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Loans and Allowance for Credit Losses | 9 Months Ended
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Sep. 30, 2023
Receivables [Abstract] |
Loans and Allowance for Credit Losses | Loans and Allowance for Credit Losses Loans Held for Sale Loans held for sale are comprised entirely of 1-4 family residential mortgage loans as of September 30, 2023 and December 31, 2022. Loans Held for Investment The following table presents amortized cost and unpaid principal balance of loans, categorized by the segments used in the Company's Current Expected Credit Losses (“CECL”) methodology to assess credit risk, for the periods indicated:
| September 30, 2023 | December 31, 2022
(In Thousands) | Amortized Cost | Unpaid Principal | Difference | Amortized Cost | Unpaid Principal | Difference
Commercial & industrial loans | $415,898 |  | $417,695 |  | ($1,797) |  | $358,128 |  | $359,900 |  | ($1,772) |
Commercial real estate: |  |  |  |  |  |
Owner occupied properties | 357,455 |  | 359,019 |  | (1,564) |  | 349,973 |  | 351,580 |  | (1,607) |
Non-owner occupied and multifamily properties | 506,256 |  | 509,939 |  | (3,683) |  | 482,270 |  | 486,021 |  | (3,751) |
Residential real estate: |  |  |  |  |  |
1-4 family residential properties secured by first liens | 180,849 |  | 180,719 |  | 130 |  | 73,381 |  | 73,674 |  | (293) |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | 27,535 |  | 27,342 |  | 193 |  | 20,259 |  | 20,103 |  | 156 |
1-4 family residential construction loans | 32,185 |  | 32,374 |  | (189) |  | 44,000 |  | 44,314 |  | (314) |
Other construction, land development and raw land loans | 119,716 |  | 120,909 |  | (1,193) |  | 99,182 |  | 100,075 |  | (893) |
Obligations of states and political subdivisions in the US | 30,463 |  | 30,465 |  | (2) |  | 32,539 |  | 32,540 |  | (1) |
Agricultural production, including commercial fishing | 40,923 |  | 41,143 |  | (220) |  | 34,099 |  | 34,263 |  | (164) |
Consumer loans | 5,986 |  | 5,930 |  | 56 |  | 4,335 |  | 4,293 |  | 42 |
Other loans | 2,825 |  | 2,842 |  | (17) |  | 3,619 |  | 3,632 |  | (13) |
Total | 1,720,091 |  | 1,728,377 |  | (8,286) |  | 1,501,785 |  | 1,510,395 |  | (8,610) |
Allowance for credit losses | (16,491) |  |  |  | (13,838) |  |  |
| $1,703,600 |  | $1,728,377 |  | ($8,286) |  | $1,487,947 |  | $1,510,395 |  | ($8,610) |
The difference between the amortized cost and unpaid principal balance is net deferred origination fees totaling $8.3 million at September 30, 2023 and $8.6 million at December 31, 2022. Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $8.0 million and $5.5 million at September 30, 2023 and December 31, 2022, respectively, and is included in other assets in the Consolidated Balance Sheets. Amortized cost in the above table includes $3.2 million and $7.1 million as of September 30, 2023 and December 31, 2022, respectively, in Paycheck Protection Program loans administered by the U.S. Small Business Administration ("SBA") within the Commercial & industrial loan segment. Allowance for Credit Losses The table below presents activity in the ACL related to loans held for investment for the periods indicated. The ACL for loans held for investment increased $2.7 million from December 31, 2022 primarily due to higher non-government guaranteed loan balances as well as a decrease in estimated prepayment rates in the Company's discounted cash flow model given the current economic environment. These changes were only partially offset by a decrease in the Company's forecasted future unemployment rates.
