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LOANS AND ALLOWANCE FOR CREDIT LOSSES

12 Months Ended

Dec. 31, 2023

The loan portfolio balances, net of unearned income and fees, consist of various types of loans primarily all made to borrowers located within Texas and segregated by class of loan were as follows:


	December 31,
	2023		2022
	(In thousands)
Commercial and industrial	$	1,409,002	$	1,455,795
Paycheck Protection Program (PPP)	5,100		13,226
Real estate:
Commercial real estate (including multi-family residential)	4,071,807		3,931,480
Commercial real estate construction and land development	1,060,406		1,037,678
1-4 family residential (including home equity)	1,047,174		1,000,956
Residential construction	267,357		268,150
Consumer and other	64,287		47,466
Total loans	7,925,133		7,754,751
Allowance for credit losses on loans	(91,684)		(93,180)
Loans, net	$	7,833,449	$	7,661,571

Loan Origination/Risk Management

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. The Company maintains an independent loan review department that reviews and validates the credit risk program on a periodic basis. In addition, an independent third party loan review is performed on a semi-annual basis. In connection with the reviews of the loan portfolio, the Company considers risk elements attributable to particular loan types or categories in assessing the quality of individual loans. Some of the risk elements include:

Commercial and Industrial Loans—The Company makes commercial and industrial loans in its market area that are underwritten on the basis of the borrower’s ability to service the debt from income. The portfolio includes loans to commercial customers for use in financing working capital needs, equipment purchases and expansions. The loans in this category are repaid primarily from the cash flow of a borrower’s principal business operation. Credit risk in these loans is driven by creditworthiness of a borrower and the economic conditions that impact the cash flow stability from business operations. The Company generally takes as collateral a lien on any available real estate, equipment or other assets owned by the borrower and typically obtains a personal guaranty of the borrower or principal.

Commercial Real Estate—The Company makes loans collateralized by owner-occupied, nonowner-occupied and multi-family real estate to finance the purchase or ownership of real estate.

The Company’s nonowner-occupied and multi-family commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on sufficient income from the properties securing the loans to cover operating expenses and debt service. The Company generally requires the borrower to have had an existing relationship with the

Company and have a proven record of success. In addition, these loans are generally guaranteed by individual owners of the borrower and have typically lower loan to value ratios.

Loans secured by owner-occupied properties represented 46.2% of the outstanding principal balance of the Company’s commercial real estate loans at December 31, 2023. The Company is dependent on the cash flows of the business occupying the property and its owners and requires these loans generally to be secured by property with adequate margins and guaranteed by the individual owners. The Company’s owner-occupied commercial real estate loans collateralized by first liens on real estate typically have fixed interest rates and amortize over a 10 to 20 year period.

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Credit risk in these loans may be impacted by the creditworthiness of a borrower, property values and the local economies in the Company’s metropolitan area.

Construction and Land Development Loans—The Company makes loans to finance the construction of residential and to a lesser extent nonresidential properties. Construction loans generally are collateralized by first liens on real estate and generally have floating interest rates. Construction and land development real estate loans are usually based upon estimates of costs and estimated value of the completed project and include independent appraisal reviews and a financial analysis of the developers and property owners. The Company generally conducts periodic inspections, either directly or through an agent, prior to approval of periodic draws on these loans. Underwriting guidelines similar to those described above are also used in the Company’s construction lending activities. The Company may be required to fund additional amounts to complete a project and may have to hold the property for an indeterminate period of time. Sources of repayment of these loans may include permanent loans, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are considered to be higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions and the availability of long-term financing. Credit risk in these loans may be impacted by the creditworthiness of a borrower, property values and the local economies in the Company’s metropolitan area.

Residential Real Estate Loans—The Company’s lending activities also include the origination of 1-4 family residential mortgage loans (including home equity loans) collateralized by owner-occupied residential properties located in the Company’s market areas. The Company offers a variety of mortgage loan portfolio products which have a term of 5 to 7 years and generally amortize over 10 to 30 years. Loans collateralized by 1-4 family residential real estate generally have been originated in amounts of no more than 90% of appraised value. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers. Credit risk in these loans can be impacted by economic conditions within the Company’s metropolitan area that might impact either property values or a borrower’s personal income. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a larger number of borrowers.

