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LOANS HELD FOR INVESTMENT
 12 Months Ended
Dec. 31, 2023
LOANS HELD FOR INVESTMENT [Abstract]  
LOANS HELD FOR INVESTMENT
3.
LOANS HELD FOR INVESTMENT

Loans held for investment are summarized by category at year-end as follows (dollars in thousands):

   
December 31,
2023
    
December 31,
2022
  
Commercial real estate
  
$
1,081,056
    
$
919,358
  
Commercial - specialized
    
372,376
      
327,513
  
Commercial - general
    
517,361
      
484,783
  
Consumer:
                
1-4 family residential
    
534,731
      
460,124
  
Auto loans
    
305,271
      
321,476
  
Other consumer
    
74,168
      
81,308
  
Construction
    
129,190
      
153,519
  
     
3,014,153
      
2,748,081
  
Allowance for credit losses on loans
    
(42,356
)
    
(39,288
)
Loans, net
  
$
2,971,797
    
$
2,708,793
  

The Company has certain lending policies, underwriting standards, and procedures in place that are designed to maximize loan income with an acceptable level of risk. Management reviews and approves these policies, underwriting standards, and procedures on a regular basis and makes changes as appropriate. Management receives frequent reports related to loan originations, quality, concentrations, delinquencies, non-performing, and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions, both by type of loan and geography.

Commercial Real Estate – Underwriting standards have been designed to determine whether the borrower possesses sound business ethics and practices, evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed and ensure appropriate collateral is obtained to secure the loan. Commercial real estate loans are underwritten primarily based on projected cash flows for income-producing properties and collateral values for non-income-producing properties. The repayment of these loans is generally dependent on the successful operation of the property securing the loans or the sale or refinancing of the property. Real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s real estate portfolio are diversified by type and geographic location. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry.

Commercial – General and Specialized – Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably. Underwriting standards have been designed to determine whether the borrower possesses sound business ethics and practices, evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations, as agreed and ensure appropriate collateral is obtained to secure the loan. Commercial loans are primarily made based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. Most commercial loans are secured by the assets being financed or other business assets, such as real estate, accounts receivable, or inventory, and typically include personal guarantees. Owner-occupied real estate is included in commercial loans, as the repayment of these loans is generally dependent on the operations of the commercial borrower’s business rather than on income-producing properties or the sale of the properties. Commercial loans are grouped into two distinct sub-categories: specialized and general. Commercial related segments that are considered “specialized” include agricultural production and real estate loans, energy loans, and finance, investment, and insurance loans. Commercial related segments that contain a broader diversity of borrowers, sub-industries, or serviced industries are grouped into the “general category.” These include goods, services, restaurant & retail, construction, and other industries. Performance of these loans is subject to operating and cash flow results of the borrower, with risk in the volatility of operating results for particular industries.


Consumer – Loans to consumers include 1-4 family residential loans, auto loans, and other loans for recreational vehicles or other purposes. The Company utilizes a computer-based credit scoring analysis to supplement its policies and procedures in underwriting consumer loans. The Company’s loan policy addresses types of consumer loans that may be originated and the collateral, if secured, which must be perfected. The relatively smaller individual dollar amounts of consumer loans that are spread over numerous individual borrowers also minimizes the Company’s risk. The Company generally requires mortgage title insurance and hazard insurance on 1-4 family residential loans. All consumer loans are generally dependent on the risk characteristics of the borrower’s ability to repay the loan, a consideration of the debt to income ratio, employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral.

Construction – Loans for residential construction are for single-family properties to developers, builders, or end-users. These loans are underwritten based on estimates of costs and completed value of the project. Funds are advanced based on estimated percentage of completion for the project. Performance of these loans is affected by economic conditions as well as the ability to control costs of the projects.

The ACL for loans was $42.4 million at December 31, 2023, compared to $39.3 million at December 31, 2022. The ACL for loans to loans held for investment was 1.41% at December 31, 2023 and 1.43% at December 31, 2022.

The following table details the activity in the ACL for the years ended December 31, 2023, 2022, and 2021 (dollars in thousands). Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.


