XML 27 R13.htm IDEA: XBRL DOCUMENT v3.22.4
Loans, Allowance for Credit Losses, and Asset Quality Information
 12 Months Ended
Dec. 31, 2022
Receivables [Abstract]  
Loans, Allowance for Credit Losses, and Asset Quality Information Loans, Allowance for Credit Losses, and Asset Quality Information
The following is a summary of the major categories of total loans outstanding:
December 31, 2022December 31, 2021
($ in thousands)AmountPercentageAmountPercentage
Commercial, financial, and agricultural
$641,941 9 %648,997 11 %
Real estate – construction, land development & other land loans
934,176 14 %828,549 13 %
Real estate mortgage – residential (1-4 family) first mortgages1,195,785 18 %1,021,966 17 %
Real estate mortgage – home equity loans/lines of credit323,726 5 %331,932 5 %
Real estate mortgage – commercial and other3,510,261 53 %3,194,737 53 %
Consumer loans60,659 1 %57,238 1 %
Subtotal
6,666,548 100 %6,083,419 100 %
Unamortized net deferred loan fees(1,403)(1,704)
Total loans
$6,665,145 6,081,715 
Also included in the table above are SBA loans, generally originated under the SBA 7A loan program, with additional information on these loans presented in the table below.
($ in thousands)December 31,
2022		December 31,
2021
Guaranteed portions of SBA Loans included in table above$31,893 48,377 
Unguaranteed portions of SBA Loans included in table above116,910 122,772 
Total SBA loans included in the table above$148,803 171,149 
Sold portions of SBA loans with servicing retained - not included in table above$392,370 414,240 
As of December 31, 2022, there were essentially no remaining loans originated under the SBA's Paycheck Protection Program ("PPP") as provided for under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") of 2020. As of December 31, 2021, the Company had $39.0 million in remaining PPP loans which have been excluded from the above SBA 7A Loan program table.
At December 31, 2022 and December 31, 2021, there were remaining unaccreted discounts on the retained portion of sold SBA loans amounting to $4.3 million and $6.0 million respectively.
At December 31, 2022 and December 31, 2021, loans in the amount of $5.3 billion and $4.3 billion, respectively, were pledged as collateral for certain borrowings. Refer to Note 9 for further discussion.
Total loans at December 31, 2022 and 2021 included loans to executive officers and directors of the Company, and their associates, totaling approximately $6.0 million and $0.6 million, respectively. There were six new loans and advances totaling approximately $5.5 million on those loans in 2022 and repayments amounted to $0.1 million. Management does not believe these loans involve more than the normal risk of collectability or present other unfavorable features.
For acquisitions completed prior to the Company's adoption of CECL, loans designated as PCI loans were reclassified as PCD loans, upon the adoption of CECL. Activity in the accretable yield for PCI loans under the Incurred Loss methodology used by the Company prior to adopting CECL was not material for the year ended December 31, 2020.
As of December 31, 2022 and 2021, unamortized discounts on all acquired loans totaled $11.6 million and $17.2 million, respectively. Loan discounts are generally amortized as yield adjustments over the respective lives of the loans, while the loans perform.
Nonperforming assets, defined as nonaccrual loans, troubled debt restructurings, loans past due 90 or more days and still accruing interest, and foreclosed real estate, are summarized as follows:
($ in thousands)December 31,
2022		December 31,
2021
Nonperforming assets  
Nonaccrual loans$28,514 34,696 
Restructured loans - accruing9,121 13,866 
Accruing loans > 90 days past due— 1,004 
Total nonperforming loans37,635 49,566 
Foreclosed properties658 3,071 
Total nonperforming assets$38,293 52,637 
At December 31, 2022 and 2021, the Company had $0.8 million and $1.5 million in residential mortgage loans in process of foreclosure, respectively.
At December 31, 2022, there was one loan with an immaterial commitment to lend additional funds to borrowers whose loans were nonperforming. At December 31, 2021, there were no commitments to lend additional funds to debtors whose loans were nonperforming.
