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Loans and ACL | 3 Months Ended
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Mar. 31, 2024
Receivables [Abstract] |
Loans and ACL | Note 3 – Loan s and ACL The following table presents the amortized cost of loans held for investment as of the dates stated.
(Dollars in thousands) |  | March 31, 2024 |  |  | December 31, 2023 |
Commercial and industrial |  | $ | 489,972 |  |  | $ | 508,944 |
Real estate – construction, commercial |  |  | 156,943 |  |  |  | 180,052 |
Real estate – construction, residential |  |  | 62,947 |  |  |  | 75,832 |
Real estate – commercial |  |  | 881,798 |  |  |  | 870,540 |
Real estate – residential |  |  | 740,249 |  |  |  | 730,110 |
Real estate – farmland |  |  | 5,673 |  |  |  | 5,470 |
Consumer |  |  | 55,782 |  |  |  | 59,169 |
Gross loans |  |  | 2,393,364 |  |  |  | 2,430,117 |
Deferred loan fees, net of costs |  |  | 725 |  |  |  | 830 |
Total |  | $ | 2,394,089 |  |  | $ | 2,430,947 |
The Company has pledged certain commercial and residential mortgages as collateral for borrowings with the FHLB. Loans totaling $815.2 million and $767.1 million were pledged as of March 31, 2024 and December 31, 2023, respectively. T he Company has pledged certain commercial and industrial loans totaling $101.8 million and $161.0 million as collateral for borrowings with the FRB Discount Window as of March 31, 2024 and December 31, 2023, respectively. The decline in availability at the FRB Discount Window during the first quarter of 2024 was primarily due to changes in eligibility of certain collateral. The following tables present the aging of the amortized cost of loans held for investment by loan category as of the dates stated.
|  | March 31, 2024 |
(Dollars in thousands) |  | Current Loans |  |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Greater than 90 Days Past Due & Accruing |  |  | Nonaccrual |  |  | Total Loans |
Commercial and industrial |  | $ | 448,156 |  |  | $ | 4,357 |  |  | $ | 1,609 |  |  | $ | 1,904 |  |  | $ | 33,946 |  |  | $ | 489,972 |
Real estate – construction, commercial |  |  | 154,710 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,233 |  |  |  | 156,943 |
Real estate – construction, residential |  |  | 62,947 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 62,947 |
Real estate – commercial |  |  | 872,060 |  |  |  | 2,297 |  |  |  | — |  |  |  | — |  |  |  | 7,441 |  |  |  | 881,798 |
Real estate – residential |  |  | 727,010 |  |  |  | 6,356 |  |  |  | 419 |  |  |  | — |  |  |  | 6,464 |  |  |  | 740,249 |
Real estate – farmland |  |  | 5,673 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,673 |
Consumer |  |  | 47,151 |  |  |  | 6,966 |  |  |  | 470 |  |  |  | 405 |  |  |  | 790 |  |  |  | 55,782 |
Less: Deferred loan fees, net of costs |  |  | 725 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 725 |
Total Loans |  | $ | 2,318,432 |  |  | $ | 19,976 |  |  | $ | 2,498 |  |  | $ | 2,309 |  |  | $ | 50,874 |  |  | $ | 2,394,089 |
|  | December 31, 2023 |
(Dollars in thousands) |  | Current Loans |  |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Greater than 90 Days Past Due & Accruing |  |  | Nonaccrual |  |  | Total Loans |
Commercial and industrial |  | $ | 464,939 |  |  | $ | 2,235 |  |  | $ | 632 |  |  | $ | 1,709 |  |  | $ | 39,429 |  |  | $ | 508,944 |
Real estate – construction, commercial |  |  | 177,653 |  |  |  | 2,016 |  |  |  | — |  |  |  | — |  |  |  | 383 |  |  |  | 180,052 |
Real estate – construction, residential |  |  | 75,309 |  |  |  | 523 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 75,832 |
Real estate – commercial |  |  | 855,263 |  |  |  | 2,109 |  |  |  | 714 |  |  |  | 574 |  |  |  | 11,880 |  |  |  | 870,540 |
Real estate – residential |  |  | 717,141 |  |  |  | 5,101 |  |  |  | 288 |  |  |  | — |  |  |  | 7,580 |  |  |  | 730,110 |
Real estate – farmland |  |  | 5,470 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,470 |
Consumer |  |  | 55,084 |  |  |  | 2,298 |  |  |  | 279 |  |  |  | 754 |  |  |  | 754 |  |  |  | 59,169 |
Deferred loan fees, net of costs |  |  | 830 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 830 |
Total Loans |  | $ | 2,351,689 |  |  | $ | 14,282 |  |  | $ | 1,913 |  |  | $ | 3,037 |  |  | $ | 60,026 |  |  | $ | 2,430,947 |
The following tables present the amortized cost of nonaccrual loans held for investment with and without an ACL by loan category as of the dates stated.
