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Loans and Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2024
Receivables [Abstract]  
Loans and Allowance for Credit Losses Loans and Allowance for Credit Losses
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 net deferred fees, at December 31, 2024 and 2023 are summarized by portfolio segment as follows:
December 31, 2024December 31, 2023
(dollars in thousands)Amount%  Amount%
Commercial$1,183,341 15 %$1,473,766 18 %
PPP loans287 — %528 — %
Income producing - commercial real estate4,064,846 51 %4,094,614 51 %
Owner occupied - commercial real estate1,269,669 16 %1,172,239 15 %
Real estate mortgage - residential50,535 1 %73,396 1 %
Construction - commercial and residential1,210,763 15 %969,766 12 %
Construction - C&I (owner occupied)103,259 1 %132,021 2 %
Home equity51,130 1 %51,964 1 %
Other consumer1,058 — 401 — 
Total loans7,934,888 100 %7,968,695 100 %
Less: allowance for credit losses(114,390)(85,940)
Net loans (1)
$7,820,498 $7,882,755 
(1)Excludes accrued interest receivable of $42.9 million and $45.3 million at December 31, 2024 and 2023, respectively, which were recorded in other assets on the Consolidated Balance Sheets.
Unamortized net deferred fees and costs were $18.8 million and $27.0 million at December 31, 2024 and 2023, respectively.
As of December 31, 2024 and 2023, the Bank serviced $63.7 million and $328.0 million, respectively, of SBA loans and other loan participations, which are not reflected as loan balances on the Consolidated Balance Sheets. During the year ended December 31, 2024, the Company sold the remaining servicing rights to all FHA loans for net proceeds of $4.8 million and a gain on sale of $1.5 million.
Real estate loans are secured primarily by duly recorded first deeds of trust or mortgages. 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 ("ADC") loans generally are underwritten with a maximum term of 36 months, including extensions approved at origination.
Commercial land acquisition and construction loans are secured by real property where loan funds will be used to acquire land and to construct or improve appropriately zoned real property for the creation of income producing or owner-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 Chief Financial Officer. Prior to an advance, the Bank or its contractor inspects the project to determine that the work has been completed, to justify the draw requisition.
Commercial permanent loans are generally secured by improved real property which 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 ("DSCR") is ordinarily at least 1.15 to 1.0. As part of the underwriting process, DSCRs 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 five to seven years, with amortization to a maximum of 25 years.
The Company’s loan portfolio includes ADC real estate loans including both investment and owner occupied projects. ADC loans amounted to $1.8 billion at December 31, 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 59% of the outstanding ADC loan portfolio at December 31, 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) borrower equity contribution; and (5) the level of collateral protection. When appropriate, an interest reserve provides an effective 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 this inherent risk, 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 which are monitored on an ongoing basis which 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 includes 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 years ended December 31, 2024, 2023 and 2022. PPP loans are excluded from these tables since they do not carry an allowance for credit loss, as these loans are fully guaranteed as to principal and interest by the SBA, whose guarantee is backed by the full faith and credit of the U.S. Government. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
