v3.24.1.u1
Loans and Allowance for Credit Losses on Loans
 3 Months Ended
Mar. 31, 2024
Receivables [Abstract]  
Loans and Allowance for Credit Losses on Loans Loans and Allowance for Credit Losses on Loans
Loans Held-For-Investment
The following table presents the composition of the Company’s loans held-for-investment as of the dates indicated.
($ in thousands)March 31, 2024December 31, 2023
Commercial real estate:
Commercial property
$874,300 $855,270 
Business property578,903 558,772 
Multifamily131,742 132,500 
Construction
29,212 24,843 
Total commercial real estate1,614,157 1,571,385 
Commercial and industrial371,934 342,002 
Consumer:
Residential mortgage389,888 389,420 
Other consumer21,985 20,645 
Total consumer411,873 410,065 
Loans held-for-investment
2,397,964 2,323,452 
Allowance for credit losses on loans(28,332)(27,533)
Net loans held-for-investment
$2,369,632 $2,295,919 
In the ordinary course of business, the Company may grant loans to certain officers and directors, and the companies with which they are associated. As of March 31, 2024 and December 31, 2023, the Company had $109 thousand and $111 thousand of such loans outstanding, respectively,
Allowance for Credit Losses on Loans
The following table presents a composition of provision (reversal) for credit losses for the periods indicated:
Three Months Ended March 31,
($ in thousands)20242023
Provision (reversal) for credit losses on loans $922 $(2,417)
Provision (reversal) for credit losses on off-balance sheet credit exposures168 (361)
Total provision (reversal) for credit losses$1,090 $(2,778)
The following table presents the activities in ACL on loans for the periods indicated:
($ in thousands)Commercial PropertyBusiness PropertyMultifamilyConstructionCommercial and IndustrialResidential MortgageOther ConsumerTotal
Balance at January 1, 2024$12,665 $4,739 $1,441 $135 $6,245 $2,226 $82 $27,533 
Charge-offs— — — — (155)— (30)(185)
Recoveries— 2 — — 9 — 51 62 
Provision (reversal) for credit losses on loans(546)73 (126)(26)1,489 108 (50)922 
Balance at March 31, 2024$12,119 $4,814 $1,315 $109 $7,588 $2,334 $53 $28,332 
Balance at January 1, 2023$8,502 $5,749 $1,134 $151 $5,502 $3,691 $213 $24,942 
Impact of ASC 326 adoption(1,762)896 256 — 4,344 (2,534)(133)1,067 
Charge-offs— — — — — — — — 
Recoveries— 5 — — 1,085 — 12 1,102 
Provision (reversal) for credit losses on loans1,736 (581)(9)5 (3,617)57 (8)(2,417)
Balance at March 31, 2023$8,476 $6,069 $1,381 $156 $7,314 $1,214 $84 $24,694 
The increase in overall ACL for the three months ended March 31, 2024 was primarily due to an increase in loans held-for-investment.
Credit Quality Indicators
The Company classifies loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans in regards to credit risk. This analysis typically includes non-homogeneous loans, such as commercial property and commercial and industrial loans, and is performed on an ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings:
Pass - Loans classified as pass include non-homogeneous loans not meeting the risk ratings defined below and smaller, homogeneous loans not assessed on an individual basis.
Special Mention - Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of repayment prospects for the loan or of the institution’s credit position at some future date.
Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
The following table summarizes the Company’s loans held-for-investment by loan segment, internal risk ratings and vintage year as of March 31, 2024 and gross write offs for the three months ended March 31, 2024. The vintage year is the year of origination, renewal or major modification. Revolving loans that are converted to term loans presented in the table below are excluded from the Term Loans by Origination Year columns.