|  | March 31, 2024 |
(Dollars in thousands) |  | Nonaccrual Loans with No ACL |  |  | Nonaccrual Loans with an ACL |  |  | Total Nonaccrual Loans |
Commercial and industrial |  | $ | — |  |  | $ | 33,946 |  |  | $ | 33,946 |
Real estate – construction, commercial |  |  | 1,863 |  |  |  | 370 |  |  |  | 2,233 |
Real estate – commercial |  |  | — |  |  |  | 7,441 |  |  |  | 7,441 |
Real estate – residential |  |  | 565 |  |  |  | 5,899 |  |  |  | 6,464 |
Consumer |  |  | — |  |  |  | 790 |  |  |  | 790 |
Total |  | $ | 2,428 |  |  | $ | 48,446 |  |  | $ | 50,874 |
|  | December 31, 2023 |
(Dollars in thousands) |  | Nonaccrual Loans with No ACL |  |  | Nonaccrual Loans with an ACL |  |  | Total Nonaccrual Loans |
Commercial and industrial |  | $ | 1,487 |  |  | $ | 37,942 |  |  | $ | 39,429 |
Real estate – construction, commercial |  |  | — |  |  |  | 383 |  |  |  | 383 |
Real estate – commercial |  |  | 2,024 |  |  |  | 9,856 |  |  |  | 11,880 |
Real estate – residential |  |  | 577 |  |  |  | 7,003 |  |  |  | 7,580 |
Consumer |  |  | — |  |  |  | 754 |  |  |  | 754 |
Total |  | $ | 4,088 |  |  | $ | 55,938 |  |  | $ | 60,026 |
The Company recognized $65 thousand and $89 thousand of interest income on nonaccrual loans during the three months ended March 31, 2024 and March 31, 2023, respectively. The following table presents accrued interest receivable by loan type reversed from interest income associated with loans held for investment that were placed on nonaccrual status for the periods stated.
|  | For the three months ended March 31, |
(Dollars in thousands) |  | 2024 |  |  | 2023 |
Commercial and industrial |  | $ | 57 |  |  | $ | 11 |
Real estate – construction, commercial |  |  | 25 |  |  |  | 1 |
Real estate – commercial |  |  | 51 |  |  |  | 20 |
Real estate – residential |  |  | 10 |  |  |  | 245 |
Consumer |  |  | 5 |  |  |  | 49 |
Total |  | $ | 148 |  |  | $ | 326 |
Credit Quality Indicators The Company segments loans held for investment into risk categories based on relevant information about the expected ability of borrowers to repay debt, such as current financial information, historical payment performance, experience, collateral adequacy, credit documentation, and current economic trends, among other factors. Management assigns loan risk grades by a numerical system as an indication of credit quality of its portfolio of loans held for investment. The Company uses the following definitions for loan risk ratings and periodically evaluates the appropriateness of these ratings across its loan portfolio. Independent third-party loan reviews are periodically performed on the Company's loan portfolio and such reviews are used to validate management's determination of loan risk grades. Bank regulatory agencies also periodically review the Company's loan portfolio, including loan risk grades and may change a grade based on their judgment of the facts at the time of review. Risk Grade 1 – Strong: This grade is reserved for loans to the strongest of borrowers. These loans are to individuals or businesses where the probability of default is extremely low to the Bank and are secured with collateral where the loss given default is unlikely because of the source of repayment such as a lien on a deposit account held at the Bank. Character, credit history, and ability of individuals or company principals are excellent. High liquidity, minimum risk, strong ratios, and low servicing cost are present. Risk Grade 2 – Minimal: This grade is reserved for loans to borrowers who are deemed exceptionally strong. These loans are within established guidelines and where the borrowers have documented significant overall financial strength with consistent and predictable cash flows. These loans have excellent sources of repayment, significant balance sheet liquidity, no significant identifiable risk of collection, and conform in all respects to policy, underwriting standards, and federal and state regulations (no exceptions of any kind). In addition, guarantor support, when provided, is viewed as excellent. Risk Grade 3 – Acceptable: This grade is reserved for loans to borrowers who are deemed strong. These loans have adequate sources of repayment, with minimal identifiable risk of collection. Generally, loans assigned this risk grade will demonstrate the