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LOANS AND ALLOWANCE FOR CREDIT LOSSES

6 Months Ended

Jun. 30, 2023

LOANS AND ALLOWANCE FOR CREDIT LOSSES

NOTE 6: LOANS AND ALLOWANCE FOR CREDIT LOSSES

The Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, effective January 1, 2021. The allowance for credit losses is measured using an average historical loss model that incorporates relevant information about past events (including historical credit loss experience on loans with similar risk characteristics), current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the loans. The allowance for credit losses is measured on a collective (pool) basis. Loans are aggregated into pools based on similar risk characteristics, including borrower type, collateral and repayment types and expected credit loss patterns. Loans that do not share similar risk characteristics, primarily classified loans with a balance greater than or equal to $100,000, are evaluated on an individual basis.

For loans evaluated for credit losses on a collective basis, average historical loss rates are calculated for each pool using the Company’s historical net charge-offs (combined charge-offs and recoveries by observable historical reporting period) and outstanding loan balances during a lookback period. Lookback periods can be different based on the individual pool and represent management’s credit expectations for the pool of loans over the remaining contractual life. In certain loan pools, if the Company’s own historical loss rate is not reflective of the loss expectations, the historical loss rate is augmented by industry and peer data. The calculated average net charge-off rate is then adjusted for current conditions and reasonable and supportable forecasts. These adjustments increase or decrease the average historical loss rate to reflect expectations of future losses given economic forecasts of key macroeconomic variables including, but not limited to, unemployment rate, gross domestic product (“GDP”), commercial real estate price index,

consumer sentiment and construction spending. The adjustments are based on results from various regression models projecting the impact of the macroeconomic variables to loss rates. The forecast is used for a reasonable and supportable period before reverting to historical averages. The forecast-adjusted loss rate is applied to the amortized cost of loans over the remaining contractual lives, adjusted for expected prepayments. The contractual term excludes expected extensions, renewals and modifications. Additionally, the allowance for credit losses considers other qualitative factors not included in historical loss rates or macroeconomic forecasts such as changes in portfolio composition, underwriting practices, or significant unique events or conditions.

In addition, ASU 2016-13 requires an allowance for off balance sheet credit exposures: unfunded lines of credit, undisbursed portions of loans, written residential and commercial commitments, and letters of credit. To determine the amount needed for allowance purposes, a utilization rate is determined either by the model or internally for each pool. Our loss model calculates the reserve on unfunded commitments based upon the utilization rate multiplied by the average loss rate factors in each pool with unfunded and committed balances. The liability for unfunded lending commitments utilizes the same model as the allowance for credit losses on loans; however, the liability for unfunded lending commitments incorporates assumptions for the portion of unfunded commitments that are expected to be funded.

Classes of loans at June 30, 2023 and December 31, 2022 were as follows:


	June 30,			December 31,
	2023			2022

	(In Thousands)
One- to four-family residential construction	$	31,531		$	33,849
Subdivision construction		26,513			32,067
Land development		53,203			41,613
Commercial construction		705,457			757,690
Owner occupied one- to four-family residential		777,978			778,533
Non-owner occupied one- to four-family residential		123,238			124,870
Commercial real estate		1,497,659			1,530,663
Other residential		885,394			781,761
Commercial business		294,600			293,228
Industrial revenue bonds		12,355			12,852
Consumer auto		33,008			37,281
Consumer other		34,663			33,732
Home equity lines of credit		114,901			123,242
		4,590,500			4,581,381
Allowance for credit losses		(64,852)			(63,480)
Deferred loan fees and gains, net		(9,035)			(11,065)
	$	4,516,613		$	4,506,836

Weighted average interest rate		6.02	%		5.54	%

The following tables present the classes of loans by aging as of the dates indicated.


