| LOANS AND ALLOWANCE FOR CREDIT LOSSES | LOANS AND ALLOWANCE FOR CREDIT LOSSES Loans Held for Investment The Company’s loan portfolio consists primarily of loans to borrowers within its Southern and Northern California markets effective July 31, 2024. Although the Company seeks to avoid concentrations of loans to a single industry or based upon a single class of collateral, real estate and real estate associated businesses are among the principal industries in the Company’s market area. The Company’s loan portfolio in real estate secured credit represented 75% and 83% of total loans at September 30, 2024 and December 31, 2023, respectively. The Company also originates SBA loans either for sale to institutional investors or for retention in the loan portfolio. Loans identified as held for sale are carried at the lower of cost or market value and separately designated as such in the consolidated financial statements. A portion of the Company’s revenues are from origination of loans guaranteed by the SBA under its various programs and sale of the guaranteed portions of the loans. Funding for these loans depends on annual appropriations by the U.S. Congress. The composition of the Company’s loan portfolio at September 30, 2024 and December 31, 2023 was as follows: (dollars in thousands) September 30, December 31, Construction and land development $ 247,934 $ 243,521 Real estate - other: 1-4 family residential 152,540 143,903 Multifamily residential 252,134 221,247 Commercial real estate and other 1,755,908 1,024,243 Commercial and industrial 765,472 320,142 Consumer 25,726 4,386 Loans held for investment (1) 3,199,714 1,957,442 Allowance for credit losses (53,552) (22,569) Loans held for investment, net $ 3,146,162 $ 1,934,873 (1) Loans held for investment includes net unearned fees of $1.6 million and $2.3 million and net unearned discounts on acquired loans of $66.0 million and $1.4 million at September 30, 2024 and December 31, 2023, respectively. The Company recognized $4.2 million and $4.3 million, respectively, in interest accretion for acquired loans for the three and nine months ended September 30, 2024. The Company has pledged $2.20 billion of loans with the FHLB under a blanket lien, of which an unpaid principal balance of $1.44 billion was considered as eligible collateral under this secured borrowing arrangement and loans with an unpaid principal balance totaling $466.8 million were pledged as collateral under a secured borrowing arrangement with the Federal Reserve as of September 30, 2024. See Note 8 – Borrowing Arrangements for additional information regarding the FHLB and Federal Reserve secured lines of credit. Loans Held for Sale Credit Quality Indicators The Company categorizes loans using risk ratings 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. Larger, non-homogeneous loans such as CRE and C&I loans are analyzed individually for risk rating assessment. For purposes of risk classification, 1-4 Family Residential loans for investment purposes are evaluated with CRE loans. This analysis 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 loans not meeting the risk ratings defined below. 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 deterioration of the 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 so classified 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 liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss - Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. The risk category of loans by class of loans and origination year as of September 30, 2024 follows: Term Loans Amortized Cost Basis by Origination Year Revolving Loans Amortized Cost Basis Revolving Loans Amortized Cost Basis (dollars in thousands) 2024 2023 2022 2021 2020 Prior Total September 30, 2024 Construction and land development Pass $ 493 $ 40,861 $ 111,686 $ 51,163 $ 17,283 $ 2,340 $ 8,476 $ — $ 232,302 Special mention — — — — — — — — — Substandard — — 9,659 — 2,945 3,028 — — 15,632 Doubtful — — — — — — — — — Loss — — — — — — — — — Total construction and land development 493 40,861 121,345 51,163 20,228 5,368 8,476 — 247,934 Real estate - other: 1-4 family residential Pass 6,271 21,137 33,768 