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Loans and Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2025
Receivables [Abstract]  
Loans and Allowance for Credit Losses Loans and Allowance for Credit Losses
The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables. For further discussion on the most significant accounting policies that the Company follows, see Note 1 – “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” included in Part II, Item 8. of the 2024 Annual Report.
The following table provides information about the principal classes of the loan portfolio at March 31, 2025 and December 31, 2024.
($ in thousands)March 31, 2025% of Total LoansDecember 31, 2024% of Total Loans
Commercial real estate$2,544,107 53.2 %$2,557,806 53.6 %
Residential real estate1,325,858 27.8 1,329,406 27.9 
Construction366,218 7.7 335,999 7.0 
Commercial234,499 4.9 237,932 5.0 
Consumer300,007 6.3 303,746 6.4 
Credit cards6,800 0.1 7,099 0.1 
Total loans 4,777,489 100.0 %4,771,988 100.0 %
Allowance for credit losses on loans(58,042)(57,910)
Total loans, net$4,719,447 $4,714,078 
Loans are stated at their principal amount outstanding, net of any purchase premiums/discounts and deferred fees and costs. Included in loans were deferred costs, net of fees, of $3.2 million and $3.2 million at March 31, 2025 and December 31, 2024, respectively. At March 31, 2025 and December 31, 2024, loans included $1.64 billion and $1.69 billion, respectively, of aggregate loans that were acquired as part of the acquisitions of Severn Bancorp, Inc. (“Severn”) and The Community Financial Corporation (“TCFC”). These balances were presented net of the related aggregate discounts, which totaled $88.1 million and $92.0 million at March 31, 2025 and December 31, 2024, respectively.
At March 31, 2025, the Bank was servicing $366.9 million in loans for the Federal National Mortgage Association and $115.4 million in loans for Federal Home Loan Mortgage Corporation.
The following tables provide information on amortized cost basis on nonaccrual loans by loan class as of March 31, 2025 and December 31, 2024.
($ in thousands)Nonaccrual With No Allowance For Credit LossNonaccrual With An Allowance For Credit LossTotal Nonaccrual Loans
March 31, 2025
Nonaccrual loans:
Commercial real estate$3,283 $2,135 $5,418 
Residential real estate7,558 418 7,976 
Construction345 — 345 
Commercial 405 961 1,366 
Consumer276 — 276 
Credit cards— 21 21 
Total$11,867 $3,535 $15,402 
Interest income $191 $58 $249 
($ in thousands)Nonaccrual With No Allowance For Credit LossNonaccrual With An Allowance For Credit LossTotal Nonaccrual Loans
December 31, 2024
Nonaccrual loans:
Commercial real estate$8,192 $2,194 $10,386 
Residential real estate6,741 873 7,614 
Construction360 — 360 
Commercial458 549 1,007 
Consumer761 712 1,473 
Credit cards— 168 168 
Total$16,512 $4,496 $21,008 
Interest income$274 $65 $339 
($ in thousands)Nonaccrual Delinquent LoansNonaccrual Current LoansTotal Nonaccrual Loans
March 31, 2025
Nonaccrual loans:
Commercial real estate$701 $4,717 $5,418 
Residential real estate4,976 3,000 7,976 
Construction345 — 345 
Commercial216 1,150 1,366 
Consumer248 28 276 
Credit cards— 21 21 
Total$6,486 $8,916 $15,402 
($ in thousands)Nonaccrual Delinquent LoansNonaccrual Current LoansTotal Nonaccrual Loans
December 31, 2024
Nonaccrual loans:
Commercial real estate$7,268 $3,118 $10,386 
Residential real estate3,979 3,635 7,614 
Construction360 — 360 
Commercial70 937 1,007 
Consumer1,431 42 1,473 
Credit cards146 22 168 
Total$13,254 $7,754 $21,008 
The overall quality of the Bank’s loan portfolio is primarily assessed using the Bank’s risk-grading scale. This review process is assisted by frequent internal reporting of loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming and potential problem loans. Credit quality indicators are adjusted based on management’s judgment during the quarterly review process.
