Loans Receivable

9 Months Ended

Sep. 30, 2025

Note 4 – Loans Receivable

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


	September 30, 2025			December 31, 2024
	(In thousands)
Commercial real estate	$	1,353,039		$	1,385,085
Commercial and industrial		81,370			92,857
Construction		203,004			257,169
Residential first-lien mortgage		135,930			68,030
Home equity/consumer		22,799			18,133
Total loans		1,796,142			1,821,274
Deferred fees and costs		(2,355	)		(2,399	)
Loans, net	$	1,793,787		$	1,818,875

The Company purchased approximately $74.2 million in residential loans and $5.1 million in consumer loans during the nine months ended September 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 September 30, 2025.

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


	September 30, 2025			December 31, 2024
	(In thousands)
Allowance for credit losses - loans	$	(20,441	)	$	(23,657	)
Allowance for credit losses - off balance sheet		(397	)		(361	)
	$	(20,838	)	$	(24,018	)

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


	September 30, 2025				December 31, 2024
	With a Related Allowance		Without a Related Allowance		With a Related Allowance		Without a Related Allowance
	(In thousands)
Commercial real estate	$	—	$	15,285	$	18,502	$	6,939
Commercial and industrial		—		1,285		109		1,178
Construction		—		—		—		—
Residential first-lien mortgage		—		140		—		94
Home equity/consumer		—		—		—		19
Total nonaccrual loans	$	—	$	16,710	$	18,611	$	8,230

Note 4 – Loans Receivable (continued)

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 nine months ended September 30, 2025, the Company wrote off $933 thousand in accrued interest receivable for loans, compared to $692 thousand for the nine months ended September 30, 2024. Accrued interest receivable related to loans, at September 30, 2025, and December 31, 2024, was $7.6 million and $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 September 30, 2025:


	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans Receivable		Loans Receivable >90 Days and Accruing
	(In thousands)
Commercial real estate	$	6,026	$	1,820	$	15,285	$	23,131	$	1,329,908	$	1,353,039	$	—
Commercial and industrial		248		16		1,285		1,549		79,821		81,370		—
Construction		—		—		—		—		203,004		203,004		—
Residential first-lien mortgage		1,705		84		140		1,929		134,001		135,930		—
Home equity/consumer		—		—		—		—		22,799		22,799		—
Total	$	7,979	$	1,920	$	16,710	$	26,609	$	1,769,533	$	1,796,142	$	—

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


	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans Receivable		Loans Receivable >90 Days and 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.

Note 4 – Loans Receivable (continued)

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


	2025		2024		2023		2022		2021		Prior		Revolving Loans		Total
	(Dollars in thousands)
Commercial real estate
Pass	$	57,432	$	128,366	$	164,147	$	300,794	$	130,646	$	542,083	$	5,856	$	1,329,324
Special mention		—		—		—		—		—		8,429		—		8,429
Substandard		—		—		—		—		—		15,285		—		15,285
Total commercial real estate		57,432		128,366		164,147		300,794		130,646		565,797		5,856		1,353,038
Current period gross charge-offs												9,950				9,950
Commercial and industrial																—
Pass		7,608		2,910		4,228		16,491		11,355		8,788		20,735		72,115
Special mention		—		—		—		—		—		674		—		674
Substandard		—		—		—		—		—		8,581		—		8,581
Total commercial and industrial		7,608		2,910		4,228		16,491		11,355		18,043		20,735		81,370
Current period gross charge-offs												83				83
Construction																—
Pass		5,000		5,124		—		9,290		31,349		12,181		139,912		202,856
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		148		—		148
Total construction		5,000		5,124		—		9,290		31,349		12,329		139,912		203,004
Current period gross charge-offs												—				—
Residential first-lien mortgage																—
Performing		10,090		45,645		20,097		6,747		5,711		47,493		—		135,783
Nonperforming		—		—		—		—		—		147		—		147
Total residential first-lien mortgage		10,090		45,645		20,097		6,747		5,711		47,640		—		135,930
Home equity/consumer																—
Performing		6,578		1,061		923		1,348		1,056		470		11,308		22,744
Nonperforming		—		—		—		55		—		—		—		55
Total home equity/consumer		6,578		1,061		923		1,403		1,056		470		11,308		22,799
Total
Pass		86,708		183,106		189,395		334,670		180,117		611,015		177,811		1,762,822
Special mention		—		—		—		—		—		9,103		—		9,103
Substandard		—		—		—		55		—		24,161		—		24,216
Total loans	$	86,708	$	183,106	$	189,395	$	334,725	$	180,117	$	644,279	$	177,811	$	1,796,141

