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Loans and Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2022
Receivables [Abstract]  
Loans and Allowance for Credit Losses Loans and Allowance for Credit Losses
The Bank makes loans to customers primarily in the Washington, D.C. metropolitan area and surrounding communities. A substantial portion of the Bank’s loan portfolio consists of loans to businesses secured by real estate and other business assets.
Loans, net of unamortized net deferred fees, at December 31, 2022 and 2021 are summarized by type as follows:
December 31, 2022December 31, 2021
(dollars in thousands)Amount%  Amount%
Commercial$1,487,349 19 %$1,354,317 19 %
PPP loans3,256 — %51,105 1 %
Income producing - commercial real estate3,919,941 51 %3,385,298 48 %
Owner occupied - commercial real estate1,110,325 15 %1,087,776 15 %
Real estate mortgage - residential73,001 1 %73,966 1 %
Construction - commercial and residential877,755 12 %896,319 13 %
Construction - C&I (owner occupied)110,479 1 %159,579 2 %
Home equity51,782 1 %55,811 1 %
Other consumer1,744 — 1,427 — 
Total loans7,635,632 100 %7,065,598 100 %
Less: allowance for credit losses(74,444)(74,965)
Net loans$7,561,188 $6,990,633 
Unamortized net deferred fees amounted to $29.2 million and $26.9 million at December 31, 2022 and 2021.
As of December 31, 2022 and 2021, the Bank serviced $361.5 million and $351.1 million, respectively, of multifamily FHA loans, SBA loans and other loan participations, which are not reflected as loan balances on the Consolidated Balance Sheets.
Real estate loans are secured primarily by duly recorded first deeds of trust or mortgages. In some cases, the Bank may accept a recorded junior trust position. In general, borrowers will have a proven ability to build, lease, manage and/or sell a commercial or residential project and demonstrate satisfactory financial condition. Additionally, an equity contribution toward the project is customarily required.
Construction loans require that the financial condition and experience of the general contractor and major subcontractors be satisfactory to the Bank. Guaranteed, fixed price contracts are required whenever appropriate, along with payment and performance bonds or completion bonds for larger scale projects.
Loans intended for residential land acquisition, lot development and construction are made on the premise that the land: 1) is or will be developed for building sites for residential structures; and 2) will ultimately be utilized for construction or improvement of residential zoned real properties, including the creation of housing. Residential development and construction loans will finance projects such as single family subdivisions, planned unit developments, townhouses and condominiums. Residential land acquisition, development and construction loans generally are underwritten with a maximum term of 36 months, including extensions approved at origination.
Commercial land acquisition and construction loans are secured by real property where loan funds will be used to acquire land and to construct or improve appropriately zoned real property for the creation of income producing or owner user commercial properties. Borrowers are generally required to put equity into each project at levels determined by the appropriate Loan Committee. Commercial land acquisition and construction loans generally are underwritten with a maximum term of 24 months.
Substantially all construction draw requests must be presented in writing on American Institute of Architects documents and certified either by the contractor, the borrower and/or the borrower’s architect. Each draw request shall also include the borrower’s soft cost breakdown certified by the borrower or their Chief Financial Officer. Prior to an advance, the Bank or its contractor inspects the project to determine that the work has been completed, to justify the draw requisition.
Commercial permanent loans are generally secured by improved real property which is generating income in the normal course of operation. Debt service coverage, assuming stabilized occupancy, must be satisfactory to support a permanent loan. The
debt service coverage ratio is ordinarily at least 1.15 to 1.0. As part of the underwriting process, debt service coverage ratios are stress tested assuming a 200 basis point increase in interest rates from their current levels.
Commercial permanent loans generally are underwritten with a term not greater than 10 years or the remaining useful life of the property, whichever is lower. The preferred term is between five to seven years, with amortization to a maximum of 25 years.
