LOANS AND CREDIT QUALITY

6 Months Ended

Jun. 30, 2024

3. LOANS AND CREDIT QUALITY

The following table presents loans by class, excluding loans held for sale, net of deferred fees and costs as of the dates presented:


(dollars in thousands)	June 30, 2025		December 31, 2024



Commercial and industrial	$	608,130	$	606,936
Real estate:
Construction	190,008		145,211
Residential mortgage	1,851,690		1,892,520
Home equity	627,834		676,982
Commercial mortgage	1,540,523		1,500,680
Consumer	471,624		510,523



Loans, net of deferred fees and costs	$	5,289,809	$	5,332,852

Interest income on loans is accrued at the contractual rate of interest on the unpaid principal balance. The Company elected to not measure an estimate of credit losses on accrued interest receivable as the Company writes off any uncollectible accrued interest receivable in a timely manner. Accrued interest receivable on loans is reported together with accrued interest receivable on investment securities and other assets in the consolidated balance sheets. Accrued interest receivable on loans totaled $18.0 million and $17.5 million as of June 30, 2025 and December 31, 2024, respectively.

During the three months ended March 31, 2025, the Company identified and reclassified $58.3 million in consumer loans to the commercial and industrial loan class as the loans' structure and characteristics more closely aligned with loans in the commercial and industrial class.

The Company did not transfer any loans to the held for sale category during the three and six months ended June 30, 2025 and 2024 and did not sell any loans originally held for investment during the three and six months ended June 30, 2025 and 2024.

Collateral-Dependent Loans

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral, which are individually evaluated to determine expected

credit losses. The following tables present the amortized cost basis of collateral-dependent loans by class and the related ACL allocated to these loans as of the dates presented:


(dollars in thousands)	Secured by 1-4 Family Residential Properties		Allocated ACL
June 30, 2025

Real estate:

Residential mortgage	$	12,327	$	—
Home equity	1,889		—



Total	$	14,216	$	—


(dollars in thousands)	Secured by 1-4 Family Residential Properties		Allocated ACL
December 31, 2024

Real estate:

Residential mortgage	$	9,044	$	—
Home equity	952		—



Total	$	9,996	$	—

Foreclosure Proceedings

The Company did not own any foreclosed properties as of June 30, 2025 and December 31, 2024. The Company did not sell any foreclosed properties during the three and six months ended June 30, 2025 and 2024.

The Company had $2.8 million and $3.9 million of residential mortgage loans collateralized by residential real estate properties that were in the process of foreclosure as of June 30, 2025 and December 31, 2024, respectively.

The Company did not have any commercial real estate loans in the process of foreclosure as of June 30, 2025 and December 31, 2024.

Nonaccrual and Past Due Loans

For all loan types, the Company determines delinquency status by considering the number of days full payments required by the contractual terms of the loan are past due. The following tables present by class, the aging of the recorded investment in past due loans as of the dates presented. The following tables also present the amortized cost of loans on nonaccrual status for which there was no related ACL as of the dates presented:


(dollars in thousands)	Accruing Loans 30 - 59 Days Past Due		Accruing Loans 60 - 89 Days Past Due		Accruing Loans 90+ Days Past Due		Nonaccrual Loans		Total Past Due and Nonaccrual		Loans Not Past Due		Total Loans		Nonaccrual Loans With No ACL
June 30, 2025



Commercial and industrial	$	1,601	$	231	$	—	$	110	$	1,942	$	606,188	$	608,130	$	—
Real estate:
Construction	—		—		—		—		—		190,008		190,008		—
Residential mortgage	693		4,077		1,625		12,327		18,722		1,832,968		1,851,690		12,327
Home equity	716		1,023		21		1,889		3,649		624,185		627,834		1,889
Commercial mortgage	481		—		—		—		481		1,540,042		1,540,523		—
Consumer	3,506		1,488		418		569		5,981		465,643		471,624		—

Total	$	6,997	$	6,819	$	2,064	$	14,895	$	30,775	$	5,259,034	$	5,289,809	$	14,216


(dollars in thousands)	Accruing Loans 30 - 59 Days Past Due		Accruing Loans 60 - 89 Days Past Due		Accruing Loans 90+ Days Past Due		Nonaccrual Loans		Total Past Due and Nonaccrual		Loans Not Past Due		Total Loans		Nonaccrual Loans With No ACL
December 31, 2024



