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Loans and Asset Quality
 3 Months Ended
Mar. 31, 2025
Receivables [Abstract]  
Loans and Asset Quality Loans and Asset Quality
Loans
Loans HFI by category and loans HFS are summarized below:
(in thousands)March 31, 2025December 31, 2024
Real estate:
Commercial real estate$892,205 $884,641 
One-to-four family residential617,679 614,551 
Construction and development175,575 155,229 
Commercial and industrial339,115 327,086 
Tax-exempt61,722 64,930 
Consumer28,446 28,576 
Total loans HFI$2,114,742 $2,075,013 
Total loans HFS$2,178 $2,547 
Accrued interest receivable on loans HFI totaled $7.4 million and $6.9 million as of March 31, 2025 and December 31, 2024, respectively, and was reported in accrued interest receivable on the accompanying consolidated balance sheets.
Allowance for Credit Losses
The Company maintains an ACL on all loans that reflects management’s estimate of expected credit losses for the full life of the loan portfolio.
The following table summarizes the activity in the ACL by category for the three months ended March 31, 2025:
(in thousands)
Beginning Balance December 31, 2024
Provision for Credit LossesCharge-offsRecoveries
Ending Balance March 31, 2025
Real estate:
Commercial real estate$9,047 $112 $— $— $9,159 
One-to-four family residential6,452 22 (22)3 6,455 
Construction and development1,653 202 (250)— 1,605 
Commercial and industrial4,123 117 (39)7 4,208 
Tax-exempt103 (4)— — 99 
Consumer353 1 (76)31 309 
Total allowance for credit losses$21,731 $450 $(387)$41 $21,835 
The following table summarizes the activity in the ACL by category for the three months ended March 31, 2024:
(in thousands)Beginning Balance December 31, 2023 Provision for Credit Losses Charge-offsRecoveries
Ending Balance March 31, 2024
Real estate:
Commercial real estate$9,118 $115 $— $— $9,233 
One-to-four family residential7,484 49 — 3 7,536 
Construction and development1,309 (117)— — 1,192 
Commercial and industrial2,553 258 (51)15 2,775 
Tax-exempt575 (50)— — 525 
Consumer297 45 (80)41 303 
Total allowance for credit losses$21,336 $300 $(131)$59 $21,564 
Nonaccrual and Past Due Loans
The following table presents nonaccrual loans as of March 31, 2025:
(in thousands)Nonaccrual with No ACLNonaccrual with ACLTotal Nonaccrual
Real estate:
Commercial real estate$486 $276 $762 
One-to-four family residential391 183 574 
Construction and development— 702 702 
Commercial and industrial410 98 508 
Tax-exempt— — — 
Consumer— 79 79 
Total loans HFI$1,287 $1,338 $2,625 
The following table presents nonaccrual loans as of December 31, 2024:
(in thousands)Nonaccrual with No ACLNonaccrual with ACLTotal Nonaccrual
Real estate:
Commercial real estate$458 $276 $734 
One-to-four family residential397 289 686 
Construction and development— 920 920 
Commercial and industrial412 142 554 
Tax-exempt— — — 
Consumer— 74 74 
Total loans HFI$1,267 $1,701 $2,968 
No material interest income was recognized in the consolidated statements of income on nonaccrual loans for the three months ended March 31, 2025 and 2024.