The Company’s loan portfolio includes ADC real estate loans including both investment and owner occupied projects. ADC loans amounted to $1.5 billion at December 31, 2022. A portion of the ADC portfolio, both speculative and non-speculative, includes loan funded interest reserves at origination. ADC loans that provide for the use of interest reserves represent approximately 56% of the outstanding ADC loan portfolio at December 31, 2022. The decision to establish a loan-funded interest reserve is made upon origination of the ADC loan and is based upon a number of factors considered during underwriting of the credit including: (1) the feasibility of the project; (2) the experience of the sponsor; (3) the creditworthiness of the borrower and guarantors; (4) borrower equity contribution; and (5) the level of collateral protection. When appropriate, an interest reserve provides an effective means of addressing the cash flow characteristics of a properly underwritten ADC loan. The Company does not significantly utilize interest reserves in other loan products. The Company recognizes that one of the risks inherent in the use of interest reserves is the potential masking of underlying problems with the project and/or the borrower’s ability to repay the loan. In order to mitigate this inherent risk, the Company employs a series of reporting and monitoring mechanisms on all ADC loans, whether or not an interest reserve is provided, including: (1) construction and development timelines which are monitored on an ongoing basis which track the progress of a given project to the timeline projected at origination; (2) a construction loan administration department independent of the lending function; (3) third party independent construction loan inspection reports; (4) monthly interest reserve monitoring reports detailing the balance of the interest reserves approved at origination and the days of interest carry represented by the reserve balances as compared to the then current anticipated time to completion and/or sale of speculative projects; and (5) quarterly commercial real estate construction meetings among senior Company management, which includes monitoring of current and projected real estate market conditions. If a project has not performed as expected, it is not the customary practice of the Company to increase loan funded interest reserves.
The following tables detail activity in the ACL by portfolio segment for the years ended December 31, 2022, 2021 and 2020. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
(dollars in thousands)CommercialIncome Producing -
Commercial
Real Estate		Owner Occupied -
Commercial
Real Estate		Real Estate
Mortgage -
Residential		Construction -
Commercial and
Residential		Home
Equity		Other
Consumer		Total
Year Ended December 31, 2022
Allowance for credit losses:                
Balance at beginning of period$14,475 $38,287 $12,146 $449 $9,099 $474 $35 $74,965 
Loans charged-off(1,561)(1,355)— — — — (79)(2,995)
Recoveries of loans previously charged-off713 25 — — 1,627 — 6 2,371 
Net loans charged-off(848)(1,330)— — 1,627 — (73)(624)
Provision for credit losses2,028 (1,269)556 520 (1,925)81 112 103 
Ending balance$15,655 $35,688 $12,702 $969 $8,801 $555 $74 $74,444 
Year Ended December 31, 2021
Allowance for credit losses:
Balance at beginning of period prior to adoption of ASC 326$26,569 $55,385 $14,000 $1,020 $11,529 $1,039 $37 $109,579 
Impact of adopting ASC 326— — — — — — — — 
Loans charged-off(8,788)— (5,444)— (206)— (1)(14,439)
Recoveries of loans previously charged-off486 — 97 — 499 — 18 1,100 
Net loans (charged-off) recoveries(8,302)— (5,347)— 293 — 17 (13,339)
Provision for credit losses(3,792)(17,098)3,493 (571)(2,723)(565)(19)(21,275)
Ending balance$14,475 $38,287 $12,146 $449 $9,099 $474 $35 $74,965 
Year Ended December 31, 2020
Allowance for credit losses:
Balance at beginning of period prior to adoption of ASC 326$18,832 $29,265 $5,838 $1,557 $17,485 $656 $25 $73,658 
Impact of adopting ASC 326892 11,230 4,674 (301)(6,143)245 17 10,614 
Loans charged-off(12,082)(4,300)(20)(815)(2,947)(92)(3)(20,259)
Recoveries of loans previously charged-off130 — — — 4 — 28 162 
Net loans (charged-off) recoveries(11,952)(4,300)(20)(815)(2,943)(92)25 (20,097)
Provision for credit losses18,797 19,190 3,508 579 3,130 230 (30)45,404 
Ending balance$26,569 $55,385 $14,000 $1,020 $11,529 $1,039 $37 $109,579 
The following table presents the ending allowance balance attributable to loans individually and collectively evaluated, as well as associated loan balances, as of December 31, 2022 and 2021:
(dollars in thousands)CommercialIncome  Producing -
Commercial
Real Estate		Owner  Occupied -
Commercial
Real Estate		Real Estate
Mortgage -
