v3.26.1
Loans and Asset Quality
 6 Months Ended
Jun. 30, 2026
Receivables [Abstract]  
Loans and Asset Quality Loans and Asset Quality
Loans
Loans HFI by category and loans HFS are summarized below:
(in thousands)June 30, 2026December 31, 2025
Real estate:
Commercial real estate$914,002 $920,294 
One-to-four family residential637,566 628,762 
Construction and development234,190 221,214 
Commercial and industrial399,933 392,824 
Tax-exempt51,539 57,541 
Consumer26,750 28,034 
Total loans HFI$2,263,980 $2,248,669 
Total loans HFS$2,512 $3,148 
Accrued interest receivable on loans HFI totaled $7.2 million and $7.8 million as of June 30, 2026 and December 31, 2025, 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 six months ended June 30, 2026:
(in thousands)
Beginning Balance December 31, 2025
Provision for Credit LossesCharge-offsRecoveries
Ending Balance June 30, 2026
Real estate:
Commercial real estate$9,359 $551 $— $— $9,910 
One-to-four family residential6,962 563 (56)— 7,469 
Construction and development1,751 51 — — 1,802 
Commercial and industrial4,939 157 (40)94 5,150 
Tax-exempt91 (3)— — 88 
Consumer297 181 (178)52 352 
Total allowance for credit losses$23,399 $1,500 $(274)$146 $24,771 
The following table summarizes the activity in the ACL by category for the six months ended June 30, 2025:
(in thousands)Beginning Balance December 31, 2024Provision for Credit LossesCharge-offsRecoveries
Ending Balance June 30, 2025
Real estate:
Commercial real estate$9,047 $24 $(19)$— $9,052 
One-to-four family residential6,452 356 (22)12 6,798 
Construction and development1,653 212 (250)— 1,615 
Commercial and industrial4,123 258 (46)11 4,346 
Tax-exempt103 (5)— — 98 
Consumer353 55 (161)66 313 
Total allowance for credit losses$21,731 $900 $(498)$89 $22,222 
Nonaccrual and Past Due Loans
The following table presents nonaccrual loans as of June 30, 2026:
(in thousands)Nonaccrual with No ACLNonaccrual with ACLTotal Nonaccrual
Real estate:
Commercial real estate$147 $— $147 
One-to-four family residential424 1,690 2,114 
Construction and development67 — 67 
Commercial and industrial— 68 68 
Tax-exempt— — — 
Consumer— — — 
Total loans HFI$638 $1,758 $2,396 
For the three and six months ended June 30, 2026, interest income of $105,000 and $108,000, respectively, was recognized in the consolidated statements of income on nonaccrual loans.
The following table presents nonaccrual loans as of December 31, 2025:
(in thousands)Nonaccrual with No ACLNonaccrual with ACLTotal Nonaccrual
Real estate:
Commercial real estate$— $— $— 
One-to-four family residential294 1,723 2,017 
Construction and development— 1,189 1,189 
Commercial and industrial— 19 19 
Tax-exempt— — — 
Consumer56 — 56 
Total loans HFI$350 $2,931 $3,281 
No material interest income was recognized in the consolidated statements of income on nonaccrual loans for the three and six months ended June 30, 2025.
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 June 30, 2026:
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$1,070 $576 $— $912,356 $914,002 $— 
One-to-four family residential561 622 1,420 634,963 637,566 22 
Construction and development— — — 234,190 234,190 — 
Commercial and industrial266 22 74 399,571 399,933 6 
Tax-exempt— — — 51,539 51,539 — 
Consumer39 5 3 26,703 26,750 3 
Total loans HFI$1,936 $1,225 $1,497 $2,259,322 $2,263,980 $31 
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, 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$174 $— $— $920,120 $920,294 $— 
One-to-four family residential1,993 658 1,530 624,581 628,762 211 
Construction and development— — 1,189 220,025 221,214 — 
Commercial and industrial306 68 19 392,431 392,824 — 
Tax-exempt— — — 57,541 57,541 — 
Consumer22 4 8 28,000 28,034 8 
Total loans HFI$2,495 $730 $2,746 $2,242,698 $2,248,669 $219 
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 June 30, 2026 and 2025, 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 June 30, 2026, the Company had no loans classified as doubtful or loss. The following table summarizes loans by risk rating and year of origination as of June 30, 2026, and gross charge-offs for the six months ended June 30, 2026:
