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Loans
 3 Months Ended
Mar. 31, 2025
Receivables [Abstract]  
Loans
Note 4 — Loans
Loans consist of the following:
(Dollars in thousands)March 31, 2025December 31, 2024
Loans held for sale$10,191 $10,494 
LHFI:
Loans secured by real estate:
Commercial real estate(1)
$2,383,849 $2,477,431 
Construction/land/land development798,609 864,011 
Residential real estate(2)
1,954,957 1,857,589 
Total real estate5,137,415 5,199,031 
Commercial and industrial2,022,085 2,002,634 
Mortgage warehouse lines of credit404,131 349,081 
Consumer21,895 22,967 
Total LHFI(3)
7,585,526 7,573,713 
Less: Allowance for loan credit losses (“ALCL”)
92,011 91,060 
LHFI, net$7,493,515 $7,482,653 
____________________________
(1)Includes owner occupied commercial real estate of $938.0 million and $975.9 million at March 31, 2025, and December 31, 2024, respectively.
(2)Includes multifamily real estate of $489.8 million and $425.5 million at March 31, 2025, and December 31, 2024, respectively.
(3)Includes unamortized purchase accounting adjustment and net deferred loan fees of $9.2 million and $9.8 million at March 31, 2025, and December 31, 2024, respectively.
Credit quality indicators. As part of the Company’s commitment to managing the credit quality of its loan portfolio, management annually and periodically updates and evaluates certain credit quality indicators, which include but are not limited to (i) weighted-average risk rating of the loan portfolio, (ii) net charge-offs, (iii) level of non-performing loans, (iv) level of classified loans (defined as substandard, doubtful and loss), and (v) the general economic conditions particularly in the cities and states in which the Company operates. The Company maintains an internal risk rating system where ratings are assigned to individual loans based on assessed risk. Loan risk ratings are the primary indicator of credit quality for the loan portfolio and are continually evaluated to ensure they are appropriate based on currently available information.
The following is a summary description of the Company’s internal risk ratings:
• Pass (1-6)Loans within this risk rating are further categorized as follows:
Minimal risk (1)Well-collateralized by cash equivalent instruments held by the Banks.
Moderate risk (2)Borrowers with excellent asset quality and liquidity. Borrowers’ capitalization and liquidity exceed industry norms. Borrowers in this category have significant levels of liquid assets and have a low level of leverage.
Better than average risk (3)Borrowers with strong financial strength and excellent liquidity that consistently demonstrate strong operating performance. Borrowers in this category generally have a sizable net worth that can be converted into liquid assets within 12 months.
Average risk (4)Borrowers with sound credit quality and financial performance, including liquidity. Borrowers are supported by sufficient cash flow coverage generated through operations across the full business cycle.
Marginally acceptable risk (5)Loans generally meet minimum requirements for an acceptable loan in accordance with lending policy but possess one or more attributes that cause the overall risk profile to be higher than the majority of newly approved loans.
Watch (6)A passing loan with one or more factors that identify a potential weakness in the overall ability of the borrower to repay the loan. These weaknesses are generally mitigated by other factors that reduce the risk of delinquency or loss.
• Special Mention (7)This grade is intended to be temporary and includes borrowers whose credit quality has deteriorated and is at risk of further decline.
• Substandard (8)This grade includes “Substandard” loans under regulatory guidelines. Substandard loans exhibit a well-defined weakness that jeopardizes debt repayment in accordance with contractual agreements, even though the loan may be performing. These obligations are characterized by the distinct possibility that a loss may be incurred if these weaknesses are not corrected, and repayment may be dependent upon collateral liquidation or secondary source of repayment.
• Doubtful (9)This grade includes “Doubtful” loans under regulatory guidelines. Such loans are placed on nonaccrual status and repayment may be dependent upon collateral with no readily determinable valuation or valuations that are highly subjective in nature. Repayment for these loans is considered improbable based on currently existing facts and circumstances.
• Loss (0)This grade includes “Loss” loans under regulatory guidelines. Loss loans are charged-off or written down when repayment is not expected.
