Loans and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2024

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 deferred fees and costs, at March 31, 2024 and December 31, 2023 are summarized by portfolio segment as follows:


	March 31, 2024				December 31, 2023
(dollars in thousands, except amounts in the footnote)	Amount		%		Amount		%
Commercial	$	1,408,767	18	%	$	1,473,766	18	%
PPP loans	467		—	%	528		—	%
Income-producing - commercial real estate	4,040,655		50	%	4,094,614		51	%
Owner-occupied - commercial real estate	1,185,582		15	%	1,172,239		15	%
Real estate mortgage - residential	72,087		1	%	73,396		1	%
Construction - commercial and residential	1,082,556		13	%	969,766		12	%
Construction - C&I (owner-occupied)	138,379		2	%	132,021		2	%
Home equity	53,251		1	%	51,964		1	%
Other consumer	958		—	%	401		—	%
Total loans	7,982,702		100	%	7,968,695		100	%
Less: allowance for credit losses	(99,684)				(85,940)
Net loans (1)	$	7,883,018			$	7,882,755

(1)Excludes accrued interest receivable of $46.3 million and $45.3 million at March 31, 2024 and December 31, 2023, respectively, which were recorded in other assets on the Consolidated Balance Sheets.

Unamortized net deferred fees and costs amounted to $24.1 million and $27.0 million at March 31, 2024 and December 31, 2023, respectively.

As of March 31, 2024 and December 31, 2023, the Bank serviced $334.1 million and $328.0 million, respectively, of multifamily FHA loans, SBA loans and other loan participations that 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 occupied commercial properties. Borrowers are generally required to put equity into each project at levels determined by the appropriate approval authority. 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 agent. 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 that 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 5 to 7 years, with amortization to a maximum of 25 years.

The Company's loan portfolio includes acquisition, development and construction ("ADC") real estate loans including both investment and owner-occupied projects. ADC loans amounted to $1.6 billion at March 31, 2024. 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 58.5% of the outstanding ADC loan portfolio at March 31, 2024. 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) the borrower equity contribution; and (5) the level of collateral protection. When appropriate, an interest reserve provides a 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 these inherent risks, 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 that are monitored on an ongoing basis and 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 include 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 table details activity in the ACL by portfolio segment for the three months ended March 31, 2024 and 2023. PPP loans are excluded from these tables since they do not carry an allowance for credit loss, as these loans are fully guaranteed as to principal and interest by the SBA, whose guarantee is backed by the full faith and credit of the U.S. Government. Allocation of a portion of the allowance to one category of loans does not restrict the use of the allowance to absorb losses in other categories.


(dollars in thousands)	Commercial		Income-Producing Commercial Real Estate		Owner-Occupied -Commercial Real Estate		Real Estate Mortgage Residential		Construction - Commercial and Residential		Construction - C&I (Owner-Occupied)		Home Equity		Other Consumer		Total









Three Months Ended March 31, 2024
Allowance for credit losses:
Balance at beginning of period	$	17,824	$	40,050	$	14,333	$	861	$	10,198	$	1,992	$	657	$	25	$	85,940
Loans charged-off	(496)		(20,943)		—		—		(129)		—		—		(1)		(21,569)
Recoveries of loans previously charged-off	115		—		24		—		—		—		—		—		139
Net loans (charged-off) recovered	(381)		(20,943)		24		—		(129)		—		—		(1)		(21,430)
Provision for (reversal of) credit losses	6,239		26,830		(820)		32		2,989		(63)		(39)		6		35,174
Ending balance	$	23,682	$	45,937	$	13,537	$	893	$	13,058	$	1,929	$	618	$	30	$	99,684










Three Months Ended March 31, 2023
Allowance for credit losses:
Balance at beginning of period	$	15,655	$	35,688	$	12,702	$	969	$	7,195	$	1,606	$	555	$	74	$	74,444
Loans charged-off	(868)		—		—		—		(136)		—		—		(50)		(1,054)
Recoveries of loans previously charged-off	76		—		—		—		—		—		—		3		79
Net loans (charged-off) recovered	(792)		—		—		—		(136)		—		—		(47)		(975)
Provision for (reversal of) credit losses	912		2,452		(245)		33		1,682		36		38		—		4,908
Ending balance	$	15,775	$	38,140	$	12,457	$	1,002	$	8,741	$	1,642	$	593	$	27	$	78,377

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2024 and December 31, 2023:


	March 31, 2024				December 31, 2023
	Business/Other				Business/Other
(dollars in thousands)	Assets		Real Estate		Assets		Real Estate
Commercial	$	1,532	$	1,218	$	1,674	$	1,240
Income-producing - commercial real estate	878		66,724		1,754		39,172
Owner-occupied - commercial real estate	—		19,798		—		19,836
Real estate mortgage - residential	—		1,692		—		1,692
Construction - commercial and residential	—		—		—		525
Home equity	—		237		—		242
Total	$	2,410	$	89,669	$	3,428	$	62,707

Credit Quality Indicators

The Company uses several credit quality indicators to manage credit risk in an ongoing manner. The Company's primary credit quality indicators inform 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 that 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 that 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.

