| Loans |
Loans The composition of the loan portfolio at March 31, 2023 and December 31, 2022 was as follows: | | | | | | | | | | | | | | | | March 31, 2023 | | | December 31, 2022 | | (In thousands) | Amortized Cost | | | Amortized Cost | Commercial, financial and agricultural: (1) | | | | | Commercial, financial and agricultural (1) | $ | 1,256,705 | | | | $ | 1,295,238 | | | PPP loans | 3,445 | | | | 4,206 | | | Overdrafts | 1,831 | | | | 1,489 | | Commercial real estate (1) | 1,800,878 | | | | 1,794,054 | | | Construction real estate: | | | | | | Commercial | 173,668 | | | | 208,982 | | | Retail | 117,075 | | | | 116,433 | | | Residential real estate: | | | | | | Commercial | 562,759 | | | | 550,183 | | | Mortgage | 1,089,772 | | | | 1,075,446 | | | HELOC | 164,656 | | | | 167,151 | | | Installment | 3,987 | | | | 4,091 | | | Consumer: | | | | | | Consumer | 1,898,398 | | | | 1,902,557 | | | GFSC | 140 | | | | 274 | | | Check loans | 2,071 | | | | 2,150 | | | Leases | 18,472 | | | | 19,637 | | | Total | $ | 7,093,857 | | | | $ | 7,141,891 | | | Allowance for credit losses | (85,946) | | | | (85,379) | | | Net loans | $ | 7,007,911 | | | | $ | 7,056,512 | |
(1) Included within each of commercial, financial and agricultural loans and commercial real estate loans is an immaterial amount of consumer loans that were not broken out by class.
In order to support customers, Park participated in the CARES Act Paycheck Protection Program ("PPP"). For its assistance in making and retaining these loans, Park received an aggregate of $33.1 million in fees from the SBA. During the three months ended March 31, 2023 and March 31, 2022, $17,400 and $1.5 million, respectively, of PPP fee income was recognized within loan interest income.
Loans are shown net of deferred origination fees, costs and unearned income of $17.7 million at March 31, 2023, and of $18.2 million at December 31, 2022, which represented a net deferred income position in both years. At March 31, 2023 and December 31, 2022, included in the net deferred origination fees, costs and unearned income were $51,000 and $68,000, respectively, in net origination fees related to PPP loans. At March 31, 2023 and December 31, 2022, loans included purchase accounting adjustments of $2.3 million and $2.5 million, respectively, which represented a net deferred income position at each date. This fair market value purchase accounting adjustment is expected to be recognized into interest income on a level yield basis over the remaining expected life of the loans.
Overdrawn deposit accounts of $1.8 million and $1.5 million were reclassified to loans at March 31, 2023 and December 31, 2022, respectively. Credit Quality Among other things, the adoption of ASU 2022-02 on January 1, 2023 eliminated the concept of TDRs. After the adoption of ASU 2022-02 on January 1, 2023, nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing. Prior to the adoption of ASU 2022-02, nonperforming loans consisted of nonaccrual loans, accruing TDRs and loans past due 90 days or more and still accruing.
The following table presents the amortized cost of nonaccrual loans and loans past due 90 days or more and still accruing, by class of loan, at March 31, 2023. | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | | (In thousands) | | Nonaccrual
Loans | | | Loans Past Due
90 Days
or More
and Accruing | | Total
Nonperforming
Loans | | Commercial, financial and agricultural: | | | | | | | | | Commercial, financial and agricultural | | $ | 39,054 | | | | $ | — | | | $ | 39,054 | | | PPP loans | | — | | | | 294 | | | 294 | | | Overdrafts | | — | | | | — | | | — | | | Commercial real estate | | 15,476 | | | | — | | | 15,476 | | | Construction real estate: | | | | | | | | | Commercial | | 1,997 | | | | — | | | 1,997 | | | Retail | | — | | | | — | | | — | | | Residential real estate: | | | | | | | | | Commercial | | 2,338 | | | | — | | | 2,338 | | | Mortgage | | 10,888 | | | | 291 | | | 11,179 | | | HELOC | | 1,145 | | | | 16 | | | 1,161 | | | Installment | | 47 | | | | — | | | 47 | | | Consumer: | | | | | | | | | Consumer | | 1,545 | | | | 634 | | | 2,179 | | | GFSC | | 7 | | | | 1 | | | 8 | | | Check loans | | — | | | | — | | | — | | | Leases | | 617 | | | | 15 | | | 632 | | | Total loans | | $ | 73,114 | | | | $ | 1,251 | | | $ | 74,365 | |
The following table presents the amortized cost of nonaccrual loans, accruing TDRs, and loans past due 90 days or more and still accruing, by class of loan, at December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2022 | | (In thousands) | | Nonaccrual
Loans | | Accruing
TDRs | | Loans Past Due 90 Days or More and Accruing | | Total
Nonperforming
