$	1,332,652	$	1,643,081
Charge-offs	$	—	$	496	$	274	$	586	$	—	$	—	$	—	$	1,356
AG & AGRE
Pass	$	16,850	$	9,825	$	6,490	$	14,267	$	5,237	$	16,606	$	33,728	$	103,003
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		147		—		147
Total	$	16,850	$	9,825	$	6,490	$	14,267	$	5,237	$	16,753	$	33,728	$	103,150
Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CON & MAR
Pass	$	748	$	4,329	$	247	$	115	$	27	$	4,339	$	3,862	$	13,667
Special Mention		—		—		—		15		15		—		—		30
Substandard		—		—		—		—		—		3		—		3
Total	$	748	$	4,329	$	247	$	130	$	42	$	4,342	$	3,862	$	13,700
Charge-offs	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	1

Total Pass	$	1,947,008	$	1,902,347	$	409,166	$	135,601	$	73,977	$	55,806	$	5,355,754	$	9,879,659
Total Special Mention	$	130,842	$	12,709	$	8,692	$	187	$	74	$	2,053	$	36,710	$	191,267
Total Substandard	$	37,282	$	39,055	$	37,018	$	878	$	62	$	438	$	13,844	$	128,577
Total Doubtful	$	—	$	—	$	—	$	—	$	—	$	50	$	—	$	50
Total Loans	$	2,115,132	$	1,954,111	$	454,876	$	136,666	$	74,113	$	58,347	$	5,406,308	$	10,199,553
Total Charge-offs	$	—	$	8,896	$	274	$	586	$	—	$	22	$	13	$	9,791

The Company did not have any material revolving loans converted to term loans at March 31, 2024 or December 31, 2023.

Delinquent Loans

The following tables present the Company’s loan portfolio aging analysis of the recorded investment in loans as of March 31, 2024 and December 31, 2023.


	March 31, 2024
	30-59 Days		60-89 Days		Greater Than		Total				Total
	Past Due		Past Due		90 Days		Past Due		Current		Loans

	(In thousands)
MTG WHRA	$	—	$	—	$	—	$	—	$	1,142,994	$	1,142,994
RES RE		4,588		682		218		5,488		1,315,812		1,321,300
MF FIN		24,870		—		78,910		103,780		3,992,826		4,096,606
HC FIN		—		25,600		48,733		74,333		2,390,352		2,464,685
CML & CRE		1,922		—		3,006		4,928		1,661,823		1,666,751
AG & AGRE		44		10		159		213		65,764		65,977
CON & MAR		—		—		—		—		7,912		7,912
	$	31,424	$	26,292	$	131,026	$	188,742	$	10,577,483	$	10,766,225


	December 31, 2023
	30-59 Days		60-89 Days		Greater Than		Total				Total
	Past Due		Past Due		90 Days		Past Due		Current		Loans

	(In thousands)
MTG WHRA	$	—	$	—	$	—	$	—	$	752,468	$	752,468
RES RE		4,557		—		2,379		6,936		1,317,369		1,324,305
MF FIN		38,218		11,055		39,609		88,882		3,917,278		4,006,160
HC FIN		—		47,275		35,999		83,274		2,273,415		2,356,689
CML & CRE		172		393		3,665		4,230		1,638,851		1,643,081
AG & AGRE		27		11		147		185		102,965		103,150
CON & MAR		1		3		18		22		13,678		13,700
	$	42,975	$	58,737	$	81,817	$	183,529	$	10,016,024	$	10,199,553

The above tables do not include two delinquent loans that were classified as held for sale at March 31, 2024, totaling $30.2 million.

Nonperforming Loans

Nonaccrual loans, including modified loans to borrowers experiencing financial difficulty that have not met the six-month minimum performance criterion, are reported as nonperforming loans. For all loan classes, it is the Company’s policy to have any modified loans which are on nonaccrual status prior to being modified remain on nonaccrual status until six months of satisfactory borrower performance, at which time management would consider its return to accrual status. A loan is generally classified as nonaccrual when the Company believes that receipt of principal and interest is doubtful under the terms of the loan agreement. Most generally, this is at 90 or more days past due. The amount of interest income recognized on nonaccrual financial assets during the three months ended as of March 31, 2024 and 2023, respectively, was immaterial.

The following table presents the Company’s nonaccrual loans and loans past due 90 days or more and still accruing at March 31, 2024 and December 31, 2023.


	March 31,				December 31,
	2024				2023
			Total Loans >				Total Loans >
			90 Days &				90 Days &
	Nonaccrual		Accruing		Nonaccrual		Accruing

	(In thousands)
RES RE	$	760	$	218	$	1,486	$	894
MF FIN		46,248		32,662		39,608		—
HC FIN		28,783		19,950		28,783		7,216
CML & CRE		2,866		140		3,820		43
AG & AGRE		147		12		147		—
CON & MAR		—		—		3		15
	$	78,804	$	52,982	$	73,847	$	8,168

The Company did not have any nonperforming loans without an estimated ACL at March 31, 2024.

Modifications to Borrowers Experiencing Financial Difficulty

On January 1, 2023, the Company adopted FASB ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures, which eliminates the recognition and measurement of a troubled debt restructuring (“TDR”). The Company adopted the prospective approach for this new guidance.

Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate reduction. In some cases, the Company provides multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

There were no new loans modified for borrowers experiencing financial difficulty during the three months ended March 31, 2024.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The Company did not have loans modified in the last twelve months that were delinquent as of March 31, 2024.

Foreclosures

There were no residential loans in the process of foreclosure as of March 31, 2024 and December 31, 2023.

Loans Purchased

The Company purchased $27.7 million and $98.8 million of loans during the three months ended March 31, 2024 and 2023, respectively.