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Loans and Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2026
Receivables [Abstract]  
Loans and Allowance for Credit Losses
Note 4 – Loans and Allowance for Credit Losses
The Bank makes loans to customers primarily in the Washington, D.C. metropolitan area and surrounding communities. The Bank’s loan portfolio primarily consists of loans to businesses secured by real estate and other business assets, as evidenced by the table below.
The table below presents HFI Loans, net of unamortized net deferred fees, summarized by portfolio segment.
As of
March 31, 2026December 31, 2025
(dollars in thousands)Amount%Amount%
Commercial$1,432,933 21 %$1,338,486 18 %
Income producing - commercial real estate3,030,004 44 %3,350,718 46 %
Owner occupied - commercial real estate1,686,210 23 %1,602,124 22 %
Real estate mortgage - residential35,743 1 %37,100 1 %
Construction - commercial and residential617,992 9 %795,400 11 %
Construction - C&I (owner occupied)87,666 1 %108,468 1 %
Home equity44,948 1 %47,448 1 %
Other consumer3,064 — %715 — %
Total loans6,938,560 100 %7,280,459 100 %
Less: allowance for credit losses(147,163)(159,604)
Net loans (1)
$6,791,397 $7,120,855 
(1)Excludes accrued interest receivable of $33.3 million and $35.9 million as of March 31, 2026 and December 31, 2025, respectively, which were recorded in other assets on the Consolidated Balance Sheets.
Unamortized net deferred fees and costs were $17.5 million and $17.6 million as of March 31, 2026 and December 31, 2025, respectively.
During the three months ended March 31, 2026, certain loans, primarily income producing - commercial real estate loans, were reclassified from HFI to HFS loans with the lower of cost or fair value of $111.8 million. As of March 31, 2026 and December 31, 2025, the outstanding balance of all HFS loans were $55.7 million and $90.7 million, respectively, as reported on the Consolidated Balance Sheets, of which $55.2 million and $90.7 million, respectively, were on nonaccrual status.
As of March 31, 2026 and December 31, 2025, the Bank serviced $102.3 million and $81.5 million, respectively, of SBA loans and other loan participations, which are not reflected as loan balances on the Consolidated Balance Sheets.
Real estate loans are secured primarily by duly recorded first deeds of trust or mortgages. In some cases, the Bank may accept a recorded junior trust position. In general, borrowers will have a proven ability to build, lease, manage and/or sell a commercial or residential project and demonstrate satisfactory financial condition. Additionally, an equity contribution toward the project is customarily required.
Construction loans require that the financial condition and experience of the general contractor and major subcontractors be satisfactory to the Bank. Guaranteed, fixed price contracts are required whenever appropriate, along with payment and performance bonds or completion bonds for larger scale projects.
Loans intended for residential land acquisition, lot development and construction are made on the premise that the land: 1) is or will be developed for building sites for residential structures; and 2) will ultimately be utilized for construction or improvement of residential zoned real properties, including the creation of housing. Residential development and construction loans will finance projects such as single family subdivisions, planned unit developments, townhouses and condominiums. Residential land acquisition, development and construction ("ADC") loans generally are underwritten with a maximum term of 36 months, including extensions approved at origination.
Commercial land acquisition and construction loans are secured by real property where loan funds will be used to acquire land and to construct or improve appropriately zoned real property for the creation of income producing or owner-occupied commercial properties. Borrowers are generally required to put equity into each project at levels determined by the appropriate approval authority. Commercial land acquisition and construction loans generally are underwritten with a maximum term of 24 months.
Substantially all construction draw requests must be presented in writing on American Institute of Architects documents and certified either by the contractor, the borrower and/or the borrower’s architect. Each draw request shall also include the borrower’s soft cost breakdown certified by the borrower or their Chief Financial Officer. Prior to an advance, the Bank or its contractor inspects the project to determine that the work has been completed, to justify the draw requisition.