The following table presents the aging analysis of the past due loans and loans 90 days or more past due and still accruing interest by loan category as of March 31, 2025:
Past Due
(in thousands)30-59 Days60-89 Days90 Days or MoreCurrentTotal Loans HFI90 Days or More Past Due and Accruing
Real estate:
Commercial real estate$20 $— $735 $891,450 $892,205 $— 
One-to-four family residential2,240 252 2,961 612,226 617,679 2,434 
Construction and development31 — 699 174,845 175,575 — 
Commercial and industrial82 — 403 338,630 339,115 — 
Tax-exempt— — — 61,722 61,722 — 
Consumer30 3 4 28,409 28,446 4 
Total loans HFI$2,403 $255 $4,802 $2,107,282 $2,114,742 $2,438 
The following table presents the aging analysis of the past due loans and loans 90 days or more past due and still accruing interest by loan category as of December 31, 2024:
Past Due
(in thousands)30-59 Days60-89 Days90 Days or MoreCurrentTotal Loans HFI90 Days or More Past Due and Accruing
Real estate:
Commercial real estate$— $— $704 $883,937 $884,641 $— 
One-to-four family residential1,762 2,705 899 609,185 614,551 264 
Construction and development32 — 918 154,279 155,229 — 
Commercial and industrial4 2 453 326,627 327,086 — 
Tax-exempt— — — 64,930 64,930 — 
Consumer44 15 2 28,515 28,576 2 
Total loans HFI$1,842 $2,722 $2,976 $2,067,473 $2,075,013 $266 
Loan Modifications
Modifications are made to a borrower experiencing financial difficulty, and the modified terms are in the form of principal forgiveness, interest rate reduction, other-than-insignificant payment delay, or a term extension in the current reporting period. For the periods ended March 31, 2025 and 2024, modifications were made to certain borrowers by granting term extensions. These term extensions were not significant to the consolidated financial statements.
Credit Quality Indicators
Loans are categorized based on the degree of risk inherent in the credit and the ability of the borrower to service the debt. A description of the general characteristics of the Bank’s risk rating grades follows:
Pass - These loans are of satisfactory quality and do not require a more severe classification.
Special mention - This category includes loans with potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan. However, the loss potential does not warrant substandard classification.
Substandard - Loans in this category have well-defined weaknesses that jeopardize normal repayment of principal and interest. Prompt corrective action is required to reduce exposure and to assure adequate remedial actions are taken by the borrower. If these weaknesses do not improve, loss is possible.
Doubtful - Loans in this category have well-defined weaknesses that make full collection improbable.
Loss - Loans classified in this category are considered uncollectible and charged-off to the ACL.
As of March 31, 2025, the Company had no loans classified as doubtful or loss. The following table summarizes loans by risk rating and year of origination as of March 31, 2025, and gross charge-offs for the three months ended March 31, 2025:
Year of Origination
(in thousands)20252024202320222021Prior YearsRevolving LinesTotal
Real estate:
Commercial real estate
Pass$31,867 $145,755 $107,665 $237,741 $201,864 $135,289 $24,822 $885,003 
Special Mention— 2,688 216 1,455 — 684 — 5,043 
Substandard— 713 — — 684 762 — 2,159 
Total$31,867 $149,156 $107,881 $239,196 $202,548 $136,735 $24,822 $892,205 
One-to-four family residential
Pass$22,569 $94,305 $100,019 $110,405 $106,117 $158,334 $20,095 $611,844 
Special Mention— 121 — 2,435 793 254 — 3,603 
Substandard37 183 184 298 — 779 751 2,232 
Total$22,606 $94,609 $100,203 $113,138 $106,910 $159,367 $20,846 $617,679 
Construction and development
Pass$11,388 $89,114 $53,649 $13,441 $3,278 $1,928 $1,851 $174,649 
Special Mention— — — — — — — — 
Substandard— — 699 — — 227 — 926 
Total$11,388 $89,114 $54,348 $13,441 $3,278 $2,155 $1,851 $175,575 
Commercial and industrial
Pass$24,721 $75,386 $38,333 $28,968 $33,148 $7,631 $128,475 $336,662 
Special Mention— 605 — 1,144 — — 95 1,844 
Substandard75 25 2 21 9 — 477 609 
Total$24,796 $76,016 $38,335 $30,133 $33,157 $7,631 $129,047 $339,115 
