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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-29 · 687 added, 771 removed, 1474 unchanged (50% of the section changed)

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of Eagle Bancorp, Inc.

(the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

(the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework:

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and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of this critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance and Provision for Credit Losses on Loans

The allowance for credit losses (the “ACL”) is an accounting estimate of the expected credit losses in the loans held for investment portfolio over the life of an exposure (or pool of exposures).

The allowance for credit losses (the “ACL”) is an accounting estimate of the expected credit losses in the HFI loans portfolio over the life of an exposure (or pool of exposures).

Expected credit losses are measured on a collective (pooled) basis for financial assets with similar risk characteristics.

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• The completeness and accuracy of historical inputs, loan data used in the development of the PD and LGD assumptions, and the use of third-party data in the computation.

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Substantively testing management’s estimate, which included:

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• Evaluating the mathematical accuracy of the PD and LGD rates on a pooled loan level with the assistance of valuation specialists, including the completeness and accuracy of loan data used in the model.

Goodwill Impairment Analysis

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired.

As described in Note 7 to the consolidated financial statements, the Company’s consolidated goodwill balance was $104,168,000 as of December 31, 2023, which is allocated to the Company's single reporting unit.

Goodwill is tested for impairment at least annually or on an interim basis if an event triggering an impairment assessment is determined to have occurred.

In the second quarter of 2023, management determined that a triggering event had occurred as a result of a sustained decrease in the Company's stock price and as a result of a revision in the earnings outlook in comparison to budget for the remainder of 2023 due primarily to the economic uncertainty and market volatility resulting from the rising interest rate environment and the recent events in the banking sector.

The Company performed a qualitative assessment and quantitative impairment test on its only reporting unit as of May 31, 2023, and determined that there was no impairment.

The Company performed a second qualitative assessment and quantitative impairment test on its only reporting unit as of December 31, 2023, which resulted in a determination of no impairment.

The quantitative goodwill impairment tests performed on the interim and annual basis involved a high degree of management judgment and the use of subjective assumptions in the determination of the fair value of a reporting unit.

The Company used a combination of a risk-weighted income valuation methodology, comprising a discounted cash flow analysis, and a market valuation methodology, to determine the fair value of the reporting unit.

The discounted cash flow analysis included the use of assumptions such as multi-year cash projections that rely on internal forecasts and discount rate.

The market approach considers a combination of price to tangible book value and price to earnings, adjusted based on peer data for companies similar to the reporting unit.

We determined that auditing the interim and annual quantitative goodwill impairment tests was a critical audit matter because of the extent of auditor judgment applied and audit effort to evaluate the significant judgment and assumptions made by management in the determination of the fair value of the reporting unit, including the need to use the firm valuation specialists.

The principal considerations resulting in our determination included the significant auditor judgment and audit effort in evaluating the following:

• The reasonableness of assumptions utilized in the discounted cash flow analysis including the discount rate and multi-year cash projections.

• The reasonableness of assumptions utilized in the market approach including the selected peer data, and price to tangible book value and price to earnings assumptions.

Our audit procedures to address the critical audit matter included:

Testing of internal controls over:

• Management’s review for completeness and accuracy of internal data, and evaluation of the relevance and reliability of external data used in the quantitative goodwill impairment tests.

• Management’s evaluation of the reasonableness of the valuation methodologies, and significant assumptions used in the discounted cash flow analysis including the discount rate and multi-year cash projections.

• Management’s selection and review of selected peer market data, and price to tangible book value and price to earnings assumptions.

Substantively testing management’s estimate, which included:

• Testing the completeness and accuracy of key financial internal data, and evaluation of the relevance and reliability of external data.

• With the assistance of firm valuation specialists, evaluating the appropriateness of valuation methodologies, and testing significant assumptions used in the discounted cash flow analysis including the discount rate and multi-year cash projections.

• Testing the reasonableness of the peer group selected, and assumptions related to price to tangible book value and price to earnings assumptions.

/s/ Crowe LLP

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February 27, 2025

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EAGLE BANCORP, INC.

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Federal Reserve and Federal Home Loan Bank stock 51,763 25,748

Loans held for sale — 6,734

Loans 7,968,695 7,635,632

Loans held for investment, at amortized cost

7,934,888 7,968,695

Less allowance for credit losses ( 114,390 ) ( 85,940 )

Loans, net 7,882,755 7,561,188

Loans held for investment, net of allowance

7,820,498 7,882,755

Premises and equipment, net 7,694 10,189

Operating lease right-of-use assets 19,129 24,544

Right-of-use assets - operating leases 18,494 19,129

Deferred income taxes 91,472 86,620

1 unchanged sentence

115,806 112,921

Goodwill and intangible assets, net 104,925 104,233

Goodwill and other intangible assets, net

Other real estate owned 2,743 1,108

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Customer repurchase agreements 33,157 30,587

Other short-term borrowings

490,000 1,369,918

Long-term borrowings

Operating lease liabilities 23,815 23,238

8 unchanged sentences

Retained earnings 982,304 1,061,456

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

( 141,473 ) ( 162,357 )

2 unchanged sentences

See Notes to Consolidated Financial Statements.

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EAGLE BANCORP, INC.

Consolidated Statements of Income

Consolidated Statements of Operations

Years Ended December 31,

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Interest on customer repurchase agreements 1,271 1,218 356

Interest on borrowings

Interest on other short-term borrowings

72,386 73,253 3,980

Interest on long-term borrowings

4,797 2,766 4,149

Total interest expense 398,875 334,781 91,746

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Provision for (Reversal of) Credit Losses 66,360 31,536 266

31,536 266 ( 20,821 )

(Reversal of) Provision for Unfunded Commitments

Provision for (Reversal of) Credit Losses for Unfunded Commitments

( 2,127 ) ( 267 ) 1,477

Net Interest Income After Provision for (Reversal of) Credit Losses 224,455 259,277 331,124

259,277 331,124 346,454

Noninterest Income

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Gain on sale of loans 57 418 3,702

Net (loss) gain on sale of investment securities

Net gain (loss) on sale of investment securities

14 ( 11 ) ( 169 )

Increase in the cash surrender value of bank-owned life insurance 2,885 2,659 2,547

2,659 2,547 2,059

Other income 10,140 12,015 12,175

8 unchanged sentences

SEC/FRB penalties — — 22,977

Goodwill impairment

Other expenses 13,479 15,509 14,406

Total noninterest expense 274,634 153,293 165,098

Income Before Income Tax Expense 127,520 189,680 237,674

Income (Loss) Before Income Tax Expense ( 30,240 ) 127,520 189,680

Income Tax Expense 16,795 26,986 48,750

Net Income $ 100,534 $ 140,930 $ 176,691

Earnings Per Common Share

Net Income (Loss) $ ( 47,035 ) $ 100,534 $ 140,930

Earnings (Loss) Per Common Share

Basic $ ( 1.56 ) $ 3.31 $ 4.40

1 unchanged sentence

See Notes to Consolidated Financial Statements.

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EAGLE BANCORP, INC.

3 unchanged sentences

2024 2023 2022

Net Income $ 100,534 $ 140,930 $ 176,691

Net Income (Loss)

$ ( 47,035 ) $ 100,534 $ 140,930

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on securities available-for-sale 15,406 32,519 ( 140,926 )

32,519 ( 140,926 ) ( 27,923 )

Reclassification adjustment for net losses (gains) included in net income

Reclassification adjustment for net (gains) losses included in net income (loss)

Total unrealized gain (loss) on investment securities available-for-sale

15,394 32,527 ( 140,815 )

Total unrealized gain (loss) on investment securities 32,527 ( 140,815 ) ( 30,126 )

Unrealized loss on securities transferred to held-to-maturity — — ( 49,095 )

— ( 49,095 ) —

Amortization of unrealized loss on securities transferred to held-to-maturity 5,290 4,805 4,361

4,805 4,361 —

Total unrealized gain (loss) on investment securities held-to-maturity 5,290 4,805 ( 44,734 )

4,805 ( 44,734 ) —

Unrealized (loss) gain on derivatives

( 182 ) 284 —

Reclassification adjustment for loss included in net income

Total unrealized (loss) gain on derivatives

( 182 ) 284 384

Unrealized gain (loss) on derivatives 200 ( 182 ) 284

Other comprehensive income (loss) 20,884 37,150 ( 185,265 )

2 unchanged sentences

See Notes to Consolidated Financial Statements.

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EAGLE BANCORP, INC.

12 unchanged sentences

Stock-based compensation expense — — 9,899 — — 9,899

Vesting of time based stock awards issued at date of grant, net of shares withheld for payroll taxes ( 24,429 ) 1 ( 1 ) — — —

Vesting of performance based stock awards, net of shares withheld for payroll taxes 15,686 — — — — —

Time based stock awards granted 179,624 — — — — —

Issuance of common stock related to options exercised, net of shares disposed for payroll taxes

3,289 — 97 — — 97

Issuance of common stock under share-based compensation arrangements 117,211 2 ( 2 ) — — —

Issuance of common stock related to employee stock purchase plan 14,611 — 748 — — 748

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Net Income — — — 100,534 — 100,534

Other comprehensive loss, net of tax — — — — ( 185,265 ) ( 185,265 )

Other comprehensive income, net of tax

— — — — 37,150 37,150

Stock-based compensation expense — — 10,018 — — 10,018

Issuance of common stock related to options exercised, net of shares withheld for payroll taxes 3,289 — 97 — — 97

Vesting of time based stock awards issued at date of grant, net of shares withheld for payroll taxes ( 70,286 ) 2 ( 2 ) — — —

Vesting of performance based stock awards, net of shares withheld for payroll taxes 21,026 — — — — —

Time based stock awards granted 166,471 — — — — —

Issuance of common stock under share-based compensation arrangements 157,560 1 ( 1 ) — — —

Issuance of common stock related to employee stock purchase plan 21,149 — 586 — — 586

3 unchanged sentences

Balance at December 31, 2023 29,925,612 296 374,888 1,061,456 ( 162,357 ) 1,274,283

Net Income — — — 100,534 — 100,534

Net Income (Loss)

— — — ( 47,035 ) — ( 47,035 )

Other comprehensive income, net of tax

1 unchanged sentence

Stock-based compensation expense — — 9,561 — — 9,561

Vesting of time based stock awards issued at date of grant, net of shares withheld for payroll taxes ( 59,992 ) 1 ( 1 ) — — —

Vesting of performance based stock awards, net of shares withheld for payroll taxes 27,296 — — — — —

Time based stock awards granted 190,256 — — — — —

Issuance of common stock under share-based compensation arrangements 252,576 2 ( 2 ) — — —

Issuance of common stock related to employee stock purchase plan 23,815 — 485 — — 485

4 unchanged sentences

See Notes to Consolidated Financial Statements.

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EAGLE BANCORP, INC.

4 unchanged sentences

Cash Flows From Operating Activities:

Net Income $ 100,534 $ 140,930 $ 176,691

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for (reversal of) credit losses

Net Income (Loss) $ ( 47,035 ) $ 100,534 $ 140,930

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Provision for credit losses

66,360 31,536 266

(Reversal of) provision for unfunded commitments

Provision for (reversal of) unfunded commitments

( 2,127 ) ( 267 ) 1,477

Goodwill impairment

Depreciation and amortization 3,198 3,480 3,319

Gains on sale of loans ( 57 ) ( 418 ) ( 3,702 )

Loss (gain) on mortgage servicing rights

Net (gain) loss on mortgage servicing rights

( 1,512 ) 142 ( 837 )

Securities premium amortization, net 5,416 6,189 9,011

6,189 9,011 4,031

Origination of loans held for sale — ( 29,690 ) ( 299,317 )

3 unchanged sentences

Net increase in cash surrender value of bank owned life insurance ( 2,885 ) ( 2,659 ) ( 2,547 )

( 2,659 ) ( 2,547 ) ( 2,059 )

Net loss (gain) on sale of investment securities

Net (gain) loss on call/sale of investment securities

( 14 ) 11 169

Stock-based compensation expense 9,561 10,018 9,899

(Increase) decrease in other assets

Increase in other assets

( 7,703 ) ( 14,976 ) ( 26,162 )

Increase in other liabilities 58,395 12,581 24,823

Increase (decrease) in other liabilities

( 6,201 ) 58,395 12,581

Net cash provided by operating activities 123,770 195,626 194,902

2 unchanged sentences

Proceeds from maturities of available-for-sale investment securities 115,404 123,782 261,999

123,782 261,999 313,921

Proceeds from sale/call of available-for-sale investment securities 141,100 8,303 6,225

8,303 6,225 201,034

Purchase of held-to-maturity investment securities — — ( 290,740 )

— ( 290,740 ) —

Proceeds from maturities from held-to-maturity investment securities

Proceeds from maturities of held-to-maturity investment securities

70,235 78,251 115,777

Proceeds from call of held-to-maturity investment securities 11,868 2,906 8,350

Purchases of Federal Reserve Bank stock

( 2,383 ) ( 299 ) ( 288 )

Purchases of Federal Reserve and Federal Home Loan Bank stock ( 299 ) ( 30,914 ) ( 218 )

Proceeds from redemption of Federal Reserve and Federal Home Loan Bank stock 39,618 — 6,169

Net change in loans

Net proceeds from (purchases of) Federal Home Loan Bank stock

( 23,633 ) 39,618 ( 30,626 )

Proceeds from sale of SBA PPP loans — — 170,154

Redemption (purchase) of bank-owned life insurance

Proceeds from sale of mortgage servicing rights

Net increase in loans

( 6,982 ) ( 351,913 ) ( 570,977 )

Redemption of bank-owned life insurance

Proceeds from sale of other real estate owned 656 987 241

Purchases of premises and equipment ( 326 ) ( 70 ) ( 2,113 )

Net cash used in investing activities ( 97,699 ) ( 927,077 ) ( 857,922 )

Net cash provided by (used in) investing activities

310,737 ( 97,699 ) ( 927,077 )

Cash Flows From Financing Activities:

(Decrease) increase in deposits

Increase (decrease) in deposits

323,039 94,857 ( 1,268,358 )

(Decrease) Increase in customer repurchase agreements

Increase (decrease) in customer repurchase agreements

2,570 ( 4,513 ) 11,182

Increase (decrease) in borrowings

Net Increase (decrease) in short-term borrowings

( 880,000 ) 324,999 675,001

Net proceeds from long-term borrowings

Proceeds from exercise of equity compensation plans — — 97

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Net cash provided by (used in) financing activities ( 523,711 ) 312,903 ( 670,193 )

312,903 ( 670,193 ) 544,652

Net Increase (Decrease) in Cash and Cash Equivalents ( 89,204 ) 410,830 ( 1,402,368 )

410,830 ( 1,402,368 ) ( 74,833 )

Cash and Cash Equivalents at Beginning of Period 722,684 311,854 1,714,222

Cash and Cash Equivalents at End of Period $ 633,480 $ 722,684 $ 311,854

See Notes to Consolidated Financial Statements.

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EAGLE BANCORP, INC.

Consolidated Statements of Cash Flows - Continued

Years Ended December 31,

(dollars in thousands)

2024 2023 2022

Supplemental Cash Flow Information:

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Income taxes paid $ 8,210 $ 21,540 $ 23,453

Non-Cash Operating Activities

Supplemental Non-Cash Disclosures:

Initial recognition of operating lease right-of-use assets $ 5,786 $ 418 $ —

Non-Cash Investing Activities

Transfers of investment securities from available-for-sale to held-to-maturity $ — $ — $ 922,975

Transfer of loans for investment to loans held for sale $ 5,000 $ — $ —

Transfers from loans to other real estate owned $ 2,370 $ — $ 475

See Notes to Consolidated Financial Statements.

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Eagle Bancorp, Inc.

1 unchanged sentence

Note 1 – Summary of Significant Accounting Policies

The Consolidated Financial Statements include the accounts of Eagle Bancorp, Inc.