Consumer credit cards are monitored based on a borrower payment history. Credit card loans are classified as performing and are typically charged off no later than 180 days past due when, or in the opinion of management, the collection of principal or interest is considered doubtful. As of March 31, 2025, there were seven credit cards that were evaluated based on economic conditions specific to the loans or borrowers, and were downgraded to substandard and nonperforming.
Loans subject to risk rating are graded on a scale of one to ten.
Ratings 1 thru 6 – Pass – Ratings 1 thru 6 have asset risks ranging from excellent-low to adequate. The specific rating assigned considers customer history of earnings, cash flows, liquidity, leverage, capitalization, consistency of debt service coverage, the nature and extent of customer relationship and other relevant specific business factors such as the stability of the industry or market area, changes to management, litigation or unexpected events that could have an impact on risks.
Rating 7 – Special Mention – These credits have potential weaknesses due to economic conditions, less than adequate earnings performance or other factors which require the lending officer to direct more than normal attention to the credit. Financing alternatives may be limited and/or command higher risk interest rates. Special mention loan relationships are reviewed at least quarterly.
Rating 8 – Substandard – Substandard assets are assets that are inadequately protected by the sound worth or paying capacity of the borrower or of the collateral pledged. Substandard loans are the first adversely classified loans on the Bank’s watchlist. These assets have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard. The loans may have a delinquent history or combination of weak collateral, weak guarantor or operating losses. When a loan is assigned to this category the Bank may estimate a specific reserve in the credit loss allowance analysis and/or place the loan on nonaccrual. These assets listed may include assets with histories of repossessions or some that are nonperforming bankruptcies. These relationships will be reviewed at least quarterly.
Rating 9 – Doubtful – Doubtful assets have many of the same characteristics of substandard with the exception that the Bank has determined that loss is not only possible but is probable. The amount of loss is not discernible due to factors such as merger, acquisition, or liquidation; a capital injection; a pledge of additional collateral; the sale of assets; or alternative refinancing plans. Credits receiving a doubtful classification are required to be on nonaccrual. These relationships will be reviewed at least quarterly.
Rating 10 – Loss – Loss assets are uncollectible or of little value.
The following table provides information on loan risk ratings as of March 31, 2025 and gross write-offs during the three months ended March 31, 2025.
Term Loans by Origination YearRevolving LoansRevolving Converted to Term LoansTotal
($ in thousands)Prior20212022202320242025
March 31, 2025
Commercial real estate
Pass$1,086,053 $416,624 $543,786 $252,723 $136,600 $45,532 $26,176 $— $2,507,494 
Special mention7,435 2,945 19,752 — — — 355 — 30,487 
Substandard2,670 2,899 — — — — 557 — 6,126 
Total$1,096,158 $422,468 $563,538 $252,723 $136,600 $45,532 $27,088 $— $2,544,107 
Gross charge-offs$— $— $— $— $— $— $— $— $— 
Residential real estate
Pass$354,826 $209,479 $290,361 $221,305 $102,520 $14,345 $122,175 $64 $1,315,075 
Special mention2,020 — — — — — — — 2,020 
Substandard5,581 1,579 284 881 — — 438 — 8,763 
Total$362,427 $211,058 $290,645 $222,186 $102,520 $14,345 $122,613 $64 $1,325,858 
Gross charge-offs$— $— $— $— $— $— $— $— $— 
Construction
Pass$37,068 $8,240 $56,341 $59,151 $154,069 $24,141 $26,459 $187 $365,656 
Special mentions— 217 — — — — — — 217 
Substandard345 — — — — — — — 345 
Total$37,413 $8,457 $56,341 $59,151 $154,069 $24,141 $26,459 $187 $366,218 
Gross charge-offs$— $— $— $— $— $— $— $— $— 
Commercial
Pass$33,367 $36,453 $26,437 $29,006 $36,469 $5,338 $62,808 $431 $230,309 
Special mention165 — 39 — — — 528 — 732 
Substandard650 6 1,517 925 — — 360 — 3,458 
Total$34,182 $36,459 $27,993 $29,931 $36,469 $5,338 $63,696 $431 $234,499 
Gross charge-offs$(2)$— $— $— $— $— $— $— $(2)
Consumer
Pass$11,098 $57,447 $109,068 $56,232 $46,983 $17,776 $682 $— $299,286 
Special mention— — — — — — — — — 
Substandard— 40 123 558 — — — — 721 
Total$11,098 $57,487 $109,191 $56,790 $46,983 $17,776 $682 $— $300,007 
Gross charge-offs$(140)$(34)$(287)$(17)$— $— $(4)$— $(482)
Total
Pass$1,522,412 $728,243 $1,025,993 $618,417 $476,641 $107,132 $238,300 $682 $4,717,820 
Special mention9,620 3,162 19,791 — — — 883 — 33,456 
Substandard9,246 4,524 1,924 2,364 — — 1,355 — 19,413 
Total loans by risk category$1,541,278 $735,929 $1,047,708 $620,781 $476,641 $107,132 $240,538 $682 $4,770,689 
Total gross charge-offs$(142)$(34)$(287)$(17)$— $— $(4)$— $(484)
The following table presents the amortized cost in credit card loans based on performing status and gross charge-off as of March 31, 2025 and gross write-offs during the three months ended March 31, 2025. Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing.
