Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2024

The Bank makes loans to customers primarily in the Washington, D.C. metropolitan area and surrounding communities. A substantial portion of the Bank's loan portfolio consists of loans to businesses secured by real estate and other business assets.

HFI Loans, net of unamortized deferred fees and costs, at June 30, 2024 and December 31, 2023 are summarized by portfolio segment as follows:


	June 30, 2024				December 31, 2023
(dollars in thousands, except amounts in the footnote)	Amount		%		Amount		%
Commercial	$	1,238,261	15	%	$	1,473,766	18	%
PPP loans	407		—	%	528		—	%
Income-producing - commercial real estate	4,217,525		53	%	4,094,614		51	%
Owner-occupied - commercial real estate	1,263,714		16	%	1,172,239		15	%
Real estate mortgage - residential	61,338		1	%	73,396		1	%
Construction - commercial and residential	1,063,764		13	%	969,766		12	%
Construction - C&I (owner-occupied)	99,526		1	%	132,021		2	%
Home equity	52,773		1	%	51,964		1	%
Other consumer	4,431		—	%	401		—	%
Total loans	8,001,739		100	%	7,968,695		100	%
Less: allowance for credit losses	(106,301)				(85,940)
Net loans (1)	$	7,895,438			$	7,882,755

(1)Excludes accrued interest receivable of $46.8 million and $45.3 million at June 30, 2024 and December 31, 2023, respectively, which were recorded in other assets on the Consolidated Balance Sheets.

Unamortized net deferred costs amounted to $21.9 million and $27.0 million at June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024 and December 31, 2023, the Bank serviced $150.9 million and $328.0 million, respectively, of multifamily FHA loans, SBA loans and other loan participations that are not reflected as loan balances on the Consolidated Balance Sheets. During the six months ended June 30, 2024, the Company sold the servicing rights to all FHA loans.

Real estate loans are secured primarily by duly recorded first deeds of trust or mortgages. In some cases, the Bank may accept a recorded junior trust position. In general, borrowers will have a proven ability to build, lease, manage and/or sell a commercial or residential project and demonstrate satisfactory financial condition. Additionally, an equity contribution toward the project is customarily required.

Construction loans require that the financial condition and experience of the general contractor and major subcontractors be satisfactory to the Bank. Guaranteed, fixed-price contracts are required whenever appropriate, along with payment and performance bonds or completion bonds for larger scale projects.

Loans intended for residential land acquisition, lot development and construction are made on the premise that the land: 1) is or will be developed for building sites for residential structures, and 2) will ultimately be utilized for construction or improvement of residential zoned real properties, including the creation of housing. Residential development and construction loans will finance projects such as single family subdivisions, planned unit developments, townhouses, and condominiums. Residential land acquisition, development and construction loans generally are underwritten with a maximum term of 36 months, including extensions approved at origination.

Commercial land acquisition and construction loans are secured by real property where loan funds will be used to acquire land and to construct or improve appropriately zoned real property for the creation of income producing or owner occupied commercial properties. Borrowers are generally required to put equity into each project at levels determined by the appropriate approval authority. Commercial land acquisition and construction loans generally are underwritten with a maximum term of 24 months.

Substantially all construction draw requests must be presented in writing on American Institute of Architects documents and certified either by the contractor, the borrower and/or the borrower's architect. Each draw request shall also include the borrower's soft cost breakdown certified by the borrower or their agent. Prior to an advance, the Bank or its contractor inspects the project to determine that the work has been completed, to justify the draw requisition.

Commercial permanent loans are generally secured by improved real property that is generating income in the normal course of operation. Debt service coverage, assuming stabilized occupancy, must be satisfactory to support a permanent loan. The debt service coverage ratio is ordinarily at least 1.15 to 1.0. As part of the underwriting process, debt service coverage ratios are stress tested assuming a 200 basis point increase in interest rates from their current levels.