The following table is a summary of the Company’s nonaccrual loans by major categories for the year ended December 31, 2022.
($ in thousands)Nonaccrual Loans with No AllowanceNonaccrual Loans with an AllowanceTotal Nonaccrual Loans
Commercial, financial, and agricultural$3,855 6,374 10,229 
Real estate – construction, land development & other land loans— 1,009 1,009 
Real estate mortgage – residential (1-4 family) first mortgages157 3,132 3,289 
Real estate mortgage – home equity loans/lines of credit— 1,397 1,397 
Real estate mortgage – commercial and other5,010 7,495 12,505 
Consumer loans— 85 85 
Total$9,022 19,492 28,514 
The following table is a summary of the Company’s nonaccrual loans by major categories for the year ended December 31, 2021.
($ in thousands)Nonaccrual Loans with No AllowanceNonaccrual Loans with an AllowanceTotal Nonaccrual Loans
Commercial, financial, and agricultural$3,947 8,205 12,152 
Real estate – construction, land development & other land loans495 137 632 
Real estate mortgage – residential (1-4 family) first mortgages858 4,040 4,898 
Real estate mortgage – home equity loans/lines of credit— 694 694 
Real estate mortgage – commercial and other7,648 8,583 16,231 
Consumer loans— 89 89 
Total$12,948 21,748 34,696 
There is no interest income recognized during the periods presented on nonaccrual loans. The Company follows its nonaccrual policy of reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status.
The following table represents the accrued interest receivables written off by reversing interest income for the periods indicate.
($ in thousands)Year Ended December 31, 2022Year Ended December 31, 2021
Commercial, financial, and agricultural$102 195 
Real estate – construction, land development & other land loans16 6 
Real estate mortgage – residential (1-4 family) first mortgages45 31 
Real estate mortgage – home equity loans/lines of credit20 14 
Real estate mortgage – commercial and other139 453 
Consumer loans2 — 
Total$324 699 

The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2022.
($ in thousands)Accruing
30-59 Days
Past Due		Accruing 60-
89 Days
Past Due		Accruing 90
Days or More
Past Due		Nonaccrual
Loans		Accruing
Current		Total Loans
Receivable
Commercial, financial, and agricultural
$438 565 — 10,229 630,709 641,941 
Real estate – construction, land development & other land loans
238 1,687 — 1,009 931,242 934,176 
Real estate mortgage – residential (1-4 family) first mortgages3,415 25 — 3,289 1,189,056 1,195,785 
Real estate mortgage – home equity loans/lines of credit457 371 — 1,397 321,501 323,726 
Real estate mortgage – commercial and other620 97 — 12,505 3,497,039 3,510,261 
Consumer loans249 66 — 85 60,259 60,659 
Total$5,417 2,811 — 28,514 6,629,806 6,666,548 
Unamortized net deferred loan fees(1,403)
Total loans$6,665,145 
The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2021.
($ in thousands)Accruing
30-59 Days
Past Due		Accruing 60-
89 Days
Past Due		Accruing 90
Days or More
Past Due		Nonaccrual
Loans		Accruing
Current		Total Loans
Receivable
Commercial, financial, and agricultural
$377 93 — 12,152 636,375 648,997 
Real estate – construction, land development & other land loans
4,046 — 286 632 823,585 828,549 
Real estate mortgage – residential (1-4 family) first mortgages6,571 1,488 — 4,898 1,009,009 1,021,966 
Real estate mortgage – home equity loans/lines of credit489 124 718 694 329,907 331,932 
Real estate mortgage – commercial and other164 1,496 — 16,231 3,176,846 3,194,737 
Consumer loans116 62 — 89 56,971 57,238 
Total$11,763 3,263 1,004 34,696 6,032,693 6,083,419 
Unamortized net deferred loan (fees) costs(1,704)
Total loans$6,081,715 

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. The Company reviews individually evaluated loans on nonaccrual with a net book balance of $350,000 or greater for designation as collateral dependent loans, as well as certain other loans that may still be accruing interest and/or are less than $350,000 in size that management of the Company designates as having higher risk. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses.
