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Loans and ACL | 9 Months Ended
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Sep. 30, 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) |  | September 30, 2024 |  |  | December 31, 2023 |
Commercial and industrial |  | $ | 378,922 |  |  | $ | 508,944 |
Real estate – construction, commercial |  |  | 116,276 |  |  |  | 180,052 |
Real estate – construction, residential |  |  | 43,322 |  |  |  | 75,832 |
Real estate – commercial |  |  | 873,721 |  |  |  | 870,540 |
Real estate – residential |  |  | 713,442 |  |  |  | 730,110 |
Real estate – farmland |  |  | 5,619 |  |  |  | 5,470 |
Consumer |  |  | 48,206 |  |  |  | 59,169 |
Gross loans |  |  | 2,179,508 |  |  |  | 2,430,117 |
Deferred costs, net of loan fees |  |  | 905 |  |  |  | 830 |
Total |  | $ | 2,180,413 |  |  | $ | 2,430,947 |
The Company has pledged certain commercial and residential mortgages as collateral for borrowings with the FHLB. Loans totaling $802.6 million and $767.1 million were pledged with the FHLB as of September 30, 2024 and December 31, 2023, respectively. T he Company has pledged certain commercial and industrial loans totaling $69.6 million and $161.0 million as collateral for borrowings with the FRB Discount Window as of September 30, 2024 and December 31, 2023, respectively. The decline in the amount pledged at the FRB Discount Window was primarily due to paydowns and payoffs of the commercial and industrial loans serving as collateral. The following tables present the aging of the amortized cost of loans held for investment by loan category as of the dates stated.
|  | September 30, 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 |  | $ | 361,417 |  |  | $ | 1,640 |  |  | $ | 1,253 |  |  | $ | 3,142 |  |  | $ | 11,470 |  |  | $ | 378,922 |
Real estate – construction, commercial |  |  | 115,963 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 313 |  |  |  | 116,276 |
Real estate – construction, residential |  |  | 43,322 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 43,322 |
Real estate – commercial |  |  | 862,140 |  |  |  | 4,252 |  |  |  | — |  |  |  | — |  |  |  | 7,329 |  |  |  | 873,721 |
Real estate – residential |  |  | 703,539 |  |  |  | 1,237 |  |  |  | 77 |  |  |  | — |  |  |  | 8,589 |  |  |  | 713,442 |
Real estate – farmland |  |  | 5,619 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,619 |
Consumer |  |  | 44,433 |  |  |  | 1,942 |  |  |  | 600 |  |  |  | 583 |  |  |  | 648 |  |  |  | 48,206 |
Deferred costs, net of loan fees |  |  | 905 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 905 |
Total |  | $ | 2,137,338 |  |  | $ | 9,071 |  |  | $ | 1,930 |  |  | $ | 3,725 |  |  | $ | 28,349 |  |  | $ | 2,180,413 |
|  | 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 costs, net of loan fees |  |  | 830 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 830 |
Total |  | $ | 2,351,689 |  |  | $ | 14,282 |  |  | $ | 1,913 |  |  | $ | 3,037 |  |  | $ | 60,026 |  |  | $ | 2,430,947 |
In the second quarter of 2024, the Company executed an agreement to sell a nonperforming specialty finance loan to a third party, reclassifying the loan from loans held for investment to loans held for sale in the same period at its estimated fair value. Upon reclassification, the Company recorded a charge-off of substantially all of the reserve held on the loan, which was provisioned for in prior years. In the third quarter, the sale was completed upon the receipt of all contractual amounts due. Upon the completion of the sale, the Company recorded an $8.4 million recovery of credit losses. 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.
