(1)

Construction and land development includes loans for both commercial construction and development, as well as loans for 1-4 family construction and lot loans.

(2)

Consumer owner occupied real estate includes loans on both 1-4 family owner occupied property, as well as loans collateralized by 1-4 family owner occupied property with a business intent.

The above table reflects the loan portfolio at the amortized cost basis for the periods March 31, 2023 and December 31, 2022, to include net deferred costs of $55.3 million and $49.7 million, respectively, and unamortized discount total related to loans acquired of $64.7 million and $72.1 million, respectively. Accrued interest receivables of $109.4 million and $105.4 million, respectively, are accounted for separately and reported in other assets for the periods March 31, 2023 and December 31, 2022.

The Company purchased loans through its acquisition of ACBI, for which there was, at acquisition, evidence of more than an insignificant deterioration of credit quality since origination. The carrying amount of those loans, at acquisition, is as follows:


(Dollars in thousands)	March 1, 2022
Book value of acquired loans at acquisition	$	137,874
Allowance for credit losses at acquisition		(13,758)
Non-credit discount at acquisition		(5,943)
Carrying value or book value of acquired loans at acquisition	$	118,173

As part of the ongoing monitoring of the credit quality of our loan portfolio, management tracks certain credit quality indicators, including trends related to (i) the level of classified loans, (ii) net charge-offs, (iii) non-performing loans (see details below), and (iv) the general economic conditions of the markets that we serve.

The Company utilizes a risk grading matrix to assign a risk grade to each commercial loan. Classified loans are assessed at a minimum every six months. A description of the general characteristics of the risk grades is as follows:

●

Pass—These loans range from minimal credit risk to average, however, still acceptable credit risk.

●

Special mention—A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date.

●

Substandard—A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

●

Doubtful—A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.

Construction and land development loans in the following table are on commercial and speculative real estate. Consumer owner occupied loans are collateralized by 1-4 family owner occupied property with a business intent.

The following tables present the credit risk profile by risk grade of commercial loans by origination year as of March 31, 2023 and December 31, 2022:


		Term Loans
(Dollars in thousands)		Amortized Cost Basis by Origination Year
As of March 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Construction and land development
Risk rating:
Pass	$	65,979	$	898,029	$	602,843	$	109,487	$	34,046	$	33,860	$	75,139	$	1,819,383
Special mention		—		2,022		1,193		264		20,255		7,671		—		31,405
Substandard		1,518		139		164		9		1,334		1,590		—		4,754
Doubtful		—		—		—		—		—		6		—		6
Total Construction and land development	$	67,497	$	900,190	$	604,200	$	109,760	$	55,635	$	43,127	$	75,139	$	1,855,548
Construction and land development
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial non-owner occupied
Risk rating:
Pass	$	144,211	$	2,339,057	$	1,964,957	$	799,333	$	892,806	$	1,834,435	$	89,240	$	8,064,039
Special mention		95		9,442		708		12,167		5,423		60,130		—		87,965
Substandard		2,875		5,697		38,180		1,405		10,164		25,637		253		84,211
Doubtful		—		—		1		—		—		—		—		1
Total Commercial non-owner occupied	$	147,181	$	2,354,196	$	2,003,846	$	812,905	$	908,393	$	1,920,202	$	89,493	$	8,236,216
Commercial non-owner occupied
Current-period gross charge-offs	$	—	$	—	$	51	$	—	$	—	$	—	$	—	$	51