Commercial permanent loans generally are underwritten with a term not greater than 10 years or the remaining useful life of the property, whichever is lower. The preferred term is between 5 to 7 years, with amortization to a maximum of 25 years.

The Company's loan portfolio includes acquisition, development and construction ("ADC") real estate loans including both investment and owner-occupied projects. ADC loans amounted to $1.7 billion at June 30, 2024. A portion of the ADC portfolio, both speculative and non-speculative, includes loan-funded interest reserves at origination. ADC loans that provide for the use of interest reserves represent approximately 62.8% of the outstanding ADC loan portfolio at June 30, 2024. The decision to establish a loan-funded interest reserve is made upon origination of the ADC loan and is based upon a number of factors considered during underwriting of the credit, including: (1) the feasibility of the project; (2) the experience of the sponsor; (3) the creditworthiness of the borrower and guarantors; (4) the borrower equity contribution; and (5) the level of collateral protection. When appropriate, an interest reserve provides a means of addressing the cash flow characteristics of a properly underwritten ADC loan. The Company does not significantly utilize interest reserves in other loan products. The Company recognizes that one of the risks inherent in the use of interest reserves is the potential masking of underlying problems with the project and/or the borrower's ability to repay the loan. In order to mitigate these inherent risks, the Company employs a series of reporting and monitoring mechanisms on all ADC loans, whether or not an interest reserve is provided, including: (1) construction and development timelines that are monitored on an ongoing basis and track the progress of a given project to the timeline projected at origination; (2) a construction loan administration department independent of the lending function; (3) third party independent construction loan inspection reports; (4) monthly interest reserve monitoring reports detailing the balance of the interest reserves approved at origination and the days of interest carry represented by the reserve balances as compared to the then current anticipated time to completion and/or sale of speculative projects; and (5) quarterly commercial real estate construction meetings among senior Company management, which include monitoring of current and projected real estate market conditions. If a project has not performed as expected, it is not the customary practice of the Company to increase loan funded interest reserves.

The following table details activity in the ACL by portfolio segment for the three and six months ended June 30, 2024 and 2023. PPP loans are excluded from these tables since they do not carry an allowance for credit loss, as these loans are fully guaranteed as to principal and interest by the SBA, whose guarantee is backed by the full faith and credit of the U.S. Government. Allocation of a portion of the allowance to one category of loans does not restrict the use of the allowance to absorb losses in other categories.


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









Three Months Ended June 30, 2024
Allowance for credit losses:
Balance at beginning of period	$	23,682	$	45,937	$	13,537	$	893	$	13,058	$	1,929	$	618	$	30	99,684
Loans charged-off	(2,091)		(386)		—		—		—		—		—		(69)		(2,546)
Recoveries of loans previously charged-off	50		185		24		—		—		—		—		—		259
Net loans (charged-off) recovered	(2,041)		(201)		24		—		—		—		—		(69)		(2,287)
Provision for (reversal of) credit losses	(630)		7,515		2,080		(143)		452		(498)		59		69		8,904
Ending balance	21,011		53,251		15,641		750		13,510		1,431		677		30		106,301

Six Months Ended June 30, 2024
Allowance for credit losses:
Balance at beginning of period	$	17,824	$	40,050	$	14,333	$	861	$	10,198	$	1,992	$	657	$	25	$	85,940
Loans charged-off	(2,587)		(21,329)		—		—		(129)		—		—		(70)		(24,115)
Recoveries of loans previously charged-off	166		185		47		—		—		—		—		—		398
Net loans (charged-off) recovered	(2,421)		(21,144)		47		—		(129)		—		—		(70)		(23,717)
Provision for (reversal of) credit losses	5,608		34,345		1,261		(111)		3,441		(561)		20		75		44,078
Ending balance	$	21,011	$	53,251	$	15,641	$	750	$	13,510	$	1,431	$	677	$	30	$	106,301










