LOANS AND ALLOWANCE FOR CREDIT LOSSES (Revised and Restated) | 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (Revised and Restated) The following table summarizes the composition of our loan portfolio as of June 30, 2023 and December 31, 2022 (in thousands): June 30, 2023 December 31, 2022 Loans held for sale $ 57,704 $ 27,626 Loans held for investment Loans secured by real estate: Commercial real estate - owner occupied (1) $ 454,067 $ 459,866 Commercial real estate - non-owner occupied 595,805 579,733 Secured by farmland 5,271 5,970 Construction and land development 175,073 148,690 Residential 1-4 family 591,938 609,694 Multi-family residential 133,754 140,321 Home equity lines of credit 62,808 65,152 Total real estate loans 2,018,716 2,009,426 Commercial loans (2) 598,305 520,741 Paycheck Protection Program loans 2,143 4,564 Consumer loans 567,755 405,278 Total Non-PCD loans 3,186,919 2,940,009 PCD loans 6,049 6,628 Total loans held for investment $ 3,192,968 $ 2,946,637 1 2 Accrued Interest Receivable Accrued interest receivable on loans totaled $13.5 million and $10.8 million at June 30, 2023 and December 31, 2022, respectively, and is included in other assets in the consolidated balance sheets. Nonaccrual and Past Due Loans Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. In determining whether or not a borrower may be unable to meet payment obligations for each class of loans, we consider the borrower’s debt service capacity through the analysis of current financial information, if available, and/or current information with regards to our collateral position. Regulatory provisions would typically require the placement of a loan on nonaccrual status if (i) principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection or (ii) full payment of principal and interest is not expected. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income on nonaccrual loans is recognized only to the extent that cash payments are received in excess of principal due. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period (at least six months) of repayment performance by the borrower. The following tables present the aging of the recorded investment in past due loans by class of loans held for investment as of June 30, 2023 and December 31, 2022 (in thousands): 30 - 59 60 - 89 90 Days Days Days Total Loans Not Total June 30, 2023 Past Due Past Due or More Past Due Past Due Loans Commercial real estate - owner occupied $ 83 $ 53 $ — $ 136 $ 453,931 $ 454,067 Commercial real estate - non-owner occupied — — 19,187 19,187 576,618 595,805 Secured by farmland 2 — 503 505 4,766 5,271 Construction and land development 41 — — 41 175,032 175,073 Residential 1-4 family 2,277 904 715 3,896 588,042 591,938 Multi- family residential 101 — — 101 133,653 133,754 Home equity lines of credit 670 294 254 1,218 61,590 62,808 Commercial loans 10,437 184 1,371 11,992 586,313 598,305 Paycheck Protection Program loans 7 — 1,775 1,782 361 2,143 Consumer loans 2,628 1,872 129 4,629 563,126 567,755 Total Non-PCD loans 16,246 3,307 23,934 43,487 3,143,432 3,186,919 PCD loans 443 — 1,242 1,685 4,364 6,049 Total $ 16,689 $ 3,307 $ 25,176 $ 45,172 $ 3,147,796 $ 3,192,968 30 - 59 60 - 89 90 Days Days Days Total Loans Not Total December 31, 2022 Past Due Past Due or More Past Due Past Due Loans Commercial real estate - owner occupied $ 55 $ — $ — $ 55 $ 459,811 $ 459,866 Commercial real estate - non-owner occupied 290 169 19,641 20,100 559,633 579,733 Secured by farmland — — — — 5,970 5,970 Construction and land development 46 — — 46 148,644 148,690 Residential 1-4 family 2,180 410 