Commercial Owner Occupied
Risk rating:
Pass	$	165,248	$	1,052,756	$	1,154,709	$	712,735	$	702,606	$	1,437,016	$	70,057	$	5,295,127
Special mention		342		3,576		24,689		3,285		4,397		37,842		1,020		75,151
Substandard		1,916		14,645		34,913		19,882		12,394		68,401		80		152,231
Doubtful		—		—		—		1		—		4		—		5
Total commercial owner occupied	$	167,506	$	1,070,977	$	1,214,311	$	735,903	$	719,397	$	1,543,263	$	71,157	$	5,522,514
Commercial owner occupied
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial and industrial
Risk rating:
Pass	$	417,089	$	1,349,157	$	807,583	$	478,312	$	253,680	$	514,686	$	1,354,618	$	5,175,125
Special mention		533		6,705		4,488		702		1,698		4,791		23,114		42,031
Substandard		2,464		4,025		27,306		5,574		6,359		13,109		45,274		104,111
Doubtful		1		2		17		1		—		16		2		39
Total commercial and industrial	$	420,087	$	1,359,889	$	839,394	$	484,589	$	261,737	$	532,602	$	1,423,008	$	5,321,306
Commercial and industrial
Current-period gross charge-offs	$	2	$	1,097	$	160	$	14	$	149	$	280	$	104	$	1,806

Other income producing property
Risk rating:
Pass	$	14,839	$	161,959	$	107,741	$	58,591	$	45,660	$	142,437	$	49,887	$	581,114
Special mention		80		603		859		1,007		337		3,387		2,076		8,349
Substandard		—		842		900		294		236		7,081		614		9,967
Doubtful		—		397		—		—		—		6		—		403
Total other income producing property	$	14,919	$	163,801	$	109,500	$	59,892	$	46,233	$	152,911	$	52,577	$	599,833
Other income producing property
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer owner occupied
Risk rating:
Pass	$	1,349	$	4,740	$	3,117	$	1,720	$	382	$	467	$	17,524	$	29,299
Special mention		—		528		19		132		281		—		—		960
Substandard		—		7		94		931		1,601		193		151		2,977
Doubtful		—		—		—		—		—		1		—		1
Total Consumer owner occupied	$	1,349	$	5,275	$	3,230	$	2,783	$	2,264	$	661	$	17,675	$	33,237
Consumer owner occupied
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other loans
Risk rating:
Pass	$	7,145	$	—	$	—	$	—	$	—	$	—	$	—	$	7,145
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total other loans	$	7,145	$	—	$	—	$	—	$	—	$	—	$	—	$	7,145
Other loans
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total Commercial Loans
Risk rating:
Pass	$	815,860	$	5,805,698	$	4,640,950	$	2,160,178	$	1,929,180	$	3,962,901	$	1,656,465	$	20,971,232
Special mention		1,050		22,876		31,956		17,557		32,391		113,821		26,210		245,861
Substandard		8,773		25,355		101,557		28,095		32,088		116,011		46,372		358,251
Doubtful		1		399		18		2		—		33		2		455
Total Commercial Loans	$	825,684	$	5,854,328	$	4,774,481	$	2,205,832	$	1,993,659	$	4,192,766	$	1,729,049	$	21,575,799
Total Commercial Loans
Current-period gross charge-offs	$	2	$	1,097	$	211	$	14	$	149	$	280	$	104	$	1,857


		Term Loans
(Dollars in thousands)		Amortized Cost Basis by Origination Year
As of December 31, 2022	2022		2021		2020		2019		2018		Prior		Revolving		Total
Construction and land development
Risk rating:
Pass	$	875,751	$	742,985	$	134,996	$	63,439	$	14,521	$	29,442	$	65,656	$	1,926,790
Special mention		1,643		988		268		76		7,219		2,068		—		12,262
Substandard		214		10,409		11		2,326		—		4,282		—		17,242
Doubtful		—		—		—		—		—		6		—		6
Total Construction and land development	$	877,608	$	754,382	$	135,275	$	65,841	$	21,740	$	35,798	$	65,656	$	1,956,300
Construction and land development
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial non-owner occupied
Risk rating:
Pass	$	2,245,943	$	1,849,079	$	816,791	$	959,707	$	506,350	$	1,417,397	$	108,759	$	7,904,026
Special mention		7,579		4,225		936		11,036		24,067		32,110		5,000		84,953
Substandard		13,256		25,557		609		9,383		6,472		26,366		2,257		83,900
Doubtful		—		1		—		79		—		—		—		80
Total Commercial non-owner occupied	$	2,266,778	$	1,878,862	$	818,336	$	980,205	$	536,889	$	1,475,873	$	116,016	$	8,072,959
Commercial non-owner occupied
Current-period gross charge-offs	$	8	$	—	$	—	$	—	$	—	$	360	$	—	$	368