Three Months Ended June 30, 2023
Allowance for credit losses:
Balance at beginning of period	$	15,775	$	38,140	$	12,457	$	1,002	$	8,741	$	1,642	$	593	$	27	$	78,377
Loans charged-off	(492)		(5,306)		—		—		—		—		—		—		(5,798)
Recoveries of loans previously charged-off	156		—		8		—		34		—		—		2		200
Net loans (charged-off) recovered	(336)		(5,306)		8		—		34		—		—		2		(5,598)
Provision for (reversal of) credit losses	(65)		5,652		340		(191)		(757)		272		2		(3)		5,250
Ending balance	$	15,374	$	38,486	$	12,805	$	811	$	8,018	$	1,914	$	595	$	26	$	78,029

Six Months Ended June 30, 2023
Allowance for credit losses:
Balance at beginning of period	$	15,655	$	35,688	$	12,702	$	969	$	7,195	$	1,606	$	555	$	74	$	74,444
Loans charged-off	(1,360)		(5,306)		—		—		(136)		—		—		(50)		(6,852)
Recoveries of loans previously charged-off	232		—		8		—		34		—		—		5		279
Net loans (charged-off) recovered	(1,128)		(5,306)		8		—		(102)		—		—		(45)		(6,573)
Provision for (reversal of) credit losses	847		8,104		95		(158)		925		308		40		(3)		10,158
Ending balance	$	15,374	$	38,486	$	12,805	$	811	$	8,018	$	1,914	$	595	$	26	$	78,029

The following table presents the amortized cost basis of collateral-dependent HFI loans by class of loans as of June 30, 2024 and December 31, 2023:


	June 30, 2024				December 31, 2023
	Business/Other				Business/Other
(dollars in thousands)	Assets		Real Estate		Assets		Real Estate
Commercial	$	1,110	$	1,658	$	1,674	$	1,240
Income-producing - commercial real estate	878		71,279		1,754		39,172
Owner-occupied - commercial real estate	—		19,797		—		19,836
Real estate mortgage - residential	—		1,693		—		1,692
Construction - commercial and residential	—		2,063		—		525
Home equity	—		266		—		242
Total	$	1,988	$	96,756	$	3,428	$	62,707

Credit Quality Indicators

The Company uses several credit quality indicators to manage credit risk in an ongoing manner. The Company's primary credit quality indicators inform an internal credit risk rating system that categorizes loans into pass, watch, special mention, or classified categories. Credit risk ratings are applied individually to those classes of loans that have significant or unique credit characteristics that benefit from a case-by-case evaluation. These are typically loans to businesses or individuals in the classes that comprise the commercial portfolio segment. Groups of loans that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk rated and monitored collectively. These are typically loans to individuals in the classes that comprise the consumer portfolio segment.

The following are the definitions of the Company's credit quality indicators:


Pass:			Loans in all classes that comprise the commercial and consumer portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan agreement. Management believes that there is a low likelihood of loss related to those loans that are considered pass.

Special Mention:			Loans in the classes that comprise the commercial portfolio segment that have potential weaknesses that deserve management's close attention. If not addressed, these potential weaknesses may result in deterioration of the repayment prospects for the loan. The special mention credit quality indicator is not used for classes of loans that comprise the consumer portfolio segment. Management believes that there is a moderate likelihood of some loss related to those loans that are considered special mention.

Classified:			Classified (a) Substandard – Loans inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual loans classified substandard.

			Classified (b) Doubtful – Loans that have all the weaknesses inherent in a loan classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the assets, its classification as an estimated loss is deferred until its more exact status may be determined.