Loans | | Commercial, financial and agricultural | | | | | | | | | | Commercial, financial and agricultural | | $ | 38,158 | | | $ | 3,261 | | | $ | — | | | $ | 41,419 | | | PPP loans | | — | | | — | | | 389 | | | 389 | | | Overdrafts | | — | | | — | | | — | | | — | | | Commercial real estate | | 24,504 | | | 7,919 | | | — | | | 32,423 | | | Construction real estate: | | | | | | | | | | Commercial | | 1,712 | | | — | | | — | | | 1,712 | | | Retail | | 1,254 | | | 12 | | | — | | | 1,266 | | | Residential real estate: | | | | | | | | | | Commercial | | 1,894 | | | 298 | | | — | | | 2,192 | | | Mortgage | | 9,260 | | | 6,750 | | | 182 | | | 16,192 | | | HELOC | | 1,133 | | | 187 | | | 7 | | | 1,327 | | | Installment | | 51 | | | 1,037 | | | — | | | 1,088 | | | Consumer | | | | | | | | | | Consumer | | 1,012 | | | 670 | | | 703 | | | 2,385 | | | GFSC | | 10 | | | — | | | — | | | 10 | | | Check loans | | — | | | — | | | — | | | — | | | Leases | | 708 | | | — | | | — | | | 708 | | | Total loans | | $ | 79,696 | | | $ | 20,134 | | | $ | 1,281 | | | $ | 101,111 | |
The following tables provide additional detail on nonaccrual loans and the related ACL, by class of loan, at March 31, 2023 and December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | | (In thousands) | | Nonaccrual Loans With No ACL | | Nonaccrual Loans With an ACL | | Related ACL | | Commercial, financial and agricultural: | | | | | | | | Commercial, financial and agricultural | | $ | 29,007 | | | $ | 10,047 | | | $ | 4,112 | | | PPP loans | | — | | | — | | | — | | | Overdrafts | | — | | | — | | | — | | | Commercial real estate | | 12,730 | | | 2,746 | | | 215 | | | Construction real estate: | | | | | | | | Commercial | | 1,997 | | | — | | | — | | | Retail | | — | | | — | | | — | | | Residential real estate: | | | | | | | | Commercial | | 2,338 | | | — | | | — | | | Mortgage | | — | | | 10,888 | | | 105 | | | HELOC | | — | | | 1,145 | | | 175 | | | Installment | | — | | | 47 | | | 18 | | | Consumer | | | | | | | | Consumer | | — | | | 1,545 | | | 364 | | | GFSC | | — | | | 7 | | | 1 | | | Check loans | | — | | | — | | | — | | | Leases | | 593 | | | 24 | | | 2 | | | Total loans | | $ | 46,665 | | | $ | 26,449 | | | $ | 4,992 | |
| | | | | | | | | | | | | | | | | | | | | | | December 31, 2022 | | (In thousands) | | Nonaccrual Loans With No ACL | | Nonaccrual Loans With an ACL | | Related ACL | | Commercial, financial and agricultural: | | | | | | | | Commercial, financial and agricultural | | $ | 28,291 | | | $ | 9,867 | | | $ | 3,440 | | | PPP loans | | — | | | — | | | — | | | Overdrafts | | — | | | — | | | — | | | Commercial real estate | | 22,965 | | | 1,539 | | | 130 | | | Construction real estate: | | | | — | | | | | Commercial | | 1,712 | | | — | | | — | | | Retail | | — | | | 1,254 | | | 19 | | | Residential real estate: | | | | — | | | | | Commercial | | 1,894 | | | — | | | — | | | Mortgage | | — | | | 9,260 | | | 85 | | | HELOC | | — | | | 1,133 | | | 191 | | | Installment | | — | | | 51 | | | 17 | | | Consumer | | | | | | | | Consumer | | — | | | 1,012 | | | 283 | | | GFSC | | — | | | 10 | | | 1 | | | Check loans | | — | | | — | | | — | | | Leases | | 680 | | | 28 | | | 9 | | | Total | | $ | 55,542 | | | $ | 24,154 | | | $ | 4,175 | |
Nonaccrual commercial loans are evaluated on an individual basis and are excluded from the collective evaluation. Management’s general practice is to proactively charge down loans individually evaluated to the fair value of the underlying collateral. Nonaccrual consumer loans are collectively evaluated based on similar risk characteristics.
The following tables provide the amortized cost basis of collateral-dependent loans by class of loan, as of March 31, 2023 and December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | | (In thousands) | | Real Estate | | Business Assets | | Other | Total | | Commercial, financial and agricultural | | | | | | | | | Commercial, financial and agricultural | | $ | 8,541 | | | $ | 7,364 | | | $ | 23,133 | | $ | 39,038 | | | Commercial real estate | | 18,782 | | | 155 | | | — | | 18,937 | | | Construction real estate: | | | | | | | | | Commercial | | 2,648 | | | — | | | — | | 2,648 | | | Residential real estate: | | | | | | | | | Commercial | | 2,613 | | | — | | | — | | 2,613 | | | Mortgage | | 86 | | | — | | | — | | 86 | | | Leases | | — | | | 617 | | | — | | 617 | | | Total loans | | $ | 32,670 | | | $ | 8,136 | | | $ | 23,133 | | $ | 63,939 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2022 | | (In thousands) | | Real Estate | | Business Assets | | Other | Total | | Commercial, financial and agricultural | | | | | | | | | Commercial, financial and agricultural | | $ | 8,242 | | | $ | 7,788 | | | $ | 23,125 | | $ | 39,155 | | | Commercial real estate | | 35,908 | | | 28 | | | — | | 35,936 | | | Construction real estate: | | | | | | | | | Commercial | | 2,372 | | | — | | | — | | 2,372 | | | Residential real estate: | | | | | | | | | Commercial | | 2,479 | | | — | | | — | | 2,479 | | | Mortgage | | 90 | | | — | | | — | | 90 | | | Leases | | — | | | 708 | | | — | | 708 | | | Total loans | | $ | 49,091 | | | $ | 8,524 | | | $ | 23,125 | | $ | 80,740 | |
