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Note 6 - Loans and the Allowance for Credit Losses

6 Months Ended

Jun. 30, 2025

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 6. Loans and the Allowance for Credit Losses

Loans Receivable – The following table sets forth the composition of the Company’s loan portfolio segments, including net deferred loan fees, as of June 30, 2025 and December 31, 2024:

	June 30, 2025			December 31, 2024
	(dollars in thousands)
Commercial	$	1,607,528		$	1,532,730
Commercial real estate		7,624,033			5,880,679
Commercial construction		681,222			616,246
Residential real estate		1,254,646			249,691
Consumer		1,709			1,136
Gross loans		11,169,138			8,280,482
Net deferred loan fees		(4,661	)		(5,672	)
Total loans receivable	$	11,164,477		$	8,274,810

As of June 30, 2025 and December 31, 2024, loans totaling approximately $7.8 billion and $5.8 billion, respectively, were pledged to secure borrowings from the FHLB of New York and the Federal Reserve Bank of New York.

Loans held-for-sale – The following table sets forth the composition of the Company's loans held-for-sale portfolio as of June 30, 2025 and December 31, 2024.

	June 30, 2025		December 31, 2024
	(dollars in thousands)
Residential real estate	$	1,027	$	743

Loans Receivable on Nonaccrual Status - The following tables present the carrying value of nonaccrual loans with an ACL and the carrying value of nonaccrual loans without an ACL as of June 30, 2025 and December 31, 2024:

	June 30, 2025
	Nonaccrual loans with ACL		Nonaccrual loans without ACL		Total nonaccrual loans
	(dollars in thousands)
Commercial	$	2,175	$	11,295	$	13,470
Commercial real estate		666		20,653		21,319
Commercial construction		-		2,204		2,204
Residential real estate		440		1,795		2,235
Total	$	3,281	$	35,947	$	39,228

	December 31, 2024
	Nonaccrual loans with ACL		Nonaccrual loans without ACL		Total nonaccrual loans
	(dollars in thousands)
Commercial	$	1,744	$	14,487	$	16,231
Commercial real estate		3,822		32,664		36,486
Commercial construction		-		2,204		2,204
Residential real estate		333		2,056		2,389
Total	$	5,899	$	51,411	$	57,310

Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated and loans that are individually evaluated.

Purchased Credit-Deteriorated Loans ("PCD") - PCD loans are defined as a loan or group of loans that have experienced more-than-insignificant credit deterioration since origination. The following table presents the recorded investment of those loans as of June 30, 2025.

(dollars in thousands)	June 30, 2025
Commercial	$	7,443
Commercial real estate		228,576
Commercial construction		—
Residential real estate		1,822
Consumer		—
Total purchased credit-deteriorated loans		237,841

Within the PCD loan portfolio as of June 30, 2025, there is a pool of rent-regulated loans amounting to $208.2 million. These loans are associated with multifamily properties located in the five boroughs of New York City, most of which are entirely or predominantly rent-regulated. This specific pool is subject to unique stressors, primarily due to the 2019 New York rent laws, which restricted rent increases while operating in an environment of escalating expenses.

Credit Quality Indicators - The Company continuously monitors the credit quality of its loans receivable. In addition to its internal monitoring, the Company utilizes the services of a third-party loan review firm to periodically validate the credit quality of its loans receivable on a sample basis. Credit quality is monitored by reviewing certain credit quality indicators. Assets classified “Pass” are deemed to possess average to superior credit quality, requiring no more than normal attention. Assets classified as “Special Mention” have generally acceptable credit quality yet possess higher risk characteristics/circumstances than satisfactory assets. Such conditions include strained liquidity, slow pay, stale financial statements, or other conditions that require more stringent attention from the lending staff. These conditions, if not corrected, may weaken the credit quality or inadequately protect the Company’s credit position at some future date. Assets are classified “Substandard” if the asset has a well-defined weakness that requires management’s attention to a greater degree than for loans classified special mention. Such weakness, if left uncorrected, could possibly result in the compromised ability of the loan to perform to contractual requirements. An asset is classified as “Doubtful” if it is inadequately protected by the net worth and/or paying capacity of the obligor or of the collateral, if any, that secures the obligation. Assets classified as doubtful include assets for which there is a “distinct possibility” that a degree of loss will occur if the inadequacies are not corrected.