Three Months Ended September 30, | Beginning Balance |  | Credit Loss Expense (Benefit) | Charge-offs | Recoveries | Ending Balance
| (In Thousands)
2023 |  |  |  |  |  |
Commercial & industrial loans | $3,418 |  |  | ($55) |  | ($91) |  | $181 |  | $3,453 |
Commercial real estate: |  |  |  |  |  |
Owner occupied properties | 2,807 |  |  | (15) |  | — |  | — |  | 2,792 |
Non-owner occupied and multifamily properties | 3,260 |  |  | (36) |  | — |  | — |  | 3,224 |
Residential real estate: |  |  |  |  |  |
1-4 family residential properties secured by first liens | 3,206 |  |  | 334 |  | — |  | — |  | 3,540 |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | 423 |  |  | 78 |  | — |  | 5 |  | 506 |
1-4 family residential construction loans | 206 |  |  | (31) |  | — |  | — |  | 175 |
Other construction, land development and raw land loans | 1,996 |  |  | 480 |  | — |  | — |  | 2,476 |
Obligations of states and political subdivisions in the US | 88 |  |  | (11) |  | — |  | — |  | 77 |
Agricultural production, including commercial fishing | 162 |  |  | 2 |  | — |  | — |  | 164 |
Consumer loans | 74 |  |  | 4 |  | — |  | 1 |  | 79 |
Other loans | 5 |  |  | — |  | — |  | — |  | 5 |
Total | $15,645 |  |  | $750 |  | ($91) |  | $187 |  | $16,491 |
2022 |  |  |  |  |  |
Commercial & industrial loans | $2,961 |  |  | ($1,344) |  | ($45) |  | $1,325 |  | $2,897 |
Commercial real estate: |  |  |  |  |  |
Owner occupied properties | 2,573 |  |  | 132 |  | — |  | 55 |  | 2,760 |
Non-owner occupied and multifamily properties | 3,107 |  |  | 120 |  | — |  | — |  | 3,227 |
Residential real estate: |  |  |  |  |  |
1-4 family residential properties secured by first liens | 620 |  |  | 73 |  | — |  | 5 |  | 698 |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | 327 |  |  | 30 |  | — |  | 9 |  | 366 |
1-4 family residential construction loans | 231 |  |  | 50 |  | — |  | — |  | 281 |
Other construction, land development and raw land loans | 1,462 |  |  | 15 |  | — |  | — |  | 1,477 |
Obligations of states and political subdivisions in the US | 59 |  |  | 4 |  | — |  | — |  | 63 |
Agricultural production, including commercial fishing | 127 |  |  | 13 |  | — |  | — |  | 140 |
Consumer loans | 64 |  |  | 3 |  | (3) |  | 2 |  | 66 |
Other loans | 6 |  |  | 1 |  | — |  | — |  | 7 |
Total | $11,537 |  |  | ($903) |  | ($48) |  | $1,396 |  | $11,982 |
Nine Months Ended September 30, | Beginning Balance |  | Credit Loss Expense (Benefit) | Charge-offs | Recoveries | Ending Balance
| (In Thousands)
2023 |  |  |  |  |  |
Commercial & industrial loans | $2,914 |  |  | $412 |  | ($140) |  | $267 |  | $3,453 |
Commercial real estate: |  |  |  |  |  |
Owner occupied properties | 3,094 |  |  | (302) |  | — |  | — |  | 2,792 |
Non-owner occupied and multifamily properties | 3,615 |  |  | (391) |  | — |  | — |  | 3,224 |
Residential real estate: |  |  |  |  |  |
1-4 family residential properties secured by first liens | 1,413 |  |  | 2,127 |  | — |  | — |  | 3,540 |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | 389 |  |  | 100 |  | — |  | 17 |  | 506 |
1-4 family residential construction loans | 312 |  |  | (137) |  | — |  | — |  | 175 |
Other construction, land development and raw land loans | 1,803 |  |  | 673 |  | — |  | — |  | 2,476 |
Obligations of states and political subdivisions in the US | 79 |  |  | (2) |  | — |  | — |  | 77 |
Agricultural production, including commercial fishing | 145 |  |  | 19 |  | — |  | — |  | 164 |
Consumer loans | 68 |  |  | 21 |  | (14) |  | 4 |  | 79 |
Other loans | 6 |  |  | (1) |  | — |  | — |  | 5 |
Total | $13,838 |  |  | $2,519 |  | ($154) |  | $288 |  | $16,491 |
2022 |  |  |  |  |  |
Commercial & industrial loans | $3,027 |  |  | ($1,065) |  | ($506) |  | $1,441 |  | $2,897 |
Commercial real estate: |  |  |  |  |  |
Owner occupied properties | 3,176 |  |  | (471) |  | — |  | 55 |  | 2,760 |
Non-owner occupied and multifamily properties | 2,930 |  |  | 297 |  | — |  | — |  | 3,227 |
Residential real estate: |  |  |  |  |  |
1-4 family residential properties secured by first liens | 439 |  |  | 254 |  | — |  | 5 |  | 698 |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | 215 |  |  | 121 |  | — |  | 30 |  | 366 |