(the "Parent") and its subsidiaries (together with the Parent, the “Company”) with all significant intercompany transactions eliminated.

EagleBank (the “Bank”), a Maryland chartered commercial bank, is the Company’s principal subsidiary.

The investment in subsidiaries is recorded on the Company’s books (Parent Only) on the basis of its equity in the net assets of the subsidiary (see Note 24 "Parent Company Financial Information" for further detail).

The accounting and reporting policies of the Company conform to generally accepted accounting principles in the United States of America (“GAAP”) and to general practices in the banking industry.

The following is a summary of the significant accounting policies.

Nature of Operations

The Company, through the Bank, conducts a full service community banking business, primarily in Northern Virginia, Suburban Maryland and Washington, D.C.

Eagle Bancorp, Inc.

(the "Parent") and its subsidiaries (together with the Parent, the “Company”), through EagleBank (the “Bank”), conducts a full service community banking business, primarily in Northern Virginia, Suburban Maryland and Washington, D.C.

The primary financial services offered by the Bank include real estate, commercial and consumer lending, as well as traditional deposit and repurchase agreement products.

The Bank was previously active in the origination and sale of residential mortgage loans, the origination of small business loans and the origination, securitization and sale of multifamily Federal Housing Administration ("FHA") loans.

The Company no longer originates residential mortgages for sale as the Company ceased originations of first lien residential mortgage loans for secondary sale during the three months ended March 31, 2023, and completed residual origination and sales activities as of June 30, 2023.

The Bank is also active in the origination of small business loans.

The guaranteed portion of small business loans, guaranteed by the Small Business Administration ("SBA"), is typically sold to third party investors in a transaction apart from the loan’s origination.

As of December 31, 2023, the Bank offers its products and services through thirteen banking offices, four lending centers and various electronic capabilities, including remote deposit services and mobile banking services.

Eagle Insurance Services, LLC, which had been offering access to insurance products and services through a referral program with a third party insurance broker, continues to receive fee income in connection with such program.

The Bank offers its products and services through twelve banking offices, four lending centers and various digital capabilities, including PC and smartphone-enabled banking services.

Eagle Insurance Services, LLC, a subsidiary of the Bank that previously offered access to insurance products and services through a referral program with a third party insurance broker, continues to receive fee income in connection with such program.

Landroval Municipal Finance, Inc., a subsidiary of the Bank, focuses on lending to municipalities by buying debt on the public market as well as direct purchase issuance.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company with all significant intercompany transactions eliminated.

EagleBank, a Maryland chartered commercial bank, is the Company’s principal subsidiary.

Basis of Presentation

The accounting and reporting policies of the Company conform to generally accepted accounting principles in the United States of America (“GAAP”) and to predominant practices in the banking industry.

The Consolidated Financial Statements reflect all adjustments, consisting of normal recurring adjustments, that in the opinion of management are necessary to present fairly the results for the periods presented.

Certain reclassifications have been made to 2023 amounts previously reported to conform to the 2024 presentation.

Reclassifications had no effect on net income (loss) or shareholders' equity.

The following is a summary of the significant accounting policies.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes.

Actual results may differ from those estimates and such differences could be material to the financial statements.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes.

Actual results may differ from those estimates and such differences could be material to the consolidated financial statements.

The allowance for credit losses ("ACL") is a material estimate that is particularly susceptible to significant variance in the near-term.

Cash and Cash Equivalents and Statements of Cash Flows

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, federal funds sold and interest bearing deposits with other banks that have an original maturity of three months or less.

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Interest-bearing deposits in other financial institutions mature within one year and are carried at cost.

Loans Held for Sale

The Company regularly engaged in sale of residential mortgage loans held for sale in 2022 and engages in the sale of the guaranteed portion of SBA loans originated by the Bank.

In the first quarter of 2023, the Company ceased originations of first lien residential mortgage loans for secondary sale and completed residual origination and sales activities in the second quarter of 2023.

The Company carried loans held for sale at fair value.

Fair value is derived from secondary market quotations for similar instruments.

Gains and losses on sales of these loans are recorded as a component of noninterest income in the Consolidated Statements of Income.

The Company entered into commitments to originate residential mortgage loans whereby the interest rate on the loan was determined prior to funding (i.e.

interest rate lock commitments).

Such interest rate lock commitments on mortgage loans to be sold in the secondary market were considered to be derivatives.

To protect against the price risk inherent in residential mortgage loan commitments, the Company utilized either or both “best efforts” and “mandatory delivery” forward loan sale commitments to mitigate the risk of potential decreases in the values of loans that would result from the exercise of the derivative loan commitments.

Under a “best efforts” contract, the Company committed to deliver an individual mortgage loan of a specified principal amount and quality to an investor with the intent that the buyer/investor had assumed the interest rate risk, rather than the Company.

Under a “mandatory delivery” contract, the Company committed to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date.

If the Company failed to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, it was obligated to pay the investor a “pair-off” fee, based on then-current market prices, to compensate the investor for the shortfall.

The Company managed the interest rate risk on interest rate lock commitments by entering into forward sale contracts of mortgage-backed securities ("MBS"), whereby the Company obtained the right to deliver securities to investors in the future at a specified price.

Such contracts were accounted for as derivatives and were recorded at fair value in derivative assets or liabilities, carried on the Consolidated Balance Sheet within other assets or other liabilities, with changes in fair value recorded in other income within the Consolidated Statements of Income.

The gross gains on loan sales were recognized based on new loan commitments with adjustments for price and pair-off activity.

Commission expenses on loans held for sale were recognized based on loans closed.

In circumstances where the Company did not deliver the whole loan to an investor, but rather elected to retain the loan in its portfolio, the loan was transferred from held for sale to loans at fair value at the date of transfer.

The sale of the guaranteed portion of SBA loans on a servicing retained basis gives rise to an excess servicing asset, which is computed on a loan by loan basis with the unamortized amount being included in intangible assets in the Consolidated Balance Sheets.

This excess servicing asset is being amortized on a straight-line basis (with adjustment for prepayments) as an offset to servicing fees collected and is included in other income in the Consolidated Statements of Income.

The Company originates multifamily FHA loans through the Department of Housing and Urban Development’s Multifamily Accelerated Program.

The Company securitizes these loans through the Government National Mortgage Association ("Ginnie Mae") MBS I program and sells the resulting securities in the open market to authorized dealers in the normal course of business and periodically bundles and sells the servicing rights.

When servicing is retained on multifamily FHA loans securitized and sold, the Company computes an excess servicing asset on a loan by loan basis.

Unamortized multifamily FHA mortgage servicing rights ("MSRs") totaled $ 2.3 million as of December 31, 2023 and $ 2.4 million as of December 31, 2022.

Noninterest Income includes gains from the sale of the Ginnie Mae securities and net revenues earned on the servicing of multifamily FHA loans underlying the Ginnie Mae securities.

Revenue from servicing commercial multifamily FHA mortgages is recognized as earned based on the specific contractual terms of the underlying servicing agreements, along with amortization of and changes in impairment of MSRs.

Investment Securities

1 unchanged sentence

Investment securities comprise debt securities, which are classified depending on the Company's intent and ability to hold the securities to maturity.

Debt securities are classified as available-for-sale when management may have the intent to sell them prior to maturity.

Debt securities are classified as held-to-maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity.

Securities available-for-sale are acquired as part of the Company’s asset/liability management strategy and may be sold in response to changes in interest rates, current market conditions, loan demand, changes in prepayment risk and other factors.

Securities available-for-sale are carried at fair value, with unrealized gains or losses, other than impairment losses, being reported as accumulated other comprehensive income/(loss), a separate component of shareholders’ equity, net of deferred income tax.

Realized gains and losses, using the specific identification method, are included as a separate component of noninterest income in the Consolidated Statements of Income.

Debt securities are classified as

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available-for-sale ("AFS") when management may have the intent to sell them prior to maturity.

Debt securities are classified as held-to-maturity ("HTM") and carried at amortized cost when management has the positive intent and ability to hold them to maturity.

AFS Securities are acquired as part of the Company’s asset/liability management strategy and may be sold in response to changes in interest rates, current market conditions, loan demand, changes in prepayment risk and other factors.

AFS securities are carried at fair value, with unrealized gains or losses, other than impairment losses, being reported as accumulated other comprehensive income (loss), a separate component of shareholders’ equity, net of deferred income tax.

Realized gains and losses, using the specific identification method, are included as a separate component of noninterest income in the Consolidated Statements of Operations.

Premiums and discounts on investment securities are amortized/accreted to the earlier of call or maturity based on expected lives, which lives are adjusted based on prepayment assumptions and call optionality.

Declines in the fair value of

individual available-for-sale securities below their cost that are other-than-temporary in nature result in write-downs of the individual securities to their fair value.

Declines in the fair value of individual available-for-sale securities below their cost that are other-than-temporary in nature result in write-downs of the individual securities to their fair value.

Factors affecting the determination of whether other-than-temporary impairment has occurred include a downgrading of the security by a rating agency or a significant deterioration in the financial condition of the issuer.

4 unchanged sentences

and (3) structure of the security.

Premiums and discounts on investment securities held-to-maturity, like available-for-sale securities, are amortized or accreted to the earlier of call or maturity based on expected lives, which include prepayment adjustments and call optionality.

Interest income included amortization of $ 10.9 million, which was partially offset by accretion of $ 4.7 million for the period ended December 31, 2023.

Premiums and discounts on HTM securities, like AFS securities, are amortized or accreted to the earlier of call or maturity based on expected lives, which include prepayment adjustments and call optionality.

Transfers of Investment Securities from Available-for-Sale to Held-to-Maturity

Transfers of debt securities into the held-to-maturity category from the available-for-sale category are made at amortized cost, net of unrealized gain or loss reported in accumulated other comprehensive income (loss) at the date of transfer.

The unrealized holding gain or loss at the date of transfer is retained in other comprehensive income and in the carrying value of the held-to-maturity securities.

Transfers of debt securities into the HTM category from the AFS category are made at amortized cost, net of unrealized gain or loss reported in accumulated other comprehensive income (loss) at the date of transfer.

The unrealized holding gain or loss at the date of transfer is retained in other comprehensive income (loss) and in the carrying value of the held-to-maturity securities.

Such amounts are amortized over the remaining life of the security.

The Company does not intend to sell the held-to-maturity investments, and it is more likely than not that the Company will not have to sell the securities before recovery of its amortized cost basis, which may be at maturity.

For the impairment of investment securities please see "Allowance for Credit Losses - Available-for-Sale Debt Securities" and "Allowance for Credit Losses - Held-to-Maturity Debt Securities" below.

Loans are stated at the principal amount outstanding, net of unamortized deferred costs and fees.

Interest income on loans is accrued at the contractual rate on the principal amount outstanding.

The Company does not intend to sell the HTM investments, and it is more likely than not that the Company will not have to sell the securities before recovery of its amortized cost basis, which may be at maturity.

For the impairment of investment securities please see "Allowance for Credit Losses - AFS Securities" and "Allowance for Credit Losses - HTM Securities" below.

The Company classifies loans in its portfolio as held for investment (“HFI”) when management has the intent and ability to hold the loans for the foreseeable future or until maturity or payoff.

HFI loans are stated at the principal amount outstanding, net of unamortized deferred costs and fees.

Interest income on loans is recognized at the contractual rate on the principal amounts outstanding.

It is the Company’s policy to discontinue the accrual of interest when circumstances indicate that collection is doubtful.

Deferred fees and costs are being amortized on the interest method over the term of the loan.

Loan origination fees, net of direct loan origination costs, and commitment fees are deferred and amortized on the interest method over the term of the loan.

Past due loans are placed on nonaccrual status when the contractual payment of principal or interest has become 90 days past due or there is a clear indication that the borrower's cash flow may not be sufficient to meet payments as they become due, even when the loan is currently performing.

A loan may remain on accrual status if it is in the process of collection and is well secured.

When a loan is placed on nonaccrual status, all previously accrued and unpaid interest is reversed through interest income.

Interest income is subsequently recognized on a cash basis as long as the remaining book balance of the asset is deemed to be collectible.

If collectability is questionable, then cash payments are applied to principal.

A loan is placed back on accrual status when both principal and interest are current and it is probable that we will be able to collect all amounts due (both principal and interest) according to the terms of the loan agreement.

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Allowance for Credit Losses

The following table presents a breakdown of the current provision for credit losses included in our Consolidated Statements of Income for the applicable periods:

The following table presents a breakdown of the current provision for credit losses included in our Consolidated Statements of Operations for the applicable periods:

For the Years Ended December 31,

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Provision for credit losses - HTM debt securities ( 645 ) 1,190 766

(Reversal of) provision for credit losses - AFS debt securities

— ( 603 ) 454

Provision for (reversal of) credit losses - AFS debt securities

Total Provision for credit losses

$ 66,360 $ 31,536 $ 266

Allowance for Credit Losses - Loans

The allowance for credit losses ("ACL") - Loans is an estimate of the expected credit losses in the loans held for investment portfolio.

The ACL - Loans is an estimate of the expected credit losses in the HFI loans portfolio.

The Company's ACL on its loan portfolio is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans.

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Expected recoveries are recorded to the extent they do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Reserves on loans that do not share risk characteristics are evaluated on an individual basis.

The ACL - Loans is measured on a collective pool basis when similar risk characteristics are present.

Reserves on loans that do not share similar risk characteristics are evaluated on an individual basis.

Nonaccrual loans are specifically reviewed for loss potential and when deemed appropriate are assigned a reserve based on an individual evaluation.

The remainder of the portfolio, representing all loans not evaluated individually for impairment, is segregated by call report codes and a loan-level probability of default (“PD”) / Loss Given Default (“LGD”) cash flow method is applied using an exposure at default (“EAD”) model.

The remainder of the portfolio, representing all loans not evaluated individually for impairment, is pooled into portfolio segments by call report codes and a loan-level probability of default (“PD”) / Loss Given Default (“LGD”) cash flow method is applied using an exposure at default (“EAD”) model.

These historical loss rates are then modified to incorporate our reasonable and supportable forecast of future losses at the portfolio segment level, as well as any necessary qualitative adjustments.

The Company uses regression analysis of historical internal and peer data (as Company loss data is insufficient) to determine suitable credit loss drivers to utilize when modeling lifetime PD and LGD.

The Company uses regression analysis of historical internal and peer data provided by a third-party provider (as Company loss data is insufficient) to determine suitable credit loss drivers to utilize when modeling lifetime PD and LGD.

This analysis also determines how expected PD will be impacted by different forecasted levels of the loss drivers.

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Some unique loan types, such as Paycheck Protection Program ("PPP") loans, are grouped separately due to their specific risk characteristics.

For each of these loan segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speeds, PD rates and LGD rates.

For each of the loan segments listed below, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speeds, PD rates and LGD rates.

The modeling of expected prepayment speeds is based on historical internal data.

EAD is based on each instrument's underlying amortization schedule in order to estimate the bank's expected credit loss exposure at the time of the borrower's potential default.

For our cash flow model, management utilizes and forecasts regional unemployment by using a national forecast and estimating a regional adjustment based on historical differences between the two as the loss driver over our reasonable and supportable period of 18 months and reverts back to a historical loss rate over twelve months on a straight-line basis over the loan's remaining maturity.

In 2023, the improvement in economic conditions, which impacted the unemployment projections, which inform our current expected credit losses ("CECL") economic forecast, along with improvements in credit quality, offset by an increase in charge offs, resulted in minor fluctuations in the levels of our ACL during 2023.

Management leverages economic projections from reputable and independent third parties to inform its loss driver forecasts over the forecast period.

The ACL also includes an amount for inherent risks not reflected in the historical analyses.

Relevant factors include, but are not limited to, concentrations of credit risk, changes in underwriting standards, experience and depth of lending staff and trends in delinquencies.