following characteristics: (1) conformity in all respects with policy, guidelines, underwriting standards, and federal and state regulations (no exceptions of any kind), (2) documented historical cash flow that meets or exceeds required minimum guidelines, or that can be supplemented with verifiable cash flow from other sources, and (3) adequate secondary sources to liquidate the debt. In addition, guarantor support, when provided, is viewed as strong. Risk Grade 4 – Satisfactory: This grade is given to satisfactory loans containing more, but deemed acceptable, risk and where the borrower is assessed as sound. These loans have adequate sources of repayment, with minimal identifiable risk of collection. Loans assigned this risk grade will demonstrate the following characteristics: (1) general conformity to the Bank's underwriting requirements, with limited exceptions to policy, product, or underwriting guidelines. All exceptions noted have documented mitigating factors that offset any additional risk associated with the exceptions noted, (2) documented historical cash flow that meets or exceeds required minimum guidelines, or that can be supplemented with verifiable cash flow from other sources, and (3) adequate secondary sources to liquidate the debt. In addition, guarantor support, when provided, is viewed as satisfactory. Risk Grade 5 – Watch: This grade is for satisfactory loans containing acceptable but elevated risk. These loans are characterized by borrowers who exhibit signs of financial distress or experience unstable or unfavorable change(s) adversely impacting their current or expected financial condition. The borrower's management is deemed to be satisfactory, the collateral securing the loan may have decreased in value, the debt service coverage ratio is inconsistent or breakeven but mostly positive, and/or guarantor support, if any, is limited or marginal. Loans classified as Watch warrant additional monitoring by management. Risk Grade 6 – Special Mention: This grade is for loans that have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the Bank's credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Special mention credits typically do not conform to underwriting guidelines and/or exceptions without mitigating factors, or have emerging weaknesses that may or may not be cured with the passage of time. Risk Grade 7 – Substandard: A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. The probability of default is likely and may have occurred. Loans in this category are characterized by deterioration in quality exhibited by any number of well-defined weaknesses requiring corrective action. The weaknesses may include, but are not limited to: (1) current or expected unprofitable operations, (2) inadequate debt service coverage, (3) declining or inadequate liquidity, (4) improper loan structure, (5) questionable or weak repayment sources, and (6) lack of well-defined secondary repayment source. There is a distinct possibility of loss and the Bank will sustain some loss if the deficiencies are not corrected. Risk Grade 8 – Doubtful: Loans classified doubtful have all the weaknesses inherent in loans 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. However, these loans are not yet rated as loss because certain events may occur which would salvage the Bank's position, which can include, but is not limited to (1) an injection of capital, (2) alternative financing, and (3) liquidation of assets or the pledging of additional collateral. Doubtful is a temporary grade where a loss is expected but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is charged off against the allowance for credit losses. Risk Grade 9 – Loss: Loans classified loss are considered uncollectible and of such little value that continuance as assets 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 charging off the worthless loan, even though partial recovery may be effected in the future. Probable loss portions deemed uncollectible are charged off promptly against the allowance for credit losses. The following table presents the amortized cost of loans held for investment by internal loan risk grade by year of origination as of March 31, 2024. Also presented are current period gross charge-offs by loan type for the three months ended March 31, 2024.