Commercial permanent loans are generally secured by improved real property which is generating income in the normal course of operation. Debt service coverage, assuming stabilized occupancy, must be satisfactory to support a permanent loan. The debt service coverage ratio ("DSCR") is ordinarily at least 1.15 to 1.0. As part of the underwriting process, DSCRs are stress tested assuming a 200 basis point increase in interest rates from their current levels. Commercial permanent loans generally are underwritten with a term not greater than 10 years or the remaining useful life of the property, whichever is less. The preferred term is between 5 to 7 years, with amortization to a maximum of 25 years.
The Company’s loan portfolio includes ADC real estate loans including both investment and owner occupied projects. ADC loans amounted to $1.0 billion as of March 31, 2026. A portion of the ADC portfolio, both speculative and non-speculative, includes loan-funded interest reserves at origination. ADC loans that provide for the use of interest reserves represent approximately 27% of the outstanding ADC loan portfolio as of March 31, 2026. The decision to establish a loan-funded interest reserve is made upon origination of the ADC loan and is based upon a number of factors considered during underwriting of the credit including: (1) the feasibility of the project; (2) the experience of the sponsor; (3) the creditworthiness of the borrower and guarantors; (4) borrower equity contribution; and (5) the level of collateral protection. When appropriate, an interest reserve provides an effective means of addressing the cash flow characteristics of a properly underwritten ADC loan. The Company does not significantly utilize interest reserves in other loan products.
The Company recognizes that one of the risks inherent in the use of interest reserves is the potential masking of underlying problems with the project and/or the borrower’s ability to repay the loan. In order to mitigate this inherent risk, the Company employs a series of reporting and monitoring mechanisms on all ADC loans, whether or not an interest reserve is provided, including: (1) construction and development timelines which are monitored on an ongoing basis which track the progress of a given project to the timeline projected at origination; (2) a construction loan administration department independent of the lending function; (3) third party independent construction loan inspection reports; (4) monthly interest reserve monitoring reports detailing the balance of the interest reserves approved at origination and the days of interest carry represented by the reserve balances as compared to the then current anticipated time to completion and/or sale of speculative projects; and (5) quarterly commercial real estate construction meetings among senior Company management, which includes monitoring of current and projected real estate market conditions. If a project has not performed as expected, it is not the customary practice of the Company to increase loan funded interest reserves.
The table below details activity in the ACL by portfolio segment. The Company has updated its allocation methodology to better reflect the ACL attributable to loan categories and collateral types. Conforming changes have been made to prior period amounts. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
(dollars in thousands)CommercialIncome 
Producing - Commercial Real Estate		Owner 
Occupied - Commercial Real Estate		Real Estate Mortgage - ResidentialConstruction -Commercial and ResidentialConstruction - C&I (Owner Occupied)Home EquityOther ConsumerTotal
For the Three Months Ended March 31, 2026
Allowance for credit losses:
Balance at beginning of quarter
$26,607 $98,707 $20,719 $339 $11,171 $1,515 $519 $27 $159,604 
Loans charged-off(11,533)(11,557)(2,926)(80)— — — — (26,096)
Recoveries of loans previously charged-off87 38 24 — — — — — 149 
Net loans (charged-off) and recovered(11,446)(11,519)(2,902)(80)— — — — (25,947)
Provision for (reversal of) credit losses11,130 981 180 56 1,432 (391)112 6 13,506 
Ending balance$26,291 $88,169 $17,997 $315 $12,603 $1,124 $631 $33 $147,163 
For the Three Months Ended March 31, 2025
Allowance for credit losses:
Balance at beginning of quarter
$19,390 $55,185 $22,654 $610 $14,585 $1,282 $653 $31 $114,390 
Loans charged-off(270)(6,170)(4,862)— — — — (4)(11,306)
Recoveries of loans previously charged-off53 — 23 — — — — — 76 
Net loans (charged-off) and recovered(217)(6,170)(4,839)— — — — (4)(11,230)
Provision for (reversal of) credit losses1,489 12,922 9,057 60 2,306 398 71 6 26,309 
Ending balance$20,662 $61,937 $26,872 $670 $16,891 $1,680 $724 $33 $129,469 
The table below presents the amortized cost basis of collateral-dependent HFI loans by portfolio segment.
