Loans and Allowance for Credit Losses

Summary of aging in past due loans and nonaccrual status, with and without an ACL, by loan segment

The following tables present the aging in past due loans and nonaccrual status, with and without an ACL, by loan segment as of September 30, 2023 and December 31, 2022:


	Accruing Interest
			30-89 Days		90 Days or		Nonaccrual		Nonaccrual
(dollars in thousands)	Current		Past Due		More Past Due		with ACL		without ACL		Total
September 30, 2023
Commercial	$	458,883	$	11	$	—	$	74	$	95	$	459,063
Paycheck Protection Program		791		—		—		—		—		791
Construction and Land Development		294,732		—		—		—		86		294,818
1-4 Family Construction		64,463		—		—		—		—		64,463
Real Estate Mortgage:
1-4 Family Mortgage		404,716		—		—		—		—		404,716
Multifamily		1,378,669		—		—		—		—		1,378,669
CRE Owner Occupied		158,991		—		—		—		494		159,485
CRE Nonowner Occupied		951,263		—		—		—		—		951,263
Consumer and Other		9,003		—		—		—		—		9,003
Totals	$	3,721,511	$	11	$	—	$	74	$	675	$	3,722,271


	Accruing Interest
			30-89 Days		90 Days or		Nonaccrual		Nonaccrual
(dollars in thousands)	Current		Past Due		More Past Due		with ACL		without ACL		Total
December 31, 2022
Commercial	$	435,274	$	70	$	—	$	—	$	—	$	435,344
Paycheck Protection Program		1,049		—		—		—		—		1,049
Construction and Land Development		295,448		—		—		—		106		295,554
1-4 Family Construction		70,242		—		—		—		—		70,242
Real Estate Mortgage:
HELOC and 1-4 Family Junior Mortgage		36,875		—		—		—		—		36,875
1st REM - 1-4 Family		50,945		—		—		—		—		50,945
LOCs and 2nd REM - Rentals		27,985		—		—		—		—		27,985
1st REM - Rentals		239,553		116		—		—		—		239,669
Multifamily		1,306,738		—		—		—		—		1,306,738
CRE Owner Occupied		149,372		—		—		—		533		149,905
CRE Nonowner Occupied		947,008		—		—		—		—		947,008
Consumer and Other		8,132		—		—		—		—		8,132
Totals	$	3,568,621	$	186	$	—	$	—	$	639	$	3,569,446

Summary of the activity in the allowance for loan losses by segment

The following table presents the activity in the allowance for credit losses, by segment, for the three and nine months ended September 30, 2023. On January 1, 2023, the Company adopted CECL, which added $650,000 to the total ACL. Under CECL, the Company recorded a $0 and $2.1 million provision for credit losses on loans during the three and nine months ended September 30, 2023, respectively, compared to a $1.5 million and $6.2 million provision for loan losses in the three and nine months ended September 30, 2022, respectively, under the incurred loss method.


			Paycheck		Construction								CRE		CRE
			Protection		and Land		1-4 Family		1--4 Family				Owner		Non-owner		Consumer
(dollars in thousands)	Commercial		Program		Development		Construction		Mortgage		Multifamily		Occupied		Occupied		and Other		Unallocated		Total
Three Months Ended September 30, 2023
Allowance for Credit Losses for Loans:
Beginning Balance	$	5,439	$	—	$	3,476	$	654	$	2,836	$	21,164	$	1,086	$	15,976	$	70	$	—	$	50,701
Provision for Credit Losses for Loans		151		—		(704)		(80)		22		1,052		3		(464)		20		—		—
Loans Charged-off		(96)		—		—		—		—		—		—		—		(26)		—		(122)
Recoveries of Loans		2		—		—		—		2		—		—		—		2		—		6
Total Ending Allowance Balance	$	5,496	$	—	$	2,772	$	574	$	2,860	$	22,216	$	1,089	$	15,512	$	66	$	—	$	50,585

Nine Months Ended September 30, 2023
Allowance for Credit Losses for Loans:
Beginning Balance, Prior to Adoption of CECL	$	6,500	$	1	$	3,911	$	845	$	4,325	$	17,459	$	1,965	$	12,576	$	151	$	263	$	47,996
Impact of Adopting CECL		(1,157)		(1)		(1,070)		(235)		(1,778)		3,318		(943)		2,869		(90)		(263)		650
Provision for Credit Losses for Loans		242		—		(69)		(36)		309		1,439		67		67		31		—		2,050
Loans Charged-off		(96)		—		—		—		—		—		—		—		(33)		—		(129)
Recoveries of Loans		7		—		—		—		4		—		—		—		7		—		18
Total Ending Allowance Balance	$	5,496	$	—	$	2,772	$	574	$	2,860	$	22,216	$	1,089	$	15,512	$	66	$	—	$	50,585

The following table presents the activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2022, prepared using the previous GAAP incurred loss method prior to the adoption of CECL:


			Paycheck		Construction								CRE		CRE
			Protection		and Land		1-4 Family		1--4 Family				Owner		Non-owner		Consumer
(dollars in thousands)	Commercial		Program		Development		Construction		Mortgage		Multifamily		Occupied		Occupied		and Other		Unallocated		Total
Three Months Ended September 30, 2022
Allowance for Loan Losses:
Beginning Balance	$	6,275	$	2	$	4,134	$	638	$	4,206	$	14,977	$	1,920	$	12,235	$	154	$	170	$	44,711
Provision for Loan Losses		70		(1)		(363)		60		(257)		1,845		107		47		13		(21)		1,500
Loans Charged-off		—		—		—		—		—		—		—		—		(5)		—		(5)
Recoveries of Loans		3		—		—		—		281		—		—		—		1		—		285
Total Ending Allowance Balance	$	6,348	$	1	$	3,771	$	698	$	4,230	$	16,822	$	2,027	$	12,282	$	163	$	149	$	46,491