Residential		Construction -
Commercial  and
Residential		Home
Equity		Other
Consumer		Total
Year Ended December 31, 2022
Allowance for credit losses:                
Ending Allowance Balance Attributable to loans:
Individually evaluated for impairment$1,644 $3,198 $— $294 $— $— $47 $5,183 
Collectively evaluated for impairment14,011 32,490 12,702 675 8,801 555 27 69,261 
Total Allowance Ending Balance$15,655 $35,688 $12,702 $969 $8,801 $555 $74 $74,444 
Loans:
Loans Individually evaluated for impairment$3,434 $6,328 $19,187 $1,698 $— $— $50 $30,697 
Loans Collectively evaluated for impairment1,487,171 3,913,613 1,091,138 71,303 988,234 51,782 1,694 7,604,935 
Total Ending Loans Balance$1,490,605 $3,919,941 $1,110,325 $73,001 $988,234 $51,782 $1,744 $7,635,632 
Year Ended December 31, 2021
Allowance for credit losses:
Ending Allowance Balance Attributable to loans:
Individually evaluated for impairment$1,799 $5,156 $— $— $— $— $— $6,955 
Collectively evaluated for impairment12,676 33,131 12,146 449 9,099 474 35 68,010 
Total Allowance Ending Balance$14,475 $38,287 $12,146 $449 $9,099 $474 $35 $74,965 
Loans:
Loans Individually evaluated for impairment$11,284 $22,570 $42 $1,779 $3,093 $366 $— $39,134 
Loans Collectively evaluated for impairment1,394,138 3,362,728 1,087,734 72,187 1,052,805 55,445 1,427 7,026,464 
Total Ending Loans Balance$1,405,422 $3,385,298 $1,087,776 $73,966 $1,055,898 $55,811 $1,427 $7,065,598 
The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2022 and 2021:
December 31, 2022
December 31, 2021
(dollars in thousands)Business/Other AssetsReal EstateBusiness/Other AssetsReal Estate
Commercial$1,563 $1,871 $3,098 $6,821 
PPP loans— — 1,365 — 
Income-producing-commercial real estate2,000 4,328 3,193 19,378 
Owner occupied - commercial real estate— 19,187 — 42 
Real estate mortgage- residential— 1,698 — 1,779 
Construction - commercial and residential— — — 3,093 
Home Equity— — — 366 
Other consumer50 — — — 
Total$3,613 $27,084 $7,656 $31,479 

Credit Quality Indicators
The Company uses several credit quality indicators to manage credit risk in an ongoing manner. The Company’s primary credit quality indicator is an internal credit risk rating system that categorizes loans into pass, watch, special mention or classified categories. Credit risk ratings are applied individually to those classes of loans that have significant or unique credit characteristics that benefit from a case-by-case evaluation. These are typically loans to businesses or individuals in the classes which comprise the commercial portfolio segment. Groups of loans that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk rated and monitored collectively. These are typically loans to individuals in the classes which comprise the consumer portfolio segment.
The following are the definitions of the Company’s credit quality indicators:
Pass:Loans in all classes that comprise the commercial and consumer portfolio segments that are not adversely rated, are contractually current as to principal and interest and are otherwise in compliance with the contractual terms of the loan agreement. Management believes that there is a low likelihood of loss related to those loans that are considered pass.
Watch:Loan is paying as agreed with generally acceptable asset quality; however the obligor’s performance has not met expectations. Balance sheet and/or income statement has shown deterioration to the point that the obligor could not sustain any further setbacks. Credit is expected to be strengthened through improved obligor performance and/or additional collateral within a reasonable period of time.
Special Mention:Loans in the classes that comprise the commercial portfolio segment that have potential weaknesses that deserve management’s close attention. If not addressed, these potential weaknesses may result in deterioration of the repayment prospects for the loan. The special mention credit quality indicator is not used for classes of loans that comprise the consumer portfolio segment. Management believes that there is a moderate likelihood of some loss related to those loans that are considered special mention.
Classified:
Classified (a) Substandard – Loans inadequately protected by the current sound worth and paying capacity of the obligor or 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 the company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual loans classified substandard.
Classified (b) Doubtful – Loans that have all the weaknesses inherent in a loan classified 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. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the assets, its classification as an estimated loss is deferred until its more exact status may be determined.