|  | September 30, 2024 |
(Dollars in thousands) |  | Nonaccrual Loans with No ACL |  |  | Nonaccrual Loans with an ACL |  |  | Total Nonaccrual Loans |
Commercial and industrial |  | $ | — |  |  | $ | 11,470 |  |  | $ | 11,470 |
Real estate – construction, commercial |  |  | — |  |  |  | 313 |  |  |  | 313 |
Real estate – commercial |  |  | — |  |  |  | 7,329 |  |  |  | 7,329 |
Real estate – residential |  |  | 2,496 |  |  |  | 6,093 |  |  |  | 8,589 |
Consumer |  |  | — |  |  |  | 648 |  |  |  | 648 |
Total |  | $ | 2,496 |  |  | $ | 25,853 |  |  | $ | 28,349 |
|  | 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 $275 thousand and $463 thousand of interest income on nonaccrual loans during the three and nine months ended September 30, 2024, respectively, compared to $0 and $89 thousand for the same respective periods in 2023. The following tables present 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 September 30, |  |  | For the nine months ended September 30, |
(Dollars in thousands) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Commercial and industrial |  | $ | 165 |  |  | $ | 34 |  |  | $ | 381 |  |  | $ | 302 |
Real estate – construction, commercial |  |  | 35 |  |  |  | 42 |  |  |  | 60 |  |  |  | 42 |
Real estate – construction, residential |  |  | — |  |  |  | 11 |  |  |  | — |  |  |  | 26 |
Real estate – commercial |  |  | 77 |  |  |  | 53 |  |  |  | 175 |  |  |  | 251 |
Real estate – residential |  |  | 52 |  |  |  | 12 |  |  |  | 104 |  |  |  | 49 |
Consumer |  |  | 5 |  |  |  | 6 |  |  |  | 10 |  |  |  | 15 |
Total |  | $ | 334 |  |  | $ | 158 |  |  | $ | 730 |  |  | $ | 685 |
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 September 30, 2024. There were no loans classified as loss (risk grade 9) as of the same date. Also presented are current period gross charge-offs by loan type for the nine months ended September 30, 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 |  | $ | 9,046 |  |  | $ | 9,673 |  |  | $ | 84,473 |  |  | $ | 16,702 |  |  | $ | 19,368 |  |  | $ | 17,087 |  |  | $ | 102,357 |  |  | $ | 258,706 |
Risk Grades 5 - 6 |  |  | 752 |  |  |  | 25,585 |  |  |  | 38,620 |  |  |  | 11,558 |  |  |  | 5,621 |  |  |  | 893 |  |  |  | 13,974 |  |  |  | 97,003 |
Risk Grade 7 |  |  | 871 |  |  |  | 1,013 |  |  |  | 4,250 |  |  |  | 10,515 |  |  |  | 420 |  |  |  | 1,376 |  |  |  | 1,701 |  |  |  | 20,146 |
Risk Grade 8 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,289 |  |  |  | 727 |  |  |  | 1 |  |  |  | 50 |  |  |  | 3,067 |
Total |  |  | 10,669 |  |  |  | 36,271 |  |  |  | 127,343 |  |  |  | 41,064 |  |  |  | 26,136 |  |  |  | 19,357 |  |  |  | 118,082 |  |  |  | 378,922 |
Current period gross charge-offs |  |  | 73 |  |  |  | 475 |  |  |  | 16,213 |  |  |  | 2,437 |  |  |  | 130 |  |  |  | 165 |  |  |  | 447 |  |  |  | 19,940 |
Real estate – construction, commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 6,071 |  |  |  | 7,005 |  |  |  | 63,471 |  |  |  | 15,166 |  |  |  | 10,480 |  |  |  | 5,615 |  |  |  | 399 |  |  |  | 108,207 |
Risk Grades 5 - 6 |  |  | — |  |  |  | 1,094 |  |  |  | 102 |  |  |  | 1,034 |  |  |  | — |  |  |  | 3,620 |  |  |  | — |  |  |  | 5,850 |
Risk Grade 7 |  |  | — |  |  |  | 116 |  |  |  | 1,723 |  |  |  | 26 |  |  |  | — |  |  |  | 354 |  |  |  | — |  |  |  | 2,219 |
Total |  |  | 6,071 |  |  |  | 8,215 |  |  |  | 65,296 |  |  |  | 16,226 |  |  |  | 10,480 |  |  |  | 9,589 |  |  |  | 399 |  |  |  | 116,276 |
Real estate – construction, residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 12,491 |  |  |  | 11,772 |  |  |  | 3,563 |  |  |  | 11,917 |  |  |  | — |  |  |  | 60 |  |  |  | — |  |  |  | 39,803 |
Risk Grades 5 - 6 |  |  | 255 |  |  |  | — |  |  |  | 3,005 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,260 |