Term Loans by Origination YearRevolving LoansRevolving Loans Converted to Term
($ in thousands)20242023202220212020PriorTotal
March 31, 2024
Commercial Real Estate:
Commercial property
Pass$43,270 $153,834 $265,870 $155,402 $79,651 $158,912 $14,358 $— $871,297 
Special mention— — — 481 — 240 — — 721 
Substandard— — — — — 2,282 — — 2,282 
Doubtful— — — — — — — — — 
Total$43,270 $153,834 $265,870 $155,883 $79,651 $161,434 $14,358 $— $874,300 
Current period gross write offs$— $— $— $— $— $— $— $— $— 
Business property
Pass$29,660 $102,866 $102,981 $159,474 $48,997 $125,262 $1,239 $4,298 $574,777 
Special mention— — — — — — — — — 
Substandard— — 622 194 499 2,811 — — 4,126 
Doubtful— — — — — — — — — 
Total$29,660 $102,866 $103,603 $159,668 $49,496 $128,073 $1,239 $4,298 $578,903 
Current period gross write offs$— $— $— $— $— $— $— $— $— 
Multifamily
Pass$— $14,173 $40,433 $42,565 $26,294 $8,277 $— $— $131,742 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Total$— $14,173 $40,433 $42,565 $26,294 $8,277 $— $— $131,742 
Current period gross write offs$— $— $— $— $— $— $— $— $— 
Construction
Pass$— $7,348 $10,187 $— $7,500 $4,177 $— $— $29,212 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Total$— $7,348 $10,187 $— $7,500 $4,177 $— $— $29,212 
Current period gross write offs$— $— $— $— $— $— $— $— $— 
Term Loans by Origination YearRevolving LoansRevolving Loans Converted to Term
($ in thousands)20242023202220212020PriorTotal
March 31, 2024 (Continued)
Commercial and Industrial
Pass$10,924 $76,833 $27,387 $11,165 $3,911 $13,931 $222,924 $3,558 $370,633 
Special mention— — — — 380 — — — 380 
Substandard— — — — — 921 — — 921 
Doubtful— — — — — — — — — 
Total$10,924 $76,833 $27,387 $11,165 $4,291 $14,852 $222,924 $3,558 $371,934 
Current period gross write offs$— $— $— $150 $— $5 $— $— $155 
Consumer
Residential mortgage
Pass$7,359 $78,711 $160,422 $77,750 $11,146 $54,064 $— $— $389,452 
Special mention— — — — — — — — — 
Substandard— — — — — 436 — — 436 
Doubtful— — — — — — — — — 
Total$7,359 $78,711 $160,422 $77,750 $11,146 $54,500 $— $— $389,888 
Current period gross write offs$— $— $— $— $— $— $— $— $— 
Other consumer
Pass$30 $4,195 $6,765 $2,760 $1,022 $288 $6,919 $— $21,979 
Special mention— — — — — — — — — 
Substandard— — — — 6 — — — 6 
Doubtful— — — — — — — — — 
Total$30 $4,195 $6,765 $2,760 $1,028 $288 $6,919 $— $21,985 
Current period gross write offs$— $12 $15 $— $3 $— $— $— $30 
Total loans held-for-investment
Pass$91,243 $437,960 $614,045 $449,116 $178,521 $364,911 $245,440 $7,856 $2,389,092 
Special mention— — — 481 380 240 — — 1,101 
Substandard— — 622 194 505 6,450 — — 7,771 
Doubtful— — — — — — — — — 
Total$91,243 $437,960 $614,667 $449,791 $179,406 $371,601 $245,440 $7,856 $2,397,964 
Current period gross write offs$— $12 $15 $150 $3 $5 $— $— $185 
The following table summarize the Company’s loans held-for-investment by loan segment, internal risk ratings and vintage year as of December 31, 2023. The vintage year is the year of origination, renewal or major modification. Revolving loans that are converted to term loans presented in the table below are excluded from term loans by vintage year columns.