|  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |
(Dollars in thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | Prior |  |  | Revolving Loans |  |  | Total |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  | $ | 2,491 |  |  | $ | 14,949 |  |  | $ | 109,129 |  |  | $ | 25,875 |  |  | $ | 23,954 |  |  | $ | 20,635 |  |  | $ | 136,887 |  |  | $ | 333,920 |
Risk Grades 5 - 6 |  |  | 68 |  |  |  | 27,159 |  |  |  | 37,715 |  |  |  | 13,637 |  |  |  | 6,044 |  |  |  | 2,338 |  |  |  | 20,977 |  |  |  | 107,938 |
Risk Grade 7 |  |  | — |  |  |  | 77 |  |  |  | 324 |  |  |  | 6,135 |  |  |  | 803 |  |  |  | 752 |  |  |  | 7,716 |  |  |  | 15,807 |
Risk Grade 8 |  |  | — |  |  |  | — |  |  |  | 29,750 |  |  |  | 2,557 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 32,307 |
Total |  |  | 2,559 |  |  |  | 42,185 |  |  |  | 176,918 |  |  |  | 48,204 |  |  |  | 30,801 |  |  |  | 23,725 |  |  |  | 165,580 |  |  |  | 489,972 |
Current period gross charge-offs |  |  | — |  |  |  | 447 |  |  |  | 1,364 |  |  |  | 138 |  |  |  | 3 |  |  |  | 5 |  |  |  | — |  |  |  | 1,957 |
Real estate – construction, commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 115 |  |  |  | 9,397 |  |  |  | 85,565 |  |  |  | 17,534 |  |  |  | 13,531 |  |  |  | 7,463 |  |  |  | 1,537 |  |  |  | 135,142 |
Risk Grades 5 - 6 |  |  | — |  |  |  | 1,101 |  |  |  | 5,529 |  |  |  | 1,513 |  |  |  | 194 |  |  |  | 5,684 |  |  |  | 3,632 |  |  |  | 17,653 |
Risk Grade 7 |  |  | — |  |  |  | 118 |  |  |  | 3,630 |  |  |  | 36 |  |  |  | — |  |  |  | 364 |  |  |  | — |  |  |  | 4,148 |
Total |  |  | 115 |  |  |  | 10,616 |  |  |  | 94,724 |  |  |  | 19,083 |  |  |  | 13,725 |  |  |  | 13,511 |  |  |  | 5,169 |  |  |  | 156,943 |
Current period gross charge-offs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Real estate – construction, residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 5,952 |  |  |  | 27,017 |  |  |  | 8,063 |  |  |  | 6,740 |  |  |  | 26 |  |  |  | 64 |  |  |  | 10,729 |  |  |  | 58,591 |
Risk Grades 5 - 6 |  |  | — |  |  |  | 2,281 |  |  |  | 1,362 |  |  |  | — |  |  |  | 165 |  |  |  | — |  |  |  | — |  |  |  | 3,808 |
Risk Grade 7 |  |  | — |  |  |  | 393 |  |  |  | 155 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 548 |
Total |  |  | 5,952 |  |  |  | 29,691 |  |  |  | 9,580 |  |  |  | 6,740 |  |  |  | 191 |  |  |  | 64 |  |  |  | 10,729 |  |  |  | 62,947 |
Current period gross charge-offs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Real estate – commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 5,053 |  |  |  | 18,197 |  |  |  | 269,429 |  |  |  | 122,861 |  |  |  | 147,005 |  |  |  | 168,496 |  |  |  | 21,967 |  |  |  | 753,011 |
Risk Grades 5 - 6 |  |  | — |  |  |  | 452 |  |  |  | 43,469 |  |  |  | 15,779 |  |  |  | 17,641 |  |  |  | 33,312 |  |  |  | 4,214 |  |  |  | 114,867 |
Risk Grade 7 |  |  | — |  |  |  | — |  |  |  | 1,104 |  |  |  | 6,977 |  |  |  | 3,835 |  |  |  | 2,007 |  |  |  | — |  |  |  | 13,923 |
Total |  |  | 5,053 |  |  |  | 18,649 |  |  |  | 314,002 |  |  |  | 145,617 |  |  |  | 168,481 |  |  |  | 203,815 |  |  |  | 26,181 |  |  |  | 881,798 |
Current period gross charge-offs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Real estate – residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 145 |  |  |  | 52,894 |  |  |  | 230,577 |  |  |  | 118,789 |  |  |  | 68,096 |  |  |  | 157,871 |  |  |  | 55,377 |  |  |  | 683,749 |
