XML 22 R11.htm IDEA: XBRL DOCUMENT v3.25.3
Loans and Asset Quality
 9 Months Ended
Sep. 30, 2025
Receivables [Abstract]  
Loans and Asset Quality Loans and Asset Quality
Loans
Loans HFI by category and loans HFS are summarized below:
(in thousands)September 30, 2025December 31, 2024
Real estate:
Commercial real estate$896,211 $884,641 
One-to-four family residential618,320 614,551 
Construction and development202,589 155,229 
Commercial and industrial369,245 327,086 
Tax-exempt59,465 64,930 
Consumer27,243 28,576 
Total loans HFI$2,173,073 $2,075,013 
Total loans HFS$3,260 $2,547 
Accrued interest receivable on loans HFI totaled $7.0 million and $6.9 million as of September 30, 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 nine months ended September 30, 2025:
(in thousands)
Beginning Balance December 31, 2024
Provision for Credit LossesCharge-offsRecoveries
Ending Balance September 30, 2025
Real estate:
Commercial real estate$9,047 $167 $(19)$— $9,195 
One-to-four family residential6,452 368 (26)14 6,808 
Construction and development1,653 308 (250)— 1,711 
Commercial and industrial4,123 621 (69)16 4,691 
Tax-exempt103 (8)— — 95 
Consumer353 94 (228)82 301 
Total allowance for credit losses$21,731 $1,550 $(592)$112 $22,801 
The following table summarizes the activity in the ACL by category for the nine months ended September 30, 2024:
(in thousands)Beginning Balance December 31, 2023 
Provision for Credit Losses(1)
 Charge-offsRecoveries
Ending Balance September 30, 2024
Real estate:
Commercial real estate$9,118 $213 $— $— $9,331 
One-to-four family residential7,484 (978)— 7 6,513 
Construction and development1,309 (83)— — 1,226 
Commercial and industrial2,553 1,813 (218)59 4,207 
Tax-exempt575 (469)— — 106 
Consumer297 304 (327)100 374 
Total allowance for credit losses$21,336 $800 $(545)$166 $21,757 
(1)The $900,000 provision for credit losses on the consolidated statements of income for the nine months ended September 30, 2024, includes $800,000 for loans and $100,000 for unfunded loan commitments.
Nonaccrual and Past Due Loans
The following table presents nonaccrual loans as of September 30, 2025:
(in thousands)Nonaccrual with No ACLNonaccrual with ACLTotal Nonaccrual
Real estate:
Commercial real estate$— $— $— 
One-to-four family residential311 896 1,207 
Construction and development— 1,033 1,033 
Commercial and industrial6 106 112 
Tax-exempt— — — 
Consumer62 21 83 
Total loans HFI$379 $2,056 $2,435 
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 nine months ended September 30, 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 September 30, 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$1,970 $— $— $894,241 $896,211 $— 
One-to-four family residential669 208 765 616,678 618,320 — 
Construction and development71 — 1,033 201,485 202,589 — 
Commercial and industrial23 92 47 369,083 369,245 — 
Tax-exempt— — — 59,465 59,465 — 
Consumer49 9 26 27,159 27,243 5 
Total loans HFI$2,782 $309 $1,871 $2,168,111 $2,173,073 $5 
The following table presents the aging analysis of the past due loans and loans 90 days or more past due and still accruing interest by loan category as of December 31, 2024:
Past Due
(in thousands)30-59 Days60-89 Days90 Days or MoreCurrentTotal Loans HFI90 Days or More Past Due and Accruing
Real estate:
Commercial real estate$— $— $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 September 30, 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 September 30, 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 September 30, 2025, and gross charge-offs for the nine months ended September 30, 2025:
Year of Origination
(in thousands)20252024202320222021Prior YearsRevolving LinesTotal
Real estate:
Commercial real estate
Pass$115,705 $147,833 $88,344 $224,709 $194,199 $102,618 $16,159 $889,567 
Special Mention— 2,289 — — 91 675 — 3,055 
Substandard— 693 213 1,995 688 — — 3,589 
Total$115,705 $150,815 $88,557 $226,704 $194,978 $103,293 $16,159 $896,211 
One-to-four family residential
Pass$74,862 $79,172 $91,964 $102,419 $97,928 $142,825 $23,265 $612,435 
Special Mention301 109 — 1,336 — — — 1,746 
Substandard36 304 545 629 782 1,098 745 4,139 
Total$75,199 $79,585 $92,509 $104,384 $98,710 $143,923 $24,010 $618,320 
Construction and development
Pass$54,543 $78,194 $54,095 $7,333 $2,796 $1,487 $2,897 $201,345 
Special Mention— — — — — — — — 
Substandard1,033 — — — — 211 — 1,244 
Total$55,576 $78,194 $54,095 $7,333 $2,796 $1,698 $2,897 $202,589 
Commercial and industrial
Pass$83,409 $58,464 $30,527 $23,636 $27,327 $3,498 $140,389 $367,250 
Special Mention— — — 859 — — 99 958 
Substandard837 65 — 24 7 — 104 1,037 
Total$84,246 $58,529 $30,527 $24,519 $27,334 $3,498 $140,592 $369,245 
Tax-exempt
Pass$— $2,492 $2,221 $13,731 $6,036 $34,985 $— $59,465 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Total$— $2,492 $2,221 $13,731 $6,036 $34,985 $— $59,465 
Consumer
Pass$11,514 $6,427 $4,343 $1,865 $516 $109 $2,379 $27,153 
Special Mention— — — — — — — — 
Substandard1 — 9 12 — 62 6 90 
Total$11,515 $6,427 $4,352 $1,877 $516 $171 $2,385 $27,243 
Total loans HFI$342,241 $376,042 $272,261 $378,548 $330,370 $287,568 $186,043 $2,173,073 
Gross charge-offs$7 $8 $256 $47 $5 $19 $250 $592 
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 September 30, 2025 and December 31, 2024, unfunded loan commitments totaled approximately $527.5 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 September 30, 2025 and December 31, 2024, commitments under standby letters of credit totaled approximately $14.3 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 September 30, 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 Nine Months Ended
(in thousands)September 30, 2025September 30, 2024
Reserve for unfunded commitments at beginning of period$642 $442 
Provision for credit losses(1,2)
— 100 
Reserve for unfunded commitments at end of period$642 $542 
(1)The $1.6 million provision for credit losses on the consolidated income statements for the nine months ended September 30, 2025, is all for loans.
(2)The $900,000 provision for credit losses on the consolidated statements of income for the nine months ended September 30, 2024, includes $800,000 for loans and $100,000 for unfunded loan commitments.