Loan and Lease Receivables and Allowance for Credit Losses | Note 5—Loan and Lease Receivables and Allowance for Credit Losses Loan and Lease Receivables Outstanding loan and lease receivables as of the dates shown were categorized as follows: June 30, December 31, 2023 2022 Commercial real estate $ 1,959,721 $ 1,905,909 Residential real estate 504,364 489,411 Construction, land development, and other land 389,216 440,016 Commercial and industrial 2,101,638 2,055,213 Installment and other 3,686 1,709 Lease financing receivables 599,818 518,654 Total loans and leases 5,558,443 5,410,912 Net unamortized deferred fees and costs 6,197 5,014 Initial direct costs 5,877 5,332 Allowance for credit losses - loans and leases ( 92,665 ) ( 81,924 ) Net loans and leases $ 5,477,852 $ 5,339,334 June 30, December 31, 2023 2022 Lease financing receivables Net minimum lease payments $ 587,296 $ 509,980 Unguaranteed residual values 75,719 54,118 Unearned income ( 63,197 ) ( 45,444 ) Total lease financing receivables 599,818 518,654 Initial direct costs 5,877 5,332 Lease financial receivables before allowance for $ 605,695 $ 523,986 Total loans and leases consist of originated loans and leases, purchased credit deteriorated ("PCD") and acquired non-credit-deteriorated loans and leases. At June 30, 2023 and December 31, 2022, total loans and leases included the guaranteed amount of U.S. government guaranteed loans of $ 112.3 million a nd $ 123.2 million respectively. At June 30, 2023 and December 31, 2022 , the discount on the unguaranteed portion of U.S. government guaranteed loans was $ 26.3 million and $ 26.7 million, respectively, which are included in total loans and leases. At June 30, 2023 and December 31, 2022 , installment and other loans included overdraft deposits of $ 653,000 and $ 467,000 , respectively, which were reclassified as loans. At June 30, 2023 and December 31, 2022 , loans and leases and loans held for sale pledged as security for borrowings were $ 1.9 billion and $ 2.2 billion, respectively. Accrued interest on loans and leases were $ 25.5 million as of June 30, 2023 and December 31, 2022, and are included in the accrued interest receivable and other assets line item on the Condensed Consolidated Statement of Financial Condition. The minimum annual lease payments for lease financing receivables as of June 30, 2023 are summarized as follows: Minimum Lease 2023 $ 88,841 2024 181,693 2025 144,991 2026 101,754 2027 55,379 Thereafter 14,638 Total $ 587,296 Originated loans and leases represent originations excluding loans initially acquired in a business combination. However, once an acquired non-credit-deteriorated loan reaches its maturity date, and is re-underwritten and renewed, it is internally classified as an originated loan. PCD loans are those acquired from a business combination with evidence of credit quality deterioration and are accounted for under ASC Topic 326. Acquired non-credit-deteriorated loans and leases represent loans and leases acquired from a business combination without more than insignificant evidence of credit quality deterioration and are accounted for under ASC Topic 310-20. The following tables summarize the balances for each respective loan and lease category as of June 30, 2023 and December 31, 2022: June 30, 2023 Originated Purchased Credit Deteriorated Acquired Total Commercial real estate $ 1,806,531 $ 30,724 $ 126,191 $ 1,963,446 Residential real estate 453,880 26,012 25,055 504,947 Construction, land development, and other land 387,623 