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Loans and Allowance for Credit Losses
 6 Months Ended
Jun. 30, 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
June 30, 2026December 31, 2025
(dollars in thousands)Amount%Amount%
Commercial$1,540,766 23 %$1,338,486 18 %
Income producing - commercial real estate2,729,383 41 %3,350,718 46 %
Owner occupied - commercial real estate1,660,748 25 %1,602,124 22 %
Real estate mortgage - residential35,535 1 %37,100 1 %
Construction - commercial and residential523,121 8 %795,400 11 %
Construction - C&I (owner occupied)88,458 1 %108,468 1 %
Home equity43,479 1 %47,448 1 %
Other consumer945 — %715 — %
Total loans6,622,435 100 %7,280,459 100 %
Less: allowance for credit losses(121,141)(159,604)
Net loans (1)
$6,501,294 $7,120,855 
(1)Excludes accrued interest receivable of $30.8 million and $35.9 million as of June 30, 2026 and December 31, 2025, respectively, which were recorded in other assets on the Consolidated Balance Sheets.
Unamortized net deferred fees and costs were $16.8 million and $17.6 million as of June 30, 2026 and December 31, 2025, respectively.
During the six months ended June 30, 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 $238.5 million. As of June 30, 2026 and December 31, 2025, the outstanding balance of all HFS loans were $49.7 million and $90.7 million, respectively, as reported on the Consolidated Balance Sheets, of which $25.6 million and $90.7 million, respectively, were on nonaccrual status.
As of June 30, 2026 and December 31, 2025, the Bank serviced $253.8 million and $81.5 million, respectively, of loan participations and SBA loans, 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 $861.2 million as of June 30, 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 28% of the outstanding ADC loan portfolio as of June 30, 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 of HFI Loans. 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 Residential		Construction - C&I (Owner Occupied)Home EquityOther ConsumerTotal
For the Three Months Ended June 30, 2026
Allowance for credit losses:
Balance at beginning of quarter
$26,291 $88,169 $17,997 $315 $12,603 $1,124 $631 $33 $147,163 
Loans charged-off(2,388)(37,970)— — (8,703)— — — (49,061)
Recoveries of loans previously charged-off34 1,086 13 — 6 — — — 1,139 
Net loans (charged-off) and recovered(2,354)(36,884)13 — (8,697)— — — (47,922)
Provision for (reversal of) credit losses4,736 17,539 (824)(10)501 (12)(26)(4)21,900 
Ending balance$28,673 $68,824 $17,186 $305 $4,407 $1,112 $605 $29 $121,141 
For the Three Months Ended June 30, 2025
Allowance for credit losses:
Balance at beginning of quarter
$20,662 $61,937 $26,872 $670 $16,891 $1,680 $724 $33 $129,469 
Loans charged-off(698)(68,025)(4,935)— (10,703)— — (31)(84,392)
Recoveries of loans previously charged-off162 329 23 — — — — — 514 
Net loans (charged-off) and recovered(536)(67,696)(4,912)— (10,703)— — (31)(83,878)
Provision for (reversal of) credit losses8,829 99,965 5,222 144 19,801 3,889 308 47 138,205 
Ending balance$28,955 $94,206 $27,182 $814 $25,989 $5,569 $1,032 $49 $183,796 
For the Six Months Ended June 30, 2026
Allowance for credit losses:              
Balance at beginning of period
$26,607 $98,707 $20,719 $339 $11,171 $1,515 $519 $27 $159,604 
Loans charged-off(13,921)(49,527)(2,926)(80)(8,703)— — — (75,157)
Recoveries of loans previously charged-off122 1,123 37 — 6 — — — 1,288 
Net loans (charged-off) and recovered(13,799)(48,404)(2,889)(80)(8,697)— — — (73,869)
Provision for (reversal of) credit losses15,865 18,521 (644)46 1,933 (403)86 2 35,406 
Ending balance$28,673 $68,824 $17,186 $305 $4,407 $1,112 $605 $29 $121,141 
For the Six Months Ended June 30, 2025
Allowance for credit losses:
Balance at beginning of year$19,390 $55,185 $22,654 $610 $14,585 $1,282 $653 $31 $114,390 
Loans charged-off(968)(74,195)(9,797)— (10,703)— — (35)(95,698)
Recoveries of loans previously charged-off215 329 47 — — — — — 591 
Net loans (charged-off) and recovered(753)(73,866)(9,750)— (10,703)— — (35)(95,107)
Provision for (reversal of) credit losses10,318 112,887 14,278 204 22,107 4,287 379 53 164,513 
Ending balance$28,955 $94,206 $27,182 $814 $25,989 $5,569 $1,032 $49 $183,796 
The table below presents the amortized cost basis of collateral-dependent HFI loans by portfolio segment.