(dollars in thousands)CommercialIncome Producing - Commercial Real EstateOwner Occupied - Commercial Real EstateReal Estate Mortgage - ResidentialConstruction -Commercial and ResidentialConstruction - C&I (Owner Occupied)Home EquityOther ConsumerTotal
Year Ended December 31, 2024
Allowance for credit losses:                
Balance at beginning of year$17,824 $40,050 $14,333 $861 $10,198 $1,992 $657 $25 $85,940 
Loans charged-off(4,906)(30,284)(3,800)— (129)— — (88)(39,207)
Recoveries of loans previously charged-off373 185 94 — — — — — 652 
Net loans (charged-off) and recovered(4,533)(30,099)(3,706)— (129)— — (88)(38,555)
Provision for (reversal of) credit losses6,099 45,234 12,027 (251)4,516 (710)(4)94 67,005 
Ending balance$19,390 $55,185 $22,654 $610 $14,585 $1,282 $653 $31 $114,390 
Year Ended December 31, 2023
Allowance for credit losses:
Balance at beginning of year$15,655 $35,688 $12,702 $969 $7,195 $1,606 $555 $74 $74,444 
Loans charged-off(2,020)(11,817)— — (5,636)— — (50)(19,523)
Recoveries of loans previously charged-off576 — 55 — 36 — — 6 673 
Net loans (charged-off) and recovered(1,444)(11,817)55 — (5,600)— — (44)(18,850)
Provision for (reversal of) credit losses3,613 16,179 1,576 (108)8,603 386 102 (5)30,346 
Ending balance$17,824 $40,050 $14,333 $861 $10,198 $1,992 $657 $25 $85,940 
Year Ended December 31, 2022
Allowance for credit losses:
Balance at beginning of year$14,475 $38,287 $12,146 $449 $7,094 $2,005 $474 $35 $74,965 
Loans charged-off(1,561)(1,355)— — — — — (79)(2,995)
Recoveries of loans previously charged-off713 25 — — 1,627 — — 6 2,371 
Net loans (charged-off) and recovered(848)(1,330)— — 1,627 — — (73)(624)
Provision for (reversal of) credit losses
2,028 (1,269)556 520 (1,526)(399)81 112 103 
Ending balance$15,655 $35,688 $12,702 $969 $7,195 $1,606 $555 $74 $74,444 
The following table presents the amortized cost basis of collateral-dependent HFI loans by portfolio segment as of December 31, 2024 and 2023:
December 31, 2024December 31, 2023
(dollars in thousands)Business/Other AssetsReal EstateBusiness/Other AssetsReal Estate
Commercial$1,214 $1,125 $1,674 $1,240 
Income-producing-commercial real estate880 167,574 1,754 39,172 
Owner occupied - commercial real estate— 37,746 — 19,836 
Real estate mortgage- residential— — — 1,692 
Construction - commercial and residential— — — 525 
Home equity— 303 — 242 
Other consumer— — — — 
Total$2,094 $206,748 $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 indicator is an internal credit risk rating system that categorizes loans into pass, 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 which 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 which 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, as of December 31, 2024 and 2023, by risk category, class and year of origination, along with any charge-offs that were recorded in the applicable loan segment, if applicable, were as follows:
(dollars in thousands)Prior2020202120222023
2024
Revolving Loans Amort. Cost BasisRevolving Loans Convert. to TermTotal
December 31, 2024
Commercial:
Pass$132,595 $26,775 $133,400 $110,439 $89,608 $104,927 $513,645 $4,394 $1,115,783 
Special Mention7,828 3,479 — — — — 18,384 — 29,691 
Substandard11,404 3,713 2,128 519 — — 12,223 7,880 37,867 