Commercial Owner Occupied
Risk rating:
Pass	$	1,046,562	$	1,136,289	$	725,040	$	709,669	$	446,497	$	1,080,522	$	75,506	$	5,220,085
Special mention		3,620		25,263		3,383		7,934		7,160		34,724		1,294		83,378
Substandard		12,861		34,210		19,962		16,502		9,487		62,808		895		156,725
Doubtful		—		—		1		—		—		4		—		5
Total commercial owner occupied	$	1,063,043	$	1,195,762	$	748,386	$	734,105	$	463,144	$	1,178,058	$	77,695	$	5,460,193
Commercial owner occupied
Current-period gross charge-offs		—		—		—		1,143		—		833		—		1,976

Commercial and industrial
Risk rating:
Pass	$	1,566,203	$	895,368	$	506,655	$	274,446	$	212,522	$	333,286	$	1,386,678	$	5,175,158
Special mention		5,885		3,782		3,401		1,859		3,378		1,316		24,347		43,968
Substandard		6,308		27,974		4,770		6,591		6,783		8,476		32,876		93,778
Doubtful		—		—		—		—		155		422		2		579
Total commercial and industrial	$	1,578,396	$	927,124	$	514,826	$	282,896	$	222,838	$	343,500	$	1,443,903	$	5,313,483
Commercial and industrial
Current-period gross charge-offs		4		2,825		198		630		2,214		2,589		1,742		10,202

Other income producing property
Risk rating:
Pass	$	149,793	$	92,887	$	60,473	$	46,189	$	47,155	$	107,436	$	46,179	$	550,112
Special mention		952		957		1,257		378		190		3,652		2,328		9,714
Substandard		876		359		1,281		300		214		11,214		1,065		15,309
Doubtful		401		—		—		—		—		136		—		537
Total other income producing property	$	152,022	$	94,203	$	63,011	$	46,867	$	47,559	$	122,438	$	49,572	$	575,672
Other income producing property
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	46	$	50	$	96

Consumer owner occupied
Risk rating:
Pass	$	5,947	$	3,124	$	1,811	$	418	$	68	$	332	$	15,910	$	27,610
Special mention		537		20		136		284		—		—		66		1,043
Substandard		13		95		12		1,614		—		202		151		2,087
Doubtful		—		—		—		—		1		—		—		1
Total Consumer owner occupied	$	6,497	$	3,239	$	1,959	$	2,316	$	69	$	534	$	16,127	$	30,741
Consumer owner occupied
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other loans
Risk rating:
Pass	$	20,989	$	—	$	—	$	—	$	—	$	—	$	—	$	20,989
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total other loans	$	20,989	$	—	$	—	$	—	$	—	$	—	$	—	$	20,989
Other loans
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total Commercial Loans
Risk rating:
Pass	$	5,911,188	$	4,719,732	$	2,245,766	$	2,053,868	$	1,227,113	$	2,968,415	$	1,698,688	$	20,824,770
Special mention		20,216		35,235		9,381		21,567		42,014		73,870		33,035		235,318
Substandard		33,528		98,604		26,645		36,716		22,956		113,348		37,244		369,041
Doubtful		401		1		1		79		156		568		2		1,208
Total Commercial Loans	$	5,965,333	$	4,853,572	$	2,281,793	$	2,112,230	$	1,292,239	$	3,156,201	$	1,768,969	$	21,430,337

Current-period gross charge-offs	$	12	$	2,825	$	198	$	1,773	$	2,214	$	3,828	$	1,792	$	12,642

For the consumer segment, delinquency of a loan is determined by past due status. Consumer loans are automatically placed on nonaccrual status once the loan is 90 days past due. Construction and land development loans are on 1-4 properties and lots.