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 generally updated annually, however, credits rated "Special Mention" or below are reviewed more frequently. Based on the most recent analysis performed, the amortized cost basis of loans by risk category, class and year of origination, along with any charge-offs that were recorded in the applicable loan segment, if applicable, were as follows:


(dollars in thousands)	Prior		2020		2021		2022		2023		2024		Revolving Loans Amort. Cost Basis		Revolving Loans Convert. to Term		Total
March 31, 2024
Commercial
Pass	$	193,755	$	35,451	$	174,103	$	141,181	$	187,057	$	24,604	$	569,226	$	1,154	$	1,326,531
Special Mention	8,493		—		—		—		—		—		4,286		8,058		20,837
Substandard	13,771		9,371		1,538		281		—		—		36,438		—		61,399
Total	216,019		44,822		175,641		141,462		187,057		24,604		609,950		9,212		1,408,767
YTD gross charge-offs	(396)		—		—		—		—		—		(100)		—		(496)
PPP loans
Pass	—		—		467		—		—		—		—		—		467

Income producing - commercial real estate
Pass	1,452,244		308,573		559,404		755,375		299,264		26,251		243,343		19,359		3,663,813
Special Mention	170,118		6,744		—		—		—		—		—		—		176,862
Substandard	199,980		—		—		—		—		—		—		—		199,980
Total	1,822,342		315,317		559,404		755,375		299,264		26,251		243,343		19,359		4,040,655
YTD gross charge-offs	(20,943)		—		—		—		—		—		—		—		(20,943)
Owner occupied - commercial real estate
Pass	628,063		34,703		222,361		41,514		126,663		4,590		515		—		1,058,409
Special Mention	61,117		—		—		—		—		—		—		—		61,117
Substandard	64,791		1,265		—		—		—		—		—		—		66,056
Total	753,971		35,968		222,361		41,514		126,663		4,590		515		—		1,185,582

Real estate mortgage - residential
Pass	29,496		2,175		15,668		14,689		5,889		—		—		—		67,917
Substandard	4,170		—		—		—		—		—		—		—		4,170
Total	33,666		2,175		15,668		14,689		5,889		—		—		—		72,087

Construction - commercial and residential
Pass	77,388		11,101		241,373		485,461		89,757		3,874		136,092		1,177		1,046,223
Special Mention	6,532		—		—		—		—		—		—		—		6,532
Substandard	—		29,801		—		—		—		—		—		—		29,801
Total	83,920		40,902		241,373		485,461		89,757		3,874		136,092		1,177		1,082,556
YTD gross charge-offs	(129)		—		—		—		—		—		—		—		(129)
Construction - C&I (owner occupied)
Pass	26,151		56,094		615		33,242		15,084		—		7,193		—		138,379



Home equity
Pass	1,758		86		185		117		—		—		50,589		146		52,881
Substandard	71		—		237		—		—		—		62		—		370
Total	1,829		86		422		117		—		—		50,651		146		53,251

Other consumer
Pass	2		—		—		—		—		—		956		—		958

Total	2		—		—		—		—		—		956		—		958
YTD gross charge-offs	—		—		—		—		—		—		—		(1)		(1)
Total recorded investment	$	2,937,900	$	495,364	$	1,215,951	$	1,471,860	$	723,714	$	59,319	$	1,048,700	$	29,894	$	7,982,702
Total YTD gross charge-offs	$	(21,468)	$	—	$	—	$	—	$	—	$	—	$	(100)	$	(1)	$	(21,569)

(dollars in thousands)	Prior		2019		2020		2021		2022		2023		Revolving Loans Amort. Cost Basis		Revolving Loans Convert. to Term		Total
December 31, 2023
Commercial
Pass	$	157,563	$	48,524	$	39,133	$	194,555	$	149,320	$	191,889	$	623,684	$	5,207	$	1,409,875
Special Mention	1,415		—		—		—		—		—		2,259		—		3,674
Substandard	13,797		58		10,337		1,509		222		—		33,670		624		60,217
Total	172,775		48,582		49,470		196,064		149,542		191,889		659,613		5,831		1,473,766
YTD gross charge-offs	(885)		—		—		—		—		—		—		(1,135)		(2,020)
PPP loans
Pass	—		—		—		528		—		—		—		—		528