Total151,827 33,967 135,528 110,958 89,608 104,927 544,252 12,274 1,183,341 
YTD gross charge-offs(4,350)— — — — — (506)(50)(4,906)
PPP loans:
Pass— — 287 — — — — — 287 
Income producing - commercial real estate:
Pass1,442,246 176,268 626,527 680,822 276,731 151,535 216,363 29,243 3,599,735 
Special Mention74,251 91,643 — 20,600 — — — — 186,494 
Substandard266,309 1,808 — — — — 10,500 — 278,617 
Total1,782,806 269,719 626,527 701,422 276,731 151,535 226,863 29,243 4,064,846 
YTD gross charge-offs(29,898)(386)— — — — — — (30,284)
Owner occupied - commercial real estate:
Pass622,258 57,611 219,162 39,221 138,860 69,623 299 — 1,147,034 
Special Mention23,658 — — — — — — — 23,658 
Substandard96,634 1,248 — 1,095 — — — — 98,977 
Total742,550 58,859 219,162 40,316 138,860 69,623 299 — 1,269,669 
YTD gross charge-offs(3,800)— — — — — — — (3,800)
Real estate mortgage - residential:
Pass20,080 2,435 9,972 12,181 5,867 — — — 50,535 
Total20,080 2,435 9,972 12,181 5,867 — — — 50,535 
YTD gross charge-offs— 
Construction - commercial and residential:
Pass26,739 38,385 199,933 595,496 202,577 7,588 124,508 — 1,195,226 
Special Mention
— — 4,964 — — — — — 4,964 
Substandard5,683 — 4,890 — — — — — 10,573 
Total32,422 38,385 209,787 595,496 202,577 7,588 124,508 — 1,210,763 
YTD gross charge-offs(129)— — — — — — — (129)
Construction - C&I (owner occupied):
Pass6,063 24,632 — 36,544 8,458 26,730 832 — 103,259 
Home equity
Pass1,366 71 35 116 — — 48,443 765 50,796 
Substandard59 — 222 — — — 53 — 334 
Total1,425 71 257 116 — — 48,496 765 51,130 
YTD gross charge-offs— 
Other consumer
Pass3 — — — — 49 1,006 — 1,058 
YTD gross charge-offs(70)— — — — — (17)(1)(88)
Total Recorded Investment$2,737,176 $428,068 $1,201,520 $1,497,033 $722,101 $360,452 $946,256 $42,282 $7,934,888 
Total YTD gross charge-offs$(38,247)$(386)$— $— $— $— $(523)$(51)$(39,207)
(dollars in thousands)Prior2019202020212022
2023
Revolving Loans Amort. Cost BasisRevolving Loans Convert. to TermTotal
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 Mention1,415 — — — — — 2,259 — 3,674 
Substandard13,797 58 10,337 1,509 222 — 33,670 624 60,217 
Total172,775 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:
Pass1,257,937 326,999 328,743 517,957 732,291 327,126 263,317 1,845 3,756,215 
Special Mention84,585 44,424 6,740 — — — — — 135,749 
Substandard139,961 62,689 — — — — — — 202,650 
Total1,482,483 434,112 335,483 517,957 732,291 327,126 263,317 1,845 4,094,614 
YTD gross charge-offs(11,817)— — — — — — — (11,817)
Owner occupied - commercial real estate:
Pass534,525 103,034 35,385 202,776 41,907 125,934 673 55 1,044,289 
Special Mention54,288 13,348 — — — — — — 67,636 
Substandard37,167 — 1,274 — — — — 21,873 60,314 
Total625,980 116,382 36,659 202,776 41,907 125,934 673 21,928 1,172,239 
Real estate mortgage - residential:
Pass22,877 7,545 2,186 15,967 14,756 5,895 — — 69,226 
Substandard4,170 — — — — — — — 4,170 
Total27,047 7,545 2,186 15,967 14,756 5,895 — — 73,396 
Construction - commercial and residential:
Pass30,619 3,440 45,739 251,038 419,393 87,400 124,013 — 961,642 
Substandard8,124 — — — — — — — 8,124 
Total38,743 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):
Pass18,551 4,265 56,361 618 33,237 12,619 6,370 — 132,021 
Home equity:
Pass1,590 — 87 151 118 — 49,035 643 51,624 
Substandard— 36 — — — — 62 242 340 
Total1,590 36 87 151 118 — 49,097 885 51,964 
Other consumer:
Pass1 — — — 46 — 354 — 401 
Total1 — — — 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, information related to the amortized cost basis of nonaccrual HFI loans as of December 31, 2024 and 2023.