320 — 387,943 Commercial and industrial 2,086,274 1,726 16,750 2,104,750 Installment and other 3,582 129 25 3,736 Lease financing receivables 604,437 — 1,258 605,695 Total loans and leases $ 5,342,327 $ 58,911 $ 169,279 $ 5,570,517 December 31, 2022 Originated Purchased Credit Deteriorated Acquired Total Commercial real estate $ 1,712,152 $ 45,143 $ 152,193 $ 1,909,488 Residential real estate 426,226 32,228 31,508 489,962 Construction, land development, and other land 438,617 372 — 438,989 Commercial and industrial 2,030,616 2,192 24,266 2,057,074 Installment and other 1,410 140 209 1,759 Lease financing receivables 521,689 — 2,297 523,986 Total loans and leases $ 5,130,710 $ 80,075 $ 210,473 $ 5,421,258 PCD loans —The unpaid principal balance and carrying amount of all PCD loans are summarized below. The balances do not include an allowance for credit losses - loans and leases of $ 1.1 million and $ 1.9 million at June 30, 2023 and December 31, 2022, respectively. June 30, 2023 December 31, 2022 Unpaid Carrying Unpaid Carrying Commercial real estate $ 70,284 $ 30,724 $ 85,089 $ 45,143 Residential real estate 69,803 26,012 76,270 32,228 Construction, land development, and other land 6,993 320 7,042 372 Commercial and industrial 3,427 1,726 3,902 2,192 Installment and other 793 129 807 140 Total purchased credit deteriorated loans $ 151,300 $ 58,911 $ 173,110 $ 80,075 Acquired non-credit-deteriorated loans and leases — The unpaid principal balance and carrying value for acquired non-credit deteriorated loans and leases at June 30, 2023 and December 31, 2022 were as follows: June 30, 2023 December 31, 2022 Unpaid Carrying Unpaid Carrying Commercial real estate $ 129,186 $ 126,191 $ 155,652 $ 152,193 Residential real estate 25,397 25,055 31,863 31,508 Construction, land development, and other land 63 — 63 — Commercial and industrial 17,193 16,750 25,022 24,266 Installment and other 31 25 216 209 Lease financing receivables 1,260 1,258 2,302 2,297 Total acquired non-credit-deteriorated $ 173,130 $ 169,279 $ 215,118 $ 210,473 The Company hedges interest rates on certain loans using interest rate swaps through which the Company pays variable amounts and receives fixed amounts. Refer to Note 16—Derivative Instruments and Hedging Activities for additional discussion. Allowance for Credit Losses Loans and leases considered for inclusion in the allowance for credit losses include acquired non-credit-deteriorated loans and leases, purchased credit deteriorated loans, and originated loans and leases. The Bank’s credit risk rating methodology assigns risk ratings from 1 to 10, where a higher rating represents higher risk. Risk ratings for all loans of $ 1.0 million or more are reviewed annually. The risk rating categories are described by the following groupings: Pass —1‑4, risk levels of borrowers and guarantors that offer a minimal to an acceptable level of risk. Watch —5, credit exposure that presents higher than average risk and warrants greater than routine attention. Special Mention —6, potential weaknesses that if left uncorrected may result in deterioration of the repayment prospects. Substandard Accrual —7, weaknesses in cash flow and collateral coverage resulting in a distinct possibility of losses if not corrected. Used in limited cases, where the borrower is current on payments and an agreed plan for credit remediation. Substandard Non‑Accrual —8, well‑defined weakness or weaknesses in cash flow and collateral coverage resulting in the distinct possibility of losses if not