	June 30, 2023
													Total Loans
					Over 90						Total		> 90 Days Past
	30-59 Days		60-89 Days		Days		Total Past				Loans		Due and
	Past Due		Past Due		Past Due		Due		Current		Receivable		Still Accruing

	(In Thousands)
One- to four-family residential construction	$	—	$	—	$	—	$	—	$	31,531	$	31,531	$	—
Subdivision construction		—		—		—		—		26,513		26,513		—
Land development		—		—		384		384		52,819		53,203		—
Commercial construction		—		—		—		—		705,457		705,457		—
Owner occupied one- to four-family residential		568		—		359		927		777,051		777,978		—
Non-owner occupied one- to four-family residential		23		—		—		23		123,215		123,238		—
Commercial real estate		165		—		10,192		10,357		1,487,302		1,497,659		—
Other residential		—		—		—		—		885,394		885,394		—
Commercial business		—		—		16		16		294,584		294,600		—
Industrial revenue bonds		—		—		—		—		12,355		12,355		—
Consumer auto		39		4		35		78		32,930		33,008		—
Consumer other		359		5		136		500		34,163		34,663		—
Home equity lines of credit		44		32		27		103		114,798		114,901		—

Total	$	1,198	$	41	$	11,149	$	12,388	$	4,578,112	$	4,590,500	$	—


	December 31, 2022
													Total Loans
					Over 90						Total		> 90 Days Past
	30-59 Days		60-89 Days		Days		Total Past				Loans		Due and
	Past Due		Past Due		Past Due		Due		Current		Receivable		Still Accruing

	(In Thousands)
One- to four-family residential construction	$	—	$	—	$	—	$	—	$	33,849	$	33,849	$	—
Subdivision construction		—		—		—		—		32,067		32,067		—
Land development		—		—		384		384		41,229		41,613		—
Commercial construction		—		—		—		—		757,690		757,690		—
Owner occupied one- to four-family residential		2,568		462		722		3,752		774,781		778,533		—
Non-owner occupied one- to four-family residential		—		63		—		63		124,807		124,870		—
Commercial real estate		196		—		1,579		1,775		1,528,888		1,530,663		—
Other residential		—		—		—		—		781,761		781,761		—
Commercial business		8		—		586		594		292,634		293,228		—
Industrial revenue bonds		—		—		—		—		12,852		12,852		—
Consumer auto		100		34		14		148		37,133		37,281		—
Consumer other		288		114		111		513		33,219		33,732		—
Home equity lines of credit		234		38		274		546		122,696		123,242		—

Total	$	3,394	$	711	$	3,670	$	7,775	$	4,573,606	$	4,581,381	$	—

Loans are placed on nonaccrual status at 90 days past due and interest is considered a loss unless the loan is well secured and in the process of collection. Payments received on nonaccrual loans are applied to principal until the loans are returned to accrual status. Loans are returned to accrual status when all payments contractually due are brought current, payment performance is sustained for a period of time, generally six months, and future payments are reasonably assured. With the exception of consumer loans, charge-offs on loans are recorded when available information indicates a loan is not fully collectible and the loss is reasonably quantifiable. Consumer loans are charged-off at specified delinquency dates consistent with regulatory guidelines.

Non-accruing loans are summarized as follows:


	June 30,		December 31,
	2023		2022

	(In Thousands)
One- to four-family residential construction	$	—	$	—
Subdivision construction		—		—
Land development		384		384
Commercial construction		—		—
Owner occupied one- to four-family residential		359		722
Non-owner occupied one- to four-family residential		—		—
Commercial real estate		10,192		1,579
Other residential		—		—
Commercial business		16		586
Industrial revenue bonds		—		—
Consumer auto		35		14
Consumer other		136		111
Home equity lines of credit		27		274
Total non-accruing loans	$	11,149	$	3,670

No interest income was recorded on these loans for the three and six months ended June 30, 2023 and 2022, respectively.

Nonaccrual loans for which there is no related allowance for credit losses as of June 30, 2023 had an amortized cost of $1.7 million. These loans are individually assessed and do not require an allowance due to being adequately collateralized under the collateral-dependent valuation method. A collateral-dependent loan is a financial asset for which the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Company’s assessment as of the reporting date. Collateral-dependent loans are identified primarily by a classified risk rating with a loan balance equal to or greater than $100,000, including, but not limited to, any loan in process of foreclosure or repossession.

The following table presents the activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2023 and 2022. During the three months ended June 30, 2023, the Company did not record a provision expense on its portfolio of outstanding loans. During the six months ended June 30, 2023, the Company recorded provision expense of $1.5 million on its portfolio of outstanding loans. During the three and six months ended June 30, 2022, the Company did not record a provision expense on its portfolio of outstanding loans.