304 2,894 606,800 609,694 Multi- family residential — — — — 140,321 140,321 Home equity lines of credit 431 96 249 776 64,376 65,152 Commercial loans 39 — 2,956 2,995 517,746 520,741 Paycheck Protection Program loans 16 15 3,360 3,391 1,173 4,564 Consumer loans 2,079 1,421 200 3,700 401,578 405,278 Total Non-PCD loans 5,136 2,111 26,710 33,957 2,906,052 2,940,009 PCD loans — — 1,328 1,328 5,300 6,628 Total $ 5,136 $ 2,111 $ 28,038 $ 35,285 $ 2,911,352 $ 2,946,637 The amortized cost, by class, of loans and leases on nonaccrual status at June 30, 2023 and December 31, 2022, were as follows (in thousands): 90 Less Than Total Nonaccrual With Days 90 Days Nonaccrual No Credit June 30, 2023 or More Past Due Loans Loss Allowance Commercial real estate - owner occupied $ — $ 491 $ 491 $ 491 Commercial real estate - non-owner occupied 19,187 — 19,187 1,323 Secured by farmland 503 2 505 505 Construction and land development — 26 26 26 Residential 1-4 family 715 529 1,244 1,244 Home equity lines of credit 254 276 530 530 Commercial loans 1,371 60 1,431 61 Paycheck Protection Program loans 61 — 61 61 Consumer loans 129 444 573 573 Total Non-PCD loans 22,220 1,828 24,048 4,814 PCD loans 1,242 — 1,242 1,242 Total $ 23,462 $ 1,828 $ 25,290 $ 6,056 90 Less Than Total Nonaccrual With Days 90 Days Nonaccrual No Credit December 31, 2022 or More Past Due Loans Loss Allowance Commercial real estate - owner occupied $ — $ 509 $ 509 $ 509 Commercial real estate - non-owner occupied 19,641 — 19,641 19,641 Secured by farmland — 713 713 713 Construction and land development — 29 29 29 Residential 1-4 family 304 8,995 9,299 9,299 Home equity lines of credit 249 301 550 550 Commercial loans 2,956 121 3,077 121 Paycheck Protection Program loans — 4 4 4 Consumer loans 200 134 334 299 Total Non-PCD loans 23,350 10,806 34,156 31,165 PCD loans 1,328 — 1,328 1,328 Total $ 24,678 $ 10,806 $ 35,484 $ 32,493 There were $1.7 million and $3.4 million of Paycheck Protection Program (“PPP”) loans greater than 90 days past due and still accruing at June 30, 2023 and December 31, 2022, respectively . The following table presents nonaccrual loans as of June 30, 2023 by class and year of origination (in thousands): Revolving Loans Revolving Converted 2023 2022 2021 2020 2019 Prior Loans To Term Total Commercial real estate - owner occupied $ — $ — $ — $ — $ — $ 491 $ — $ — $ 491 Commercial real estate - non-owner occupied — — — — 19,187 — — 19,187 Secured by farmland — — — — 2 503 — — 505 Construction and land development — — — — — 26 — — 26 Residential 1-4 family — — — — 981 — 263 1,244 Home equity lines of credit — — — — — 54 457 19 530 Commercial loans — — — 3 — 1,428 — — 1,431 Paycheck Protection Program loans — — — 61 — — — — 61 Consumer loans — 379 194 — — — — — 573 Total non-PCD nonaccruals — 379 194 64 2 22,670 457 282 24,048 PCD loans — — — — — 1,242 — — 1,242 Total nonaccrual loans $ — $ 379 $ 194 $ 64 $ 2 $ 23,912 $ 457 $ 282 $ 25,290 Interest received on nonaccrual loans was zero and $0.1 million for the three months ended June 30, 2023 and 2022, respectively and $0.01 million and $0.3 million for the six months ended June 30, 2023 and 2022, respectively. Modifications Provided to Borrowers Experiencing Financial Difficulty The Bank determines that a borrower may be experiencing financial difficulty if the borrower is currently delinquent on any of its debt, or if the Bank is concerned that the borrower may not be able to perform in accordance with the current terms of the loan agreement in the foreseeable future. Many aspects of the borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty, particularly