1-4 family residential construction loans | 120 |  |  | 161 |  | — |  | — |  | 281 |
Other construction, land development and raw land loans | 1,635 |  |  | (158) |  | — |  | — |  | 1,477 |
Obligations of states and political subdivisions in the US | 32 |  |  | 31 |  | — |  | — |  | 63 |
Agricultural production, including commercial fishing | 91 |  |  | 34 |  | — |  | 15 |  | 140 |
Consumer loans | 67 |  |  | (1) |  | (3) |  | 3 |  | 66 |
Other loans | 7 |  |  | — |  | — |  | — |  | 7 |
Total | $11,739 |  |  | ($797) |  | ($509) |  | $1,549 |  | $11,982 |
The following table shows gross charge-offs by grade and by year of loan origination for the periods indicated:
Nine Months Ended September 30, |
(In Thousands) | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Total
2023 |  |  |  |  |  |  |
Commercial & industrial loans | $— |  | $— |  | $49 |  | $— |  | $— |  | $91 |  | $140 |
Consumer loans | — |  | 1 |  | — |  | — |  | — |  | 13 |  | 14 |
Total | $— |  | $1 |  | $49 |  | $— |  | $— |  | $104 |  | $154 |
Credit Quality Information As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management utilizes a loan risk grading system called the Asset Quality Rating (“AQR”) system to assign a risk classification to each of its loans. The risk classification is a dual rating system that contemplates both probability of default and risk of loss given default. Loans are graded on a scale of 1 to 10 and, loans graded 1 – 6 are considered “pass” grade loans. Loans graded 7 or higher are considered “classified” loans. A description of the general characteristics of the AQR risk classifications are as follows: Pass grade loans – 1 through 6: The borrower demonstrates sufficient cash flow to fund debt service, including acceptable profit margins, cash flows, liquidity and other balance sheet ratios. Historic and projected performance indicates that the borrower is able to meet obligations under most economic circumstances. The borrower has competent management with an acceptable track record. The category does not include loans with undue or unwarranted credit risks that constitute identifiable weaknesses. Classified loans: Special Mention – 7: A “special mention” credit has weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset at some future date. Substandard – 8: A “substandard” credit is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that Northrim Bank will sustain some loss if the deficiencies are not corrected. Doubtful – 9: An asset classified “doubtful” has all the weaknesses inherent in one that is classified "substandard-8" with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable. The loan has substandard characteristics, and available information suggests that it is unlikely that the loan will be repaid in its entirety. Loss – 10: An asset classified “loss” is considered uncollectible and of such little value that its continuance on the books is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset, even though partial recovery may be affected in the future. The following tables present the Company's portfolio of risk-rated loans by grade and by year of origination. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Generally, current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below.
September 30, 2023 | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Total
| (In Thousands)
Commercial & industrial loans |  |  |  |  |  |  |
Pass | $96,467 |  | $123,831 |  | $58,372 |  | $24,947 |  | $14,227 |  | $48,281 |  | $366,125 |
Classified | 3,916 |  | 18,880 |  | 17,231 |  | 7,235 |  | 65 |  | 2,446 |  | 49,773 |
Total commercial & industrial loans | $100,383 |  | $142,711 |  | $75,603 |  | $32,182 |  | $14,292 |  | $50,727 |  | $415,898 |
Commercial real estate: |  |  |  |  |  |  |
Owner occupied properties |  |  |  |  |  |  |
Pass | $26,585 |  | $68,242 |  | $72,939 |  | $83,211 |  | $30,245 |  | $73,253 |  | $354,475 |
Classified | — |  | — |  | — |  | 1,152 |  | — |  | 1,828 |  | 2,980 |
Total commercial real estate owner occupied properties | $26,585 |  | $68,242 |  | $72,939 |  | $84,363 |  | $30,245 |  | $75,081 |  | $357,455 |
Non-owner occupied and multifamily properties |  |  |  |  |
