Loans | Note 4 — Loans Loans consist of the following: (Dollars in thousands) September 30, 2023 December 31, 2022 Loans held for sale $ 14,944 $ 49,957 LHFI: Loans secured by real estate: Owner occupied commercial real estate $ 932,109 $ 843,006 Non-owner occupied commercial real estate 1,503,782 1,461,672 Total commercial real estate 2,435,891 2,304,678 Construction/land/land development 1,076,756 945,625 Residential real estate 1,688,169 1,477,538 Total real estate 5,200,816 4,727,841 Commercial and industrial 2,058,073 2,051,161 Mortgage warehouse lines of credit 286,293 284,867 Consumer 22,881 26,153 Total LHFI (1) 7,568,063 7,090,022 Less: Allowance for loan credit losses (“ALCL”) 95,177 87,161 LHFI, net $ 7,472,886 $ 7,002,861 ____________________________ (1) Includes unamortized purchase accounting adjustment and net deferred loan fees of $11.5 million and $14.2 million at September 30, 2023, and December 31, 2022, respectively. As of September 30, 2023, and December 31, 2022, the remaining purchase accounting net loan discount was $179,000 and $2.2 million, respectively. Credit quality indicators. As part of the Company’s commitment to managing the credit quality of its loan portfolio, management annually and periodically updates and evaluates certain credit quality indicators, which include but are not limited to (i) weighted-average risk rating of the loan portfolio, (ii) net charge-offs, (iii) level of non-performing loans, (iv) level of classified loans (defined as substandard, doubtful and loss), and (v) the general economic conditions in the cities and states in which the Company operates. The Company maintains an internal risk rating system where ratings are assigned to individual loans based on assessed risk. Loan risk ratings are the primary indicator of credit quality for the loan portfolio and are continually evaluated to ensure they are appropriate based on currently available information. The following is a summary description of the Company’s internal risk ratings: • Pass (1-6) Loans within this risk rating are further categorized as follows: Minimal risk (1) Well-collateralized by cash equivalent instruments held by the Banks. Moderate risk (2) Borrowers with excellent asset quality and liquidity. Borrowers’ capitalization and liquidity exceed industry norms. Borrowers in this category have significant levels of liquid assets and have a low level of leverage. Better than average risk (3) Borrowers with strong financial strength and excellent liquidity that consistently demonstrate strong operating performance. Borrowers in this category generally have a sizable net worth that can be converted into liquid assets within 12 months. Average risk (4) Borrowers with sound credit quality and financial performance, including liquidity. Borrowers are supported by sufficient cash flow coverage generated through operations across the full business cycle. Marginally acceptable risk (5) Loans generally meet minimum requirements for an acceptable loan in accordance with lending policy, but possess one or more attributes that cause the overall risk profile to be higher than the majority of newly approved loans. Watch (6) A passing loan with one or more factors that identify a potential weakness in the overall ability of the borrower to repay the loan. These weaknesses are generally mitigated by other factors that reduce the risk of delinquency or loss. • Special Mention (7) This grade is intended to be temporary and includes borrowers whose credit quality has deteriorated and is at risk of further decline. • Substandard (8) This grade includes “Substandard” loans under regulatory guidelines. Substandard loans exhibit a well-defined weakness that jeopardizes debt repayment in accordance with contractual agreements, even though the loan may be performing. These obligations are