In connection with the review of the loan portfolio, the Company considers risk elements attributable to particular loan types or categories in assessing the quality of individual loans. The list of loans to be reviewed for possible individual evaluation consists of unsecured loans over 90 days past due, modified loans to borrowers experiencing financial difficulty, loans greater than $100,000 in which the borrower has filed bankruptcy, collateralized loans 180 days or more past due, classified commercial loans, including non-accrual, over $100,000 with direct exposure, and consumer loans greater than $100,000 with a FICO score under 625. Loans under $50,000 will be evaluated collectively in designated pools unless a loss exposure has been identified. Some additional risk elements considered by loan type include:
•for commercial real estate loans, the debt service coverage ratio, operating results of the owner in the case of owner-occupied properties, the loan to value ratio, the age and condition of the collateral and the volatility of income, property value and future operating results typical of properties of that type;
•for construction, land and land development loans, the perceived feasibility of the project, including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer and loan to value ratio;
•for residential mortgage loans, the borrower’s ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral;
•for commercial and industrial loans, the debt service coverage ratio (income from the business in excess of operating expenses compared to loan repayment requirements), the operating results of the commercial, industrial or professional enterprise, the borrower’s business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category and the value, nature and marketability of collateral; and
•for mortgage warehouse loans, the borrower’s adherence to agency or investor underwriting guidelines, while the risk associated with the underlying consumer mortgage loan repayments, similar to other consumer loans, depends on the borrower’s financial stability and are more likely than commercial loans to be adversely affected by divorce, job loss, illness and other personal hardships.
Purchased loans that have experienced more than insignificant credit deterioration since origination at the time of acquisition are purchase credit deteriorated (“PCD”) loans. An allowance for credit losses is determined using the same methodology as other individually evaluated loans. As a result of the merger with BTH Holdings, Inc. (“BTH”), the Company held approximately $8.0 million and $12.3 million of unpaid principal balance PCD loans at March 31, 2025 and December 31, 2024, respectively.
Please see Note 1 — Significant Accounting Policies included in the 2024 Form 10-K, filed with the SEC for a description of our accounting policies related to purchased financial assets with credit deterioration.
The following table reflects recorded investments in loans by credit quality indicator and origination year at March 31, 2025, and gross charge-offs for the three months ended March 31, 2025, excluding loans held for sale. Loans acquired are shown in the table by origination year, not merger date. The Company had an immaterial amount of revolving loans converted to term loans at March 31, 2025.
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in thousands)20252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
Commercial real estate:
Pass$69,854 $237,236 $330,075 $889,371 $383,044 $418,503 $40,366 $2,368,449 
Special mention429 1,209 — — 19 2,103 635 4,395 
Classified— 1,643 1,133 1,119 2,387 4,723 — 11,005 
Total commercial real estate loans$70,283 $240,088 $331,208 $890,490 $385,450 $425,329 $41,001 $2,383,849 
Year-to-date gross charge-offs$— $— $— $— $— $— $257 $257 
Construction/land/land development:
Pass$30,211 $155,226 $191,636 $238,025 $90,799 $16,969 $53,843 $776,709 
Special mention— — 174 — — — — 174 
Classified126 1,211 2,269 9,984 4,887 937 2,312 21,726 
Total construction/land/land development loans$30,337 $156,437 $194,079 $248,009 $95,686 $17,906 $56,155 $798,609 
Year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Residential real estate:
Pass$78,881 $140,362 $312,217 $542,648 $337,059 $371,911 $117,165 $1,900,243 
Special mention— — — — 15,066 309 — 15,375 
Classified1,635 1,173 10,644 16,034 3,648 5,978 227 39,339 
Total residential real estate loans$80,516 $141,535 $322,861 $558,682 $355,773 $378,198 $117,392 $1,954,957 
Year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Commercial and industrial:
Pass$118,908 $246,466 $226,696 $146,321 $73,151 $66,190 $1,079,521 $1,957,253 
Special mention— 307 65 533 3,113 534 4,808 9,360 
Classified282 5,505 6,496 17,968 499 974 23,748 55,472 
Total commercial and industrial loans$119,190 $252,278 $233,257 $164,822 $76,763 $67,698 $1,108,077 $2,022,085 
Year-to-date gross charge-offs$— $205 $122 $19 $494 $146 $3,575 $4,561 
Mortgage Warehouse Lines of Credit:
Pass$— $— $— $— $— $— $404,131 $404,131 
Year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Consumer:
Pass$2,581 $8,293 $3,599 $1,042 $220 $85 $5,941 $21,761 
Classified60 13 30 30 — — 1 134 
Total consumer loans$2,641 $8,306 $3,629 $1,072 $220 $85 $5,942 $21,895 
Year-to-date gross charge-offs$— $9 $13 $2 $— $1 $5 $30 
The following table reflects recorded investments in loans by credit quality indicator and origination year at December 31, 2024, and gross charge-offs for the year ended December 31, 2024, excluding loans held for sale. Loans acquired are shown in the table by origination year, not merger date. The Company had an immaterial amount of revolving loans converted to term loans at December 31, 2024.