	One- to Four-
	Family
	Residential and		Other		Commercial		Commercial		Commercial
	Construction		Residential		Real Estate		Construction		Business		Consumer		Total

	(In Thousands)
Allowance for credit losses
Balance, March 31, 2022	$	9,382	$	10,502	$	28,604	$	2,797	$	4,162	$	5,350	$	60,797
Provision (credit) charged to expense		—		—		—		—		—		—		—
Losses charged off		(2)		—		—		—		—		(431)		(433)
Recoveries		54		110		—		—		203		327		694
Balance, June 30, 2022	$	9,434	$	10,612	$	28,604	$	2,797	$	4,365	$	5,246	$	61,058

Allowance for credit losses
Balance, March 31, 2023	$	11,797	$	13,189	$	25,506	$	2,502	$	7,821	$	4,172	$	64,987
Provision (credit) charged to expense		—		—		—		—		—		—		—
Losses charged off		—		—		—		—		—		(477)		(477)
Recoveries		21		—		2		—		6		313		342
Balance, June 30, 2023	$	11,818	$	13,189	$	25,508	$	2,502	$	7,827	$	4,008	$	64,852


	One- to Four-
	Family
	Residential and		Other		Commercial		Commercial		Commercial
	Construction		Residential		Real Estate		Construction		Business		Consumer		Total

	(In Thousands)
Allowance for credit losses
Balance, January 1, 2022	$	9,364	$	10,502	$	28,604	$	2,797	$	4,142	$	5,345	$	60,754
Provision (credit) charged to expense		—		—		—		—		—		—		—
Losses charged off		(38)		—		—		—		—		(832)		(870)
Recoveries		108		110		—		—		223		733		1,174
Balance, June 30, 2022	$	9,434	$	10,612	$	28,604	$	2,797	$	4,365	$	5,246	$	61,058

Allowance for credit losses
Balance, January 1, 2023	$	11,171	$	12,110	$	27,096	$	2,865	$	5,822	$	4,416	$	63,480
Provision (credit) charged to expense		647		1,079		(1,590)		(363)		1,851		(124)		1,500
Losses charged off		(31)		—		—		—		—		(911)		(942)
Recoveries		31		—		2		—		154		627		814
Balance, June 30, 2023	$	11,818	$	13,189	$	25,508	$	2,502	$	7,827	$	4,008	$	64,852

The following table presents the activity in the allowance for unfunded commitments by portfolio segment for the three and six months ended June 30, 2023 and 2022. The provision for losses on unfunded commitments for the three months ended June 30, 2023 was a credit (negative expense) of $1.6 million, compared to a provision expense of $2.2 million for the three months ended June 30, 2022. The provision for losses on unfunded commitments for the six months ended June 30, 2023 was a credit (negative expense) of $2.4 million, compared to a provision expense of $2.0 million for the six months ended June 30, 2022. The analysis of the level and mix of unfunded commitments resulted in a decrease in the required reserve for such potential losses in the three and six month periods of 2023 presented below.


	One- to Four-
	Family
	Residential and		Other		Commercial		Commercial		Commercial
	Construction		Residential		Real Estate		Construction		Business		Consumer		Total

	(In Thousands)
Allowance for unfunded commitments
Balance, March 31, 2022	$	1,199	$	4,700	$	423	$	1,069	$	1,618	$	427	$	9,436
Provision (credit) charged to expense		(61)		2,719		78		(374)		(212)		73		2,223
Balance, June 30, 2022	$	1,138	$	7,419	$	501	$	695	$	1,406	$	500	$	11,659

Allowance for unfunded commitments
Balance, March 31, 2023	$	832	$	8,058	$	445	$	891	$	1,263	$	501	$	11,990
Provision (credit) charged to expense		(74)		(1,267)		19		(20)		(276)		(1)		(1,619)
Balance, June 30, 2023	$	758	$	6,791	$	464	$	871	$	987	$	500	$	10,371


	One- to Four-
	Family
	Residential and		Other		Commercial		Commercial		Commercial
	Construction		Residential		Real Estate		Construction		Business		Consumer		Total