As of
March 31, 2026December 31, 2025
(dollars in thousands)Business/Other AssetsReal EstateBusiness/Other AssetsReal Estate
Commercial$15,305 $3,215 $15,285 $2,813 
Income producing-commercial real estate
880 75,781 880 61,657 
Owner occupied - commercial real estate— 5,052 — 7,938 
Real estate mortgage- residential— 464 — 579 
Construction - commercial and residential— 28,016 — 17,394 
Home equity— 517 — 351 
Total$16,185 $113,045 $16,165 $90,732 
Credit Quality Indicators
The Company uses several credit quality indicators to manage credit risk in an ongoing manner. The Company’s primary credit quality indicator is an internal credit risk rating system that categorizes loans into pass, special mention or classified categories. Credit risk ratings are applied individually to those classes of loans that have significant or unique credit characteristics that benefit from a case-by-case evaluation. These are typically loans to businesses or individuals in the classes which comprise the commercial portfolio segment. Groups of loans that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk rated and monitored collectively. These are typically loans to individuals in the classes which comprise the consumer portfolio segment.
The following are the definitions of the Company’s credit quality indicators:
Pass:
Loans in all classes that comprise the commercial and consumer portfolio segments that 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. Management believes that there is a low likelihood of loss related to those loans that are considered pass.
Special Mention:
Loans in the classes that comprise the commercial portfolio segment that have potential weaknesses that deserve management’s close attention. If not addressed, these potential weaknesses may result in deterioration of the repayment prospects for the loan. The special mention credit quality indicator is not used for classes of loans that comprise the consumer portfolio segment. Management believes that there is a moderate likelihood of some loss related to those loans that are considered special mention.
Classified (a) Substandard:
Loans inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual loans classified substandard.
Classified (b) Doubtful:
Loans that have all the weaknesses inherent in a loan classified 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 possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the assets, its classification as an estimated loss is deferred until its more exact status may be determined.
The Company's credit quality indicators are generally updated annually, however, credits rated "Special Mention" or below are reviewed more frequently. The table below presents the amortized cost basis of HFI loans by risk category, class and year of origination, along with any charge-offs that were recorded in the applicable loan segment, if applicable. The table below excludes $11.6 million of gross charge-offs associated with loans that were reclassified to HFS or sold during the three months ended March 31, 2026.
As of March 31, 2026
(dollars in thousands)Prior2022202320242025
2026
Revolving Loans Amort. Cost BasisRevolving Loans Convert. to TermTotal
Commercial:
Pass$104,869 $33,046 $67,471 $88,369 $358,736 $145,359 $541,703 $3,540 $1,343,093 
Special Mention56 11,534 996 7,260 — — 20,841 — 40,687 
Substandard24,515 9,586 424 2,738 — — 11,678 212 49,153 
Total129,440 54,166 68,891 98,367 358,736 145,359 574,222 3,752 1,432,933 
YTD gross charge-offs(2,681)(8,852)— — — — — — (11,533)
Income producing - commercial real estate:
Pass1,352,420 443,676 412,067 88,766 123,779 771 151,826 — 2,573,305 
Special Mention57,450 56,173 — — — — — — 113,623 
Substandard248,923 93,545 — — — — 608 — 343,076 
Total1,658,793 593,394 412,067 88,766 123,779 771 152,434 — 3,030,004 