corrected. Doubtful —9, weaknesses inherent in 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. Loss —10, is considered uncollectible and of such little value that its continuance as a realizable asset is not warranted. Revolving loans that are converted to term loans are treated as new originations and are presented by year of origination. Generally, existing term loans that are re-underwritten are reflected in the table in the year of renewal. The following tables summarize the risk rating categories of the loans and leases considered for inclusion in the allowance for credit losses - loans and leases calculation, as of June 30, 2023 and December 31, 2022: Term loans amortized cost by origination year Revolving Total June 30, 2023 2023 2022 2021 2020 2019 Prior Loans Loans Commercial Real Estate Pass $ 102,875 $ 463,129 $ 522,071 $ 192,889 $ 106,593 $ 391,004 $ 9,980 $ 1,788,541 Watch 366 8,439 19,755 22,068 16,249 53,949 — 120,826 Special Mention — — — 1,875 1,066 8,057 — 10,998 Substandard — 233 2,081 1,099 9,097 30,571 — 43,081 Total $ 103,241 $ 471,801 $ 543,907 $ 217,931 $ 133,005 $ 483,581 $ 9,980 $ 1,963,446 Gross charge-offs for quarter ended June 30, 2023 $ — $ — $ 60 $ 203 $ 2,039 $ 1,608 $ — $ 3,910 Residential Real Estate Pass $ 36,607 $ 67,682 $ 57,845 $ 41,240 $ 30,487 $ 204,751 $ 48,711 $ 487,323 Watch — — — 906 1,253 10,866 2,750 15,775 Special Mention — — — 315 20 549 — 884 Substandard — — — 197 366 402 — 965 Total $ 36,607 $ 67,682 $ 57,845 $ 42,658 $ 32,126 $ 216,568 $ 51,461 $ 504,947 Gross charge-offs for quarter ended June 30, 2023 $ — $ — $ — $ — $ — $ 9 $ — $ 9 Construction, Land Development, Pass $ 29,694 $ 65,849 $ 181,279 $ 65,679 $ 16,057 $ 24,953 $ 1,208 $ 384,719 Watch 63 — — — 3,153 8 — 3,224 Special Mention — — — — — — — — Substandard — — — — — — — — Total $ 29,757 $ 65,849 $ 181,279 $ 65,679 $ 19,210 $ 24,961 $ 1,208 $ 387,943 Gross charge-offs for quarter ended June 30, 2023 $ — $ — $ — $ — $ — $ — $ — $ — Commercial & Industrial Pass $ 245,662 $ 488,522 $ 251,286 $ 127,415 $ 52,016 $ 151,605 $ 455,930 $ 1,772,436 Watch 12,698 25,957 46,723 12,278 35,047 28,157 58,238 219,098 Special Mention 19,000 — 7,847 — 289 10,016 21,508 58,660 Substandard — 4,902 11,523 8,142 10,854 9,783 9,352 54,556 Total $ 277,360 $ 519,381 $ 317,379 $ 147,835 $ 98,206 $ 199,561 $ 545,028 $ 2,104,750 Gross charge-offs for quarter ended June 30, 2023 $ — $ 942 $ 1,077 $ 581 $ 664 $ 623 $ — $ 3,887 Installment and Other Pass $ 339 $ 216 $ 125 $ 24 $ 55 $ 455 $ 2,486 $ 3,700 Watch — 31 — — — 4 1 36 Special Mention — — — — — — — — Substandard — — — — — — — — Total $ 339 $ 247 $ 125 $ 24 $ 55 $ 459 $ 2,487 $ 3,736 Gross charge-offs for quarter ended June 30, 2023 $ — $ — $ — $ — $ — $ — $ — $ — Lease Financing Receivables Pass $ 179,770 $ 250,644 $ 119,560 $ 40,499 $ 9,505 $ 3,003 $ — $ 602,981 Watch — 80 1,328 21 — — — 1,429 Special Mention — — — 224 140 116 — 480 Substandard — 350 307 102 22 24 — 805 Total $ 179,770 $ 251,074 $ 121,195 $ 40,846 $ 9,667 $ 3,143 $ — $ 605,695 Gross charge-offs for quarter ended June 30, 2023 $ — $ 216 $ 400 $ 86 $ 37 $ 28 $ — $ 767 Total Loans and Leases Pass $ 594,947 $ 1,336,042 $ 1,132,166 $ 467,746 $ 214,713 $ 775,771 $ 518,315 $ 5,039,700 Watch 13,127 34,507 67,806 35,273 55,702 92,984 60,989 360,388 Special Mention 19,000 — 7,847 2,414 1,515 18,738 21,508 71,022 Substandard — 5,485 13,911 9,540 20,339 40,780 9,352 99,407 Total $ 627,074 $ 1,376,034 $ 1,221,730 $ 514,973 $ 292,269 $ 928,273 $ 610,164 $ 5,570,517 Gross charge-offs