Risk Grades 5 - 6 |  |  | 229 |  |  |  | 12,509 |  |  |  | 10,066 |  |  |  | 3,659 |  |  |  | 2,278 |  |  |  | 13,796 |  |  |  | 3,341 |  |  |  | 45,878 |
Risk Grade 7 |  |  | — |  |  |  | — |  |  |  | 2,160 |  |  |  | 1,266 |  |  |  | 1,455 |  |  |  | 5,465 |  |  |  | 276 |  |  |  | 10,622 |
Total |  |  | 374 |  |  |  | 65,403 |  |  |  | 242,803 |  |  |  | 123,714 |  |  |  | 71,829 |  |  |  | 177,132 |  |  |  | 58,994 |  |  |  | 740,249 |
Current period gross charge-offs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |  |  | — |  |  |  | — |
Real estate – farmland |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | — |  |  |  | — |  |  |  | 1,004 |  |  |  | 1,383 |  |  |  | — |  |  |  | 2,956 |  |  |  | 186 |  |  |  | 5,529 |
Risk Grades 5 - 6 |  |  | — |  |  |  | 144 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 144 |
Total |  |  | — |  |  |  | 144 |  |  |  | 1,004 |  |  |  | 1,383 |  |  |  | — |  |  |  | 2,956 |  |  |  | 186 |  |  |  | 5,673 |
Current period gross charge-offs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 3,566 |  |  |  | 23,334 |  |  |  | 12,661 |  |  |  | 3,001 |  |  |  | 2,303 |  |  |  | 1,179 |  |  |  | 8,098 |  |  |  | 54,142 |
Risk Grades 5 - 6 |  |  | — |  |  |  | 58 |  |  |  | 40 |  |  |  | 8 |  |  |  | 6 |  |  |  | 60 |  |  |  | 495 |  |  |  | 667 |
Risk Grade 7 |  |  | — |  |  |  | 195 |  |  |  | 377 |  |  |  | 193 |  |  |  | 123 |  |  |  | 85 |  |  |  | — |  |  |  | 973 |
Total |  |  | 3,566 |  |  |  | 23,587 |  |  |  | 13,078 |  |  |  | 3,202 |  |  |  | 2,432 |  |  |  | 1,324 |  |  |  | 8,593 |  |  |  | 55,782 |
Current period gross charge-offs |  |  | 523 |  |  |  | 75 |  |  |  | 119 |  |  |  | 10 |  |  |  | 16 |  |  |  | 2 |  |  |  | — |  |  |  | 745 |
Total Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  | $ | 17,322 |  |  | $ | 145,788 |  |  | $ | 716,428 |  |  | $ | 296,183 |  |  | $ | 254,915 |  |  | $ | 358,664 |  |  | $ | 234,781 |  |  | $ | 2,024,081 |
Risk Grades 5 - 6 |  |  | 297 |  |  |  | 43,704 |  |  |  | 98,181 |  |  |  | 34,596 |  |  |  | 26,328 |  |  |  | 55,190 |  |  |  | 32,659 |  |  |  | 290,955 |
Risk Grade 7 |  |  | — |  |  |  | 783 |  |  |  | 7,750 |  |  |  | 14,607 |  |  |  | 6,216 |  |  |  | 8,673 |  |  |  | 7,992 |  |  |  | 46,021 |
Risk Grade 8 |  |  | — |  |  |  | — |  |  |  | 29,750 |  |  |  | 2,557 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 32,307 |
Total |  | $ | 17,619 |  |  | $ | 190,275 |  |  | $ | 852,109 |  |  | $ | 347,943 |  |  | $ | 287,459 |  |  | $ | 422,527 |  |  | $ | 275,432 |  |  | $ | 2,393,364 |
Total current period gross charge-offs |  | $ | 523 |  |  | $ | 522 |  |  | $ | 1,483 |  |  | $ | 148 |  |  | $ | 19 |  |  | $ | 7 |  |  | $ | — |  |  | $ | 2,702 |
Of the $32.3 million of commercial and industrial loans classified as doubtful (risk grade 8) as of March 31, 2024, $29.8 million was attributable to a specialty finance loan with a specific reserve, a component of the ACL, of $9.6 million as of the same date. There were no loans classified as loss (risk grade 9) as of March 31, 2024. The following table presents the amortized cost of loans held for investment by internal loan risk grade by year of origination as of December 31, 2023.