The Company’s credit quality indicators are updated on an ongoing basis along with our credits rated watch or below reviews. The following table presents by class and by credit quality indicator, the recorded investment in the Company’s loans and leases as of December 31, 2022 and 2021. The data is further defined by year of loan origination.

December 31, 2022 (dollars in thousands)Prior2018201920202021
2022
Revolving Loans Amort. Cost BasisRevolving Loans Convert. to TermTotal
Commercial
Pass$177,307 $45,510 $56,011 $60,010 $234,258 $143,636 $708,201 $8,570 $1,433,503 
Watch6,022 1,883 250 4,153 2,888 754 27,889 — 43,839 
Special Mention— — — — — 82 5,475 — 5,557 
Substandard1,332 351 276 — — — 1,344 1,147 4,450 
Total184,661 47,744 56,537 64,163 237,146 144,472 742,909 9,717 1,487,349 
PPP loans
Pass— — — 2,479 777 — 3,256 
Total— — — 2,479 777 — — — 3,256 
Income producing - commercial real estate
Pass778,683 434,031 480,474 298,458 542,143 744,328 192,089 358 3,470,564 
Watch237,846 5,190 — 35,707 — — — — 278,743 
Special Mention44,195 5,206 4,209 6,735 — — 47,676 — 108,021 
Substandard60,613 2,000 — — — — — — 62,613 
Total1,121,337 446,427 484,683 340,900 542,143 744,328 239,765 358 3,919,941 
Owner occupied - commercial real estate
Pass444,153 180,142 106,902 40,562 206,595 41,765 24,181 13,238 1,057,538 
Watch16,876 11,504 4,595 — — — 59 — 33,034 
Substandard19,753 — — — — — — — 19,753 
Total480,782 191,646 111,497 40,562 206,595 41,765 24,240 13,238 01,110,325 
Real estate mortgage - residential
Pass13,930 12,438 8,219 2,640 16,307 14,731 — — 68,265 
Watch3,038 — — — — — — — 3,038 
Substandard1,698 — — — — — — — 1,698 
Total18,666 12,438 8,219 2,640 16,307 14,731 — — 73,001 
Construction - commercial and residential
Pass40,113 18,669 90,560 189,023 191,127 159,771 90,911 — 780,174 
Watch44,409 53,172 — — — — — — 97,581 
Total84,522 71,841 90,560 189,023 191,127 159,771 90,911 — 877,755 
Construction - C&I (owner occupied)
Pass13,792 4,906 4,367 33,854 653 34,679 6,507 — 98,758 
Watch1,024 3,254 7,443 — — — — — 11,721 
Total14,816 8,160 11,810 33,854 653 34,679 6,507 — 110,479 
Home Equity
Pass1,695 — — 98 551 — 48,182 906 51,432 
Watch52 — — — — — 196 — 248 
Substandard— — 41 — — — 61 — 102 
Total1,747 — 41 98 551 — 48,439 906 51,782 
Other Consumer
Pass4 — — — — 126 1,561 3 1,694 
Watch— — — — — — — — — 
Substandard— — — — — — — 50 50 
Total4 — — — — 126 1,561 53 1,744 
Total Recorded Investment$1,906,535 $778,256 $763,347 $673,719 $1,195,299 $1,139,872 $1,154,332 $24,272 $7,635,632 
December 31, 2021 (dollars in thousands)Prior20172018201920202021Revolving Loans Amort. Cost BasisRevolving Loans Convert. to TermTotal
Commercial
Pass$180,877 $58,693 $103,058 $90,874 $87,515 $211,563 $549,055 $6,023 $1,287,658 
Watch5,896 6,567 1,020 996 4,268 3,137 18,336 627 40,847 
Special Mention— 9,515 363 — — — 901 — 10,779 
Substandard4,205 778 1,850 437 — — 7,763 — 15,033 
Total190,978 75,553 106,291 92,307 91,783 214,700 576,055 6,650 1,354,317 
PPP loans
Pass— — — — 16,840 32,900 — — 49,740 
— — — — 1,365 — — — 1,365 
Total— — — — 18,205 32,900 — — 51,105 
Income producing - commercial real estate
Pass572,550 333,394 418,489 495,808 337,178 549,356 198,210 — 2,904,985 
Watch58,334 73,760 — 43,561 35,094 — — — 210,749 
Special Mention101,580 — 41,936 4,264 — — 47,692 — 195,472 
Substandard60,059 — 8,491 5,542 — — — — 74,092 
Total792,523 407,154 468,916 549,175 372,272 549,356 245,902 — 3,385,298 