Interest income on nonaccrual loans individually evaluated for impairment is recognized on a cash basis only when Park expects to receive the entire recorded investment in the loans. The following table presents interest income recognized on nonaccrual loans for the three-month periods ended March 31, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | Interest Income Recognized | | (In thousands) | | Three Months Ended
March 31, 2023 | | Three Months Ended
March 31, 2022 | | | Commercial, financial and agricultural: | | | | | | | Commercial, financial and agricultural | | $ | 605 | | | $ | 17 | | | | PPP loans | | — | | | — | | | | Overdrafts | | — | | | — | | | | Commercial real estate | | 160 | | | 257 | | | | Construction real estate: | | | | | | | Commercial | | 32 | | | 1 | | | | Retail | | — | | | 4 | | | | Residential real estate: | | | | | | | Commercial | | 26 | | | 20 | | | | Mortgage | | 49 | | | 33 | | | | HELOC | | 8 | | | 4 | | | | Installment | | 1 | | | 2 | | | | Consumer: | | | | | | | Consumer | | 19 | | | 14 | | | | GFSC | | — | | | 2 | | | | Check loans | | — | | | — | | | | Leases | | — | | | 14 | | | | Total loans | | $ | 900 | | | $ | 368 | | |
The following tables present the aging of the amortized cost in past due loans at March 31, 2023 and December 31, 2022 by class of loan:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | | (In thousands) | Accruing
Loans
Past Due
30-89 Days | | Past Due Nonaccrual Loans and Loans Past Due 90 Days or More and Accruing (1) | | Total Past
Due | | Total Current (2) | | Total
Amortized Cost | | Commercial, financial and agricultural: | | | | | | | | | | | Commercial, financial and agricultural | $ | 2,732 | | | $ | 31,450 | | | $ | 34,182 | | | $ | 1,222,523 | | | $ | 1,256,705 | | | PPP loans | — | | | 294 | | | 294 | | | 3,151 | | | 3,445 | | | Overdrafts | — | | | — | | | — | | | 1,831 | | | 1,831 | | | Commercial real estate | 390 | | | 2,478 | | | 2,868 | | | 1,798,010 | | | 1,800,878 | | | Construction real estate: | | | | | | | | | | | Commercial | — | | | — | | | — | | | 173,668 | | | 173,668 | | | Retail | 50 | | | — | | | 50 | | | 117,025 | | | 117,075 | | | Residential real estate: | | | | | | | | | | | Commercial | 18 | | | 328 | | | 346 | | | 562,413 | | | 562,759 | | | Mortgage | 4,439 | | | 5,362 | | | 9,801 | | | 1,079,971 | | | 1,089,772 | | | HELOC | 418 | | | 745 | | | 1,163 | | | 163,493 | | | 164,656 | | | Installment | 11 | | | — | | | 11 | | | 3,976 | | | 3,987 | | | Consumer: | | | | | | | | | | | Consumer | 4,593 | | | 878 | | | 5,471 | | | 1,892,927 | | | 1,898,398 | | | GFSC | 26 | | | 2 | | | 28 | | | 112 | | | 140 | | | Check loans | 1 | | | — | | | 1 | | | 2,070 | | | 2,071 | | | Leases | 98 | | | 15 | | | 113 | | | 18,359 | | | 18,472 | | | Total loans | $ | 12,776 | | | $ | 41,552 | | | $ | 54,328 | | | $ | 7,039,529 | | | $ | 7,093,857 | |
(1) Includes an aggregate of $1.3 million of loans past due 90 days or more and accruing. The remaining loans were past due nonaccrual loans. (2) Includes an aggregate of $32.8 million of nonaccrual loans which were current in regards to contractual principal and interest payments. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2022 | | (in thousands) | Accruing
Loans
Past Due
30-89 Days | | Past Due Nonaccrual Loans and Loans Past Due 90 Days or More and Accruing (1) | | Total Past
Due | | Total Current (2) | | Total
Amortized Cost | | Commercial, financial and agricultural | | | | | | | | | | | Commercial, financial and agricultural | $ | 378 | | | $ | 9,246 | | | $ | 9,624 | | | $ | 1,285,614 | | | $ | 1,295,238 | | | PPP loans | 155 | | | 389 | | | 544 | | | 3,662 | | | 4,206 | | | Overdrafts | — | | | — | | | — | | | 1,489 | | | 1,489 | | | Commercial real estate | 737 | | | 4,738 | | | 5,475 | | | 1,788,579 | | | 1,794,054 | | | Construction real estate: | | | | | | | | | | | Commercial | 751 | | | — | | | 751 | | | 208,231 | | | 208,982 | | | Retail | 1,035 | | | 523 | | | 1,558 | | | 114,875 | | | 116,433 | | | Residential real estate: | | | | | | | | | | | Commercial | 519 | | | 477 | | | 996 | | | 549,187 | | | 550,183 | | | Mortgage | 7,630 | | | 5,157 | | | 12,787 | | | 1,062,659 | | | 1,075,446 | | | HELOC | 832 | | | 587 | | | 1,419 | | | 165,732 | | | 167,151 | | | Installment | 57 | | | 4 | | | 61 | | | 4,030 | | | 4,091 | | | Consumer | | | | | | | | | | | Consumer | 5,451 | | | 964 | | | 6,415 | | | 1,896,142 | | | 1,902,557 | | | GFSC | 48 | | | — | | | 48 | | | 226 | | | 274 | | | Check loans | 2 | | | — | | | 2 | | | 2,148 | | | 2,150 | | | Leases | — | | | — | | | — | | | 19,637 | | | 19,637 | | | Total loans | $ | 17,595 | | | $ | 22,085 | | | $ | 39,680 | | | $ | 7,102,211 | | | $ | 7,141,891 | |
(1) Includes an aggregate of $1.3 million of loans past due 90 days or more and accruing. The remaining loans were past due nonaccrual loans. (2) Includes an aggregate of $58.9 million of nonaccrual loans which were current in regards to contractual principal and interest payments.