|  | Term Loans Recorded Investment Basis by Origination Year |  |  |  |  |  |  |
(Dollars in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Revolving Loans |  |  | Total |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  | $ | 15,830 |  |  | $ | 114,291 |  |  | $ | 32,273 |  |  | $ | 25,429 |  |  | $ | 8,217 |  |  | $ | 14,200 |  |  | $ | 138,267 |  |  | $ | 348,507 |
Risk Grades 5 - 6 |  |  | 26,563 |  |  |  | 40,399 |  |  |  | 12,759 |  |  |  | 6,305 |  |  |  | 819 |  |  |  | 1,537 |  |  |  | 19,722 |  |  |  | 108,104 |
Risk Grade 7 |  |  | — |  |  |  | 877 |  |  |  | 3,623 |  |  |  | 829 |  |  |  | 543 |  |  |  | 134 |  |  |  | 9,191 |  |  |  | 15,197 |
Risk Grade 8 |  |  | — |  |  |  | 34,203 |  |  |  | 2,554 |  |  |  | — |  |  |  | — |  |  |  | 379 |  |  |  | — |  |  |  | 37,136 |
Total |  |  | 42,393 |  |  |  | 189,770 |  |  |  | 51,209 |  |  |  | 32,563 |  |  |  | 9,579 |  |  |  | 16,250 |  |  |  | 167,180 |  |  |  | 508,944 |
Real estate – construction, commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 8,533 |  |  |  | 85,687 |  |  |  | 33,344 |  |  |  | 14,690 |  |  |  | 6,358 |  |  |  | 5,589 |  |  |  | 4,367 |  |  |  | 158,568 |
Risk Grades 5 - 6 |  |  | 4,213 |  |  |  | 11,072 |  |  |  | 760 |  |  |  | 293 |  |  |  | — |  |  |  | 738 |  |  |  | 3,827 |  |  |  | 20,903 |
Risk Grade 7 |  |  | 119 |  |  |  | 46 |  |  |  | 40 |  |  |  | — |  |  |  | — |  |  |  | 376 |  |  |  | — |  |  |  | 581 |
Total |  |  | 12,865 |  |  |  | 96,805 |  |  |  | 34,144 |  |  |  | 14,983 |  |  |  | 6,358 |  |  |  | 6,703 |  |  |  | 8,194 |  |  |  | 180,052 |
Real estate – construction, residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 31,611 |  |  |  | 22,734 |  |  |  | 3,867 |  |  |  | 59 |  |  |  | 741 |  |  |  | 67 |  |  |  | 10,656 |  |  |  | 69,735 |
Risk Grades 5 - 6 |  |  | 1,486 |  |  |  | 2,672 |  |  |  | — |  |  |  | 167 |  |  |  | 200 |  |  |  | — |  |  |  | — |  |  |  | 4,525 |
Risk Grade 7 |  |  | 367 |  |  |  | 1,205 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,572 |
Total |  |  | 33,464 |  |  |  | 26,611 |  |  |  | 3,867 |  |  |  | 226 |  |  |  | 941 |  |  |  | 67 |  |  |  | 10,656 |  |  |  | 75,832 |
Real estate – commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 14,671 |  |  |  | 280,479 |  |  |  | 121,257 |  |  |  | 144,498 |  |  |  | 42,226 |  |  |  | 123,774 |  |  |  | 20,332 |  |  |  | 747,237 |
Risk Grades 5 - 6 |  |  | 2,841 |  |  |  | 25,075 |  |  |  | 9,038 |  |  |  | 19,597 |  |  |  | 12,921 |  |  |  | 27,778 |  |  |  | 4,214 |  |  |  | 101,464 |
Risk Grade 7 |  |  | 323 |  |  |  | — |  |  |  | 8,202 |  |  |  | 4,938 |  |  |  | 111 |  |  |  | 8,265 |  |  |  | — |  |  |  | 21,839 |
Total |  |  | 17,835 |  |  |  | 305,554 |  |  |  | 138,497 |  |  |  | 169,033 |  |  |  | 55,258 |  |  |  | 159,817 |  |  |  | 24,546 |  |  |  | 870,540 |
Real estate – residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 51,042 |  |  |  | 218,375 |  |  |  | 121,872 |  |  |  | 69,165 |  |  |  | 27,877 |  |  |  | 132,986 |  |  |  | 55,327 |  |  |  | 676,644 |
Risk Grades 5 - 6 |  |  | 12,014 |  |  |  | 9,339 |  |  |  | 677 |  |  |  | 1,944 |  |  |  | 2,122 |  |  |  | 7,281 |  |  |  | 3,255 |  |  |  | 36,632 |
Risk Grade 7 |  |  | — |  |  |  | 2,240 |  |  |  | 2,446 |  |  |  | 1,812 |  |  |  | 943 |  |  |  | 9,307 |  |  |  | 85 |  |  |  | 16,833 |
Risk Grade 8 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 1 |
Total |  |  | 63,056 |  |  |  | 229,954 |  |  |  | 124,995 |  |  |  | 72,921 |  |  |  | 30,942 |  |  |  | 149,575 |  |  |  | 58,667 |  |  |  | 730,110 |
Real estate – farmland |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | — |  |  |  | 729 |  |  |  | 1,397 |  |  |  | — |  |  |  | 1,520 |  |  |  | 1,562 |  |  |  | 115 |  |  |  | 5,323 |