Income producing - commercial real estate
Pass	1,257,937		326,999		328,743		517,957		732,291		327,126		263,317		1,845		3,756,215
Special Mention	84,585		44,424		6,740		—		—		—		—		—		135,749
Substandard	139,961		62,689		—		—		—		—		—		—		202,650
Total	1,482,483		434,112		335,483		517,957		732,291		327,126		263,317		1,845		4,094,614
YTD gross charge-offs	(11,817)		—		—		—		—		—		—		—		(11,817)
Owner occupied - commercial real estate
Pass	534,525		103,034		35,385		202,776		41,907		125,934		673		55		1,044,289
Special Mention	54,288		13,348		—		—		—		—		—		—		67,636
Substandard	37,167		—		1,274		—		—		—		—		21,873		60,314
Total	625,980		116,382		36,659		202,776		41,907		125,934		673		21,928		1,172,239

Real estate mortgage - residential
Pass	22,877		7,545		2,186		15,967		14,756		5,895		—		—		69,226
Substandard	4,170		—		—		—		—		—		—		—		4,170
Total	27,047		7,545		2,186		15,967		14,756		5,895		—		—		73,396

Construction - commercial and residential
Pass	30,619		3,440		45,739		251,038		419,393		87,400		124,013		—		961,642

Substandard	8,124		—		—		—		—		—		—		—		8,124
Total	38,743		3,440		45,739		251,038		419,393		87,400		124,013		—		969,766
YTD Gross Charge-offs	(136)		(5,500)		—		—		—		—		—		—		(5,636)
Construction - C&I (owner occupied)
Pass	18,551		4,265		56,361		618		33,237		12,619		6,370		—		132,021



Home equity
Pass	1,590		—		87		151		118		—		49,035		643		51,624
Substandard	—		36		—		—		—		—		62		242		340
Total	1,590		36		87		151		118		—		49,097		885		51,964

Other consumer
Pass	1		—		—		—		46		—		354		—		401

Total	1		—		—		—		46		—		354		—		401
YTD gross charge-offs	(50)		—		—		—		—		—		—		—		(50)
Total recorded investment	$	2,367,170	$	614,362	$	525,985	$	1,185,099	$	1,391,290	$	750,863	$	1,103,437	$	30,489	$	7,968,695
Total YTD gross charge-offs	$	(12,888)	$	(5,500)	$	—	$	—	$	—	$	—	$	—	$	(1,135)	$	(19,523)

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 portfolio segment the nonaccrual loans on an amortized cost basis as of March 31, 2024 and December 31, 2023:


(dollars in thousands, except amounts in footnotes)	Nonaccrual with No Allowance for Credit Losses		Nonaccrual with an Allowance for Credit Losses		Total Nonaccrual Loans
March 31, 2024
Commercial	$	1,045	$	875	$	1,920
Income producing - commercial real estate	67,602		—		67,602
Owner occupied - commercial real estate	19,798		—		19,798
Real estate mortgage - residential	—		1,934		1,934
Home equity	237		—		237
Total (1)	$	88,682	$	2,809	$	91,491

December 31, 2023
Commercial	$	1,002	$	1,047	$	2,049
Income producing - commercial real estate	40,926		—		40,926
Owner occupied - commercial real estate	19,836		—		19,836
Real estate mortgage - residential	—		1,946		1,946
Construction - commercial and residential	—		525		525
Home equity	242		—		242
Total (1)	$	62,006	$	3,518	$	65,524

(1)Gross coupon interest income of approximately $1.3 million and $182 thousand would have been recorded for the three months ended March 31, 2024 and 2023, respectively, if nonaccrual loans shown above had been current and in accordance with their original terms, while no coupon interest income was actually recorded on such loans for the three months ended March 31, 2024 and 2023, respectively.

The table presents, by portfolio segment, an aging analysis and the recorded investments in loans past due on an amortized cost basis as of March 31, 2024 and December 31, 2023:


(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 Loans		Total Recorded Investment in Loans
March 31, 2024
Commercial	$	11,175	$	—	$	—	$	11,175	$	1,395,672	$	1,920	$	1,408,767
PPP loans	—		—		—		—		467		—		467
Income producing - commercial real estate	11,106		—		—		11,106		3,961,947		67,602		4,040,655
Owner occupied - commercial real estate	—		—		—		—		1,165,784		19,798		1,185,582
Real estate mortgage - residential	199		—		—		199		69,954		1,934		72,087
Construction - commercial and residential	8,590		—		—		8,590		1,073,966		—		1,082,556
Construction - C&I (owner occupied)	—		—		—		—		138,379		—		138,379
Home equity	—		36		—		36		52,978		237		53,251
Other consumer	2		—		—		2		956		—		958
Total	$	31,072	$	36	$	—	$	31,108	$	7,860,103	$	91,491	$	7,982,702