We evaluate whether a modification, extension or renewal of a loan is a current period origination in accordance with GAAP. Generally, loans up for renewal are subject to a full credit evaluation before the renewal is granted and such loans are considered current period originations for purposes of the table below. The following table presents loans by origination, risk designation and gross charge-offs as of and during the six months ended June 30, 2025 (dollars in thousands):

	*Term loans amortized cost basis by origination year*
	*2025*		*2024*		*2023*		*2022*		*2021*		*Prior*		*Revolving Loans*		*Total Gross Loans*
Commercial
Pass	$	61,680	$	87,123	$	142,634	$	196,011	$	228,357	$	123,836	$	712,620	$	1,552,261
Special mention		-		1,896		-		314		-		4,999		596		7,805
Substandard		-		-		3,857		4,576		2,603		18,771		17,655		47,462
Doubtful		-		-		-		-		-		-		-		-
Total commercial	$	61,680	$	89,019	$	146,491	$	200,901	$	230,960	$	147,606	$	730,871	$	1,607,528
YTD gross charge-offs	$	-	$	-	$	-	$	1,669	$	-	$	467	$	875	$	3,011

Commercial real estate
Pass	$	291,020	$	471,351	$	376,511	$	1,779,950	$	1,864,697	$	2,210,694	$	422,045	$	7,416,268
Special mention		-		4,051		-		47,290		841		77,477		-		129,659
Substandard		-		-		-		15,069		8,265		54,772		-		78,106
Doubtful		-		-		-		-		-		-		-		-
Total commercial real estate	$	291,020	$	475,402	$	376,511	$	1,842,309	$	1,873,803	$	2,342,943	$	422,045	$	7,624,033
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	5,582	$	-	$	5,582

Commercial construction
Pass	$	487	$	25,440	$	-	$	3,663	$	-	$	4,362	$	645,066	$	679,018
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		2,204		2,204
Doubtful		-		-		-		-		-		-		-		-
Total commercial construction	$	487	$	25,440	$	-	$	3,663	$	-	$	4,362	$	647,270	$	681,222
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Residential real estate
Pass	$	28,589	$	26,696	$	39,426	$	261,820	$	167,204	$	663,073	$	60,522	$	1,247,330
Special mention		-		-		-		-		-		627		2,750		3,377
Substandard		-		-		-		632		-		3,174		133		3,939
Doubtful		-		-		-		-		-		-		-		-
Total residential real estate	$	28,589	$	26,696	$	39,426	$	262,452	$	167,204	$	666,874	$	63,405	$	1,254,646
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer
Pass	$	1,554	$	19	$	21	$	-	$	-	$	-	$	115	$	1,709
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total consumer	$	1,554	$	19	$	21	$	-	$	-	$	-	$	115	$	1,709
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	1	$	1

Total
Pass	$	383,330	$	610,629	$	558,592	$	2,241,444	$	2,260,258	$	3,001,965	$	1,840,368	$	10,896,586
Special mention		-		5,947		-		47,604		841		83,103		3,346		140,841
Substandard		-		-		3,857		20,277		10,868		76,717		19,992		131,711
Doubtful		-		-		-		-		-		-		-		-
Grand total	$	383,330	$	616,576	$	562,449	$	2,309,325	$	2,271,967	$	3,161,785	$	1,863,706	$	11,169,138
YTD gross charge-offs	$	-	$	-	$	-	$	1,669	$	-	$	6,049	$	876	$	8,594

The following table presents loans by origination, risk designation and gross charge-offs as of and for the year ended December 31, 2024 (dollars in thousands):

	*Term loans amortized cost basis by origination year*
	*2024*		*2023*		*2022*		*2021*		*2020*		*Prior*		*Revolving Loans*		*Total Gross Loans*
Commercial
Pass	$	67,298	$	157,067	$	194,602	$	237,065	$	29,717	$	111,841	$	678,206	$	1,475,796
Special mention		1,908		-		2,817		2,538		1,643		6,209		17,491		32,606
Substandard		-		3,019		3,705		217		-		15,844		1,543		24,328
Doubtful		-		-		-		-		-		-		-		-
Total commercial	$	69,206	$	160,086	$	201,124	$	239,820	$	31,360	$	133,894	$	697,240	$	1,532,730
YTD gross charge-offs	$	-	$	-	$	1,003	$	49	$	-	$	316	$	1,918	$	3,286