Consumer and Other Loans—The Company makes a variety of loans to individuals for personal and household purposes including secured and unsecured installment and term loans. Consumer loans are underwritten based on the individual borrower’s income, current debt level, past credit history and the value of any available collateral. Repayment for these loans will come from a borrower’s income source that are typically independent of the loan purpose. The terms of these loans typically range from 12 to 60 months and vary based upon the nature of collateral and size of loan. Credit risk is driven by consumer economic factors, such as, unemployment and general economic conditions in the Company metropolitan area and the creditworthiness of a borrower.

In addition, for each category, the Company considers secondary sources of income and the financial strength and credit history of the borrower and any guarantors.

Concentrations of Credit

A majority of the Company’s lending activity occurs in and around our market. The Company’s loans are primarily loans secured by real estate, including commercial and residential construction, owner-occupied and nonowner-occupied and multi-family commercial real estate, raw land and other real estate based loans.

Related Party Loans

Related-party loans activity for the year ended December 31, 2023 was as follows (in thousands):


Beginning balance on January 1	$	78,865
New loans and additions	63,811
Repayments	(27,533)
Ending balance on December 31	$	115,143

The related party loans outstanding at December 31, 2023 and 2022 are net of cash collateralized loans of $22.7 million and $21.9 million, respectively.

Nonaccrual and Past Due Loans

An aging analysis of the recorded investment in past due loans, segregated by class of loans, is included below. The Company defines recorded investment as the outstanding loan balances including net deferred loan fees, and excluding accrued interest receivable of $37.4 million and $34.1 million as of December 31, 2023 and 2022, respectively, due to immateriality.


	December 31, 2023
	Loans Past Due and Still Accruing						Nonaccrual Loans		Current Loans		Total Loans
	30-89 Days		90 or More Days		Total Past Due Loans
	(In thousands)
Commercial and industrial	$	6,096	$	—	$	6,096	$	5,048	$	1,397,858	$	1,409,002
Paycheck Protection Program (PPP)	375		—		375		—		4,725		5,100
Real estate:
Commercial real estate (including multi-family residential)	9,600		—		9,600		16,699		4,045,508		4,071,807
Commercial real estate construction and land development	7,341		—		7,341		5,043		1,048,022		1,060,406
1-4 family residential (including home equity)	3,492		—		3,492		8,874		1,034,808		1,047,174
Residential construction	498		—		498		3,288		263,571		267,357
Consumer and other	64		—		64		239		63,984		64,287
Total loans	$	27,466	$	—	$	27,466	$	39,191	$	7,858,476	$	7,925,133


	December 31, 2022
	Loans Past Due and Still Accruing						Nonaccrual Loans		Current Loans		Total Loans
	30-89 Days		90 or More Days		Total Past Due Loans
	(In thousands)
Commercial and industrial	$	1,591	$	—	$	1,591	$	25,297	$	1,428,907	$	1,455,795
Paycheck Protection Program (PPP)	517		—		517		105		12,604		13,226
Real estate:
Commercial real estate (including multi-family residential)	3,222		—		3,222		9,970		3,918,288		3,931,480
Commercial real estate construction and land development	851		—		851		—		1,036,827		1,037,678
1-4 family residential (including home equity)	3,385		—		3,385		9,404		988,167		1,000,956
Residential construction	—		—		—		—		268,150		268,150
Consumer and other	192		—		192		272		47,002		47,466
Total loans	$	9,758	$	—	$	9,758	$	45,048	$	7,699,945	$	7,754,751

If interest on nonaccrual loans had been accrued under the original loan terms, approximately $1.5 million and $1.7 million would have been recorded as income for the years ended December 31, 2023 and 2022, respectively.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt. The Company utilizes a risk rating matrix to assign a risk rating to each of its loans. Loans are rated on a scale of 10 to 90. Risk ratings are updated on an ongoing basis and are subject to change by continuous loan monitoring processes including lending management monitoring, executive management and board committee oversight, and independent credit review. As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio and methodology for calculating the allowance for credit losses, management assigns and tracks certain risk ratings to be used as credit quality indicators including trends related to (1) the weighted-average risk grade of loans, (2) the level of classified loans, (3) the delinquency status of loans, (4) nonperforming loans and (5) the general economic conditions in the our market. Individual bankers, under the oversight of credit administration, review updated financial information for all pass grade commercial loans to reassess the risk grade on at least an annual basis. When a loan reaches a set of internally designated criteria, including Substandard or higher, a special assets officer will be involved in the monitoring of the loan on an on-going basis.