While our methodology in establishing the ACL attributes portions of the ACL and RUC to the separate loan pools or segments, the entire ACL and RUC is available to absorb credit losses expected in the total loan portfolio and total amount of unfunded credit commitments, respectively.

Portfolio segments are used to pool loans with similar risk characteristics and align with our methodology for measuring expected credit losses.

A summary of our primary portfolio segments is as follows:

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Income producing – commercial real estate .

Income producing commercial real estate loans comprise permanent and bridge financing provided to professional real estate owners/managers of commercial and residential real estate projects and properties who have a demonstrated a record of past success with similar properties.

Income producing commercial real estate loans comprise permanent and bridge financing provided to professional real estate owners/managers of commercial and residential real estate projects and properties who generally have a demonstrated record of past success with similar properties.

Collateral properties include apartment buildings, office buildings, hotels, mixed-use buildings, retail, data centers, warehouse, and shopping centers.

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Income producing commercial real estate loans are impacted by fluctuation in collateral values, as well as rental demand and rates.

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Owner occupied – commercial real estate.

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This category also includes other loan items such as overdrawn deposit accounts as well as loans and loan payments in process.

We have several pass credit grades that are assigned to loans based on varying levels of risk, ranging from credits that are secured by cash or marketable securities, to watch credits which have all the characteristics of an acceptable credit risk but warrant more than the normal level of monitoring.

The ACL also includes a qualitative adjustment for inherent risks not reflected in the historical quantitative analysis associated with the reasonable and supportable forecast.

Relevant factors include, but are not limited to, concentrations of credit risk, changes in underwriting standards, experience and depth of lending staff and trends in delinquencies.

While our methodology in establishing the reserve for credit losses attributes portions of the ACL and RUC to the commercial and consumer portfolio segments, the entire ACL and RUC is available to absorb credit losses expected in the total loan portfolio and total amount of unfunded credit commitments, respectively.

Our model may reflect assumptions by management that are not covered by the qualitative and environmental factors, and we reevaluate all of its factors quarterly.

For our cash flow model, management historically forecasted regional unemployment.

During the first quarter of 2024, management enhanced the cash flow model to incorporate three macroeconomic variables in addition to national unemployment.

The four economic variables selected, national unemployment, which was the original variable used, Commercial Real Estate ("CRE") Price Index, House Price Index and Gross Domestic Product ("GDP"), are incorporated by utilizing a Loss Driver Analysis approach that factors in historical losses, including during the Great Recession, of regional peer banks and the Bank.

The updated model incorporates a weighting of three economic scenarios;

baseline, upside and downside.

The scenarios cover the four economic forecast variables, with each segment of the portfolio linked to two of these variables, depending on the segment.

The loss driver analysis is spread over a reasonable and supportable period of 18 months and reverts back to a historical loss rate over twelve months on a straight-line basis over the loan's remaining maturity.

Management leverages economic projections from reputable and independent third parties to inform its loss driver forecasts over the forecast period.

The ACL also includes an amount for inherent risks not reflected in the historical analyses.

Relevant factors include, but are not limited to, concentrations of credit risk, changes in underwriting standards, experience and depth of lending staff and trends in delinquencies.

Portfolio segments are used to pool loans with similar risk characteristics and align with our methodology for measuring expected credit losses ("CECL").

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We have several pass credit grades that are assigned to loans based on varying levels of risk, ranging from loans that are secured by cash or marketable securities, to watch list loans that have all the characteristics of an acceptable credit risk but warrant more than the normal level of monitoring.

Special mention loans are those that are currently protected by the sound worth and paying capacity of the borrower, but that are potentially weak and constitute an additional credit risk.

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Substandard loans can be accruing or can be on nonaccrual depending on the circumstances of the individual loans.

Loans classified as doubtful have all the weaknesses inherent in substandard loans with the added characteristics that the weaknesses make collection in full highly questionable and improbable.

Loans graded as doubtful have all the weaknesses inherent in substandard loans with the added characteristics that the weaknesses make collection in full highly questionable and improbable.

The possibility of loss is extremely high.

All doubtful loans are on nonaccrual.

Classified loans represent the sum of loans graded substandard and doubtful.

The methodology used in the estimation of the allowance, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality and forecasted economic conditions.

Changes are reflected in the pool-basis allowance and in specific reserves assigned on an individual basis as the collectability of classified loans is evaluated with new information.

All doubtful loans are accounted for on a nonaccrual basis.

Classified loans is the aggregation of loans graded substandard and doubtful.

The methodology used in the estimation of the ACL, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality and forecasted economic conditions.

Changes are reflected in the pool-basis allowance and individually assessed loans as the collectability of classified loans is evaluated with new information.

As our portfolio has matured, historical loss ratios have been closely monitored.

The review of the appropriateness of the allowance is performed by executive management and presented to the Risk Committee.

The committees' reports to the Board of Directors (the "Board") are part of the Board's review on a quarterly basis of our consolidated financial statements.

The review of the appropriateness of the allowance is performed by executive management and presented to management committees and the Audit Committee of the Board of Directors (the "Board").

The committees' reports to the Board are part of the Board's review on a quarterly basis of our consolidated financial statements.

When management determines that foreclosure is probable, and for certain collateral-dependent loans where foreclosure is not considered probable, expected credit losses are based on the estimated fair value of the collateral adjusted for selling costs, when appropriate.

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Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate.

The contractual term excludes expected extensions, renewals and modifications unless management has a reasonable expectation that a borrower will result in financial difficulty.

The contractual term excludes expected extensions, renewals and modifications unless management has a reasonable expectation that a borrower will experience financial difficulty.

We do not measure an ACL on accrued interest receivable balances because these balances are written off in a timely manner as a reduction to interest income when loans are placed on nonaccrual status.

Loans Held for Sale

The Company regularly engages in the sale of the guaranteed portion of SBA loans originated by the Bank.

The Company previously regularly engaged in sale of residential mortgage loans held for sale through the end 2022.

The Company originated multifamily FHA loans through the Department of Housing and Urban Development’s Multifamily Accelerated Program.

The Company securitized these loans through the Government National Mortgage Association ("Ginnie Mae") MBS I program and sells the resulting securities in the open market to authorized dealers in the normal course of business and periodically bundles and sells the servicing rights.

When servicing was retained on multifamily FHA loans securitized and sold, the Company computed an excess servicing asset on a loan by loan basis.

During the year ended December 31, 2024, the Company sold the remaining servicing rights to all multifamily FHA loans.

Unamortized multifamily FHA mortgage servicing rights ("MSRs") were zero as of December 31, 2024 and $ 2.3 million as of December 31, 2023.

Noninterest Income includes gains from the sale of the Ginnie Mae securities and net revenues earned on the servicing of multifamily FHA loans underlying the Ginnie Mae securities.

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Collateral Dependent Financial Assets

Loans that do not share risk characteristics are evaluated on an individual basis.

For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date.

When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the financial asset exceeds the NPV from the operation of the collateral.

For collateral dependent loans for which the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date.

When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the financial asset exceeds the fair value of the underlying collateral less estimated cost to sell.

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Loan Modifications to Borrowers in Financial Difficulty

On January 1, 2023, the Company adopted the accounting guidance in ASU No.

2022-02, which eliminated the recognition and measurement of troubled debt restructurings ("TDR").

Due to the removal of the TDR designation, the Company evaluates loan restructurings to determine if we have a loan modification and whether it results in a new loan or the continuation of the existing loan.

The Company evaluates loan restructurings to determine if we have a loan modification and whether it results in a new loan or the continuation of the existing loan.

Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include situations where there are principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications.

A loan that is considered a modified loan may be subject to an individually-evaluated loan analysis if the commitment is $ 1.0 million or greater;

A loan that is considered a modified loan may be subject to an individually-evaluated loan analysis if the commitment is $ 500 thousand or greater;

otherwise, the restructured loan remains in the appropriate segment in the ACL model and associated provisions are adjusted based on changes in the discounted cash flows resulting from the modification of the restructured loan.

Management strives to identify borrowers in financial difficulty early and work with them to modify their loan to more affordable terms before their loan reaches nonaccrual status, foreclosure or repossession of the collateral to minimize economic loss to the Company.

Allowance for Credit Losses - Available-for-Sale Debt Securities

Although ASC 326 replaced the legacy other-than-temporary impairment (“OTTI”) model with a credit loss model, it retained the fundamental nature of the legacy OTTI model.

One notable change from the legacy OTTI model is when evaluating whether credit loss exists, an entity may no longer consider the length of time fair value has been less than amortized cost.

Allowance for Credit Losses - AFS Securities

For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis.

If either criterion is met, the security’s amortized cost basis is written down to fair value through income.

If either criteria is met, the security’s amortized cost basis is written down to fair value through income.

For AFS debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors.

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If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount by which the fair value is less than the amortized cost basis.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis.

Any impairment that has not been recorded through an ACL is recognized in other comprehensive income, as a non-credit-related impairment.

The entire amount of an impairment loss is recognized in earnings only when:

The entire amount of an impairment loss is recognized in earnings (loss) only when:

(1) the Company intends to sell the security;

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or (3) the Company does not expect to recover the entire amortized cost basis of the security.

In all other situations, only the portion of the impairment loss representing the credit loss must be recognized in earnings, with the remaining portion being recognized in other comprehensive income, net of deferred taxes.

In all other situations, only the portion of the impairment loss representing the credit loss must be recognized in earnings (loss), with the remaining portion being recognized in other comprehensive income (loss), net of deferred taxes.

Changes in the ACL are recorded as a provision for (or reversal of) credit losses.

Losses are charged against the allowance when management believes the uncollectability of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

We have made a policy election to exclude accrued interest from the amortized cost basis of available-for-sale debt securities and report accrued interest separately in accrued interest and other assets in the Consolidated Balance Sheets.

Available-for-sale debt securities are placed on nonaccrual status when we no longer expect to receive all contractual amounts

due, which is generally at 90 days past due.

We have made a policy election to exclude accrued interest from the amortized cost basis of AFS debt securities and report accrued interest separately in accrued interest and other assets in the Consolidated Balance Sheets.

AFS debt securities are placed on nonaccrual status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due.

Accrued interest receivable is reversed against interest income when a security is placed on nonaccrual status.

Accordingly, we do not recognize an allowance for credit loss against accrued interest receivable.

Allowance for Credit Losses - Held-to-Maturity Debt Securities

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Allowance for Credit Losses - HTM Securities

The Company separately evaluates its HTM investment securities for any credit losses.

The Company pools like securities and calculates expected credit losses through an estimate based on a security's credit rating, which is recognized as part of the allowance for credit losses for held-to-maturity securities and included in the balance of investment securities held-to-maturity on the Consolidated Balance Sheets.

If the Company determines that a security indicates evidence of deteriorated credit quality, the security is individually-evaluated and a discounted cash flow analysis is performed and compared to the amortized cost basis.

The Company pools like securities and calculates expected credit losses through an estimate based on a security's credit rating, which is recognized as part of the ACL for HTM securities and included in the balance of HTM securities on the Consolidated Balance Sheets.

If the Company determines that a security indicates evidence of deteriorated credit quality, the security is individually evaluated and a discounted cash flow analysis may be performed and compared to the amortized cost basis.

Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

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Such financial instruments are recorded when they are funded.

The Company records a reserve for unfunded commitments (“RUC”) on off-balance sheet credit exposures through a charge to provision for credit loss expense in the Company’s Consolidated Statement of Income.

The RUC on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur and is included in the RUC on the Company’s Consolidated Balance Sheet.

The Company records a RUC on off-balance sheet credit exposures through a charge to provision for credit loss expense in the Company's Consolidated Statement of Operations.

Premises and Equipment

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The costs of major renewals and betterments are capitalized, while the costs of ordinary maintenance and repairs are expensed as incurred.

These costs are included as a component of premises and equipment expenses on the Consolidated Statements of Income.

These costs are included as a component of premises and equipment expenses on the Consolidated Statements of Operations.

Other Real Estate Owned (OREO)

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Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired, including other intangible assets.

Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets acquired.

Other intangible assets include purchased assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights.

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Intangible assets (other than goodwill) are amortized to expense using accelerated or straight-line methods over their respective estimated useful lives.

Goodwill is subject to impairment testing at the reporting unit level, which must be conducted either at least annually, or when events or changes in circumstances indicate the assets might be impaired and/or upon the occurrence of a triggering event.

Goodwill is deemed to have an indefinite useful life and as such is not subject to amortization, and instead is subject to impairment testing at the reporting unit level, which must be conducted either at least annually, as well as when events or changes in circumstances indicate the assets might be impaired and/or upon the occurrence of a triggering event.

Various factors, such as the Company’s results of operations, the trading price of the Company’s common stock relative to the book value per share, macroeconomic conditions and conditions in the banking sector, inform whether a triggering event for an interim goodwill impairment test has occurred.

Goodwill is recorded and evaluated for impairment at its reporting unit,

Goodwill is recorded and evaluated for impairment at its reporting unit, the Company.

The Company's policy is to test goodwill for impairment annually as of December 31, or on an interim basis if an event triggering an impairment assessment is determined to have occurred.

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If the fair values of the reporting unit exceed the book value, no write-down of recorded goodwill is required.

If the fair value of a reporting unit is less than book value, an expense may be required to write-down the related goodwill to the proper carrying value.

If the fair value of a reporting unit is less than book value, an expense

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may be required to write-down the related goodwill to the proper carrying value.

Any impairment would be recorded through a reduction of goodwill or other intangible asset and an offsetting charge to noninterest expense.

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In its performance of impairment testing, the Company has the unconditional option to proceed directly to the quantitative impairment test, bypassing the qualitative assessment.

If the carrying amount of the reporting unit exceeds the fair value, the amount by which the carrying amount exceeds fair value, up to the carrying value of goodwill, is recorded through earnings as an impairment charge.

If the results of the qualitative assessment indicate that it is not more likely than not that an impairment has occurred, or if the quantitative impairment test results in a fair value of the reporting unit that is greater than the carrying amount, then no impairment charge is recorded.

In the second quarter of 2023, Management determined that a triggering event had occurred as a result of a sustained decrease in the Company's stock price and as a result of a revision in the earnings outlook in comparison to budget for the remainder of 2023 due primarily to the economic uncertainty and market volatility resulting from the rising interest rate environment and the recent events in the banking sector.

The Company performed a qualitative assessment and quantitative impairment test on its only reporting unit as of May 31, 2023 and determined that there was no impairment as the fair value exceeded the carrying amount of the Company.

In accordance with its regular schedule for impairment testing, the Company performed a second qualitative assessment and quantitative impairment test that rolled forward its second quarter of 2023 testing on its only reporting unit as of December 31, 2023, which resulted in a determination of no impairment.

However, future events could cause the Company to conclude that goodwill or other intangibles have become impaired, which would result in recording an impairment loss.

Management continues to evaluate economic conditions for evidence of new triggering events.

During the second quarter ended June 30, 2024, Management determined that a triggering event had occurred as a result of the share price trading under book value for more than four quarters due to the impact of changing macroeconomic conditions and rising interest rates on the banking industry, resulting in a sustained decrease in the Company's stock price.

As a result of the triggering event, the Company engaged a third-party service provider to assist Management with the determination of the fair value of the Company during the second quarter of 2024.

The valuation indicated that the fair value did not exceed the carrying amount of the Company's sole reporting unit as of May 31, 2024 which resulted in a determination that goodwill had become fully impaired.

The goodwill impairment charge of $ 104.2 million reduced the carrying value of the Company's goodwill to zero as of June 30, 2024.

The impaired goodwill was primarily related to the acquisition of the Virginia Heritage Bank in October 2014.

The impairment charge did not impact our cash flows, liquidity ratios, core operating performance, or regulatory capital ratios.

Interest Rate Swap Derivatives

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Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows or other types of forecasted transactions, are considered cash flow hedges.

Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings (loss) effect of the hedged forecasted transactions in a cash flow hedge.