Tax-exempt
Pass$— $2,504 $2,295 $14,305 $6,170 $36,448 $— $61,722 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Total$— $2,504 $2,295 $14,305 $6,170 $36,448 $— $61,722 
Consumer
Pass$5,411 $10,757 $5,950 $2,562 $739 $304 $2,638 $28,361 
Special Mention— — — — — — — — 
Substandard— — 9 — — 70 6 85 
Total$5,411 $10,757 $5,959 $2,562 $739 $374 $2,644 $28,446 
Total loans HFI$96,068 $422,156 $309,021 $412,775 $352,802 $342,710 $179,210 $2,114,742 
Gross charge-offs$— $5 $251 $48 $5 $— $78 $387 
As of December 31, 2024, the Company had no loans classified as doubtful or loss. The following table summarizes loans by risk rating and year of origination as of December 31, 2024, and gross charge-offs for the year ended December 31, 2024:
Year of Origination
(in thousands)20242023202220212020Prior YearsRevolving LinesTotal
Real estate:
Commercial real estate
Pass$141,677 $107,788 $242,693 $208,595 $68,371 $85,212 $22,731 $877,067 
Special Mention2,883 221 1,475 — — 658 — 5,237 
Substandard725 — 194 684 — 734 — 2,337 
Total$145,285 $108,009 $244,362 $209,279 $68,371 $86,604 $22,731 $884,641 
One-to-four family residential
Pass$92,621 $104,575 $117,750 $111,730 $78,869 $86,432 $19,294 $611,271 
Special Mention125 — — 798 — 255 — 1,178 
Substandard— 63 369 42 33 785 810 2,102 
Total$92,746 $104,638 $118,119 $112,570 $78,902 $87,472 $20,104 $614,551 
Construction and development
Pass$79,431 $51,997 $15,031 $3,629 $672 $1,514 $1,799 $154,073 
Special Mention— — — — — — — — 
Substandard— 918 — — — 238 — 1,156 
Total$79,431 $52,915 $15,031 $3,629 $672 $1,752 $1,799 $155,229 
Commercial and industrial
Pass$85,573 $43,242 $32,024 $38,991 $7,619 $1,356 $115,704 $324,509 
Special Mention646 — 1,191 — — — 78 1,915 
Substandard26 2 58 11 2 78 485 662 
Total$86,245 $43,244 $33,273 $39,002 $7,621 $1,434 $116,267 $327,086 
Tax-exempt
Pass$2,510 $1,893 $14,976 $6,626 $10,811 $28,114 $— $64,930 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Total$2,510 $1,893 $14,976 $6,626 $10,811 $28,114 $— $64,930 
Consumer
Pass$15,638 $7,316 $3,009 $869 $335 $183 $1,135 $28,485 
Special Mention— — — — — — — — 
Substandard— 10 — — — 74 7 91 
Total$15,638 $7,326 $3,009 $869 $335 $257 $1,142 $28,576 
Total loans HFI$421,855 $318,025 $428,770 $371,975 $166,712 $205,633 $162,043 $2,075,013 
Gross charge-offs$13 $27 $37 $1 $— $312 $413 $803 
Commitments to Extend Credit
Commitments to extend credit are agreements to lend to a customer if all conditions of the commitment have been met. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management’s evaluation of the customer’s ability to repay. As of March 31, 2025 and December 31, 2024, unfunded loan commitments totaled approximately $503.1 million and $509.6 million, respectively.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including
commercial paper, bond financing, and similar transactions. As of March 31, 2025 and December 31, 2024, commitments under standby letters of credit totaled approximately $14.6 million and $11.9 million, respectively. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.
The Company estimates expected credit losses for unfunded commitments over the contractual period in which the Company is exposed to credit risk through a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The reserve for unfunded commitments is recorded within accrued expenses and other liabilities on the consolidated balance sheets, and the related provision is recorded in provision for credit losses on the consolidated statements of income. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The loss rates computed for each pool and expected pool-level funding rates are applied to the related unfunded commitment balance to obtain the reserve amount. As of March 31, 2025 and December 31, 2024, the reserve on unfunded commitments was $642,000.
The following table summarizes the reserve for unfunded commitments for the periods indicated:
As of and For the Three Months Ended
(in thousands)March 31, 2025March 31, 2024
Reserve for unfunded commitments at beginning of period$642 $442 
Provision for credit losses— — 
Reserve for unfunded commitments at end of period$642 $442