  
Beginning
Balance
    
Impact of
CECL
Adoption
    
Provision for
Credit
Losses (1)
    
Charge-offs
    
Recoveries
    
Ending
Balance
  
For the year ended December 31, 2023
                                    
Commercial real estate
  
$
13,029
     $ 827    
$
1,952
    
$
—
    
$
—
     $ 15,808  
Commercial - specialized
    
3,425
       33      
398
      
(11
)
    
175
      
4,020
  
Commercial - general
    
9,215
       (2,574 )    
42
      
(469
)
    
177
      
6,391
  
Consumer:
                                                
1-4 family residential
    
6,194
       1,700      
1,278
      
(1
)
    
6
      
9,177
  
Auto loans
    
3,926
       (332 )    
698
      
(888
)
    
197
      
3,601
  
Other consumer
    
1,376
       (235 )    
688
      
(1,140
)
    
279
      
968
  
Construction
    
2,123
       683      
(96
)
    
(319
)
    
—
      
2,391
  
    $ 39,288     $ 102     $ 4,960     $ (2,828 )   $ 834     $ 42,356  

(1) The $4.6 million provision for credit loss on the consolidated statement of comprehensive income (loss) includes a $5.0 million provision for credit losses on loans and a $(350) thousand provision for off-balance sheet credit exposures for the year ended December 31, 2023.

   
Beginning
Balance
    
Provision for
Credit Losses
    
Charge-offs
     Recoveries
   
Ending
Balance
  
For the year ended December 31, 2022
                              
Commercial real estate
  
$
17,245
    
$
(4,634
)
  
$
—
    
$
418
    
$
13,029
  
Commercial - specialized
    
4,363
      
(1,745
)
    
(199
)
    
1,006
      
3,425
  
Commercial - general
    
8,466
      
627
      
(328
)
    
450
      
9,215
  
Consumer:
                                        
1-4 family residential
    
5,268
      
1,026
      
(140
)
    
40
      
6,194
  
Auto loans
    
3,653
      
637
      
(508
)
    
144
      
3,926
  
Other consumer
    
1,357
      
932
      
(1,167
)
    
254
      
1,376
  
Construction
    
1,746
      
538
      
(166
)
    
5
      
2,123
  

 
$
42,098
    
$
(2,619
)
  
$
(2,508
)
  
$
2,317
    
$
39,288
  

    
Beginning
Balance
   
Provision for
Credit Losses
     Charge-offs
    Recoveries
    Ending
Balance
 
For the year ended December 31, 2021
                              
Commercial real estate
  
$
18,962
    
$
(1,826
)
  
$
—
    
$
109
    
$
17,245
  
Commercial - specialized
    
5,760
      
(1,386
)
    
(172
)
    
161
      
4,363
  
Commercial - general
    
9,227
      
(302
)
    
(677
)
    
218
      
8,466
  
Consumer:
                                        
1-4 family residential
    
4,646
      
666
      
(52
)
    
8
      
5,268
  
Auto loans
    
4,226
      
(90
)
    
(598
)
    
115
      
3,653
  
Other consumer
    
1,671
      
339
      
(903
)
    
250
      
1,357
  
Construction
    
1,061
      
681
      
—
      
4
      
1,746
  

 
$
45,553
    
$
(1,918
)
  
$
(2,402
)
  
$
865
    
$
42,098
  

During the year ended December 31, 2023, the provision for credit losses on loans of $5.0 million was driven primarily by organic loan growth experienced during 2023 and net charge-offs of $2.0 million during the year.

The following table shows the Company’s amortized cost in loans and related ACL for collateral dependent loans by class using the fair value of collateral loss estimation methodology of evaluating expected credit losses at the date indicated (dollars in thousands).

 
   Equipment     Real Estate    
Accounts
Receivable
    
Total Loans
Individually
Evaluated
    
Total ACL
for
Individually
Evaluated
Loans
  
December 31, 2023
                              
Commercial real estate
   $ —     $ —     $ —    
$
—
    
$
—
  
Commercial - specialized
     —       —       —      
—
      
—
  
Commercial - general
     353       691       —      
1,044
      
142
  
Consumer:
                                        
1-4 family residential
     —       362       —      
362
      
—
  
Auto loans
     —       —       —      
—
      
—
  
Other consumer
     —       —       —      
—
      
—
  
Construction
     —       218       —      
218
      
—
  
 
   $
 353     $
 1,271     $ —    
$
1,624
    
$
142
  

The following table shows the Company’s investment in loans disaggregated based on the method of evaluating impairment at the date indicated (dollars in thousands):

   
Recorded Investment
    
ACL for Loans
 
   
Individually
Evaluated
    
Collectively
Evaluated
    
Individually
Evaluated
    
Collectively
Evaluated
  
December 31, 2022
                       
Commercial real estate
  
$
—
    
$
919,358
    
$
—
    
$
13,029
  
Commercial - specialized
    
—
      
327,513
      
—
      
3,425
  
Commercial - general
    
3,350
      
481,433
      
22
      
9,193
  
Consumer:
                                