The following table presents the credit risk profile by past due status of consumer loans by origination year as of March 31, 2023:


	Term Loans
(Dollars in thousands)	Amortized Cost Basis by Origination Year
As of March 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Consumer owner occupied
Days past due:
Current	$	240,632	$	1,748,552	$	1,587,281	$	657,794	$	309,618	$	939,645	$	—	$	5,483,522
30 days past due		—		438		451		323		672		2,242		—		4,126
60 days past due		—		243		97		620		—		746		—		1,706
90 days past due		—		676		268		853		683		3,475		—		5,955
Total Consumer owner occupied	$	240,632	$	1,749,909	$	1,588,097	$	659,590	$	310,973	$	946,108	$	—	$	5,495,309
Consumer owner occupied
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	2	$	—	$	2

Home equity loans
Days past due:
Current	$	4,563	$	7,084	$	5,367	$	3,733	$	1,141	$	17,773	$	1,287,131	$	1,326,792
30 days past due		—		273		—		—		89		1,003		2,424		3,789
60 days past due		—		59		—		—		—		221		494		774
90 days past due		—		—		162		21		277		121		349		930
Total Home equity loans	$	4,563	$	7,416	$	5,529	$	3,754	$	1,507	$	19,118	$	1,290,398	$	1,332,285
Home equity loans
Current-period gross charge-offs	$	—	$	—	$	—	$	39	$	—	$	—	$	—	$	39

Consumer
Days past due:
Current	$	104,807	$	383,665	$	187,023	$	100,664	$	78,646	$	173,622	$	224,373	$	1,252,800
30 days past due		—		252		449		37		107		1,213		11,052		13,110
60 days past due		—		231		19		49		55		242		7,531		8,127
90 days past due		—		456		76		39		34		1,400		1,507		3,512
Total consumer	$	104,807	$	384,604	$	187,567	$	100,789	$	78,842	$	176,477	$	244,463	$	1,277,549
Consumer
Current-period gross charge-offs	$	20	$	295	$	100	$	79	$	100	$	244	$	1,891	$	2,729

Construction and land development
Days past due:
Current	$	20,979	$	554,627	$	251,650	$	35,810	$	11,006	$	18,336	$	615	$	893,023
30 days past due		—		325		—		—		—		279		—		604
60 days past due		—		—		—		22		—		92		—		114
90 days past due		—		—		—		1		—		—		—		1
Total Construction and land development	$	20,979	$	554,952	$	251,650	$	35,833	$	11,006	$	18,707	$	615	$	893,742
Construction and land development
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other income producing property
Days past due:
Current	$	3,664	$	45,269	$	20,833	$	4,812	$	2,624	$	43,104	$	604	$	120,910
30 days past due		—		—		—		—		—		292		—		292
60 days past due		—		—		—		—		—		—		—		—
90 days past due		—		—		—		—		—		256		—		256
Total other income producing property	$	3,664	$	45,269	$	20,833	$	4,812	$	2,624	$	43,652	$	604	$	121,458
Other income producing property
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total Consumer Loans
Days past due:
Current	$	374,645	$	2,739,197	$	2,052,154	$	802,813	$	403,035	$	1,192,480	$	1,512,723	$	9,077,047
30 days past due		—		1,288		900		360		868		5,029		13,476		21,921
60 days past due		—		533		116		691		55		1,301		8,025		10,721
90 days past due		—		1,132		506		914		994		5,252		1,856		10,654
Total Consumer Loans	$	374,645	$	2,742,150	$	2,053,676	$	804,778	$	404,952	$	1,204,062	$	1,536,080	$	9,120,343