	(In Thousands)
Allowance for unfunded commitments
Balance, January 1, 2022	$	687	$	5,703	$	367	$	908	$	1,582	$	382	$	9,629
Provision (credit) charged to expense		451		1,716		134		(213)		(176)		118		2,030
Balance, June 30, 2022	$	1,138	$	7,419	$	501	$	695	$	1,406	$	500	$	11,659

Allowance for unfunded commitments
Balance, January 1, 2023	$	736	$	8,624	$	416	$	802	$	1,734	$	504	$	12,816
Provision (credit) charged to expense		22		(1,833)		48		69		(747)		(4)		(2,445)
Balance, June 30, 2023	$	758	$	6,791	$	464	$	871	$	987	$	500	$	10,371

The portfolio segments used in the preceding tables correspond to the loan classes used in all other tables in Note 6 as follows:

●

The one- to four-family residential and construction segment includes the one- to four-family residential construction, subdivision construction, owner occupied one- to four-family residential and non-owner occupied one- to four-family residential classes.

●

The other residential segment corresponds to the other residential class.

●

The commercial real estate segment includes the commercial real estate and industrial revenue bonds classes.

●

The commercial construction segment includes the land development and commercial construction classes.

●

The commercial business segment corresponds to the commercial business class.

●

The consumer segment includes the consumer auto, consumer other and home equity lines of credit classes.

The following table presents the amortized cost basis of collateral-dependent loans by class of loans:


	June 30, 2023				December 31, 2022
	Principal		Specific		Principal		Specific
	Balance		Allowance		Balance		Allowance

	(In Thousands)
One- to four-family residential construction	$	—	$	—	$	—	$	—
Subdivision construction		—		—		—		—
Land development		384		192		384		—
Commercial construction		—		—		—		—
Owner occupied one- to four- family residential		402		1		1,637		40
Non-owner occupied one- to four-family residential		—		—		—		—
Commercial real estate		10,186		1,200		1,571		—
Other residential		—		—		—		—
Commercial business		—		—		586		125
Industrial revenue bonds		—		—		—		—
Consumer auto		—		—		—		—
Consumer other		—		—		160		80
Home equity lines of credit		—		—		135		—

Total	$	10,972	$	1,393	$	4,473	$	245

Modified Loans. As indicated in Note 3, in March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the troubled debt restructuring recognition and measurement guidance and, instead, requires that an entity evaluate whether the loan modification represents a new loan or a continuation of an existing loan. It also enhances existing disclosure requirements and introduces new disclosure requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. ASU 2022-02 became effective for the Company on January 1, 2023.

Adoption of this ASU did not have a material impact on the Company’s results of operations, financial position or liquidity, but resulted in additional disclosure requirements related to gross charge offs by vintage year and the removal of troubled debt restructuring (“TDR”) disclosures, replaced by additional disclosures on the types of modifications of loans to borrowers experiencing financial difficulties. The Corporation has adopted this update prospectively.

Under ASU 2022-02, loan modifications are reported if concessions have been granted to borrowers that are experiencing financial difficulty. Information on these loan modifications originated after the effective date is presented according to the new accounting guidance. Reporting periods prior to the adoption of ASU 2022-02 present information on TDRs under the previous disclosure requirements.

The estimate of lifetime expected losses utilized in the allowance for credit losses model is developed using average historical loss on loans with similar risk characteristics, which includes losses from modifications of loans to borrowers experiencing financial difficulty. As a result, a change to the allowance for credit losses is generally not recorded upon modification. For modifications to loans made to borrowers experiencing financial difficulty that are adversely classified, the Company determines the allowance for credit losses on an individual basis, using the same process that it utilizes for other adversely classified loans. If collection efforts have begun and the modified loan is subsequently deemed collateral-dependent, the loan is placed on non-accrual status and the allowance for credit losses is determined based on an individual evaluation. If necessary, the loan is charged down to fair market value less sales costs.