As of
June 30, 2026December 31, 2025
(dollars in thousands)Business/Other AssetsReal EstateBusiness/Other AssetsReal Estate
Commercial$22,554 $2,669 $15,285 $2,813 
Income producing-commercial real estate
880 74,185 880 61,657 
Owner occupied - commercial real estate— 5,095 — 7,938 
Real estate mortgage- residential— 552 — 579 
Construction - commercial and residential— 4,952 — 17,394 
Home equity137 501 — 351 
Total$23,571 $87,954 $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. We have several pass credit grades that are assigned to loans based on varying levels of risk, ranging from credits that are secured by cash or marketable securities, to watch credits, which have all the characteristics of an acceptable credit risk but warrant more than the normal level of monitoring.
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 $36.7 million of gross charge-offs associated with loans that were reclassified to HFS or sold as of June 30, 2026.
As of June 30, 2026
(dollars in thousands)Prior2022202320242025
2026
Revolving Loans Amort. Cost BasisRevolving Loans Convert. to TermTotal
Commercial:
Pass$95,440 $32,257 $67,680 $85,140 $357,968 $251,052 $558,378 $25,975 $1,473,890 
Special Mention43 2,115 — — — — 16,906 — 19,064 
Substandard18,604 6,927 391 6,994 — 2,796 11,599 501 47,812 
Total114,087 41,299 68,071 92,134 357,968 253,848 586,883 26,476 1,540,766 
YTD gross charge-offs(9,621)(53)— — — — (2,045)(11,719)
Income producing - commercial real estate:
Pass1,055,480 381,599 386,963 87,161 123,191 15,605 140,390 — 2,190,389 
Special Mention125,863 56,189 — — — — — — 182,052 
Substandard227,385 128,949 — — — — 608 — 356,942 
Total1,408,728 566,737 386,963 87,161 123,191 15,605 140,998 — 2,729,383 
YTD gross charge-offs(23,744)— — — — — — — (23,744)
Owner occupied - commercial real estate:
Pass776,000 90,699 130,068 127,161 338,073 134,157 1 — 1,596,159 
Special Mention28,927 — — — 16,445 — — — 45,372 
Substandard19,217 — — — — — — — 19,217 
Total824,144 90,699 130,068 127,161 354,518 134,157 1 — 1,660,748 
YTD gross charge-offs(2,926)— — — — — — — (2,926)
Real estate mortgage - residential:
Pass18,395 10,767 5,821 — — — — — 34,983 
Substandard552 — — — — — — — 552 
Total18,947 10,767 5,821 — — — — — 35,535 
Construction - commercial and residential:
Pass100,756 170,824 75,000 9,525 41,816 7,298 48,010 7,935 461,164 
Special Mention— — — — — — 27,699 — 27,699 
Substandard15,591 14,993 131 — — — 3,543 — 34,258 
Total116,347 185,817 75,131 9,525 41,816 7,298 79,252 7,935 523,121 
YTD gross charge-offs(28)— — — — — — — (28)
Construction - C&I (owner occupied):
Pass3,671 — 9,639 45,815 27,517 1,046 770 — 88,458 
Home equity:
Pass1,666 113 — — — — 40,398 310 42,487 
Substandard415 — — — — 36 376 165 992 
Total2,081 113 — — — 36 40,774 475 43,479 
Other consumer:
Pass— — — — 113 22 810 — 945 
Total Recorded Investment$2,488,005 $895,432 $675,693 $361,796 $905,123 $412,012 $849,488 $34,886 $6,622,435 
Total YTD gross charge-offs$(36,319)$(53)$— $— $— $— $(2,045)$— $(38,417)
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
June 30, 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$3,120 $21,648 $24,768 $3,397 $14,702 $18,099 
Income producing - commercial real estate30,872 44,250 75,122 38,275 24,262 62,537 
Owner occupied - commercial real estate5,093 — 5,093 3,199 4,738 7,937 
Real estate mortgage - residential552 — 552 579 — 579 
Construction- commercial and residential4,262 690 4,952 2,074 15,320 17,394 
Home equity450 187 637 333 18 351 
Total (1)
$44,349 $66,775 $111,124 $47,857 $59,040 $106,897 
