Note 3 - Loans and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

3.    LOANS AND ALLOWANCE FOR CREDIT LOSSES

Our total loans at September 30, 2023 were $4.10 billion compared to $3.92 billion at December 31, 2022, an increase of $188 million, or 4.8%. The components of our loan portfolio disaggregated by class of loan within the loan portfolio segments at September 30, 2023 and  December 31, 2022, and the percentage change in loans from the end of 2022 to the end of the third quarter of 2023, are as follows:

									Percent
	September 30, 2023				December 31, 2022				Increase
	Balance			%	Balance			%	(Decrease)
Commercial:
Commercial and industrial	$	1,166,187,000	28.4	%	$	1,185,083,000	30.3	%		(1.6	)%
Vacant land, land development, and residential construction		72,921,000	1.7			61,873,000	1.6			17.9
Real estate – owner occupied		671,083,000	16.4			639,192,000	16.3			5.0
Real estate – non-owner occupied *		1,000,411,000	24.4			979,214,000	25.0			2.2
Real estate – multi-family and residential rental *		308,229,000	7.5			266,468,000	6.8			15.7
Total commercial		3,218,831,000	78.4			3,131,830,000	80.0			2.8
Retail:
1-4 family mortgages		854,175,000	20.8			755,036,000	19.3			13.1
Other consumer loans		31,370,000	0.8			29,753,000	0.7			5.4
Total retail		885,545,000	21.6			784,789,000	20.0			12.8
Total loans	$	4,104,376,000	100.0	%	$	3,916,619,000	100.0	%		4.8	%

(*) We have made certain reclassifications of how multi-family construction loans are disaggregated by loan segment. The table above reflects an increase of $54.5 million in Real Estate – Multi-Family and Residential Rental loans and a corresponding decrease in Real Estate – Non-Owner Occupied loans as of December 31, 2022. All the tables that follow have been adjusted to reflect the reclassifications as of the applicable dates.

Nonperforming loans as of September 30, 2023 and December 31, 2022 were as follows:

	September 30,		December 31,
	2023		2022
Loans past due 90 days or more still accruing interest	$	0	$	0
Nonaccrual loans		5,889,000		7,728,000
Total nonperforming loans	$	5,889,000	$	7,728,000

The recorded principal balance of nonperforming loans was as follows:

	September 30,		December 31,
	2023		2022
Commercial:
Commercial and industrial	$	3,288,000	$	6,024,000
Vacant land, land development, and residential construction		0		0
Real estate – owner occupied		738,000		248,000
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		4,026,000		6,272,000
Retail:
1-4 family mortgages		1,863,000		1,456,000
Other consumer loans		0		0
Total retail		1,863,000		1,456,000
Total nonperforming loans	$	5,889,000	$	7,728,000

An age analysis of past due loans is as follows as of September 30, 2023:

													Recorded
					Greater								Balance
	30 – 59		60 – 89		Than 89								> 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Commercial:
Commercial and industrial	$	4,000	$	0	$	249,000	$	253,000	$	1,165,934,000	$	1,166,187,000	$	0
Vacant land, land development, and residential construction		0		0		0		0		72,921,000		72,921,000		0
Real estate – owner occupied		0		0		70,000		70,000		671,013,000		671,083,000		0
Real estate – non- owner occupied		0		0		0		0		1,000,411,000		1,000,411,000		0
Real estate – multi-family and residential rental		0		0		0		0		308,229,000		308,229,000		0
Total commercial		4,000		0		319,000		323,000		3,218,508,000		3,218,831,000		0
Retail:
1-4 family mortgages		680,000		499,000		132,000		1,311,000		852,864,000		854,175,000		0
Other consumer loans		1,000		0		0		1,000		31,369,000		31,370,000		0
Total retail		681,000		499,000		132,000		1,312,000		884,233,000		885,545,000		0
Total past due loans	$	685,000	$	499,000	$	451,000	$	1,635,000	$	4,102,741,000	$	4,104,376,000	$	0

An age analysis of past due loans is as follows as of December 31, 2022:

													Recorded
					Greater								Balance
	30 –59		60 –89		Than 89								> 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Commercial:
Commercial and industrial	$	0	$	5,705,000	$	249,000	$	5,954,000	$	1,179,129,000	$	1,185,083,000	$	0
Vacant land, land development, and residential construction		0		0		0		0		61,873,000		61,873,000		0
Real estate – owner occupied		0		248,000		0		248,000		638,944,000		639,192,000		0
Real estate – non-owner occupied		0		0		0		0		979,214,000		979,214,000		0
Real estate – multi-family and residential rental		0		0		0		0		266,468,000		266,468,000		0
Total commercial		0		5,953,000		249,000		6,202,000		3,125,628,000		3,131,830,000		0
Retail:
1-4 family mortgages		1,334,000		88,000		116,000		1,538,000		753,498,000		755,036,000		0
Other consumer loans		15,000		1,000		0		16,000		29,737,000		29,753,000		0
Total retail		1,349,000		89,000		116,000		1,554,000		783,235,000		784,789,000		0
Total past due loans	$	1,349,000	$	6,042,000	$	365,000	$	7,756,000	$	3,908,863,000	$	3,916,619,000	$	0

Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. Identified problem loans, which exhibit characteristics (financial or otherwise) that could cause the loans to become nonperforming or require restructuring in the future, are included on an internal watch list. Senior management and the Board of Directors review this list regularly. Fair value estimates of collateral on distressed lending relationships, as well as on foreclosed and repossessed assets, are reviewed periodically. We also have a process in place to monitor whether value estimates at each quarter-end are reflective of current market conditions. Our credit policies establish criteria for obtaining appraisals and determining internal value estimates. We may also adjust outside and internal valuations based on identifiable trends within our markets, such as recent sales of similar properties or assets, listing prices and offers received. In addition, we may discount certain appraised and internal value estimates to address distressed market conditions. Under CECL for collateral dependent loans in instances where the borrower is experiencing financial difficulties, we adopted the practical expedient to measure the allowance based on the fair value of collateral. The allowance is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral and the recorded principal balance. If the fair value of the collateral exceeds the recorded principal balance, no allowance is required. Collateral dependent loans, representing the entire amount of loans on nonaccrual, totaled $5.9 million and $7.7 million as of September 30, 2023 and December 31, 2022, respectively.

Nonaccrual loans as of September 30, 2023 were as follows:

	Amortized		Related
	Cost		Allowance
With no allowance recorded:
Commercial:
Commercial and industrial	$	249,000	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		738,000		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		987,000		0
Retail:
1-4 family mortgages		1,366,000		0
Other consumer loans		0		0
Total retail		1,366,000		0
Total with no allowance recorded	$	2,353,000	$	0
With an allowance recorded:
Commercial:
Commercial and industrial	$	3,039,000	$	1,233,000
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		3,039,000		1,233,000
Retail:
1-4 family mortgages		497,000		192,000
Other consumer loans		0		0
Total retail		497,000		192,000
Total with an allowance recorded	$	3,536,000	$	1,425,000
Total nonaccrual loans:
Commercial	$	4,026,000	$	1,233,000
Retail		1,863,000		192,000
Total nonaccrual loans	$	5,889,000	$	1,425,000

No interest income was recognized on nonaccrual loans during the first nine months of 2023.

Nonaccrual loans as of December 31, 2022 were as follows:

	Amortized		Related
	Cost		Allowance
With no allowance recorded:
Commercial:
Commercial and industrial	$	249,000	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		249,000		0
Retail:
1-4 family mortgages		1,064,000		0
Other consumer loans		0		0
Total retail		1,064,000		0
Total with no allowance recorded	$	1,313,000	$	0
With an allowance recorded:
Commercial:
Commercial and industrial	$	5,775,000	$	2,051,000
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		248,000		32,000
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		6,023,000		2,083,000
Retail:
1-4 family mortgages		392,000		200,000
Other consumer loans		0		0
Total retail		392,000		200,000
Total with an allowance recorded	$	6,415,000	$	2,283,000
Total nonaccrual loans:
Commercial	$	6,272,000	$	2,083,000
Retail		1,456,000		200,000
Total nonaccrual loans	$	7,728,000	$	2,283,000

No interest income was recognized on nonaccrual loans during 2022.