17,995 6,736 17,562 45,329 — 148,798 Special mention — — — — — 847 — — 847 Substandard — — 2,895 — — — — — 2,895 Doubtful — — — — — — — — — Loss — — — — — — — — — Total 1-4 family residential 6,271 21,137 36,663 17,995 6,736 18,409 45,329 — 152,540 Multifamily residential Pass 1,625 18,808 91,437 89,992 5,287 43,506 1,479 — 252,134 Special mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Loss — — — — — — — — — Total multifamily residential 1,625 18,808 91,437 89,992 5,287 43,506 1,479 — 252,134 Term Loans Amortized Cost Basis by Origination Year Revolving Loans Amortized Cost Basis Revolving Loans Amortized Cost Basis (dollars in thousands) 2024 2023 2022 2021 2020 Prior Total September 30, 2024 Commercial real estate and other Pass 74,938 83,188 457,671 398,356 101,050 472,661 106,386 151 1,694,401 Special mention — 9,585 5,059 14,148 2,277 10,870 1,596 497 44,032 Substandard — — — 11,573 — 5,902 — — 17,475 Doubtful — — — — — — — — — Loss — — — — — — — — — Total commercial real estate and other 74,938 92,773 462,730 424,077 103,327 489,433 107,982 648 1,755,908 Commercial and industrial Pass 48,106 75,264 122,585 45,355 15,765 70,103 271,764 — 648,942 Special mention 383 1,251 — 7,556 285 2,099 36,995 — 48,569 Substandard — 50 21,535 268 — 3,644 42,464 — 67,961 Doubtful — — — — — — — — — Loss — — — — — — — — — Total commercial and industrial 48,489 76,565 144,120 53,179 16,050 75,846 351,223 — 765,472 Consumer Pass 1,088 — 1,107 22,946 100 7 143 — 25,391 Special mention — — — — — — — — — Substandard — — — 335 — — — — 335 Doubtful — — — — — — — — — Loss — — — — — — — — — Total consumer 1,088 — 1,107 23,281 100 7 143 — 25,726 Total loans $ 132,904 $ 250,144 $ 857,402 $ 659,687 $ 151,728 $ 632,569 $ 514,632 $ 648 $ 3,199,714 Total by risk rating: Pass $ 132,521 $ 239,258 $ 818,254 $ 625,807 $ 146,221 $ 606,179 $ 433,577 $ 151 $ 3,001,968 Special mention 383 10,836 5,059 21,704 2,562 13,816 38,591 497 93,448 Substandard — 50 34,089 12,176 2,945 12,574 42,464 — 104,298 Doubtful — — — — — — — — — Loss — — — — — — — — — Total loans $ 132,904 $ 250,144 $ 857,402 $ 659,687 $ 151,728 $ 632,569 $ 514,632 $ 648 $ 3,199,714 The risk category of loans by class of loans and origination year as of December 31, 2023 follows: Term Loans Amortized Cost Basis by Origination Year Revolving Loans Amortized Cost Basis Revolving Loans Amortized Cost Basis (dollars in thousands) 2023 2022 2021 2020 2019 Prior Total December 31, 2023 Construction and land development Pass $ 25,113 $ 127,496 $ 71,199 $ 17,022 $ 2,071 $ 528 $ — $ — $ 243,429 Special mention — — — — — — — — — Substandard — — — — — 92 — — 92 Doubtful — — — — — — — — — Loss — — — — — — — — — Total construction and land development 25,113 127,496 71,199 17,022 2,071 620 — — 243,521 Real estate - other: 1-4 family residential Pass 24,928 35,670 20,207 6,887 4,884 15,582 35,645 100 143,903 Special mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Loss — — — — — — — — — Total 1-4 family residential 24,928 35,670 20,207 6,887 4,884 15,582 35,645 100 143,903 Multifamily residential Pass 18,803 61,677 73,365 5,712 27,292 21,245 149 — 208,243 Special mention — — — — — — — — — Substandard — 13,004 — — — — — — 13,004 Doubtful — — — — — — — — — Loss — — — — — — — — — Total multifamily residential 18,803 74,681 73,365 5,712 27,292 21,245 149 — 221,247 Term Loans Amortized Cost Basis by Origination Year Revolving Loans Amortized Cost Basis Revolving Loans Amortized Cost Basis (dollars in thousands) 2023 2022 2021 2020 2019 Prior Total Commercial real estate and other Pass 76,434 304,524 287,245 57,736 51,992 203,976 36,543 1,626 1,020,076 Special mention — 2,701 — — — — 295 — 2,996 Substandard — — — — — 1,171 — — 1,171 Doubtful — — — — — — — — — Loss — — — — — — — — — Total commercial real estate and other 76,434 307,225 287,245 57,736 51,992 205,147 36,838 1,626 1,024,243 Commercial and industrial Pass 46,701 70,658 12,883 7,095 8,266 13,715 153,712 1,877 314,907 Special mention — — — — — — — — — Substandard — 346 64 — 1,208 121 3,097 399 5,235 Doubtful — — — — — — — — — Loss — — — — — — — — — Total commercial and industrial 46,701 71,004 12,947 7,095 9,474 13,836 156,809 2,276 