The following tables show the composition of loan modifications made to borrowers experiencing financial difficulty by the loan portfolio and type of concessions granted during the three and six months ended June 30, 2023. Each of the types of concessions granted comprised 2% or less of their respective classes of loan portfolios at June 30, 2023. During the three and six months ended June 30, 2023, principal forgiveness of $6,000 and $39,000, respectively, was completed on consumer loans. A commercial real estate loan modified in the three months ended March 31, 2023, which totaled $21.6 million, was paid in full during the three months ended June 30, 2023.


	Three Months Ended June 30, 2023
	Interest Rate		Term				Total
	Reduction		Extension		Combination		Modifications

		(In Thousands)
Construction and land development	$	—	$	—	$	—	$	—
One- to four-family residential		—		—		—		—
Other residential		—		—		—		—
Commercial real estate		—		77		—		77
Commercial business		—		16		—		16
Consumer		—		—		—		—
	$	—	$	93	$	—	$	93


	Six Months Ended June 30, 2023
	Interest Rate		Term				Total
	Reduction		Extension		Combination		Modifications

		(In Thousands)
Construction and land development	$	—	$	—	$	1,208	$	1,208
One- to four-family residential		—		143		—		143
Other residential		—		—		—		—
Commercial real estate		—		77		21,030		21,107
Commercial business		—		16		—		16
Consumer		6		—		—		6
	$	6	$	236	$	22,238	$	22,480

The Company closely monitors the performance of loans to borrowers experiencing financial difficulty that are modified to understand the effectiveness of its modification efforts. The following table depicts the performance (under modified terms) at June 30, 2023 of loans that were modified during the six months ended June 30, 2023:


	June 30, 2023
			30-89 Days		Over 90 Days
	Current		Past Due		Past Due		Total

		(In Thousands)
Construction and land development	$	1,208	$	—	$	—	$	1,208
One- to four-family residential		143		—		—		143
Other residential		—		—		—		—
Commercial real estate		21,107		—		—		21,107
Commercial business		16		—		—		16
Consumer		6		—		—		6
	$	22,480	$	—	$	—	$	22,480

TDRs by class are presented below as of December 31, 2022.


	December 31, 2022
	Accruing TDR Loans			Non-accruing TDR Loans			Total TDR Loans
	Number	Balance		Number	Balance		Number	Balance

	(In Thousands)
Construction and land development	—	$	—	—	$	—	—	$	—
One- to four-family residential	13		1,028	3		98	16		1,126
Other residential	—		—	—		—	—		—
Commercial real estate	—		—	2		1,571	2		1,571
Commercial business	—		—	—		—	—		—
Consumer	13		210	5		42	18		252
	26	$	1,238	10	$	1,711	36	$	2,949

The following table presents newly restructured loans, which were considered TDRs, during the three and six months ended June 30, 2022, by type of modification:

Three Months Ended June 30, 2022

Total

Interest Only

Term

Combination

Modifications

(In Thousands)

Commercial real estate

—

Consumer

—


	Six Months Ended June 30, 2022
							Total
	Interest Only		Term		Combination		Modifications

		(In Thousands)
Commercial real estate	$	—	$	—	$	247	$	247
Consumer		—		4		3		7
	$	—	$	4	$	250	$	254

At December 31, 2022, of the $2.9 million in TDRs, $1.7 million were classified as substandard using the Company’s internal grading system. The Company had no TDRs that were modified in the previous 12 months and subsequently defaulted during the year ended December 31, 2022.

During the three and six months ended June 30, 2022, $290,000 and $511,000 of loans, respectively, met the criteria for placement back on accrual status. The criteria are generally a minimum of six months of consistent and timely payment performance under original or modified terms.

Loan Risk Ratings. The nature and extent of impairments of modified loans, including those which have experienced a subsequent payment default, are considered in the determination of an appropriate level of the allowance for credit losses. The Company utilizes an internal risk rating system comprised of a series of grades to categorize loans according to perceived risk associated with the

expectation of debt repayment. The analysis of the borrower’s ability to repay considers specific information, including but not limited to current financial information, historical payment experience, industry information, collateral levels and collateral types. A risk rating is assigned at loan origination and then monitored throughout the contractual term for possible risk rating changes.