Term Loans by Origination YearRevolving LoansRevolving Converted to Term LoansTotal
($ in thousands)Prior20212022202320242025
March 31, 2025
Credit cards
Performing$— $— $— $— $— $— $6,779 $— $6,779 
Nonperforming— — — — — — 21 — 21 
Total$— $— $— $— $— $— $6,800 $— $6,800 
Gross charge-offs$— $— $— $— $— $— $(242)$— $(242)
Total loans evaluated by performing status$— $— $— $— $— $— $6,800 $— $6,800 
Total gross charge-offs$— $— $— $— $— $— $(242)$— $(242)
Total recorded investment$1,541,278 $735,929 $1,047,708 $620,781 $476,641 $107,132 $247,338 $682 $4,777,489 
The following table provides information on loan risk ratings as of December 31, 2024 and gross write-offs during the year ended December 31, 2024.
Term Loans by Origination YearRevolving
Loans		Revolving
Converted to
Term Loans		Total
($ in thousands)Prior20202021202220232024
December 31, 2024
Commercial real estate
Pass$822,391 $297,098 $435,084 $534,936 $250,482 $136,891 $24,966 $14,084 $2,515,932 
Special mention7,514 — 2,964 19,746 — — 417 — $30,641 
Substandard7,684 — 2,991 — — — 558 — 11,233 
Total$837,589 $297,098 $441,039 $554,682 $250,482 $136,891 $25,941 $14,084 $2,557,806 
Gross charge-offs$— $— $— $— $— $— $— $— $— 
Residential real estate
Pass$291,306 $78,568 $211,938 $295,402 $220,753 $101,005 $119,367 $613 $1,318,952 
Special mention1,529 518 — — — — — — 2,047 
Substandard5,414 — 1,342 290 885 — 476 — 8,407 
Total$298,249 $79,086 $213,280 $295,692 $221,638 $101,005 $119,843 $613 $1,329,406 
Gross charge-offs$(1)$— $— $— $— $— $— $— $(1)
Construction
Pass$31,884 $8,191 $8,628 $56,685 $70,232 $131,383 $26,785 $1,851 $335,639 
Special mentions— — — — — — — — — 
Substandard360 — — — — — — — 360 
Total$32,244 $8,191 $8,628 $56,685 $70,232 $131,383 $26,785 $1,851 $335,999 
Gross charge-offs$— $— $(12)$— $— $— $— $— $(12)
Commercial
Pass$25,214 $11,088 $40,817 $29,142 $29,458 $39,489 $57,982 $874 $234,064 
Special mention116 — — — — — 703 11 830 
Substandard515 — 8 1,257 500 — 257 501 3,038 
Total$25,845 $11,088 $40,825 $30,399 $29,958 $39,489 $58,942 $1,386 $237,932 
Gross charge-offs$(54)$(11)$— $(56)$(69)$— $— $— $(190)
Consumer
Pass$1,315 $10,469 $60,718 $114,639 $61,652 $52,798 $682 $— $302,273 
Special mention— — — — — — — — — 
Substandard2 — 48 860 563 — — — 1,473 
Total$1,317 $10,469 $60,766 $115,499 $62,215 $52,798 $682 $— $303,746 
Gross charge-offs$(1,287)$(12)$(389)$(1,764)$(177)$— $(17)$— $(3,646)
Total
Pass$1,172,110 $405,414 $757,185 $1,030,804 $632,577 $461,566 $229,782 $17,422 $4,706,860 
Special mention9,159 $518 $2,964 $19,746 $— $— $1,120 $11 33,518 
Substandard13,975 — 4,389 2,407 1,948 — 1,291 501 24,511 
Total loans by risk
category		$1,195,244 $405,932 $764,538 $1,052,957 $634,525 $461,566 $232,193 $17,934 $4,764,889 
Total gross
charge-offs		$(1,342)$(23)$(401)$(1,820)$(246)$— $(17)$— $(3,849)
The following table presents the amortized cost in credit card loans based on performing status and gross charge-off as of December 31, 2024 and gross write-offs during the year ended December 31, 2024. Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing.