Pass | $38,234 |  | $95,181 |  | $83,998 |  | $69,550 |  | $56,536 |  | $153,324 |  | $496,823 |
Classified | — |  | — |  | — |  | — |  | — |  | 9,433 |  | 9,433 |
Total commercial real estate non-owner occupied and multifamily properties | $38,234 |  | $95,181 |  | $83,998 |  | $69,550 |  | $56,536 |  | $162,757 |  | $506,256 |
Residential real estate: |  |  |  |  |  |  |
1-4 family residential properties secured by first liens |  |  |  |  |
Pass | $114,314 |  | $48,278 |  | $5,120 |  | $4,736 |  | $2,434 |  | $5,835 |  | $180,717 |
Classified | — |  | — |  | — |  | — |  | — |  | 132 |  | 132 |
Total residential real estate 1-4 family residential properties secured by first liens | $114,314 |  | $48,278 |  | $5,120 |  | $4,736 |  | $2,434 |  | $5,967 |  | $180,849 |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens |  |
Pass | $10,648 |  | $5,283 |  | $2,446 |  | $1,452 |  | $2,324 |  | $5,053 |  | $27,206 |
Classified | — |  | — |  | — |  | — |  | — |  | 329 |  | 329 |
Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | $10,648 |  | $5,283 |  | $2,446 |  | $1,452 |  | $2,324 |  | $5,382 |  | $27,535 |
1-4 family residential construction loans |  |  |  |  |  |  |
Pass | $16,057 |  | $6,205 |  | $1,118 |  | $21 |  | $— |  | $8,675 |  | $32,076 |
Classified | — |  | — |  | — |  | — |  | — |  | 109 |  | 109 |
Total residential real estate 1-4 family residential construction loans | $16,057 |  | $6,205 |  | $1,118 |  | $21 |  | $— |  | $8,784 |  | $32,185 |
Other construction, land development and raw land loans |  |  |  |
Pass | $18,172 |  | $53,412 |  | $33,797 |  | $3,186 |  | $1,479 |  | $7,897 |  | $117,943 |
Classified | — |  | — |  | — |  | — |  | — |  | 1,773 |  | 1,773 |
Total other construction, land development and raw land loans | $18,172 |  | $53,412 |  | $33,797 |  | $3,186 |  | $1,479 |  | $9,670 |  | $119,716 |
Obligations of states and political subdivisions in the US |  |  |  |
Pass | $— |  | $30,341 |  | $— |  | $— |  | $— |  | $122 |  | $30,463 |
Classified | — |  | — |  | — |  | — |  | — |  | — |  | — |
Total obligations of states and political subdivisions in the US | $— |  | $30,341 |  | $— |  | $— |  | $— |  | $122 |  | $30,463 |
Agricultural production, including commercial fishing |  |  |  |
Pass | $7,842 |  | $9,892 |  | $17,095 |  | $3,567 |  | $589 |  | $1,938 |  | $40,923 |
Classified | — |  | — |  | — |  | — |  | — |  | — |  | — |
Total agricultural production, including commercial fishing | $7,842 |  | $9,892 |  | $17,095 |  | $3,567 |  | $589 |  | $1,938 |  | $40,923 |
Consumer loans |  |  |  |  |  |  |
Pass | $2,791 |  | $1,094 |  | $282 |  | $394 |  | $279 |  | $1,133 |  | $5,973 |
Classified | — |  | 13 |  | — |  | — |  | — |  | — |  | 13 |
Total consumer loans | $2,791 |  | $1,107 |  | $282 |  | $394 |  | $279 |  | $1,133 |  | $5,986 |
Other loans |  |  |  |  |  |  |
Pass | $590 |  | $190 |  | $313 |  | $1,379 |  | $331 |  | $22 |  | $2,825 |
Classified | — |  | — |  | — |  | — |  | — |  | — |  | — |
Total other loans | $590 |  | $190 |  | $313 |  | $1,379 |  | $331 |  | $22 |  | $2,825 |
Total loans |  |  |  |  |  |  |
Pass | $331,700 |  | $441,949 |  | $275,480 |  | $192,443 |  | $108,444 |  | $305,533 |  | $1,655,549 |
Classified | 3,916 |  | 18,893 |  | 17,231 |  | 8,387 |  | 65 |  | 16,050 |  | 64,542 |
Total loans | $335,616 |  | $460,842 |  | $292,711 |  | $200,830 |  | $108,509 |  | $321,583 |  | $1,720,091 |
Total pass loans | $331,700 |  | $441,949 |  | $275,480 |  | $192,443 |  | $108,444 |  | $305,533 |  | $1,655,549 |
Government guarantees | (842) |  | (8,194) |  | (19,164) |  | (2,469) |  | (12,321) |  | (7,726) |  | (50,716) |
Total pass loans, net of government guarantees | $330,858 |  | $433,755 |  | $256,316 |  | $189,974 |  | $96,123 |  | $297,807 |  | $1,604,833 |
Total classified loans | $3,916 |  | $18,893 |  | $17,231 |  | $8,387 |  | $65 |  | $16,050 |  | $64,542 |
Government guarantees | (3,849) |  | (16,896) |  | (15,331) |  | (7,259) |  | — |  | (8,500) |  | (51,835) |
Total classified loans, net government guarantees | $67 |  | $1,997 |  | $1,900 |  | $1,128 |  | $65 |  | $7,550 |  | $12,707 |
December 31, 2022 | 2022 | 2021 | 2020 | 2019 | 2018 | Prior | Total