Risk Grade 7 |  |  | — |  |  |  | 104 |  |  |  | 155 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 259 |
Total |  |  | 12,746 |  |  |  | 11,876 |  |  |  | 6,723 |  |  |  | 11,917 |  |  |  | — |  |  |  | 60 |  |  |  | — |  |  |  | 43,322 |
Current period gross charge-offs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 39 |  |  |  | — |  |  |  | 39 |
Real estate – commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 4,799 |  |  |  | 22,723 |  |  |  | 274,021 |  |  |  | 120,168 |  |  |  | 144,931 |  |  |  | 142,903 |  |  |  | 20,621 |  |  |  | 730,166 |
Risk Grades 5 - 6 |  |  | 535 |  |  |  | — |  |  |  | 65,919 |  |  |  | 7,042 |  |  |  | 15,291 |  |  |  | 24,264 |  |  |  | 4,184 |  |  |  | 117,235 |
Risk Grade 7 |  |  | 1,570 |  |  |  | — |  |  |  | — |  |  |  | 12,403 |  |  |  | 3,690 |  |  |  | 6,753 |  |  |  | 525 |  |  |  | 24,941 |
Risk Grade 8 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,379 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,379 |
Total |  |  | 6,904 |  |  |  | 22,723 |  |  |  | 339,940 |  |  |  | 140,992 |  |  |  | 163,912 |  |  |  | 173,920 |  |  |  | 25,330 |  |  |  | 873,721 |
Current period gross charge-offs |  |  | — |  |  |  | — |  |  |  | 1,103 |  |  |  | — |  |  |  | — |  |  |  | 6 |  |  |  | — |  |  |  | 1,109 |
Real estate – residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 940 |  |  |  | 56,212 |  |  |  | 225,724 |  |  |  | 114,846 |  |  |  | 64,510 |  |  |  | 143,476 |  |  |  | 55,317 |  |  |  | 661,025 |
Risk Grades 5 - 6 |  |  | 300 |  |  |  | 12,649 |  |  |  | 8,715 |  |  |  | 3,075 |  |  |  | 2,250 |  |  |  | 9,237 |  |  |  | 1,274 |  |  |  | 37,500 |
Risk Grade 7 |  |  | — |  |  |  | 741 |  |  |  | 2,598 |  |  |  | 2,321 |  |  |  | 1,769 |  |  |  | 5,318 |  |  |  | 2,170 |  |  |  | 14,917 |
Total |  |  | 1,240 |  |  |  | 69,602 |  |  |  | 237,037 |  |  |  | 120,242 |  |  |  | 68,529 |  |  |  | 158,031 |  |  |  | 58,761 |  |  |  | 713,442 |
Current period gross charge-offs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 72 |  |  |  | 2 |  |  |  | 74 |
Real estate – farmland |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 148 |  |  |  | — |  |  |  | 1,000 |  |  |  | 1,252 |  |  |  | — |  |  |  | 2,816 |  |  |  | 164 |  |  |  | 5,380 |
Risk Grades 5 - 6 |  |  | — |  |  |  | 138 |  |  |  | — |  |  |  | 101 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 239 |
Total |  |  | 148 |  |  |  | 138 |  |  |  | 1,000 |  |  |  | 1,353 |  |  |  | — |  |  |  | 2,816 |  |  |  | 164 |  |  |  | 5,619 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  |  | 6,217 |  |  |  | 19,199 |  |  |  | 9,923 |  |  |  | 2,151 |  |  |  | 1,461 |  |  |  | 599 |  |  |  | 7,178 |  |  |  | 46,728 |
Risk Grades 5 - 6 |  |  | — |  |  |  | 50 |  |  |  | 36 |  |  |  | 10 |  |  |  | 24 |  |  |  | 53 |  |  |  | 450 |  |  |  | 623 |
Risk Grade 7 |  |  | 45 |  |  |  | 201 |  |  |  | 344 |  |  |  | 141 |  |  |  | 83 |  |  |  | 41 |  |  |  | — |  |  |  | 855 |
Total |  |  | 6,262 |  |  |  | 19,450 |  |  |  | 10,303 |  |  |  | 2,302 |  |  |  | 1,568 |  |  |  | 693 |  |  |  | 7,628 |  |  |  | 48,206 |
Current period gross charge-offs |  |  | 609 |  |  |  | 324 |  |  |  | 1,007 |  |  |  | 64 |  |  |  | 26 |  |  |  | 33 |  |  |  | — |  |  |  | 2,063 |
Total Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Grades 1 - 4 |  | $ | 39,712 |  |  | $ | 126,584 |  |  | $ | 662,175 |  |  | $ | 282,202 |  |  | $ | 240,750 |  |  | $ | 312,556 |  |  | $ | 186,036 |  |  | $ | 1,850,015 |
Risk Grades 5 - 6 |  |  | 1,842 |  |  |  | 39,516 |  |  |  | 116,397 |  |  |  | 22,820 |  |  |  | 23,186 |  |  |  | 38,067 |  |  |  | 19,882 |  |  |  | 261,710 |
Risk Grade 7 |  |  | 2,486 |  |  |  | 2,175 |  |  |  | 9,070 |  |  |  | 25,406 |  |  |  | 5,962 |  |  |  | 13,842 |  |  |  | 4,396 |  |  |  | 63,337 |