for quarter ended June 30, 2023 $ — $ 1,158 $ 1,537 $ 870 $ 2,740 $ 2,268 $ — $ 8,573 Term loans amortized cost by origination year Revolving Total December 31, 2022 2022 2021 2020 2019 2018 Prior Loans Loans (1) Commercial Real Estate Pass $ 471,009 $ 510,529 $ 207,765 $ 111,792 $ 84,382 $ 324,271 $ 28,343 $ 1,738,091 Watch 6,422 12,723 20,583 11,004 17,269 44,462 — 112,463 Special Mention — — 121 1,075 1,232 10,075 — 12,503 Substandard — 1,910 915 13,042 12,685 22,915 — 51,467 Total $ 477,431 $ 525,162 $ 229,384 $ 136,913 $ 115,568 $ 401,723 $ 28,343 $ 1,914,524 Residential Real Estate Pass $ 68,752 $ 59,075 $ 41,768 $ 31,726 $ 48,432 $ 170,279 $ 49,622 $ 469,654 Watch — — 1,137 682 4,098 9,026 2,586 17,529 Special Mention — — 323 32 420 876 — 1,651 Substandard — — 234 381 296 2,185 660 3,756 Total $ 68,752 $ 59,075 $ 43,462 $ 32,821 $ 53,246 $ 182,366 $ 52,868 $ 492,590 Construction, Land Development, Pass $ 62,310 $ 203,672 $ 61,895 $ 27,189 $ 26,489 $ 38,186 $ 185 $ 419,926 Watch — — — 4,409 — 3,064 — 7,473 Special Mention — — 1,845 — 4,199 — — 6,044 Substandard — — — 1,530 4,012 4 — 5,546 Total $ 62,310 $ 203,672 $ 63,740 $ 33,128 $ 34,700 $ 41,254 $ 185 $ 438,989 Commercial & Industrial Pass $ 508,664 $ 305,056 $ 137,335 $ 72,486 $ 96,304 $ 113,965 $ 549,431 $ 1,783,241 Watch 16,657 20,856 15,857 32,282 19,362 9,809 47,119 161,942 Special Mention — 13,056 697 1,162 2,958 7,831 22,320 48,024 Substandard 1,156 3,415 6,671 11,949 5,434 25,275 10,738 64,638 Total $ 526,477 $ 342,383 $ 160,560 $ 117,879 $ 124,058 $ 156,880 $ 629,608 $ 2,057,845 Installment and Other Pass $ 332 $ 146 $ 65 $ 79 $ 15 $ 584 $ 429 $ 1,650 Watch 34 — — — 2 73 — 109 Special Mention — — — — — — — — Substandard — — — — — — — — Total $ 366 $ 146 $ 65 $ 79 $ 17 $ 657 $ 429 $ 1,759 Lease Financing Receivables Pass $ 296,395 $ 148,588 $ 53,642 $ 14,478 $ 7,245 $ 934 $ — $ 521,282 Watch 93 1,560 26 — — — — 1,679 Special Mention — — 290 182 250 23 — 745 Substandard 35 82 80 77 6 — — 280 Total $ 296,523 $ 150,230 $ 54,038 $ 14,737 $ 7,501 $ 957 $ — $ 523,986 Total Loans and Leases Pass $ 1,407,462 $ 1,227,066 $ 502,470 $ 257,750 $ 262,867 $ 648,219 $ 628,010 $ 4,933,844 Watch 23,206 35,139 37,603 48,377 40,731 66,434 49,705 301,195 Special Mention — 13,056 3,276 2,451 9,059 18,805 22,320 68,967 Substandard 1,191 5,407 7,900 26,979 22,433 50,379 11,398 125,687 Total $ 1,431,859 $ 1,280,668 $ 551,249 $ 335,557 $ 335,090 $ 783,837 $ 711,433 $ 5,429,693 (1) - Includes $8.4 million of substandard loans classified as held for sale. The following tables summarize contractual delinquency information of the loans and leases considered for inclusion in the allowance for credit losses - loans and leases calculation at June 30, 2023 and December 31, 2022: June 30, 2023 2023 2022 2021 2020 2019 Prior Revolving Total Commercial Real Estate Current $ 103,241 $ 471,704 $ 543,147 $ 217,549 $ 131,169 $ 470,626 $ 9,980 $ 1,947,416 30-59 Days Past Due — — — — — 41 — 41 60-89 Days Past Due — 97 760 74 — 714 — 1,645 Greater than 90 Accruing — — — — — — — — Non-accrual — — — 308 1,836 12,200 — 14,344 Total Past Due — 97 760 382 1,836 12,955 — 16,030 Total $ 103,241 $ 471,801 $ 543,907 $ 217,931 $ 133,005 $ 483,581 $ 9,980 $ 1,963,446 Residential Real Estate Current $ 36,607 $ 64,797 $ 57,845 $ 42,461 $ 31,760 $ 216,055 $ 51,226 $ 500,751 30-59 Days Past Due — 2,885 — — — 110 235 3,230 60-89 Days Past Due — — — — — — — — Greater than 90 Accruing — — — — — — — — Non-accrual — — — 197 366 403 — 966 Total Past Due — 2,885 — 