320,142 Consumer Pass 163 — 39 91 6 11 4,076 — 4,386 Special mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Loss — — — — — — — — — Total consumer 163 — 39 91 6 11 4,076 — 4,386 Total loans $ 192,142 $ 616,076 $ 465,002 $ 94,543 $ 95,719 $ 256,441 $ 233,517 $ 4,002 $ 1,957,442 Total by risk rating: Pass $ 192,142 $ 600,025 $ 464,938 $ 94,543 $ 94,511 $ 255,057 $ 230,125 $ 3,603 $ 1,934,944 Special mention — 2,701 — — — — 295 — 2,996 Substandard — 13,350 64 — 1,208 1,384 3,097 399 19,502 Doubtful — — — — — — — — — Loss — — — — — — — — — Total loans $ 192,142 $ 616,076 $ 465,002 $ 94,543 $ 95,719 $ 256,441 $ 233,517 $ 4,002 $ 1,957,442 A summary of gross charge-offs by class of loans and origination year for the nine months ended September 30, 2024 and 2023 follows: Term Loans Gross Charge-offs by Origination Year Revolving Loans Amortized Cost Basis Revolving Loans Amortized Cost Basis (dollars in thousands) 2024 2023 2022 2021 2020 Prior Total Nine Months Ended September 30, 2024 Construction and land development $ — $ — $ 967 $ — $ — $ — $ — $ — $ 967 Real estate - other: 1-4 family residential — — — — — — 1 — 1 Multifamily residential — — 1,456 — — — — — 1,456 Commercial real estate and other — — — — — — — — — Commercial and industrial — 37 24 — — — — — 61 Consumer — — — 135 — — — — 135 Total $ — $ 37 $ 2,447 $ 135 $ — $ — $ 1 $ — $ 2,620 Term Loans Gross Charge-offs by Origination Year Revolving Loans Amortized Cost Basis Revolving Loans Amortized Cost Basis (dollars in thousands) 2023 2022 2021 2020 2019 Prior Total Nine Months Ended September 30, 2023 Construction and land development $ — $ — $ — $ — $ — $ — $ — $ — $ — Real estate - other: 1-4 family residential — — — — — 12 — — 12 Multifamily residential — — — — — — — — — Commercial real estate and other — — — — — — — — — Commercial and industrial — — — 15 — 9 — — 24 Consumer — — — — — — — — — Total $ — $ — $ — $ 15 $ — $ 21 $ — $ — $ 36 Past Due Loans A summary of past due loans as of September 30, 2024 and December 31, 2023 follows: Current (dollars in thousands) 30-59 Days 60-89 Days Over 90 Days Total Current Nonaccrual Total September 30, 2024 Construction and land development $ — $ — $ — $ — $ 238,275 $ 9,659 $ 247,934 Real estate - other: 1-4 family residential — — — — 149,645 2,895 152,540 Multifamily residential — — — — 252,134 — 252,134 Commercial real estate and other 18,175 — — 18,175 1,728,628 9,105 1,755,908 Commercial and industrial 667 — — 667 760,803 4,002 765,472 Consumer 96 172 37 305 25,421 — 25,726 $ 18,938 $ 172 $ 37 $ 19,147 $ 3,154,906 $ 25,661 $ 3,199,714 Current (dollars in thousands) 30-59 Days 60-89 Days Over 90 Days Total Current Nonaccrual Total December 31, 2023 Construction and land development $ — $ — $ — $ — $ 243,521 $ — $ 243,521 Real estate - other: 1-4 family residential — — — — 143,903 — 143,903 Multifamily residential — — — — 208,243 13,004 221,247 Commercial real estate and other — — — — 1,024,243 — 1,024,243 Commercial and industrial 19 — — 19 320,123 — 320,142 Consumer — — — — 4,386 — 4,386 $ 19 $ — $ — $ 19 $ 1,944,419 $ 13,004 $ 1,957,442 The Company had $37 thousand in consumer solar loans that were over 90 days past due that were accruing interest at September 30, 2024. There were no loans over 90 days past due loans and still accruing interest as of December 31, 2023. Nonaccrual Loans A summary of total nonaccrual loans and the amount of nonaccrual loans with no related ACL as of September 30, 2024 and December 31, 2023 follows: September 30, 2024 December 31, 2023 (dollars in thousands) Total Nonaccrual Total Nonaccrual Construction and land development $ 9,659 $ 9,659 $ — $ — Real estate - other: 1-4 family residential 2,895 2,895 — — Multifamily residential — — 13,004 13,004 Commercial real estate and other 9,105 117 — — Commercial and industrial 4,002 — — — Consumer — — — — $ 25,661 $ 12,671 $ 13,004 $ 13,004 Collateral Dependent Loans Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. 