| (In Thousands)
Commercial & industrial loans |  |  |  |  |  |  |
Pass | $157,555 |  | $86,543 |  | $37,147 |  | $17,881 |  | $9,844 |  | $40,571 |  | $349,541 |
Classified | 137 |  | 4,879 |  | 397 |  | 91 |  | 2,737 |  | 346 |  | 8,587 |
Total commercial & industrial loans | $157,692 |  | $91,422 |  | $37,544 |  | $17,972 |  | $12,581 |  | $40,917 |  | $358,128 |
Commercial real estate: |  |  |  |  |  |  |
Owner occupied properties |  |  |  |  |  |  |
Pass | $66,955 |  | $70,777 |  | $90,496 |  | $32,564 |  | $13,233 |  | $69,701 |  | $343,726 |
Classified | — |  | — |  | 1,261 |  | — |  | 165 |  | 4,821 |  | 6,247 |
Total commercial real estate owner occupied properties | $66,955 |  | $70,777 |  | $91,757 |  | $32,564 |  | $13,398 |  | $74,522 |  | $349,973 |
Non-owner occupied and multifamily properties |  |  |  |  |
Pass | $94,412 |  | $82,352 |  | $71,407 |  | $58,033 |  | $16,905 |  | $149,223 |  | $472,332 |
Classified | — |  | — |  | — |  | 274 |  | 3 |  | 9,661 |  | 9,938 |
Total commercial real estate non-owner occupied and multifamily properties | $94,412 |  | $82,352 |  | $71,407 |  | $58,307 |  | $16,908 |  | $158,884 |  | $482,270 |
Residential real estate: |  |  |  |  |  |  |
1-4 family residential properties secured by first liens |  |  |  |  |
Pass | $52,117 |  | $5,088 |  | $6,001 |  | $2,535 |  | $462 |  | $6,968 |  | $73,171 |
Classified | — |  | — |  | — |  | — |  | 79 |  | 131 |  | 210 |
Total residential real estate 1-4 family residential properties secured by first liens | $52,117 |  | $5,088 |  | $6,001 |  | $2,535 |  | $541 |  | $7,099 |  | $73,381 |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens |  |
Pass | $6,992 |  | $3,376 |  | $2,041 |  | $2,763 |  | $2,781 |  | $2,060 |  | $20,013 |
Classified | — |  | — |  | — |  |  | 239 |  | 7 |  | 246 |
Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | $6,992 |  | $3,376 |  | $2,041 |  | $2,763 |  | $3,020 |  | $2,067 |  | $20,259 |
1-4 family residential construction loans |  |  |  |  |  |  |
Pass | $26,860 |  | $3,897 |  | $61 |  | $— |  | $— |  | $13,073 |  | $43,891 |
Classified | — |  | — |  | — |  | — |  | — |  | 109 |  | 109 |
Total residential real estate 1-4 family residential construction loans | $26,860 |  | $3,897 |  | $61 |  | $— |  | $— |  | $13,182 |  | $44,000 |
Other construction, land development and raw land loans |  |  |  |
Pass | $38,673 |  | $42,448 |  | $5,740 |  | $1,713 |  | $3,675 |  | $5,112 |  | $97,361 |
Classified | — |  | — |  | — |  | — |  | 369 |  | 1,452 |  | 1,821 |
Total other construction, land development and raw land loans | $38,673 |  | $42,448 |  | $5,740 |  | $1,713 |  | $4,044 |  | $6,564 |  | $99,182 |
Obligations of states and political subdivisions in the US |  |  |  |
Pass | $32,319 |  | $— |  | $— |  | $— |  | $219 |  | $1 |  | $32,539 |
Classified | — |  | — |  | — |  | — |  | — |  | — |  | — |
Total obligations of states and political subdivisions in the US | $32,319 |  | $— |  | $— |  | $— |  | $219 |  | $1 |  | $32,539 |
Agricultural production, including commercial fishing |  |  |  |
Pass | $9,748 |  | $17,692 |  | $3,740 |  | $604 |  | $879 |  | $1,436 |  | $34,099 |
Classified | — |  | — |  | — |  | — |  | — |  | — |  | — |
Total agricultural production, including commercial fishing | $9,748 |  | $17,692 |  | $3,740 |  | $604 |  | $879 |  | $1,436 |  | $34,099 |
Consumer loans |  |  |  |  |  |  |
Pass | $1,513 |  | $363 |  | $481 |  | $345 |  | $235 |  | $1,391 |  | $4,328 |
Classified | — |  | — |  | — |  | — |  | — |  | 7 |  | 7 |
Total consumer loans | $1,513 |  | $363 |  | $481 |  | $345 |  | $235 |  | $1,398 |  | $4,335 |
Other loans |  |  |  |  |  |  |
Pass | $1,291 |  | $330 |  | $1,547 |  | $384 |  | $— |  | $67 |  | $3,619 |
Classified | — |  | — |  | — |  | — |  | — |  | — |  | — |
Total other loans | $1,291 |  | $330 |  | $1,547 |  | $384 |  | $— |  | $67 |  | $3,619 |
Total loans |  |  |  |  |  |  |
Pass | $488,435 |  | $312,866 |  | $218,661 |  | $116,822 |  | $48,233 |  | $289,603 |  | $1,474,620 |
Classified | 137 |  | 4,879 |  | 1,658 |  | 365 |  | 3,592 |  | 16,534 |  | 27,165 |
Total loans | $488,572 |  | $317,745 |  | $220,319 |  | $117,187 |  | $51,825 |  | $306,137 |  | $1,501,785 |