The Company's credit quality indicators are generally updated annually, however, credits rated "Special Mention" or below are reviewed more frequently. Based on the most recent analysis performed, the amortized cost basis of HFI loans by risk category, class and year of origination, along with any charge-offs that were recorded in the applicable loan segment, if applicable, were as follows:


(dollars in thousands)	Prior		2020		2021		2022		2023		2024		Revolving Loans Amort. Cost Basis		Revolving Loans Convert. to Term		Total
June 30, 2024
Commercial
Pass	$	160,126	$	32,016	$	149,826	$	125,551	$	163,260	$	67,459	$	470,263	$	6,572	$	1,175,073
Special Mention	8,183		—		—		—		—		—		4,124		60		12,367
Substandard	1,097		8,697		2,010		272		—		—		30,772		7,973		50,821
Total	169,406		40,713		151,836		125,823		163,260		67,459		505,159		14,605		1,238,261
YTD gross charge-offs	(687)		—		—		(29)		—		—		(1,871)		—		(2,587)
PPP loans
Pass	—		—		407		—		—		—		—		—		407

Income producing - commercial real estate
Pass	1,395,943		310,508		600,932		809,691		306,896		74,544		232,229		28,215		3,758,958
Special Mention	242,105		—		—		—		—		—		—		—		242,105
Substandard	205,986				—		—		—		—		10,476		—		216,462
Total	1,844,034		310,508		600,932		809,691		306,896		74,544		242,705		28,215		4,217,525
YTD gross charge-offs	(20,943)		(386)		—		—		—		—		—		—		(21,329)
Owner occupied - commercial real estate
Pass	645,982		34,129		222,166		48,087		136,767		26,577		664		—		1,114,372
Special Mention	53,434		—		—		—		—		—		—		—		53,434
Substandard	94,651		1,257		—		—		—		—		—		—		95,908
Total	794,067		35,386		222,166		48,087		136,767		26,577		664		—		1,263,714

Real estate mortgage - residential
Pass	22,811		2,458		14,389		14,107		5,880		—		—		—		59,645
Substandard	1,693		—		—		—		—		—		—		—		1,693
Total	24,504		2,458		14,389		14,107		5,880		—		—		—		61,338

Construction - commercial and residential
Pass	27,083		10,464		223,690		515,365		119,831		5,107		123,395		711		1,025,646

Substandard	6,202		29,854		—		2,062		—		—		—		—		38,118
Total	33,285		40,318		223,690		517,427		119,831		5,107		123,395		711		1,063,764
YTD gross charge-offs	(129)		—		—		—		—		—		—		—		(129)
Construction - C&I (owner occupied)
Pass	6,951		50,230		—		33,258		8,236		—		851		—		99,526



Home equity
Pass	1,556		72		185		117		—		—		50,001		544		52,475
Substandard	66		—		232		—		—		—		—		—		298
Total	1,622		72		417		117		—		—		50,001		544		52,773

Other consumer
Pass	2		—		—		—		—		69		4,349		—		4,420
Substandard	—		—		—		—		—		—		11		—		11
Total	2		—		—		—		—		69		4,360		—		4,431
YTD gross charge-offs	(34)		—		—		—		—		—		(35)		(1)		(70)
Total recorded investment	$	2,873,871	$	479,685	$	1,213,837	$	1,548,510	$	740,870	$	173,756	$	927,135	$	44,075	$	8,001,739
Total YTD gross charge-offs	$	(21,793)	$	(386)	$	—	$	(29)	$	—	$	—	$	(1,906)	$	(1)	$	(24,115)

(dollars in thousands)	Prior		2019		2020		2021		2022		2023		Revolving Loans Amort. Cost Basis		Revolving Loans Convert. to Term		Total
December 31, 2023
Commercial
Pass	$	157,563	$	48,524	$	39,133	$	194,555	$	149,320	$	191,889	$	623,684	$	5,207	$	1,409,875
Special Mention	1,415		—		—		—		—		—		2,259		—		3,674
Substandard	13,797		58		10,337		1,509		222		—		33,670		624		60,217
Total	172,775		48,582		49,470		196,064		149,542		191,889		659,613		5,831		1,473,766
YTD gross charge-offs	(885)		—		—		—		—		—		—		(1,135)		(2,020)
PPP loans
Pass	—		—		—		528		—		—		—		—		528