The following is a general description of the risk ratings used by the Company:

Pass—Credits in this category contain an acceptable amount of risk.

Special Mention—Loans classified as special mention have a potential weakness that deserves 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 at some future date. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Substandard—Loans classified as substandard have well-defined weaknesses on a continuing basis and are inadequately protected by the current net worth and paying capacity of the borrower, declining collateral values, or a continuing downturn in their industry which is reducing their profits to below zero and having a significantly negative impact on their cash flow. These loans so classified are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful—Loans classified as doubtful 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.

Loss—Loans classified as loss are to be charged-off or charged-down when payment is acknowledged to be uncertain or

when the timing or value of payments cannot be determined. “Loss” is not intended to imply that the loan or some portion of it will never be paid, nor does it in any way imply that there has been a forgiveness of debt.

The following table presents risk ratings by category and the gross charge-offs by primary loan type and year of origination or renewal. Generally, current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below. The following summarizes the amortized cost basis of loans by year of origination/renewal and credit quality indicator by class of loan as of December 31, 2023 and 2022:


	December 31, 2023																		December 31, 2022
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans		Total		Total
	2023		2022		2021		2020		2019		Prior
	(In thousands)
Commercial and industrial
Pass	$	301,765	$	260,052	$	163,930	$	41,778	$	25,436	$	18,802	$	533,531	$	31,824	$	1,377,118	$	1,400,191
Special Mention	121		2,708		491		407		358		—		4,169		86		8,340		18,982
Substandard	1,611		3,677		1,452		696		11,558		260		2,352		1,890		23,496		36,568
Doubtful	48				—		—		—		—		—		—		48		54
Total commercial and industrial loans	$	303,545	$	266,437	$	165,873	$	42,881	$	37,352	$	19,062	$	540,052	$	33,800	$	1,409,002	$	1,455,795

Current period gross charge-offs	$	—	$	549	$	4,009	$	796	$	280	$	—	$	4,193	$	773	$	10,600

Paycheck Protection Program (PPP)
Pass	$	—	$	—	$	2,755	$	2,345	$	—	$	—	$	—	$	—	$	5,100	$	13,226
Special Mention	—		—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—		—
Total PPP loans	$	—	$	—	$	2,755	$	2,345	$	—	$	—	$	—	$	—	$	5,100	$	13,226

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial real estate (including multi-family residential)
Pass	$	421,800	$	1,315,088	$	874,084	$	439,365	$	337,674	$	427,103	$	132,261	$	12,300	$	3,959,675	$	3,844,951
Special Mention	9,791		9,551		14,255		14,139		847		4,139		1,761		—		54,483		18,183
Substandard	4,087		6,172		19,076		9,457		4,967		13,456		87		347		57,649		68,346
Doubtful	—		—		—		—		—		—		—		—		—		—
Total commercial real estate (including multi-family residential) loans	$	435,678	$	1,330,811	$	907,415	$	462,961	$	343,488	$	444,698	$	134,109	$	12,647	$	4,071,807	$	3,931,480

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial real estate construction and land development
Pass	$	289,698	$	523,742	$	129,927	$	21,601	$	9,978	$	4,311	$	53,233	$	299	$	1,032,789	$	1,025,141
Special Mention	210		4,962		4,076		—		—		489		—		—		9,737		832
Substandard	2,211		1,553		13,181		163		79		—		135		558		17,880		11,705
Doubtful	—		—		—		—		—		—		—		—		—		—
Total commercial real estate construction and land development	$	292,119	$	530,257	$	147,184	$	21,764	$	10,057	$	4,800	$	53,368	$	857	$	1,060,406	$	1,037,678

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


	December 31, 2023																		December 31, 2022
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans		Total		Total
	2023		2022		2021		2020		2019		Prior
	(In thousands)
1-4 family residential (including home equity)
Pass	$	167,718	$	262,920	$	219,584	$	110,264	$	69,534	$	81,062	$	90,227	$	10,434	$	1,011,743	$	969,396
Special Mention	874		121		1,284		1,833		329		17		650		276		5,384		3,714
Substandard	1,926		2,456		3,527		1,579		4,967		5,816		7,727		2,049		30,047		27,846
Doubtful	—		—		—		—		—		—		—		—		—		—
Total 1-4 family residential (including home equity)	$	170,518	$	265,497	$	224,395	$	113,676	$	74,830	$	86,895	$	98,604	$	12,759	$	1,047,174	$	1,000,956