Year of Origination
(in thousands)20262025202420232022Prior YearsRevolving LinesTotal
Real estate:
Commercial real estate
Pass$93,507 $147,249 $131,327 $79,866 $190,056 $226,121 $23,116 $891,242 
Special Mention— 1,918 1,052 2,029 7,145 7,038 — 19,182 
Substandard— — 662 355 1,901 660 — 3,578 
Total$93,507 $149,167 $133,041 $82,250 $199,102 $233,819 $23,116 $914,002 
One-to-four family residential
Pass$54,176 $103,073 $63,803 $82,063 $92,723 $208,985 $26,344 $631,167 
Special Mention81 — 89 — 1,313 — — 1,483 
Substandard— 338 135 1,163 607 1,903 770 4,916 
Total$54,257 $103,411 $64,027 $83,226 $94,643 $210,888 $27,114 $637,566 
Construction and development
Pass$15,027 $104,800 $52,115 $44,117 $5,933 $2,897 $9,047 $233,936 
Special Mention— — — — — — — — 
Substandard— — — — 67 187 — 254 
Total$15,027 $104,800 $52,115 $44,117 $6,000 $3,084 $9,047 $234,190 
Commercial and industrial
Pass$78,501 $86,872 $39,514 $22,357 $16,193 $13,348 $140,800 $397,585 
Special Mention— 160 — — 697 — 493 1,350 
Substandard50 767 21 68 92 — — 998 
Total$78,551 $87,799 $39,535 $22,425 $16,982 $13,348 $141,293 $399,933 
Tax-exempt
Pass$— $— $523 $2,107 $13,406 $35,503 $— $51,539 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Total$— $— $523 $2,107 $13,406 $35,503 $— $51,539 
Consumer
Pass$8,135 $8,228 $3,015 $2,888 $1,019 $193 $3,271 $26,749 
Special Mention— — — — — — — — 
Substandard— — — — — — 1 1 
Total$8,135 $8,228 $3,015 $2,888 $1,019 $193 $3,272 $26,750 
Total loans HFI$249,477 $453,405 $292,256 $237,013 $331,152 $496,835 $203,842 $2,263,980 
Gross charge-offs$2 $19 $66 $14 $— $6 $167 $274 
As of December 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 December 31, 2025, and gross charge-offs for the year ended December 31, 2025:
Year of Origination
(in thousands)20252024202320222021Prior YearsRevolving LinesTotal
Real estate:
Commercial real estate
Pass$170,649 $145,282 $87,583 $211,897 $187,813 $92,842 $17,771 $913,837 
Special Mention2,153 — — — 89 — — 2,242 
Substandard— 680 211 1,971 688 665 — 4,215 
Total$172,802 $145,962 $87,794 $213,868 $188,590 $93,507 $17,771 $920,294 
One-to-four family residential
Pass$110,358 $70,297 $89,416 $99,726 $94,963 $133,883 $23,855 $622,498 
Special Mention— 103 — 1,337 — — — 1,440 
Substandard339 356 911 624 779 1,076 739 4,824 
Total$110,697 $70,756 $90,327 $101,687 $95,742 $134,959 $24,594 $628,762 
Construction and development
Pass$88,310 $66,981 $49,648 $6,934 $2,583 $1,263 $4,103 $219,822 
Special Mention— — — — — — — — 
Substandard1,189 — — — — 203 — 1,392 
Total$89,499 $66,981 $49,648 $6,934 $2,583 $1,466 $4,103 $221,214 
Commercial and industrial
Pass$120,525 $52,973 $27,599 $21,001 $16,086 $2,769 $149,734 $390,687 
Special Mention160 — — 748 — — 99 1,007 
Substandard855 36 68 101 6 — 64 1,130 
Total$121,540 $53,009 $27,667 $21,850 $16,092 $2,769 $149,897 $392,824 
Tax-exempt
Pass$— $2,481 $2,187 $13,731 $6,036 $33,106 $— $57,541 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Total$— $2,481 $2,187 $13,731 $6,036 $33,106 $— $57,541 
Consumer
Pass$13,697 $5,504 $3,687 $1,586 $417 $37 $3,049 $27,977 
Special Mention— — — — — — — — 
Substandard— — — — — 56 1 57 
Total$13,697 $5,504 $3,687 $1,586 $417 $93 $3,050 $28,034 
Total loans HFI$508,235 $344,693 $261,310 $359,656 $309,460 $265,900 $199,415 $2,248,669 
Gross charge-offs$22 $40 $264 $83 $5 $20 $337 $771 
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 June 30, 2026 and December 31, 2025, unfunded loan commitments totaled approximately $592.9 million and $545.7 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 June 30, 2026 and December 31, 2025, commitments under standby letters of credit totaled approximately $14.6 million and $14.5 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 June 30, 2026 and December 31, 2025, 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 Six Months Ended
(in thousands)June 30, 2026June 30, 2025
Reserve for unfunded commitments at beginning of period$642 $642 
Provision for credit losses— — 
Reserve for unfunded commitments at end of period$642 $642