Nine Months Ended September 30, 2022
Allowance for Loan Losses:
Beginning Balance	$	6,256	$	13	$	3,139	$	618	$	3,757	$	12,610	$	1,495	$	11,335	$	147	$	650	$	40,020
Provision for Loan Losses		98		(12)		632		80		187		4,212		532		947		25		(501)		6,200
Loans Charged-off		(13)		—		—		—		—		—		—		—		(21)		—		(34)
Recoveries of Loans		7		—		—		—		286		—		—		—		12		—		305
Total Ending Allowance Balance	$	6,348	$	1	$	3,771	$	698	$	4,230	$	16,822	$	2,027	$	12,282	$	163	$	149	$	46,491

The following tables present the balance in the allowance for credit losses and the recorded investment in loans, by segment, based on impairment method as of September 30, 2023 and December 31, 2022:


			Paycheck		Construction								CRE		CRE
			Protection		and Land		1-4 Family		1--4 Family				Owner		Non-owner		Consumer
(dollars in thousands)	Commercial		Program		Development		Construction		Mortgage		Multifamily		Occupied		Occupied		and Other		Unallocated		Total
ACL at September 30, 2023
Individually Evaluated for Impairment	$	84	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	84
Collectively Evaluated for Impairment		5,412		—		2,772		574		2,860		22,216		1,089		15,512		66		—		50,501
Totals	$	5,496	$	—	$	2,772	$	574	$	2,860	$	22,216	$	1,089	$	15,512	$	66	$	—	$	50,585

ALL at December 31, 2022
Individually Evaluated for Impairment	$	71	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	71
Collectively Evaluated for Impairment		6,429		1		3,911		845		4,325		17,459		1,965		12,576		151		263		47,925
Totals	$	6,500	$	1	$	3,911	$	845	$	4,325	$	17,459	$	1,965	$	12,576	$	151	$	263	$	47,996


			Paycheck		Construction								CRE		CRE
			Protection		and Land		1-4 Family		1--4 Family				Owner		Non-owner		Consumer
(dollars in thousands)	Commercial		Program		Development		Construction		Mortgage		Multifamily		Occupied		Occupied		and Other		Total
Loans at September 30, 2023
Individually Evaluated for Impairment	$	15,831	$	—	$	86	$	—	$	663	$	—	$	1,569	$	17,472	$	—	$	35,621
Collectively Evaluated for Impairment		443,232		791		294,732		64,463		404,053		1,378,669		157,916		933,791		9,003		3,686,650
Totals	$	459,063	$	791	$	294,818	$	64,463	$	404,716	$	1,378,669	$	159,485	$	951,263	$	9,003	$	3,722,271

Loans at December 31, 2022
Individually Evaluated for Impairment	$	19,675	$	—	$	106	$	—	$	392	$	—	$	1,637	$	6,239	$	—	$	28,049
Collectively Evaluated for Impairment		415,669		1,049		295,448		70,242		355,082		1,306,738		148,268		940,769		8,132		3,541,397
Totals	$	435,344	$	1,049	$	295,554	$	70,242	$	355,474	$	1,306,738	$	149,905	$	947,008	$	8,132	$	3,569,446

Summary of impaired loans by loan segment

The following table presents information regarding total carrying amounts and total unpaid principal balances of impaired loans by loan segment as of December 31, 2022:


	December 31, 2022
	Recorded		Principal		Related
(dollars in thousands)	Investment		Balance		Allowance
Loans With No Related Allowance for Loan Losses:
Commercial	$	19,508	$	19,508	$	—
Construction and Land Development		106		713		—
Real Estate Mortgage:
1-4 Family Mortgage		392		392		—
CRE Owner Occupied		1,637		1,726		—
CRE Nonowner Occupied		6,239		6,239		—
Totals		27,882		28,578		—

Loans With An Allowance for Loan Losses:
Commercial		167		167		71
Totals		167		167		71
Grand Totals	$	28,049	$	28,745	$	71

The following table presents information regarding the average balances and interest income recognized on impaired loans by loan segment for the three and nine months ended September 30, 2022:



	Three Months Ended				Nine Months Ended
	September 30, 2022				September 30, 2022
	Average		Interest		Average		Interest
(dollars in thousands)	Investment		Recognized		Investment		Recognized
Loans With No Related Allowance for Loan Losses:
Commercial	$	9,929	$	187	$	11,343	$	519
Construction and Land Development		114		—		120		—
Real Estate Mortgage:
1st REM - 1-4 Family		282		4		286		11
CRE Owner Occupied		1,751		17		1,762		49
CRE Nonowner Occupied		6,333		85		6,431		249
Totals		18,409		293		19,942		828

Loans With An Allowance for Loan Losses:
Commercial		84		—		86		1
Real Estate Mortgage:
CRE Nonowner Occupied		12,135		127		12,135		370
Totals		12,219		127		12,221		371
Grand Totals	$	30,628	$	420	$	32,163	$	1,199