Satisfactory loans range from Excellent to Moderate Risk, but generally are loans supported by strong recent financial statements. The character and capacity of the borrower are strong, including reasonable project performance, good industry experience, liquidity and/or net worth. The probability of financial deterioration seems unlikely. Repayment is expected from approved sources over a reasonable period of time.

Watch loans are identified when the borrower has capacity to perform according to terms; however, elements of uncertainty exist. Margins of debt service coverage may be narrow, historical patterns of financial performance may be erratic, collateral margins may be diminished and the borrower may be a new and/or thinly capitalized company. Some management weakness may also exist, the borrower may have somewhat limited access to other financial institutions, and that access may diminish in difficult economic times.

Special Mention loans have weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of repayment prospects or the Bank’s credit position at some future date. It is a transitional grade that is closely monitored for improvement or deterioration.

The Substandard rating is applied to loans where the borrower exhibits well-defined weaknesses that jeopardize its continued performance and are of a severity that the distinct possibility of default exists. Loans are placed on “non-accrual” when management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment.

Doubtful loans have all the weaknesses inherent to those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. Loans considered loss are uncollectable and no longer included as an asset.

All loans are analyzed for risk rating updates regularly. For larger loans, rating assessments may be more frequent if relevant information is obtained earlier through debt covenant monitoring or overall relationship management. Smaller loans are monitored as identified by the loan officer based on the risk profile of the individual borrower or if the loan becomes past due related to credit issues. Loans rated Watch, Special Mention, Substandard or Doubtful are subject to quarterly review and monitoring processes. In addition to the regular monitoring performed by the lending personnel and credit committees, loans are subject to review by the credit review department, which verifies the appropriateness of the risk ratings for the loans chosen as part of its risk-based review plan.

The following table presents a summary of loans by category and risk rating separated by origination and loan class as of June 30, 2023.


	Term Loans by Origination Year
													Revolving
	2023 YTD		2022		2021		2020		2019		Prior		Loans		Total

	(In Thousands)
One- to four-family residential construction
Satisfactory (1-4)	$	6,411	$	17,787	$	1,390	$	—	$	—	$	—	$	5,943	$	31,531
Watch (5)		—		—		—		—		—		—		—		—
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		—		—		—
Total		6,411		17,787		1,390		—		—		—		5,943		31,531

Subdivision construction
Satisfactory (1-4)		115		1,066		24,457		101		199		555		20		26,513
Watch (5)		—		—		—		—		—		—		—		—
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		—		—		—
Total		115		1,066		24,457		101		199		555		20		26,513

Construction and land development
Satisfactory (1-4)		12,644		15,581		5,638		5,190		7,381		5,628		757		52,819
Watch (5)		—		—		—		—		—		—		—		—
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		—		384		384
Total		12,644		15,581		5,638		5,190		7,381		5,628		1,141		53,203

Other construction
Satisfactory (1-4)		23,349		256,939		398,835		23,248		3,086		—		—		705,457
Watch (5)		—		—		—		—		—		—		—		—
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		—		—		—
Total		23,349		256,939		398,835		23,248		3,086		—		—		705,457

One- to four-family residential
Satisfactory (1-4)		37,116		337,293		212,612		115,931		67,085		128,615		519		899,171
Watch (5)		—		—		—		—		176		1,076		51		1,303
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		154		—		588		—		742
Total		37,116		337,293		212,612		116,085		67,261		130,279		570		901,216

Other residential
Satisfactory (1-4)		13,077		90,893		203,313		278,920		141,891		150,278		3,746		882,118
Watch (5)		—		—		—		—		—		3,276		—		3,276
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		—		—		—
Total		13,077		90,893		203,313		278,920		141,891		153,554		3,746		885,394

Commercial real estate
Satisfactory (1-4)		18,547		265,927		189,508		106,759		171,934		700,933		28,636		1,482,244
Watch (5)		—		—		—		—		—		5,223		—		5,223
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		10,192		—		10,192
Total		18,547		265,927		189,508		106,759		171,934		716,348		28,636		1,497,659

Commercial business
Satisfactory (1-4)		10,056		72,163		51,025		32,683		11,011		64,957		65,026		306,921
Watch (5)		—		—		—		—		—		18		—		18
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		16		—		—		—		—		—		16
Total		10,056		72,179		51,025		32,683		11,011		64,975		65,026		306,955