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. At September 30, 2024, a substandard nonaccrual construction loan and a 1-4 family residential loan were classified as collateral dependent loans. The construction loan was collateralized by a stalled construction project for a single family residential estate located in Los Angeles, California. Based on the Company's internal analysis, the estimated collateral value was $9.7 million, and was $967 thousand lower than the subject loan’s net carrying value resulting in a partial charge-off in the third quarter of 2024 . The net estimated collateral value after accounting for selling costs for the 1-4 family residential loan was sufficient to cover the subject loan’s net carrying value resulting in no partial charge-off in the third quarter of 2024 . At December 31, 2023, a $13.0 million multifamily residential loan was classified as a collateral dependent loan, and was collateralized by three investment multifamily properties. The subject loan was partially charged off by $1.3 million in the fourth quarter of 2023, foreclosed on in the first quarter of 2024 and sold in the second quarter of 2024. A summary of collateral dependent loans by collateral type as of September 30, 2024 and December 31, 2023 follows: Type of Collateral (dollars in thousands) Commercial Real Estate Residential Real Estate Business Assets September 30, 2024 Construction and land development $ — $ 9,659 $ — Real estate - other: 1-4 family residential — 2,895 — Commercial real estate and other 10,535 — — Commercial and industrial — 271 2,301 $ 10,535 $ 12,825 $ 2,301 December 31, 2023 Multifamily residential $ — $ 13,004 $ — $ — $ 13,004 $ — Other Real Estate Owned (“OREO”), Net Real estate acquired by foreclosure or deed in lieu of foreclosure is recorded at fair value less costs to sell at the date of foreclosure, establishing a new cost basis by a charge to the ACL, if necessary. The Company had $4.1 million and zero foreclosed assets at September 30, 2024 and December 31, 2023, respectively. During the nine months ended September 30, 2024, the Company foreclosed on and sold $13.1 million of OREO related to a three-property multifamily OREO in Santa Monica, California, and recognized a $4.8 million pre-tax loss. Additionally, during the nine months ended September 30, 2024, the Company foreclosed on a multifamily nonaccrual loan of $4.7 million, that was transferred to OREO. During the three and nine months ended September 30, 2024, the Company recorded a $614 thousand valuation allowance due to a decline in the fair value of the underlying property in the third quarter of 2024. Modified Loans to Borrowers Experiencing Financial Difficulty A summary of modified loans to borrowers experiencing financial difficulty as of September 30, 2024 follows: (dollars in thousands) Commercial & Industrial Total September 30, 2024: Term extension: Amortized cost basis 13,094 13,094 % of total class of loans 1.7 % 0.4 % The modified loans to borrowers experiencing financial difficulty in the table above were all loans that were acquired in the Merger. There were no modified loans to borrowers experiencing financial difficulty as of December 31, 2023. A summary of the payment status for modified loans to borrowers experiencing financial difficulty as of September 30, 2024 follows: (dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Over 90 Days Past Due Total Current Total September 30, 2024: Commercial and industrial — — 397 397 12,697 13,094 $ — $ — $ 397 $ 397 $ 12,697 $ 13,094 The modified loans were acquired from the merger. The were no new modifications or refinancings (including those with borrowers that are experiencing financial difficulty) of loans representing a new non-acquired loan or a continuation of an existing non-acquired loan during the three and nine months ended September 30, 2024, and 2023. Allowance for Credit Losses - Loans The ACL consists of: (i) a specific allowance established for CECL on loans individually evaluated, (ii) a quantitative allowance for current expected loan losses based on the portfolio and expected economic conditions over a reasonable and supportable forecast period that reverts back to long-term trends to cover the expected life of the loan, (iii) a qualitative allowance including management judgment to capture factors and trends that are not adequately reflected in the