characterized by the distinct possibility that a loss may be incurred if these weaknesses are not corrected and repayment may be dependent upon collateral liquidation or secondary source of repayment. • Doubtful (9) This grade includes “Doubtful” loans under regulatory guidelines. Such loans are placed on nonaccrual status and repayment may be dependent upon collateral with no readily determinable valuation or valuations that are highly subjective in nature. Repayment for these loans is considered improbable based on currently existing facts and circumstances. • Loss (0) This grade includes “Loss” loans under regulatory guidelines. Loss loans are charged-off or written down when repayment is not expected. In connection with the review of the loan portfolio, the Company considers risk elements attributable to particular loan types or categories in assessing the quality of individual loans. The list of loans to be reviewed for possible individual evaluation consists of nonaccrual commercial loans over $100,000 with direct exposure, unsecured loans over 90 days past due, commercial loans classified as substandard or worse over $100,000 with direct exposure, modified loans to borrowers experiencing financial difficulty, consumer loans greater than $100,000 with a FICO score under 625, loans greater than $100,000 in which the borrower has filed bankruptcy, and all loans 180 days or more past due. Loans under $50,000 will be evaluated collectively in designated pools unless a loss exposure has been identified. Some additional risk elements considered by loan type include: • for commercial real estate loans, the debt service coverage ratio, operating results of the owner in the case of owner-occupied properties, the loan to value ratio, the age and condition of the collateral and the volatility of income, property value and future operating results typical of properties of that type; • for construction, land and land development loans, the perceived feasibility of the project, including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer and loan to value ratio; • for residential mortgage loans, the borrower’s ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral; and • for commercial and industrial loans, the debt service coverage ratio (income from the business in excess of operating expenses compared to loan repayment requirements), the operating results of the commercial, industrial or professional enterprise, the borrower’s business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category and the value, nature and marketability of collateral. Purchased loans that have experienced more than insignificant credit deterioration since origination are PCD loans. An allowance for credit losses is determined using the same methodology as other individually evaluated loans. As a result of the merger with BT Holdings, Inc., (“BTH”), the Company held approximately $36.8 million and $48.1 million of unpaid principal balance PCD loans at September 30, 2023, and December 31, 2022, respectively. Please see Note 1 — Significant Accounting Policies included in the 2022 Form 10-K, filed with the SEC for a description of our accounting policies related to purchased financial assets with credit deterioration. The following table reflects recorded investments in loans by credit quality indicator and origination year at September 30, 2023, and gross charge-offs for the nine months ended September 30, 2023, excluding loans held for sale. Loans acquired are shown in the table by origination year, not merger date. The Company had an immaterial amount of revolving loans converted to term loans at September 30, 2023. Term Loans Amortized Cost Basis by Origination Year (Dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total Commercial real estate: Pass $ 269,854 $ 888,014 $ 485,198 $ 257,683 $ 223,348 $ 209,716 $ 76,329 $ 2,410,142 Special mention — — — — — 7,996 — 7,996 Classified 745 1,916 3,239 1,595 587 9,671 — 17,753 Total commercial real estate loans $ 270,599 $ 889,930 $ 488,437 $ 259,278 $ 223,935 $ 227,383 $ 76,329 $ 2,435,891 Current period year-to-date gross charge-offs $ — $ — $ — $ — $ — $ 42 $ — $ 42 Construction/land/land development: Pass $ 203,868 $ 492,097 $ 235,360 $ 30,838 $ 17,281 $ 25,621 $ 35,821 $ 1,040,886 Special mention — 10,718 20,932 — — — — 31,650 Classified 1 180 54 245 667 754 2,319 4,220 Total construction/land/land development loans $ 203,869 $ 502,995 $ 256,346 $ 31,083 $ 17,948 $ 26,375 $ 38,140 $ 1,076,756 Current period year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Residential real estate: Pass $ 279,903 $ 517,755 $ 305,358 $ 242,179 $ 99,778 $ 149,748 $ 83,182 $ 1,677,903 Special mention 250 — — 145 — 309 — 704 Classified 342 1,988 1,471 420 1,378 3,853 110 9,562 Total residential real estate loans $ 280,495 $ 519,743 $ 306,829 $ 242,744 $ 101,156 $ 153,910 $ 83,292 $ 1,688,169 Current period year-to-date gross charge-offs $ — $ — $ — $ 5 $ — $ 22 $ — $ 27 Commercial and industrial: Pass $ 252,933 $ 328,833 $ 183,124 $ 40,747 $ 61,655 $ 53,379 $ 1,091,475 $ 2,012,146 Special mention 524 9,918 — 96 — — 3,026 13,564 Classified 2,492 1,488 8,724 313 1,005 430 17,911 32,363 Total commercial and industrial loans $ 255,949 $ 340,239 $ 191,848 $ 41,156 $ 62,660 $ 53,809 $ 1,112,412 $ 2,058,073 Current period year-to-date gross charge-offs $ 111 $ 263 $ 40 $ 141 $ — $ 411 $ 7,104 $ 8,070 Mortgage Warehouse Lines of Credit: Pass $ — $ — $ — $ — $ — $ — $ 286,293 $ 286,293 Current period year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Consumer: Pass $ 8,423 $ 4,473 $ 1,659 $ 510 $ 522 $ 58 $ 7,113 $ 22,758 Classified 20 72 27 — 3 — 1 123 Total consumer loans $ 8,443 $ 4,545 $ 1,686 $ 510 $ 525 $ 58 $ 7,114 $ 22,881 Current period year-to-date gross charge-offs $ — $ 90 $ 7 $ — $ — $ — $ 10 $ 107 The following table reflects recorded investments in loans by credit quality indicator and origination year at December 31, 2022, and gross charge-offs for the year ended December 31, 2022, excluding loans held for sale. Loans acquired are shown in the table by origination year, not merger date. The Company had an immaterial amount of revolving loans converted to term loans at December 31, 2022. Term Loans Amortized Cost Basis by Origination Year (Dollars in thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total Commercial real estate: Pass $ 885,244 $ 502,287 $ 283,368 $ 230,040 $ 168,079 $ 131,411 $ 69,952 $ 2,270,381 Special mention — — — — 8,174 1,359 1,558 11,091 Classified 930 1,795 1,551 4,014 2,965 11,901 50 23,206 Total commercial real estate loans $ 886,174 $ 504,082 $ 284,919 $ 234,054 $ 179,218 $ 144,671 $ 71,560 $ 2,304,678 Current period year-to-date gross charge-offs $ — $ — $ — $ — $ — $ 166 $ — $ 166 Construction/land/land development: Pass $ 445,943 $ 320,951 $ 58,880 $ 27,381 $ 27,753 $ 5,253 $ 48,436 $ 934,597 Special mention 6,217 — — — — — — 6,217 Classified 180 100 286 38 160 1,708 2,339 4,811 Total construction/land/land development loans $ 452,340 $ 321,051 $ 59,166 $ 27,419 $ 27,913 $ 6,961 $ 50,775 $ 945,625 Current period year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Residential real estate: Pass $ 535,739 $ 308,070 $ 261,293 $ 107,530 $ 48,652 $ 123,052 $ 80,375 $ 1,464,711 Special mention — — 390 — — — — 390 Classified 2,227 2,764 90 1,494 1,064 4,653 145 12,437 Total residential real estate loans $ 537,966 $ 310,834 $ 261,773 $ 109,024 $ 49,716 $ 127,705 $ 80,520 $ 1,477,538 Current period year-to-date gross charge-offs $ — $ — $ — $ — $ — $ 91 $ — $ 91 Commercial and industrial: Pass $ 454,813 $ 239,411 $ 82,168 $ 75,043 $ 40,534 $ 29,745 $ 1,083,221 $ 2,004,935 Special mention 8,683 2,563 — — 187 — 1,620 