Risk Grade 8 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,668 |  |  |  | 727 |  |  |  | 1 |  |  |  | 50 |  |  |  | 4,446 |
Total |  | $ | 44,040 |  |  | $ | 168,275 |  |  | $ | 787,642 |  |  | $ | 334,096 |  |  | $ | 270,625 |  |  | $ | 364,466 |  |  | $ | 210,364 |  |  | $ | 2,179,508 |
Total current period gross charge-offs |  | $ | 682 |  |  | $ | 799 |  |  | $ | 18,323 |  |  | $ | 2,501 |  |  | $ | 156 |  |  | $ | 315 |  |  | $ | 449 |  |  | $ | 23,225 |
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. There were no loans classified as loss (risk grade 9) as of the same date.
|  | 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 table presents an analysis of the change in the ACL by loan segment for the periods stated.
|  | As of and for the three months ended |  |  | As of and for the nine months ended |
(Dollars in thousands) |  | September 30, 2024 |  |  | September 30, 2023 |  |  | September 30, 2024 |  |  | September 30, 2023 |
Allowance for credit losses, beginning of period |  | $ | 28,036 |  |  | $ | 38,567 |  |  | $ | 35,893 |  |  | $ | 30,740 |
Impact of ASC 326 adoption |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,418 |
Charge-offs |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | (6,001 | ) |  | $ | (1,832 | ) |  | $ | (19,940 | ) |  | $ | (9,927 | )
Real estate – construction, commercial |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (28 | )
Real estate – construction, residential |  |  | — |  |  |  | — |  |  |  | (39 | ) |  |  | — |
Real estate – commercial |  |  | (1,109 | ) |  |  | — |  |  |  | (1,109 | ) |  |  | — |
Real estate – residential |  |  | (30 | ) |  |  | — |  |  |  | (74 | ) |  |  | (1,255 | )
Consumer |  |  | (773 | ) |  |  | (749 | ) |  |  | (2,063 | ) |  |  | (1,699 | )
Total charge-offs |  |  | (7,913 | ) |  |  | (2,581 | ) |  |  | (23,225 | ) |  |  | (12,909 | )
Recoveries |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 11,095 |  |  | $ | 1,596 |  |  | $ | 14,455 |  |  | $ | 2,327 |
Real estate – construction, commercial |  |  | — |  |  |  | 5 |  |  |  | — |  |  |  | 15 |
Real estate – construction, residential |  |  | — |  |  |  | 132 |  |  |  | — |  |  |  | 132 |
Real estate – commercial |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 263 |
Real estate – residential |  |  | 60 |  |  |  | 126 |  |  |  | 76 |  |  |  | 145 |
Consumer |  |  | 175 |  |  |  | 186 |  |  |  | 654 |  |  |  | 397 |
Total recoveries |  |  | 11,330 |  |  |  | 2,045 |  |  |  | 15,185 |  |  |  | 3,279 |
Net recoveries (charge-offs) |  |  | 3,417 |  |  |  | (536 | ) |  |  | (8,040 | ) |  |  | (9,630 | )
Total (recovery of) provision for credit losses - loans |  |  | (6,000 | ) |  |  | 11,600 |  |  |  | (2,400 | ) |  |  | 21,103 |
Allowance for credit losses, end of period |  | $ | 25,453 |  |  | $ | 49,631 |  |  | $ | 25,453 |  |  | $ | 49,631 |
Of the commercial and industrial loan net charge-off amount in the nine months ended September 30, 2024, $9.4 million was charged-off when the previously noted specialty finance loan was reclassified from loans held for investment to loans held for sale in the second quarter of 2024. Of this charge-off, $8.4 million was recovered in the third quarter of 2024 upon the completion of the note sale, which is reflected in the recovery of provision for credit losses - loans, for the three and nine months ended September 30, 2024. 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 (recovery of) credit losses for loans held for investment as of and for the three and nine months ended September 30, 2024. Excluded from the ACL as of September 30, 2024 and December 31, 2023 was $11.1 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 sheets. The following table presents the amortized cost of collateral-dependent loans as of the dates stated.