Total pass loans | $488,435 |  | $312,866 |  | $218,661 |  | $116,822 |  | $48,233 |  | $289,603 |  | $1,474,620 |
Government guarantees | (25,172) |  | (36,531) |  | (9,751) |  | (12,885) |  | (2,964) |  | (5,314) |  | (92,617) |
Total pass loans, net of government guarantees | $463,263 |  | $276,335 |  | $208,910 |  | $103,937 |  | $45,269 |  | $284,289 |  | $1,382,003 |
Total classified loans | $137 |  | $4,879 |  | $1,658 |  | $365 |  | $3,592 |  | $16,534 |  | $27,165 |
Government guarantees | — |  | (4,396) |  | (1,135) |  | — |  | — |  | (9,293) |  | (14,824) |
Total classified loans, net government guarantees | $137 |  | $483 |  | $523 |  | $365 |  | $3,592 |  | $7,241 |  | $12,341 |
Past Due Loans: The following tables present an aging of contractually past due loans as of the periods presented:
(In Thousands) | 30-59 Days Past Due |  | 60-89 Days Past Due |  | Greater Than 90 Days Past Due |  | Total Past Due |  | Current |  | Total |  | Greater Than 90 Days Past Due Still Accruing
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial loans | $3,748 |  |  | $— |  |  | $297 |  |  | $4,045 |  |  | $411,853 |  |  | $415,898 |  |  | $— |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied properties | — |  |  | — |  |  | 271 |  |  | 271 |  |  | 357,184 |  |  | 357,455 |  |  | — |
Non-owner occupied and multifamily properties | 380 |  |  | — |  |  | — |  |  | 380 |  |  | 505,876 |  |  | 506,256 |  |  | — |
Residential real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
1-4 family residential properties secured by first liens | — |  |  | — |  |  | 28 |  |  | 28 |  |  | 180,821 |  |  | 180,849 |  |  | 28 |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | — |  |  | — |  |  | 159 |  |  | 159 |  |  | 27,376 |  |  | 27,535 |  |  | — |
1-4 family residential construction loans | — |  |  | — |  |  | 109 |  |  | 109 |  |  | 32,076 |  |  | 32,185 |  |  | — |
Other construction, land development and raw land loans |  |  | — |  |  | 1,545 |  |  | 1,545 |  |  | 118,171 |  |  | 119,716 |  |  | — |
Obligations of states and political subdivisions in the US | — |  |  | — |  |  | — |  |  | — |  |  | 30,463 |  |  | 30,463 |  |  | — |
Agricultural production, including commercial fishing | — |  |  | — |  |  | — |  |  | — |  |  | 40,923 |  |  | 40,923 |  |  | — |
Consumer loans | — |  |  | 13 |  |  | — |  |  | 13 |  |  | 5,973 |  |  | 5,986 |  |  | — |
Other loans | — |  |  | — |  |  | — |  |  | — |  |  | 2,825 |  |  | 2,825 |  |  | — |
Total | $4,128 |  |  | $13 |  |  | $2,409 |  |  | $6,550 |  |  | $1,713,541 |  |  | $1,720,091 |  |  | $28 |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial loans | $37 |  |  | $521 |  |  | $56 |  |  | $614 |  |  | $357,514 |  |  | $358,128 |  |  | $— |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied properties | — |  |  | — |  |  | 798 |  |  | 798 |  |  | 349,175 |  |  | 349,973 |  |  | — |
Non-owner occupied and multifamily properties | — |  |  | — |  |  | 274 |  |  | 274 |  |  | 481,996 |  |  | 482,270 |  |  | — |
Residential real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
1-4 family residential properties secured by first liens | 60 |  |  | 79 |  |  | 72 |  |  | 211 |  |  | 73,170 |  |  | 73,381 |  |  | — |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | 112 |  |  | — |  |  | 127 |  |  | 239 |  |  | 20,020 |  |  | 20,259 |  |  | — |
1-4 family residential construction loans | — |  |  | — |  |  | 109 |  |  | 109 |  |  | 43,891 |  |  | 44,000 |  |  | — |
Other construction, land development and raw land loans | — |  |  | — |  |  | 1,545 |  |  | 1,545 |  |  | 97,637 |  |  | 99,182 |  |  | — |
Obligations of states and political subdivisions in the US | — |  |  | — |  |  | — |  |  | — |  |  | 32,539 |  |  | 32,539 |  |  | — |
Agricultural production, including commercial fishing | — |  |  | — |  |  | — |  |  | — |  |  | 34,099 |  |  | 34,099 |  |  | — |
Consumer loans | 6 |  |  | 80 |  |  | — |  |  | 86 |  |  | 4,249 |  |  | 4,335 |  |  | — |
Other loans | — |  |  | — |  |  | — |  |  | — |  |  | 3,619 |  |  | 3,619 |  |  | — |
Total | $215 |  |  | $680 |  |  | $2,981 |  |  | $3,876 |  |  | $1,497,909 |  |  | $1,501,785 |  |  | $— |