13,053 Classified 3,641 11,455 188 1,978 1,224 3 14,684 33,173 Total commercial and industrial loans $ 467,137 $ 253,429 $ 82,356 $ 77,021 $ 41,945 $ 29,748 $ 1,099,525 $ 2,051,161 Current period year-to-date gross charge-offs $ 28 $ 726 $ 48 $ 869 $ 337 $ 1,103 $ 5,348 $ 8,459 Term Loans Amortized Cost Basis by Origination Year (Dollars in thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total Mortgage Warehouse Lines of Credit: Pass $ — $ — $ — $ — $ — $ — $ 282,298 $ 282,298 Special mention — — — — — — 2,042 2,042 Classified — — — — — — 527 527 Total mortgage warehouse lines of credit $ — $ — $ — $ — $ — $ — $ 284,867 $ 284,867 Current period year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Consumer: Pass $ 9,730 $ 3,822 $ 1,210 $ 784 $ 135 $ 15 $ 10,408 $ 26,104 Classified 22 19 — 6 — — 2 49 Total consumer loans $ 9,752 $ 3,841 $ 1,210 $ 790 $ 135 $ 15 $ 10,410 $ 26,153 Current period year-to-date gross charge-offs $ 3 $ 27 $ 7 $ 2 $ 1 $ 1 $ 2 $ 43 The following tables present the Company’s loan portfolio aging analysis at the dates indicated: September 30, 2023 (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Loans Past Due 90 Days or More Total Past Due Current Loans Total Loans Receivable Accruing Loans 90 or More Days Past Due Loans secured by real estate: Commercial real estate $ — $ — $ 136 $ 136 $ 2,435,755 $ 2,435,891 $ — Construction/land/land development 1,085 23 55 1,163 1,075,593 1,076,756 — Residential real estate 261 3,076 4,425 7,762 1,680,407 1,688,169 — Total real estate 1,346 3,099 4,616 9,061 5,191,755 5,200,816 — Commercial and industrial 918 6,746 3,509 11,173 2,046,900 2,058,073 — Mortgage warehouse lines of credit — — — — 286,293 286,293 — Consumer 88 10 15 113 22,768 22,881 — Total LHFI $ 2,352 $ 9,855 $ 8,140 $ 20,347 $ 7,547,716 $ 7,568,063 $ — December 31, 2022 (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Loans Past Due 90 Days or More Total Past Due Current Loans Total Loans Receivable Accruing Loans 90 or More Days Past Due Loans secured by real estate: Commercial real estate $ 31 $ — $ 104 $ 135 $ 2,304,543 $ 2,304,678 $ — Construction/land/land development 854 — 17 871 944,754 945,625 — Residential real estate 1,814 891 450 3,155 1,474,383 1,477,538 — Total real estate 2,699 891 571 4,161 4,723,680 4,727,841 — Commercial and industrial 3,878 1,972 544 6,394 2,044,767 2,051,161 — Mortgage warehouse lines of credit — — — — 284,867 284,867 — Consumer 350 16 11 377 25,776 26,153 — Total LHFI $ 6,927 $ 2,879 $ 1,126 $ 10,932 $ 7,079,090 $ 7,090,022 $ — The following tables detail activity in the ALCL by portfolio segment. Accrued interest of $33.0 million and $21.9 million was not included in the book value for the purposes of calculating the allowance at September 30, 2023 and 2022, respectively. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories. Three Months Ended September 30, 2023 Commercial Real Estate Construction/ Land/ Land Development Residential Real Estate Commercial and Industrial Mortgage Warehouse Lines of Credit Consumer Total (Dollars in thousands) Beginning balance $ 20,839 $ 8,729 $ 9,018 $ 54,173 $ 817 $ 777 $ 94,353 Charge-offs — — — 3,187 — 15 3,202 Recoveries 28 3 3 477 — 5 516 Provision (1) (1,758) 613 1,048 3,990 (359) (24) 3,510 Ending balance $ 19,109 $ 9,345 $ 10,069 $ 55,453 $ 458 $ 743 $ 95,177 Average balance $ 2,428,969 $ 1,044,180 $ 1,663,291 $ 2,024,675 $ 376,275 $ 23,704 $ 7,561,094 Net charge-offs to loan average balance (annualized) — % — % — % 0.53 % — % 0.17 % 0.14 % __________________________ (1) The $3.5 million provision for credit losses on the consolidated statements of income includes a $3.5 million provision for loan credit losses, a $50,000 provision for off-balance sheet commitments and $45,000 net benefit provision for held to maturity securities credit losses for the three months