Owner occupied - commercial real estate:
Pass844,229 88,995 131,357 127,490 338,606 105,439 657 — 1,636,773 
Special Mention11,491 — — — 16,441 — — — 27,932 
Substandard20,440 1,065 — — — — — — 21,505 
Total876,160 90,060 131,357 127,490 355,047 105,439 657 — 1,686,210 
YTD gross charge-offs(2,926)— — — — — — (2,926)
Real estate mortgage - residential:
Pass14,101 10,832 5,830 — — — — — 30,763 
Substandard4,980 — — — — — — — 4,980 
Total19,081 10,832 5,830 — — — — — 35,743 
Construction - commercial and residential:
Pass112,240 184,622 75,117 9,990 29,369 7,149 56,029 6,874 481,390 
Special Mention— 81,094 — — — — 27,491 — 108,585 
Substandard12,118 15,152 — — — — 747 — 28,017 
Total124,358 280,868 75,117 9,990 29,369 7,149 84,267 6,874 617,992 
Construction - C&I (owner occupied):
Pass3,698 — 10,445 49,507 23,236 — 780 — 87,666 
Home equity:
Pass2,026 113 — — — — 41,622 314 44,075 
Substandard418 — — — — 37 377 41 873 
Total2,444 113 — — — 37 41,999 355 44,948 
Other consumer:
Pass— — — — 135 200 2,729 — 3,064 
Total Recorded Investment$2,813,974 $1,029,433 $703,707 $374,120 $890,302 $258,955 $857,088 $10,981 $6,938,560 
Total YTD gross charge-offs$(5,607)$(8,852)$— $— $— $— $— $— $(14,459)
As of December 31, 2025
(dollars in thousands)Prior2021202220232024
2025
Revolving Loans Amort. Cost BasisRevolving Loans Convert. to TermTotal
Commercial:
Pass$92,082 $18,390 $35,098 $66,402 $83,098 $357,934 $593,711 $3,815 $1,250,530 
Special Mention524 309 11,264 994 10,360 — 7,018 — 30,469 
Substandard22,721 433 18,134 406 — — 13,102 2,691 57,487 
Total115,327 19,132 64,496 67,802 93,458 357,934 613,831 6,506 1,338,486 
YTD gross charge-offs(1,208)(525)(304)— (57)— (296)— (2,390)
Income producing - commercial real estate:
Pass1,087,720 435,579 533,070 364,692 88,823 123,114 145,256 13,381 2,791,635 
Special Mention86,600 43,104 56,157 — — — — — 185,861 
Substandard167,878 90,035 114,451 — — — 858 — 373,222 
Total1,342,198 568,718 703,678 364,692 88,823 123,114 146,114 13,381 3,350,718 
YTD gross charge-offs(35,833)— — — — — (10,500)— (46,333)
Owner occupied - commercial real estate:
Pass667,233 209,803 89,580 132,719 126,792 356,437 636 — 1,583,200 
Substandard14,263 3,137 1,072 452 — — — — 18,924 
Total681,496 212,940 90,652 133,171 126,792 356,437 636 — 1,602,124 
YTD gross charge-offs(22,238)— — — — — — (22,238)
Real estate mortgage - residential:
Pass13,331 6,411 10,941 5,838 — — — — 36,521 
Substandard579 — — — — — — — 579 
Total13,910 6,411 10,941 5,838 — — — — 37,100 
Construction - commercial and residential:
Pass10,095 106,241 307,223 120,558 10,228 23,415 92,900 8,294 678,954 
Special Mention— — 25,082 — — — 27,469 — 52,551 
Substandard35,517 11,618 15,320 — — — 1,440 — 63,895 
Total45,612 117,859 347,625 120,558 10,228 23,415 121,809 8,294 795,400 
YTD gross charge-offs(1,579)———————(1,579)
Construction - C&I (owner occupied):
Pass3,737 — — 10,199 43,484 18,945 791 31,312 108,468 
Home equity:
Pass1,282 35 114 — — — 44,822 805 47,058 
Substandard248 — — — — — 82 60 390 
Total1,530 35 114 — — — 44,904 865 47,448 
  YTD gross charge-offs
— (206)— — — — — — (206)
Other consumer:
Pass— — — — — 156 559 — 715 
YTD gross charge-offs(3)— — — — — — (32)(35)
Total Recorded Investment$2,203,810 $925,095 $1,217,506 $702,260 $362,785 $880,001 $928,644 $60,358 $7,280,459 
Total YTD gross charge-offs$(60,861)$(731)$(304)$— $(57)$— $(10,796)$(32)$(72,781)
The Company individually evaluates nonaccrual loans when performing its CECL estimate to calculate the ACL. Additionally, the Company utilizes historical internal and third-party service provider sourced loss data in the determination of its PD/LGD rates applied in the calculation of its CECL estimate. Upon determination that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.