Credit Quality Indicators. We utilize a comprehensive grading system for our commercial loans. All commercial loans are graded on a ten grade rating system. The rating system utilizes standardized grade paradigms that analyze several critical factors such as cash flow, operating performance, financial condition, collateral, industry condition and management. All commercial loans are graded at inception and reviewed and, if appropriate, re-graded at various intervals thereafter. The primary risk elements with respect to commercial loans are the financial condition of the borrower, the sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers and employ a disciplined and formalized review of the existence of collateral and its value. All commercial loans are graded using the following criteria:

Grade 1.	“Exceptional”  Loans with this rating contain very little, if any, risk.
Grade 2.	“Outstanding”  Loans with this rating have excellent and stable sources of repayment and conform to bank policy and regulatory requirements.
Grade 3.	“Very Good”  Loans with this rating have strong sources of repayment and conform to bank policy and regulatory requirements. These are loans for which repayment risks are acceptable.
Grade 4.	“Good”  Loans with this rating have solid sources of repayment and conform to bank policy and regulatory requirements. These are loans for which repayment risks are modest.
Grade 5.	“Acceptable”  Loans with this rating exhibit acceptable sources of repayment and conform with most bank policies and all regulatory requirements. These are for loans for which repayment risks are satisfactory.
Grade 6.	“Monitor”  Loans with this rating are considered to have emerging weaknesses which may include negative current cash flow, high leverage, or operating losses. Generally, if further deterioration is observed, these credits will be downgraded to the criticized asset report.
Grade 7.	“Special Mention”  Loans with this rating 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 loan at some future date.
Grade 8.	“Substandard”  Loans with this rate are inadequately protected by current sound net worth, paying capacity of the obligor, or of the pledged collateral, if any. A Substandard loan normally has one or more well-defined weaknesses that jeopardize the repayment of the debt. They are characterized by the distinct possibility of loss if the deficiencies are not corrected.
Grade 9.	“Doubtful”  Loans with this rating exhibit all the weaknesses inherent in the Substandard classification and where collection or liquidation in full is highly questionable and improbable.
Grade 10.	“Loss”  Loans with this rating are considered uncollectable, and of such little value that continuance as an active asset is not warranted.

The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments. We have a reporting system that monitors past due loans and have adopted policies to pursue creditors’ rights in order to preserve our collateral position. Retail loans that reach 90 days or more past due are generally placed into nonaccrual status and are categorized as nonperforming.

The following table reflects amortized cost basis of loans and year-to-date loan charge-offs as of  September 30, 2023 based on year of origination (dollars in thousands):

															Revolving		Grand
	2023		2022		2021		2020		2019		Prior		Term Total		Loans		Total
Commercial:
Commercial and Industrial:
Grades 1 – 4	$	94,356	$	94,042	$	100,652	$	25,063	$	7,012	$	9,411	$	330,536	$	384,697	$	715,233
Grades 5 – 7		112,012		67,379		32,543		19,118		7,629		154		238,835		180,387		419,222
Grades 8 – 9		3,674		2,439		296		0		0		0		6,409		25,323		31,732
Total	$	210,042	$	163,860	$	133,491	$	44,181	$	14,641	$	9,565	$	575,780	$	590,407	$	1,166,187
Current year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	218	$	218
Vacant Land, Land Development and Residential Construction:
Grades 1 – 4	$	17,966	$	15,813	$	1,751	$	2,832	$	0	$	287	$	38,649	$	0	$	38,649
Grades 5 – 7		13,749		17,194		2,359		319		43		514		34,178		0		34,178
Grades 8 – 9		10		0		0		0		0		84		94		0		94
Total	$	31,725	$	33,007	$	4,110	$	3,151	$	43	$	885	$	72,921	$	0	$	72,921
Current year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Real Estate – Owner Occupied:
Grades 1 – 4	$	165,698	$	117,923	$	82,222	$	49,528	$	17,511	$	16,968	$	449,850	$	456	$	450,306
Grades 5 – 7		62,259		62,487		36,949		29,235		9,614		10,064		210,608		6,332		216,940
Grades 8 – 9		0		3,727		0		40		0		70		3,837		0		3,837
Total	$	227,957	$	184,137	$	119,171	$	78,803	$	27,125	$	27,102	$	664,295	$	6,788	$	671,083
Current year-to-date gross write offs	$	0	$	14	$	0	$	0	$	0	$	40	$	54	$	0	$	54
Real Estate – Non-Owner Occupied:
Grades 1 – 4	$	92,790	$	88,742	$	113,072	$	101,821	$	28,307	$	17,189	$	441,921	$	0	$	441,921
Grades 5 – 7		162,540		126,362		128,389		96,612		6,553		26,013		546,469		0		546,469
Grades 8 – 9		0		6,507		5,514		0		0		0		12,021		0		12,021
Total	$	255,330	$	221,611	$	246,975	$	198,433	$	34,860	$	43,202	$	1,000,411	$	0	$	1,000,411
Current year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Real Estate – Multi-Family and Residential Rental:
Grades 1 – 4	$	20,509	$	42,674	$	61,279	$	35,615	$	4,974	$	5,780	$	170,831	$	0	$	170,831
Grades 5 – 7		52,733		53,171		4,985		9,727		2,783		1,735		125,134		0		125,134
Grades 8 – 9		11,250		0		0		1,014		0		0		12,264		0		12,264
Total	$	84,492	$	95,845	$	66,264	$	46,356	$	7,757	$	7,515	$	308,229	$	0	$	308,229
Current year-to-date gross write offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Total Commercial	$	809,546	$	698,460	$	570,011	$	370,924	$	84,426	$	88,269	$	2,621,636	$	597,195	$	3,218,831
Total Commercial current YTD gross write offs	$	0	$	14	$	0	$	0	$	0	$	40	$	54	$	218	$	272