ended September 30, 2023. Three Months Ended September 30, 2022 Commercial Real Estate Construction/ Land/ Land Development Residential Real Estate Commercial and Industrial Mortgage Warehouse Lines of Credit Consumer Total (Dollars in thousands) Beginning balance $ 16,112 $ 4,707 $ 5,851 $ 35,477 $ 459 $ 517 $ 63,123 Allowance for loan credit losses - BTH merger (1) 1 — — 5,525 — 1 5,527 Charge-offs — — — 1,618 — 10 1,628 Recoveries 17 200 6 325 — 2 550 Provision (2) 1,901 2,159 1,898 9,349 97 383 15,787 Ending balance $ 18,031 $ 7,066 $ 7,755 $ 49,058 $ 556 $ 893 $ 83,359 Average balance $ 2,046,411 $ 760,682 $ 1,249,746 $ 1,816,912 $ 491,584 $ 24,137 $ 6,389,472 Net charge-offs to loan average balance (annualized) — % (0.10) % — % 0.28 % — % 0.13 % 0.07 % ____________________________ (1) Excluded from the allowance is $10.8 million in PCD loans that were acquired in the merger with BTH that were added to the allowance and immediately written off. (2) The $16.9 million provision for credit losses on the consolidated statements of income includes a $15.8 million provision for loan losses, a $1.2 million provision for off-balance sheet commitments and no provision for held to maturity securities credit losses for the three months ended September 30, 2022. Nine Months Ended September 30, 2023 Commercial Real Estate Construction/ Land/ Land Development Residential Real Estate Commercial and Industrial Mortgage Warehouse Lines of Credit Consumer Total (Dollars in thousands) Beginning balance $ 19,772 $ 7,776 $ 8,230 $ 50,148 $ 379 $ 856 $ 87,161 Charge-offs 42 — 27 8,070 — 107 8,246 Recoveries 113 3 13 2,189 — 12 2,330 Provision (1) (734) 1,566 1,853 11,186 79 (18) 13,932 Ending balance $ 19,109 $ 9,345 $ 10,069 $ 55,453 $ 458 $ 743 $ 95,177 Average balance $ 2,393,028 $ 997,296 $ 1,599,803 $ 2,051,272 $ 329,205 $ 24,836 $ 7,395,440 Net charge-offs to loan average balance (annualized) — % — % — % 0.38 % — % 0.51 % 0.11 % _________________________ (1) The $14.0 million provision for credit losses on the consolidated statement of income includes a $13.9 million provision for loan losses, a $95,000 provision for off-balance sheet commitments and a $9,000 net benefit provision for held to maturity securities credit losses for the nine months ended September 30, 2023. Nine Months Ended September 30, 2022 Commercial Real Estate Construction/ Land/ Land Development Residential Real Estate Commercial and Industrial Mortgage Warehouse Lines of Credit Consumer Total (Dollars in thousands) Beginning balance $ 13,425 $ 4,011 $ 6,116 $ 40,146 $ 340 $ 548 $ 64,586 Allowance for loan credit losses - BTH merger (1) 1 — — 5,525 — 1 5,527 Charge-offs 166 — 75 5,943 — 38 6,222 Recoveries 19 200 98 1,505 — 15 1,837 Provision (2) 4,752 2,855 1,616 7,825 216 367 17,631 Ending balance $ 18,031 $ 7,066 $ 7,755 $ 49,058 $ 556 $ 893 $ 83,359 Average balance $ 1,865,658 $ 638,683 $ 1,042,397 $ 1,548,419 $ 453,658 $ 18,887 $ 5,567,702 Net charge-offs to loan average balance (annualized) 0.01 % (0.04) % — % 0.38 % — % 0.16 % 0.11 % _________________________ (1) Excluded from the allowance is $10.8 million in PCD loans that were acquired in the merger with BTH that were added to the allowance and immediately written off. (2) The $20.1 million provision for credit losses on the consolidated statements of income includes a $17.6 million provision for loan losses, a $1.7 million provision for off-balance sheet commitments and a $725,000 provision for held to maturity securities credit losses for the nine months ended September 30, 2022. The decrease in provision expense during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, was primarily due to the provision expense increase associated with the BTH merger which occurred on August 1, 2022, offset by an increase in loan provision primarily due to loan growth during the