The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

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Substantially all of the Company’s revenue is generated from contracts with customers.

Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our income statements as components of noninterest income are as follows:

Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our Statements of Operations as components of noninterest income are as follows:

• Service charges on deposit accounts (i.e.

automated teller machine ("ATM") fees) - These represent general service fees for monthly account maintenance and activity- or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue.

Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance

services or when a transaction has been completed (such as a wire transfer).

Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer).

Payment for such performance obligations is generally received at the time the performance obligations are satisfied.

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insurance commissions, investment advisory fees, credit card fees, interchange fees) – Generally, the Company receives compensation when a customer that it refers opens an account with certain third-parties.

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• Sale of OREO – The Company assesses whether it is “probable” that it will collect the consideration to which it will be entitled in exchange for transferring the asset to the customer.

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temporary differences) and are measured at the enacted rates that will be in effect when these differences reverse.

The Company utilizes statutory requirements for its income tax accounting and limits risks associated with potentially problematic tax positions that may incur challenge upon audit, where an adverse outcome is more likely than not.

Therefore, no provisions are necessary for either uncertain tax positions nor accompanying potential tax penalties and interest for underpayments of income taxes in the Company’s tax valuation allowance.

In accordance with ASC 740, the Company may establish a reserve against deferred tax assets in those cases where realization is less than certain.

The Company’s policy is to recognize interest and penalties on income taxes in other noninterest expenses.

The Company remains subject to examination of income tax returns by the Internal Revenue Service, as well as all of the states where it conducts business, for the years ending after December 31, 2020.

There are currently no examinations in process as of December 31, 2023.

We recognize deferred tax assets ("DTA") to the extent that we believe that these assets are more likely than not to be realized.

In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations.

If we determine that we would be able to realize our DTAs in the future in excess of their recorded amount, we would make an adjustment to the DTA valuation allowance, which would reduce the provision for income taxes.

The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, the Company believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely to be realized upon settlement with the applicable taxing authority.

The Company's policy is to recognize interest accrued and penalties on income taxes in other noninterest expense.

Transfer of Financial Assets

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Stock-Based Compensation

In accordance with ASC Topic 718, “Compensation,” the Company records as salaries and employee benefits expense on its Consolidated Statements of Income an amount equal to the amortization (over the remaining service period) of the fair value of option and restricted stock awards computed at the date of grant.

In accordance with ASC Topic 718, “Compensation,” the Company records as salaries and employee benefits expense on its Consolidated Statements of Operations an amount equal to the amortization (over the remaining service period) of the fair value of option and restricted stock awards computed at the date of grant.

Salary and employee benefits expense on variable stock grants (i.e., performance based grants) is recorded based on the probability of achievement of the goals underlying the performance grant.

Refer to Note 16 - "Stock-Based Compensation" for a description of stock-based compensation awards, activity and expense for the years ended December 31, 2024, 2023 and 2022.

The Company records the discount from the fair market value of shares issued under its Employee Share Purchase Plan as a component of Salaries and employee benefits expense in its Consolidated Statement of Income.

Earnings per Common Share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period measured.

Diluted earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period including the potential dilutive effects of common stock equivalents.

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Earnings (Loss) per Common Share

Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period measured.

Diluted earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period including the potential dilutive effects of common stock equivalents.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income and other comprehensive income (loss).

Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss).

Other comprehensive income (loss) includes unrealized gains and losses on debt securities available for sale, debt securities transferred to HTM from AFS, and derivatives, net of taxes.

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Segment Reporting

While the chief operating decision-maker monitors the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis.

Operating results are not reviewed by senior management to make resource allocation or performance decisions.

Accordingly, all of the financial services operations are considered by management to be aggregated in one reportable operating segment.

The Company has one reporting unit, one operating segment and, consequently, a single reportable segment.

Refer to Note 25 - "Segment Reporting" for further details.

New Authoritative Accounting Guidance

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These requirements are similar to, but require additional information than, generally accepted accounting principles.

They modify the disclosure or presentation requirements of a variety of Topics in the Codification.

These new updates modify the disclosure or presentation requirements of a variety of Topics in the Codification.

Entities should apply the amendments in ASU 2023-06 prospectively.

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We are currently in the process of evaluating this guidance.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” ("ASU 2023-07) requires filers to disclose significant segment expenses, an amount and description for other segment items, the title and position of the entity’s chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measures of profit or loss to assess segment performance, and, on an interim basis, certain segment related disclosures that previously were required only on an annual basis.

ASU 2023-07 also clarifies that entities with a single reportable segment are subject to both new and existing segment reporting requirements and that an entity is permitted to disclose multiple measures of segment profit or loss, provided that certain criteria are met.

ASU 2023-07 is effective for the Company for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently in the process of evaluating this guidance.

2023-09, "Income Taxes (Topic 740):

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ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024 and interim periods within those fiscal years.

The impact of ASU 2023-09 should be applied prospectively.

The Company is currently evaluating the effect that ASU 2023-09 will have on its consolidated financial statements.

2024-01, "Compensation—Stock Compensation (Topic 718):

Scope Application of Profits Interest and Similar Awards" ("ASU 2024-01") clarifies how an entity determines whether a profits interest or similar award (hereafter a "profits interest award") is accounted for either (1) as a share-based payment arrangement, and therefore, within the scope of ASC 718 or (2) not a share-based payment arrangement and therefore within the scope of other guidance.

ASU 2024-01 also

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improves the clarity and operation of the guidance in ASC 718-10-15-3.

The guidance in ASU 2024-01 applies to all entities that issue profits interest awards as compensation to employees or non-employees in exchange for goods or services.

For public business entities, the amendments are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods.

For all other entities, the amendments are effective for annual periods beginning after December 15, 2025, and interim periods within those annual periods.

Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.

If an entity adopts the amendments in an interim period, it should adopt them as of the beginning of the annual period that includes that interim period.

The amendments should be applied (i) retrospectively to all prior periods presented in the financial statements or (ii) prospectively to profits interest and similar awards granted or modified on or after the date at which the entity first applies the amendments.

If the amendments are applied prospectively, an entity is required to disclose the nature of and reason for the change in accounting principle.

We are currently in the process of evaluating this guidance.

2024-02, "Codification Improvements—Amendments to Remove References to the Concepts Statements" ("ASU 2024-02") amends the Accounting Standard Codification (“Codification”) by removing references to various concepts statements.

In most instances, the references are extraneous and not required to understand or apply the guidance.

In other instances, the references were used in prior statements to provide guidance in certain topical areas.

As stated in paragraph 105-10-05-3 of the Codification, FASB Concepts Statements are non-authoritative.

These amendments will simplify the Codification which will further draw a distinction between authoritative and non-authoritative literature.

The amendments are effective for public business entities for fiscal years beginning after December 15, 2024.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2025.

Early application of the amendments is permitted for all entities, for any fiscal year or interim period for which financial statements have not yet been issued (or made available for issuance).

If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period.

An entity should apply the amendments using one of the following transition methods:

(1) prospectively to all new transactions recognized on or after the date that the entity first applies the amendments, or (2) retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied.

We are currently in the process of evaluating this guidance.

2024-03, “ Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40);

Disaggregation of Income Statement Expenses” (“ASU 2024-03”) which requires disaggregated disclosure of income statement expenses for public business entities.

The ASU does not change the expense captions an entity presents on the face of the income statement;

rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements at interim and annual reporting periods.

ASU 2024-03 adds to ASC 220-40 to require a footnote disclosure about specific expenses by requiring public business entities to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses:

(1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other types of depletion expenses.

The tabular disclosure would also include certain other expenses, when applicable.

ASU 2024-03 does not change or remove existing expense disclosure requirements;

however, it may affect where that information appears in the footnotes to the financial statements.

The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The amendments in this update should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this Update or (2) retrospectively to any or all prior periods presented in the financial statements.

We are currently in the process of evaluating this guidance.

Accounting Standards Adopted in 2024

2022-02, " Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures " ("ASU 2022-02") eliminates the accounting guidance for TDRs while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty that assess whether a modification has created a new loan.

Additionally, ASU 2022-02 requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases.

Effective January 1, 2023, the Company adopted the guidance prescribed under ASU 2022-02.

Refer to the "Loan Modifications" subsection above and Note 4 for additional disclosure.

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures." ("ASU 2023-07") requires filers to disclose significant segment expenses, an amount and description for other segment items, the title and position of the entity’s chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measures of profit or loss to assess segment performance, and, on an interim basis, certain segment related disclosures that previously were required only on an annual basis.

ASU 2023-07 is effective for the Company for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

Since early adoption is permitted, the Company adopted the guidance prescribed under ASU 2023-07 effective January 1, 2024.

Adoption of this guidance did not have a material impact on our consolidated financial statements for fiscal year 2024.

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Note 2 – Cash and Due from Banks

In 2023 and 2022, the Bank maintained average daily balances at the Federal Reserve Bank of Richmond ("Federal Reserve Bank") of $ 1.1 billion and $ 1.3 billion, respectively, on which interest is paid.

In the years ended December 31, 2024 and 2023, the Bank maintained average daily balances at the Federal Reserve Bank of Richmond ("Federal Reserve Bank") of $ 1.8 billion and $ 1.1 billion, respectively, on which interest is paid.

Additionally, the Bank maintains interest-bearing balances with the Federal Home Loan Bank of Atlanta ("FHLB") and noninterest-bearing balances with domestic correspondent banks to cover associated costs for services they provide to the Bank.

Note 3 – Investment Securities

The following tables summarize the Company's investment securities available-for-sale and held-to-maturity by major security type:

(dollars in thousands) Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Allowance for Credit Losses

Estimated Fair Value

The following tables summarize the Company's investment in AFS and HTM securities by major security type:

(dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Estimated Fair Value

December 31, 2024

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Corporate bonds 2,000 — ( 160 ) ( 22 ) 1,818

$ 1,668,316 $ 45 $ ( 161,956 ) $ ( 17 ) $ 1,506,388

(dollars in thousands) Amortized Cost

Gross Unrecognized Gains

Gross Unrecognized Losses

Estimated Fair Value

Total available-for-sale securities $ 1,408,935 $ 36 $ ( 141,545 ) $ ( 22 ) $ 1,267,404

(dollars in thousands) Amortized Cost Gross Unrecognized Gains Gross Unrecognized Losses Estimated Fair Value

December 31, 2024

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Corporate bonds 131,414 — ( 9,172 ) 122,242

1,017,693 $ 5 $ ( 116,116 ) $ 901,582

allowance for credit losses

Total amortized cost, net of allowance for credit losses

(dollars in thousands) Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Total 939,953 $ — $ ( 119,571 ) $ 820,382

allowance for credit losses ( 1,306 )

Estimated Fair Value

Total held-to-maturity securities, net of ACL $ 938,647

(dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Estimated Fair Value

December 31, 2023

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Corporate bonds 2,000 — ( 300 ) ( 17 ) 1,683

$ 1,803,898 $ 63 $ ( 205,278 ) $ ( 17 ) $ 1,598,666

(dollars in thousands) Amortized Cost

Gross Unrecognized Gains

Gross Unrecognized Losses

Estimated Fair Value

Total available-for-sale securities $ 1,668,316 $ 45 $ ( 161,956 ) $ ( 17 ) $ 1,506,388

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(dollars in thousands) Amortized Cost Gross Unrecognized Gains Gross Unrecognized Losses Estimated Fair Value

December 31, 2023

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Corporate bonds 132,309 — ( 14,729 ) 117,580

1,094,140 $ — $ ( 125,433 ) $ 968,707

Total 1,017,693 $ 5 $ ( 116,116 ) $ 901,582

allowance for credit losses ( 1,956 )

Total amortized cost, net of allowance for credit losses

Total held-to-maturity securities, net of ACL $ 1,015,737

In addition, at December 31, 2024 and December 31, 2023, the Company held $ 51.8 million and $ 25.7 million in non marketable equity securities, respectively, in a combination of Federal Reserve System ("Federal Reserve Board," "Federal Reserve" or "FRB") and FHLB stocks, which are required to be held for regulatory purposes.

These securities cannot be disposed of other than through redemption by the issuer and, if redeemed, would be redeemed at the original cost.

The securities are carried at cost, classified as restricted securities, and periodically evaluated for impairment based on ultimate recovery of par value.

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At the time of transfer, the Company reversed the allowance for credit losses associated with the available-for-sale securities through the provision for credit losses.

The securities were transferred at their amortized cost basis, net of any remaining unrealized gain or loss reported in accumulated other comprehensive income.

The securities were transferred at their amortized cost basis, net of any remaining unrealized gain or loss reported in accumulated other comprehensive income (loss).

The related unrealized loss of $ 66.2 million was included in other comprehensive loss at the time of transfer and, as of December 31, 2024, $ 44.8 million remains in accumulated other comprehensive loss, to be amortized out through interest income as a yield adjustment over the remaining term of the securities.

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The accrued interest on investment securities is excluded from the amortized cost of the securities and is reported in other assets in the Consolidated Balance Sheets.

The following tables summarize, by length of time, the Company's investment securities available-for-sale that have been in a continuous unrealized loss position and investment securities held-to-maturity that have been in a continuous unrecognized loss position:

Less than 12 Months

12 Months or Greater

(dollars in thousands) Number of Securities

Estimated Fair Value

Unrealized Losses

Estimated Fair Value

Unrealized Losses

Estimated Fair Value

Unrealized Losses

The following tables summarize, by length of time, the Company's AFS securities that have been in a continuous unrealized loss position and HTM securities that have been in a continuous unrecognized loss position:

Less than 12 Months 12 Months or Greater Total

(dollars in thousands) Number of Securities Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses

December 31, 2024

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Corporate bonds 1 — — 1,818 ( 160 ) 1,818 ( 160 )

244 $ 3,084 $ ( 4 ) $ 1,493,993 $ ( 161,952 ) $ 1,497,077 $ ( 161,956 )

Less than 12 Months

12 Months or Greater

(dollars in thousands) Number of Securities

Estimated Fair Value

Unrecognized Losses

Estimated Fair Value

Unrecognized Losses

Estimated Fair Value

Unrecognized Losses

Total 235 $ 9,830 $ ( 136 ) $ 1,256,180 $ ( 141,409 ) $ 1,266,010 $ ( 141,545 )

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Less than 12 Months 12 Months or Greater Total

(dollars in thousands) Number of Securities Estimated Fair Value Unrecognized Losses Estimated Fair Value Unrecognized Losses Estimated Fair Value Unrecognized Losses

December 31, 2024

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Corporate bonds 30 1,928 ( 77 ) 110,280 ( 9,095 ) 112,208 ( 9,172 )

228 $ — $ — $ 885,977 $ ( 116,116 ) $ 885,977 $ ( 116,116 )

Less than 12 Months

12 Months or Greater

(dollars in thousands) Number of Securities

Estimated Fair Value

Unrealized Losses

Estimated Fair Value

Unrealized Losses

Estimated Fair Value

Unrealized Losses

Total 222 $ 5,954 $ ( 152 ) $ 804,394 $ ( 119,419 ) $ 810,348 $ ( 119,571 )

Less than 12 Months 12 Months or Greater Total

(dollars in thousands) Number of Securities Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses

December 31, 2023

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Corporate bonds 1 — — 1,683 ( 300 ) 1,683 ( 300 )

260 $ 495,164 $ ( 58,439 ) $ 1,093,919 $ ( 146,839 ) $ 1,589,083 $ ( 205,278 )

Less than 12 Months

12 Months or Greater

(dollars in thousands) Number of Securities

Estimated Fair Value

Unrecognized Losses

Estimated Fair Value

Unrecognized Losses

Estimated Fair Value

Unrecognized Losses

Total 244 $ 3,084 $ ( 4 ) $ 1,493,993 $ ( 161,952 ) $ 1,497,077 $ ( 161,956 )

Less than 12 Months 12 Months or Greater Total

(dollars in thousands) Number of Securities Estimated Fair Value Unrecognized Losses Estimated Fair Value Unrecognized Losses Estimated Fair Value Unrecognized Losses

December 31, 2023

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Corporate bonds 30 — — 105,523 ( 14,729 ) 105,523 ( 14,729 )

232 $ 23,881 $ ( 3,228 ) $ 932,753 $ ( 122,205 ) $ 956,634 $ ( 125,433 )

Unrealized losses at December 31, 2023 were generally attributable to changes in market interest rates and interest spread relationships subsequent to the dates the investment securities were originally purchased, and not due to credit quality concerns on the investment securities.