															Revolving		Grand
	2023		2022		2021		2020		2019		Prior		Term Total		Loans		Total
Retail:
1-4 Family Mortgages:
Performing	$	104,955	$	334,373	$	235,394	$	83,701	$	10,833	$	46,666	$	815,922	$	36,390	$	852,312
Nonperforming		142		313		333		0		11		1,064		1,863		0		1,863
Total	$	105,097	$	334,686	$	235,727	$	83,701	$	10,844	$	47,730	$	817,785	$	36,390	$	854,175
Current year-to-date gross write offs	$	0	$	136	$	0	$	0	$	0	$	239	$	375	$	138	$	513
Other Consumer Loans:
Performing	$	4,449	$	2,954	$	1,667	$	542	$	658	$	336	$	10,606	$	20,764	$	31,370
Nonperforming		0		0		0		0		0		0		0		0		0
Total	$	4,449	$	2,954	$	1,667	$	542	$	658	$	336	$	10,606	$	20,764	$	31,370
Current year-to-date gross write offs	$	2	$	3	$	0	$	0	$	0	$	3	$	8	$	17	$	25
Total Retail	$	109,546	$	337,640	$	237,394	$	84,243	$	11,502	$	48,066	$	828,391	$	57,154	$	885,545
Total Retail Current YTD gross write offs	$	2	$	139	$	0	$	0	$	0	$	242	$	383	$	155	$	538
Grand Total	$	919,092	$	1,036,100	$	807,405	$	455,167	$	95,928	$	136,335	$	3,450,027	$	654,349	$	4,104,376
Grand Total Current YTD gross write offs	$	2	$	153	$	0	$	0	$	0	$	282	$	437	$	373	$	810

There were no revolving loans converted to term loans during the first nine months of 2023.

The following table reflects amortized cost basis of loans as of December 31, 2022 based on year of origination (dollars in thousands):