intervening period, as well as an increase in the provision for individually evaluated loan balances at September 30, 2023, compared to September 30, 2022. The Company’s credit quality profile in relation to the ALCL drove an increase of $7.3 million in the collectively evaluated portion of the reserve at September 30, 2023, when compared to September 30, 2022, primarily due to qualitative factor changes across the Company’s risk pools. The individually evaluated portion of the reserve increased $4.5 million at September 30, 2023, when compared to September 30, 2022. The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related ALCL allocated to these loans. September 30, 2023 (Dollars in thousands) Commercial Real Estate Construction/ Land/ Land Development Residential Real Estate Commercial and Industrial Mortgage Warehouse Lines of Credit Consumer Total Real Estate $ 752 $ — $ 3,799 $ — $ — $ — $ 4,551 Equipment — — — 152 — — 152 Other — — — 529 — — 529 Total $ 752 $ — $ 3,799 $ 681 $ — $ — $ 5,232 ALCL Allocation $ — $ — $ — $ — $ — $ — $ — December 31, 2022 (Dollars in thousands) Commercial Real Estate Construction/ Land/ Land Development Residential Real Estate Commercial and Industrial Mortgage Warehouse Lines of Credit Consumer Total Real Estate $ 273 $ 97 $ 6,731 $ — $ — $ — $ 7,101 Accounts Receivable — — — 831 — — 831 Equipment — — — 285 — — 285 Total $ 273 $ 97 $ 6,731 $ 1,116 $ — $ — $ 8,217 ALCL Allocation $ — $ — $ — $ 738 $ — $ — $ 738 Collateral-dependent loans consist primarily of residential real estate, commercial real estate and commercial and industrial loans. These loans are individually evaluated when foreclosure is probable or when the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral. In the case of commercial and industrial loans secured by equipment, the fair value of the collateral is estimated by third-party valuation experts. Loan balances are charged down to the underlying collateral value when they are deemed uncollectible. Note that the Company did not elect to use the collateral maintenance agreement practical expedient available under CECL. Nonaccrual LHFI was as follows: Nonaccrual With No Total Nonaccrual (Dollars in thousands) Loans secured by real estate: September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 Commercial real estate $ 900 $ 435 $ 942 $ 526 Construction/land/land development — 59 235 270 Residential real estate 5,363 7,023 13,236 7,712 Total real estate 6,263 7,517 14,413 8,508 Commercial and industrial 4,592 527 17,072 1,383 Consumer — — 123 49 Total nonaccrual loans $ 10,855 $ 8,044 $ 31,608 $ 9,940 All interest formerly accrued but not received for loans placed on nonaccrual status is reversed from interest income. Subsequent receipts on nonaccrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. At September 30, 2023, and December 31, 2022, the Company had $682,000 and zero funding commitments for loans in which the terms were modified as a result of the borrowers experiencing financial difficulty, respectively. For the nine months ended September 30, 2023 and 2022, gross interest income that would have been recorded had the nonaccruing loans been current in accordance with their original terms, was $884,000 and $799,000, respectively. No interest income was recorded on these loans while they were considered nonaccrual during the nine months ended September 30, 2023 and 2022. The Company elects the fair value option for recording residential mortgage loans held for sale in accordance with U.S. GAAP. The Company transferred $7.1 million of nonperforming mortgage loans from the held for sale portfolio to the held for investment portfolio during the three months ended June 30, 2023. As a result, the company had zero nonaccrual mortgage loans held for sale that were recorded using the fair value option election at September 