Current-period gross charge-offs	$	20	$	295	$	100	$	118	$	100	$	246	$	1,891	$	2,770

The following table presents the credit risk profile by past due status of total loans by origination year as of March 31, 2023:

Term Loans

(Dollars in thousands)

Amortized Cost Basis by Origination Year

As of March 31, 2023

2023

2022

2021

2020

2019

Prior

Revolving

Total

Total Loans

1,200,329

8,596,478

6,828,157

3,010,610

2,398,611

5,396,828

3,265,129

30,696,142

Current-period gross charge-offs

890

524

311

132

249

526

1,995

4,627

The following table presents the credit risk profile by past due status of consumer loans by origination year as of December 31, 2022:


	Term Loans
(Dollars in thousands)	Amortized Cost Basis by Origination Year
As of December 31, 2022	2022		2021		2020		2019		2018		Prior		Revolving		Total
Consumer owner occupied
Days past due:
Current	$	1,695,454	$	1,467,080	$	657,005	$	315,458	$	187,580	$	792,572	$	—	$	5,115,149
30 days past due		1,316		1,254		1,681		664		272		2,028		—		7,215
60 days past due		255		337		579		—		242		1,650		—		3,063
90 days past due		—		944		776		454		664		3,036		—		5,874
Total Consumer owner occupied	$	1,697,025	$	1,469,615	$	660,041	$	316,576	$	188,758	$	799,286	$	—	$	5,131,301
Consumer owner occupied
Current-period gross charge-offs	$	25	$	—	$	—	$	6	$	23	$	66	$	—	$	120

Home equity loans
Days past due:
Current	$	5,921	$	5,231	$	3,282	$	1,560	$	1,955	$	17,941	$	1,272,848	$	1,308,738
30 days past due		—		—		155		77		418		422		1,586		2,658
60 days past due		—		—		19		36		70		26		540		691
90 days past due		—		—		60		87		—		611		323		1,081
Total Home equity loans	$	5,921	$	5,231	$	3,516	$	1,760	$	2,443	$	19,000	$	1,275,297	$	1,313,168
Home equity loans
Current-period gross charge-offs	$	—	$	—	$	—	$	19	$	—	$	280	$	146	$	445

Consumer
Days past due:
Current	$	407,825	$	206,003	$	111,210	$	86,008	$	44,303	$	141,053	$	248,314	$	1,244,716
30 days past due		718		194		78		174		63		1,255		17,471		19,953
60 days past due		55		103		107		36		144		557		9,836		10,838
90 days past due		126		60		58		66		165		1,660		784		2,919
Total consumer	$	408,724	$	206,360	$	111,453	$	86,284	$	44,675	$	144,525	$	276,405	$	1,278,426
Consumer
Current-period gross charge-offs	$	254	$	653	$	337	$	265	$	62	$	664	$	7,979	$	10,214

Construction and land development
Days past due:
Current	$	466,475	$	351,485	$	50,472	$	14,053	$	7,006	$	13,588	$	379	$	903,458
30 days past due		2		—		—		57		23		43		—		125
60 days past due		—		—		—		—		—		—		—		—
90 days past due		—		—		436		—		—		41		—		477
Total Construction and land development	$	466,477	$	351,485	$	50,908	$	14,110	$	7,029	$	13,672	$	379	$	904,060
Construction and land development
Current-period gross charge-offs	$	—	$	—	$	21	$	—	$	—	$	4	$	—	$	25