Commercial real estate
Pass	$	408,314	$	268,533	$	1,424,209	$	1,510,087	$	339,553	$	1,357,858	$	415,286	$	5,723,840
Special mention		-		-		53,642		-		-		59,719		-		113,361
Substandard		-		-		3,822		1,846		1,752		36,058		-		43,478
Doubtful		-		-		-		-		-		-		-		-
Total commercial real estate	$	408,314	$	268,533	$	1,481,673	$	1,511,933	$	341,305	$	1,453,635	$	415,286	$	5,880,679
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	10,416	$	-	$	10,416

Commercial construction
Pass	$	15,390	$	-	$	2,137	$	8,995	$	6,518	$	-	$	581,002	$	614,042
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		2,204		2,204
Doubtful		-		-		-		-		-		-		-		-
Total commercial construction	$	15,390	$	-	$	2,137	$	8,995	$	6,518	$	-	$	583,206	$	616,246
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Residential real estate
Pass	$	17,763	$	14,542	$	39,197	$	21,925	$	17,339	$	96,657	$	36,471	$	243,894
Special mention		-		-		-		-		-		635		2,773		3,408
Substandard		-		-		633		-		1,157		364		235		2,389
Doubtful		-		-		-		-		-		-		-		-
Total residential real estate	$	17,763	$	14,542	$	39,830	$	21,925	$	18,496	$	97,656	$	39,479	$	249,691
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer
Pass	$	1,015	$	24	$	1	$	-	$	-	$	-	$	96	$	1,136
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total consumer	$	1,015	$	24	$	1	$	-	$	-	$	-	$	96	$	1,136
YTD gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total
Pass	$	509,780	$	440,166	$	1,660,146	$	1,778,072	$	393,127	$	1,566,356	$	1,711,061	$	8,058,708
Special mention		1,908		-		56,459		2,538		1,643		66,563		20,264		149,375
Substandard		-		3,019		8,160		2,063		2,909		52,266		3,982		72,399
Doubtful		-		-		-		-		-		-		-		-
Grand total	$	511,688	$	443,185	$	1,724,765	$	1,782,673	$	397,679	$	1,685,185	$	1,735,307	$	8,280,482
YTD gross charge-offs	$	-	$	-	$	1,003	$	49	$	-	$	10,732	$	1,918	$	13,702

Collateral Dependent Loans: The following tables present the amortized cost basis of collateral-dependent loans by loan segment as of June 30, 2025 and December 31, 2024:

	June 30, 2025
	Real Estate		Other		Total
	(dollars in thousands)
Commercial	$	9,023	$	9,246	$	18,269
Commercial real estate		249,896		-		249,896
Commercial construction		2,204		-		2,204
Residential real estate		3,858		-		3,858
Total	$	264,981	$	9,246	$	274,227

	December 31, 2024
	Real Estate		Other		Total
	(dollars in thousands)
Commercial	$	2,308	$	9,222	$	11,530
Commercial real estate		36,486		-		36,486
Commercial construction		2,204		-		2,204
Residential real estate		2,056		-		2,056
Total	$	43,054	$	9,222	$	52,276

Aging Analysis - The following tables present the aging of the amortized cost in past-due loans as of June 30, 2025 and December 31, 2024:

	June 30, 2025
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due and Still Accruing		Nonaccrual		Total Past Due and Nonaccrual		Current		Gross Loans
	(dollars in thousands)
Commercial	$	151	$	409	$	-	$	13,470	$	14,030	$	1,593,498	$	1,607,528
Commercial real estate		-		12,800		-		21,319		34,119		7,589,914		7,624,033
Commercial construction		-		-		-		2,204		2,204		679,018		681,222
Residential real estate		227		930		-		2,235		3,392		1,251,254		1,254,646
Consumer		-		-		-		-		-		1,709		1,709
Total	$	378	$	14,139	$	-	$	39,228	$	53,745	$	11,115,393	$	11,169,138

	December 31, 2024
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due and Still Accruing		Nonaccrual		Total Past Due and Nonaccrual		Current		Gross Loans
	(dollars in thousands)
Commercial	$	1,340	$	-	$	-	$	16,231	$	17,571	$	1,515,159	$	1,532,730
Commercial real estate		-		-		-		36,486		36,486		5,844,193		5,880,679
Commercial construction		-		-		-		2,204		2,204		614,042		616,246
Residential real estate		1,991		-		-		2,389		4,380		245,311		249,691
Consumer		-		-		-		-		-		1,136		1,136
Total	$	3,331	$	-	$	-	$	57,310	$	60,641	$	8,219,841	$	8,280,482

The following tables detail the amount of gross loans that are individually analyzed, collectively evaluated, and loans acquired with deteriorated quality, and the related portion of the allowance for credit losses for loans that are allocated to each loan portfolio segment.