															Revolving		Grand
	2022		2021		2020		2019		2018		Prior		Term Total		Loans		Total
Commercial:
Commercial and Industrial:
Grades 1 – 4	$	115,494	$	141,481	$	43,961	$	9,194	$	3,230	$	9,851	$	323,211	$	396,372	$	719,583
Grades 5 – 7		151,783		47,030		31,697		8,870		569		93		240,042		210,363		450,405
Grades 8 – 9		3,784		249		0		0		48		29		4,110		10,985		15,095
Total	$	271,061	$	188,760	$	75,658	$	18,064	$	3,847	$	9,973	$	567,363	$	617,720	$	1,185,083
Vacant Land, Land Development and Residential Construction:
Grades 1 – 4	$	31,756	$	6,196	$	3,428	$	0	$	0	$	331	$	41,711	$	0	$	41,711
Grades 5 – 7		10,270		8,760		351		50		0		626		20,057		0		20,057
Grades 8 – 9		0		0		0		0		14		91		105		0		105
Total	$	42,026	$	14,956	$	3,779	$	50	$	14	$	1,048	$	61,873	$	0	$	61,873
Real Estate – Owner Occupied:
Grades 1 – 4	$	194,072	$	113,528	$	53,630	$	19,670	$	19,279	$	6,162	$	406,341	$	0	$	406,341
Grades 5 – 7		115,720		56,173		33,913		10,245		12,550		1,165		229,766		0		229,766
Grades 8 – 9		2,919		0		44		0		122		0		3,085		0		3,085
Total	$	312,711	$	169,701	$	87,587	$	29,915	$	31,951	$	7,327	$	639,192	$	0	$	639,192
Real Estate – Non-Owner Occupied:
Grades 1 – 4	$	121,281	$	152,035	$	89,125	$	44,196	$	10,079	$	12,018	$	428,734	$	0	$	428,734
Grades 5 – 7		176,217		142,645		133,163		35,200		13,456		37,399		538,080		0		538,080
Grades 8 – 9		6,712		5,688		0		0		0		0		12,400		0		12,400
Total	$	304,210	$	300,368	$	222,288	$	79,396	$	23,535	$	49,417	$	979,214	$	0	$	979,214
Real Estate – Multi-Family and Residential Rental:
Grades 1 – 4	$	39,342	$	49,178	$	36,348	$	5,306	$	3,082	$	4,003	$	137,259	$	0	$	137,259
Grades 5 – 7		56,018		47,474		19,666		3,162		2,557		283		129,160		0		129,160
Grades 8 – 9		0		0		0		0		0		49		49		0		49
Total	$	95,360	$	96,652	$	56,014	$	8,468	$	5,639	$	4,335	$	266,468	$	0	$	266,468
Total Commercial	$	1,025,368	$	770,437	$	445,326	$	135,893	$	64,986	$	72,100	$	2,514,110	$	617,720	$	3,131,830

															Revolving		Grand
	2022		2021		2020		2019		2018		Prior		Term Total		Loans		Total
Retail:
1-4 Family Mortgages:
Performing	$	313,611	$	242,950	$	91,936	$	12,094	$	14,297	$	41,622	$	716,510	$	37,070	$	753,580
Nonperforming		142		82		0		0		203		1,029		1,456		0		1,456
Total	$	313,753	$	243,032	$	91,936	$	12,094	$	14,500	$	42,651	$	717,966	$	37,070	$	755,036
Other Consumer Loans:
Performing	$	4,349	$	2,870	$	1,040	$	1,074	$	395	$	430	$	10,158	$	19,595	$	29,753
Nonperforming		0		0		0		0		0		0		0		0		0
Total	$	4,349	$	2,870	$	1,040	$	1,074	$	395	$	430	$	10,158	$	19,595	$	29,753
Total Retail	$	318,102	$	245,902	$	92,976	$	13,168	$	14,895	$	43,081	$	728,124	$	56,665	$	784,789
Grand Total	$	1,343,470	$	1,016,339	$	538,302	$	149,061	$	79,881	$	115,181	$	3,242,234	$	674,385	$	3,916,619

There were no revolving loans converted to term loans during 2022.

Activity in the allowance for credit losses during the three months and nine months ended September 30, 2023 is as follows (dollars in thousands):

				Commercial								Commercial
				vacant land,								real estate –
	Commercial			land development			Commercial			Commercial		multi-family						Other
	and			and residential			real estate –			real estate –		and			1-4 family			consumer
	industrial			reconstruction			owner occupied			non-owner occupied		residential rental			mortgages			loans			Unallocated			Total
Allowance for credit losses:
Balance at 6-30-23	$	6,472		$	304		$	5,838		$	8,689	$	3,700		$	19,498		$	199		$	21		$	44,721
Provision for credit losses		2,500			31			627			564		(1,071	)		726			(56	)		(21	)		3,300
Charge-offs		0			0			(40	)		0		0			(201	)		(2	)		0			(243	)
Recoveries		26			22			9			0		6			161			6			0			230
Ending balance	$	8,998		$	357		$	6,434		$	9,253	$	2,635		$	20,184		$	147		$	0		$	48,008
Balance at 12-31-22	$	10,203		$	490		$	5,914		$	9,242	$	2,191		$	14,027		$	160		$	19		$	42,246
Provision for credit losses		(1,123	)		(167	)		495			11		426			6,317			(40	)		(19	)		5,900
Charge-offs		(218	)		0			(54	)		0		0			(513	)		(25	)		0			(810	)
Recoveries		136			34			79			0		18			353			52			0			672
Ending balance	$	8,998		$	357		$	6,434		$	9,253	$	2,635		$	20,184		$	147		$	0		$	48,008