December 31, 2024
December 31, 2023
(dollars in thousands)Nonaccrual with No Allowance for Credit LossNonaccrual with an Allowance for Credit LossesTotal Nonaccrual LoansNonaccrual with No Allowance for Credit LossNonaccrual with an Allowance for Credit LossesTotal Nonaccrual Loans
Commercial$1,439 $609 $2,048 $1,002 $1,047 $2,049 
Income producing - commercial real estate47,224 121,230 168,454 40,926 — 40,926 
Owner occupied - commercial real estate642 37,102 37,744 19,836 — 19,836 
Real estate mortgage - residential— 157 157 — 1,946 1,946 
Construction- commercial and residential— — — — 525 525 
Home equity303 — 303 242 — 242 
Other consumer— — — — — — 
Total (1)
$49,608 $159,098 $208,706 $62,006 $3,518 $65,524 
(1)Gross coupon interest income of $8.8 million, $4.2 million and $558 thousand would have been recorded for years ended December 31, 2024, 2023 and 2022, respectively, if nonaccrual loans shown above had been current and in accordance with their original terms, while interest actually recorded on such loans were $4.1 million, $1.5 million and $17 thousand for the years ended December 31, 2024, 2023 and 2022, respectively. See Note 1 to the Consolidated Financial Statements for a description of the Company’s policy for placing loans on nonaccrual status.
The following table presents, by portfolio segment, an aging analysis and the recorded investments in HFI loans past due as of December 31, 2024 and 2023:
(dollars in thousands)Loans 30-59 Days Past DueLoans 60-89 Days Past DueLoans 90 Days or More Past DueTotal Past Due LoansCurrent LoansNonaccrual LoansTotal Recorded Investment in Loans
December 31, 2024
Commercial$5,121 $3,759 $— $8,880 $1,172,413 $2,048 $1,183,341 
PPP loans— — — — 287 — 287 
Income producing - commercial real estate13,804 — — 13,804 3,882,588 168,454 4,064,846 
Owner occupied - commercial real estate2,968 — — 2,968 1,228,957 37,744 1,269,669 
Real estate mortgage – residential— — — — 50,378 157 50,535 
Construction - commercial and residential— 1,031 — 1,031 1,209,732 — 1,210,763 
Construction - C&I (owner occupied)— — — — 103,259 — 103,259 
Home equity52 — — 52 50,775 303 51,130 
Other consumer28 — — 28 1,030 — 1,058 
Total$21,973 $4,790 $— $26,763 $7,699,419 $208,706 $7,934,888 
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 estate1,274 — — 1,274 1,151,129 19,836 1,172,239 
Real estate mortgage – residential2,089 — — 2,089 69,361 1,946 73,396 
Construction - commercial and residential2,056 — — 2,056 967,185 525 969,766 
Construction - C&I (owner occupied)— — — — 132,021 — 132,021 
Home equity197 — — 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 modifications according to the accounting guidance to determine if the modification results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications. Modifications with terms not as favorable to the Company as the terms for comparable loans to other customers with similar collection risk who are not refinancing or restructuring a loan with the Company and which have a direct impact on cash flows are considered modified loans to borrowers experiencing financial difficulty.
The Company may offer various types of modifications when restructuring a loan. 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 table presents the amortized cost basis as of December 31, 2024 and 2023, and the financial effect of HFI loans modified to borrowers experiencing financial difficulty during the years ended December 31, 2024 and 2023:
(dollars in thousands)Term ExtensionCombination - Term Extension and Principal Payment Delay
Combination - Principal Payment Delay and Interest Rate Reduction
Combination - Term Extension, Principal Payment Delay and Interest Rate ReductionTotalPercentage of Total Loan Type
Weighted Average Term and Principal Payment Extension (1)
Weighted Average Interest Rate Reduction (2)
December 31, 2024
Commercial$27,249 $28,576 $7,728 $— $63,553 5.3 %13 months1.63 %
Income producing - commercial real estate
25,290 288,111 — 3,514 316,915 7.8 %8 months3.59 %
Owner occupied - commercial real estate870 — — — 870 0.1 %12 months— %
Construction - commercial and residential— 20,454 — — 20,454 1.7 %9 months— %
Total$53,409 $337,141 $7,728 $3,514 $401,792 
December 31, 2023
Commercial$14,182 $21,003 $— $— $35,185 2.4 %11 months— %
Income producing - commercial real estate
7,191 62,356 — 106,256 175,803 4.3 %16 months2.56 %
Owner occupied - commercial real estate— 19,127 — — 19,127 1.6 %9 months— %
Construction - commercial and residential7,095 — — — 7,095 0.7 %12 months— %
Total$28,468 $102,486 $— $106,256 $237,210 
(1)For loans that received multiple modifications during the year, weighted average term and principal payment extensions were calculated based on the aggregate impact of the extensions received during the period.