Term Loans by Origination YearRevolving LoansRevolving Loans Converted to Term
($ in thousands)20232022202120202019PriorTotal
December 31, 2023
Commercial Real Estate:
Commercial property
Pass$154,563 $268,369 $155,817 $83,461 $70,425 $107,879 $8,807 $— $849,321 
Special mention— — 484 — — 2,952 — — 3,436 
Substandard— — — — 311 2,202 — — 2,513 
Doubtful— — — — — — — — — 
Total$154,563 $268,369 $156,301 $83,461 $70,736 $113,033 $8,807 $— $855,270 
Business property
Pass$103,364 $103,549 $163,136 $50,362 $69,852 $59,765 $882 $4,327 $555,237 
Special mention— — — — — — — — — 
Substandard— 452 193 — 2,254 636 — — 3,535 
Doubtful— — — — — — — — — 
Total$103,364 $104,001 $163,329 $50,362 $72,106 $60,401 $882 $4,327 $558,772 
Multifamily
Pass$14,219 $40,618 $42,848 $26,472 $2,419 $5,924 $— $— $132,500 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Total$14,219 $40,618 $42,848 $26,472 $2,419 $5,924 $— $— $132,500 
Construction
Pass$4,617 $9,120 $— $7,500 $3,606 $— $— $— $24,843 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Total$4,617 $9,120 $— $7,500 $3,606 $— $— $— $24,843 
Term Loans by Origination YearRevolving LoansRevolving Loans Converted to Term
($ in thousands)20232022202120202019PriorTotal
December 31, 2023 (Continued)
Commercial and Industrial
Pass$77,957 $28,638 $11,950 $4,354 $6,323 $8,327 $198,010 $3,796 $339,355 
Special mention— — — 379 314 27 1,000 — 1,720 
Substandard— — — — 142 785 — — 927 
Doubtful— — — — — — — — — 
Total$77,957 $28,638 $11,950 $4,733 $6,779 $9,139 $199,010 $3,796 $342,002 
Consumer
Residential mortgage
Pass$79,581 $163,734 $78,499 $11,363 $10,865 $45,378 $— $— $389,420 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Total$79,581 $163,734 $78,499 $11,363 $10,865 $45,378 $— $— $389,420 
Other consumer
Pass$4,837 $7,527 $3,275 $1,326 $458 $7 $3,190 $— $20,620 
Special mention— — — — — — — — — 
Substandard— 15 — 10 — — — — 25 
Doubtful— — — — — — — — — 
Total$4,837 $7,542 $3,275 $1,336 $458 $7 $3,190 $— $20,645 
Total loans held-for-investment
Pass$439,138 $621,555 $455,525 $184,838 $163,948 $227,280 $210,889 $8,123 $2,311,296 
Special mention— — 484 379 314 2,979 1,000 — 5,156 
Substandard— 467 193 10 2,707 3,623 — — 7,000 
Doubtful— — — — — — — — — 
Total$439,138 $622,022 $456,202 $185,227 $166,969 $233,882 $211,889 $8,123 $2,323,452 
Nonaccrual Loans
The following table presents the loans on nonaccrual status by loan segments as of the date indicated:
($ in thousands)Total Nonaccrual LoansNonaccrual Loans with ACLACL on Nonaccrual LoansCollateral Dependent Nonaccrual LoansACL on Collateral Dependent Nonaccrual Loans
March 31, 2024
Commercial real estate:
Commercial property
$932 $— $— $932 $— 
Business property3,455 740 277 3,455 277 
Total commercial real estate4,387 740 277 4,387 277 
Commercial and industrial111 45 26 66 — 
Consumer:
Residential mortgage436 — — 436 — 
Other consumer6 6 — — — 
Total consumer442 6 — 436 — 
Total
$4,940 $791 $303 $4,889 $277 
December 31, 2023
Commercial real estate:
Commercial property
$958 $— $— $958 $— 
Business property2,865 689 264 2,865 264 
Total commercial real estate3,823 689 264 3,823 264 
Commercial and industrial68 — — 68 — 
Consumer:
Other consumer25 25 — — — 
Total consumer25 25 — — — 
Total
$3,916 $714 $264 $3,891 $264 
There were no nonaccrual loans guaranteed by a U.S. government agency at March 31, 2024 and December 31, 2023.