The Company measures its available-for-sale and held-to-maturity security portfolios for current expected credit losses as part of its allowance for credit losses analysis.

There was no provision for credit losses recorded during the year ended December 31, 2023 and a reversal of credit losses of $ 603 thousand was recorded for the year ended December 31, 2022 on the available-for-sale securities portfolio.

During the years ended December 31, 2023 and 2022, the Company recorded a provision for credit losses of $ 1.2 million and $ 766 thousand, respectively, on its investment securities held-to-maturity.

As of December 31, 2023 and 2022, the Company had an allowance for credit losses outstanding of $ 17 thousand and $ 17 thousand, respectively, on its AFS securities and $ 2.0 million and $ 766 thousand, respectively, on its HTM securities.

The following table summarizes the Company's investment securities available-for-sale and investment securities held-to-maturity by contractual maturity.

Total 228 $ — $ — $ 885,977 $ ( 116,116 ) $ 885,977 $ ( 116,116 )

Unrealized losses at December 31, 2024 were generally attributable to changes in market interest rates and interest spread relationships subsequent to the dates the securities were originally purchased, and were considered to be temporary, and not due to credit quality concerns on the investment securities.

The fair values of these securities are expected to recover as the securities approach their respective maturity dates.

The Company does not intend to sell and it is likely that it will not be required to sell the securities prior to their anticipated recovery.

The Company measures its AFS and HTM securities portfolios for current expected credit losses as part of its ACL analysis.

For further information on provision for credit losses on AFS and HTM securities, see Allowance for Credit Losses discussion in "Note 1.

Summary of Significant Accounting Policies".

As of December 31, 2024 and 2023, the Company had an allowance for credit losses outstanding of 22 thousand and 17 thousand, respectively, on its AFS securities and $ 1.3 million and $ 2.0 million, respectively, on its HTM securities, each of which primarily comprise allowances for corporate bonds.

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The following table summarizes the Company's investment in AFS securities and HTM securities by contractual maturity.

Expected maturities for MBS will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

December 31, 2024

(dollars in thousands) Amortized Cost

Estimated Fair Value

(dollars in thousands) Amortized Cost Estimated Fair Value

Investment securities available-for-sale:

Within one year $ 188,499 $ 184,939

$ 141,266 $ 137,159

One to five years 359,242 331,649

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Residential mortgage-backed securities 719,815 625,316

823,992 727,353

Commercial mortgage-backed securities 53,248 48,945

54,557 49,564

allowance for credit losses — ( 22 )

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Commercial mortgage-backed securities 88,575 75,506

90,227 77,360

allowance for credit losses ( 1,306 ) —

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During the years ended December 31, 2024, 2023 and 2022, proceeds from the sale or call of investment securities were $ 153.0 million, $ 11.2 million and $ 14.6 million, respectively.

During the year ended December 31, 2023, gross realized gains on sales and calls of investment securities were $ 129 thousand and gross realized losses on sales of investment securities were $ 140 thousand.

During the year ended December 31, 2024, gross realized gains on sales and calls of investment securities were $ 14 thousand and gross realized losses on sales of investment securities were $ 0 .

During the year ended December 31, 2023, gross realized gains on sales of investment securities were $ 129 thousand and gross realized losses on sales of investment securities were $ 140 thousand.

During the year ended December 31, 2021, gross realized gains on sales of investment securities were $ 3.2 million and gross realized losses on sales of investment securities were $ 187 thousand.

At December 31, 2023 and 2022, the book value of securities pledged as collateral for certain government deposits, securities sold under agreements to repurchase and certain lines of credit with correspondent banks was $ 2.1 billion and $ 220.1 million, respectively, which were well in excess of required amounts in order to operationally provide significant reserve amounts for new business.

During the year ended December 31, 2022, gross realized gains on sales of investment securities were $ 18 thousand and gross realized losses on sales of investment securities were $ 187 thousand.

At December 31, 2024 and 2023, the book value of securities pledged as collateral for certain government deposits, securities sold under agreements to repurchase and certain lines of credit with correspondent banks was $ 0.4 billion and $ 2.1 billion, respectively, which were well in excess of required amounts in order to operationally provide significant reserve amounts for new business.

As of December 31, 2024 and 2023, there were no holdings of securities of any one issuer, other than the U.S.

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agency securities, which exceeded ten percent of shareholders’ equity.

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Note 4 – Loans and Allowance for Credit Losses

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A substantial portion of the Bank’s loan portfolio consists of loans to businesses secured by real estate and other business assets.

Loans, net of unamortized net deferred fees, at December 31, 2023 and 2022 are summarized by portfolio segment as follows:

HFI Loans, net of unamortized net deferred fees, at December 31, 2024 and 2023 are summarized by portfolio segment as follows:

December 31, 2024 December 31, 2023

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Unamortized net deferred fees and costs were $ 18.8 million and $ 27.0 million at December 31, 2024 and 2023, respectively.

As of December 31, 2023 and 2022, the Bank serviced $ 328.0 million and $ 361.5 million, respectively, of multifamily FHA loans, SBA loans and other loan participations, which are not reflected as loan balances on the Consolidated Balance Sheets.

As of December 31, 2024 and 2023, the Bank serviced $ 63.7 million and $ 328.0 million, respectively, of SBA loans and other loan participations, which are not reflected as loan balances on the Consolidated Balance Sheets.

During the year ended December 31, 2024, the Company sold the remaining servicing rights to all FHA loans for net proceeds of $ 4.8 million and a gain on sale of $ 1.5 million.

Real estate loans are secured primarily by duly recorded first deeds of trust or mortgages.

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Residential land acquisition, development and construction ("ADC") loans generally are underwritten with a maximum term of 36 months, including extensions approved at origination.

Commercial land acquisition and construction loans are secured by real property where loan funds will be used to acquire land and to construct or improve appropriately zoned real property for the creation of income producing or owner user commercial properties.

Borrowers are generally required to put equity into each project at levels determined by the appropriate Loan Committee.

Borrowers are generally required to put equity into each project at levels determined by the appropriate approval authority.

Commercial land acquisition and construction loans generally are underwritten with a maximum term of 24 months.

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Each draw request shall also include the borrower’s soft cost breakdown certified by the borrower or their Chief Financial Officer.

Prior to an advance, the Bank or its

contractor inspects the project to determine that the work has been completed, to justify the draw requisition.

Prior to an advance, the Bank or its contractor inspects the project to determine that the work has been completed, to justify the draw requisition.

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Commercial permanent loans are generally secured by improved real property which is generating income in the normal course of operation.

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If a project has not performed as expected, it is not the customary practice of the Company to increase loan funded interest reserves.

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The following table details activity in the ACL by portfolio segment for the years ended December 31, 2024, 2023 and 2022.

PPP loans are excluded from these tables since they do not carry an allowance for credit loss, as these loans are fully guaranteed as to principal and interest by the SBA, whose guarantee is backed by the full faith and credit of the U.S.

Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

(dollars in thousands) Commercial Income Producing - Commercial Real Estate

Owner Occupied - Commercial Real Estate

Real Estate Mortgage - Residential

Construction -Commercial and Residential

Construction - C&I (Owner Occupied)

Other Consumer

(dollars in thousands) Commercial Income Producing - Commercial Real Estate Owner Occupied - Commercial Real Estate Real Estate Mortgage - Residential Construction -Commercial and Residential Construction - C&I (Owner Occupied) Home Equity Other Consumer Total

Year Ended December 31, 2024

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Balance at beginning of year $ 17,824 $ 40,050 $ 14,333 $ 861 $ 10,198 $ 1,992 $ 657 $ 25 $ 85,940

$ 15,655 $ 35,688 $ 12,702 $ 969 $ 7,195 $ 1,606 $ 555 $ 74 $ 74,444

Loans charged-off ( 4,906 ) ( 30,284 ) ( 3,800 ) — ( 129 ) — — ( 88 ) ( 39,207 )

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Net loans (charged-off) and recovered ( 4,533 ) ( 30,099 ) ( 3,706 ) — ( 129 ) — — ( 88 ) ( 38,555 )

( 1,444 ) ( 11,817 ) 55 — ( 5,600 ) — — ( 44 ) ( 18,850 )

Provision for (reversal of) credit losses 6,099 45,234 12,027 ( 251 ) 4,516 ( 710 ) ( 4 ) 94 67,005

3,613 16,179 1,576 ( 108 ) 8,603 386 102 ( 5 ) 30,346

Ending balance $ 19,390 $ 55,185 $ 22,654 $ 610 $ 14,585 $ 1,282 $ 653 $ 31 $ 114,390

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Balance at beginning of year $ 15,655 $ 35,688 $ 12,702 $ 969 $ 7,195 $ 1,606 $ 555 $ 74 $ 74,444

$ 14,475 $ 38,287 $ 12,146 $ 449 $ 7,094 $ 2,005 $ 474 $ 35 $ 74,965

Loans charged-off ( 2,020 ) ( 11,817 ) — — ( 5,636 ) — — ( 50 ) ( 19,523 )

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Net loans (charged-off) and recovered ( 1,444 ) ( 11,817 ) 55 — ( 5,600 ) — — ( 44 ) ( 18,850 )

( 848 ) ( 1,330 ) — — 1,627 — — ( 73 ) ( 624 )

Provision for (reversal of) credit losses 3,613 16,179 1,576 ( 108 ) 8,603 386 102 ( 5 ) 30,346

2,028 ( 1,269 ) 556 520 ( 1,526 ) ( 399 ) 81 112 103

Ending balance $ 17,824 $ 40,050 $ 14,333 $ 861 $ 10,198 $ 1,992 $ 657 $ 25 $ 85,940

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Balance at beginning of year $ 14,475 $ 38,287 $ 12,146 $ 449 $ 7,094 $ 2,005 $ 474 $ 35 $ 74,965

$ 26,569 $ 55,385 $ 14,000 $ 1,020 $ 9,092 $ 2,437 $ 1,039 $ 37 $ 109,579

Loans charged-off ( 1,561 ) ( 1,355 ) — — — — — ( 79 ) ( 2,995 )

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Net loans (charged-off) and recovered ( 848 ) ( 1,330 ) — — 1,627 — — ( 73 ) ( 624 )

( 8,302 ) — ( 5,347 ) — 293 — — 17 ( 13,339 )

(Reversal of) provision for credit losses

Provision for (reversal of) credit losses

2,028 ( 1,269 ) 556 520 ( 1,526 ) ( 399 ) 81 112 103

Ending balance $ 15,655 $ 35,688 $ 12,702 $ 969 $ 7,195 $ 1,606 $ 555 $ 74 $ 74,444

The following table presents the amortized cost basis of collateral-dependent loans by portfolio segment as of December 31, 2023 and 2022:

The following table presents the amortized cost basis of collateral-dependent HFI loans by portfolio segment as of December 31, 2024 and 2023:

December 31, 2024 December 31, 2023

5 unchanged sentences

Construction - commercial and residential — — — 525

Home equity — 303 — 242

Other consumer — — — —

Total $ 2,094 $ 206,748 $ 3,428 $ 62,707

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Credit Quality Indicators

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The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the assets, its classification as an estimated loss is deferred until its more exact status may be determined.

The Company’s credit quality indicators are updated on an ongoing basis along with our credits rated watch or below reviews.

The following table presents by class and by credit quality indicator, the recorded investment in the Company’s loans and leases as of December 31, 2023 and 2022.

The data is further defined by year of loan origination.

(dollars in thousands)

Prior 2019 2020 2021 2022 2023

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The Company's credit quality indicators are generally updated annually, however, credits rated "Special Mention" or below are reviewed more frequently.

Based on the most recent analysis performed, the amortized cost basis of HFI loans, as of December 31, 2024 and 2023, by risk category, class and year of origination, along with any charge-offs that were recorded in the applicable loan segment, if applicable, were as follows:

(dollars in thousands) Prior 2020 2021 2022 2023 2024

Revolving Loans Amort.

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Special Mention 23,658 — — — — — — — 23,658

54,288 13,348 — — — — — — 67,636

Substandard 96,634 1,248 — 1,095 — — — — 98,977

Total 742,550 58,859 219,162 40,316 138,860 69,623 299 — 1,269,669

YTD gross charge-offs ( 3,800 ) — — — — — — — ( 3,800 )

Real estate mortgage - residential:

Pass 20,080 2,435 9,972 12,181 5,867 — — — 50,535

Substandard 4,170 — — — — — — — 4,170

Total 20,080 2,435 9,972 12,181 5,867 — — — 50,535

YTD gross charge-offs —

Construction - commercial and residential:

Pass 26,739 38,385 199,933 595,496 202,577 7,588 124,508 — 1,195,226

Special Mention

— — 4,964 — — — — — 4,964

Substandard 5,683 — 4,890 — — — — — 10,573

Total 32,422 38,385 209,787 595,496 202,577 7,588 124,508 — 1,210,763

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Total 1,425 71 257 116 — — 48,496 765 51,130

YTD gross charge-offs —

Other consumer

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Total YTD gross charge-offs $ ( 38,247 ) $ ( 386 ) $ — $ — $ — $ — $ ( 523 ) $ ( 51 ) $ ( 39,207 )

(dollars in thousands)

Prior 2018 2019 2020 2021 2022

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(dollars in thousands) Prior 2019 2020 2021 2022 2023

Revolving Loans Amort.

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YTD gross charge-offs ( 885 ) — — — — — — ( 1,135 ) ( 2,020 )

( 569 ) ( 645 ) — — — — ( 247 ) ( 100 ) ( 1,561 )

Pass — — — 528 — — — — 528

5 unchanged sentences

YTD gross charge-offs ( 11,817 ) — — — — — — — ( 11,817 )

( 1,355 ) — — — — — — — ( 1,355 )

Owner occupied - commercial real estate:

Pass 534,525 103,034 35,385 202,776 41,907 125,934 673 55 1,044,289

Special Mention 54,288 13,348 — — — — — — 67,636

Substandard 37,167 — 1,274 — — — — 21,873 60,314

6 unchanged sentences

Pass 30,619 3,440 45,739 251,038 419,393 87,400 124,013 — 961,642

Substandard 8,124 — — — — — — — 8,124

Total 38,743 3,440 45,739 251,038 419,393 87,400 124,013 — 969,766

YTD gross charge-offs ( 136 ) ( 5,500 ) — — — — — — ( 5,636 )

Construction - C&I (owner occupied):

5 unchanged sentences

Pass 1 — — — 46 — 354 — 401

Substandard — — — — — — — 50 50

Total 1 — — — 46 — 354 — 401

YTD gross charge-offs ( 50 ) — — — — — — — ( 50 )

( 36 ) — — — — — — ( 43 ) ( 79 )

Total Recorded Investment $ 2,367,170 $ 614,362 $ 525,985 $ 1,185,099 $ 1,391,290 $ 750,863 $ 1,103,437 $ 30,489 $ 7,968,695

Total YTD gross charge-offs $ ( 12,888 ) $ ( 5,500 ) $ — $ — $ — $ — $ — $ ( 1,135 ) $ ( 19,523 )

$ ( 1,960 ) $ ( 645 ) $ — $ — $ — $ — $ ( 247 ) $ ( 143 ) $ ( 2,995 )

Nonaccrual and Past Due Loans

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Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The following table presents, by portfolio segment, information related to nonaccrual loans as of December 31, 2023 and 2022.