Income producing - commercial real estate
Pass	1,257,937		326,999		328,743		517,957		732,291		327,126		263,317		1,845		3,756,215
Special Mention	84,585		44,424		6,740		—		—		—		—		—		135,749
Substandard	139,961		62,689		—		—		—		—		—		—		202,650
Total	1,482,483		434,112		335,483		517,957		732,291		327,126		263,317		1,845		4,094,614
YTD gross charge-offs	(11,817)		—		—		—		—		—		—		—		(11,817)
Owner occupied - commercial real estate
Pass	534,525		103,034		35,385		202,776		41,907		125,934		673		55		1,044,289
Special Mention	54,288		13,348		—		—		—		—		—		—		67,636
Substandard	37,167		—		1,274		—		—		—		—		21,873		60,314
Total	625,980		116,382		36,659		202,776		41,907		125,934		673		21,928		1,172,239

Real estate mortgage - residential
Pass	22,877		7,545		2,186		15,967		14,756		5,895		—		—		69,226
Substandard	4,170		—		—		—		—		—		—		—		4,170
Total	27,047		7,545		2,186		15,967		14,756		5,895		—		—		73,396

Construction - commercial and residential
Pass	30,619		3,440		45,739		251,038		419,393		87,400		124,013		—		961,642

Substandard	8,124		—		—		—		—		—		—		—		8,124
Total	38,743		3,440		45,739		251,038		419,393		87,400		124,013		—		969,766
YTD Gross Charge-offs	(136)		(5,500)		—		—		—		—		—		—		(5,636)
Construction - C&I (owner occupied)
Pass	18,551		4,265		56,361		618		33,237		12,619		6,370		—		132,021



Home equity
Pass	1,590		—		87		151		118		—		49,035		643		51,624
Substandard	—		36		—		—		—		—		62		242		340
Total	1,590		36		87		151		118		—		49,097		885		51,964

Other consumer
Pass	1		—		—		—		46		—		354		—		401

Total	1		—		—		—		46		—		354		—		401
YTD gross charge-offs	(50)		—		—		—		—		—		—		—		(50)
Total recorded investment	$	2,367,170	$	614,362	$	525,985	$	1,185,099	$	1,391,290	$	750,863	$	1,103,437	$	30,489	$	7,968,695
Total YTD gross charge-offs	$	(12,888)	$	(5,500)	$	—	$	—	$	—	$	—	$	—	$	(1,135)	$	(19,523)

Nonaccrual and Past Due Loans

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The following table presents, by portfolio segment, the nonaccrual HFI loans on amortized cost basis as of June 30, 2024 and December 31, 2023:


(dollars in thousands, except amounts in footnotes)	Nonaccrual with No Allowance for Credit Losses		Nonaccrual with an Allowance for Credit Losses		Total Nonaccrual Loans
June 30, 2024
Commercial	$	1,426	$	525	$	1,951
Income producing - commercial real estate	1,463		65,694		67,157
Owner occupied - commercial real estate	19,795		—		19,795
Real estate mortgage - residential	1,693		230		1,923
Construction - commercial and residential	2,062		—		2,062
Home equity	265		—		265
Total (1)	$	26,704	$	66,449	$	93,153

December 31, 2023
Commercial	$	1,002	$	1,047	$	2,049
Income producing - commercial real estate	40,926		—		40,926
Owner occupied - commercial real estate	19,836		—		19,836
Real estate mortgage - residential	—		1,946		1,946
Construction - commercial and residential	—		525		525
Home equity	242		—		242
Total (1)	$	62,006	$	3,518	$	65,524

(1)Gross coupon interest income of approximately $2.9 million and $1.1 million would have been recorded for the six months ended June 30, 2024 and 2023, respectively, if nonaccrual loans shown above had been current and in accordance with their original terms, while no coupon interest income was actually recorded on such loans for the six months ended June 30, 2024 and 2023, respectively.