Collateral Dependent Loans
Loans that have been classified as collateral dependent are loans where substantially all repayment of the loan is expected to come from the operation of or eventual liquidation of the collateral. Collateral dependent loans are evaluated individually for purposes of determining the ACL, which is determined based on the estimated fair value of the collateral. Estimates for costs to sell are included in the determination of the ACL when liquidation of the collateral is anticipated. In cases where the loan is well secured and the estimated value of the collateral exceeds the amortized cost of the loan, no ACL is recorded. The following table presents the collateral dependent loans by loan segments as of the date indicated:
($ in thousands)Hotel / MotelWarehouseRetailSingle Family ResidentialOtherTotal
March 31, 2024
Commercial real estate:
Commercial property$932 $— $— $— $— $932 
Business property— 2,569 848 — 38 3,455 
Total commercial real estate932 2,569 848 — 38 4,387 
Commercial and industrial13 — — 53 — 66 
Consumer:
Residential mortgage— — — 436 — 436 
Total consumer— — — 436 — 436 
Total$945 $2,569 $848 $489 $38 $4,889 
December 31, 2023
Commercial real estate:
Commercial property$958 $— $— $— $— $958 
Business property— 2,137 689 — 39 2,865 
Total commercial real estate958 2,137 689 — 39 3,823 
Commercial and industrial13 — — 55 — 68 
Total$971 $2,137 $689 $55 $39 $3,891 
Past Due Loans
The following table presents the aging of past due in accruing loans and nonaccrual loans by loan segments as of date indicated:
Still AccruingNonaccrual
($ in thousands)30 to 59 Days Past Due60 to 89 Days Past Due90 or More Days Past DueTotal30 to 59 Days Past Due60 to 89 Days Past Due90 or More Days Past DueTotalTotal Loans Past Due
March 31, 2024
Commercial real estate:
Commercial property$491 $427 $— $918 $932 $— $— $932 $1,850 
Business property414 — — 414 108 — 759 867 1,281 
Total commercial real estate905 427 — 1,332 1,040 — 759 1,799 3,131 
Commercial and industrial10 — — 10 66 45 — 111 121 
Consumer:
Residential mortgage2,485 676 — 3,161 — — 436 436 3,597 
Other consumer12 — — 12 — — — — 12 
Total consumer2,497 676 — 3,173 — — 436 436 3,609 
Total$3,412 $1,103 $— $4,515 $1,106 $45 $1,195 $2,346 $6,861 
December 31, 2023
Commercial real estate:
Commercial property$— $— $— $— $— $296 $— $296 $296 
Business property560 — — 560 — 39 168 207 767 
Total commercial real estate560 — — 560 — 335 168 503 1,063 
Commercial and industrial217 — — 217 — — — — 217 
Consumer:
Residential mortgage604 — — 604 — — — — 604 
Other consumer13 34 — 47 — 15 3 18 65 
Total consumer617 34 — 651 — 15 3 18 669 
Total$1,394 $34 $— $1,428 $— $350 $171 $521 $1,949 
Loan Modification
Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay, interest rate reduction or combination of at above mentioned modifications. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL.
The following table presents loans that the borrowers were both experiencing financial difficulty and modified during the periods indicated by loan segments and modification type:
($ in thousands)Interest OnlyTotalPercentage to Each Loan Segment
Three months ended March 31, 2024
Commercial and industrial$45 $45 0.1 %
Total$45 $45 0.1 %
Three months ended March 31, 2023
Commercial and industrial$11 $11 0.1 %
Total$11 $11 0.1 %
The Company had no commitments to lend to the borrower included in the above table as of March 31, 2024. The loan was nonaccrual status as of March 31, 2024 and had no payment default after the modification.
Purchases, Sales, and Transfers
The Company had no loans that were transferred from loans held-for-investment to loans held-for-sale during the three months ended March 31, 2024 or 2023.
The Company had no loans that were transferred from loans held-for-sale to loans held-for investment during three months ended March 31, 2024 or 2023.
The following table presents a summary of purchases of loans held-for-investment for the periods indicated:
Three Months Ended March 31,
($ in thousands)20242023
Consumer:
Residential mortgage$— $15,741 
Total consumer— 15,741 
Total$— $15,741 
Loans Held-For-Sale
The following table presents a composition of loans held-for-sale as of the date indicated:
($ in thousands)March 31, 2024December 31, 2023
Commercial real estate:
Business property$— $2,802 
Total commercial real estate— 2,802 
Commercial and industrial3,256 2,353 
Total$3,256 $5,155 
Loans held-for-sale are carried at the lower of cost or fair value. When a determination is made at the time of commitment to originate as held-for-investment, it is the Company’s intent to hold these loans to maturity or for the “foreseeable future,” subject to periodic reviews under the Company’s management evaluation processes, including asset/liability management and credit risk management. When the Company subsequently changes its intent to hold certain loans, the loans are transferred to held-for-sale at the lower of cost or fair value. Certain loans are transferred to held-for-sale with write-downs to ACL on loans.