The following table presents an analysis of collateral-dependent loans of the Company as of December 31, 2022.
($ in thousands)Residential PropertyBusiness AssetsLandCommercial PropertyTotal Collateral-Dependent Loans
Commercial, financial, and agricultural$— 6,394 — — 6,394 
Real estate mortgage – residential (1-4 family) first mortgages157 — — — 157 
Real estate mortgage – commercial and other— — — 6,723 6,723 
Total$157 6,394 — 6,723 13,274 

The following table presents an analysis of collateral-dependent loans of the Company as of December 31, 2021.
($ in thousands)Residential PropertyBusiness AssetsLandCommercial PropertyTotal Collateral-Dependent Loans
Commercial, financial, and agricultural$— 7,886 — — 7,886 
Real estate – construction, land development & other land loans— — 533 — 533 
Real estate mortgage – residential (1-4 family) first mortgages871 — — — 871 
Real estate mortgage – commercial and other— — — 10,743 10,743 
Total$871 7,886 533 10,743 20,033 
Under CECL, for collateral dependent loans, the Company has adopted the 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 liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.
The Company's policy is to obtain third-party appraisals on any significant pieces of collateral. For loans secured by real estate, the Company's policy is to write nonaccrual loans down to 90% of the appraised value, which considers estimated selling costs. For real estate collateral that is in industries that are undergoing heightened stress, the Company often discounts the collateral values by an additional 10% to 25% due to additional discounts that are estimated to be incurred in a near-term sale. For non real-estate collateral secured loans, the Company generally writes nonaccrual loans down to 75% of the appraised value, which provides for selling costs and liquidity discounts that are usually incurred when disposing of non real-estate collateral. For reviewed loans that are not on nonaccrual basis, the Company assigns a specific allowance based on the parameters noted above.
The Company does not believe that there is significant over-coverage of collateral for any of the loan types noted above.
The following tables presents the activity in the ACL on loans for the periods indicated. The increase in ACL at December 31, 2022 as compared to the prior year was related to a combination of the allowance required for loan growth during the year, and updated economic forecasts and loss driver inputs to the CECL model. Throughout 2022, the economic forecasts have projected general weakening of the economy demonstrated by higher projected unemployment rates, lower GDP, and declining price indices for both commercial real estate and residential mortgages. These worsening economic projections translated to higher forecasted life of loan losses in our portfolio and a higher estimated ACL.
($ in thousands)Commercial,
Financial, and
Agricultural		Real Estate -
Construction,
Land
Development & Other Land Loans		Real Estate Mortgage -
Residential
(1-4 Family)
First Mortgages		Real Estate Mortgage -
Home Equity Loans/Lines of Credit		Real Estate
Mortgage -
Commercial
and Other		Consumer LoansTotal
As of and for the year ended December 31, 2022
Beginning balance$16,249 16,519 8,686 4,337 30,342 2,656 78,789 
Charge-offs(2,519)— — (43)(1,063)(840)(4,465)
Recoveries756 480 17 600 1,983 207 4,043 
Provisions/(Reversals)3,232 (1,871)2,651 (1,736)9,447 877 12,600 
Ending balance$17,718 15,128 11,354 3,158 40,709 2,900 90,967 


($ in thousands)Commercial,
Financial, and
Agricultural		Real Estate -
Construction,
Land
Development & Other Land Loans		Real Estate Mortgage -
Residential
(1-4 Family)
First Mortgages		Real Estate Mortgage -
Home Equity Loans/Lines of Credit		Real Estate
Mortgage -
Commercial
and Other		Consumer loansUnallocatedTotal
As of and for the year ended December 31, 2021
Beginning balance
$11,316 5,355 8,048 2,375 23,603 1,478 213 52,388 
Adjustment for implementation of CECL3,067 6,140 2,584 2,580 (257)674 (213)14,575 
Allowance for Select PCD loans2,917 165 222 92 1,489 10 — 4,895 
Charge-offs
(3,722)(245)(273)(400)(2,295)(667)— (7,602)
Recoveries
1,744 948 761 578 533 358 — 4,922 
Provisions/ (Reversals)927 4,156 (2,656)(888)7,269 803 — 9,611 
Ending balance
$16,249 16,519 8,686 4,337 30,342 2,656 — 78,789 
The following table presents the activity in the allowance for loan losses for the year ended December 31, 2020 under the Incurred Loss methodology.