quantitative allowance, and (iv) the ACL for off-balance sheet credit exposure for unfunded loan commitments. For prepayment and curtailment rates, the Company used its own historical quarterly prepayment and curtailment experience covering the period starting February 2021 to estimate the ACL. The Company used the probability-weighted two-scenario forecasts, representing a base-case scenario and one downside scenario, to estimate the ACL. The Company utilized economic forecasts released by Moody’s Analytics during the fourth week of September 2024. Other sources of economic forecasts and meeting minutes of the Federal Open Market Committee meeting were also considered by the Company when determining the scenario weighting. At September 30, 2024, the Moody’s economic forecast assumes two interest rate cuts in 2024. In its September 2024 meeting, the Federal Reserve chose to lower its key overnight borrowing rate by 50 basis points to 4.75% to 5.00%, amid signals that inflation was moderating and the labor market was weakening. The underlying assumptions in the Moody’s economic forecasts supporting the baseline forecast remained consistent in the expectation that the Federal Reserve will continue to reduce the Federal Reserve’s balance sheet through quantitative tightening at its current pace. Moody’s baseline national gross domestic product forecast was 2.6% in 2024 on an annual average basis. The forecast assumes the growth is largely based on the Bureau of Economic Analysis’ upward revision of 2Q24 GDP. Growth in the following two years is forecasted at 2.1% in 2025 and 2.0% in 2026. The Conference Board increased their September forecast from 1% to 2.4%. The upward revision is now in line with Moody’s Baseline scenario of 2.6% while the Federal Reserve members median projection for GDP growth in 2024 and 2025 remained at 2.0%. Moody’s economic forecasts for California suggested a modest change for its September 2024 baseline forecast state unemployment rate and Gross State Product (GSP) growth rate of 5.2% and 2.04%, respectively, declining to 4.9% and 1.3%, respectively, in 2025. Moody’s downside scenario forecasted the state unemployment rate would rise in the fourth quarter of 2024 and will reach 7.86% in the third quarter of 2025 from the weakening economy. The outlook for GSP growth rate was adjusted higher at the near term in baseline and downside scenario from 1.54% and 1.05%, respectively, in the fourth quarter of 2024 to 1.60% and -0.77%, respectively, in the fourth quarter of 2025. The mix changes in these key economic forecasts for California would have a mix impact to the Company ACL. During the third quarter of 2024, the Company updated its historical prepayment and curtailment rates analysis, which reflected a moderate decrease from the second quarter of 2024 primarily due to lower payoffs and paydowns. Accrued interest receivable on loans receivable, net, totaled $14.2 million and $6.4 million at September 30, 2024 and December 31, 2023, respectively, and is included within accrued interest receivable and other assets in the accompanying consolidated balance sheets. Accrued interest receivable is excluded from the ACL. Allowance for Credit Losses - Unfunded Loan Commitments The allowance for unfunded credit commitments is maintained at a level that management believes to be sufficient to absorb estimated expected credit losses related to unfunded credit facilities. The Company evaluates the loss exposure for unfunded loan commitments to extend credit following the same principles used for the ACL, with consideration for experienced utilization rates on client credit lines and the inherently lower risk of unfunded loan commitments relative to disbursed commitments. The Company recognized a provision for unfunded loan commitments of $3.3 million and $3.1 million, respectively, for the three and nine months ended September 30, 2024, of which $2.7 million related to the initial allowance for unfunded credit commitments acquired in the Merger. There was a $298 thousand and $509 thousand negative provision for unfunded loan commitments for the three and nine months ended September 30, 2023, respectively. The