The table presents, by portfolio segment, an aging analysis and the recorded investments in HFI loans past due, on an amortized cost basis as of June 30, 2024 and December 31, 2023:


(dollars in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 Days or More Past Due		Total Past Due Loans		Current Loans		Nonaccrual Loans		Total Recorded Investment in Loans
June 30, 2024
Commercial	$	6,078	$	861	$	—	$	6,939	$	1,229,371	$	1,951	$	1,238,261
PPP loans	—		—		—		—		407		—		407
Income producing - commercial real estate	1,203		—		—		1,203		4,149,165		67,157		4,217,525
Owner occupied - commercial real estate	266		—		—		266		1,243,653		19,795		1,263,714
Real estate mortgage - residential	—		—		—		—		59,415		1,923		61,338
Construction - commercial and residential	—		—		—		—		1,061,702		2,062		1,063,764
Construction - C&I (owner occupied)	—		—		—		—		99,526		—		99,526
Home equity	—		—		—		—		52,508		265		52,773
Other consumer	—		12		—		12		4,419		—		4,431
Total	$	7,547	$	873	$	—	$	8,420	$	7,900,166	$	93,153	$	8,001,739


(dollars in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 Days or More Past Due		Total Past Due Loans		Current Loans		Nonaccrual Loans		Total Recorded Investment in Loans
December 31, 2023
Commercial	$	985	$	7,048	$	—	$	8,033	$	1,463,684	$	2,049	$	1,473,766
PPP loans	—		—		—		—		528		—		528
Income producing - commercial real estate	—		—		—		—		4,053,688		40,926		4,094,614
Owner occupied - commercial real estate	1,274		—		—		1,274		1,151,129		19,836		1,172,239
Real estate mortgage – residential	2,089		—		—		2,089		69,361		1,946		73,396
Construction - commercial and residential	2,056		—		—		2,056		967,185		525		969,766
Construction - C&I (owner occupied)	—		—		—		—		132,021		—		132,021
Home equity	197		—		—		197		51,525		242		51,964
Other consumer	—		—		—		—		401		—		401
Total	$	6,601	$	7,048	$	—	$	13,649	$	7,889,522	$	65,524	$	7,968,695

Loan Modifications for Borrowers Experiencing Financial Difficulty

The Company evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications. Therefore, the disclosures related to loan restructurings are for modifications which have a direct impact on cash flows.

The Company may offer various types of modifications when restructuring a loan. Commercial and industrial loans modified in a loan restructuring often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor is often requested.

Commercial mortgage and construction loans modified in a loan restructuring often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Construction loans modified in a loan restructuring may also involve extending the interest-only payment period.

Loans modified in a loan restructuring for the Company may have the financial effect of increasing the specific allowance associated with the loan. An allowance for consumer and commercial loans that have been modified in a loan restructuring is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates.

Commercial and consumer loans modified in a loan restructuring are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a loan restructuring subsequently default, the Company evaluates the loan for possible further loss. The allowance may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.

The following tables present the amortized cost basis as of June 30, 2024 and 2023 and the financial effect of HFI loans modified to borrowers experiencing financial difficulty during the three and six months ended June 30, 2024 and 2023:


	June 30, 2024
(dollars in thousands)	Term Extension		Combination - Term Extension and Principal Payment Delay				Combination - Interest Rate Reduction and Principal Payment Delay		Combination - Term Extension, Principal Payment Delay and Interest Rate Reduction		Total		Percentage of Total Loan Type	Weighted Average Term and Principal Payment Extension	Weighted Average Interest Rate Reduction
Three months ended June 30, 2024
Commercial	$	36,303	$	—			$	7,896	$	—	$	44,199	3.6%	6 months	1.63%
Income producing - commercial real estate	—		83,368				—		3,510		86,878		2.9%	4 months	3.59%
Owner occupied - commercial real estate	876		—				—		—		876		0.1%	12 months	—%
Construction - commercial and residential	—		11,012				—		—		11,012		1.0%	9 months	—%
Total	$	37,179	$	94,380			$	7,896	$	3,510	$	142,965