($ in thousands)Commercial,
Financial, and
Agricultural		Real Estate -
Construction,
Land
Development & Other Land Loans		Real Estate Mortgage -
Residential
(1-4 Family)
First Mortgages		Real Estate Mortgage -
Home Equity Loans/Lines of Credit		Real Estate
Mortgage -
Commercial
and Other		Consumer loansUnallo-
cated		Total
As of and for the year ended December 31, 2020
Beginning balance$4,553 1,976 3,832 1,127 8,938 972 — 21,398 
Charge-offs(5,608)(51)(478)(524)(968)(873)— (8,502)
Recoveries745 1,552 754 487 621 294 — 4,453 
Provisions11,626 1,878 3,940 1,285 15,012 1,085 213 35,039 
Ending balance$11,316 5,355 8,048 2,375 23,603 1,478 213 52,388 
Ending balances as of December 31, 2020: Allowance for loan losses
Individually evaluated for impairment$3,546 30 800 — 2,175 — — 6,551 
Collectively evaluated for impairment7,742 5,325 7,141 2,375 21,428 1,475 213 45,699 
Purchased credit impaired28 — 107 — — 3 — 138 
Loans receivable as of December 31, 2020:
Ending balance – total$782,549 570,672 972,378 306,256 2,049,203 53,955 — 4,735,013 
Unamortized net deferred loan fees(3,698)
Total loans4,731,315 
Ending balances as of December 31, 2020: Loans
Individually evaluated for impairment$7,700 677 9,303 15 18,582 4 — 36,281 
Collectively evaluated for impairment774,712 569,845 958,848 306,141 2,026,682 53,913 — 4,690,141 
Purchased credit impaired137 150 4,227 100 3,939 38 — 8,591 

Interest income recorded on impaired loans during the year ended December 31, 2020 was $1.1 million, and reflects interest income recorded on nonaccrual loans prior to them being placed on nonaccrual status and interest income recorded on accruing TDRs.
Credit Quality Indicators
The Company tracks credit quality based on its internal risk ratings. Upon origination, a loan is assigned an initial risk grade, which is generally based on several factors such as the borrower’s credit score, the loan-to-value ratio, the debt-to-income ratio, etc. Loans that are risk-graded as substandard during the origination process are declined. After loans are initially graded, they are monitored regularly for credit quality based on many factors, such as payment history, the borrower’s financial status, and changes in collateral value. Loans can be downgraded or upgraded depending on management’s evaluation of these factors. Internal risk-grading policies are consistent throughout each loan type.
The following describes the Company’s internal risk grades in ascending order of likelihood of loss:
Risk GradeDescription
Pass:
1Loans with virtually no risk, including cash secured loans.
2Loans with documented significant overall financial strength.  These loans have minimum chance of loss due to the presence of multiple sources of repayment – each clearly sufficient to satisfy the obligation.
3Loans with documented satisfactory overall financial strength.  These loans have a low loss potential due to presence of at least two clearly identified sources of repayment – each of which is sufficient to satisfy the obligation under the present circumstances.
4Loans to borrowers with acceptable financial condition.  These loans could have signs of minor operational weaknesses, lack of adequate financial information, or loans supported by collateral with questionable value or marketability.  
5Loans that represent above average risk due to minor weaknesses and warrant closer scrutiny by management.  Collateral is generally available and felt to provide reasonable coverage with realizable liquidation values in normal circumstances.  Repayment performance is satisfactory.