Owner occupied - commercial real estate
Pass353,471 127,687 210,348 81,604 41,135 184,529 16,838 1,922 1,017,534 
Watch22,710 4,581 11,783 7,026 — — 62 — 46,162 
Special Mention— — — 2,122 — — — — 2,122 
Substandard21,958 — — — — — — — 21,958 
Total398,139 132,268 222,131 90,752 41,135 184,529 16,900 1,922 1,087,776 
Real estate mortgage - residential
Pass14,645 5,854 12,956 15,546 3,436 16,495 — — 68,932 
Watch3,255 — — — — — — — 3,255 
Substandard1,698 — — 81 — — — — 1,779 
Total19,598 5,854 12,956 15,627 3,436 16,495 — — 73,966 
Construction - commercial and residential
Pass32,815 139,756 171,152 142,599 160,952 71,799 127,956 1,773 848,802 
Watch506 43,918 — — — — — — 44,424 
Substandard— — — 3,093 — — — — 3,093 
Total33,321 183,674 171,152 145,692 160,952 71,799 127,956 1,773 896,319 
Construction - C&I (owner occupied)
Pass19,710 1,754 25,163 39,803 61,408 768 6,648 — 155,254 
Watch680 390 3,255 — — — — — 4,325 
Total20,390 2,144 28,418 39,803 61,408 768 6,648 — 159,579 
Home Equity
Pass1,474 — — — 70 702 52,077 883 55,206 
Watch193 — — — — — — — 193 
Substandard46 — — 45 — — 58 263 412 
Total1,713 — — 45 70 702 52,135 1,146 55,811 
Other Consumer
Pass370 — — — — — 1,002 — 1,372 
Substandard— — — — — — 55 — 55 
Total370 — — — — — 1,057 — 1,427 
Total Recorded Investment$1,457,032 $806,647 $1,009,864 $933,401 $749,261 $1,071,249 $1,026,653 $11,491 $7,065,598 
Nonaccrual and Past Due Loans
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
The following table presents, by class of loan, information related to nonaccrual loans as of December 31, 2022 and 2021.
December 31, 2022
(dollars in thousands)Nonaccrual with No Allowance for Credit LossNonaccrual with an Allowance for Credit LossesTotal Nonaccrual Loans
Commercial$101 $2,387 $2,488 
Income producing - commercial real estate— 2,000 2,000 
Owner occupied - commercial real estate17 — 17 
Real estate mortgage - residential— 1,913 1,913 
Other Consumer— 50 50 
Total nonaccrual loans (1)(2) (3)
$118 $6,350 $6,468 
December 31, 2021
(dollars in thousands)Nonaccrual with No Allowance for Credit LossNonaccrual with an Allowance for Credit LossesTotal Nonaccrual Loans
Commercial$5,806 $3,070 $8,876 
PPP1,365 — 1,365 
Income producing - commercial real estate3,920 9,536 13,456 
Owner occupied - commercial real estate42 — 42 
Real estate mortgage - residential1,779 231 2,010 
Construction - commercial and residential3,093 — 3,093 
Home equity366 — 366 
Total nonaccrual loans (1)(2) (3)
$16,371 $12,837 $29,208 

(1)Excludes TDRs that were performing under their restructured terms totaling $24.4 million at December 31, 2022 and $10.2 million at December 31, 2021.
(2)Gross interest income of $0.6 million, $1.7 million and $3.7 million would have been recorded for 2022, 2021 and 2020, respectively, if nonaccrual loans shown above had been current and in accordance with their original terms, while interest actually recorded on such loans were $17 thousand, $101 thousand and $679 thousand at December 31, 2022 2021 and 2020, respectively. See Note 1 to the Consolidated Financial Statements for a description of the Company’s policy for placing loans on nonaccrual status.
(3)The CARES Act created the PPP, a program designed to aid small- and medium-sized businesses through federally guaranteed loans distributed through banks. These loans are intended to guarantee payroll and other costs to help those businesses remain viable and allow their workers to pay their bills.
