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Loans Receivable

6 Months Ended

Jun. 30, 2025

Note 4 – Loans Receivable

Loans receivable, net at June 30, 2025 and December 31, 2024 were comprised of the following:


	June 30,			December 31,
	2025			2024
	(In thousands)
Commercial real estate	$	1,378,327		$	1,385,085
Commercial and industrial		78,409			92,857
Construction		255,335			257,169
Residential first-lien mortgage		108,558			68,030
Home equity/consumer		21,416			18,133

Total loans		1,842,045			1,821,274
Deferred fees and costs		(2,817	)		(2,399	)

Loans, net	$	1,839,228		$	1,818,875

The Company purchased approximately $43.0 million in residential loans and $2.8 million in consumer loans during the

six-months

ended June 30, 2025. Besides the loans acquired in the acquisition of Cornerstone Bank in the third quarter of 2024, the Company did not purchase any loans during the year ended December 31, 2024.

The Company uses the discounted cash flow methodology in determining the appropriate quantitative adjustments, which projects future losses, based on historical and peer loss data, as part of the allowance for credit losses (“ACL”) reserve. Qualitative adjustments include and consider changes in national, regional, and local economic and business conditions, an assessment of the lending environment, including underwriting standards, and other factors affecting credit quality. There were no significant changes to the Company’s ACL methodology for the quarter ended June 30, 2025.

The following table presents the components of the allowance for credit losses:


	June 30, 2025			December 31, 2024
	(In thousands)
Allowance for credit losses - loans	$	(21,014	)	$	(23,657	)
Allowance for credit losses - off balance sheet		(411	)		(361	)

	$	(21,425	)	$	(24,018	)

The following table presents nonaccrual loans by segment of the loan portfolio as of June 30, 2025 and December 31, 2024:


	June 30, 2025				December 31, 2024
	With a		Without a		With a		Without a
	Related		Related		Related		Related
	Allowance		Allowance		Allowance		Allowance
	(In thousands)
Commercial real estate	$	—	$	15,312	$	18,502	$	6,939
Commercial and industrial		—	$	1,071		109		1,178
Construction		—		—		—		—
Residential first-lien mortgage		—		147		—		94
Home equity/consumer		—		—		—		19

Total nonaccrual loans	$	—	$	16,530	$	18,611	$	8,230

The calculation of the allowance for credit losses does not include any accrued interest receivable. The Company’s policy is to write off any interest not collected after 90 days or when the ability to collect principal and interest according to the contractual terms is in doubt. During the

six-month

period ended June 30, 2025, the Company wrote off $675 thousand in accrued interest receivable for loans, compared to $666 thousand for the

six-month

period ended June 30, 2024. Accrued interest receivable related to loans, at June 30, 2025, and December 31, 2024, was $6.5 million, respectively. The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loan receivables by the length of time a recorded payment is past due. The following table presents the segments of the loan portfolio, summarized by the past due status as of June 30, 2025:


													Loans
	30-59		60-89		>90								Receivable
	Days		Days		Days		Total				Total		>90 Days
	Past		Past		Past		Past				Loans		and
	Due		Due		Due		Due		Current		Receivable		Accruing
	(In thousands)
Commercial real estate	$	379	$	—	$	15,312	$	15,691	$	1,362,636	$	1,378,327	$	—
Commercial and industrial		1,423		—		1,071		2,494		75,915		78,409		65
Construction		—		—		—		—		255,335		255,335		—
Residential first-lien mortgage		612		—		147		759		107,799		108,558		—
Home equity/consumer		—		—		—		—		21,416		21,416		—

Total	$	2,414	$	—	$	16,530	$	18,944	$	1,823,101	$	1,842,045	$	65

The following table presents the segments of the loan portfolio summarized by the past due status as of December 31, 2024:


													Loans
	30-59		60-89		>90								Receivable
	Days		Days		Days		Total				Total		>90 Days
	Past		Past		Past		Past				Loans		and
	Due		Due		Due		Due		Current		Receivable		Accruing
	(In thousands)
Commercial real estate	$	—	$	—	$	25,441	$	25,441	$	1,359,644	$	1,385,085	$	—
Commercial and industrial		36		—		421		457		92,400		92,857		32
Construction		—		—		—		—		257,169		257,169		—
Residential first-lien mortgage		700		94		—		794		67,236		68,030		—
Home equity/consumer		—		—		—		—		18,133		18,133		—

Total	$	736	$	94	$	25,862	$	26,692	$	1,794,582	$	1,821,274	$	32

The Company categorizes 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, credit documentation and current economic trends, among other factors. The Company evaluates risk ratings on an ongoing basis and assigns one of the following ratings: pass, special mention, substandard and doubtful. The Company engages a third party to review its assessment on a semiannual basis. The Company classifies residential and consumer loans as either performing or nonperforming based on payment status.