	June 30, 2025
	Commercial		Commercial real estate		Commercial construction		Residential real estate		Consumer		Total
	(dollars in thousands)
Allowance for credit losses – loans
Individually analyzed	$	641	$	33	$	-	$	-	$	-	$	674
Collectively evaluated		19,358		72,914		5,422		14,461		29		112,184
Acquired with deteriorated credit quality		962		42,256		-		114		-		43,332
Total	$	20,961	$	115,203	$	5,422	$	14,575	$	29	$	156,190

Gross loans
Individually analyzed	$	12,908	$	21,320	$	2,204	$	2,036	$	-	$	38,468
Collectively evaluated		1,587,178		7,374,137		679,018		1,250,788		1,709		10,892,830
Acquired with deteriorated credit quality		7,442		228,576		-		1,822		-		237,840
Total	$	1,607,528	$	7,624,033	$	681,222	$	1,254,646	$	1,709	$	11,169,138

	December 31, 2024
	Commercial		Commercial real estate		Commercial construction		Residential real estate		Consumer		Total
	(dollars in thousands)
Allowance for credit losses – loans
Individually analyzed	$	326	$	909	$	-	$	-	$	-	$	1,235
Collectively evaluated		17,740		53,868		5,064		4,561		5		81,238
Acquired with deteriorated credit quality		212		-		-		-		-		212
Total	$	18,278	$	54,777	$	5,064	$	4,561	$	5	$	82,685

Gross loans
Individually analyzed	$	15,751	$	36,486	$	2,204	$	2,056	$	-	$	56,497
Collectively evaluated		1,516,557		5,844,193		614,042		247,635		1,136		8,223,563
Acquired with deteriorated credit quality		422		-		-		-		-		422
Total	$	1,532,730	$	5,880,679	$	616,246	$	249,691	$	1,136	$	8,280,482

Activity in the Company’s ACL for loans for the three and six months ended June 30, 2025 and 2024 are summarized in the tables below.

	Three Months Ended June 30, 2025
	Commercial			Commercial real estate			Commercial construction		Residential real estate			Consumer			Total
	(dollars in thousands)
Balance as of March 31, 2025	$	18,031		$	54,586		$	5,030	$	4,752		$	4		$	82,403
Charge-offs		(3,011	)		(2,027	)		-		-			(1	)		(5,039	)
Recoveries		23			90			-		5			-			118
Provision for credit losses - loans:
Initial provision related to acquisition		985			16,017			78		10,217			10			27,307
Operating provision for credit losses		3,968			4,281			314		(514	)		16			8,065
Nonaccretable credit marks on PCD loans		965			42,256			-		115			-			43,336
Balance as of June 30, 2025	$	20,961		$	115,203		$	5,422	$	14,575		$	29		$	156,190

	Six Months Ended June 30, 2025
	Commercial			Commercial real estate			Commercial construction		Residential real estate			Consumer			Total
	(dollars in thousands)
Balance as of December 31, 2024	$	18,278		$	54,777		$	5,064	$	4,561		$	5		$	82,685
Charge-offs		(3,011	)		(5,582	)		-		-			(1	)		(8,594	)
Recoveries		178			90			-		5			-			273
Provision for credit losses - loans:
Initial provision related to acquisition - loans		985			16,017			78		10,217			10			27,307
Operating provision for credit losses		3,566			7,645			280		(323	)		15			11,183
Nonaccretable credit marks on PCD loans		965			42,256			-		115			-			43,336
Balance as of June 30, 2025	$	20,961		$	115,203		$	5,422	$	14,575		$	29		$	156,190

	Three Months Ended June 30, 2024
	Commercial			Commercial real estate			Commercial construction			Residential real estate		Consumer		Total
	(dollars in thousands)
Balance as of March 31, 2024	$	20,735		$	52,794		$	5,011		$	4,326	$	3	$	82,869
Charge-offs		-			(3,595	)		-			-		-		(3,595	)
Recoveries		324			-			-			-		-		324
(Reversal of) provision for credit losses – loans		(1,039	)		3,899			(539	)		158		-		2,479
Balance as of June 30, 2024	$	20,020		$	53,098		$	4,472		$	4,484	$	3	$	82,077