Credit Quality Indicators Management utilizes past due information as a credit quality indicator across the loan portfolio. Past due information at March 31, 2023 and December 31, 2022 is included in the previous tables. The past due information is the primary credit quality indicator within the following classes of loans: (1) overdrafts in the commercial, financial and agricultural portfolio segment; (2) retail loans in the construction real estate portfolio segment; (3) mortgage loans, HELOC and installment loans in the residential real estate portfolio segment; and (4) consumer loans, GFSC loans, and check loans in the consumer portfolio segment. The primary credit indicator for commercial loans is based on an internal grading system that grades all commercial loans on a scale from 1 to 8. Credit grades are continuously monitored by the responsible loan officer and adjustments are made when appropriate. A grade of 1 indicates little or no credit risk and a grade of 8 is considered a loss. Commercial loans that are pass-rated (graded a 1 through a 4) are considered to be of acceptable credit risk. Commercial loans graded a 5 (special mention) are considered to be watch list credits and a higher PD is applied to these loans. Loans classified as special mention have potential weaknesses that require management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of Park’s credit position at some future date. Commercial loans graded a 6 (substandard), also considered watch list credits, are considered to represent higher credit risk and, as a result, a higher PD is applied to these loans. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or the value of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that Park will sustain some loss if the deficiencies are not corrected. Commercial loans graded a 7 (doubtful) are shown as nonaccrual and Park generally charges these loans down to their fair value by taking a partial charge-off or recording a specific reserve. 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. Certain 6-rated loans and all 7-rated loans are placed on nonaccrual status and included within the individually evaluated category. A commercial loan is deemed nonaccrual, and is individually evaluated, when management determines the borrower's ability to perform in accordance with the contractual loan agreement is in doubt. Any commercial loan graded an 8 (loss) is completely charged off.
Based on the then most recent analysis performed, the risk category of commercial loans by class of loans as of March 31, 2023 and December 31, 2022 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | Term Loans Amortized Cost Basis by Origination Year | | | | (In thousands) | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Revolving Loans Amortized Cost Basis | Total | Commercial, financial and agricultural: Commercial, financial and agricultural (1) | | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | 36,402 | | $ | 191,499 | | $ | 186,796 | | $ | 134,697 | | $ | 54,571 | | $ | 72,782 | | $ | 501,803 | | $ | 1,178,550 | | | Special Mention | 38 | | 1,037 | | 657 | | 965 | | 267 | | 87 | | 33,982 | | 37,033 | | | Substandard | 19 | | 254 | | 126 | | 2,777 | | 122 | | 1,718 | | 26,511 | | 31,527 | | | Doubtful | — | | 786 | | — | | — | | 150 | | 8,568 | | 91 | | 9,595 | | | Total | $ | 36,459 | | $ | 193,576 | | $ | 187,579 | | $ | 138,439 | | $ | 55,110 | | $ | 83,155 | | $ | 562,387 | | $ | 1,256,705 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 52 | | $ | — | | $ | 52 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Commercial, financial and agricultural: PPP | | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | — | | $ | — | | $ | 1,342 | | $ | 2,103 | | $ | — | | $ | — | | $ | — | | $ | 3,445 | | | Special Mention | — | | — | | — | | — | | — | | — | | — | | — | | | Substandard | — | | — | | — | | — | | — | | — | | — | | — | | | Doubtful | — | | — | | — | | — | | — | | — | | — | | — | | | Total | $ | — | | $ | — | | $ | 1,342 | | $ | 2,103 | | $ | — | | $ | — | | $ | — | | $ | 3,445 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Commercial real estate (1) | | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | 66,791 | | $ | 318,942 | | $ | 369,914 | | $ | 362,128 | | $ | 217,432 | | $ | 390,197 | | $ | 14,372 | | $ | 1,739,776 | | | Special Mention | — | | 197 | | 4,859 | | 3,845 | | 743 | | 35,851 | | 96 | | 45,591 | | | Substandard | — | | 918 | | 1,585 | | 1,753 | | 2,692 | | 6,879 | | 335 | | 14,162 | | | Doubtful | — | | — | | 81 | | 740 | | 130 | | 398 | | — | | 1,349 | | | Total | $ | 66,791 | | $ | 320,057 | | $ | 376,439 | | $ | 368,466 | | $ | 220,997 | | $ | 433,325 | | $ | 14,803 | | $ | 1,800,878 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Construction real estate: Commercial | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | 17,938 | | $ | 98,767 | | $ | 17,350 | | $ | 20,875 | | $ | 2,388 | | $ | 4,091 | | $ | 9,383 | | $ | 170,792 | | | Special Mention | — | | — | | — | | 228 | | — | | — | | — | | 228 | | | Substandard | 988 | | 647 | | 105 | | 257 | | — | | 651 | | — | | 2,648 | | | Doubtful | — | | — | | — | | — | | — | | — | | — | | — | | | Total | $ | 18,926 | | $ | 99,414 | | $ | 17,455 | | $ | 21,360 | | $ | 2,388 | | $ | 4,742 | | $ | 9,383 | | $ | 173,668 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | Term Loans Amortized Cost Basis by Origination Year | | | | (In thousands) | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Revolving Loans Amortized Cost Basis | Total | | Residential Real Estate: Commercial | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | 24,461 | | $ | 115,770 | | $ | 115,043 | | $ | 136,483 | | $ | 54,408 | | $ | 91,876 | | $ | 18,062 | | $ | 556,103 | | | Special Mention | — | | 343 | | 563 | | 1,674 | | 423 | | 1,018 | | — | | 4,021 | | | Substandard | 56 | | 597 | | 350 | | 260 | | 38 | | 995 | | 339 | | 2,635 | | | Doubtful | — | | — | | — | | — | | — | | — | | — | | — | | | Total | $ | 24,517 | | $ | 116,710 | | $ | 115,956 | | $ | 138,417 | | $ | 54,869 | | $ | 93,889 | | $ | 18,401 | | $ | 562,759 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Leases | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | 1,205 | | $ | 6,618 | | $ | 3,007 | | $ | 2,939 | | $ | 864 | | $ | 1,304 | | $ | — | | $ | 15,937 | | | Special Mention | 413 | | 857 | | 526 | | 85 | | 37 | | — | | — | | 1,918 | | | Substandard | — | | — | | — | | 412 | | 157 | | 24 | | — | | 593 | | | Doubtful | — | | — | | — | | — | | 24 | | — | | — | | 24 | | | Total | $ | 1,618 | | $ | 7,475 | | $ | 3,533 | | $ | 3,436 | | $ | 1,082 | | $ | 1,328 | | $ | — | | $ | 18,472 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Commercial Loans | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | 146,797 | | $ | 731,596 | | $ | 693,452 | | $ | 659,225 | | $ | 329,663 | | $ | 560,250 | | $ | 543,620 | | $ | 3,664,603 | | | Special Mention | 451 | | 2,434 | | 6,605 | | 6,797 | | 1,470 | | 36,956 | | 34,078 | | 88,791 | | | Substandard | 1,063 | | 2,416 | | 2,166 | | 5,459 | | 3,009 | | 10,267 | | 27,185 | | 51,565 | | | Doubtful | — | | 786 | | 81 | | 740 | | 304 | | 8,966 | | 91 | | 10,968 | | | Total | $ | 148,311 | | $ | 737,232 | | $ | 702,304 | | $ | 672,221 | | $ | 334,446 | | $ | 616,439 | | $ | 604,974 | | $ | 3,815,927 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 52 | | $ | — | | $ | 52 | |
(1) Included within each of commercial, financial and agricultural loans and commercial real estate loans is an immaterial amount of consumer loans that are not broken out by class. | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2022 | Term Loans Amortized Cost Basis by Origination Year | | | | (In thousands) | 2022 | 2021 | 2020 | 2019 | 2018 | Prior | Revolving Loans Amortized Cost Basis | Total | Commercial, financial and agricultural: Commercial, financial and agricultural (1) | | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | 197,497 | | $ | 198,999 | | $ | 142,487 | | $ | 60,845 | | $ | 32,887 | | $ | 47,135 | | $ | 546,237 | | $ | 1,226,087 | | | Special Mention | 700 | | 313 | | 918 | | 315 | | 4 | | 35 | | 25,536 | | 27,821 | | | Substandard | 1,101 | | 18 | | 2,737 | | 226 | | 1,836 | | 8,424 | | 26,464 | | 40,806 | | | Doubtful | — | | — | | 3 | | 77 | | 80 | | 172 | | 192 | | 524 | | | Total | $ | 199,298 | | $ | 199,330 | | $ | 146,145 | | $ | 61,463 | | $ | 34,807 | | $ | 55,766 | | $ | 598,429 | | $ | 1,295,238 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Commercial, financial and agricultural: PPP | | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | — | | $ | 1,875 | | $ | 2,331 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 4,206 | | | Special Mention | — | | — | | — | | — | | — | | — | | — | | — | | | Substandard | — | | — | | — | | — | | — | | — | | — | | — | | | Doubtful | — | | — | | — | | — | | — | | — | | — | | — | | | Total | $ | — | | $ | 1,875 | | $ | 2,331 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 4,206 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Commercial real estate (1) | | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | 323,235 | | $ | 374,763 | | $ | 372,653 | | $ | 220,072 | | $ | 107,467 | | $ | 305,539 | | $ | 14,052 | | $ | 1,717,781 | | | Special Mention | 199 | | 3,256 | | 3,388 | | 5,863 | | 16,059 | | 22,220 | | 150 | | 51,135 | | | Substandard | 7,856 | | 1,427 | | 3,007 | | 3,561 | | 856 | | 5,471 | | 428 | | 22,606 | | | Doubtful | — | | — | | — | | — | | 1,941 | | 591 | | — | | 2,532 | | | Total | $ | 331,290 | | $ | 379,446 | | $ | 379,048 | | $ | 229,496 | | $ | 126,323 | | $ | 333,821 | | $ | 14,630 | | $ | 1,794,054 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Construction real estate: Commercial | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | 107,976 | | $ | 40,534 | | $ | 21,556 | | $ | 2,686 | | $ | 1,428 | | $ | 3,015 | | $ | 29,183 | | $ | 206,378 | | | Special Mention | — | | — | | 232 | | — | | — | | — | | — | | 232 | | | Substandard | 652 | | 800 | | 260 | | — | | 660 | | — | | — | | 2,372 | | | Doubtful | — | | — | | — | | — | | — | | — | | — | | — | | | Total | $ | 108,628 | | $ | 41,334 | | $ | 22,048 | | $ | 2,686 | | $ | 2,088 | | $ | 3,015 | | $ | 29,183 | | $ | 208,982 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Residential Real Estate: Commercial | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | 107,086 | | $ | 120,303 | | $ | 147,802 | | $ | 56,980 | | $ | 33,140 | | $ | 63,499 | | $ | 15,191 | | $ | 544,001 | | | Special Mention | — | | 92 | | 1,477 | | 440 | | — | | 1,625 | | — | | 3,634 | | | Substandard | 610 | | 449 | | 264 | | 29 | | 304 | | 553 | | 339 | | 2,548 | | | Doubtful | — | | — | | — | | — | | — | | — | | — | | — | | | Total | $ | 107,696 | | $ | 120,844 | | $ | 149,543 | | $ | 57,449 | | $ | 33,444 | | $ | 65,677 | | $ | 15,530 | | $ | 550,183 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2022 | Term Loans Amortized Cost Basis by Origination Year | | | | (In thousands) | 2022 | 2021 | 2020 | 2019 | 2018 | Prior | Revolving Loans Amortized Cost Basis | Total |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Leases | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | 7,629 | | $ | 3,310 | | $ | 3,347 | | $ | 1,167 | | $ | 981 | | $ | 605 | | $ | — | | $ | 17,039 | | | Special Mention | 1,085 | | 614 | | 130 | | 60 | | — | | — | | — | | 1,889 | | | Substandard | — | | — | | 464 | | 111 | | 12 | | 26 | | — | | 613 | | | Doubtful | — | | — | | — | | 96 | | — | | — | | — | | 96 | | | Total | $ | 8,714 | | $ | 3,924 | | $ | 3,941 | | $ | 1,434 | | $ | 993 | | $ | 631 | | $ | — | | $ | 19,637 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Commercial Loans | | | | | | | | Risk rating | | | | | | | | | | Pass | $ | 743,423 | | $ | 739,784 | | $ | 690,176 | | $ | 341,750 | | $ | 175,903 | | $ | 419,793 | | $ | 604,663 | | $ | 3,715,492 | | | Special Mention | 1,984 | | 4,275 | | 6,145 | | 6,678 | | 16,063 | | 23,880 | | 25,686 | | 84,711 | | | Substandard | 10,219 | | 2,694 | | 6,732 | | 3,927 | | 3,668 | | 14,474 | | 27,231 | | 68,945 | | | Doubtful | — | | — | | 3 | | 173 | | 2,021 | | 763 | | 192 | | 3,152 | | | Total | $ | 755,626 | | $ | 746,753 | | $ | 703,056 | | $ | 352,528 | | $ | 197,655 | | $ | 458,910 | | $ | 657,772 | | $ | 3,872,300 | |
(1) Included within each of commercial, financial and agricultural loans and commercial real estate loans is an immaterial amount of consumer loans that are not broken out by class.