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The following table presents, by portfolio segment, information related to the amortized cost basis of nonaccrual HFI loans as of December 31, 2024 and 2023.

December 31, 2024

6 unchanged sentences

Construction- commercial and residential — — — — 525 525

— 525 525 — — —

242 — 242 — — —

Home equity 303 — 303 242 — 242

Other consumer — — — — — —

$ 49,608 $ 159,098 $ 208,706 $ 62,006 $ 3,518 $ 65,524

$ 62,006 $ 3,518 $ 65,524 $ 118 $ 6,350 $ 6,468

(1) Gross coupon interest income of $ 4.2 million, $ 558 thousand and $ 1.7 million would have been recorded for years ended December 31, 2023, 2022 and 2021, respectively, if nonaccrual loans shown above had been current and in accordance with their original terms, while interest actually recorded on such loans were $ 1.5 million, $ 17 thousand and $ 101 thousand for the years ended December 31, 2023, 2022 and 2021, respectively.

(1) Gross coupon interest income of $ 8.8 million, $ 4.2 million and $ 558 thousand would have been recorded for years ended December 31, 2024, 2023 and 2022, respectively, if nonaccrual loans shown above had been current and in accordance with their original terms, while interest actually recorded on such loans were $ 4.1 million, $ 1.5 million and $ 17 thousand for the years ended December 31, 2024, 2023 and 2022, respectively.

See Note 1 to the Consolidated Financial Statements for a description of the Company’s policy for placing loans on nonaccrual status.

The following table presents, by portfolio segment, an aging analysis and the recorded investments in loans past due as of December 31, 2023 and 2022:

(dollars in thousands) Loans 30-59 Days Past Due

Loans 60-89 Days Past Due

Loans 90 Days or More Past Due

Total Past Due Loans

Current Loans

Nonaccrual Loans Total Recorded Investment in Loans

The following table presents, by portfolio segment, an aging analysis and the recorded investments in HFI loans past due as of December 31, 2024 and 2023:

(dollars in thousands) Loans 30-59 Days Past Due Loans 60-89 Days Past Due Loans 90 Days or More Past Due Total Past Due Loans Current Loans Nonaccrual Loans Total Recorded Investment in Loans

December 31, 2024

20 unchanged sentences

Total $ 6,601 $ 7,048 $ — $ 13,649 $ 7,889,522 $ 65,524 $ 7,968,695

Modifications with Borrowers Experiencing Financial Difficulty

On January 1, 2023, the Company adopted the accounting guidance in ASU No.

2022-02, effective as of January 1, 2023, which eliminates the recognition and measurement of a TDR.

Due to the removal of the TDR designation, the Company evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan.

Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications.

Therefore, the disclosures related to loan restructurings are for modifications which have a direct impact on cash flows.

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Loan Modifications for Borrowers Experiencing Financial Difficulty

The Company evaluates all loan modifications according to the accounting guidance to determine if the modification results in a new loan or a continuation of the existing loan.

Loan modifications to borrowers experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications.

Modifications with terms not as favorable to the Company as the terms for comparable loans to other customers with similar collection risk who are not refinancing or restructuring a loan with the Company and which have a direct impact on cash flows are considered modified loans to borrowers experiencing financial difficulty.

The Company may offer various types of modifications when restructuring a loan.

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The allowance may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.

The following table presents the amortized cost basis as of December 31, 2023 and the financial effect of loans modified to borrowers experiencing financial difficulty during the year ended December 31, 2023:

(dollars in thousands) Term Extension Combination - Term Extension and Principal Payment Delay Combination - Term Extension, Principal Payment Delay and Interest Rate Reduction Total Percentage of Total Loan Type Weighted Average Term and Principal Payment Extension (1)

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The following table presents the amortized cost basis as of December 31, 2024 and 2023, and the financial effect of HFI loans modified to borrowers experiencing financial difficulty during the years ended December 31, 2024 and 2023:

(dollars in thousands) Term Extension Combination - Term Extension and Principal Payment Delay Combination - Principal Payment Delay and Interest Rate Reduction

Combination - Term Extension, Principal Payment Delay and Interest Rate Reduction Total Percentage of Total Loan Type Weighted Average Term and Principal Payment Extension (1)

Weighted Average Interest Rate Reduction (2)

December 31, 2024

Commercial $ 27,249 $ 28,576 $ 7,728 $ — $ 63,553 5.3 % 13 months 1.63 %

4 unchanged sentences

Total $ 53,409 $ 337,141 $ 7,728 $ 3,514 $ 401,792

(1) For loans that received multiple modifications during the year ended December 31, 2023, weighted average term and principal payment extensions were calculated based on the aggregated impact of the extensions received during the period.

(2) The weighted average is calculated based on the total amortized cost at December 31, 2023 of loans that received interest rate reduction modifications during the year ended December 31, 2023.

(3) Includes one loan modified as a combination - principal payment delay, term extension and interest rate reduction most recently in the fourth quarter of 2023 that was moved to nonaccrual status and incurred a $ 6.1 million charge off during the year ended December 31, 2023 in connection with the receipt of an updated appraisal in January 2024.

The following table presents the performance of loans modified to borrowers experiencing financial difficulty during the year ended December 31, 2023:

December 31, 2023

Commercial $ 14,182 $ 21,003 $ — $ — $ 35,185 2.4 % 11 months — %

Income producing - commercial real estate

7,191 62,356 — 106,256 175,803 4.3 % 16 months 2.56 %

Owner occupied - commercial real estate — 19,127 — — 19,127 1.6 % 9 months — %

Construction - commercial and residential 7,095 — — — 7,095 0.7 % 12 months — %

Total $ 28,468 $ 102,486 $ — $ 106,256 $ 237,210

(1) For loans that received multiple modifications during the year, weighted average term and principal payment extensions were calculated based on the aggregate impact of the extensions received during the period.

(2) The weighted average is calculated based on the total amortized cost of loans, at the year-end, that received interest rate reduction modifications during the year.

The following table presents the performance of HFI loans modified during the prior twelve months to borrowers experiencing financial difficulty during the years ended December 31, 2024 and 2023:

December 31, 2024

Payment Status (Amortized Cost Basis)

(dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due

(dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due Nonaccrual

Commercial $ 58,169 $ 5,384 $ — $ —

3 unchanged sentences

Total $ 264,678 $ 5,384 $ — $ 131,730

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December 31, 2023

Payment Status (Amortized Cost Basis)

(dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due Nonaccrual

Commercial $ 30,790 $ 4,395 $ — $ —

Income producing - commercial real estate 137,252 — — 38,551

Owner occupied - commercial real estate — — — 19,127

Construction - commercial and residential 7,095 — — —

Total $ 175,137 $ 4,395 $ — $ 57,678

The Company monitors loan payments on performing and nonperforming loans on an on-going basis to determine if a loan is considered to have a payment default.

To determine the existence of a payment default, the Company analyzes the economic conditions that exist for each borrower and their ability to generate positive cash flow during a given loan's term.

The following table presents the amortized cost basis of loans that were experiencing payment default at December 31, 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty:

The following table presents the amortized cost basis of HFI loans that were experiencing payment default at December 31, 2024 and 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty:

December 31, 2024

Amortized Cost Basis

(dollars in thousands) Term Extension

Combination - Term Extension and Principal Payment Delay Combination - Term Extension, Principal Payment Delay and Interest Rate Reduction

$ 4,395 $ — $ —

(dollars in thousands) Term Extension Combination - Term Extension and Principal Payment Delay Combination - Term Extension, Principal Payment Delay and Interest Rate Reduction

Commercial $ 5,384 $ — $ —

Income producing - commercial real estate — 131,730 —

Owner occupied - commercial real estate — — —

Construction - commercial and residential — — —

Total $ 5,384 $ 131,730 $ —

December 31, 2023

Amortized Cost Basis

(dollars in thousands) Term Extension Combination - Term Extension and Principal Payment Delay Combination - Term Extension, Principal Payment Delay and Interest Rate Reduction

Commercial $ 4,395 $ — $ —

Income producing - commercial real estate — — 38,551

Owner occupied - commercial real estate — 19,127 —

Total $ 4,395 $ 19,127 $ 38,551

The Company individually evaluates nonaccrual loans when performing its CECL estimate to calculate the ACL.

2 unchanged sentences

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.

Troubled Debt Restructurings ("TDRs")

Historically, a modification of a loan constituted a TDR when a borrower was experiencing financial difficulty and the modification constituted a concession.

The Company offered various types of concessions when modifying a loan.

Commercial and industrial loans modified in a TDR often involved temporary interest-only payments, term extensions and converting revolving credit lines to term loans.

Additional collateral, a co-borrower or a guarantor were often requested.

Commercial mortgage and construction loans modified in a TDR often involved reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk or substituting or adding a new borrower or guarantor.

Construction loans modified in a TDR may have involved extending the interest-only payment period.

As of December 31, 2022, all performing TDRs were categorized as interest-only modifications.

Loans modified in a TDR for the Company may have had the financial effect of increasing the specific allowance associated with the loan.

An allowance for consumer and commercial loans that had been modified in a TDR was measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the estimated fair value of the collateral, less any selling costs, if the loan was collateral dependent.

Management exercised significant judgment in developing these estimates.

The following table presents the recorded investment of loans modified in TDRs held by the Company as of December 31, 2022:

(dollars in thousands) Number of Contracts

Commercial Income Producing - Commercial Real Estate

Owner Occupied - Commercial Real Estate

Troubled debt restructurings:

Restructured accruing 5 $ 946 $ 4,328 $ 19,170 $ 24,444

Specific allowance $ 87 $ 2,140 $ — $ 2,227

Restructured and subsequently defaulted $ — $ — $ — $ —

During the year ended December 31, 2022, there was one loan totaling $ 19.2 million that was modified in a TDR and no TDRs defaulted on their modified terms that were reclassified to nonperforming loans.

As of December 31, 2022, all five TDR loans, totaling $ 24.4 million, were performing under their modified terms.

During the year ended December 31, 2022, three restructured loans, two of which were nonperforming, totaling approximately $ 11.1 million had their collateral property sold to a third party and a charge off of $ 1.4 million was recognized on the sale.

Related Party Loans

1 unchanged sentence

All of such loans are either fully repaid or performing and none of such loans are nonaccrual, past due, restructured, or rated substandard or worse (not on nonaccrual).

Amounts in “additions due to changes in related party status” or "removals due to changes in related party status" reflect loans that transitioned to being related party loans or out of being related party loans during the years presented as a result of changes in related party status with respect to certain of the Company’s directors who are affiliated with the related borrowers.

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result of changes in related party status with respect to certain of the Company’s directors who are affiliated with the related borrowers.

The following table summarizes the activity of loans outstanding to borrowers with relationships to related parties in 2024 and 2023:

3 unchanged sentences

Repayments ( 534 ) ( 44,645 )

Additions due to changes in related party status

Removals due to changes in related party status — ( 74,000 )

5 unchanged sentences

Furniture, fixtures and equipment 19,625 19,600

19,600 34,424

accumulated depreciation and amortization ( 40,497 ) ( 38,453 )

( 38,453 ) ( 53,075 )

Total premises and equipment, net $ 7,694 $ 10,189

1 unchanged sentence

Note 6 – Leases

The Company accounts for leases in accordance with ASC Topic 842.

A lease is defined as a contract that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.

Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branch offices, ATM locations and corporate office space.

All of our leases are classified as operating

leases and are included in operating lease right-of-use ("ROU") assets and operating lease liabilities in the consolidated balance sheet.

Substantially all of the leases in which the Company is the lessee comprise real estate for branch offices, ATM locations and corporate office space.

Substantially all of our leases are classified as operating leases and are included in operating lease right-of-use ("ROU") assets and operating lease liabilities in the consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

3 unchanged sentences

The incremental borrowing rate is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.

As of December 31, 2023, the Company had $ 19.1 million of operating lease ROU assets and $ 23.2 million of operating lease liabilities compared to $ 24.5 million of operating lease ROU assets and $ 29.3 million of operating lease liabilities at December 31, 2022 on the Company’s Consolidated Balance Sheet.

The Company has elected not to recognize ROU assets and lease liabilities arising from short-term leases, leases with initial terms of twelve months or less or equipment leases (deemed immaterial) on the Consolidated Balance Sheets.

Our leases contain terms and conditions of options to extend or terminate the lease which are recognized as part of the ROU assets and lease liabilities when an economic benefit to exercise the option exists and there is a 90 % probability that the Company will exercise the option.

As of December 31, 2024 and December 31, 2023, the Company had $ 18.5 million and $ 19.1 million of operating lease ROU assets respectively, and $ 23.8 million and $ 23.2 million of operating lease liabilities respectively, on the Company’s Consolidated Balance Sheets.

The Company elects not to recognize ROU assets and lease liabilities arising from short-term leases, leases with initial terms of twelve months or less or equipment leases (deemed immaterial) on the Consolidated Balance Sheets.

The leases contain options to extend or terminate the lease, which are recognized as part of the ROU assets and lease liabilities when an economic benefit to exercise the option exists and there is a 90 % probability that the Company will exercise the option.

If these criteria are not met, the options are not included in our ROU assets and lease liabilities.

As of December 31, 2024, our leases do not contain material residual value guarantees or impose restrictions or covenants related to dividends or the Company’s ability to incur additional financial obligations.

In 2023, the Company did not enter into any new leases, or extend any leases;

it renewed one lease, and it had three leases expire ( three branches were closed).

During the year ended December 31, 2024, the Company entered into a new lease agreement for its headquarters in Bethesda, MD, which is further discussed below.

The Company also extended two existing leases, one each in Maryland and District of Columbia, and one additional lease expired during the same period.

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The following table presents lease costs and other lease information.

23 unchanged sentences

Present value of net future minimum lease payments $ 23,815

Note 7 – Intangible Assets

Recognizing the connection between high-quality and high-performing workplaces coupled with a desire to maintain a strong presence in the community we serve, EagleBank has entered into a long-term lease agreement to relocate its corporate headquarters to 7500 Old Georgetown Road in downtown Bethesda, MD in 2025.

The lease commencement date is January 1, 2025, and matures on July 31, 2037.

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Note 7 – Goodwill and Intangible Assets

Intangible assets are included in the Consolidated Balance Sheets as a separate line item, net of accumulated amortization and consist of the following items:

(dollars in thousands) Gross

Assets Additions Accumulated

Amortization FHA

MSR Sales Net

(dollars in thousands) Net

Additions Accumulated

Amortization Impairment

December 31, 2024:

3 unchanged sentences

Non-compete agreements 720 — ( 720 ) — —

$ 104,233 $ 1,234 $ ( 542 ) $ — $ 104,925

Total $ 104,925 $ — $ ( 741 ) $ ( 104,168 ) $ 16

December 31, 2023:

6 unchanged sentences

Assumptions related to loan terms and amortization are made to arrive at the initial recorded values, which are included in other assets.

The Company has suspended its origination and selling activities in multifamily FHA loans, and therefore, as of December 31, 2024, the Company had no unamortized excess servicing assets for multifamily FHA loans.

The aggregate amortization expense was $ 741 thousand, $ 542 thousand and $ 89 thousand for the years ended December 31, 2024, 2023 and 2022, respectively.

The future estimated annual amortization expense is presented below:

Years Ending December 31:

(dollars in thousands) Amount

Thereafter 12

Total annual amortization $ 757

During the second quarter ended June 30, 2024, Management determined that a triggering event had occurred as a result of the share price trading under book value for more than four quarters due to changes in macroeconomic conditions and market volatility in the financial markets and the banking industry due to the impact from rising interest rates.

As a result of the triggering event, the Company engaged a third-party service provider to assist Management with the determination of the fair value of the Company in the second quarter of 2024.

The resulting calculations indicated that the fair value did not exceed the carrying amount of the Company's only reporting unit as of May 31, 2024 which resulted in a determination that goodwill had become fully impaired.