Nonaccrual and Past Due Loans
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status whether or not such loans are considered past due. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
The table below presents, by portfolio segment, information related to the amortized cost basis of nonaccrual HFI loans.
As of
March 31, 2026
December 31, 2025
(dollars in thousands)Nonaccrual with No Allowance for Credit LossNonaccrual with an Allowance for Credit LossesTotal Nonaccrual LoansNonaccrual with No Allowance for Credit LossNonaccrual with an Allowance for Credit LossesTotal Nonaccrual Loans
Commercial$3,672 $14,382 $18,054 $3,397 $14,702 $18,099 
Income producing - commercial real estate6,716 69,945 76,661 38,275 24,262 62,537 
Owner occupied - commercial real estate5,050 — 5,050 3,199 4,738 7,937 
Real estate mortgage - residential464 — 464 579 — 579 
Construction- commercial and residential2,773 25,243 28,016 2,074 15,320 17,394 
Home equity327 189 516 333 18 351 
Total (1)
$19,002 $109,759 $128,761 $47,857 $59,040 $106,897 
(1)Gross coupon interest income of $4.2 million, and $3.1 million would have been recorded for the three months ended March 31, 2026 and 2025, respectively, if nonaccrual loans shown above had been current and in accordance with their original terms. Interest income recognized on loans on nonaccrual status was $2.3 million and $1.6 million for the three months ended March 31, 2026 and 2025, respectively. See "Note 1 – Summary of Significant Accounting Policies" to the Consolidated Financial Statements for a description of the Company’s policy for placing loans on nonaccrual status.
The table below presents, by portfolio segment, an aging analysis and the recorded investments in HFI loans past due.
As of March 31, 2026
(dollars in thousands)Loans 30-59 Days Past DueLoans 60-89 Days Past DueLoans 90 Days or More Past 
Due		Total Past Due LoansCurrent LoansNonaccrual LoansTotal Recorded Investment in Loans
Commercial$769 $379 $— $1,148 $1,413,731 $18,054 $1,432,933 
Income producing - commercial real estate12,654 3,638 — 16,292 2,937,051 76,661 3,030,004 
Owner occupied - commercial real estate— — — — 1,681,160 5,050 1,686,210 
Real estate mortgage – residential578 — — 578 34,701 464 35,743 
Construction - commercial and residential— — — — 589,976 28,016 617,992 
Construction - C&I (owner occupied)— — — — 87,666 — 87,666 
Home equity— — — — 44,432 516 44,948 
Other consumer— — — — 3,064 — 3,064 
Total$14,001 $4,017 $— $18,018 $6,791,781 $128,761 $6,938,560 
As of December 31, 2025
(dollars in thousands)Loans 30-59 Days Past DueLoans 60-89 Days Past DueLoans 90 Days or More Past 
Due		Total Past Due LoansCurrent LoansNonaccrual LoansTotal Recorded Investment in Loans
Commercial$2,942 $44 $— $2,986 $1,317,401 $18,099 $1,338,486 
Income producing - commercial real estate2,688 — — 2,688 3,285,493 62,537 3,350,718 
Owner occupied - commercial real estate167 12,573 — 12,740 1,581,447 7,937 1,602,124 
Real estate mortgage – residential4,544 — — 4,544 31,977 579 37,100 
Construction - commercial and residential26,942 — — 26,942 751,064 17,394 795,400 
Construction - C&I (owner occupied)— — — — 108,468 — 108,468 
Home equity— 39 — 39 47,058 351 47,448 
Other consumer— — — — 715 — 715 
Total$37,283 $12,656 $— $49,939 $7,123,623 $106,897 $7,280,459 
Loan Modifications for Borrowers Experiencing Financial Difficulty
The Company evaluates all loan modifications according to the accounting guidance to determine if the modification results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications. Modifications with terms not as favorable to the Company as the terms for comparable loans to other customers with similar collection risk who are not refinancing or restructuring a loan with the Company and which have a direct impact on cash flows are considered modified loans to borrowers experiencing financial difficulty.