Six months ended June 30, 2024:
Commercial	$	36,303	$	—			7,896		$	—	$	44,199	3.6%	8 months	1.63%
Income producing - commercial real estate	—		119,252				—		3,510		122,762		2.9%	4 months	3.59%
Owner occupied - commercial real estate	876		—				—		—		876		0.1%	12 months	—%
Construction - commercial and residential	—		11,012				—		—		11,012		1.0%	9 months	—%

Total	$	37,179	$	130,264			$	7,896	$	3,510	$	178,849

	June 30, 2023
(dollars in thousands)	Term Extension		Combination - Term Extension and Principal Payment Delay				Combination - Interest Rate Reduction and Principal Payment Delay		Combination - Term Extension, Principal Payment Delay and Interest Rate Reduction		Total		Percentage of Total Loan Type	Weighted Average Term and Principal Payment Extension	Weighted Average Interest Rate Reduction
Three months ended June 30, 2023
Commercial	$	30,833	$	—	$	—	$	—	$	—	$	30,833	2.2%	3 months	—%
Income producing - commercial real estate	—		55,603				—		74,026		129,629		3.2%	3 months	2.90%
Owner occupied - commercial real estate	—		19,170				—		—		19,170		1.7%	3 months	—%
Construction - commercial and residential	6,971		—				—		—		6,971		0.8%	6 months	—%
Total	$	37,804	$	74,773			$	—	$	74,026	$	186,603

Six months ended June 30, 2023:
Commercial	$	30,833	$	—			$	—	$	—	$	30,833	2.2%	5 months	—%
Income producing - commercial real estate	7,184		57,823				—		74,026		139,033		3.4%	5 months	2.90%
Owner occupied - commercial real estate	—		19,170				—		—		19,170		1.7%	6 months	—%
Construction - commercial and residential	6,971		—				—		—		6,971		0.8%	6 months	—%
Total	$	44,988	$	76,993			$	—	$	74,026	$	196,007

The following table presents the performance of HFI loans modified during the prior twelve months to borrowers experiencing financial difficulty:


	June 30, 2024
	Payment Status (Amortized Cost Basis)
(dollars in thousands)	Current		30-89 Days Past Due		Nonaccrual
Commercial	$	48,981	$	3,447	$	—
Income producing - commercial real estate	120,954		—		47,234
Owner occupied - commercial real estate	876		—		19,130
Real estate mortgage - residential	—		—		—
Construction - commercial and residential	11,012		—		—
Total	$	181,823	$	3,447	$	66,364

The Company monitors loan payments on performing and nonperforming loans on an on-going basis to determine if a loan is considered to have a payment default. To determine the existence of a payment default, the Company analyzes the economic conditions that exist for each borrower and their ability to generate positive cash flow during a given loan's term.

The following table presents the amortized cost basis of HFI loans that were experiencing payment default at June 30, 2024 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty:


	June 30, 2024
	Amortized Cost Basis
(dollars in thousands)	Term Extension		Combination - Term Extension and Principal Payment Delay		Combination - Term Extension, Principal Payment Delay and Interest Rate Reduction
Commercial	$	3,447	$	—	$	—
Income producing - commercial real estate	—		47,234		—
Owner occupied - commercial real estate	—		19,130		—
Construction - commercial and residential	—		—		—
Total	$	3,447	$	66,364	$	—

The Company individually evaluates nonaccrual loans when performing its CECL estimate to calculate the ACL. Additionally, the Company utilizes historical internal and third-party service provider sourced loss data in the determination of its PD/LGD rates applied in the calculation of its CECL estimate. Upon determination that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.