Risk Grades 5 - 6 |  |  | 147 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 147 |
Total |  |  | 147 |  |  |  | 729 |  |  |  | 1,397 |  |  |  | — |  |  |  | 1,520 |  |  |  | 1,562 |  |  |  | 115 |  |  |  | 5,470 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 26,535 |  |  |  | 14,215 |  |  |  | 3,598 |  |  |  | 2,724 |  |  |  | 1,137 |  |  |  | 466 |  |  |  | 8,766 |  |  |  | 57,441 |
Risk Grades 5 - 6 |  |  | 61 |  |  |  | 42 |  |  |  | 12 |  |  |  | 12 |  |  |  | 8 |  |  |  | 433 |  |  |  | 495 |  |  |  | 1,063 |
Risk Grade 7 |  |  | 14 |  |  |  | 259 |  |  |  | 115 |  |  |  | 131 |  |  |  | 44 |  |  |  | 102 |  |  |  | — |  |  |  | 665 |
Total |  |  | 26,610 |  |  |  | 14,516 |  |  |  | 3,725 |  |  |  | 2,867 |  |  |  | 1,189 |  |  |  | 1,001 |  |  |  | 9,261 |  |  |  | 59,169 |
Total Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  | $ | 148,222 |  |  | $ | 736,510 |  |  | $ | 317,608 |  |  | $ | 256,565 |  |  | $ | 88,076 |  |  | $ | 278,644 |  |  | $ | 237,830 |  |  | $ | 2,063,455 |
Risk Grades 5 - 6 |  |  | 47,325 |  |  |  | 88,599 |  |  |  | 23,246 |  |  |  | 28,318 |  |  |  | 16,070 |  |  |  | 37,767 |  |  |  | 31,513 |  |  |  | 272,838 |
Risk Grade 7 |  |  | 823 |  |  |  | 4,627 |  |  |  | 14,426 |  |  |  | 7,710 |  |  |  | 1,641 |  |  |  | 18,184 |  |  |  | 9,276 |  |  |  | 56,687 |
Risk Grade 8 |  |  | — |  |  |  | 34,203 |  |  |  | 2,554 |  |  |  | — |  |  |  | — |  |  |  | 380 |  |  |  | — |  |  |  | 37,137 |
Total |  | $ | 196,370 |  |  | $ | 863,939 |  |  | $ | 357,834 |  |  | $ | 292,593 |  |  | $ | 105,787 |  |  | $ | 334,975 |  |  | $ | 278,619 |  |  | $ | 2,430,117 |
The following tables present an analysis of the change in the ACL by major loan segment for the periods stated. Loan segments are presented as either commercial or consumer as follows: • Commercial – commercial and industrial; real estate – construction, commercial; real estate – commercial; and real estate – farmland; and • Consumer – real estate – construction, residential; real estate – residential; and consumer.
|  | For the three months ended March 31, 2024 |
(Dollars in thousands) |  | Commercial |  |  | Consumer |  |  | Total |
Balance, beginning of period |  | $ | 27,491 |  |  | $ | 8,402 |  |  | $ | 35,893 |
Charge-offs |  |  | (1,957 | ) |  |  | (745 | ) |  |  | (2,702 | )
Recoveries |  |  | 1,531 |  |  |  | 303 |  |  |  | 1,834 |
Net charge-offs |  |  | (426 | ) |  |  | (442 | ) |  |  | (868 | )
Balance, end of period |  | $ | 27,065 |  |  | $ | 7,960 |  |  | $ | 35,025 |
|  | For the three months ended March 31, 2023 |
(Dollars in thousands) |  | Commercial |  |  | Consumer |  |  | Total |
Balance, beginning of period |  | $ | 27,070 |  |  | $ | 3,670 |  |  | $ | 30,740 |
Impact of ASC 326 adoption |  |  | 2,926 |  |  |  | 4,492 |  |  |  | 7,418 |
Charge-offs |  |  | (799 | ) |  |  | (510 | ) |  |  | (1,309 | )
Recoveries |  |  | 118 |  |  |  | 104 |  |  |  | 222 |
Net charge-offs |  |  | (681 | ) |  |  | (406 | ) |  |  | (1,087 | )
(Recovery of) provision for credit losses - loans |  |  | (2,049 | ) |  |  | 939 |  |  |  | (1,110 | )
Balance, end of period |  | $ | 27,266 |  |  | $ | 8,695 |  |  | $ | 35,961 |
There were no material changes to the assumptions, loss factors (both quantitative and qualitative), or reasonable and supportable forecasts used in the estimation of the ACL and the provision for credit losses for loans held for investment as of and for the three months ended March 31, 2024. Excluded from the ACL as of March 31, 2024 and December 31, 2023 was $12.9 million and $13.2 million of accrued interest attributable to loans held for investment, respectively, which is included in accrued interest receivable on the consolidated balance sheet. The following table presents the amortized cost of collateral-dependent loans as of the dates stated.