30, 2023, compared to $3.9 million at December 31, 2022. The tables below summarize modifications made to borrowers experiencing financial difficulty by loan and modification type during the dates indicated. Three Months Ended September 30, 2023 Term Extension Combination: Other-Than-Insignificant Payment Delay (Dollars in thousands) Amortized Cost % of Loans Amortized Cost % of Loans Amortized Cost % of Loans Loans secured by real estate: Commercial real estate $ 7,507 0.31 % $ — — % $ 427 0.02 % Construction/land/land development 3,807 0.35 — — — — Residential real estate 745 0.04 — — — — Total real estate 12,059 0.23 — — 427 0.01 Commercial and industrial 13,935 0.68 923 0.04 53 — Total $ 25,994 0.34 $ 923 0.01 $ 480 0.01 Nine Months Ended September 30, 2023 Term Extension Combination: Other-Than-Insignificant Payment Delay (Dollars in thousands) Amortized Cost % of Loans Amortized Cost % of Loans Amortized Cost % of Loans Loans secured by real estate: Commercial real estate $ 7,853 0.32 % $ — — % $ 427 0.02 % Construction/land/land development 3,808 0.35 — — — — Residential real estate 2,477 0.15 — — — — Total real estate 14,138 0.27 — — 427 0.01 Commercial and industrial 15,562 0.76 1,091 0.05 53 — Total $ 29,700 0.39 $ 1,091 0.01 $ 480 0.01 The following table describes the financial effect of the modification made to borrowers experiencing financial difficulty during three and nine months ended September 30, 2023, respectively. Three Months Ended September 30, 2023 Interest Rate Reduction Term Extension Other-Than-Insignificant Payment Delay Commercial real estate N/A Added a weighted average 10.1 months to the life of the modified loans Delayed payment of weighted average 6 months Construction/land/land development N/A Added a weighted average 8.6 months to the life of the modified loans N/A Residential real estate N/A Added a weighted average 18.4 months to the life of the modified loans N/A Commercial and industrial Reduced weighted average contractual interest rate from 10.1% to 9.5% Added a weighted average 6.7 months to the life of the modified loans Delayed payment of weighted average 6 months Nine Months Ended September 30, 2023 Interest Rate Reduction Term Extension Other-Than-Insignificant Payment Delay Commercial real estate N/A Added a weighted average 12.1 months to the life of the modified loans Delayed payment of weighted average 6 months Construction/land/land development N/A Added a weighted average 13.1 months to the life of the modified loans N/A Residential real estate N/A Added a weighted average 9.3 months to the life of the modified loans N/A Commercial and industrial Reduced weighted average contractual interest rate from 9.9% to 9.0% Added a weighted average 9.0 months to the life of the modified loans Delayed payment of weighted average 6 months The following table depicts the performance of loans that have been modified Payment Status (Amortized Cost Basis) September 30, 2023 (Dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due Loans secured by real estate: Commercial real estate $ 8,280 $ — $ — Construction/land/land development 3,808 — — Residential real estate 2,195 282 — Total real estate 14,283 282 — Commercial and industrial 16,705 — — Total LHFI $ 30,988 $ 282 $ — There were no loans to borrowers experiencing financial difficulty that defaulted during the nine months ended September 30, 2023, that were modified within the last nine months. A payment default is defined as a loan that was 90 or more days past due. The Company monitors the performance of modified loans on an ongoing basis. In the event of subsequent default, the ALCL is assessed on the basis of an individual evaluation of each loan. The modifications made during the periods presented did not significantly impact the Company’s determination of the allowance for credit losses. |