Consumer
Satisfactory (1-4)		9,881		15,808		8,350		4,117		1,551		17,678		124,617		182,002
Watch (5)		—		—		25		—		5		160		74		264
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		21		4		6		—		242		33		306
Total		9,881		15,829		8,379		4,123		1,556		18,080		124,724		182,572

Combined
Satisfactory (1-4)		131,196		1,073,457		1,095,128		566,949		404,138		1,068,644		229,264		4,568,776
Watch (5)		—		—		25		—		181		9,753		125		10,084
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		37		4		160		—		11,022		417		11,640
Total	$	131,196	$	1,073,494	$	1,095,157	$	567,109	$	404,319	$	1,089,419	$	229,806	$	4,590,500

The following table presents a summary of loans by category and risk rating separated by origination and loan class as of December 31, 2022.


	Term Loans by Origination Year
													Revolving
	2022		2021		2020		2019		2018		Prior		Loans		Total

	(In Thousands)
One- to four-family residential construction
Satisfactory (1-4)	$	21,885	$	7,265	$	1,391	$	—	$	—	$	—	$	3,308	$	33,849
Watch (5)		—		—		—		—		—		—		—		—
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		—		—		—
Total		21,885		7,265		1,391		—		—		—		3,308		33,849

Subdivision construction
Satisfactory (1-4)		4,478		25,864		800		203		134		588		—		32,067
Watch (5)		—		—		—		—		—		—		—		—
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		—		—		—
Total		4,478		25,864		800		203		134		588		—		32,067

Construction and land development
Satisfactory (1-4)		16,746		6,914		4,866		7,338		762		3,990		613		41,229
Watch (5)		—		—		—		—		—		—		—		—
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		—		384		384
Total		16,746		6,914		4,866		7,338		762		3,990		997		41,613

Other construction
Satisfactory (1-4)		113,512		446,125		176,340		21,713		—		—		—		757,690
Watch (5)		—		—		—		—		—		—		—		—
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		—		—		—
Total		113,512		446,125		176,340		21,713		—		—		—		757,690

One- to four-family residential
Satisfactory (1-4)		340,886		219,504		128,509		73,162		39,685		97,236		687		899,669
Watch (5)		—		—		—		179		88		1,341		57		1,665
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		158		—		—		1,832		79		2,069
Total		340,886		219,504		128,667		73,341		39,773		100,409		823		903,403

Other residential
Satisfactory (1-4)		83,822		133,648		168,232		142,630		122,614		123,538		3,939		778,423
Watch (5)		—		—		—		—		—		3,338		—		3,338
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		—		—		—
Total		83,822		133,648		168,232		142,630		122,614		126,876		3,939		781,761

Commercial real estate
Satisfactory (1-4)		221,341		171,484		109,939		203,426		185,682		577,216		36,658		1,505,746
Watch (5)		—		—		—		—		—		23,338		—		23,338
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		1,579		—		1,579
Total		221,341		171,484		109,939		203,426		185,682		602,133		36,658		1,530,663

Commercial business
Satisfactory (1-4)		45,349		66,258		39,645		15,505		9,309		65,307		64,088		305,461
Watch (5)		—		—		—		—		—		34		—		34
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		—		—		—		—		394		191		585
Total		45,349		66,258		39,645		15,505		9,309		65,735		64,279		306,080

Consumer
Satisfactory (1-4)		21,309		11,168		5,711		2,708		3,263		16,380		132,792		193,331
Watch (5)		—		28		—		7		—		160		100		295
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		11		9		—		2		248		359		629
Total		21,309		11,207		5,720		2,715		3,265		16,788		133,251		194,255

Combined
Satisfactory (1-4)		869,328		1,088,230		635,433		466,685		361,449		884,255		242,085		4,547,465
Watch (5)		—		28		—		186		88		28,211		157		28,670
Special Mention (6)		—		—		—		—		—		—		—		—
Classified (7-9)		—		11		167		—		2		4,053		1,013		5,246
Total		869,328	$	1,088,269	$	635,600	$	466,871	$	361,539	$	916,519	$	243,255	$	4,581,381