1-4 family residential
    
742
      
459,382
      
18
      
6,176
  
Auto loans
    
—
      
321,476
      
—
      
3,926
  
Other consumer
    
—
      
81,308
      
—
      
1,376
  
Construction
    
1,014
      
152,505
      
245
      
1,878
  

 
$
5,106
    
$
2,742,975
    
$
285
    
$
39,003
  

Prior to the adoption of ASC 326 on January 1, 2023, loan was reported as impaired when, based on current information and events, it was probable that the Company would be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. All loans rated substandard or worse and greater than $250 thousand were specifically reviewed to determine if they were impaired. Loans that were determined to be impaired were then evaluated to determine estimated impairment, if any. Impairment could be measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Loans that were not individually determined to be impaired or were not subject to the specific review of impaired status were subject to the general valuation allowance portion of the allowance for loan losses.

Impaired loans, or portions thereof, were charged off when deemed uncollectible. Impaired loan information at the date indicated follows (dollars in thousands):

   
Unpaid
Contractual
Principal Balance
    
Recorded
Investment
With No Allowance
    
Recorded
Investment
With
Allowance
    
Total
Recorded
Investment
    
Related
Allowance
    
Average
Recorded
Investment
  
                                     
December 31, 2022
                                    
Commercial real estate
  
$
—
    
$
—
    
$
—
    
$
—
    
$
—
    
$
551
  
Commercial - specialized
    
—
      
—
      
—
      
—
      
—
      
—
  
Commercial - general
    
3,350
      
799
      
2,551
      
3,350
      
22
      
4,214
  
Consumer:
                                                
1-4 family
    
742
      
486
      
256
      
742
      
18
      
1,167
  
Auto loans
    
—
      
—
      
—
      
—
      
—
      
—
  
Other consumer
    
—
      
—
      
—
      
—
      
—
      
—
  
Construction
    
1,014
      
686
      
328
      
1,014
      
245
      
507
  

 
$
5,106
    
$
1,971
    
$
3,135
    
$
5,106
    
$
285
    
$
6,439
  

All impaired loans $250 thousand and greater were specifically evaluated for impairment at December 31, 2022 . Interest income recognized using a cash-basis method on impaired loans for the years ended December 31, 2022 and 2021 was not significant.

The table below provides an age analysis on accruing past-due loans and nonaccrual loans at year-end (dollars in thousands):


  
30-89 Days
Past Due
    
90 Days or
More Past
Due
    
Total Nonaccrual
    
Nonaccrual
with no
ACL
  
December 31, 2023                        
Commercial real estate
  
$
499
    
$
86
    
$
—
     $ —  
Commercial - specialized
    
521
      
—
      
213
       —  
Commercial - general
    
1,316
      
296
      
953
       —  
Consumer:
                                
1-4 Family residential
    
793
      
1,390
      
1,828
       362  
Auto loans
    
1,208
      
60
      
—
       —  
Other consumer
    
1,134
      
103
      
30
       —  
Construction
    
759
      
—
      
218
       218  

 
$
6,230
    
$
1,935
    
$
3,242
     $ 580  

   
30-89 Days
Past Due
    
90 Days or
More Past Due
    
Total
Nonaccrual
  
December 31, 2022
                  
Commercial real estate
  
$
342
    
$
27
    
$
—
  
Commercial - specialized
    
25
      
13
      
38
  
Commercial - general
    
1,451
      
60
      
3,357
  
Consumer:
                        
1-4 Family residential
    
1,389
      
1,653
      
1,356
  
Auto loans
    
707
      
85
      
—
  
Other consumer
    
1,487
      
149
      
37
  
Construction
    
550
      
—
      
1,014
  

 
$
5,951
    
$
1,987
    
$
5,802
  

Credit Quality Indicators
The Company grades its loans on a thirteen-point grading scale. These grades fit in one of the following categories: (i) pass, (ii) special mention, (iii) substandard, (iv) doubtful, or (v) loss. Loans categorized as loss are charged-off immediately. The grading of loans reflect a judgment by the Company about the risks of default associated with the loan. The Company reviews the grades on loans as part of the Company’s on-going monitoring of the credit quality of the loan portfolio. These risk ratings are assigned based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.

Pass loans have financial factors or nature of collateral that are considered reasonable credit risks in the normal course of lending and encompass several grades that are assigned based on varying levels of risk, ranging from credits that are secured by cash or marketable securities, to watch credits which have all the characteristics of an acceptable credit risk but warrant more than the normal level of monitoring.

Special mention loans have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of repayment prospects for the loans at some future date.

Substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or by the collateral pledged, if any. These loans have a well-defined weakness or weaknesses that jeopardize collection and present the distinct possibility that some loss will be sustained if the deficiencies are not corrected. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to strengthen the Company’s position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed. Substandard loans can be accruing or can be nonaccrual depending on the circumstances of the individual loans.

Doubtful loans have all the weaknesses inherent in substandard loans with the added characteristics that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. All doubtful loans are on nonaccrual.


In connection with the review of the Company’s loan portfolio, management considers risk elements attributable to particular loan type or categories in assessing the quality of individual loans. The list of loans to be analyzed for individual evaluation consists of non-accrual loans over $250 thousand with direct exposure. Interest income recognized using a cash-basis method on non-accrual loans for the year ended December 31, 2023 was not significant. In addition, the Company closely monitors substandard accruing loans over $1 million with direct exposure, and past due accruing loans over $100 thousand for possible individual evaluation. All other loans will be evaluated collectively in designated pools unless a loss exposure has been identified. Additional funds committed to be advanced on individually analyzed loans are not significant.

The following table reflects the amortized cost basis in loans by credit quality indicator and origination year at December 31, 2023, and gross charge-offs for the year ended December 31, 2023, excluding loans held for sale. Loans acquired are shown in the table by origination year, not merger date. The Company had an immaterial amount of revolving loans converted to term loans at December 31, 2023.

 
                    
Term Loans
                    
 
              
Amortized Cost Basis by Origination Year
              

                                               
(Dollars in thousands)                                                

 
2023
    
2022
    
2021
    
2020
    
2019
    
Prior
    
Revolving Loans
    
Total
  

                                               
Commercial real estate:
                                               
Pass
  
$
254,766
    
$
324,601
    
$
189,211
    
$
50,660
    
$
47,988
    
$
174,859
    
$
3,842
    
$
1,045,927
  
Special mention
    
—
      
—
      
—
      
11,677
      
—
      
—
      
—
      
11,677
  
Substandard
    
—
      
82
      
21,152
      
1,699
      
149
      
370
      
—
      
23,452
  
Total commercial real estate loans
  
$
254,766
    
$
324,683
    
$
210,363
    
$
64,036
    
$
48,137
    
$
175,229
    
$
3,842
    
$
1,081,056
  
Current period gross charge-offs
   $ —     $ —     $ —    
$
—
     $ —     $ —     $ —     $ —  
 
                                                                
Commercial - specialized:
                                                                
Pass
  
$
117,912
    
$
56,152
    
$
57,839
    
$
19,883
    
$
10,376
    
$
22,758
    
$
83,368
    
$
368,288
  
Special mention
    
—
      
2,938
      
—
      
—
      
—
      
—
      
300
      
3,238
  
Substandard
    
—
      
105
      
196
      
393
      
19
      
137
      
—
      
850
  
Total commercial - specialized loans
  
$
117,912
    
$
59,195
    
$
58,035
    
$
20,276
    
$
10,395
    
$
22,895
    
$
83,668
    
$
372,376
  
Current period gross charge-offs
  
$
—
    
$
—
    
$
—
     $ 11     $ —     $ —     $ —     $ 11  
 
                                                                
Commercial - general:
                                                                
Pass
  
$
88,911
    
$
128,627
    
$
90,957
    
$
35,794
    
$
45,660
    
$
68,990
    
$
44,131
    
$
503,070
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
1,565
      
250
      
1,815
  
Substandard
  
201
    
2,930
    
4,676
    
227
    
2,749
    
1,442
    
251
    
12,476
  
Total commercial - general loans
  
$
89,112
    
$
131,557
    
$
95,633
    
$
36,021
    
$
48,409
    
$
71,997
    
$
44,632
    
$
517,361
  
Current period gross charge-offs
   $ —     $ 47     $ 50     $ 33     $ 18    
$
321
     $ —     $ 469  
                                                                 
Consumer: 1-4 family residential:
                                                                
 
                                                                
Pass
  
$
113,897
    
$
156,549
    
$
106,619
    
$
51,940
    
$
31,345
    
$
56,666
    
$
3,770
    
$
520,786
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Substandard
    
376
      
382
      
4,238
      
708
      
3,758
      
4,483
      
—
      
13,945
  
Total consumer: 1-4 family residential loans
  
$
114,273
    
$
156,931
    
$
110,857
    
$
52,648
    
$
35,103
    
$
61,149
    
$
3,770
    
$
534,731
  
Current period gross charge-offs
   $ —     $ —     $ 1     $ —     $ —     $ —     $ —     $ 1  
 
                                                                
Consumer: auto loans:
                                                                