provision for unfunded loan commitments is included in provision for (reversal of) credit losses in the consolidated statements of operations. The reserve for unfunded loan commitments was $4.1 million and $933 thousand at September 30, 2024 and December 31, 2023, respectively. The reserve for unfunded loan commitments is included in accrued interest payable and other liabilities in the consolidated balance sheets. A summary of the changes in the ACL for loans and unfunded commitments for the periods indicated follows: Three Months Ended Nine Months Ended (dollars in thousands) 2024 2023 2024 2023 Allowance for loan losses (ALL) Balance, beginning of period $ 23,788 $ 22,502 $ 22,569 $ 17,099 Adoption of ASU No. 2016-13 (1) — — — 5,027 Initial allowance for acquired PCD loans 11,216 — 11,216 — Provision for loan losses (2) 19,711 202 22,387 600 Charge-offs (1,163) — (2,620) (36) Recoveries — 1 — 15 Net (charge-offs) recoveries (1,163) 1 (2,620) (21) Balance, end of period $ 53,552 $ 22,705 $ 53,552 $ 22,705 Reserve for unfunded loan commitments Balance, beginning of period $ 819 $ 1,538 $ 933 $ 1,310 Adoption of ASU No. 2016-13 (1) — — — 439 Provision for (reversal of) credit losses for unfunded loan commitments (3) 3,252 (298) 3,138 (509) Balance, end of period 4,071 1,240 4,071 1,240 Allowance for credit losses, end of period $ 57,623 $ 23,945 $ 57,623 $ 23,945 (1) Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2023. As a result of adopting ASU 2016-13, the Company’s methodology to compute our ACL is based on a CECL methodology, rather than the previously applied incurred loss methodology. (2) Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the three and nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period. (3) Includes an initial provision for credit losses for unfunded commitments acquired in the Merger of $2.7 million for the three and nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period. A summary of changes in the ALL by loan portfolio segment for the periods indicated follows: (dollars in thousands) Construction and Land Development Real Estate - Commercial & Industrial Consumer Total Three Months Ended September 30, 2024 Beginning of period $ 2,942 $ 17,048 $ 3,795 $ 3 $ 23,788 Initial allowance for acquired PCD loans 328 2,392 8,355 141 11,216 (Reversal of) provision for loan losses (1) (219) 10,020 8,769 1,141 19,711 Charge-offs (967) — (61) (135) (1,163) Recoveries — — — — — Net charge-offs (967) — (61) (135) (1,163) End of period $ 2,084 $ 29,460 $ 20,858 $ 1,150 $ 53,552 Three Months Ended September 30, 2023 Beginning of period $ 3,556 $ 15,097 $ 3,808 $ 41 $ 22,502 (Reversal of) provision for loan losses (1,021) 1,318 (70) (25) 202 Charge-offs — — — — — Recoveries — — 1 — 1 Net recoveries — — 1 — 1 End of period $ 2,535 $ 16,415 $ 3,739 $ 16 $ 22,705 (1) Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the three months ended September 30, 2024. There was no similar activity in the comparable 2023 period. (dollars in thousands) Construction and Land Development Real Estate - Commercial & Industrial Consumer Total Nine Months Ended September 30, 2024 Beginning of period $ 2,032 $ 16,280 $ 4,242 $ 15 $ 22,569 Initial allowance for acquired PCD loans 328 2,392 8,355 141 11,216 Provision for loan losses (1) 691 12,245 8,322 1,129 22,387 Charge-offs (967) (1,457) (61) (135) (2,620) Recoveries — — — — — Net charge-offs $ (967) $ (1,457) $ (61) $ (135) $ (2,620) End of period $ 2,084 $ 29,460 $ 20,858 $ 1,150 $ 53,552 Nine Months Ended September 30, 2023 Beginning of period $ 2,301 $ 11,691 $ 3,079 $ 28 $ 17,099 Adoption of ASU No. 2016-13 (2) 881 2,983 1,132 31 5,027 (Reversal of) provision for loan losses (647) 1,753 (463) (43) 600 Charge-offs — (12) (24) — (36) Recoveries — — 15 — 15 Net charge-offs $ — $ (12) $ (9) $ — $ (21) End of period $ 2,535 $ 16,415 $ 3,739 $ 16 $ 22,705 (1) Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period. (2) Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2023. As a result of adopting ASU 2016-13, the Company’s methodology to compute our ACL is based on a CECL methodology, rather than the previously applied incurred loss methodology. |