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in thousands)20242023202220212020PriorRevolving Loans Amortized Cost BasisTotal
Commercial real estate:
Pass$229,213 $355,744 $918,847 $407,666 $220,040 $277,379 $54,391 $2,463,280 
Special mention1,209 — — 23 907 1,252 238 3,629 
Classified949 1,151 1,155 2,503 1,539 2,968 257 10,522 
Total commercial real estate loans$231,371 $356,895 $920,002 $410,192 $222,486 $281,599 $54,886 $2,477,431 
Year-to-date gross charge-offs$— $36 $193 $— $251 $— $— $480 
Construction/land/land development:
Pass$153,847 $206,970 $290,035 $123,645 $14,903 $3,343 $47,982 $840,725 
Special mention— — 547 — — — 145 692 
Classified1,366 2,331 10,552 5,053 731 219 2,342 22,594 
Total construction/land/land development loans$155,213 $209,301 $301,134 $128,698 $15,634 $3,562 $50,469 $864,011 
Year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Residential real estate:
Pass$147,379 $319,186 $522,226 $305,893 $215,305 $179,503 $112,471 $1,801,963 
Special mention— — — 18,176 124 309 — 18,609 
Classified1,962 8,068 17,898 3,123 748 4,854 364 37,017 
Total residential real estate loans$149,341 $327,254 $540,124 $327,192 $216,177 $184,666 $112,835 $1,857,589 
Year-to-date gross charge-offs$— $— $— $— $— $11 $— $11 
Commercial and industrial:
Pass$280,152 $265,237 $171,157 $87,040 $20,938 $54,565 $1,066,600 $1,945,689 
Special mention— 70 5,652 39 — 545 2,172 8,478 
Classified4,312 6,706 13,578 1,022 691 375 21,783 48,467 
Total commercial and industrial loans$284,464 $272,013 $190,387 $88,101 $21,629 $55,485 $1,090,555 $2,002,634 
Year-to-date gross charge-offs$346 $1,171 $2,103 $4,477 $162 $595 $13,933 $22,787 
Mortgage Warehouse Lines of Credit:
Pass$— $— $— $— $— $— $349,081 $349,081 
Year-to-date gross charge-offs$— $— $— $— $— $— $— $— 
Consumer:
Pass$10,060 $4,290 $1,277 $271 $210 $32 $6,645 $22,785 
Classified23 64 79 — — — 16 182 
Total consumer loans$10,083 $4,354 $1,356 $271 $210 $32 $6,661 $22,967 
Year-to-date gross charge-offs$— $19 $47 $3 $— $5 $288 $362 
The following tables present the Company’s loan portfolio aging analysis at the dates indicated:
March 31, 2025
(Dollars in thousands)30-59 Days Past Due60-89 Days Past DueLoans Past Due 90 Days or MoreTotal Past DueCurrent LoansTotal Loans ReceivableAccruing Loans 90 or More Days Past Due
Loans secured by real estate:
Commercial real estate
$8,312 $— $926 $9,238 $2,374,611 $2,383,849 $— 
Construction/land/land development
4,158 — 4,320 8,478 790,131 798,609 — 
Residential real estate27,498 4,892 5,066 37,456 1,917,501 1,954,957 — 
Total real estate39,968 4,892 10,312 55,172 5,082,243 5,137,415 — 
Commercial and industrial10,513 1,002 5,927 17,442 2,004,643 2,022,085 — 
Mortgage warehouse lines of credit
— — — — 404,131 404,131 — 
Consumer100 43 17 160 21,735 21,895 — 
Total LHFI$50,581 $5,937 $16,256 $72,774 $7,512,752 $7,585,526 $— 
December 31, 2024
(Dollars in thousands)30-59 Days Past Due60-89 Days Past DueLoans Past Due 90 Days or MoreTotal Past DueCurrent LoansTotal Loans ReceivableAccruing Loans 90 or More Days Past Due
Loans secured by real estate:
Commercial real estate$3,576 $1,019 $957 $5,552 $2,471,879 $2,477,431 $— 
Construction/land/land development
441 33 4,876 5,350 858,661 864,011 — 
Residential real estate12,655 5,219 5,723 23,597 1,833,992 1,857,589 — 
Total real estate16,672 6,271 11,556 34,499 5,164,532 5,199,031 — 
Commercial and industrial3,873 2,206 1,596 7,675 1,994,959 2,002,634 — 
Mortgage warehouse lines of credit— — — — 349,081 349,081 — 
Consumer199 7 57 263 22,704 22,967 — 
Total LHFI$20,744 $8,484 $13,209 $42,437 $7,531,276 $7,573,713 $— 
The following tables detail activity in the ALCL by portfolio segment. Management has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of loan credit losses. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories. Accrued interest on loans receivable of $29.8 million and $32.6 million at March 31, 2025 and December 31, 2024, respectively, was included in accrued interest receivable and other assets on the face of the consolidated balance sheets.