Other income producing property
Days past due:
Current	$	45,717	$	21,421	$	4,937	$	2,663	$	4,322	$	40,680	$	624	$	120,364
30 days past due		—		—		—		—		—		62		—		62
60 days past due		—		—		—		—		—		23		—		23
90 days past due		—		—		—		—		—		121		—		121
Total other income producing property	$	45,717	$	21,421	$	4,937	$	2,663	$	4,322	$	40,886	$	624	$	120,570
Other income producing property
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total Consumer Loans
Days past due:
Current	$	2,621,392	$	2,051,220	$	826,906	$	419,742	$	245,166	$	1,005,834	$	1,522,165	$	8,692,425
30 days past due		2,036		1,448		1,914		972		776		3,810		19,057		30,013
60 days past due		310		440		705		72		456		2,256		10,376		14,615
90 days past due		126		1,004		1,330		607		829		5,469		1,107		10,472
Total Consumer Loans	$	2,623,864	$	2,054,112	$	830,855	$	421,393	$	247,227	$	1,017,369	$	1,552,705	$	8,747,525

Current-period gross charge-offs	$	279	$	653	$	358	$	290	$	85	$	1,014	$	8,125	$	10,804

The following table presents the credit risk profile by past due status of total loans by origination year as of December 31, 2022:


	Term Loans
(Dollars in thousands)	Amortized Cost Basis by Origination Year
As of December 31, 2022	2022		2021		2020		2019		2018		Prior		Revolving		Total
Total Loans	$	8,589,197	$	6,907,684	$	3,112,648	$	2,533,623	$	1,539,466	$	4,173,570	$	3,321,674	$	30,177,862

Current-period gross charge-offs	$	291	$	3,478	$	556	$	2,063	$	2,299	$	4,842	$	9,917	$	23,446

The following table presents an aging analysis of past due accruing loans, segregated by class.


	30 - 59 Days		60 - 89 Days		90+ Days		Total				Non-		Total
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Accruing		Loans
March 31, 2023
Construction and land development	$	980	$	4,050	$	—	$	5,030	$	2,743,954	$	306	$	2,749,290
Commercial non-owner occupied		4,410		1,778		—		6,188		8,208,270		21,758		8,236,216
Commercial owner occupied		3,841		4,552		1,665		10,058		5,476,893		35,563		5,522,514
Consumer owner occupied		2,521		1,344		—		3,865		5,505,300		19,381		5,528,546
Home equity loans		2,811		673		—		3,484		1,323,065		5,736		1,332,285
Commercial and industrial		21,931		9,618		1,837		33,386		5,257,967		29,953		5,321,306
Other income producing property		2,224		156		147		2,527		715,773		2,991		721,291
Consumer		13,015		8,002		1		21,018		1,251,249		5,282		1,277,549
Other loans		—		—		—		—		7,145		—		7,145
	$	51,733	$	30,173	$	3,650	$	85,556	$	30,489,616	$	120,970	$	30,696,142
December 31, 2022
Construction and land development	$	2,146	$	3,653	$	—	$	5,799	$	2,853,734	$	827	$	2,860,360
Commercial non-owner occupied		1,158		978		77		2,213		8,050,321		20,425		8,072,959
Commercial owner occupied		10,748		2,059		2,231		15,038		5,410,066		35,089		5,460,193
Consumer owner occupied		6,001		744		40		6,785		5,137,950		17,307		5,162,042
Home equity loans		2,527		361		—		2,888		1,303,964		6,316		1,313,168
Commercial and industrial		24,500		11,677		1,704		37,881		5,258,473		17,129		5,313,483
Other income producing property		1,623		1,480		298		3,401		690,107		2,734		696,242
Consumer		19,713		10,655		—		30,368		1,243,660		4,398		1,278,426
Other loans		—		—		—		—		20,989		—		20,989
	$	68,416	$	31,607	$	4,350	$	104,373	$	29,969,264	$	104,225	$	30,177,862

The following table is a summary of information pertaining to nonaccrual loans by class, including loans modified for borrowers with financial difficulty as of March 31, 2023 and the information pertaining to nonaccrual loans by class, including restructured loans as of December 31, 2023.