The Company may offer various types of modifications when restructuring a loan. Commercial and industrial loans modified in a loan restructuring often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor is often requested.
Commercial mortgage and construction loans modified in a loan restructuring often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Construction loans modified in a loan restructuring may also involve extending the interest-only payment period.
Loans modified in a loan restructuring for the Company may have the financial effect of increasing the specific allowance associated with the loan. An allowance for consumer and commercial loans that have been modified in a loan restructuring is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates.
Commercial and consumer loans modified in a loan restructuring are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a loan restructuring subsequently default, the Company evaluates the loan for possible further loss. The allowance may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.
The table below presents the amortized cost basis and the financial effect of HFI loans modified for borrowers experiencing financial difficulty.
(dollars in thousands)Term ExtensionCombination - Term Extension and Principal Payment DelayTotalPercentage of Total Loan Type
Weighted Average Term and Principal Payment Extension(1)
Weighted Average Interest Rate Reduction(2)
For the Three Months Ended March 31, 2026
Commercial$7,252 $— $7,252 0.5 %9 months— %
Income producing - commercial real estate54,090 16,340 70,430 2.3 %4 months— %
Real estate mortgage - residential4,515 — 4,515 12.6 %14 months— %
Total$65,857 $16,340 $82,197 
For the Three Months Ended March 31, 2025
Commercial$3,310 $9,440 $12,750 1.1 %12 months— %
Income producing - commercial real estate— 70,296 70,296 1.8 %5 months— %
Total$3,310 $79,736 $83,046 
(1)For loans that received multiple modifications during the year, weighted average term and principal payment extensions were calculated based on the aggregate impact of the extensions received during the period.
(2)The weighted average is calculated based on the total amortized cost of loans, at the year-end, that received interest rate reduction modifications during the year.
The table below presents the performance of HFI loans modified during the prior twelve months for borrowers experiencing financial difficulty.
Payment Status (Amortized Cost Basis)
(dollars in thousands)Current30-89 Days Past Due90 Days or More Past DueNonaccrual
March 31, 2026
Commercial$18,997 $— $— $2,581 
Income producing - commercial real estate153,404 7,159 — 7,423 
Owner occupied - commercial real estate12,659 — — — 
Real estate mortgage - residential4,515 — 
Construction - C&I (owner occupied)— — — 8,750 
Total$189,575 $7,159 $— $18,754 
March 31, 2025
Commercial$46,010 $— $— $— 
Income producing - commercial real estate172,099 — — 84,442 
Owner occupied - commercial real estate863 — — — 
Construction - commercial and residential9,942 10,605 — — 
Total$228,914 $10,605 $— $84,442 
The Company monitors loan payments on performing and nonperforming loans on an on-going basis to determine if a loan is considered to have a payment default. To determine the existence of a payment default, the Company analyzes the economic conditions that exist for each borrower and their ability to generate positive cash flow during a given loan's term.
The table below presents the amortized cost basis of HFI loans that were experiencing payment default and were modified in the twelve months prior to that default for borrowers experiencing financial difficulty.
Amortized Cost Basis
(dollars in thousands)Term ExtensionCombination - Term Extension and Principal Payment Delay
March 31, 2026
Commercial$2,581 $— 
Income producing - commercial real estate7,159 7,423 
Construction - commercial and residential1,520 7,230 
Total$11,260 $14,653 
March 31, 2025
Income producing - commercial real estate$— $84,442 
Construction - commercial and residential— 10,605 
Total$— $95,047 
The Company individually evaluates nonaccrual loans when performing its CECL estimate to calculate the ACL. Additionally, the Company utilizes historical internal and third-party service provider sourced loss data in the determination of its PD/LGD rates applied in the calculation of its CECL estimate. Upon determination that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.