P
(Pass)		Consumer loans that are of satisfactory credit quality with borrowers who exhibit good personal credit history, average personal financial strength and moderate debt levels.  These loans generally conform to Bank policy, but may include approved mitigated exceptions to the guidelines.  
Special Mention: 
6Existing loans with defined weaknesses in primary source of repayment that, if not corrected, could cause a loss to the Company.
Classified: 
7An existing loan inadequately protected by the current sound net worth and paying capacity of the obligor or the collateral pledged, if any.  These loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.
8Loans that have a well-defined weakness that make the collection or liquidation in full highly questionable and improbable.  Loss appears imminent, but the exact amount and timing is uncertain.
9Loans that are considered uncollectible and are in the process of being charged-off.  This grade is a temporary grade assigned for administrative purposes until the charge-off is completed.
F
(Fail)		Consumer loans with a well-defined weakness, such as exceptions of any kind with no mitigating factors, history of paying outside the terms of the note, insufficient income to support the current level of debt, etc.
The following table presents the Company’s recorded investment in loans by credit quality indicators by year of origination or renewal as of December 31, 2022. Acquired loans are presented in the year originated, not in the year of acquisition.
Term Loans by Year of Origination
($ in thousands)20222021202020192018PriorRevolvingTotal
Commercial, financial, and agricultural
Pass$185,167 107,747 85,110 51,274 590 76,588 120,590 627,066 
Special Mention342 166 648 1,312 — 990 332 3,790 
Classified734 1,909 808 1,384 — 5,762 488 11,085 
Total commercial, financial, and agricultural186,243 109,822 86,566 53,970 590 83,340 121,410 641,941 
Real estate – construction, land development & other land loans
Pass550,752 267,096 42,421 30,973 — 12,722 19,519 923,483 
Special Mention5,128 5 3,679 — — 100 13 8,925 
Classified656 107 38 899 — 44 24 1,768 
Total real estate – construction, development & other land loans556,536 267,208 46,138 31,872 — 12,866 19,556 934,176 
Real estate mortgage – residential (1-4 family) first mortgages
Pass317,282 274,756 186,102 98,559 185 301,885 1,379 1,180,148 
Special Mention1,189 127 110 470 — 2,416 — 4,312 
Classified763 251 221 359 — 9,072 659 11,325 
Total real estate mortgage – residential (1-4 family) first mortgages319,234 275,134 186,433 99,388 185 313,373 2,038 1,195,785 
Real estate mortgage – home equity loans/lines of credit
Pass869 1,091 349 237 — 2,020 309,786 314,352 
Special Mention175 — — — — 18 1,072 1,265 
Classified106 156 94 87 — 213 7,453 8,109 
Total real estate mortgage – home equity loans/lines of credit1,150 1,247 443 324 — 2,251 318,311 323,726 
Real estate mortgage – commercial and other
Pass1,096,643 1,186,678 569,624 247,448 179 324,361 48,882 3,473,815 
Special Mention1,715 1,114 4,436 8,289 — 4,457 665 20,676 
Classified3,480 1,265 84 2,456 — 8,118 367 15,770 
Total real estate mortgage – commercial and other1,101,838 1,189,057 574,144 258,193 179 336,936 49,914 3,510,261 
Consumer loans
Pass35,406 7,946 3,610 1,056 3 1,250 10,953 60,224 
Special Mention— — — — — — — — 
Classified320 31 3 1 — 25 55 435 
Total consumer loans35,726 7,977 3,613 1,057 3 1,275 11,008 60,659 
Total$2,200,727 1,850,445 897,337 444,804 957 750,041 522,237 6,666,548 
Unamortized net deferred loan fees(1,403)
Total loans$6,665,145 
At December 31, 2022, as derived from the table above, the Company had $39.0 million in loans graded as Special Mention and $48.5 million in loans graded as Classified, which includes all nonaccrual loans.