Nonaccrual loans: Nonaccrual loans net of government guarantees totaled $5.0 million and $6.4 million at September 30, 2023 and December 31, 2022, respectively. The following table presents loans on nonaccrual status and loans on nonaccrual status for the periods presented for which there was no related ACL. All loans with no ACL are individually evaluated for credit losses in the Company's CECL methodology.
| September 30, 2023 | December 31, 2022
(In Thousands) | Nonaccrual | Nonaccrual With No ACL | Nonaccrual | Nonaccrual With No ACL
Commercial & industrial loans | $4,254 |  | $4,056 |  | $3,294 |  | $3,287 |
Commercial real estate: |  |  |  |
Owner occupied properties | 306 |  | 271 |  | 1,457 |  | 1,457 |
Non-owner occupied and multifamily properties | — |  | — |  | 274 |  | 274 |
Residential real estate: |  |  |  |
1-4 family residential properties secured by first liens | 53 |  | — |  | 151 |  | 144 |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | 225 |  | 119 |  | 246 |  | 198 |
1-4 family residential construction loans | 109 |  | 109 |  | 109 |  | 109 |
Other construction, land development and raw land loans | 1,545 |  | 1,545 |  | 1,545 |  | 1,545 |
Total nonaccrual loans | 6,492 |  | 6,100 |  | 7,076 |  | 7,014 |
Government guarantees on nonaccrual loans | (1,455) |  | (1,455) |  | (646) |  | (646) |
Net nonaccrual loans | $5,037 |  | $4,645 |  | $6,430 |  | $6,368 |
There was no interest on nonaccrual loans reversed through interest income during three and nine-month periods ending September 30, 2023. There was no interest on nonaccrual loans reversed through interest income during the three-month period ending September 30, 2022 and $2,000 interest on nonaccrual loans reversed through interest income during the nine-month period ending September 30, 2022. There was no interest earned on nonaccrual loans with a principal balance during the three and nine-month periods ending September 30, 2023 and September 30, 2022. However, the Company recognized interest income of $200,000 and $1.2 million in the three-month periods ending September 30, 2023 and 2022, respectively, and $584,000 and $2.1 million in the nine-month periods ending September 30, 2023 and 2022, respectively, related to interest collected on nonaccrual loans whose principal had been paid down to zero. Loan Modifications: The Company modifies loans to borrowers experiencing financial difficulty as a normal part of our business. These modifications include providing term extensions/modifications, payment modifications, interest rate modifications, or, on rare occasions, principal forgiveness. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL. The Company may provide multiple types of concessions on one loan. As discussed in Note 1, the Company adopted ASU 2022-02 effective January 1, 2023. ASU 2022-02 eliminates the accounting guidance for loans classified as TDRs. TDRs totaled $5.1 million at December 31, 2022. The following table shows the amortized cost basis of the loans that were both experiencing financial difficulty and modified as of the dates indicated, by class and type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below:
| Three Months Ended September 30, 2023
| Term Modification |  |  |  | Term and payment modifications | Total Modifications | Percentage of Class of Financing Receivable
(In Thousands)
Commercial real estate: |  |  |  |  |  |  |
Owner occupied properties | $— |  |  |  |  | $271 |  | $271 |  | 0.08 | %
Residential real estate: |  |  |  |  |  |  |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | 119 |  |  |  |  | — |  | 119 |  | 0.43 | %
1-4 family residential construction loans | 109 |  |  |  |  | — |  | 109 |  | 0.34 | %
Other construction, land development and raw land loans | 968 |  |  |  |  | 577 |  | 1,545 |  | 1.29 | %
Total | $1,196 |  |  |  |  | $848 |  | $2,044 |  | 0.12 | %
| Nine Months Ended September 30, 2023
| Term Modification | Payment Modification |  |  | Term and payment modifications | Total Modifications | Percentage of Class of Financing Receivable
(In Thousands)
Commercial & industrial loans | $1,511 |  | $1,985 |  |  |  | $— |  | $3,496 |  | 0.84 | %
Commercial real estate: |  |  |  |  |  |  |