December 31, 2023
Commercial	$	985	$	7,048	$	—	$	8,033	$	1,463,684	$	2,049	$	1,473,766
PPP loans	—		—		—		—		528		—		528
Income producing - commercial real estate	—		—		—		—		4,053,688		40,926		4,094,614
Owner occupied - commercial real estate	1,274		—		—		1,274		1,151,129		19,836		1,172,239
Real estate mortgage – residential	2,089		—		—		2,089		69,361		1,946		73,396
Construction - commercial and residential	2,056		—		—		2,056		967,185		525		969,766
Construction - C&I (owner occupied)	—		—		—		—		132,021		—		132,021
Home equity	197		—		—		197		51,525		242		51,964
Other consumer	—		—		—		—		401		—		401
Total	$	6,601	$	7,048	$	—	$	13,649	$	7,889,522	$	65,524	$	7,968,695

Loan Modifications for Borrowers Experiencing Financial Difficulty

The Company evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications. Therefore, the disclosures related to loan restructurings are for modifications which have a direct impact on cash flows.

The Company may offer various types of modifications when restructuring a loan. Commercial and industrial loans modified in a loan restructuring 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 loan restructuring 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 loan restructuring may also involve extending the interest-only payment period.

Loans modified in a loan restructuring 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 loan restructuring 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.

Commercial and consumer loans modified in a loan restructuring are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a loan restructuring 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.

The following tables present the amortized cost basis as of March 31, 2024 and 2023 and the financial effect of loans modified to borrowers experiencing financial difficulty during the three months ended March 31, 2024 and 2023:


	March 31, 2024
(dollars in thousands)	Term Extension		Combination - Term Extension and Principal Payment Delay		Total		Percentage of Total Loan Type		Weighted Average Term and Principal Payment Extension







Three months ended March 31, 2024:
Commercial	$	31,553	$	—	$	31,553	2.2	%	4 months
Income producing - commercial real estate	—		50,926		50,926		1.3	%	3 months


Real estate mortgage - residential	—		2,478		2,478		3.4	%	6 months
Total	$	31,553	$	53,404	$	84,957

	March 31, 2023
(dollars in thousands)	Term Extension		Combination - Term Extension and Principal Payment Delay		Total		Percentage of Total Loan Type		Weighted Average Term and Principal Payment Extension
Three months ended March 31, 2023:
Commercial	$	21,744	$	—	$	21,744	1.5	%	3 months
Income producing - commercial real estate	7,211		60,139		67,350		1.7	%	4 months
Owner occupied - commercial real estate	—		19,170		19,170		1.8	%	3 months

Total	$	28,955	$	79,309	$	108,264

The following table presents the performance of loans modified during the prior twelve months to borrowers experiencing financial difficulty:


	March 31, 2024
	Payment Status (Amortized Cost Basis)
(dollars in thousands)	Current		30-89 Days Past Due		Nonaccrual
Commercial	$	37,308	$	1,467	$	—
Income producing - commercial real estate	104,463		—		66,136
Owner occupied - commercial real estate	—		—		19,127
Real estate mortgage - residential	2,478		—		—
Construction - commercial and residential	—		6,532		—
Total	$	144,249	$	7,999	$	85,263

The Company monitors loan payments on performing and nonperforming loans on an on-going basis to determine if a loan is considered to have a payment default. To determine the existence of a payment default, the Company analyzes the economic conditions that exist for each borrower and their ability to generate positive cash flow during a given loan's term.

The following table presents the amortized cost basis of loans that were experiencing payment default at March 31, 2024 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty:


	March 31, 2024
	Amortized Cost Basis
(dollars in thousands)	Term Extension		Combination - Term Extension and Principal Payment Delay		Combination - Term Extension, Principal Payment Delay and Interest Rate Reduction
Commercial	$	—	$	1,467	$	—
Income producing - commercial real estate	—		—		66,136
Owner occupied - commercial real estate	—		19,127		—
Construction - commercial and residential	6,532		—		—
Total	$	6,532	$	20,594	$	66,136

The Company individually evaluates nonaccrual loans when performing its CECL estimate to calculate the ACL. Additionally, the Company utilizes historical internal and third-party service provider sourced loss data in the determination of its PD/LGD rates applied in the calculation of its CECL estimate. Upon 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 charged off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.