(2)The weighted average is calculated based on the total amortized cost of loans, at the year-end, that received interest rate reduction modifications during the year.
The following table presents the performance of HFI loans modified during the prior twelve months to borrowers experiencing financial difficulty during the years ended December 31, 2024 and 2023:
December 31, 2024
Payment Status (Amortized Cost Basis)
(dollars in thousands)Current30-89 Days Past Due90 Days or More Past DueNonaccrual
Commercial$58,169 $5,384 $— $— 
Income producing - commercial real estate185,185 — — 131,730 
Owner occupied - commercial real estate870 — — — 
Construction - commercial and residential20,454 — — — 
Total$264,678 $5,384 $— $131,730 
December 31, 2023
Payment Status (Amortized Cost Basis)
(dollars in thousands)Current30-89 Days Past Due90 Days or More Past DueNonaccrual
Commercial$30,790 $4,395 $— $— 
Income producing - commercial real estate137,252 — — 38,551 
Owner occupied - commercial real estate— — — 19,127 
Construction - commercial and residential7,095 — — — 
Total$175,137 $4,395 $— $57,678 
The Company monitors loan payments on performing and nonperforming loans on an on-going basis to determine if a loan is considered to have a payment default. To determine the existence of a payment default, the Company analyzes the economic conditions that exist for each borrower and their ability to generate positive cash flow during a given loan's term.
The following table presents the amortized cost basis of HFI loans that were experiencing payment default at December 31, 2024 and 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty:
December 31, 2024
Amortized Cost Basis
(dollars in thousands)Term ExtensionCombination - Term Extension and Principal Payment DelayCombination - Term Extension, Principal Payment Delay and Interest Rate Reduction
Commercial$5,384 $— $— 
Income producing - commercial real estate— 131,730 — 
Owner occupied - commercial real estate— — — 
Construction - commercial and residential— — — 
Total$5,384 $131,730 $— 
December 31, 2023
Amortized Cost Basis
(dollars in thousands)Term ExtensionCombination - Term Extension and Principal Payment DelayCombination - Term Extension, Principal Payment Delay and Interest Rate Reduction
Commercial$4,395 $— $— 
Income producing - commercial real estate— — 38,551 
Owner occupied - commercial real estate— 19,127 — 
Total$4,395 $19,127 $38,551 
The Company individually evaluates nonaccrual loans when performing its CECL estimate to calculate the ACL. 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.
Related Party Loans
Certain directors and executive officers of the Company and the Bank and certain affiliated entities of such directors and executive officers have had loan transactions with the Company. All of such loans are either fully repaid or performing and none of such loans are nonaccrual, past due, restructured, or rated substandard or worse (not on nonaccrual).
Amounts in “additions due to changes in related party status” or "removals due to changes in related party status" reflect loans that transitioned to being related party loans or out of being related party loans during the years presented as a
result of changes in related party status with respect to certain of the Company’s directors who are affiliated with the related borrowers.
The following table summarizes the activity of loans outstanding to borrowers with relationships to related parties in 2024 and 2023:
(dollars in thousands)
2024
2023
Balance at January 1,$836 $119,198 
Additions— 283 
Repayments(534)(44,645)
Removals due to changes in related party status— (74,000)
Balance at December 31,$302 $836