as it relates to commercial borrowers due to the complex nature of the loan structure, business/industry risk and borrower/guarantor structures. Concessions may include the reduction of an interest rate at a rate lower than current market rates for a new loan with similar risk, extension of the maturity date, reduction of accrued interest, or principal forgiveness. When evaluating whether a concession has been granted, the Bank also considers whether the borrower has provided additional collateral or guarantors and whether such additions adequately compensate the Bank for the restructured terms, or if the revised terms are consistent with those currently being offered to new loan customers. The assessments of whether a borrower is experiencing financial difficulty at the time a concession has been granted is subjective in nature and management’s judgment is required when determining whether the concession results in a modification that is accounted for as a new loan or a continuation of the existing loan under U.S. GAAP. Although each occurrence is unique to the borrower and is evaluated separately, for all portfolio segments, loans modified as a result of borrowers experiencing financial difficulty are typically modified through reduction in interest rates, reductions in payments, changing the payment terms from principal and interest to interest only, and/or extensions in term maturity. For the quarter ended June 30, 2023, two loans from our owner occupied commercial real estate loan portfolio with an amortized cost basis of $0.4 million, were modified for a borrower experiencing financial difficulty. This modification resulted in reamortization of the balance of the notes over a 25 year period, while maintaining the original maturity dates of February and July 2027, respectively. Contractual payments for both notes, prior to modification, for the three month period would have totaled $0.03 million. The modified loans had no payment delinquencies in the second quarter of 2023 and represents 0.09% of our total owner occupied commercial real estate loans. An existing modification performed in the first quarter of 2023, and was comprised of one loan with a $0.9 million amortized cost, which will resume contractual payments in August 2023. This existing modification has had no payment delinquencies since its modification and accounts for only 0.15% of our total 1-4 family residential loans. The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies certain loans by providing principal forgiveness. When principal forgiveness is provided, the amortized cost basis of the loan is written off against the allowance. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses. If it is determined that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. At that time, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. Credit Quality Indicators Through its system of internal controls, Primis evaluates and segments loan portfolio credit quality using regulatory definitions for Special Mention, Substandard and Doubtful. Special Mention loans are considered to be criticized. Substandard and Doubtful loans are considered to be classified. Special Mention loans are loans that have a potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position. Substandard loans may be inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged if any. Loans so classified 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. Doubtful loans have all the weaknesses inherent in those classified as 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. Primis had no