The following table presents, by class of loan, an aging analysis and the recorded investments in loans past due as of December 31, 2022 and 2021.
(dollars in thousands)Loans
30-59 Days
Past Due		Loans
60-89 Days
Past Due		Loans
90 Days or
More Past Due		Total Past
Due Loans		Current
Loans		Nonaccrual LoansTotal Recorded
Investment in
Loans
December 31, 2022
Commercial$697 $643 $— $1,340 $1,483,521 $2,488 $1,487,349 
PPP loans— — — — 3,256 — 3,256 
Income producing - commercial real estate— — — — 3,917,941 2,000 3,919,941 
Owner occupied - commercial real estate— 279 — 279 1,110,029 17 1,110,325 
Real estate mortgage – residential— — — — 71,088 1,913 73,001 
Construction - commercial and residential531 — — 531 877,224 — 877,755 
Construction - C&I (owner occupied)— — — — 110,479 — 110,479 
Home equity— 52 — 52 51,730 — 51,782 
Other consumer— 1 — 1 1,693 50 1,744 
Total$1,228 $975 $— $2,203 $7,626,961 $6,468 $7,635,632 
December 31, 2021
Commercial$1,462 $672 $— $2,134 $1,343,307 $8,876 $1,354,317 
PPP loans1,765 825 — 2,590 47,150 1,365 51,105 
Income producing - commercial real estate— — — — 3,371,842 13,456 3,385,298 
Owner occupied - commercial real estate419 19,108 — 19,527 1,068,207 42 1,087,776 
Real estate mortgage – residential1,372 — — 1,372 70,584 2,010 73,966 
Construction - commercial and residential— — — — 893,226 3,093 896,319 
Construction - C&I (owner occupied)— — — — 159,579 — 159,579 
Home equity33 187 — 220 55,225 366 55,811 
Other consumer— — — — 1,427 — 1,427 
Total$5,051 $20,792 $— $25,843 $7,010,547 $29,208 $7,065,598 

Loan Modifications
A modification of a loan constitutes a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession. The Company offers various types of concessions when modifying a loan. Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions and converting revolving credit lines to term loans. Additional collateral, a co-borrower or a guarantor is often requested.
Commercial mortgage and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk or substituting or adding a new borrower or guarantor. Construction loans modified in a TDR may also involve extending the interest-only payment period. As of December 31, 2022, all performing TDRs were categorized as interest-only modifications.
Loans modified in a TDR for the Company may have the financial effect of increasing the specific allowance associated with the loan. An allowance for consumer and commercial loans that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates.
In response to the COVID-19 pandemic and its economic impact to our customers, we implemented a short-term modification program that complies with the CARES Act and ASC 310-40 to provide temporary payment relief to those borrowers directly impacted by COVID-19 who were not more than 30 days past due as of December 31, 2019. This program allowed for a deferral of payments for 90 days, which we extended for an additional 90 days for certain loans, for a maximum of 180 days on a cumulative and successive basis. The deferred payments along with interest accrued during the deferral period are due and payable on the maturity date. Additionally, none of the deferrals are reflected in the Company's asset quality measures (i.e. non-performing loans) due to the provision of the CARES Act that permits U.S. financial institutions to temporarily suspend the GAAP requirements to treat such short-term loan modifications as TDR. Similar provisions have also been confirmed by interagency guidance issued by the federal banking agencies and confirmed with staff members of the Financial Accounting Standards Board. The outstanding balance of loans with active COVID-related modifications, that were not considered TDRs under the Coronavirus Aid, Relief, and Economic Security Act, as amended by Section 541 of the Consolidated Appropriations Act, totaled $0 and $13.3 million at December 31, 2022 and 2021, respectively.

The following tables present, by class, the recorded investment of loans modified in TDRs held by the Company during the years ended December 31, 2022, 2021, and 2020.