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	23	$	—	$	1,502	$	1,525

Residential construction
Pass	$	139,993	$	112,013	$	6,058	$	4,062	$	—	$	494	$	1,449	$	—	$	264,069	$	266,943
Special Mention	—		—		—		—		—		—		—		—		—		421
Substandard	—		1,377		1,911		—		—		—		—		—		3,288		786
Doubtful	—		—		—		—		—		—		—		—		—		—
Total residential construction	$	139,993	$	113,390	$	7,969	$	4,062	$	—	$	494	$	1,449	$	—	$	267,357	$	268,150

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer and other
Pass	$	33,687	$	7,843	$	3,800	$	1,810	$	568	$	209	$	15,563	$	401	$	63,881	$	47,062
Special Mention	—		22		—		—		—		—		45		—		67		43
Substandard	—		35		110		—		31		4		3		156		339		361
Doubtful	—		—		—		—		—		—		—		—		—		—
Total consumer and other	$	33,687	$	7,900	$	3,910	$	1,810	$	599	$	213	$	15,611	$	557	$	64,287	$	47,466

Current period gross charge-offs	$	—	$	290	$	—	$	—	$	—	$	—	$	1	$	—	$	291

Total loans
Pass	$	1,354,661	$	2,481,658	$	1,400,138	$	621,225	$	443,190	$	531,981	$	826,264	$	55,258	$	7,714,375	$	7,566,910
Special Mention	10,996		17,364		20,106		16,379		1,534		4,645		6,625		362		78,011		42,175
Substandard	9,835		15,270		39,257		11,895		21,602		19,536		10,304		5,000		132,699		145,612
Doubtful	48		—		—		—		—		—		—		—		48		54
Total loans	$	1,375,540	$	2,514,292	$	1,459,501	$	649,499	$	466,326	$	556,162	$	843,193	$	60,620	$	7,925,133	$	7,754,751

Total current period gross charge-offs	$	—	$	839	$	4,009	$	796	$	280	$	23	$	4,194	$	2,275	$	12,416

The following table presents the activity in the allowance for credit losses on loans by portfolio type for the years ended December 31, 2023, 2022 and 2021:


	Commercial and industrial		Paycheck Protection Program (PPP)		Commercial real estate (including multi-family residential)		Commercial real estate construction and land development		1-4 family residential (including home equity)		Residential construction		Consumer and other		Total
	(In thousands)
Allowance for credit losses on loans:
Balance December 31, 2022	$	41,236	$	—	$	32,970	$	14,121	$	2,709	$	1,796	$	348	$	93,180
Provision for credit losses on loans	120		—		5,201		(494)		3,592		827		379		9,625
Charge-offs	(10,600)		—		—		—		(1,525)		—		(291)		(12,416)
Recoveries	1,223		—		16		—		9		—		47		1,295
Net charge-offs	(9,377)		—		16		—		(1,516)		—		(244)		(11,121)
Balance December 31, 2023	$	31,979	$	—	$	38,187	$	13,627	$	4,785	$	2,623	$	483	$	91,684
Allowance for credit losses on loans:
Balance December 31, 2021	$	16,629	$	—	$	23,143	$	6,263	$	847	$	975	$	83	$	47,940
Allowance on PCD loans	4,559		—		1,040		173		1,563		7		216		7,558
Provision for credit losses on loans	26,175		—		9,013		7,698		304		814		28		44,032
Charge-offs	(7,461)		—		(400)		(72)		(57)		—		(66)		(8,056)
Recoveries	1,334		—		174		59		52		—		87		1,706
Net charge-offs	(6,127)		—		(226)		(13)		(5)		—		21		(6,350)
Balance December 31, 2022	$	41,236	$	—	$	32,970	$	14,121	$	2,709	$	1,796	$	348	$	93,180
Allowance for credit losses on loans:
Balance December 31, 2020	$	17,738	$	—	$	23,934	$	6,939	$	3,279	$	870	$	413	$	53,173
Provision for credit losses on loans	306		—		66		(676)		(2,411)		105		(313)		(2,923)
Charge-offs	(1,579)		—		(857)		—		(21)		—		(24)		(2,481)
Recoveries	164		—		—		—		—		—		7		171
Net charge-offs	(1,415)		—		(857)		—		(21)		—		(17)		(2,310)
Balance December 31, 2021	$	16,629	$	—	$	23,143	$	6,263	$	847	$	975	$	83	$	47,940

During 2022, the Company recorded a $28.2 million provision for credit losses on loans and $5.0 million provision for unfunded commitments recognized in 2022 on acquired non-PCD loans related to accounting of acquired loans from the Merger.