In the table above, substantially all of the "Classified Loans" have grades of 7 or Fail, with those categories having similar levels of risk. Revolving lines of credit that converted to term loans during the year ended December 31, 2022 amounted to $3.3 million.
The following table presents the Company’s recorded investment in loans by credit quality indicators by year of origination or renewal as of December 31, 2021. Acquired loans are presented in the year originated, not in the year of acquisition.
Term Loans by Year of Origination
($ in thousands)20212020201920182017PriorRevolvingTotal
Commercial, financial, and agricultural
Pass$204,945 138,540 71,369 66,645 16,009 17,492 112,933 627,933 
Special Mention225 1,255 1,313 2,729 225 9 2,348 8,104 
Classified1,609 793 1,703 7,096 511 96 1,152 12,960 
Total commercial, financial, and agricultural206,779 140,588 74,385 76,470 16,745 17,597 116,433 648,997 
Real estate – construction, land development & other land loans
Pass573,613 133,888 69,066 12,455 9,764 8,190 13,737 820,713 
Special Mention41 737 5,095 110 104 2 9 6,098 
Classified1,541 49 47 83 14 4 — 1,738 
Total real estate – construction, development & other land loans575,195 134,674 74,208 12,648 9,882 8,196 13,746 828,549 
Real estate mortgage – residential (1-4 family) first mortgages
Pass241,619 224,617 120,097 82,531 86,074 234,950 11,051 1,000,939 
Special Mention888 615 516 229 323 3,237 94 5,902 
Classified419 156 535 1,185 653 11,246 931 15,125 
Total real estate mortgage – residential (1-4 family) first mortgages242,926 225,388 121,148 83,945 87,050 249,433 12,076 1,021,966 
Real estate mortgage – home equity loans/lines of credit
Pass3,111 498 439 1,304 245 1,649 317,319 324,565 
Special Mention194 — 15 — — 19 1,341 1,569 
Classified75 97 71 — — 607 4,948 5,798 
Total real estate mortgage – home equity loans/lines of credit3,380 595 525 1,304 245 2,275 323,608 331,932 
Real estate mortgage – commercial and other
Pass1,328,156 796,992 355,885 211,118 197,165 197,659 66,104 3,153,079 
Special Mention1,759 4,849 5,801 3,741 2,072 1,801 1,440 21,463 
Classified7,147 413 2,110 6,025 3,897 603 — 20,195 
Total real estate mortgage – commercial and other1,337,062 802,254 363,796 220,884 203,134 200,063 67,544 3,194,737 
Consumer loans
Pass14,960 25,431 2,965 1,722 673 525 10,810 57,086 
Special Mention— 4 — — — — — 4 
Classified— 73 — 8 — 25 42 148 
Total consumer loans14,960 25,508 2,965 1,730 673 550 10,852 57,238 
Total$2,380,302 1,329,007 637,027 396,981 317,729 478,114 544,259 6,083,419 
Unamortized net deferred loan fees(1,704)
Total loans$6,081,715 
At December 31, 2021, as derived from the table above, the Company had $43.1 million in loans graded as Special Mention and $56.0 million in loans graded as Classified, which includes all nonaccrual loans.
In the table above, substantially all of the "Classified Loans" have grades of 7 or Fail, with those categories having similar levels of risk. Revolving lines of credit that converted to term loans during the year ended December 31, 2021 amounted to $1.0 million.
Troubled Debt Restructurings
The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extension of terms and other actions intended to minimize potential losses.
The vast majority of the Company’s TDRs modified during the years ended December 31, 2022, 2021, and 2020 related to interest rate reductions combined with extension of terms. The Company does not generally grant principal forgiveness.
The Company’s TDRs can be classified as either nonaccrual or accruing based on the loan’s payment status. The TDRs that are nonaccrual are reported within the nonaccrual loan totals presented previously.
The following table presents information related to loans modified in a TDR during the year ended December 31, 2022.