The following table summarizes total loans by year of origination, internally assigned credit grades and risk characteristics as of June 30, 2025. Gross charge-offs are included for the

six-months

ended June 30, 2025.


	2025		2024		2023		2022		2021		Prior		Revolving Loans		Total
	(Dollars in thousands)
Commercial real estate
Pass	$	48,349	$	129,926	$	163,654	$	302,928	$	131,269	$	572,356	$	6,030	$	1,354,512
Special mention		—		—		—		—		—		8,502		—		8,502
Substandard		—		—		—		—		—		15,313		—		15,313

Total commercial real estate		48,349		129,926		163,654		302,928		131,269		596,171		6,030		1,378,327
Current period gross charge-offs												9,950				9,950
Commercial and industrial
Pass		2,641		3,046		4,952		10,625		11,517		14,513		29,404		76,698
Special mention		—		—		—		—		—		641		—		641
Substandard		—		—		—		—		—		1,070		—		1,070

Total commercial and industrial		2,641		3,046		4,952		10,625		11,517		16,224		29,404		78,409
Current period gross charge-offs												83				83
Construction
Pass		18,602		4,000		7,234		9,380		31,349		6,416		178,354		255,335
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—

Total construction		18,602		4,000		7,234		9,380		31,349		6,416		178,354		255,335
Current period gross charge-offs												—				—
Residential first-lien mortgage
Performing		5,204		34,213		11,357		7,957		7,083		42,597		—		108,411
Nonperforming		—		—		—		—		—		147		—		147

Total residential first-lien mortgage		5,204		34,213		11,357		7,957		7,083		42,744		—		108,558
Home equity/consumer
Performing		4,147		1,596		374		1,930		986		995		11,388		21,416
Nonperforming		—		—		—		—		—		—		—		—

Total home equity/consumer		4,147		1,596		374		1,930		986		995		11,388		21,416
Total
Pass		78,943		172,781		187,571		332,820		182,204		636,877		225,176		1,816,372
Special mention		—		—		—		—		—		9,143		—		9,143
Substandard		—		—		—		—		—		16,530		—		16,530

Total loans	$	78,943	$	172,781	$	187,571	$	332,820	$	182,204	$	662,550	$	225,176	$	1,842,045

The following table summarizes total loans by year of origination, internally assigned credit grades and risk characteristics as of December 31, 2024. Gross charge-offs are included for the year-ended December 31, 2024.


	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total
	(Dollars in thousands)
Commercial real estate
Pass	$	143,453	$	168,828	$	309,379	$	136,509	$	58,755	$	537,532	$	2,600	$	1,357,056
Special mention		—		—		—		—		—		2,588		—		2,588
Substandard		—		—		—		—		6,938		18,503		—		25,441

Total commercial real estate		143,453		168,828		309,379		136,509		65,693		558,623		2,600		1,385,085
Current period gross charge-offs												236				236
Commercial and industrial
Pass		—		3,022		10,876		11,183		—		16,440		48,143		89,664
Special mention		—		—		—		—		—		1,906		—		1,906
Substandard		—		—		—		—		—		1,287		—		1,287

Total commercial and industrial		—		3,022		10,876		11,183		—		19,633		48,143		92,857
Current period gross charge-offs												516				516
Construction
Pass		17,765		22,109		46,558		92,841		16,431		242		61,223		257,169
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—

Total construction		17,765		22,109		46,558		92,841		16,431		242		61,223		257,169
Current period gross charge-offs												—				—
Residential first-lien mortgage
Performing		596		1,895		6,789		6,134		2,860		49,662		—		67,936
Nonperforming		—		—		—		—		—		94		—		94

Total residential first-lien mortgage		596		1,895		6,789		6,134		2,860		49,756		—		68,030
Home equity/consumer
Performing		1,234		967		556		—		—		—		15,357		18,114
Nonperforming		—		—		19		—		—		—		—		19

Total home equity/consumer		1,234		967		575		—		—		—		15,357		18,133
Total
Pass		163,048		196,821		374,158		246,667		78,046		603,876		127,323		1,789,939
Special mention		—		—		—		—		—		4,494		—		4,494
Substandard		—		—		19		—		6,938		19,884		—		26,841

Total loans	$	163,048	$	196,821	$	374,177	$	246,667	$	84,984	$	628,254	$	127,323	$	1,821,274

The following table presents the allowance for credit losses on loans receivable at and for the three months ended June 30, 2025:


				Commercial					Residential
	Commercial			and					first-lien		Home equity/
	real estate			industrial			Construction		mortgage		consumer			Total
	(In thousands)
Allowance for credit losses:
Beginning balance	$	20,981		$	1,104		$	400	$	1,288	$	169			23,942
Provision (reversal) 1		7,013			(155	)		29		70		(8	)		6,949
Charge-offs		(9,950	)		1			—		—		—			(9,949	)
Recoveries		6			66			—		—		—			72

Total	$	18,050		$	1,016		$	429	$	1,358	$	161		$	21,014

1	The provision for credit losses on the Consolidated Statement of Income is $7.0 million comprising of an increase of $6.9 million to the allowance for loan loss and a $7 thousand increase to the reserve for unfunded liabilities.

The following table presents the allowance for credit losses on loans receivable at and for the six months ended June 30, 2025:


				Commercial						Residential
	Commercial			and						first-lien		Home equity/
	real estate			industrial			Construction			mortgage		consumer		Total
	(In thousands)
Allowance for credit losses:
Beginning balance	$	20,821		$	1,173		$	609		$	893	$	161		23,657
Provision (reversal) 1		7,162			(273	)		(180	)		465		—		7,174
Charge-offs		(9,950	)		(83	)		—			—		—		(10,033	)
Recoveries		17			199			—			—		—		216

Total	$	18,050		$	1,016		$	429		$	1,358	$	161	$	21,014

1	The provision for credit losses on the Consolidated Statement of Income is $7.2 million comprising of an increase of $7.1 million increase to the allowance for loan loss and a $50 thousand increase to the reserve for unfunded liabilities.

The following table presents the allowance for credit losses on loans receivable at and for the three months ended June 30, 2024:


			Commercial						Residential
	Commercial		and						first-lien		Home equity/
	real estate		industrial			Construction			mortgage		consumer			Total
	(In thousands)
Allowance for credit losses:
Beginning balance	$	16,446	$	513		$	1,021		$	572	$	66		$	18,618
Provision (reversal) 1		106		(80	)		(277	)		88		(6	)		(169	)
Charge-offs		—		(84	)		—			—		—			(84	)
Recoveries		71		28			—			—		—			99

Total	$	16,623	$	377		$	744		$	660	$	60		$	18,464

1	The reversal of credit losses on the Consolidated Statement of Income is $118 thousand comprising of a $169 thousand decrease to the allowance for credit losses on loans and a $51 thousand increase to the reserve for unfunded liabilities.

The following table presents the allowance for credit losses on loans receivable at and for the six months ended June 30, 2024:


				Commercial						Residential
	Commercial			and						first-lien			Home equity/
	real estate			industrial			Construction			mortgage			consumer			Total
	(In thousands)
Allowance for credit losses:
Beginning balance	$	16,047		$	488		$	1,145		$	725		$	87		$	18,492
Provision (reversal) 1		737			(111	)		(401	)		(65	)		(27	)		133
Charge-offs		(237	)		(130	)		—			—			—			(367	)
Recoveries		76			130			—			—			—			206

Total	$	16,623		$	377		$	744		$	660		$	60		$	18,464

1	The provision for credit losses on the Consolidated Statement of Income is $68 thousand comprising of a $133 thousand increase to the allowance for credit losses on loans and a $65 thousand reduction to the reserve for unfunded liabilities.

As of June 30, 2025, the Company had seven loans totaling $16.5 million that were individually analyzed for potential credit loss. Loans totaling $16.0 million have real estate as credit support, and $458 thousand are evaluated through the discounted cash flow method. As of December 31, 2024, the Company had nine loans totaling $26.8 million that were individually analyzed for potential credit loss and all the loans have real estate credit support.

Occasionally, the Company will modify the contractual terms of loans to a borrower experiencing financial difficulties as a way to mitigate loss, proactively work with borrowers in financial difficulty, or to comply with regulations regarding the treatment of certain bankruptcy filing and discharge situations. Typically, such concessions may consist of a reduction in interest rate to a below market rate, taking into account the credit quality of the note, extension of additional credit base on receipt of adequate collateral, or a deferment or reduction of payments (principal or interest) which materially alters the Company’s position or significantly extends the note’s maturity date, such that the present value of cash flows to be received is materially less than those contractually established at the loan’s origination. When principal forgiveness is provided, the amount forgiven is charged off against the allowance for credit losses on loans. There were no modifications to borrowers with financial difficulties and no previously modified loans that defaulted during the

six-month

period ended June 30, 2025, and the twelve-months ended December 31, 2024.