(Dollars in thousands) |  | March 31, 2024 |  |  | December 31, 2023 |
Commercial and industrial |  | $ | 62,905 |  |  | $ | 67,555 |
Real estate – construction, commercial |  |  | 5,719 |  |  |  | 6,309 |
Real estate – construction, residential |  |  | — |  |  |  | 2,303 |
Real estate – commercial |  |  | 14,285 |  |  |  | 13,401 |
Real estate – residential |  |  | 8,690 |  |  |  | 7,337 |
Total collateral-dependent loans |  | $ | 91,599 |  |  | $ | 96,905 |
Acquired Loans As of both March 31, 2024 and December 31, 2023, the amortized cost of purchased credit deteriorated ("PCD") loans totaled $51.0 million, with estimated ACL of $522 thousand and $529 thousand, respectively. The remaining non-credit discount on PCD loans was $3.7 million and $3.8 million as of March 31, 2024 and December 31, 2023, respectively. Modified Loans The Company closely monitors the performance of borrowers experiencing financial difficulty that have been granted certain loan modifications it would otherwise not consider. The following table presents information on loans modified in the last 12 months from the date stated.
|  | March 31, 2024
(Dollars in thousands) |  | Number of Loans |  |  | Recorded Investment |  |  | Recorded Investment of Modified Loans to Gross Loans by Category |  |  | Financial Effect
Modification - term extension and forbearance |  |  |  |  |  |  |  |  |  |  | Forbearance agreements
Commercial and industrial (1) |  |  | 3 |  |  | $ | 33,979 |  |  |  | 6.93 | % |  |
Real estate – construction, residential |  |  | 1 |  |  |  | 155 |  |  |  | 0.02 | % |  |
Real estate – residential |  |  | 1 |  |  |  | 127 |  |  |  | 0.02 | % |  |
Modification - payment deferral |  |  |  |  |  |  |  |  |  |  | Payment deferral 6-9 months
Real estate – residential |  |  | 1 |  |  |  | 565 |  |  |  | 0.06 | % |  |
Commercial and industrial |  |  | 1 |  |  |  | 183 |  |  |  | 0.04 | % |  |
Total |  |  | 7 |  |  | $ | 35,009 |  |  |  | 1.46 | % |  |
(1) Included in this balance was a $29.8 million loan that was modified via a forbearance agreement in the second quarter of 2023 under which the borrower defaulted in the same period. This loan is collateral-dependent, is on nonaccrual status, and has a specific reserve of $9.6 million as of March 31, 2024. Subsequent to March 31, 2024, the Company received cash payments totaling $1.5 million, which were applied to the book principal balance of the loan.
The following table presents an aging analysis of the recorded investment of loans modified as of the date stated.
|  | March 31, 2024 |
(Dollars in thousands) |  | Current Loans |  |  | 30-89 Days Past Due |  |  | Greater than 90 Days Past Due & Accruing |  |  | Nonaccrual |  |  | Total |
Commercial and industrial |  | $ | 1,681 |  |  | $ | — |  |  | $ | — |  |  | $ | 32,481 |  |  | $ | 34,162 |
Real estate – residential |  |  | 127 |  |  |  | — |  |  |  | — |  |  |  | 565 |  |  |  | 692 |
Real estate – construction, residential |  |  | 155 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 155 |
Total modified loans |  | $ | 1,963 |  |  | $ | — |  |  | $ | — |  |  | $ | 33,046 |  |  | $ | 35,009 |
During the three months ended March 31, 2024, no loans modified on behalf of borrowers experiencing financial difficulty had a payment default. Nine residential mortgage loans with a total recorded investment of $1.3 million were in the process of foreclosure as of March 31, 2024.

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//310-10/tableOfContent + Details
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