Three Months Ended March 31, 2025
Commercial Real EstateConstruction/ Land/ Land DevelopmentResidential Real EstateCommercial and IndustrialMortgage Warehouse Lines of CreditConsumerTotal
(Dollars in thousands)
Beginning balance$16,546 $7,398 $12,454 $53,449 $501 $712 $91,060 
Charge-offs257 — — 4,561 — 30 4,848 
Recoveries13 — 46 2,042 — 19 2,120 
Provision(1)
(117)(562)527 3,832 (79)78 3,679 
Ending balance$16,185 $6,836 $13,027 $54,762 $422 $779 $92,011 
Average balance$2,448,099 $821,754 $1,909,922 $2,004,034 $289,521 $22,709 $7,496,039 
Net charge-offs (recoveries) to loan average balance (annualized)
0.04 %— %(0.01)%0.51 %— %0.20 %0.15 %
_________________________
(1)The $3.4 million provision for credit losses on the consolidated statement of income includes a $3.7 million provision for loan losses, and a $233,000 and $1,000 net benefit provision for off-balance sheet commitments and held to maturity securities credit losses, respectively, for the three months ended March 31, 2025.
Three Months Ended March 31, 2024
Commercial Real EstateConstruction/ Land/ Land DevelopmentResidential Real EstateCommercial and IndustrialMortgage Warehouse Lines of CreditConsumerTotal
(Dollars in thousands)
Beginning balance$19,625 $9,990 $10,619 $55,330 $529 $775 $96,868 
Charge-offs455 — — 6,181 — 47 6,683 
Recoveries30 — 4 4,064 — 3 4,101 
Provision(1)
(1,656)(11)11 5,610 132 3 4,089 
Ending balance$17,544 $9,979 $10,634 $58,823 $661 $734 $98,375 
Average balance$2,438,476 $1,130,355 $1,739,105 $2,121,502 $306,248 $23,319 $7,759,005 
Net charge-offs to loan average balance0.07 %— %— %0.40 %— %0.76 %0.13 %
____________________________
(1)The $3.0 million provision for credit losses on the consolidated statements of income includes a $4.1 million provision for loan credit losses, a $1.0 million and $39,000 net benefit provision for off-balance sheet commitments and held to maturity securities credit losses, respectively, for the three months ended March 31, 2024.
The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related ALCL allocated to these loans.
March 31, 2025
(Dollars in thousands)Commercial Real EstateConstruction/ Land/ Land DevelopmentResidential Real EstateCommercial and IndustrialMortgage Warehouse Lines of CreditConsumerTotal
Real Estate $802 $— $15,116 $— $— $— $15,918 
Equipment — — — 18 — — 18 
Total$802 $— $15,116 $18 $— $— $15,936 
ALCL Allocation$— $— $66 $— $— $— $66 
December 31, 2024
(Dollars in thousands)Commercial Real EstateConstruction/ Land/ Land DevelopmentResidential Real EstateCommercial and IndustrialMortgage Warehouse Lines of CreditConsumerTotal
Real Estate $832 $— $16,804 $— $— $— $17,636 
Equipment— — — 42 — 46 88 
Total$832 $— $16,804 $42 $— $46 $17,724 
ALCL Allocation$— $— $121 $— $— $— $121 
Collateral-dependent loans consist primarily of residential real estate, commercial real estate and commercial and industrial loans. These loans are individually evaluated when foreclosure is probable or when the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral. In the case of commercial and industrial loans secured by equipment, the fair value of the collateral is estimated by third-party valuation experts. Loan balances are charged down to the underlying collateral value when they are deemed uncollectible. Note that the Company did not elect to use the collateral maintenance agreement practical expedient available under the current expected credit loss (“CECL”) guidance.
Nonaccrual LHFI was as follows:
Nonaccrual With No
Allowance for Credit Loss		Total Nonaccrual
(Dollars in thousands)
Loans secured by real estate:
March 31, 2025December 31, 2024March 31, 2025December 31, 2024
Commercial real estate$5,403 $832 $5,465 $4,974 
Construction/land/land development
12,985 — 17,694 18,505 
Residential real estate37,470 16,048 40,749 36,221 
Total real estate55,858 16,880 63,908 59,700 
Commercial and industrial
1,587 42 17,325 15,120 
Consumer— 46 135 182 
Total nonaccrual loans$57,445 $16,968 $81,368 $75,002 
All interest formerly accrued but not received for loans placed on nonaccrual status is reversed from interest income. Subsequent receipts on nonaccrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
No interest income was recorded on nonaccrual loans while they were considered nonaccrual during the three months ended March 31, 2025 and 2024.