Commercial and industrial	$	2,978	$	210	$	—	$	414	$	3,602	$	603,334	$	606,936	$	—
Real estate:
Construction	—		—		—		—		—		145,211		145,211		—
Residential mortgage	8,880		3,316		323		9,044		21,563		1,870,957		1,892,520		9,044
Home equity	943		485		78		952		2,458		674,524		676,982		952
Commercial mortgage	—		—		—		—		—		1,500,680		1,500,680		—
Consumer	5,255		1,444		373		608		7,680		502,843		510,523		—

Total	$	18,056	$	5,455	$	774	$	11,018	$	35,303	$	5,297,549	$	5,332,852	$	9,996

Loan Modifications for Borrowers Experiencing Financial Difficulty

The Company has not had any material modifications to loans either individually or in the aggregate for borrowers experiencing financial difficulty during the three and six months ended June 30, 2025 and 2024.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans by credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed regularly on an ongoing basis. The Company uses the following definitions for risk rating of loans.

Pass. Loans classified as pass are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan agreement.

Special Mention. Loans classified as special mention, while still adequately protected by the borrower's capital adequacy and payment capability, exhibit distinct weakening trends and/or elevated levels of exposure to external conditions. If left unchecked or uncorrected, these potential weaknesses may result in deteriorated prospects of repayment. These exposures require management's close attention so as to avoid becoming undue or unwarranted credit exposures.

Substandard. Loans classified as substandard are inadequately protected by the borrower's current financial condition and payment capability or of the collateral pledged, if any. These loans have a well-defined weakness or weaknesses that jeopardize the orderly repayment of debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

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 orderly repayment in full, on the basis of current existing facts, conditions and values, highly questionable and improbable. Possibility of loss is extremely high, but because of certain important and reasonably specific factors that may work to the advantage and strengthening of the exposure, its classification as an estimate loss is deferred until its more exact status may be determined.

Loss. Loans classified as loss are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean the loan has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan, even though partial recovery may be obtained in the future. Losses are taken in the period in which they surface as uncollectible.

The following tables present the amortized cost basis, net of deferred fees and costs, of the Company's loans by class, credit quality indicator and origination year as of the dates presented. Revolving loans converted to term as of and during the periods presented were not material to the total loan portfolio. In addition, the following tables present gross charge-offs of loans by origination year during the periods presented.


(dollars in thousands)	Amortized Cost of Term Loans by Year of Origination												Amortized Cost of Revolving Loans
June 30, 2025	2025		2024		2023		2022		2021		Prior				Total
















Commercial and industrial:
Risk Rating
Pass	$	31,282	$	187,004	$	45,474	$	62,664	$	56,749	$	123,716	$	96,531	$	603,420
Special Mention	—		—		473		—		79		—		—		552
Substandard	—		3,346		60		703		16		33		—		4,158


Subtotal	31,282		190,350		46,007		63,367		56,844		123,749		96,531		608,130
Construction:
Risk Rating
Pass	17,703		17,259		52,798		43,193		17,887		41,168		—		190,008




Subtotal	17,703		17,259		52,798		43,193		17,887		41,168		—		190,008
Residential mortgage:
Risk Rating
Pass	21,133		81,145		87,380		252,374		576,264		818,561		—		1,836,857

Substandard	—		—		259		1,599		1,318		11,657		—		14,833


Subtotal	21,133		81,145		87,639		253,973		577,582		830,218		—		1,851,690
Home equity:
Risk Rating
Pass	230		2,354		11,516		26,800		16,854		32,338		535,832		625,924

Substandard	—		—		1,190		—		—		470		250		1,910


Subtotal	230		2,354		12,706		26,800		16,854		32,808		536,082		627,834
Commercial mortgage:
Risk Rating
Pass	74,618		146,086		94,851		198,733		217,594		729,933		6,171		1,467,986
Special Mention	—		—		618		29,939		1,403		—		—		31,960
Substandard	—		33,261		—		—		—		7,316		—		40,577


Subtotal	74,618		179,347		95,469		228,672		218,997		737,249		6,171		1,540,523
Consumer:
Risk Rating
Pass	45,082		85,783		65,601		139,490		74,807		24,325		35,548		470,636

Substandard	—		102		67		185		51		564		1		970

Loss	—		—		—		—		—		18		—		18
Subtotal	45,082		85,885		65,668		139,675		74,858		24,907		35,549		471,624
Total	$	190,048	$	556,340	$	360,287	$	755,680	$	963,022	$	1,790,099	$	674,333	$	5,289,809