Park considers the performance of the loan portfolio and its impact on the allowance for credit losses. For residential and consumer loan classes, Park also evaluates credit quality based on the aging status of the loan, which was previously presented, and by performing status. The following tables present the amortized cost in residential and consumer loans based on performing status. As previously mentioned, the adoption of ASU 2022-02 on January 1, 2023 eliminated the concept of TDRs. After the adoption of ASU 2022-02 on January 1, 2023, nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing. Prior to the adoption of ASU 2022-02, nonperforming loans consisted of nonaccrual loans, accruing TDRs and loans past due 90 days or more and still accruing.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | Term Loans Amortized Cost Basis by Origination Year | | | | (In thousands) | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Revolving Loans Amortized Cost Basis | Total | | Commercial, financial and agricultural: Overdrafts | | | | | | | | Performing | $ | 1,831 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,831 | | Nonperforming | — | | — | | — | | — | | — | | — | | — | | — | | | Total | $ | 1,831 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,831 | | | | | | | | | | | | Current period gross write offs | $ | 297 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 297 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Construction Real Estate: Retail | | | | | | | | Performing | $ | 6,050 | | $ | 79,178 | | $ | 17,718 | | $ | 5,986 | | $ | 4,121 | | $ | 3,948 | | $ | 74 | | $ | 117,075 | | Nonperforming | — | | — | | — | | — | | — | | — | | — | | — | | | Total | $ | 6,050 | | $ | 79,178 | | $ | 17,718 | | $ | 5,986 | | $ | 4,121 | | $ | 3,948 | | $ | 74 | | $ | 117,075 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | Term Loans Amortized Cost Basis by Origination Year | | | | (In thousands) | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Revolving Loans Amortized Cost Basis | Total | | Residential Real Estate: Mortgage | | | | | | | | Performing | $ | 29,761 | | $ | 208,136 | | $ | 229,318 | | $ | 189,929 | | $ | 87,938 | | $ | 333,511 | | $ | — | | $ | 1,078,593 | | Nonperforming | — | | 835 | | 597 | | 939 | | 549 | | 8,259 | | — | | 11,179 | | | Total | $ | 29,761 | | $ | 208,971 | | $ | 229,915 | | $ | 190,868 | | $ | 88,487 | | $ | 341,770 | | $ | — | | $ | 1,089,772 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 20 | | $ | — | | $ | 20 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Residential Real Estate: HELOC | | | | | | | | Performing | $ | — | | $ | 140 | | $ | 299 | | $ | 71 | | $ | 137 | | $ | 2,120 | | $ | 160,728 | | $ | 163,495 | | Nonperforming | — | | — | | — | | — | | 99 | | 787 | | 275 | | 1,161 | | | Total | $ | — | | $ | 140 | | $ | 299 | | $ | 71 | | $ | 236 | | $ | 2,907 | | $ | 161,003 | | $ | 164,656 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 9 | | $ | — | | $ | 9 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Residential Real Estate: Installment | | | | | | | | Performing | $ | 74 | | $ | 180 | | $ | — | | $ | 7 | | $ | 213 | | $ | 3,466 | | $ | — | | $ | 3,940 | | Nonperforming | — | | — | | — | | — | | — | | 47 | | — | | 47 | | | Total | $ | 74 | | $ | 180 | | $ | — | | $ | 7 | | $ | 213 | | $ | 3,513 | | $ | — | | $ | 3,987 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Consumer: Consumer | | | | | | | | | | Performing | $ | 146,771 | | $ | 778,177 | | $ | 422,523 | | $ | 299,815 | | $ | 129,981 | | $ | 109,603 | | $ | 9,349 | | $ | 1,896,219 | | | Nonperforming | — | | 660 | | 459 | | 314 | | 250 | | 496 | | — | | 2,179 | | | Total | $ | 146,771 | | $ | 778,837 | | $ | 422,982 | | $ | 300,129 | | $ | 130,231 | | $ | 110,099 | | $ | 9,349 | | $ | 1,898,398 | | | | | | | | | | | | Current period gross write offs | $ | 8 | | $ | 600 | | $ | 588 | | $ | 314 | | $ | 195 | | $ | 142 | | $ | — | | $ | 1,847 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Consumer: GFSC | | | | | | | | | | Performing | $ | — | | $ | — | | $ | — | | $ | 30 | | $ | 40 | | $ | 21 | | $ | 41 | | $ | 132 | | | Nonperforming | — | | — | | — | | — | | 8 | | — | | — | | 8 | | | Total | $ | — | | $ | — | | $ | — | | $ | 30 | | $ | 48 | | $ | 21 | | $ | 41 | | $ | 140 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Consumer: Check loans | | | | | | | | | | Performing | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 2,071 | | $ | 2,071 | | Nonperforming | — | | — | | — | | — | | — | | — | | — | | — | | | Total | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 2,071 | | $ | 2,071 | | | | | | | | | | | | Current period gross write offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 10 | | $ | 10 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Consumer Loans | | | | | | | | | | Performing | $ | 184,487 | | $ | 1,065,811 | | $ | 669,858 | | $ | 495,838 | | $ | 222,430 | | $ | 452,669 | | $ | 172,263 | | $ | 