loans classified as Doubtful at June 30, 2023 or December 31, 2022. In monitoring credit quality trends in the context of assessing the appropriate level of the allowance for credit losses on loans, we monitor portfolio credit quality by the weighted-average risk grade of each class of loan. The following table presents weighted-average risk grades for all loans, by class and year of origination/renewal as of June 30, 2023 (in thousands) Revolving Loans Revolving Converted 2023 2022 2021 2020 2019 Prior Loans To Term Total Commercial real estate - owner occupied Pass $ 26,032 $ 91,578 $ 61,730 $ 18,444 $ 21,553 $ 214,548 $ 2,832 $ 6,821 $ 443,538 Special Mention — — 220 — — 5,081 — — 5,301 Substandard — — — — 97 5,131 — — 5,228 Doubtful — — — — — — — — — $ 26,032 $ 91,578 $ 61,950 $ 18,444 $ 21,650 $ 224,760 $ 2,832 $ 6,821 $ 454,067 Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Weighted average risk grade 3.49 3.31 3.44 3.39 3.28 3.53 3.66 3.97 3.46 Commercial real estate - nonowner occupied Pass $ 1,472 $ 59,088 $ 120,978 $ 43,528 $ 41,039 $ 281,105 $ 1,884 $ 5,085 $ 554,179 Special Mention — — — 1,548 — 20,291 — 601 22,440 Substandard — — — — — 19,186 — — 19,186 Doubtful — — — — — — — — — $ 1,472 $ 59,088 $ 120,978 $ 45,076 $ 41,039 $ 320,582 $ 1,884 $ 5,686 $ 595,805 Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Weighted average risk grade 3.15 3.27 3.08 3.83 3.95 3.84 2.86 3.21 3.63 Secured by farmland Pass $ 514 $ — $ 13 $ 108 $ — $ 3,627 $ 328 $ 176 $ 4,766 Special Mention — — — — — — — — — Substandard — — — — 2 503 — — 505 Doubtful — — — — — — — — — $ 514 $ — $ 13 $ 108 $ 2 $ 4,130 $ 328 $ 176 $ 5,271 Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Weighted average risk grade N/A N/A 4.00 4.00 6.00 4.02 3.92 3.12 3.97 Construction and land development Pass $ 15,392 $ 61,912 $ 71,105 $ 544 $ 2,522 $ 21,805 $ 807 $ 9 $ 174,096 Special Mention — — — — — 951 — — 951 Substandard — — — — — 26 — — 26 Doubtful — — — — — — — — — $ 15,392 $ 61,912 $ 71,105 $ 544 $ 2,522 $ 22,782 $ 807 $ 9 $ 175,073 Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Weighted average risk grade 3.55 3.21 3.39 3.39 3.29 3.57 3.37 4.00 3.36 Residential 1-4 family Pass $ 12,664 $ 153,892 $ 154,811 $ 42,560 $ 57,486 $ 162,489 $ 1,908 $ 2,736 $ 588,546 Special Mention — — — — — 179 — — 179 Substandard — — — — 118 2,363 — 732 3,213 Doubtful — — — — — — — — — $ 12,664 $ 153,892 $ 154,811 $ 42,560 $ 57,604 $ 165,031 $ 1,908 $ 3,468 $ 591,938 Current period gross charge offs $ — $ — $ — $ — $ 94 $ — $ — $ — $ 94 Weighted average risk grade 3.16 3.08 3.04 3.07 3.07 3.22 3.92 3.64 3.12 Multi- family residential Pass $ — $ 8,257 $ 21,678 $ 18,045 $ 6,997 $ 76,520 $ 649 $ 648 $ 132,794 Special Mention — — — — — — — — — Substandard — — — — — 669 — 291 960 Doubtful — — — — — — — — — $ — $ 8,257 $ 21,678 $ 18,045 $ 6,997 $ 77,189 $ 649 $ 939 $ 133,754 Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Weighted average risk grade N/A 3.69 3.00 3.90 3.00 3.41 4.00 4.62 3.42 Home equity lines of credit Pass $ 75 $ 492 $ 423 $ 50 $ 52 $ 3,201 $ 57,009 $ 880 $ 62,182 Special Mention — — — — — — — — — Substandard — — — — — 54 553 19 626 Doubtful — — — — — — — — — $ 75 $ 492 $ 423 $ 50 $ 52 $ 3,255 $ 57,562 $ 899 $ 62,808 Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Weighted average risk grade 3.00 3.00 3.00 3.00 3.00 3.89 3.05 3.93 3.11 Commercial loans Pass $ 123,570 $ 290,981 $ 54,530 $ 6,648 $ 2,888 $ 28,008 $ 81,285 $ 6,947 $ 594,857 Special Mention — — — 12 144 — 1,311 360 1,827 Substandard — — — 3 66 1,552 — — 1,621 Doubtful — — — — — — — — — $ 123,570 $ 290,981 $ 54,530 $ 6,663 $ 3,098 $ 29,560 $ 82,596 $ 7,307 $ 598,305 Current period gross charge offs $ — $ — $ — $ — $ — $ 1,590 $ — $ — $ 1,590 Weighted average risk grade 2.74 3.01 3.36 3.36 3.98 3.47 3.20 3.82 3.06 Revolving Loans Revolving Converted 2023 2022 2021 2020 2019 Prior Loans To Term Total Paycheck Protection Program loans Pass $ — $ — $ 1,115 $ 967 $ — $ — $ — $ — $ 2,082 Special Mention — — — 61 — — — — 61 Substandard — — — — — — — — — Doubtful — — — — — — — — — $ — $ — $ 1,115 $ 1,028 $ — $ — $ — $ — $ 2,143 Current period gross charge offs $ — $ — $ — $ $ — $ — $ — $ — $ — Weighted average risk grade N/A N/A 2.00 2.24 N/A N/A N/A N/A 2.11 Consumer loans Pass $ 279,034 $ 249,363 $ 26,879 $ 1,209 $ 200 $ 4,176 $ 5,872 $ 186 $ 566,919 Special Mention — — — — — 67 — — 67 Substandard — 382 387 — — — — — 769 Doubtful — — — — — — — — — $ 279,034 $ 249,745 $ 27,266 $ 1,209 $ 200 $ 4,243 $ 5,872 $ 186 $ 567,755 Current period gross charge offs $ — $ 3,729 $ 751 $ — $ — $ — $ — $ — $ 4,480 Weighted average risk grade 3.50 2.70 3.67 3.99 3.97 4.02 2.93 4.00 3.16 PCD Pass $ — $ — $ — $ — $ — $ 2,908 $ — $ — $ 2,908 Special Mention — — — — — 1,618 — — 1,618 Substandard — — — — — 1,523 — — 1,523 Doubtful — — — — — — — — — $ — $ — $ — $ — $ — $ 6,049 $ — $ — $ 6,049 Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Weighted average risk grade N/A N/A N/A N/A N/A 4.67 N/A N/A 4.67 Total $ 458,753 $ 915,945 $ 513,869 $ 133,727 $ 133,164 $ 857,581 $ 154,438 $ 25,491 $ 3,192,968 Current period gross charge offs $ — $ 3,729 $ 751 $ — $ 94 $ 1,590 $ — $ — $ 6,164 Weighted average risk grade 3.29 3.00 3.21 3.50 3.40 3.59 3.16 3.73 3.29 The following table presents weighted-average risk grades for all loans, by class and year of origination/renewal as of December 31, 2022 (in thousands): Revolving Loans Revolving Converted 2022 2021 2020 2019 2018 Prior Loans To Term Total Commercial real estate - owner occupied Pass $ 116,545 $ 58,202 $ 19,178 $ 21,985 $ 27,397 $ 202,484 $ 3,389 $ 6,740 $ 455,920 Special Mention — — — — — 988 — — 988 Substandard — — — — — 2,958 — — 2,958 Doubtful — — — — — — — — — $ 116,545 $ 58,202 $ 19,178 $ 21,985 $ 27,397 $ 206,430 $ 3,389 $ 6,740 $ 459,866 Weighted average risk grade 3.25 3.45 3.38 3.27 3.43 3.50 3.52 3.96 3.42 Commercial real estate - nonowner occupied Pass $ 28,128 $ 126,291 $ 44,696 $ 41,631 $ 55,702 $ 228,735 $ 4,173 $ 3,065 $ 532,421 Special Mention — — 1,566 — 926 24,580 — 601 27,673 Substandard — — — — 13,066 6,573 — — 19,639 Doubtful — — — — — — — — — $ 28,128 $ 126,291 $ 46,262 $ 41,631 $ 69,694 $ 259,888 $ 4,173 $ 3,666 $ 579,733 Weighted average risk grade 3.36 3.16 3.82 3.95 4.01 3.82 2.87 3.33 3.68 Secured by farmland Pass $ 141 $ 16 $ 110 $ — $ — $ 3,425 $ 551 $ 85 $ 4,328 Special Mention — — — — — 649 — 112 761 Substandard — — — 6 — 875 — — 881 Doubtful — — — — — — — — — $ 141 $ 16 $ 110 $ 6 $ — $ 4,949 $ 551 $ 197 $ 5,970 Weighted average risk grade 4.00 4.00 4.00 6.00 N/A 4.20 3.98 3.70 4.13 Construction and land development Pass $ 44,253 $ 73,226 $ 847 $ 3,006 $ 6,937 $ 19,553 $ 822 $ 17 $ 148,661 Special Mention — — — — — — — — — Substandard — — — — — 29 — — 29 Doubtful — — — — — — — — — $ 44,253 $ 73,226 $ 847 $ 3,006 $ 6,937 $ 19,582 $ 822 $ 17 $ 148,690 Weighted average risk grade 3.21 3.06 3.60 3.42 3.17 3.69 3.36 4.00 3.20 Residential 1-4 family Pass $ 152,178 $ 157,233 $ 43,812 $ 61,268 $ 40,707 $ 138,782 $ 1,837 $ 3,437 $ 599,254 Special Mention — — — — — 30 — — 30 Substandard 285 — — 8,099 — 1,310 — 716 10,410 Doubtful — — — — — — — — — $ 152,463 $ 157,233 $ 43,812 $ 69,367 $ 40,707 $ 140,122 $ 1,837 $ 4,153 $ 609,694 Weighted average risk grade 3.09 3.04 3.07 3.41 3.13 3.23 3.92 3.54 3.15 Multi- family residential Pass $ 9,953 $ 21,927 $ 18,338 $ 7,064 $ 1,804 $ 75,370 $ 4,192 $ 676 $ 139,324 Special Mention — — — — — — — — — Substandard — — — — — 702 — 295 997 Doubtful — — — — — — — — — $ 9,953 $ 21,927 $ 18,338 $ 7,064 $ 1,804 $ 76,072 $ 4,192 $ 971 $ 140,321 Weighted average risk grade 3.58 3.00 3.90 3.00 3.21 3.31 4.00 4.61 3.37 Home equity lines of credit Pass $ 463 $ 431 $ 52 $ 63 $ 230 $ 4,093 $ 58,312 $ 957 $ 64,601 Special Mention — — — — — — — — — Substandard — — — — — 54 476 21 551 Doubtful — — — — — — — — — $ 463 $ 431 $ 52 $ 63 $ 230 $ 4,147 $ 58,788 $ 978 $ 65,152 Weighted average risk grade 3.00 3.00 3.00 3.00 3.00 3.94 3.05 3.89 3.12 Commercial loans Pass $ 295,459 $ 59,642 $ 6,768 $ 6,369 $ 9,228 $ 20,883 $ 100,207 $ 17,381 $ 515,937 Special Mention — 396 64 74 — — 519 388 1,441 Substandard — — 5 90 — 1,678 1,590 — 3,363 Doubtful — — — — — — — — — $ 295,459 $ 60,038 $ 6,837 $ 6,533 $ 9,228 $ 22,561 $ 102,316 $ 17,769 $ 520,741 Weighted average risk grade 3.14 3.41 3.38 3.90 3.42 3.70 3.47 3.33 3.29 Paycheck Protection Program loans Pass $ — $ 2,119 $ 2,435 $ — $ — $ — $ — $ — $ 4,554 Special Mention — — — — — — — — — Substandard — 10 — — — — — — 10 Doubtful — — — — — — — — — $ — $ 2,129 $ 2,435 $ — $ — $ — $ — $ — $ 4,564 Weighted average risk grade N/A 2.02 2.00 N/A N/A N/A N/A N/A 2.01 Revolving Loans Revolving Converted 2022 2021 2020 2019 2018 Prior Loans To Term Total Consumer loans Pass $ 365,842 $ 29,184 $ 1,493 $ 340 $ 534 $ 4,319 $ 2,918 $ — $ 404,630 Special Mention — — — — — 65 — — 65 Substandard 70 513 — — — — — — 583 Doubtful — — — — — — — — — $ 365,912 $ 29,697 $ 1,493 $ 340 $ 534 $ 4,384 $ 2,918 $ — $ 405,278 Weighted average risk grade 3.24 3.74 3.99 3.98 4.00 4.02 3.81 N/A 3.30 PCD Pass $ — $ — $ — $ — $ — $ 3,692 $ — $ — $ 3,692 Special Mention — — — — — 1,320 — — 1,320 Substandard — — — — — 1,616 — — 1,616 Doubtful — — — — — — — — — $ — $ — $ — $ — $ — $ 6,628 $ — $ — $ 6,628 Weighted average risk grade N/A N/A N/A N/A N/A 4.54 N/A N/A 4.54 Total $ 1,013,317 $ 529,190 $ 139,364 $ 149,995 $ 156,531 $ 744,763 $ 178,986 $ 34,491 $ 2,946,637 Weighted average risk grade 3.20 3.19 3.48 3.54 3.60 3.57 3.35 3.53 3.36 Revolving loans that converted to term during the reported periods were as follows (in thousands): For the three months ended June 30, 2023 For the six months ended June 30, 2023 Commercial real estate - owner occupied $ 214 $ 214 Commercial real estate - non-owner occupied — 2,057 Secured by farmland — — Construction and land development — — Residential 1-4 family 142 142 Multi- family residential — — Home equity lines of credit — — Commercial loans — 186 Paycheck Protection Program loans — — Consumer loans — — Total loans $ 356 $ 2,599 The recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure was $0.3 million and $0.1 million at June 30, 2023 and December 31, 2022, respectively. Allowance For Credit Losses – Loans The allowance for credit losses on loans is a contra-asset valuation account, calculated in accordance with ASC 326 that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. The amount of the allowance represents management's best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans' contractual terms, adjusted for expected prepayments when appropriate. In calculating the allowance for credit losses, most loans are segmented into pools based upon similar characteristics and risk profiles. For allowance modeling purposes, our loan pools include but are not limited to (i) commercial real |