197 366 513 235 4,196 Total $ 36,607 $ 67,682 $ 57,845 $ 42,658 $ 32,126 $ 216,568 $ 51,461 $ 504,947 Construction, Land Development, Current $ 29,757 $ 65,849 $ 181,279 $ 65,679 $ 19,210 $ 24,961 $ 1,208 $ 387,943 30-59 Days Past Due — — — — — — — — 60-89 Days Past Due — — — — — — — — Greater than 90 Accruing — — — — — — — — Non-accrual — — — — — — — — Total Past Due — — — — — — — — Total $ 29,757 $ 65,849 $ 181,279 $ 65,679 $ 19,210 $ 24,961 $ 1,208 $ 387,943 Commercial & Industrial Current $ 277,360 $ 515,117 $ 311,213 $ 144,451 $ 95,567 $ 196,640 $ 539,692 $ 2,080,040 30-59 Days Past Due — 4 — — — — 275 279 60-89 Days Past Due — 327 480 215 553 685 — 2,260 Greater than 90 Accruing — — — — — — — — Non-accrual — 3,933 5,686 3,169 2,086 2,236 5,061 22,171 Total Past Due — 4,264 6,166 3,384 2,639 2,921 5,336 24,710 Total $ 277,360 $ 519,381 $ 317,379 $ 147,835 $ 98,206 $ 199,561 $ 545,028 $ 2,104,750 Installment and Other Current $ 339 $ 247 $ 125 $ 24 $ 55 $ 458 $ 2,487 $ 3,735 30-59 Days Past Due — — — — — — — — 60-89 Days Past Due — — — — — 1 — 1 Greater than 90 Accruing — — — — — — — — Non-accrual — — — — — — — — Total Past Due — — — — — 1 — 1 Total $ 339 $ 247 $ 125 $ 24 $ 55 $ 459 $ 2,487 $ 3,736 Lease Financing Receivables Current $ 179,070 $ 249,956 $ 120,522 $ 40,587 $ 9,606 $ 3,058 $ — $ 602,799 30-59 Days Past Due 571 415 366 153 39 44 — 1,588 60-89 Days Past Due 129 353 — 18 — 16 — 516 Greater than 90 Accruing — — — — — — — — Non-accrual — 350 307 88 22 25 — 792 Total Past Due 700 1,118 673 259 61 85 — 2,896 Total $ 179,770 $ 251,074 $ 121,195 $ 40,846 $ 9,667 $ 3,143 $ — $ 605,695 Total Loans and Leases Current $ 626,374 $ 1,367,670 $ 1,214,131 $ 510,751 $ 287,367 $ 911,798 $ 604,593 $ 5,522,684 30-59 Days Past Due 571 3,304 366 153 39 195 510 5,138 60-89 Days Past Due 129 777 1,240 307 553 1,416 — 4,422 Greater than 90 Accruing — — — — — — — — Non-accrual — 4,283 5,993 3,762 4,310 14,864 5,061 38,273 Total Past Due 700 8,364 7,599 4,222 4,902 16,475 5,571 47,833 Total $ 627,074 $ 1,376,034 $ 1,221,730 $ 514,973 $ 292,269 $ 928,273 $ 610,164 $ 5,570,517 Total non-accrual loans without an allowance included $ 1.6 million of commercial real estate loans and $ 2.9 million of commercial and industrial loans as of June 30, 2023. The Company recognized $ 2.0 million of interest income on non-accrual loans and leases for the six months ended June 30, 2023. December 31, 2022 2022 2021 2020 2019 2018 Prior Revolving Total (1) Commercial Real Estate Current $ 477,334 $ 525,048 $ 229,260 $ 132,067 $ 112,126 $ 387,349 $ 28,343 $ 1,891,527 30-59 Days Past Due 97 54 — — 471 2,060 — 2,682 60-89 Days Past Due — — — — — 1,016 — 1,016 Greater than 90 Accruing — — — — — — — — Non-accrual — 60 124 4,846 2,971 11,298 — 19,299 Total Past Due 97 114 124 4,846 3,442 14,374 — 22,997 Total $ 477,431 $ 525,162 $ 229,384 $ 136,913 $ 115,568 $ 401,723 $ 28,343 $ 1,914,524 Residential Real Estate Current $ 68,752 $ 59,075 $ 40,731 $ 32,440 $ 52,950 $ 180,128 $ 52,146 $ 486,222 30-59 Days Past Due — — 2,497 — — 108 122 2,727 60-89 Days Past Due — — — — — — — — Greater than 90 Accruing — — — — — — — — Non-accrual — — 234 381 296 2,130 600 3,641 Total Past Due — — 2,731 381 296 2,238 722 6,368 Total $ 68,752 $ 59,075 $ 43,462 $ 32,821 $ 53,246 $ 182,366 $ 52,868 $ 492,590 Construction, Land Development, & Land Current $ 62,310 $ 203,672 $ 63,740 $ 33,128 $ 34,700 $ 41,250 $ 185 $ 438,985 30-59 Days Past Due — — — — — — — — 60-89 Days Past Due — — — — — — — — Greater than 90 Accruing — — — — — — — — Non-accrual — — — — — 4 — 4 Total Past Due — — — — — 4 — 4 Total $ 62,310 $ 203,672 $ 63,740 $ 33,128 $ 34,700 $ 41,254 $ 185 $ 438,989 Commercial & Industrial Current $ 524,341 $ 339,915 $ 156,713 $ 113,350 $ 122,523 $ 153,039 $ 628,747 $ 2,038,628 30-59 Days Past Due 980 1,371 391 1,717 368 922 — 5,749 60-89 Days Past Due — 8 80 87 — 472 — 647 Greater than 90 Accruing — — — — — — — — Non-accrual 1,156 1,089 3,376 2,725 1,167 2,447 861 12,821 Total Past Due 2,136 2,468 3,847 4,529 1,535 3,841 861 19,217 Total $ 526,477 $ 342,383 $ 160,560 $ 117,879 $ 124,058 $ 156,880 $ 629,608 $ 2,057,845 Installment and Other Current $ 366 $ 146 $ 65 $ 79 $ 17 $ 657 $ 429 $ 1,759 30-59 Days Past Due — — — — — — — — 60-89 Days Past Due — — — — — — — — Greater than 90 Accruing — — — — — — — — Non-accrual — — — — — — — — Total Past Due — — — — — — — — Total $ 366 $ 146 $ 65 $ 79 $ 17 $ 657 $ 429 $ 1,759 Lease Financing Receivables Current $ 294,948 $ 149,642 $ 53,680 $ 14,557 $ 7,411 $ 955 $ — $ 521,193 30-59 Days Past Due 1,461 467 295 104 77 2 — 2,406 60-89 Days Past Due 79 39 — — 9 — — 127 Greater than 90 Accruing — — — — — — — — Non-accrual 35 82 63 76 4 — — 260 Total Past Due 1,575 588 358 180 90 2 — 2,793 Total $ 296,523 $ 150,230 $ 54,038 $ 14,737 $ 7,501 $ 957 $ — $ 523,986 Total Loans and Leases Current $ 1,428,051 $ 1,277,498 $ 544,189 $ 325,621 $ 329,727 $ 763,378 $ 709,850 $ 5,378,314 30-59 Days Past Due 2,538 1,892 3,183 1,821 916 3,092 122 13,564 60-89 Days Past Due 79 47 80 87 9 1,488 — 1,790 Greater than 90 Accruing — — — — — — — — Non-accrual 1,191 1,231 3,797 8,028 4,438 15,879 1,461 36,025 Total Past Due 3,808 3,170 7,060 9,936 5,363 20,459 1,583 51,379 Total $ 1,431,859 $ 1,280,668 $ 551,249 $ 335,557 $ 335,090 $ 783,837 $ 711,433 $ 5,429,693 (1) - Includes $ 8.4 million of substandard loans classified as held for sale. Total non-accrual loans without an allowance included $ 10.8 million of commercial real estate loans, $ 4.3 million of commercial and industrial loans, and $ 2.6 million of residential real estate loans, as of December 31, 2022. The Company recognized $ 2.5 million of interest income on non-accrual loans and leases for the year ended December 31, 2022. The following table summarize the balance and activity within the allowance for credit losses - loans and leases, the components of the allowance for credit losses - loans and leases by loans and leases individually and collectively evaluated for impairment, and corresponding loan and lease balances by type for the three and six months ended June 30, 2023 are as follows: June 30, 2023 Commercial Residential Construction, Commercial Installment Lease Total Allowance for credit losses - Three months ended Beginning balance $ 24,738 $ 2,679 $ 3,498 $ 51,849 $ 25 $ 7,676 $ 90,465 Provision/(recapture) 4,359 ( 198 ) ( 1,563 ) 3,161 17 691 6,467 Charge-offs ( 2,945 ) — — ( 2,097 ) — ( 462 ) ( 5,504 ) Recoveries 225 63 — 727 1 221 1,237 Ending balance $ 26,377 $ 2,544 $ 1,935 $ 53,640 $ 43 $ 8,126 $ 92,665 Six months ended Beginning balance $ 26,061 $ 3,140 $ 3,134 $ 41,889 $ 24 $ 7,676 $ 81,924 Provision 3,240 ( 651 ) ( 1,199 ) 13,964 15 810 16,179 Charge-offs ( 3,911 ) ( 9 ) — ( 3,887 ) — ( 766 ) ( 8,573 ) Recoveries 987 64 — 1,674 4 406 3,135 Ending balance $ 26,377 $ 2,544 $ 1,935 $ 53,640 $ 43 $ 8,126 $ 92,665 Ending balance: Individually evaluated $ 8,555 $ — $ — $ 17,399 $ — $ — $ 25,954 Collectively evaluated 17,822 2,544 1,935 36,241 43 8,126 66,711 Total allowance for credit $ 26,377 $ 2,544 $ 1,935 $ 53,640 $ 43 $ 8,126 $ 92,665 Loans and leases ending balance: Individually evaluated for $ 30,750 $ — $ — $ 38,485 $ — $ — $ 69,235 Collectively evaluated for 1,932,696 504,947 387,943 2,066,265 3,736 605,695 5,501,282 Total loans and leases $ 1,963,446 $ 504,947 $ 387,943 $ 2,104,750 $ 3,736 $ 605,695 $ 5,570,517 The following table summarize the balance and activity within the allowance for loan and lease losses, the components of the allowance for loan and lease losses by loans and leases individually and collectively evaluated for impairment, loans acquired with deteriorated credit quality, and corresponding loan and lease balances by type for the three and six months ended June 30, 2022: June 30, 2022 Commercial Residential Construction, Commercial Installment Lease Total Allowance for loan and Three months ended Beginning balance $ 19,706 $ 2,145 $ 1,116 $ 33,244 $ 10 $ 3,237 $ 59,458 Provision 566 339 676 3,852 1 474 5,908 Charge-offs ( 497 ) — — ( 2,654 ) — ( 324 ) ( 3,475 ) Recoveries 43 5 — 293 — 204 545 Ending balance $ 19,818 $ 2,489 $ 1,792 $ 34,735 $ 11 $ 3,591 $ 62,436 Six months ended Beginning balance $ 16,918 $ 1,628 $ 522 $ 33,129 $ 9 $ 2,806 $ 55,012 Provision/(recapture) 3,350 852 1,270 4,310 2 1,119 10,903 Charge-offs ( 737 ) — — ( 3,117 ) — ( 687 ) ( 4,541 ) Recoveries 287 9 — 413 — 353 1,062 Ending balance $ 19,818 $ 2,489 $ 1,792 $ 34,735 $ 11 $ 3,591 $ 62,436 Ending balance: Individually evaluated $ 6,002 $ — $ — $ 11,337 $ — $ — $ 17,339 Collectively evaluated 12,576 1,680 1,764 23,012 8 3,591 42,631 Loans acquired with 1,240 809 28 386 3 — 2,466 Total allowance for loan $ 19,818 $ 2,489 $ 1,792 $ 34,735 $ 11 $ 3,591 $ 62,436 Loans and leases ending balance: Individually evaluated for $ 45,200 $ 5,188 $ 5,541 $ 27,770 $ — $ — $ 83,699 Collectively evaluated for 1,794,663 436,081 428,782 1,876,772 1,153 442,371 4,979,822 Loans acquired with 60,075 39,902 1,184 3,232 157 — 104,550 Total loans and leases $ 1,899,938 $ 481,171 $ 435,507 $ 1,907,774 $ 1,310 $ 442,371 $ 5,168,071 The Company increased the allowance for credit losses - loans and leases by $ 2.2 million and $ 10.7 million for the three and six months ended June 30, 2023 , respectively, and increased the allowance for loan and lease losses by $ 3.0 million and $ 7.4 million for the three and six months ended June 30, 2022 , respectively. For loans evaluated for impairment, the Company increased allowance for credit losses - loans and leases by $ 3.9 million and $ 10.6 million for the three and six months ended June 30, 2023 , respectively. The Company recaptured $ 3.4 million and $ 3.7 million of the allowance for loan and lease losses for the three and six months ended June 30, 2022 , respectively. For loans and leases collectively evaluated for impairment, the Company recaptured $ 1.7 million of the allowance for credit losses - loans and leases for the three months ended June 30, 2023, and increased it by $ 124,000 for the six months ended June 30, 2023. The Company increased the allowance for loan and lease losses by $ 7.0 million and $ 11.8 million for the three and six months ended June 30, 2022, respectively. The change in allowance for credit losses - loans and leases collectively evaluated for impairment was mainly due to changes in expected losses driven by macro-economic factors. The following table presents loans with modified terms as of June 30, 2023: June 30, 2023 Payment Delay Term Modification Combination Term Modification and Interest Rate Reduction Total Modified by Class % of Class of Loans and Leases Modified loans Commercial real estate $ 110 $ — $ — $ 110 0.00 % Commercial and industrial 8,719 51,370 385 60,474 2.87 % Total modified loans $ 8,829 $ 51,370 $ 385 $ 60,584 1.1 % Loans reflected as having a payment delay included a general adjustment in loan terms similar to those of pass-rated credits. Loans having term modifications included extension of term as a result of a new borrower structure and other miscellaneous term adjustments. Loans having a combination of term modification and interest rate reduction reflect a longer amortization period and a reduced weighted average contractual rate from 8.85 % to 7.01 %. TDRs are granted due to borrower financial difficulty and provide for a modification of loan repayment terms. The tables below present TDRs by loan category as of December 31, 2022: December 31, 2022 Number Pre- Post- Charge-offs Individually Evaluated Accruing: Commercial real estate 2 $ 551 $ 551 $ — $ 109 Commercial and industrial 1 24 24 — 34 Residential real estate 2 144 144 — — Total accruing 5 719 719 — 143 Non-accruing: Commercial real estate 3 830 623 207 73 Commercial and industrial 6 2,017 982 1,035 38 Total non-accruing 9 2,847 1,605 1,242 111 Total troubled debt restructurings 14 $ 3,566 $ 2,324 $ 1,242 $ 254 Loans modified as troubled debt restructurings that occurred during the three and six months ended June 30, 2022 were: Three Months Ended Six Months Ended June 30, June 30, 2022 2022 Accruing: Beginning balance $ 1,456 $ 1,927 Additions — — Net payments ( 98 ) ( 569 ) Net transfers from non-accrual — — Ending balance 1,358 1,358 Non-accruing: Beginning balance 1,343 1,506 Additions — — Net payments ( 209 ) ( 372 ) Charge-offs — — Net transfers to accrual — — Ending balance 1,134 1,134 Total troubled debt restructurings $ 2,492 $ 2,492 There were no troubled debt restructurings that subsequently defaulted within twelve months of the restructure date during the six months ended June 30, 2022. In addition, there was no commitment outstanding on troubled debt restructurings at December 31, 2022. The following table presents the amortized cost basis of collateral-dependent loans and leases, which are individually evaluated to determine expected credit losses as of June 30, 2023 and December 31, 2022: June 30, 2023 Commercial Construction Non-owner Occupied Commercial Owner-Occupied Commercial Multi-Family Single Family Residence (1st Lien) Single Family Residence (2nd Lien) Business Assets Total Commercial real estate $ — $ 8,076 $ 22,673 $ — $ — $ — $ — $ 30,749 Commercial and industrial — — — — — — 38,486 38,486 Total $ - $ 8,076 $ 22,673 $ — $ — $ — $ 38,486 $ 69,235 December 31, 2022 Commercial Construction Non-owner Occupied Commercial Owner-Occupied Commercial Multi-Family Single Family Residence (1st Lien) Single Family Residence (2nd Lien) Business Assets Total Commercial real estate $ — $ 9,749 $ 28,210 $ — $ — $ — $ — $ 37,959 Residential real estate — — — 237 422 220 — 879 Construction, land development, 5,541 — — — — — — 5,541 Commercial and industrial — — — — — — 26,034 26,034 Total $ 5,541 $ 9,749 $ 28,210 $ 237 $ 422 $ 220 $ 26,034 $ 70,413 The following table presents the change in the balance of the reserve for unfunded commitments as of June 30, 2023 and 2022: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 2023 2022 Beginning balance $ 4,316 $ 2,003 $ 4,203 $ 1,403 Provision for/(recapture) of unfunded commitments ( 677 ) 188 ( 564 ) 788 Ending balance $ 3,639 $ 2,191 $ 3,639 $ 2,191 |