(Dollars in thousands) |  | September 30, 2024 |  |  | December 31, 2023 |
Commercial and industrial |  | $ | 45,058 |  |  | $ | 67,555 |
Real estate – construction, commercial |  |  | 1,839 |  |  |  | 6,309 |
Real estate – construction, residential |  |  | — |  |  |  | 2,303 |
Real estate – commercial |  |  | 19,448 |  |  |  | 13,401 |
Real estate – residential |  |  | 7,796 |  |  |  | 7,337 |
Total collateral-dependent loans |  | $ | 74,141 |  |  | $ | 96,905 |
Acquired Loans As of September 30, 2024 and December 31, 2023, the amortized cost of purchased credit deteriorated ("PCD") loans totaled $48.5 million and $51.0 million, respectively, with estimated ACL of $463 thousand and $529 thousand, respectively. The remaining non-credit discount on PCD loans was $3.0 million and $3.8 million as of September 30, 2024 and December 31, 2023, respectively. Troubled Loan Modifications The Company closely monitors the performance of borrowers experiencing financial difficulty and grants certain loan modifications it would otherwise not consider. The Company refers to such loan modifications as troubled loan modifications ("TLMs"). The following tables present the amortized cost of TLMs, categorized by loan type and type of concession granted, for the periods stated.
|  | For the three months ended September 30, 2024 |  |  | For the nine months ended September 30, 2024 |
(Dollars in thousands) |  | Recorded Investment |  |  | % of Recorded Investment to Gross Loans by Category |  |  | Recorded Investment |  |  | % of Recorded Investment to Gross Loans by Category |
Term extension and forbearance |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 335 |  |  |  | 0.09 | % |  | $ | 335 |  |  |  | 0.09 | %
Real estate – residential |  |  | 72 |  |  |  | 0.01 | % |  |  | 72 |  |  |  | 0.01 | %
Real estate – commercial |  |  | 1,743 |  |  |  | 0.20 | % |  |  | 1,781 |  |  |  | 0.20 | %
Total term extension and forbearance |  | $ | 2,150 |  |  |  |  |  | $ | 2,188 |  |  |  |
Payment deferral 6-9 months |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 644 |  |  |  | 0.17 | % |  | $ | 1,024 |  |  |  | 0.27 | %
Real estate – residential |  |  | 504 |  |  |  | 0.07 | % |  |  | 504 |  |  |  | 0.07 | %
Real estate – commercial |  |  | 74 |  |  |  | 0.01 | % |  |  | 74 |  |  |  | 0.01 | %
Consumer loans |  |  | — |  |  |  | — |  |  |  | 11 |  |  |  | 0.02 | %
Total payment deferral |  | $ | 1,222 |  |  |  |  |  | $ | 1,613 |  |  |  |
Total |  | $ | 3,372 |  |  |  |  |  | $ | 3,801 |  |  |  |
|  | For the three months ended September 30, 2023 |  |  | For the nine months ended September 30, 2023 |
(Dollars in thousands) |  | Recorded Investment |  |  | % of Recorded Investment to Gross Loans by Category |  |  | Recorded Investment |  |  | % of Recorded Investment to Gross Loans by Category |
Term extension and forbearance |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 5,806 |  |  |  | 1.09 | % |  | $ | 32,750 |  | (1) |  | 6.14 | %
Real estate – commercial |  |  | 2,999 |  |  |  | 0.34 | % |  |  | 6,208 |  |  |  | 0.71 | %
Total term extension and forbearance |  | $ | 8,805 |  |  |  |  |  | $ | 38,958 |  |  |  |
Interest-only for 6 months |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 297 |  |  |  | 0.06 | % |  | $ | 2,982 |  |  |  | 0.34 | %
Real estate – commercial |  |  | — |  |  |  | — |  |  |  | 244 |  |  |  | 0.03 | %
Total interest-only |  | $ | 297 |  |  |  |  |  | $ | 3,226 |  |  |  |
Payment deferral 3-9 months |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | — |  |  |  | — |  |  | $ | 5,806 |  |  |  | 0.66 | %
Real estate – commercial |  |  | — |  |  |  | — |  |  |  | 2,999 |  |  |  | 0.34 | %
Total payment deferral |  | $ | — |  |  |  |  |  | $ | 8,805 |  |  |  |
Total |  | $ | 9,102 |  |  |  |  |  | $ | 50,989 |  |  |  |
(1) A $32.8 million specialty finance loan was modified via a forbearance agreement in the second quarter of 2023 under which the borrower defaulted in the same period. The Company received cash payments of $4.5 million in the first nine months of 2023 for interest, which were applied to principal as the loan was on nonaccrual status. |
The following tables present an aging analysis of the amortized cost of TLMs as of the dates stated.
