LOANS AND CREDIT QUALITY

9 Months Ended

Sep. 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)	September 30, 2025		December 31, 2024



Commercial and industrial	$	608,814	$	606,936

Construction	217,610		145,211
Residential mortgage	1,839,535		1,892,520
Home equity	610,889		676,982
Commercial mortgage	1,613,187		1,500,680
Consumer	477,167		510,523



Loans, net of deferred fees and costs	$	5,367,202	$	5,332,852

Interest income on loans is accrued at the contractual rate of interest based on the unpaid principal balance. The Company has elected to not measure an estimate of credit losses on accrued interest receivable, as any uncollectible accrued interest receivable are written off 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. As of September 30, 2025 and December 31, 2024, accrued interest receivable on loans totaled $18.3 million and $17.5 million, respectively.

During the three months ended March 31, 2025, the Company reclassified $58.3 million in consumer loans to the commercial and industrial loan class. This reclassification was based on the loans' structure and characteristics, which more closely aligned with commercial and industrial lending criteria.

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



Residential mortgage	$	11,413	$	—
Home equity	2,119		—



Total	$	13,532	$	—


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



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



Total	$	9,996	$	—

Foreclosure Proceedings

As of September 30, 2025 and December 31, 2024, the Company did not own any foreclosed properties. The Company did not sell any foreclosed properties during the three and nine months ended September 30, 2025 and 2024.

The Company had $9.6 million and $3.9 million of residential mortgage and home equity loans collateralized by residential real estate properties that were in the process of foreclosure as of September 30, 2025 and December 31, 2024, respectively.

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

Nonaccrual and Past Due Loans

For all loan types, delinquency status is determined based on 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
September 30, 2025



Commercial and industrial	$	940	$	821	$	—	$	357	$	2,118	$	606,696	$	608,814	$	160

Construction	—		—		—		—		—		217,610		217,610		—
Residential mortgage	—		1,015		1,159		11,413		13,587		1,825,948		1,839,535		11,413
Home equity	175		758		—		2,119		3,052		607,837		610,889		2,119
Commercial mortgage	831		—		—		—		831		1,612,356		1,613,187		—
Consumer	3,460		1,322		349		430		5,561		471,606		477,167		—

Total	$	5,406	$	3,916	$	1,508	$	14,319	$	25,149	$	5,342,053	$	5,367,202	$	13,692


(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	$	—

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 did not execute any material loan modifications, either individually or in the aggregate, for borrowers experiencing financial difficulty during the three and nine months ended September 30, 2025 and 2024.

Credit Quality Indicators

The Company categorizes loans into risk ratings based on the evaluation of the borrower's ability to meet debt obligations such as: current financial information, historical payment experience, credit documentation, publicly available 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
September 30, 2025	2025		2024		2023		2022		2021		Prior				Total
















Commercial and industrial:
Risk Rating
Pass	$	49,927	$	181,982	$	41,427	$	60,834	$	51,465	$	120,034	$	97,335	$	603,004
Special Mention	—		—		1,076		—		—		—		862		1,938
Substandard	—		3,231		422		—		85		124		10		3,872


Subtotal	49,927		185,213		42,925		60,834		51,550		120,158		98,207		608,814
Construction:
Risk Rating
Pass	42,890		19,092		51,045		45,923		17,814		40,846		—		217,610




Subtotal	42,890		19,092		51,045		45,923		17,814		40,846		—		217,610
Residential mortgage:
Risk Rating
Pass	53,078		77,955		83,662		241,205		565,322		804,866		—		1,826,088

Substandard	—		—		249		1,599		1,312		10,287		—		13,447


Subtotal	53,078		77,955		83,911		242,804		566,634		815,153		—		1,839,535
Home equity:
Risk Rating
Pass	301		997		11,063		25,737		16,986		32,179		521,507		608,770

Substandard	—		—		1,185		—		—		934		—		2,119


Subtotal	301		997		12,248		25,737		16,986		33,113		521,507		610,889
Commercial mortgage:
Risk Rating
Pass	188,748		145,868		94,584		197,427		215,995		691,734		5,871		1,540,227
Special Mention	—		—		617		30,000		—		475		—		31,092
Substandard	—		33,231		—		—		1,390		7,247		—		41,868


Subtotal	188,748		179,099		95,201		227,427		217,385		699,456		5,871		1,613,187
Consumer:
Risk Rating
Pass	72,953		94,023		61,288		112,369		79,008		20,943		35,804		476,388

Substandard	63		35		79		109		72		421		—		779


Subtotal	73,016		94,058		61,367		112,478		79,080		21,364		35,804		477,167
Total	$	407,960	$	556,414	$	346,697	$	715,203	$	949,449	$	1,730,090	$	661,389	$	5,367,202