	March 31,		Greater than		Non-accrual		December 31,
(Dollars in thousands)	2023		90 Days Accruing⁽¹⁾		with no allowance⁽¹⁾		2022
Construction and land development	$	306	$	—	$	8	$	827
Commercial non-owner occupied		21,758		—		11,338		20,425
Commercial owner occupied real estate		35,563		1,665		15,034		35,089
Consumer owner occupied		19,381		—		5		17,307
Home equity loans		5,736		—		1,489		6,316
Commercial and industrial		29,953		1,837		6,252		17,129
Other income producing property		2,991		147		—		2,734
Consumer		5,282		1		—		4,398
Total loans on nonaccrual status	$	120,970	$	3,650	$	34,126	$	104,225

(1)

– Greater than 90 days accruing and non-accrual with no allowance loans at March 31, 2023.

There is no interest income recognized during the period on nonaccrual loans. The Company follows its nonaccrual policy by reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status. Loans on nonaccrual status in which there is no allowance assigned are individually evaluated loans that do not carry a specific reserve. See Note 2 — Summary of Significant Accounting Policies for further detailed on individually evaluated loans.

The following is a summary of collateral dependent loans, by type of collateral, and the extent to which they are collateralized during the period:


	March 31,		Collateral			December 31,		Collateral
(Dollars in thousands)	2023		Coverage		%	2022		Coverage		%
Commercial owner occupied real estate
Industrial	$	8,166	$	9,344	114%	$	—	$	—
Other		6,868		17,012	248%		14,638		38,900	266%
Commercial non-owner occupied real estate
Other		11,338		31,860	281%		6,450		10,900	169%
Commercial and industrial
Other		18,428		30,586	166%		4,808		5,591	116%
Home equity loans
Residential 1-4 family dwelling		1,489		2,860	192%		1,523		1,671	110%
Total collateral dependent loans	$	46,289	$	91,662		$	27,419	$	57,062

The Bank designates individually evaluated loans on non-accrual with a net book balance exceeding the designated threshold as collateral dependent loans. Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining ACL. Under ASC 326-20-35-6, the Bank has adopted the collateral maintenance practical expedient to measure the ACL based on the fair value of collateral. The ACL is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for selling costs, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. The Bank’s threshold for individually evaluated loans is $1.0 million. The significant changes above in collateral percentage are due to appraisal value updates or changes in the number of loans within the asset class and collateral type. Overall collateral dependent loans increased $18.9 million during the three months ended March 31, 2023.

For loans meeting the Bank’s materiality criteria, which includes loans in excess of $250,000, an assessment of whether a borrower is experiencing financial difficulty is made on the date of the modification. Longstanding TDR accounting rules were replaced with ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (See Note 3 Recent Accounting Pronouncements). In accordance with the prospective adoption of ASU 2022-02 effective January 1, 2023, any loan modified to a borrower experiencing financial difficulty is reviewed by the Bank to determine if an interest rate reduction, a term extension, an other-than-insignificant payment delay, a principal forgiveness, or any combination of these has occurred.

The allowance for credit losses includes losses from modifications of receivables to borrowers experiencing financial difficulty. Losses on modifications of loans over $1.0 million to borrowers experiencing financial difficulty are estimated on an individual basis. Because the effect of the remainder of modifications made to borrowers experiencing financial difficulty is already incorporated into the measurement methodologies used to estimate the allowance, they are measured for expected credit losses for as pooled loans.

Loans on nonaccrual status at the date of modification are initially classified as nonaccrual. Loans on accruing status at the date of modification are initially classified as accruing if the note is reasonably assured of repayment and performance is expected in accordance with its modified terms. Such loans may be designated as nonaccrual loans subsequent to the modification date if reasonable doubt exists as to the collection of interest or principal under the modification agreement. Nonaccrual loans are returned to accruing status when there is economic substance to the modification, there is documented credit evaluation of the borrower’s financial condition, the remaining balance is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally a minimum of six months).