As of December 31, 2022
(dollars in thousands)Number
of
Contracts		CommercialIncome
Producing -
Commercial
Real Estate		Owner
Occupied -
Commercial
Real Estate		Construction -
Commercial
Real Estate		Total
Troubled debt restructurings
Restructured accruing5 $946 $4,328 $19,170 $— $24,444 
Restructured nonaccruing— — — — — 
Total5 $946 $4,328 $19,170 $— $24,444 
Specific allowance$87 $2,140 $2,227 
Restructured and subsequently defaulted$— $— $— $— 
 As of December 31, 2021
(dollars in thousands)Number
of
Contracts		CommercialIncome
Producing -
Commercial
Real Estate		Owner
Occupied -
Commercial
Real Estate		Construction -
Commercial
Real Estate		Total
Troubled debt restructurings            
Restructured accruing5 $1,043 $9,116 $— $— $10,159 
Restructured nonaccruing2 — 6,342 — — 6,342 
Total7 $1,043 $15,458 $— $— $16,501 
Specific allowance$140 $3,216 $3,356 
Restructured and subsequently defaulted$— $6,342 $— $— $6,342 
 As of December 31, 2020
(dollars in thousands)Number
of
Contracts		CommercialIncome
Producing -
Commercial
Real Estate		Owner
Occupied -
Commercial
Real Estate		Construction -
Commercial
Real Estate		Total
Troubled debt restructurings          
Restructured accruing7 $1,276 $9,183 $13 $— $10,472 
Restructured nonaccruing3 — 6,342 2,370 — 8,712 
Total10 $1,276 $15,525 $2,383 $— $19,184 
Specific allowance$733 $2,989 $— $— $3,722 
Restructured and subsequently defaulted$— $6,342 $2,370 $— $8,712 
During 2022, no TDRs defaulted on their modified terms that were reclassified to nonperforming loans, as compared to one performing TDR loans during 2021 totaling approximately $101 thousand that defaulted on their modified terms and either charged-off or were reclassified to nonperforming loans. During 2020, two performing TDR loans totaling approximately $6.3 million that defaulted on their modified terms and either charged-off or were reclassified to nonperforming loans. A default is considered to have occurred once the TDR is past due 90 days or more, or has been placed on nonaccrual.
At December 31, 2022, all five TDR loans, totaling $24.4 million, were performing under their modified terms, as compared to December 31, 2021, when there were five of TDR loans, totaling $10.2 million, performing under their modified terms, and December 31, 2020, when there were seven performing TDR loans totaling approximately $10.5 million. 
During 2022, three restructured loans, two of which totaling approximately $11.1 million that had their collateral property sold to a third party and a charge off of $1.4 million was recognized on the sale.
During 2021, one previously nonperforming restructured loan had its collateral sold and all principal collected along with partial collection of delinquent interest; one restructured loan purchased as part of the 2014 acquisition of Virginia Heritage Bank had its full carrying value collected, while additional payments are expected to recover previously written off principal and interest; and, the aforementioned performing TDR totaling $101 thousand that defaulted in 2021 was subsequently charged off later in the year. During 2020, there were two restructured loans totaling approximately $870 thousand that had their collateral property sold and were paid in full, and one TDR loan totaling $138 thousand that had previously defaulted was charged off.

Commercial and consumer loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, the Company evaluates the loan for possible further loss. The allowance may be increased, adjustments may be made in the allocation of the allowance or partial charge-offs may be taken to further write-down the carrying value of the loan.

During 2022, there was one loan totaling $19.2 million that was modified in a TDR, during 2021, there were no loans modified in a TDR, and during 2020, there were two loans totaling $572 thousand.
Related Party Loans
Certain directors and executive officers of the Company and the Bank and certain affiliated entities of such directors and executive officers have had loan transactions with the Company. All of such loans are either fully repaid or performing and none of such loans are nonaccrual, past due, restructured or, rated substandard or worse (not on nonaccrual).
The following table summarizes changes in amounts of loans outstanding, both direct and indirect, to those persons during 2022 and 2021.
Amounts in the “Additions due to Changes in Related Parties” reflect existing outstanding loans that transitioned to being related party loans between January 1, 2022 and December 31, 2022 as a result of changes in related party status with respect to certain of the Company’s directors who are affiliated with the related borrowers.
(dollars in thousands)
2022
2021
Balance at January 1,$150,822 $72,956 
Additions173 301 
Repayments(33,220)(4,750)
Additions due to Changes in Related Parties1,423 82,315 
Balance at December 31,$119,198 $150,822