Allowance for Credit Losses on Unfunded Commitments

In addition to the allowance for credit losses on loans, the Company has established an allowance for credit losses on unfunded commitments, which is classified in other liabilities and adjusted as a provision for credit loss expense. The allowance represents estimates of expected credit losses over the contractual period in which there is exposure to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on the commitments expected to fund. The estimate of commitments expected to fund is informed by historical analysis looking at utilization rates. The expected credit loss rates applied to the commitments expected to fund is informed by the general valuation allowance utilized for outstanding balances with the same underlying assumptions and drivers. The allowance for credit losses on unfunded commitments as of December 31, 2023 and 2022 was $11.3 million and $12.0 million, respectively. This reserve is maintained at a level management believes to be sufficient to absorb any losses arising from unfunded loan commitments. The Company recorded a reversal of provision on unfunded commitments during the year ended December 31, 2023 of $682 thousand and provisions of $6.7 million and $601 thousand for the years ended December 31, 2022 and 2021, respectively.

Collateral Dependent Loans

Collateral dependent loans are secured by real estate assets, accounts receivable, inventory and equipment. For a collateral dependent loan, the Company’s evaluation process includes a valuation by appraisal or other collateral analysis adjusted for selling costs, when appropriate. This valuation is compared to the remaining outstanding principal balance of the loan. If a loss is determined to be probable, the loss is included in the allowance for credit losses on loans as a specific allocation.

The following tables present the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses as of December 31, 2023 and 2022:


	December 31, 2023
	Real Estate		Business Assets		Other		Total
	(In thousands)
Commercial and industrial	$	—	$	70	$	—	$	70

Paycheck Protection Program (PPP)	—		—		—		—
Real estate:
Commercial real estate (including multi-family residential)	5,548		—		—		5,548
Commercial real estate construction and land development	437		—		—		437
1-4 family residential (including home equity)	424		—		—		424
Residential construction	—		—		—		—
Consumer and other	—		—		—		—
Total	$	6,409	$	70	$	—	$	6,479


	December 31, 2022
	Real Estate		Business Assets		Other		Total
	(In thousands)
Commercial and industrial	$	—	$	18,411	$	30	$	18,441

Paycheck Protection Program (PPP)	—		—		—		—
Real estate:
Commercial real estate (including multi-family residential)	1,612		—		—		1,612
Commercial real estate construction and land development	—		—		—		—
1-4 family residential (including home equity)	3,478		—		—		3,478
Residential construction	—		—		—		—
Consumer and other	—		—		—		—
Total	$	5,090	$	18,411	$	30	$	23,531

Nonaccrual Loans

The following table presents additional information regarding nonaccrual loans. No interest income was recognized on nonaccrual loans for the years ended December 31, 2023 and 2022, respectively.


	December 31, 2023
	Nonaccrual Loans with No Related Allowance		Nonaccrual Loans with Related Allowance		Total Nonaccrual Loans
	(In thousands)
Commercial and industrial	$	1,616	$	3,432	$	5,048

Paycheck Protection Program (PPP)	—		—		—
Real estate:
Commercial real estate (including multi-family residential)	11,844		4,855		16,699
Commercial real estate construction and land development	5,043		—		5,043
1-4 family residential (including home equity)	7,400		1,474		8,874
Residential construction	3,288		—		3,288
Consumer and other	54		185		239
Total loans	$	29,245	$	9,946	$	39,191


	December 31, 2022
	Nonaccrual Loans with No Related Allowance		Nonaccrual Loans with Related Allowance		Total Nonaccrual Loans
	(In thousands)
Commercial and industrial	$	2,776	$	22,521	$	25,297

Paycheck Protection Program (PPP)	105		—		105
Real estate:
Commercial real estate (including multi-family residential)	8,704		1,266		9,970
Commercial real estate construction and land development	—		—		—
1-4 family residential (including home equity)	4,856		4,548		9,404
Residential construction	—		—		—
Consumer and other	94		178		272
Total loans	$	16,535	$	28,513	$	45,048

Loan Modifications and Troubled Debt Restructurings

Effective January 1, 2023, under ASU 2022-02, loan modifications are reported if concessions have been granted to borrowers that are experiencing financial difficulty. Information on these loan modifications originated after the effective date is presented according to the new accounting guidance. Reporting periods prior to the adoption of ASU 2022-02 present information on TDRs under the previous disclosure requirements. The percentage of loans modified comprised less than 1% of their respective classes of loan portfolios at December 31, 2023.