The goodwill impairment charge of $ 104.2 million reduced fully the carrying value of the Company's goodwill as of May 31, 2024.

The impaired goodwill is primarily related to the acquisition of the Virginia Heritage Bank in October 2014.

The impairment charge did not impact our cash flows, liquidity ratios, core operating performance, or regulatory capital ratios.

Note 8 – Other Real Estate Owned

1 unchanged sentence

There were no properties in the process of foreclosure as of December 31, 2024 and 2023.

For the years ended December 31, 2023 and 2022, there were two and one sales of OREO, respectively.

For the years ended December 31, 2024 and 2023, there were two sales of OREO during each year.

Years Ended December 31,

4 unchanged sentences

Ending Balance $ 2,743 $ 1,108

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Note 9 – Derivatives and Hedging Activities

3 unchanged sentences

Cash Flow Hedges of Interest Rate Risk

The Company uses interest rate swaptions to assist in its interest rate risk management.

The Company’s objective in using interest rate derivatives designated as cash flow hedges is to protect itself against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows related to interest payments on a forecasted issuance of debt.

To accomplish this objective, the Company has entered into swaptions to hedge the risk of changes in its cash flows, i.e.

interest payments, attributable to changes in the designated benchmark interest rate being hedged, above the purchased swaption fixed rate, for the period from hedge inception to the Borrowings issuance window.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, changes in the fair value of the derivative are initially reported in accumulated other comprehensive loss (outside of earnings), net of tax, and subsequently reclassified to earnings in the same period during which the hedged transaction affects earnings.

The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions.

Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company’s accounting policy election.

Amounts reported in accumulated other comprehensive loss related to designated cash flow hedge derivatives will be reclassified to interest expense.

During the next 12 months, the Company estimates that an additional $ 616 thousand will be reclassified as an increase to interest expense.

The Company did no t have any designated cash flow hedge interest rate swap transaction outstanding at December 31, 2022 or 2021.

Interest Rate Products not Designated as Hedges

The Company historically utilized interest rate swaptions, accounted for as cash flow hedges, to protect itself against adverse fluctuations in interest rates on a forecasted issuance of debt.

During the year ended December 31, 2024, the Company terminated its interest rate swaption contracts and discontinued the associated hedging relationship.

The amount in accumulated other comprehensive income (loss) related to the swaption contracts is being amortized over the remainder of the hedged transaction.

The Company expects to reclassify the remaining $ 24 thousand out of accumulated other comprehensive loss over the next year as a reduction of interest expense.

Interest Rate Products

Interest rate derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers.

1 unchanged sentence

Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions.

As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

The Company entered into credit risk participation agreements (“RPAs”) with institutional counterparties, under which the Company assumes its pro-rata share of the credit exposure associated with a borrower’s performance related to interest rate derivative contracts in exchange for a fee.

3 unchanged sentences

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

The Company is exposed to credit risk in the event of nonperformance by the interest rate swap counterparty.

The Company is exposed to credit risk in the event of nonperformance by the interest rate derivative counterparty.

The Company minimizes this risk by entering into derivative contracts with only large, stable financial institutions, and the Company has not experienced, and does not expect, any losses from counterparty nonperformance on the interest rate derivatives.

The Company monitors counterparty risk in accordance with the provisions of ASC 815, "Derivatives and Hedging." In addition, the interest rate derivative agreements contain language outlining collateral-pledging requirements for each counterparty.

The designated interest rate derivative agreements detail:

At December 31, 2024, the Company had posted $ 17.4 million of cash collateral with other financial institutions and held $ 30.5 million of cash collateral on behalf of other financial institutions.

The interest rate derivative agreements detail:

1) that collateral be posted when the market value exceeds certain threshold limits associated with the secured party's exposure;

1 unchanged sentence

and 3) if the Company fails to maintain its status as a well-capitalized institution then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

Mortgage Banking Derivatives

The Company completed the cessation of first lien residential mortgage origination and sales activities during the year ended December 31, 2023.

As of December 31, 2023, the Company had no outstanding mortgage banking derivatives.

Historically, as part of its mortgage banking activities, the Bank entered into interest rate lock commitments, which were commitments to originate loans where the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate.

The Bank then locked in the loan and interest rate with an investor and commits to deliver the loan if settlement occurs ("best efforts") or committed to deliver the locked loan in a binding ("mandatory") delivery program with an investor.

Certain loans that were under interest rate lock commitments were covered under forward sales contracts of MBS.

Forward sales contracts of MBS were recorded at fair value with changes in fair value recorded in noninterest income.

Interest rate lock commitments and commitments to deliver loans to investors were considered derivatives.

The market value of interest rate lock commitments and best efforts contracts were not readily ascertainable with precision because they were not actively traded in stand-alone markets.

The Bank determined the fair value of interest rate lock commitments and delivery contracts by measuring the fair value of the underlying asset, which was impacted by current interest rates, taking into consideration the probability that the interest rate lock commitments will close or will be funded.

Certain additional risks arose from these forward delivery contracts in that the counterparties to the contracts may not have been able to meet the terms of the contracts.

The Bank did not expect any counterparty to any MBS to fail to meet its obligation.

Additional risks inherent in mandatory delivery programs included the risk that, if the Bank did not close the loans subject to interest rate risk lock commitments, it would still be obligated to deliver MBS to the counterparty under the forward sales agreement.

Should this have been required, the Bank could have incurred significant costs in acquiring replacement loans or MBS and such costs could have an adverse effect on mortgage banking operations.

The fair value of the mortgage banking derivatives was recorded as a freestanding asset or liability with the change in value being recognized in current earnings during the period of change.

The table below identifies the balance sheet category and fair value of the Company’s designated cash flow hedge derivative instruments and non-designated hedges as of December 31, 2023 and 2022.

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The table below identifies the balance sheet category and fair value of the Company’s derivative instruments as of December 31, 2024 and 2023.

The Company has a minimum collateral posting threshold with its derivative counterparty.

If the Company had breached any provisions under the agreement at December 31, 2024, it could have been required to settle its obligations under the agreement at the termination value.

December 31, 2024 December 31, 2023

5 unchanged sentences

Derivatives designated as hedging instruments:

Interest rate product $ 300,000 $ 374 Other Assets

$ — $ — Other Assets

Interest rate product $ — $ — Other Assets $ 300,000 $ 374 Other Assets

Derivatives not designated as hedging instruments:

1 unchanged sentence

Credit risk participation agreements 49,480 — Other Liabilities 49,480 3 Other Assets

Mortgage banking derivatives — — Other Assets 6,963 93 Other Assets

746,566 31,592 700,909 30,291

Total derivatives in an asset position $ 746,566 $ 31,592 $ 1,000,909 $ 30,665

$ 1,000,909 $ 30,665 $ 402,987 $ 31,132

Derivatives in a liability position:

1 unchanged sentence

Interest rate product $ 697,086 $ 29,110 Other Liabilities $ 654,757 $ 30,555 Other Liabilities

Credit risk participation agreements

— — Other Liabilities 25,902 2 Other Liabilities

$ 654,757 30,555 $ 421,926 30,067

Gross amounts not offset in the consolidated balance sheets:

Cash and other collateral (1)

Net derivatives in a liability position

$ 30,555 $ 30,067

(1) Collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance.

The other collateral consist of securities and is exchanged under bilateral collateral and master netting agreements that allow us to offset the net derivative position with the related collateral.

The application of the collateral cannot reduce the net derivative position below zero.

Therefore, excess other collateral, if any, is not reflected above.

The table below presents the pre-tax net gains (losses) of the Company’s designated cash flow hedges for the years ended December 31, 2024, 2023 and 2022.

The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income

Amount of Gain (Loss) Recognized in OCI

Location of Gain (Loss) Recognized from Accumulated Other Comprehensive Income into Income

The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)

Amount of Gain (Loss) Recognized in OCI Location of Gain (Loss) Recognized from Accumulated Other Comprehensive Income (Loss) into Income (Loss)

Amount of Gain (Loss) Reclassified from Accumulated OCI into Income

(dollars in thousands) Total

Included Component

Excluded Component

Included Component

Excluded Component

(dollars in thousands) Total Included Component Excluded Component Total Included Component Excluded Component

Year ended December 31, 2024:

7 unchanged sentences

Interest rate products $ — $ — $ — Interest expense $ — $ — $ —

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021.

The Effect of Cash Flow Hedge Accounting on the Consolidated Statements of Income

Year Ended December 31,

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The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022.

The Effect of Cash Flow Hedge Accounting on the Consolidated Statements of Operations

Year Ended Years Ended

2024 2023 2022

(dollars in thousands) Interest Expense Interest Expense Interest Expense

Total amounts of expense line items presented in the Consolidated Statements of Income in which the effects of cash flow hedges are recorded

$ ( 14 ) $ — $ ( 516 )

Total amounts of expense line items presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded $ 32 $ ( 14 ) $ —

The effect of cash flow hedging:

1 unchanged sentence

Interest rate products:

Amount of gain (loss) reclassified from accumulated other comprehensive income into income

$ ( 14 ) $ — $ ( 516 )

Amount of gain (loss) reclassified from accumulated other comprehensive income into income - included component

$ — $ — $ ( 516 )

Amount of gain (loss) reclassified from accumulated other comprehensive income into income - excluded component

$ ( 14 ) $ — $ —

Effect of Derivatives Not Designated as Hedging Instruments on the Statements of Income

(dollars in thousands)

Location of Gain or (Loss) Recognized in

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (loss) $ 32 $ ( 14 ) $ —

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (loss) - included component $ 32 $ — $ —

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (loss) - excluded component $ — $ ( 14 ) $ —

Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Operations

(dollars in thousands) Location of Gain or (Loss) Recognized in

Income on Derivative Amount of Gain or (Loss) Recognized in Income on Derivatives

Year Ended December 31,

Year Ended Years Ended

2024 2023 2022

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Balance Sheet Offsetting :

Our interest rate swap derivatives are eligible for offset in the Consolidated Balance Sheet and are subject to master netting arrangements.

Our derivative transactions with counterparties are generally executed under

International Swaps and Derivative Association (“ISDA”) master agreements which include “right of set-off” provisions.

Our interest rate swap derivatives are eligible for offset in the Consolidated Balance Sheets and are subject to master netting arrangements.

Our derivative transactions with counterparties are generally executed under International Swaps and Derivative Association (“ISDA”) master agreements which include “right of set-off” provisions.

In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis.

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Noninterest-bearing demand $ 1,544,403 $ 2,279,081

$ 2,279,081 $ 3,150,751

Interest-bearing transaction 1,211,791 997,448

997,448 1,138,235

Savings and money market 3,599,221 3,314,043

1 unchanged sentence

Total $ 9,131,078 $ 8,808,039

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The remaining maturity of time deposits at December 31, 2024 and 2023 were as follows:

7 unchanged sentences

Thereafter — —

$ 2,217,467 $ 783,499

Total $ 2,775,663 $ 2,217,467

(dollars in thousands) 2024 2023

1 unchanged sentence

More than three months through six months

578,371 544,230

More than six months through twelve months 1,294,306 558,613

Over twelve months 565,315 772,072

$ 2,217,467 $ 783,499

Total $ 2,775,663 $ 2,217,467

Interest expense on deposits for the years ended December 31, 2024, 2023 and 2022 was as follows:

1 unchanged sentence

Interest-bearing transaction $ 60,573 $ 46,140 $ 6,721

$ 46,140 $ 6,721 $ 1,609

Savings and money market 139,539 132,374 65,777

9 unchanged sentences

Total $ 1,709,217 $ 1,533,094

At December 31, 2023, total deposits included $ 2.5 billion of brokered deposits (excluding the CDARS and ICS two-way accounts), which represented 29 % of total deposits.

At December 31, 2022, total brokered deposits (excluding the CDARS and ICS two-way accounts) were $ 2.5 billion, or 29 % of total deposits.

At December 31, 2024, total brokered deposits were $ 4.0 billion, or 44 % of total deposits, of which $ 1.4 billion were attributable to the Certificates of Deposit Account Registry Service ("CDARS") and Insured Cash Sweep ("ICS") two-way accounts.

At December 31, 2023, total brokered deposits (which did not include the CDARS and ICS two-way) were $ 2.5 billion, or 29 % of total deposits.

Note 11 – Affordable Housing Projects Tax Credit Partnerships

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The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of affordable housing products offerings and to assist in achieving goals associated with the Community Reinvestment Act.

The primary activities of the limited partnerships include the identification, development and operation of multi-family housing that is leased to qualifying residential tenants.

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activities of the limited partnerships include the identification, development and operation of multi-family housing that is leased to qualifying residential tenants.

Generally, these types of investments are funded through a combination of debt and equity.

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The Company’s net affordable housing tax credit investments were $ 41.9 million and related unfunded commitments were $ 21.0 million as of December 31, 2024 and are included in Other Assets and Other Liabilities , respectively, in the Consolidated Balance Sheets.

For tax purposes, the Company recognized low income housing tax credits of $ 5.6 million, $ 5.0 million and $ 4.2 million for the years ended December 31, 2023 and 2022, and December 31, 2021, respectively, and low income housing investment expense of $ 4.3 million, $ 3.7 million and $ 3.1 million, respectively.

For tax purposes, the Company recognized low income housing tax credits of $ 5.8 million, $ 5.6 million and $ 5.0 million for the years ended December 31, 2024, 2023, and 2022, respectively, and low income housing investment expense of $ 5.4 million, $ 4.3 million and $ 3.7 million, respectively.

The Company recognizes low income housing investment expenses as a component of income tax expense .

5 unchanged sentences

Total unfunded commitments $ 20,973

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Note 12 – Borrowings

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Customer repurchase agreements $ 33,157 $ — $ 33,157 $ — N/A 2.67 %

FHLB secured borrowings — — — 1,271,846 N/A N/A

BTFP secured borrowings (4)

1,300,000 — 1,300,000 598,870 March 22, 2024 4.53 %

Discount window secured borrowings — — — 601,504 N/A N/A

Raymond James repurchase agreement — — — 17,993 N/A N/A

Subordinated notes, 5.75 %

Short-term borrowings:

Secured borrowings:

FHLB 490,000 — 490,000 874,270 Various (3)

Discount window — — — 1,800,646 N/A N/A

Subordinated notes — — — — N/A N/A

Total 490,000 — 490,000 2,674,916

Long-term borrowings:

77,665 ( 1,557 ) 76,108 — September 30, 2029 10.00 %

2 unchanged sentences

Customer repurchase agreements $ 30,587 $ — $ 30,587 $ — N/A 3.42 %

FHLB secured borrowings 975,001 — 975,001 145,104 December 1, 2023 4.57 %

FRB discount window secured borrowings — — — 607,405 N/A N/A

Subordinated notes, 5.75 %

70,000 ( 206 ) 69,794 — September 1, 2024 5.75 %

Short-term borrowings:

Secured borrowings:

FHLB — — — 1,271,846 N/A N/A

BTFP 1,300,000 — 1,300,000 598,870 March 22, 2024 4.53 %

Discount window — — — 601,504 N/A N/A

Raymond James repurchase agreement — — — 17,993 N/A N/A

Subordinated notes 70,000 ( 82 ) 69,918 — September 1, 2024 5.75 %

Total 1,370,000 ( 82 ) 1,369,918 2,490,213

Long-term borrowings:

— — — — N/A N/A

Total borrowings $ 1,400,587 $ ( 82 ) $ 1,400,505 $ 2,490,213

(1) Available capacity on the Company's borrowings arrangements with the FHLB, the FRB's BTFP program and the Raymond James repurchase line comprise pledged collateral that has not been borrowed against.

At December 31, 2023, the Company had total additional undrawn borrowing capacity of approximately $ 2.2 billion, comprising unencumbered securities available to be pledged of approximately $ 292.3 million and undrawn financing on pledged assets of $ 1.9 billion, including $ 1.3 billion with the FHLB, $ 598.9 million with the BTFP and $ 18.0 million with Raymond James.