3,263,356 | | Nonperforming | — | | 1,495 | | 1,056 | | 1,253 | | 906 | | 9,589 | | 275 | | 14,574 | | | Total | $ | 184,487 | | $ | 1,067,306 | | $ | 670,914 | | $ | 497,091 | | $ | 223,336 | | $ | 462,258 | | $ | 172,538 | | $ | 3,277,930 | | | | | | | | | | | | Current period gross write offs | $ | 305 | | $ | 600 | | $ | 588 | | $ | 314 | | $ | 195 | | $ | 171 | | $ | 10 | | $ | 2,183 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2022 | Term Loans Amortized Cost Basis by Origination Year | | | | (In thousands) | 2022 | 2021 | 2020 | 2019 | 2018 | Prior | Revolving Loans Amortized Cost Basis | Total | | Commercial, financial and agricultural: Overdrafts | | | | | | | | Performing | $ | 1,489 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,489 | | Nonperforming | — | | — | | — | | — | | — | | — | | — | | — | | | Total | 1,489 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,489 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Construction Real Estate: Retail | | | | | | | | Performing | $ | 71,923 | | $ | 26,134 | | $ | 8,218 | | $ | 4,619 | | $ | 1,618 | | $ | 2,580 | | $ | 75 | | $ | 115,167 | | Nonperforming | 731 | | — | | 523 | | — | | — | | 12 | | — | | 1,266 | | | Total | $ | 72,654 | | $ | 26,134 | | $ | 8,741 | | $ | 4,619 | | $ | 1,618 | | $ | 2,592 | | $ | 75 | | $ | 116,433 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Residential Real Estate: Mortgage | | | | | | | | Performing | $ | 207,093 | | $ | 227,131 | | $ | 192,904 | | $ | 90,014 | | $ | 55,648 | | $ | 286,464 | | $ | — | | $ | 1,059,254 | | Nonperforming | — | | — | | 700 | | 650 | | 518 | | 14,324 | | — | | 16,192 | | | Total | $ | 207,093 | | $ | 227,131 | | $ | 193,604 | | $ | 90,664 | | $ | 56,166 | | $ | 300,788 | | $ | — | | $ | 1,075,446 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Residential Real Estate: HELOC | | | | | | | | Performing | $ | 140 | | $ | 299 | | $ | 23 | | $ | 130 | | $ | 141 | | $ | 1,957 | | $ | 163,134 | | $ | 165,824 | | Nonperforming | — | | — | | 43 | | 100 | | — | | 999 | | 185 | | 1,327 | | | Total | $ | 140 | | $ | 299 | | $ | 66 | | $ | 230 | | $ | 141 | | $ | 2,956 | | $ | 163,319 | | $ | 167,151 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Residential Real Estate: Installment | | | | | | | | Performing | $ | 187 | | $ | — | | $ | 1 | | $ | 241 | | $ | 62 | | $ | 2,512 | | $ | — | | $ | 3,003 | | Nonperforming | — | | — | | 7 | | 2 | | 16 | | 1,063 | | — | | 1,088 | | | Total | $ | 187 | | $ | — | | $ | 8 | | $ | 243 | | $ | 78 | | $ | 3,575 | | $ | — | | $ | 4,091 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Consumer: Consumer | | | | | | | | | | Performing | $ | 823,484 | | $ | 462,014 | | $ | 333,336 | | $ | 150,237 | | $ | 61,174 | | $ | 65,612 | | $ | 4,315 | | $ | 1,900,172 | | Nonperforming | 440 | | 489 | | 424 | | 355 | | 157 | | 520 | | — | | 2,385 | | | Total | $ | 823,924 | | $ | 462,503 | | $ | 333,760 | | $ | 150,592 | | $ | 61,331 | | $ | 66,132 | | $ | 4,315 | | $ | 1,902,557 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Consumer: GFSC | | | | | | | | | | Performing | $ | — | | $ | — | | $ | 55 | | $ | 111 | | $ | 45 | | $ | 2 | | $ | 51 | | $ | 264 | | | Nonperforming | — | | — | | — | | 10 | | — | | — | | — | | 10 | | | Total | $ | — | | $ | — | | $ | 55 | | $ | 121 | | $ | 45 | | $ | 2 | | $ | 51 | | $ | 274 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Consumer: Check loans | | | | | | | | | | Performing | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 2,150 | | $ | 2,150 | | Nonperforming | — | | — | | — | | — | | — | | — | | — | | — | | | Total | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 2,150 | | $ | 2,150 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Consumer Loans | | | | | | | | | | Performing | $ | 1,104,316 | | $ | 715,578 | | $ | 534,537 | | $ | 245,352 | | $ | 118,688 | | $ | 359,127 | | $ | 169,725 | | $ | 3,247,323 | | Nonperforming | 1,171 | | 489 | | 1,697 | | 1,117 | | 691 | | 16,918 | | 185 | | 22,268 | | | Total | $ | 1,105,487 | | $ | 716,067 | | $ | 536,234 | | $ | 246,469 | | $ | 119,379 | | $ | 376,045 | | $ | 169,910 | | $ | 3,269,591 | |
Loans and Leases Acquired with Deteriorated Credit Quality In conjunction with the NewDominion acquisition, Park acquired loans with a book value of $277.9 million as of the July 1, 2018 acquisition date. These loans were recorded at the initial fair value of $272.8 million. Loans acquired with deteriorated credit quality (ASC 310-30) with a book value of $5.1 million were recorded at the initial fair value of $4.9 million. In conjunction with the Carolina Alliance acquisition, Park acquired loans and leases with a book value of $589.7 million as of the April 1, 2019 acquisition date. These loans and leases were recorded at the initial fair value of $578.6 million. Loans and leases acquired with deteriorated credit quality (ASC 310-30) with a book value of $19.9 million were recorded at the initial fair value of $18.4 million.
