Loans and ACL

9 Months Ended

Sep. 30, 2024

Note 3 – Loans 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. The 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.