Term Loans by Origination YearRevolving
Loans		Revolving
Converted to
Term Loans		Total
($ in thousands)Prior20202021202220232024
December 31, 2024
Credit cards
Performing$— $— $— $— $— $— $6,931 $— $6,931 
Nonperforming— — — — — — 168 — 168 
Total$— $— $— $— $— $— $7,099 $— $7,099 
Gross charge-offs$— $— $— $— $— $— $(584)$— $(584)
Total loans evaluated
by performing status		$— $— $— $— $— $— $7,099 $— $7,099 
Total gross charge-offs$— $— $— $— $— $— $(584)$— $(584)
Total recorded
investment		$1,195,244 $405,932 $764,538 $1,052,957 $634,525 $461,566 $239,292 $17,934 $4,771,988 
The following tables provide information on the aging of the Company’s loan portfolio as of March 31, 2025 and December 31, 2024.
($ in thousands)30‑59 Days Past Due60‑89 Days Past Due90 Days Past Due and Still Accruing30-89 Days Past Due and Not Accruing90 Days Past Due and Not AccruingTotal Past DueCurrent Accrual LoansCurrent Nonaccrual LoansTotal
March 31, 2025
Commercial real estate$1,079 $353 $147 $475 $226 $2,280 $2,537,110 $4,717 $2,544,107 
Residential real estate2,128 1,953 — 1,977 2,999 9,057 1,313,801 3,000 1,325,858 
Construction2,864 — — — 345 3,209 363,009 — 366,218 
Commercial— 59 — 194 22 275 233,074 1,150 234,499 
Consumer695 136 445 11 237 1,524 298,455 28 300,007 
Credit cards64 49 302 — — 415 6,364 21 6,800 
Total$6,830 $2,550 $894 $2,657 $3,829 $16,760 $4,751,813 $8,916 $4,777,489 
Percent of total loans0.1 %0.1 %0.0 %0.1 %0.1 %0.4 %99.4 %0.2 %100.0 %
($ in thousands)30‑59 days Past Due60‑89 Days Past Due90 Days Past Due and Still Accruing30-89 Days Past Due and Not Accruing90 Days Past Due and Not AccruingTotal Past DueCurrent Accrual LoansCurrent Nonaccrual LoansTotal
December 31, 2024
Commercial real estate$75 $— $— $2,328 $4,940 $7,343 $2,547,345 $3,118 $2,557,806 
Residential real estate3,828 246 127 655 3,324 8,180 1,317,591 3,635 1,329,406 
Construction30 — — — 360 390 335,609 — 335,999 
Commercial152 2 — — 70 224 236,771 937 237,932 
Consumer4,068 55 — 1,180 251 5,554 298,150 42 303,746 
Credit cards161 190 167 — 146 664 6,413 22 7,099 
Total$8,314 $493 $294 $4,163 $9,091 $22,355 $4,741,879 $7,754 $4,771,988 
Percent of total loans0.2 %0.0 %0.0 %0.1 %0.2 %0.5 %99.3 %0.2 %100.0 %
The following tables provide a summary of the activity in the ACL allocated by loan class for the three months ended March 31, 2025 and 2024. Allocation of a portion of the allowance to one loan class does not preclude its availability to absorb losses from other loan classes.