|  | September 30, 2024 |
(Dollars in thousands) |  | Current Loans |  |  | 30-89 Days Past Due |  |  | Greater than 90 Days Past Due & Accruing |  |  | Nonaccrual |  |  | Total |
Commercial and industrial |  | $ | 335 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,238 |  |  | $ | 3,573 |
Real estate – construction, residential |  |  | 155 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 155 |
Real estate – residential |  |  | 196 |  |  |  | — |  |  |  | — |  |  |  | 504 |  |  |  | 700 |
Real estate - commercial |  |  | 1,781 |  |  |  | — |  |  |  | — |  |  |  | 3,074 |  |  |  | 4,854 |
Consumer loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11 |  |  |  | 11 |
Total modified loans |  | $ | 2,467 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,826 |  |  | $ | 9,293 |
|  | December 31, 2023 |
(Dollars in thousands) |  | Current Loans |  |  | 30-89 Days Past Due |  |  | Greater than 90 Days Past Due & Accruing |  |  | Nonaccrual |  |  | Total |
Commercial and industrial |  | $ | 1,626 |  |  | $ | — |  |  | $ | — |  |  | $ | 35,486 |  |  | $ | 37,112 |
Real estate – mortgage, commercial |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,087 |  |  |  | 6,087 |
Real estate – mortgage, residential |  |  | 129 |  |  |  | — |  |  |  | — |  |  |  | 577 |  |  |  | 706 |
Real estate – construction, residential |  |  | 155 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 155 |
Total modified loans |  | $ | 1,910 |  |  | $ | — |  |  | $ | — |  |  | $ | 42,150 |  |  | $ | 44,060 |
As of September 30, 2024 and December 31, 2023, there were no unfunded commitments to borrowers of loans modified and designated as TLMs. The following table presents the amortized cost of TLMs that were modified in the preceding twelve months and had a payment default during the periods stated.
|  | For the three months ended September 30, 2024 |  |  | For the nine months ended September 30, 2024 |
(Dollars in thousands) |  | Amortized Cost |  |  | % of Amortized Cost to Gross Loans by Category |  |  | Amortized Cost |  |  | % of Amortized Cost to Gross Loans by Category |
Term extension and forbearance |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | — |  |  |  | — |  |  | $ | 350 |  |  |  | 0.09 | %
Real estate – construction, residential |  |  | — |  |  |  | — |  |  |  | 155 |  |  |  | 0.36 | %
Real estate – commercial |  |  | — |  |  |  | — |  |  |  | 299 |  |  |  | 0.03 | %
Total term extension and forbearance |  | $ | — |  |  |  |  |  | $ | 804 |  |  |  |
Payment deferral 6-9 months |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 225 |  |  |  | 0.06 | % |  | $ | 569 |  |  |  | 0.15 | %
Real estate – commercial |  |  | 74 |  |  |  | 0.01 | % |  |  | 74 |  |  |  | 0.01 | %
Total payment deferral |  | $ | 299 |  |  |  |  |  | $ | 643 |  |  |  |
Total |  | $ | 299 |  |  |  |  |  | $ | 1,447 |  |  |  |
Other than the $32.8 million specialty finance loan that defaulted in the second quarter of 2023 noted above, there were no TLMs that defaulted in 2023. As of September 30, 2024, no residential mortgage loans were in the process of foreclosure.

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