Activity in the allowance for credit losses during the three months and nine months ended September 30, 2022 is as follows (dollars in thousands):

				Commercial									Commercial
				vacant land,									real estate –
	Commercial			land development			Commercial			Commercial			multi-family						Other
	and			and residential			real estate –			real estate –			and			1-4 family			consumer
	industrial			construction			owner occupied			non-owner occupied			residential rental			mortgages			loans			Unallocated			Total
Allowance for credit losses:
Balance at 6-30-22	$	8,608		$	446		$	5,578		$	9,249		$	1,639		$	10,267		$	165		$	22		$	35,974
Provision for credit losses		1,110			21			372			(206	)		77			1,530			(13	)		9			2,900
Charge-offs		0			0			0			0			0			0			0			0			0
Recoveries		22			1			22			0			23			154			24			0			246
Ending balance	$	9,740		$	468		$	5,972		$	9,043		$	1,739		$	11,951		$	176		$	31		$	39,120
Balance at 12-31-21	$	10,782		$	420		$	6,045		$	12,990		$	2,006		$	2,449		$	626		$	45		$	35,363
Adoption of ASU 2016-13		(1,571	)		(43	)		(560	)		(2,534	)		(621	)		5,395			(411	)		(55	)		(400	)
Provision for credit losses		518			117			407			(1,413	)		317			3,587			(74	)		41			3,500
Charge-offs		(170	)		(29	)		0			0			0			(2	)		(18	)		0			(219	)
Recoveries		181			3			80			0			37			522			53			0			876
Ending balance	$	9,740		$	468		$	5,972		$	9,043		$	1,739		$	11,951		$	176		$	31		$	39,120

The following table presents the period-end amortized cost basis of modifications to borrowers experiencing financial difficulty by type of modification made during the three months ended September 30, 2023:

	Interest Rate		Principal
	Reduction	Term Extension	Forgiveness
Commercial:
Commercial and industrial	$ 0	$ 0	$ 0
Vacant land, land development and residential construction	0	0	0
Real estate – owner occupied	0	0	0
Real estate – non-owner occupied	0	0	0
Real estate – multi-family and residential rental	0	0	0
Total commercial	$ 0	$ 0	$ 0
Retail:
1-4 family mortgages	0	0	0
Other consumer loans	0	0	0
Total retail	$ 0	$ 0	$ 0
Total loans	$ 0	$ 0	$ 0

The following table presents the period-end amortized cost basis of modifications to borrowers experiencing financial difficulty by type of modification made during the nine months ended September 30, 2023:

	Interest Rate		Principal
	Reduction	Term Extension	Forgiveness
Commercial:
Commercial and industrial	$ 0	$ 8,184,000	$ 0
Vacant land, land development and residential construction	0	0	0
Real estate – owner occupied	0	0	0
Real estate – non-owner occupied	0	0	0
Real estate – multi-family and residential rental	0	0	0
Total commercial	$ 0	$ 8,184,000	$ 0
Retail:
1-4 family mortgages	0	0	0
Other consumer loans	0	0	0
Total retail	$ 0	$ 0	$ 0
Total loans	$ 0	$ 8,184,000	$ 0

Loans listed under Term Extension were generally granted a series of short-term maturity extensions as part of workout process and associated forbearance agreements.

The following table presents the period-end amortized cost basis of loans that have been modified in the past twelve months to borrowers experiencing financial difficulty by payment status and loan segment:

			30 – 89 Days		90 + Days
	Current		Past Due		Past Due		Total
Commercial:
Commercial and industrial	$	8,184,000	$	0	$	0	$	8,184,000
Vacant land, land development and residential construction		0		0		0		0
Real estate – owner occupied		0		0		0		0
Real estate – non-owner occupied		0		0		0		0
Real estate – multi-family and residential rental		0		0		0		0
Total commercial	$	8,184,000	$	0	$	0	$	8,184,000
Retail:
1-4 family mortgages		0		0		0		0
Other consumer loans		0		0		0		0
Total retail	$	0	$	0	$	0	$	0
Total loans	$	8,184,000	$	0	$	0	$	8,184,000