Owner occupied properties | — |  | — |  |  |  | 271 |  | 271 |  | 0.08 | %
Residential real estate: |  |  |  |  |  |  |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | 119 |  | — |  |  |  | — |  | 119 |  | 0.43 | %
1-4 family residential construction loans | 109 |  | — |  |  |  | — |  | 109 |  | 0.34 | %
Other construction, land development and raw land loans | 968 |  | — |  |  |  | 577 |  | 1,545 |  | 1.29 | %
Total | $2,707 |  | $1,985 |  |  |  | $848 |  | $5,540 |  | 0.32 | %
The Company has no outstanding commitments to the borrowers included in the previous table. The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty as of the dates indicated:
| Three Months Ended September 30, 2023
| Principal Forgiveness | Weighted-Average Interest Rate Reduction | Weighted-Average Term Extension (months)
(In Thousands)
Commercial real estate: |  |  |
Owner occupied properties | — |  | — | % | 5
Residential real estate: |  |  |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | — |  | — | % | 5
1-4 family residential construction loans | — |  | — | % | 5
Other construction, land development and raw land loans | — |  | — | % | 5
| Nine Months Ended September 30, 2023
| Principal Forgiveness | Weighted-Average Interest Rate Reduction | Weighted-Average Term Extension (months)
(In Thousands)
Commercial & industrial loans | $— |  | — | % | 20
Commercial real estate: |  |  |
Owner occupied properties | — |  | — | % | 5
Residential real estate: |  |  |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | — |  | — | % | 5
1-4 family residential construction loans | — |  | — | % | 5
Other construction, land development and raw land loans | — |  | — | % | 5
The Company monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the payment performance of such loans as of the dates indicated:
| September 30, 2023
| 30-59 Days Past Due | 60-89 Days Past Due | Greater Than 89 Days Past Due | Total Past Due
(In Thousands)
Commercial real estate: |  |  |  |
Owner occupied properties | $— |  | $— |  | $271 |  | $271 |
Residential real estate: |  |  |  |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | — |  | — |  | 119 |  | 119 |
1-4 family residential construction loans | — |  | — |  | 109 |  | 109 |
Other construction, land development and raw land loans | — |  | — |  | 1,545 |  | 1,545 |
Total | $— |  | $— |  | $2,044 |  | $2,044 |
The following table presents the amortized cost basis of loans that had a payment default during the three-months ended September 30, 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty:
| September 30, 2023
| Term modification |  |  | Term and payment modification |
(In Thousands)
Commercial real estate: |  |  |  |  |
Owner occupied properties | $— |  |  |  | $271 |  |
Residential real estate: |  |  |  |  |
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens | 119 |  |  |  | — |  |
1-4 family residential construction loans | 109 |  |  |  | — |  |
Other construction, land development and raw land loans | 968 |  |  |  | 577 |  |
Total | $1,196 |  |  |  | $848 |  |
Upon the Company's 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 written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. The provisions of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act included an election to not apply the guidance on accounting for TDRs to loan modifications, such as extensions or deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i) January 1, 2022 or (ii) 60 days after the end of the COVID-19 national emergency. The relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019. The Company has elected to adopt these provisions of the CARES Act. As of September 30, 2023, the Company has no loan modifications related to COVID-19, which are not classified as TDRs. At December 31, 2022, the Company had made the following types of loan modifications related to COVID-19 with a principal balance outstanding of:
Loan Modifications due to COVID-19 as of December 31, 2022
(Dollars in thousands) | Interest Only | Full Payment Deferral | Total
Portfolio loans | $999 |  | $— |  | $999 |
Number of modifications | 1 |  | — |  | 1 |

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