	Six Months Ended June 30, 2024
	Commercial			Commercial real estate			Commercial construction			Residential real estate		Consumer			Total
	(dollars in thousands)
Balance as of December 31, 2023	$	20,632		$	52,278		$	4,739		$	4,320	$	5		$	81,974
Charge-offs		(300	)		(6,480	)		-			-		-			(6,780	)
Recoveries		347			-			-			-		-			347
(Reversal of) provision for credit losses – loans		(659	)		7,300			(267	)		164		(2	)		6,536
Balance as of June 30, 2024	$	20,020		$	53,098		$	4,472		$	4,484	$	3		$	82,077

Loan Modifications to Borrowers Experiencing Financial Difficulty:

The following table presents the amortized cost basis of loans to borrowers experiencing financial difficulty that were modified during the three and six months ended June 30, 2025. The modification percentage represents the total loans modified during the three and six months ended as a percentage of the total gross loan balances as of June 30, 2025.

	Amortized Cost Basis at Time of Modification
	Term Extension		Payment Deferral		Total		Gross Loans at June 30, 2025		Modification % (Modified Loans/ Gross Loans)
June 30, 2025
(dollars in thousands)
Commercial	$	6,491	$	19,461	$	25,952	$	1,607,528		1.61	%
Commercial real estate		-		-		-		7,624,033		-
Commercial construction		8,419		-		8,419		681,222		1.24
Residential real estate		-		-		-		1,254,646		-
Consumer		-		-		-		1,709		-
Total	$	14,910	$	19,461	$	34,371	$	11,169,138		0.31	%

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three and six months ended June 30, 2025.

	Weighted Average Term Extension (Months)		Weighted Average Payment Deferral (Months)
June 30, 2025
Commercial		3		3
Commercial real estate		-		-
Commercial construction		6		-
Residential real estate		-		-
Consumer		-		-

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 following table presents the performance of such loans that have been modified in the last twelve months through June 30, 2025.

	Current		30-89 Days Past Due		90 Days or Greater Past Due
June 30, 2025
(dollars in thousands)
Commercial	$	26,285	$	-	$	-
Commercial real estate		63,804		-		-
Commercial construction		8,419		-		-
Residential real estate		-		-		-
Consumer		-		-		-
Total	$	98,508	$	-	$	-

There were no modification to borrowers experiencing financial difficulty during the three months ended March 31, 2025.

During the three and six months ended June 30, 2025 and June 30, 2024, the Company had no commitments to lend additional funds to borrowers experiencing financial difficulty for which the Company modified the terms of the loans in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension during the current period.

There were no loans to borrowers experiencing financial difficulty that had a payment default during the three and six months ended June 30, 2025 and 2024 and were modified in the twelve months prior to that default. Default is determined at 90 or more days past due, upon charge-off, or upon foreclosure. Modified loans in default are individually evaluated for the allowance for credit losses or if the modified loan is deemed uncollectible, the loan, or a portion of the loan, is written off and the allowance for credit losses is adjusted accordingly.

Allowance for Credit Losses for Unfunded Commitments

The Company has recorded an ACL for unfunded credit commitments, which was recorded in other liabilities. The provision is recorded within the provision for credit losses on the Company’s income statement. The following tables presents a roll forward of the allowance for credit losses for unfunded commitments for the three and six months ended June 30, 2025 and 2024:

	Three Months Ended		Three Months Ended
	June 30,		June 30,
	2025		2024
	(dollars in thousands)
Balance at beginning of period	$	3,009	$	2,754
Provision for credit losses – unfunded commitments		328		21
Balance at end of period	$	3,337	$	2,775

	Six Months Ended		Six Months Ended
	June 30,		June 30,
	2025		2024
	(dollars in thousands)
Balance at beginning of period	$	2,627	$	2,811
Provision for (reversal of) allowance for credit losses – unfunded commitments		710		(36	)
Balance at end of period	$	3,337	$	2,775

Components of Provision for Credit Losses

The following tables summarizes the provision for (reversal of) credit losses for the three and six months ended June 30, 2025 and 2024:

	Three Months Ended		Three Months Ended
	June 30,		June 30,
	2025		2024
	(dollars in thousands)
Provision for credit losses – loans	$	8,065	$	2,479
Initial provision related to acquisition - loans		27,307		-
Provision for credit losses - unfunded commitments		328		21
Provision for credit losses	$	35,700	$	2,500

	Six Months Ended		Six Months Ended
	June 30,		June 30,
	2025		2024
	(dollars in thousands)
Provision for credit losses – loans	$	11,183	$	6,536
Initial provision related to acquisition - loans		27,307		-
Provision for (reversal of) credit losses - unfunded commitments		710		(36	)
Provision for credit losses	$	39,200	$	6,500