Loans modified as troubled debt restructurings during the three months ended  September 30, 2022 were as follows:

			Pre-		Post-
			Modification		Modification
			Recorded		Recorded
	Number of		Principal		Principal
	Contracts		Balance		Balance
Commercial:
Commercial and industrial		1	$	19,000	$	19,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		0		0		0
Real estate – non-owner occupied		0		0		0
Real estate – multi-family and residential rental		0		0		0
Total commercial		1		19,000		19,000
Retail:
1-4 family mortgages		2		289,000		289,000
Other consumer loans		0		0		0
Total retail		2		289,000		289,000
Total loans		3	$	308,000	$	308,000

Loans modified as troubled debt restructurings during the nine months ended September 30, 2022 were as follows:

			Pre-		Post-
			Modification		Modification
			Recorded		Recorded
	Number of		Principal		Principal
	Contracts		Balance		Balance
Commercial:
Commercial and industrial		3	$	6,593,000	$	6,593,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		0		0		0
Real estate – non-owner occupied		0		0		0
Real estate – multi-family and residential rental		0		0		0
Total commercial		3		6,593,000		6,593,000
Retail:
1-4 family mortgages		5		501,000		500,000
Other consumer loans		0		0		0
Total retail		5		501,000		500,000
Total loans		8	$	7,094,000	$	7,093,000

We had no loans modified as troubled debt restructurings within the previous twelve months that became over 30 days past due within the three months or nine months ended September 30, 2022.

Activity for loans categorized as troubled debt restructurings during the three months ended  September 30, 2022 is as follows:

				Commercial
				Vacant Land,								Commercial
				Land								Real Estate -
				Development,		Commercial			Commercial			Multi-Family
	Commercial			and		Real Estate -			Real Estate -			and
	and			Residential		Owner			Non-Owner			Residential
	Industrial			Construction		Occupied			Occupied			Rental
Commercial Loan Portfolio:
Beginning Balance	$	9,938,000		$	0	$	87,000		$	139,000		$	88,000
Charge-Offs		0			0		0			0			0
Payments (net)		(891,000	)		0		(3,000	)		(4,000	)		(88,000	)
Transfers to ORE		0			0		0			0			0
Net Additions/Deletions		19,000			0		0			0			0
Ending Balance	$	9,066,000		$	0	$	84,000		$	135,000		$	0

	Retail			Retail
	1-4 Family			Other Consumer
	Mortgages			Loans
Retail Loan Portfolio:
Beginning Balance	$	2,339,000		$	3,000
Charge-Offs		0			0
Payments (net)		(84,000	)		(1,000	)
Transfers to ORE		0			0
Net Additions/Deletions		289,000			0
Ending Balance	$	2,544,000		$	2,000

Activity for loans categorized as troubled debt restructurings during the nine months ended September 30, 2022 is as follows:

				Commercial
				Vacant Land,								Commercial
				Land								Real Estate -
				Development,		Commercial			Commercial			Multi-Family
	Commercial			and		Real Estate -			Real Estate -			and
	and			Residential		Owner			Non-Owner			Residential
	Industrial			Construction		Occupied			Occupied			Rental
Commercial Loan Portfolio:
Beginning Balance	$	4,973,000		$	0	$	10,435,000		$	146,000		$	91,000
Charge-Offs		(95,000	)		0		0			0			0
Payments (net)		(378,000	)		0		(9,682,000	)		(11,000	)		(91,000	)
Transfers to ORE		0			0		0			0			0
Net Additions/Deletions		4,566,000			0		(669,000	)		0			0
Ending Balance	$	9,066,000		$	0	$	84,000		$	135,000		$	0

	Retail			Retail
	1-4 Family			Other Consumer
	Mortgages			Loans
Retail Loan Portfolio:
Beginning Balance	$	627,000		$	1,202,000
Charge-Offs		0			0
Payments (net)		(253,000	)		(13,000	)
Transfers to ORE		0			0
Net Additions/Deletions (1)		2,170,000			(1,187,000	)
Ending Balance	$	2,544,000		$	2,000

(1) Includes $1.2 million in the transfer of home equity lines of credit from other consumer loans to 1-4 family mortgages in association with the adoption of the CECL methodology effective January 1, 2022.