The following table presents loans designated as modifications made to borrowers experiencing financial difficulty during 2023 resulting from the adoption of ASU 2022-02, segregated by type of modification and asset class, and indicating the financial effect of the modifications. The amortized cost balance for the modified loans presented below exclude accrued interest receivable of approximately $12,000 as of March 31, 2023. There were no other types or combination of modifications other than term extensions for the three months ended March 31, 2023.


	Three Months Ended and As of March 31,
	2023
					Increase in
	Amortized		% of Total		Weighted Average
(Dollars in thousands)	Cost		Asset Class		Life of Loan
Term extension
Construction and land development	$	260	$	0.04%	12 months
Commercial owner occupied real estate		2,105		0.02%	8 months
Commercial and industrial		1,145		0.02%	10 months
Consumer		282		0.02%	6 months
Total term extensions	$	3,792

The Bank on occasion will enter into modification agreements which extend the maturity payoff on a loan, for borrowers willing to continue to pay, to minimize losses for the Bank. At March 31, 2023, the Company had $3.4 million remaining in commitments to lend additional funds on loans to borrowers experiencing financial difficulty and modified during the current reporting period.

The following table presents loans designated as TDRs segregated by class and type of concession that were restructured, for the comparative period, prior to the adoption of ASU 2022-02.



	Three Months Ended March 31,
	2022
		Pre-Modification		Post-Modification
	Number	Amortized		Amortized
(Dollars in thousands)	of loans	Cost		Cost
Interest rate modification
Construction and land development	1	$	120	$	120
Commercial non-owner occupied	1		187		187
Commercial owner occupied	2		268		268
Consumer owner occupied	1		99		99
Commercial and industrial	4		497		497
Other income producing property	2		119		119
Total interest rate modifications	11	$	1,290	$	1,290
Term modification
Construction and land development	1	$	141	$	141
Commercial non-owner occupied	2		2,356		2,356
Total term modifications	3		2,497		2,497
	14	$	3,787	$	3,787

At March 31, 2022, the balance of accruing TDRs was $12.4 million. The Company had $768,000 remaining availability under commitments to lend additional funds on restructured loans at March 31, 2022. The amount of specific reserve associated with restructured loans was $4.2 million at March 31, 2022.

The following table presents the changes in status of loans modified within the previous three months to borrowers experiencing financial difficulty, as of March 31, 2023, by type of modification. There were no subsequent defaults.


	Paying Under		Converted to		Foreclosures
	Restructured Terms		Nonaccrual		and Defaults
	Amortized		Amortized		Amortized
(Dollars in thousands)	Cost		Cost		Cost
Term extension
Construction and land development	$	260	$	—	$	—
Commercial owner occupied real estate		2,105		—		—
Consumer owner occupied		282		—		—
Commercial and industrial		1,145		—		—
Total term extensions	$	3,792	$	—	$	—

The following table presents the changes in status of TDR loans within the previous twelve months as of March 31, 2022 by type of concession, for the comparative period, prior to the adoption of ASU 2022-02. There were no subsequent defaults that resulted in a change to reserves on the individually evaluated loan.


	Paying Under			Converted to			Foreclosures and
	Restructured Terms			Nonaccrual			Defaults
	Number	Recorded		Number	Recorded		Number	Recorded
(Dollars in thousands)	of Loans	Investment		of Loans	Investment		of Loans	Investment
Interest rate modification	14	$	1,783	—	$	—	—	$	—
Term modification	4		2,806	—		—	—		—
	18	$	4,589	—	$	—	—	$	—

The following table depicts the performance of loans modified within the previous three months to borrowers experiencing financial difficulty, as of March 31, 2023.


	Payment Status (Amortized Cost Basis)
			30-89 Days		90+ Days
(Dollars in thousands)	Current		Past Due		Past Due
Construction and land development	$	260	$	—	$	—
Commercial owner occupied		2,105		—		—
Consumer owner occupied		282		—		—
Commercial and industrial		1,145		—		—
Total	$	3,792	$	—	$	—