Upon adoption of CECL on January 1, 2021, $52,000 of the credit discount on PCD loans was reclassified to the allowance for credit losses. PCD loans are individually evaluated on a quarterly basis to determine if a specific reserve is necessary. At March 31, 2023 and December 31, 2022, there was no allowance for credit losses on PCD loans. The carrying amount of loans acquired with deteriorated credit quality at March 31, 2023 and December 31, 2022 was $4.6 million and $4.7 million, respectively.
Modifications to Borrowers Experiencing Financial Difficulty Management identifies loans as modifications to borrowers experiencing financial difficulty when a borrower is experiencing financial difficulties and Park has altered the cash flow of the the loan as part of a modification or in the loan renewal process. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of the borrower's debt in the foreseeable future without the modification. This evaluation is performed in accordance with the Company’s internal underwriting policy. Park modifies loans to borrowers experiencing financial difficulty by providing principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate adjustments.
In some cases, Park provides multiple types of modifications on one loan. Typically, one type of modification, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another modification, such as principal forgiveness, may be granted. For the loans included in the combination columns below, multiple types of modifications have been made on the same loan within the current reporting period. The combination is at least two of the following: a term extension, principal forgiveness, an other-than-insignificant payment delay and/or an interest rate adjustment.
The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. As a result, the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses and a change to the allowance for credit losses is generally not recorded upon modification. When principal forgiveness is provided, the amount of forgiveness is charged off against the allowance for credit losses. The following table presents the amortized cost basis of loans at March 31, 2023 that were both experiencing financial difficulty and modified during the three months ended March 31, 2023 by class of and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2023 | | (In thousands) | | Principal Forgiveness | | Payment Delay | | Term Extension | | Interest Rate Adjustment | | Combination Term Extension and Interest Rate Adjustment | | Total | | Percent of Total Class of Financing Receivable | | Commercial, financial and agricultural: | | | | | | | | | | | | | | | | Commercial, financial and agricultural | | $ | — | | | $ | — | | | $ | 3,104 | | | $ | — | | | $ | — | | | $ | 3,104 | | | 0.25 | % | | PPP loans | | — | | | — | | | — | | | — | | | — | | | — | | | — | % | | Overdrafts | | — | | | — | | | — | | | — | | | — | | | — | | | — | % | | Commercial real estate | | — | | | — | | | — | | | — | | | — | | | — | | | — | % | | Construction real estate: | | | | | | | | | | | | | | | | Commercial | | — | | | — | | | 988 | | | — | | | — | | | 988 | | | 0.57 | % | | Retail | | — | | | — | | | — | | | — | | | — | | | — | | | — | % | | Residential real estate: | | | | | | | | | | | | | | | | Commercial | | — | | | — | | | 150 | | | — | | | 13 | | | 163 | | | 0.03 | % | | Mortgage | | — | | | — | | | — | | | — | | | — | | | — | | | — | % | | HELOC | | — | | | — | | | — | | | — | | | — | | | — | | | — | % | | Installment | | — | | | — | | | — | | | — | | | 64 | | | 64 | | | 1.61 | % | | Consumer: | | | | | | | | | | | | | | | | Consumer | | — | | | — | | | — | | | 15 | | | — | | | 15 | | | — | % | | GFSC | | — | | | — | | | — | | | — | | | — | | | — | | | — | % | | Check loans | | — | | | — | | | — | | | — | | | — | | | — | | | — | % | | Leases | | — | | | — | | | — | | | — | | | — | | | — | | | — | % | | Total | | $ | — | | | $ | — | | | $ | 4,242 | | | $ | 15 | | | $ | 77 | | | $ | 4,334 | | | 0.06 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Park has committed to lend additional amounts totaling $1.7 million to the borrowers included in the previous table as of March 31, 2023.
The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three months ended March 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | Principal Forgiveness | | Weighted Average Interest Rate Adjustment | | Weighted Average Term Extension (years) | | Commercial, financial and agricultural: | | | | | | | | Commercial, financial and agricultural | | $ | — | | | — | % | | 0.3 | | PPP loans | | — | | | — | % | | 0.0 | | Overdrafts | | — | | | — | % | | 0.0 | | Commercial real estate | | — | | | — | % | | 0.0 | | Construction real estate: | | | | | | | | Commercial | | — | | | — | % | | 0.2 | | Retail | | — | | | — | % | | 0.0 | | Residential real estate: | | | | | | | | Commercial | | — | | | 1.43 | % | | 0.5 | | Mortgage | | — | | | — | % | | 0.0 | | HELOC | | — | | | — | % | | 0.0 | | Installment | | — | | | (1.13) | % | | 10.0 | | Consumer: | | | | | | | | Consumer | | — | | | (4.19) | % | | 0.0 | | GFSC | | — | | | — | % | | 0.0 | | Check loans | | — | | | — | % | | 0.0 | | Leases | | — | | | — | % | | 0.0 | | Total | | $ | — | | | (1.26) | % | | 0.4 |
Park closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. There were no loans modified to borrowers experiencing financial difficulty that had been modified during the three months ended March 31, 2023 that were greater than 30 days past due as of March 31, 2023. Additionally, there were no loans that had a payment default during the three months ended March 31, 2023 and were modified to borrowers experiencing financial difficulty in the three months prior to that default.
Upon the determination that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amounts.
|