The tables below summarize modifications made to borrowers experiencing financial difficulty by loan and modification type during the three months ended March 31, 2025 and 2024.
Amortized Cost Basis at March 31, 2025
Term Extension
(Dollars in thousands)Amortized Cost% of Loans
Loans secured by real estate:
Commercial real estate$721 0.03 %
Construction/land/land development133 0.02 
Residential real estate415 0.02 
Total real estate1,269 0.02 
Commercial and industrial18,555 0.92 
Total$19,824 0.26 
Amortized Cost Basis at March 31, 2024
Term ExtensionOther-Than-Insignificant Payment Delay
(Dollars in thousands)Amortized Cost% of LoansAmortized Cost% of Loans
Loans secured by real estate:
Construction/land/land development$1,462 0.13 %$— — %
Residential real estate35 — — — 
Total real estate1,497 0.03 — — 
Commercial and industrial7,312 0.34 35 — 
Total$8,809 0.11 $35 — 
The following tables describe the financial effects of the modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2025 and 2024.
Three Months Ended March 31, 2025
Term Extension
Commercial real estate
Added a weighted average 6.0 months to the life of the modified loans
Construction/land/land development
Added a weighted average 5.9 months to the life of the modified loans
Residential real estate
Added a weighted average 28.8 months to the life of the modified loans
Commercial and industrial
Added a weighted average 5.5 months to the life of the modified loans
Three Months Ended March 31, 2024
Term ExtensionOther-Than-Insignificant Payment Delay
Construction/land/land development
Added a weighted average 3.9 months to the life of the modified loans
N/A
Residential real estate
Added a weighted average 6.0 months to the life of the modified loans
N/A
Commercial and industrial
Added a weighted average 6.0 months to the life of the modified loans
Delayed payment of weighted average 2.0 months
The following table depicts the performance of loans that have been modified during the last twelve months ended March 31, 2025 and 2024.
Payment Status (Amortized Cost Basis)
March 31, 2025
(Dollars in thousands)Current30-89 Days Past Due90 Days or More Past Due
Loans secured by real estate:
Commercial real estate
$2,265 $— $— 
Construction/land/land development
133 206 — 
Residential real estate911 643 — 
Total real estate3,309 849 — 
Commercial and industrial(1)
22,144 1,088 419 
Consumer— 3 — 
Total LHFI$25,453 $1,940 $419 
____________________________
(1)Does not include the loans impacted by the questioned activity as a result of not meeting the modification criteria as described in the Accounting Standards Codification 310-10-50-36, “Modifications”.
Payment Status (Amortized Cost Basis)
March 31, 2024
(Dollars in thousands)Current30-89 Days Past Due90 Days or More Past Due
Loans secured by real estate:
Commercial real estate
$1,198 $— $168 
Construction/land/land development
1,570 — 96 
Residential real estate2,006 117 235 
Total real estate4,774 117 499 
Commercial and industrial15,511 90 631 
Total LHFI$20,285 $207 $1,130 
At March 31, 2025, and December 31, 2024, the Company had $530,000 and $35,000 of funding commitments for loans in which the terms were modified as a result of the borrowers experiencing financial difficulty, respectively.
The table below provides the details of loans to borrowers experiencing financial difficulty that were modified within the last twelve months and defaulted during the three months ended March 31, 2025. There were no loans that were modified during the twelve months ended March 31, 2024, and defaulted during the three months ended March 31, 2024.
Twelve Months Ended March 31, 2025
Term Extension
(Dollars in thousands)Amortized Cost Default Amount
Loans secured by real estate:
Commercial real estate
$— $257 
Commercial and industrial(1)
432 2,795 
Total$432 $3,052 
____________________________
(1)Does not include the loans impacted by the questioned activity as a result of not meeting the modification criteria as described in the Accounting Standards Codification 310-10-50-36, “Modifications”.
A payment default is defined as a loan that was 90 or more days past due. The Company monitors the performance of modified loans on an ongoing basis. In the event of subsequent default, the ALCL is assessed on the basis of an individual evaluation of each loan. The modifications made during the periods presented did not significantly impact the Company’s determination of the allowance for credit losses.