Loan Modifications

The following table presents information regarding loans that were modified due to the borrowers experiencing financial difficulty during the year ended December 31, 2023:


	Year Ended December 31, 2023
	Interest Rate Reduction		Term Extension		Payment Delay		Principal Forgiveness		Combination Term Extension and Principal Forgiveness		Combination Term Extension and Interest Rate Reduction		Total
	(In thousands)

Commercial and industrial	$	—	$	2,600	$	—	$	—	$	—	$	308	$	2,908
Real estate:
Commercial real estate (including multi-family residential)	—		2,888		1,917		—		—		1,696		6,501
Commercial real estate construction and land development	—		7,103		—		—		—		—		7,103
1-4 family residential (including home equity)	—		1,108		225		—		—		70		1,403
Residential construction	—		—		—		—		—				—
Consumer and other	—		92		—		—		—				92
Total	$	—	$	13,791	$	2,142	$	—	$	—	$	2,074	$	18,007

The following table summarizes, by loan portfolio, the financial effect of the Company's loan modifications for the year ended December 31, 2023:


	Weighted-Average Interest Rate Reduction		Weighted-Average Term Extension
			(Months)
Commercial and industrial	—	%	12
Real estate:
Commercial real estate (including multi-family residential)	—	%	48
Commercial real estate construction and land development	—	%	12
1-4 family residential (including home equity)	—	%	19
Residential construction	—	%	—
Consumer and other	1.5	%	7

The following table summarizes loans that had a payment default, determined as 90 or more days past due, within the past twelve months that were modified due to the borrowers experiencing financial difficulty during the year ended December 31, 2023:


	Twelve Months Ended December 31, 2023
	Interest Rate Reduction		Term Extension		Payment Delay		Principal forgiveness
	In thousands
Commercial and industrial	$	—	$	640	$	—	$	—
Real estate:
Commercial real estate (including multi-family residential)	—		—		—		—
Commercial real estate construction and land development	—		—		—		—
1-4 family residential (including home equity)	—		709		99		—
Residential construction	—		—		—		—
Consumer and other	—		92		—		—
Total	$	—	$	1,441	$	99	$	—

Troubled Debt Restructurings

As of December 31, 2022, the Company had a recorded investment in TDRs of $48.4 million. The Company allocated $5.4 million of specific reserves for these loans at December 31, 2022 and did not commit to lend additional amounts on these loans. The following table presents information regarding loans modified in a TDR during the years ended December 31, 2022 and 2021:


	December 31,
	2022					2021
	Number of Contracts	Pre-Modification of Outstanding Recorded Investment		Post Modification of Outstanding Recorded Investment		Number of Contracts	Pre-Modification of Outstanding Recorded Investment		Post Modification of Outstanding Recorded Investment
	(In thousands)
Commercial and industrial	14	$	8,859	$	8,859	9	$	2,891	$	2,891
Paycheck Protection Program (PPP)	—	—		—		—	—		—
Real estate:
Commercial real estate (including multi-family residential)	7	2,805		2,816		1	545		545
Commercial real estate construction and land development	—	—		—		—	—		—
1-4 family residential (including home equity)	1	176		176		—	—		—
Residential construction	—	—		—		—	—		—
Consumer and other	1	45		45		—	—		—
Total	23	$	11,885	$	11,896	10	$	3,436	$	3,436

TDRs resulted in charge-offs of $891 thousand and $620 thousand during the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, one loan for a total of $136 thousand was modified as a TDRs during the previous twelve-month period that subsequently defaulted during the year 2022. Default is determined at 90 or more days past due. The modifications primarily related to extending the amortization periods of the loans. The Company did not grant principal reductions on any restructured loans. During the year ended December 31, 2022, the Company added $11.9 million in new TDRs, of which $9.6 million was outstanding on December 31, 2022.