Note 4 – Loans Receivable (continued)

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

Note 4 – Loans Receivable (continued)

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


	Commercial real estate			Commercial and industrial			Construction			Residential first-lien mortgage		Home equity/ consumer		Total
	(In thousands)
Allowance for credit losses:
Beginning balance	$	18,050		$	1,016		$	429		$	1,358	$	161		21,014
Provision (reversal)1		(1,057	)		(62	)		(65	)		514		12		(658	)
Charge-offs		—			—			—			—		—		—
Recoveries		62			23			—			—		—		85
Total	$	17,055		$	977		$	364		$	1,872	$	173	$	20,441

The reversal of credit losses on the Consolidated Statement of Income is $672 thousand comprising of a decrease of $658 thousand to the allowance for loan loss and a $14 thousand decrease to the reserve for unfunded liabilities.

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


	Commercial real estate			Commercial and industrial			Construction			Residential first-lien mortgage		Home equity/ consumer		Total
	(In thousands)
Allowance for credit losses:
Beginning balance	$	20,821		$	1,173		$	609		$	893	$	161	$	23,657
Provision (reversal)1		6,105			(335	)		(245	)		979		12		6,516
Charge-offs		(9,950	)		(83	)		—			—		—		(10,033	)
Recoveries		79			222			—			—		—		301
Total	$	17,055		$	977		$	364		$	1,872	$	173	$	20,441

The provision for credit losses on the Consolidated Statement of Income is $6.6 million comprising of an increase of $6.5 million increase to the allowance for loan loss and a $36 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 September 30, 2024:


	Commercial real estate		Commercial and industrial			Construction			Residential first-lien mortgage		Home equity/ consumer			Total
	(In thousands)
Allowance for credit losses:
Beginning balance	$	16,623	$	377		$	744		$	660	$	60		$	18,464
Purchased non-credit deteriorated loans1		2,106		15			546			271		214			3,152
Purchased credit deteriorated loans		110		4			11			13		16			154
Provision (reversal)1		1,482		867			(699	)		8		(122	)		1,536
Charge-offs		1		(279	)		—			—		—			(278	)
Recoveries		3		134			35			—		—			172
Total	$	20,325	$	1,118		$	637		$	952	$	168		$	23,200

The provision for credit losses on the Consolidated Statement of Income is $4.6 million comprising of an increase of $3.2 million related to purchased non-credit deteriorated loans acquired, $1.5 million increase to the allowance for loan loss and a $87 thousand reduction to the reserve for unfunded liabilities.

Note 4 – Loans Receivable (concluded)

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


	Commercial real estate			Commercial and industrial			Construction			Residential first-lien mortgage			Home equity/ consumer			Total
	(In thousands)
Allowance for credit losses:
Beginning balance	$	16,047		$	488		$	1,145		$	725		$	87		$	18,492
Purchased non-credit deteriorated loans1		2,106			15			546			271			214			3,152
Purchased credit deteriorated loans		110			4			11			13			16			154
Provision (reversal)1		2,219			756			(1,100	)		(57	)		(149	)		1,669
Charge-offs		(236	)		(409	)		—			—			—			(645	)
Recoveries		79			264			35			—			—			378
Total	$	20,325		$	1,118		$	637		$	952		$	168		$	23,200

The provision for credit losses on the Consolidated Statement of Income is $4.7 million comprising of an increase of $3.2 million related to purchased non-credit deteriorated loans acquired, $1.7 million increase to the allowance for loan loss and a $152 thousand reduction to the reserve for unfunded liabilities.

As of September 30, 2025, the Company had nine loans totaling $16.7 million that were individually analyzed for potential credit loss, and all nine loans have real estate as credit support. 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 nine months ended September 30, 2025, and the twelve-months ended December 31, 2024.