(1)Gross coupon interest income of $6.0 million, and $10.2 million would have been recorded for the six months ended June 30, 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 $2.7 million and $6.7 million for the six months ended June 30, 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 June 30, 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$1,062 $145 $— $1,207 $1,514,791 $24,768 $1,540,766 
Income producing - commercial real estate42,704 — — 42,704 2,611,557 75,122 2,729,383 
Owner occupied - commercial real estate176 — — 176 1,655,479 5,093 1,660,748 
Real estate mortgage – residential— — — — 34,983 552 35,535 
Construction - commercial and residential— — — — 518,169 4,952 523,121 
Construction - C&I (owner occupied)— — — — 88,458 — 88,458 
Home equity— — — — 42,842 637 43,479 
Other consumer— — — — 945 — 945 
Total$43,942 $145 $— $44,087 $6,467,224 $111,124 $6,622,435 
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)
For the Three Months Ended June 30, 2026
Commercial$7,163 $524 $7,687 0.5 %16 months
Income producing - commercial real estate20,814 14,244 35,058 1.3 %8 months
Owner occupied - commercial real estate1,547 — 1,547 0.1 %3 months
Construction - commercial and residential— 10,639 10,639 2.0 %2 months
Total$29,524 $25,407 $54,931 
For the Three Months Ended June 30, 2025
Commercial$13,554 $10,490 $24,044 2.0 %13 months
Income producing - commercial real estate4,070 103,593 107,663 2.9 %25 months
Owner occupied - commercial real estate12,711 — 12,711 0.9 %4 months
Real estate mortgage - residential— 5,736 5,736 12.5 %6 months
Construction - commercial and residential1,900 11,161 13,061 1.1 %8 months
Total$32,235 $130,980 $163,215 
For the Six Months Ended June 30, 2026
Commercial$12,338 $524 $12,862 0.8 %16 months
Income producing - commercial real estate22,710 17,757 40,467 1.5 %12 months
Owner occupied - commercial real estate1,547 — 1,547 0.1 %3 months
Real estate mortgage - residential4,508 — 4,508 12.7 %14 months
Construction - commercial and residential— 10,639 10,639 2.0 %2 months
Total$41,103 $28,920 $70,023 
For the Six Months Ended June 30, 2025
Commercial$16,855 $10,490 $27,345 2.3 %20 months
Income producing - commercial real estate4,070 137,203 141,273 3.7 %23 months
Owner occupied - commercial real estate12,711 — 12,711 0.9 %4 months
Real estate mortgage - residential— 5,736 5,736 12.5 %6 months
Construction - commercial and residential1,900 11,161 13,061 1.1 %8 months
Total$35,536 $164,590 $200,126 
(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.
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
June 30, 2026
Commercial$12,461 $— $— $5,245 
Income producing - commercial real estate86,776 3,510 — 20,526 
Owner occupied - commercial real estate1,547 — — — 
Real estate mortgage - residential4,508 — — — 
Construction - commercial and residential10,639 — — 1,087 
Total$115,931 $3,510 $— $26,858 
June 30, 2025
Commercial$43,093 $— $— $518 
Income producing - commercial real estate120,646 5,656 — 63,413 
Owner occupied - commercial real estate12,711 — — — 
Real estate mortgage - residential— — — 5,736 
Construction - commercial and residential18,083 — — 9,831 
Total$194,533 $5,656 $— $79,498 
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
June 30, 2026
Commercial$5,245 $— 
Income producing - commercial real estate12,381 11,655 
Construction - commercial and residential397 690 
Total$18,023 $12,345 
June 30, 2025
Commercial$— $518 
Income producing - commercial real estate— 69,069 
Real estate mortgages - residential— 5,736 
Construction - commercial and residential— 9,831 
Total$— $85,154 
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.