($ in thousands)Beginning BalanceCharge-offsRecoveriesProvisionsEnding Balance
Three Months Ended March 31, 2025
Commercial real estate$22,846 $— $78 $(936)$21,988 
Residential real estate21,776 — 1 616 22,393 
Construction2,854 — 1 987 3,842 
Commercial3,138 (2)6 (287)2,855 
Consumer6,889 (482)86 81 6,574 
Credit card407 (242)— 225 390 
Total$57,910 $(726)$172 $686 $58,042 

($ in thousands)Beginning BalanceCharge-offsRecoveriesProvisionsEnding
Balance
Three Months Ended March 31, 2024
Commercial real estate$23,015 $— $— $(2)$23,013 
Residential real estate19,909 (1)2 (905)19,005 
Construction3,935 (12)2 (367)3,558 
Commercial2,671 — 1 207 2,879 
Consumer7,601 (525)76 1,530 8,682 
Credit card220 (116)8 87 199 
Total$57,351 $(654)$89 $550 $57,336 
The following tables present the amortized cost basis of collateral-dependent loans by loan portfolio segment.
March 31, 2025
($ in thousands)Real Estate CollateralOther CollateralTotal
Commercial real estate$5,418 $— $5,418 
Residential real estate7,976 — 7,976 
Construction345 — 345 
Commercial— 1,366 1,366 
Consumer— 276 276 
Total$13,739 $1,642 $15,381 
December 31, 2024
($ in thousands)Real Estate CollateralOther CollateralTotal
Commercial real estate$10,386 $— $10,386 
Residential real estate7,614 — 7,614 
Construction360 — 360 
Commercial— 1,007 1,007 
Consumer— 1,473 1,473 
Total$18,360 $2,480 $20,840 
Loan Modifications to Borrowers Experiencing Financial Difficulty
Modifications to borrowers experiencing financial difficulty may include interest rate reduction, principal or interest forgiveness, forbearance, term extensions, and other combinations of actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral.
During the three months ended March 31, 2025 and 2024, no loan modifications were made to borrowers experiencing financial difficulty. During the three months ended March 31, 2025 and 2024, there were no defaults on loan modifications made to borrowers experiencing financial difficulty.
As of March 31, 2025, one loan modification balance with a borrower experiencing financial difficulty that was modified during the preceding 12 months was classified as current accrual and was for a $1.4 million commercial real estate loan.
Foreclosure Proceedings
There were $124 thousand of consumer mortgage loans collateralized by residential real estate property that were in the process of foreclosure as of March 31, 2025 and December 31, 2024.
Other Real Estate Owned (“OREO”) and Repossessed Assets
OREO and repossessed assets are adjusted for fair value upon transfer from loans to foreclosed assets, establishing a new cost basis. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value. The Company had OREO and repossessed asset balances of $179 thousand and $2.4 million as of March 31, 2025 and $179 thousand and $3.3 million as of December 31, 2024, respectively.
Mortgage Servicing Rights (“MSRs”)
Mortgage loans are sold with servicing retained and the MSRs are initially recorded at fair value with the income statement effect recorded in mortgage banking revenue. The Company recognized a net servicing loss of $65 thousand and net servicing income of $88 thousand for the three months ended March 31, 2025 and 2024, respectively.
The following table presents activity in MSRs for the three months ended March 31, 2025.
($ in thousands)Three Months Ended March 31, 2025
Beginning balance$5,874 
Net additions43 
Amortization expense(52)
Other(330)
Ending balance$5,535 
The fair value of MSRs were determined using discount rates ranging from 9.0% to 11.0% at March 31, 2025 and December 31, 2024, respectively. Depending on the stratification of the specific mortgage servicing right, prepayment speeds ranged from 5.84% to 8.94% and 6.0% to 52.22% for the three months ended March 31, 2025 and 2024, respectively. The associated weighted-average default rates were 0.15% and 1.19% for the three months ended March 31, 2025 and 2024, respectively.