(1) Available capacity on the Company's borrowings arrangements with the FHLB, the FRB and the Raymond James repurchase line comprise pledged collateral that has not been borrowed against.

At December 31, 2024, the Company had total additional undrawn borrowing capacity of approximately $ 4.0 billion, comprising unencumbered securities available to be pledged of approximately $ 1.3 billion and undrawn financing on pledged assets of $ 2.7 billion.

(2) As part of the Company's agreement governing its participation in the BTFP program and the Raymond James repurchase agreement, the borrowing capacity is determined based on the principal balance of the pledged assets.

(3) FHLB borrowing of $ 250.0 million matures January 31, 2025 while the remaining $ 240.0 million matures April 1, 2025.

(4) Represent the weighted average interest rate on customer repurchase agreements, borrowings outstanding and the coupon interest rate on the subordinated notes, which approximates the effective interest rate.

(4) In January 2024, the Company borrowed an additional $ 500.0 million through the BTFP and refinanced $ 500.0 million under the program at an interest rate of 4.76 % and a maturity date in January 2025.

The remaining $ 800.0 million matures in March 2024.

The Company offers its business customers a repurchase agreement sweep account in which it collateralizes these funds with U.S.

2 unchanged sentences

By entering into the agreement, the customer agrees to have the Bank repurchase the designated securities on the business day following the initial transaction in consideration of the payment of interest at the rate prevailing on the day of the transaction.

The contractual maturity dates on FHLB secured borrowings represent the maturity dates of current advances and are not evidence of a termination date on the line.

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The Bank can purchase up to $ 145 million in federal funds on an unsecured basis from its correspondents, against which there were no amounts outstanding at December 31, 2024 and can place brokered funds under one-way CDARS and ICS deposits in the amount of $ 1.1 billion, against which there was $ 73.4 million outstanding at December 31, 2024.

The Bank also has a commitment at December 31, 2023 from IntraFi Network, LLC ("IntraFi") to place up to $ 786.5 million of brokered deposits from its Insured Network Deposits (“IND”) program in amounts requested by the Bank, as compared to an actual balance of $ 786.5 million at December 31, 2023.

At December 31, 2023, the Bank was also eligible to take advances from the FHLB up to $ 1.3 billion based on collateral at the FHLB, of which there was none outstanding at December 31, 2023.

The Bank also had $ 894.7 million of brokered deposits placed with the Insured Network Deposits ("IND") program from IntraFi Network, LLC ("IntraFi") at December 31, 2024.

At December 31, 2024, the Bank was also eligible to take advances from the FHLB up to $ 1.4 billion based on collateral at the FHLB, of which there was $ 490.0 million outstanding at December 31, 2024.

The Bank may enter into repurchase agreements as well as obtain additional borrowing capabilities from the FHLB provided adequate collateral exists to secure these lending relationships.

The Bank also has a back-up borrowing facility through the Discount Window at the Federal Reserve Bank.

This facility, which amounts to approximately $ 601.5 million, is collateralized with specific loan assets pledged to the Federal Reserve Bank.

This facility, which amounts to approximately $ 1.8 billion, is collateralized with specific loan assets pledged to the Federal Reserve Bank.

It is anticipated that, except for periodic testing, this facility would be utilized for contingency funding only.

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economy by strengthening public confidence in the banking system as a result of and in response to recently announced bank closures.

Among other actions, the Federal Reserve announced that it would make available additional funding to eligible depository institutions through the creation of a new BTFP.

Among other actions, the Federal Reserve Board announced that it would make available additional funding to eligible depository institutions through the creation of a new BTFP.

The BTFP provides eligible depository institutions, including the Company's subsidiary bank, EagleBank, an additional source of liquidity.

1 unchanged sentence

Interest is payable at a fixed rate over the term of the borrowing and there are no prepayment penalties.

The Federal Reserve announced in January 2024 that the BTFP will stop originating new loans on March 11, 2024, as scheduled.

The Federal Reserve announced in January 2024 that the BTFP would stop originating new loans on March 11, 2024, as scheduled.

The Federal Reserve also modified the terms of the program so that the interest rate for new loans will be no lower than the interest rate on reserve balances in effect on the day the loan is made.

In January 2024, the Company borrowed an additional $ 500.0 million through the BTFP and refinanced $ 500.0 million under the program, both at an interest rate of 4.76 % and with maturity dates of January 2025.

The Company repaid $ 500.0 million in November 2024, and the remaining $ 500.0 million was repaid in December 2024.

On September 30, 2024, the Company closed a private placement of its 10.00 % senior unsecured debt totaling $ 77.7 million maturing on September 30, 2029 (the "2029 Senior Notes" or "Original Notes").

At December 31, 2024, the carrying value of these 2029 Senior Notes was $ 76.1 million which reflected $ 1.6 million in unamortized deferred financing costs that are being amortized over the life of the 2029 Senior Notes.

In connection with the issuance of the 2029 Senior Notes, the Company also entered into a registration rights agreement dated September 30, 2024 with the purchasers of the 2029 Senior Notes (the “Registration Rights Agreement”).

Pursuant to the Registration Rights Agreement, the Company filed an exchange offer registration statement with the SEC to exchange the Senior Notes for substantially identical notes registered under the Securities Act (the "Exchange Notes").

The terms of the Exchange Notes are identical to the terms of the Original Notes, except that the transfer restrictions and registration rights applicable to the Original Notes do not apply to the Exchange Notes.

The Company completed the exchange offer on January 16, 2025.

Subordinated Notes

Subordinated notes outstanding were $ 69.9 million at December 31, 2023 and $ 69.8 million at December 31, 2022.

On August 5, 2014, the Company completed the sale of $ 70 million of its 5.75 % subordinated notes, due September 1, 2024 (the “2024 Notes”).

The Notes were offered to the public at par.

The 2024 Notes qualified as Tier 2 capital for regulatory purposes to the fullest extent permitted under the Basel III Rule capital requirements, and were fully phased out of regulatory capital as of December 31, 2023 as they approached maturity.

The net proceeds were approximately $ 68.8 million, which included $ 1.2 million in deferred financing costs which are being amortized over the life of the 2024 Notes.

On August 5, 2014, the Company completed the sale of $ 70 million of its 5.75 % subordinated notes, which matured and were fully repaid in September 2024.

These subordinated notes were offered to the public at par, and qualified as Tier 2 capital for regulatory purposes to the fullest extent permitted under the Basel III Rule capital requirements, and were fully phased out of regulatory capital as of December 31, 2023 as they approached maturity.

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Note 13 – Income Taxes

5 unchanged sentences

Deferred federal income tax (benefit) expense 2,823 ( 2,966 ) 3,532

( 2,966 ) 3,532 5,185

Deferred state income tax (benefit) expense ( 222 ) ( 411 ) 3,028

( 411 ) 3,028 585

Total deferred tax (benefit) expense 2,601 ( 3,377 ) 6,560

( 3,377 ) 6,560 5,770

Total income tax expense $ 16,795 $ 26,986 $ 48,750

The Company had net deferred tax assets (deferred tax assets in excess of deferred tax liabilities) of $ 86.6 million and $ 96.6 million for the years ended at December 31, 2023 and 2022, respectively, which related primarily to our unrealized loss on securities, allowance for credit losses and loan origination fees.

The Company had net deferred tax assets (deferred tax assets in excess of deferred tax liabilities) of $ 91.5 million and $ 86.6 million for the years ended at December 31, 2024 and 2023, respectively, which related primarily to our unrealized losses on securities, allowance for credit losses, and loan origination fees.

Management believes it is more likely than not that all of the deferred tax assets will be realized with the exception of certain state net operating losses.

5 unchanged sentences

Deferred loan fees and costs 4,551 6,372

Leases 5,713 7,195

Stock-based compensation 2,003 1,796

Net operating loss 7,964 7,736

Unrealized loss on securities available-for-sale 34,656 39,671

Unrealized loss on securities held-to-maturity 10,160 11,725

Unrealized loss on interest rate swap derivatives 59 —

LIHTC and ITC Tax Credits 5,793 —

Leases 5,774 5,713

Supplemental executive retirement and death benefit agreements 2,075 2,066

Stock-based compensation 1,785 2,003

Premises and equipment 217 —

Unrealized loss on interest rate swap derivatives — 59

Net operating loss 8,104 7,964

Other assets 3,549 2,669

Gross deferred tax assets

104,662 99,523

Valuation allowances ( 7,715 ) ( 7,428 )

1 unchanged sentence

Deferred tax liabilities

Leases ( 4,483 ) ( 4,703 )

Interest Rate Swaps & Derivatives ( 602 ) —

Excess servicing — ( 561 )

Premises and equipment — ( 211 )

( 211 ) ( 205 )

Leases ( 4,703 ) ( 6,034 )

Other liabilities ( 390 ) —

1 unchanged sentence

Net deferred income tax assets $ 91,472 $ 86,620

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As of December 31, 2024.

the Company has $ 2.2 million of federal net operating loss carryforward in conjunction with the Fidelity & Trust Financial Corporation acquisition, that is subject to annual limits under Section 382 of the Internal Revenue Code and expires in 2027.

The Company has concluded, based on the weight of available positive and negative

evidence, a portion of its state net operating loss deferred tax asset is not more likely than not to be realized and accordingly, a valuation allowance of $ 7.4 million and $ 7.0 million is carried as of December 31, 2023 and 2022, respectively.

The Company has concluded, based on the weight of available positive and negative evidence, a portion of its state net operating loss deferred tax asset is not more likely than not to be realized and accordingly, a valuation allowance of $ 7.7 million and $ 7.4 million is carried as of December 31, 2024 and 2023, respectively.

A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate for the years ended December 31, 2024, 2023 and 2022 follows:

Year Ended December 31,

2024 2023 2022

2 unchanged sentences

State income taxes ( 10.53 ) % 2.75 % 3.28 %

Non-deductible fines and penalties — % 2.54 % — %

Goodwill Impairment ( 72.34 ) % — % — %

Tax credits, net of amortization (1)

11.37 % ( 1.32 ) % ( 0.80 ) %

Tax-exempt interest and dividend income 4.39 % ( 1.75 ) % ( 0.85 ) %

Bank owned life insurance 2.00 % ( 0.58 ) % ( 0.33 ) %

Stock-based compensation expense ( 3.07 ) % 0.22 % ( 0.08 ) %

Change in unrecognized tax benefits ( 3.63 ) % — % — %

Return to provision and prior period adjustments

( 3.83 ) % ( 0.24 ) % 1.33 %

Non-deductible fines and penalties — % — % 2.54 %

Other ( 0.90 ) % 1.08 % ( 0.39 ) %

Effective tax rate ( 55.54 ) % 21.16 % 25.70 %

The Company remains subject to examination by taxing authorities for the years ending after December 31, 2019.

Management has identified no uncertain tax positions at December 31, 2023.

Note 14 – Net Income per Common Share

The calculation of net income per common share for the years ended December 31 was as follows:

(1) Includes low income housing tax credit proportional amortization expense, net of tax of $ 5.7 million, $ 5.4 million and $ 5.3 million, in 2024, 2023 and 2022 respectively.

Unrecognized tax benefits ("UTBs") for the years ended December 31, 2024, 2023, and 2022, were $ 6.6 million, $ 0 and $ 0 , respectively.

The following table details the change in unrecognized tax benefits ("UTBs") for 2024:

(dollars in thousands) 2024

Balance at beginning of year $ —

Gross increases - tax positions related to prior periods 6,254

Gross decreases - tax positions related to prior periods —

Gross increases - tax positions related to the current period 296

Settlements with tax authorities —

Lapse of statute of limitations —

Balance at end of year

Included in the balance of UTBs as of December 31, 2024, 2023, and 2022, are $ 4.1 million, $ 0 , and $ 0 , respectively, of tax benefits that, if recognized, would affect the ETR.

Also, included in the balance of UTBs are some items the recognition of which would not affect the effective tax rate, such as the tax effect of certain temporary differences, the portion of gross state UTBs that would be offset by the tax benefit of the associated federal deduction.

We recognize interest accrued related to UTBs and penalties in other noninterest expense.

We accrued no penalties and interest of $ 0.2 million during 2024 and in total, as of December 31, 2024.

It is reasonably possible that a decrease of up to $ 5.2 million in UTBs related to state exposures may be necessary within the next 12 months, since resolved items will be removed from the balance whether their resolution results in refund or recognition.

The Company’s federal income tax returns are open and subject to examination from the 2021 tax return year and forward.

The Company’s state income tax returns are generally open from the 2020 and later tax return years based on individual state statutes of limitations.

There are currently no examinations in process as of December 31, 2024.

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Note 14 – Net Income (Loss) per Common Share

The calculation of net income (loss) per common share for the years ended December 31 was as follows:

(dollars and shares in thousands, except per share data) 2024 2023 2022

Net income $ 100,534 $ 140,930 $ 176,691

Net income (loss) $ ( 47,035 ) $ 100,534 $ 140,930

Average common shares outstanding 30,157 30,346 32,004

Basic net income per common share $ 3.31 $ 4.40 $ 5.53

Net income $ 100,534 $ 140,930 $ 176,691

Basic net income (loss) per common share $ ( 1.56 ) $ 3.31 $ 4.40

Net income (loss) $ ( 47,035 ) $ 100,534 $ 140,930

Average common shares outstanding 30,157 30,346 32,004

1 unchanged sentence

Average common shares outstanding-diluted 30,157 30,393 32,078

Diluted net income per common share $ 3.31 $ 4.39 $ 5.52

Diluted net income (loss) per common share (1)

$ ( 1.56 ) $ 3.31 $ 4.39

Anti-dilutive shares 75 3 3

(1) For periods ended with a net loss, anti-dilutive financial instruments have been excluded from the calculation of GAAP diluted EPS.

Basic net income (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period.

Diluted net income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the net income (loss) of the Company.

The computation of diluted per share does not assume conversion or exercise of securities that would have an anti-dilutive effect on net income (loss) per share.

Securities issued by the Company that could potentially dilute net income (loss) per share in future periods include stock options and restricted stock.

To calculate diluted net income (loss) per share, the Company utilizes the Treasury Stock method which results in only an incremental number of shares added to shares outstanding during the period.

Note 15 – Related Party Transactions

The EagleBank Foundation, a 501(c)(3) non-profit, seeks to improve the well-being of our community by providing financial support to local charitable organizations that help foster and strengthen vibrant, healthy, cultural and sustainable communities.

The Company paid $ 143 thousand, $ 113 thousand and $ 134 thousand to the EagleBank Foundation for the years ended December 31, 2023, 2022 and 2021, respectively, which were recorded in other expenses on the Consolidated Statements of Income.

The Company paid $ 180 thousand, $ 143 thousand and $ 113 thousand to the EagleBank Foundation for the years ended December 31, 2024, 2023 and 2022, respectively, which were recorded in other expenses on the Consolidated Statements of Operations.

Certain directors and executive officers of the Company and the Bank and certain affiliated entities of such directors and executive officers have had loan transactions with the Company.

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The Company maintains the 2021 Stock Plan ("2021 Plan"), the 2016 Stock Plan (“2016 Plan”), the 2006 Stock Plan (“2006 Plan”), the 2021 Employee Stock Purchase Plan ("2021 ESPP") and the 2011 Employee Stock Purchase Plan (“2011 ESPP”).

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In connection with the acquisition of Virginia Heritage Bank ("Virginia Heritage"), the Company assumed the Virginia Heritage 2006 Stock Option Plan and the 2010 Long Term Incentive Plan (the “Virginia Heritage Plans”).

6 unchanged sentences

For awards that are performance-based, compensation expense is initially recorded based on the probability of achievement of the goals underlying the grant at target.

In February 2023, the Company awarded 168,994 shares of time vested restricted stock to senior officers, directors and certain employees.