For the year ended December 31, 2022
($ in thousands, except number of contracts)Number of
Contracts		Pre-
Modification
Restructured
Balances		Post-
Modification
Restructured
Balances
TDRs – Accruing
   
Commercial, financial, and agricultural
2 $143 143 
Real estate – construction, land development & other land loans
1 67 67 
Real estate mortgage – residential (1-4 family) first mortgages2 75 78 
TDRs – Nonaccrual
Commercial, financial, and agricultural
5 744 744 
Real estate mortgage – residential (1-4 family) first mortgages1 36 36 
Real estate mortgage – commercial and other1 72 72 
Total TDRs arising during period
12 $1,137 1,140 
The following table presents information related to loans modified in a TDR during the year ended December 31, 2021.
For the year ended December 31, 2021
($ in thousands, except number of contracts)Number of
Contracts		Pre-
Modification
Restructured
Balances		Post-
Modification
Restructured
Balances
TDRs – Accruing
   
Real estate mortgage – residential (1-4 family) first mortgages1 $33 33 
TDRs – Nonaccrual
Commercial, financial, and agricultural
5 1,438 1,435 
Real estate – construction, land development & other land loans
1 75 75 
Real estate mortgage – residential (1-4 family) first mortgages1 263 263 
Real estate mortgage – commercial and other4 1,729 1,729 
Total TDRs arising during period
12 $3,538 3,535 
The following table presents information related to loans modified in a TDR during the year ended December 31, 2020.
For the year ended December 31, 2020
($ in thousands, except number of contracts)Number of
Contracts		Pre-
Modification
Restructured
Balances		Post-
Modification
Restructured
Balances
TDRs – Accruing
   
Commercial, financial, and agricultural
2 $143 143 
Real estate – construction, land development & other land loans
1 67 67 
Real estate mortgage – residential (1-4 family) first mortgages2 75 78 
Consumer loans1 4 4 
TDRs – Nonaccrual
Commercial, financial, and agricultural
1 72 72 
Real estate mortgage – commercial and other5 5,977 5,977 
Total TDRs arising during period
12 $6,338 6,341 
Accruing TDRs that were modified in the previous 12 months and that defaulted during the years ended December 31, 2022, 2021, and 2020 are presented in the table below. The Company considers a loan to have defaulted when it becomes 90 or more days delinquent under the modified terms, has been transferred to nonaccrual status, or has been transferred to foreclosed real estate.
For the Year Ended December 31, 2022For the Year Ended December 31, 2021For the Year Ended December 31, 2020
($ in thousands)Number of
Contracts		Recorded
Investment		Number of
Contracts		Recorded
Investment		Number of
Contracts		Recorded
Investment
Accruing TDRs that subsequently defaulted
      
Real estate mortgage – commercial and other— $— — $— 1 $274 
Total accruing TDRs that subsequently defaulted
— $— — $— 1 $274 
Concentration of Credit Risk
Most of the Company's business activity is with customers located within the markets where it has banking operations. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy within its markets. Approximately 90% of the Company's loan portfolio is secured by real estate and is therefore susceptible to changes in real estate valuations.

Allowance for Credit Losses - Unfunded Loan Commitments

In addition to the ACL on loans, the Company maintains an allowance for lending-related commitments such as unfunded loan commitments and letters of credit. Under CECL, the Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for lending-related commitments on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for credit losses on loans, and are discussed in Note 1. The allowance for credit losses for unfunded loan commitments of $13.3 million and $13.5 million at December 31, 2022 and December 31, 2021, respectively, is separately classified on the consolidated balance sheets within the line items "Other Liabilities."
The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for each period indicated.
($ in thousands)December 31, 2022December 31, 2021
Beginning balance$13,506 $582 
Adjustments for implementation of CECL on January 1, 2021— 7,504 
Day 2 provision for credit losses on unfunded commitments acquired from Select— 3,982 
(Reversal of) provision for credit losses on changes in unfunded commitments(200)1,438 
Ending balance $13,306 $13,506 

Allowance for Credit Losses - Securities HTM and AFS
The ACL for securities HTM and AFS was immaterial at December 31, 2022 and December 31, 2021.