Pass
  
$
106,149
    

124,588
    

48,686
    

16,524
    

6,812
    

1,935
    

—
    

304,694
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Substandard
     16
      189
      199
      60
       81       32
      —
      577
 
Total consumer: auto loans
  
$
106,165
    
$
124,777
    
$
48,885
    
$
16,584
    
$
6,893
    
$
1,967
    
$
—
    
$
305,271
  
Current period gross charge-offs
   $ 113     $ 377     $ 254     $ 14     $ 49     $ 81     $ —     $ 888  
 
                                                                
Consumer: other consumer:
                                                                
Pass
  
$
23,719
    
$
26,899
    
$
10,198
    
$
3,190
    
$
2,539
    
$
6,107
    
$
1,364
    
$
74,016
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Substandard
    
—
      
13
      
44
      
10
      
—
      
84
      
1
      
152
  
Total consumer: other consumer loans
  
$
23,719
    
$
26,912
    
$
10,242
    
$
3,200
    
$
2,539
    
$
6,191
    
$
1,365
    
$
74,168
  
Current period gross charge-offs (1)
   $ 624     $ 244     $ 88     $ 32     $ 72     $ 80     $ —     $ 1,140  
                                                 
Construction:
                                                
Pass
  
$
61,903
    
$
53,930
    
$
5,511
    
$
331
    
$
—
    
$
—
    
$
6,250
    
$
127,925
  
Special mention
    
131
      
—
      
820
      
—
      
—
      
—
      
—
      
951
  
Substandard
    
—
      
314
      
—
      
—
      
—
      
—
      
—
      
314
  
Total construction loans
  
$
62,034
    
$
54,244
    
$
6,331
    
$
331
    
$
—
    
$
—
    
$
6,250
    
$
129,190
  
Current period gross charge-offs
   $ 48     $ —     $ 271     $ —     $ —     $ —     $ —     $ 319  


(1) Includes $574 thousand in charged-off demand deposit overdrafts reported as 2023 originations.


The following table summarizes loans by credit quality indicator at December 31, 2022 (dollars in thousands):

   
Pass
    
Special
Mention
    
Substandard
    
Doubtful
    
Total
  

                             
Commercial real estate
  
$
893,312
    
$
—
    
$
26,046
    
$
—
    
$
919,358
  
Commercial - specialized
    
326,987
      
—
      
526
      
—
      
327,513
  
Commercial - general
    
451,639
      
—
      
33,144
      
—
      
484,783
  
Consumer:
                                        
1-4 family residential
    
450,034
      
—
      
10,090
      
—
      
460,124
  
Auto loans
    
321,158
      
—
      
318
      
—
      
321,476
  
Other consumer
    
81,109
      
—
      
199
      
—
      
81,308
  
Construction
    
151,995
      
—
      
1,524
      
—
      
153,519
  

 
$
2,676,234
    
$
—
    
$
71,847
    
$
—
    
$
2,748,081
  

Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extensions, an other than insignificant payment delay, or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. Typically, one type of concession, such as term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. In some cases, the Company provides multiple types of concessions on one loan. 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 following table presents the amortized cost basis of loans at December 31, 2023 that were both experiencing financial difficulty and modified during the year ended December 31, 2023, by class and by type of modification.  The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below (dollars in thousands):

 
  
Payment
Delay
    
Term
Extension
    
Term
Extension
and
Payment
Delay
    
Term
Extension and
Interest Rate
Reduction
    
Payment
Delay and
Interest Rate
Reduction
    
Payment
Delay, Term
Extension,
and Interest
Rate
Reduction
   
Total Class
of Financing
Receivable
  
                                           
December 31, 2023
                                          
Commercial real estate
  
$
—
    
$
2,118
    
$
127
    
$
—
     $ —     $ —      
0.21
%
Commercial - specialized
    
103
      
—
      
81
      
686
       —       —      
0.23
%
Commercial - general
    
266
      
6,995
      
598
      
109
       —       28      
1.55
%
Consumer:
                                                        
1-4 family
    
187
      
390
      
87
      
—
       —       7      
0.13
%
Auto loans
    
34
      
35
      
17
      
—
       42       —      
0.04
%
Other consumer
    
—
      
—
      
—
      
—
       7       —      
0.01
%
Construction
    
—
      
2,315
      
302
      
—
       —       —      
2.03
%
 
  
$
590
    
$
11,853
    
$
1,212
    
$
795
     $ 49     $ 35      
0.48
%

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.  The following presents the performance of such loans that have been modified in the year ended December 31, 2023 (dollars in thousands):

 
  
30-89 Days
Past Due
    
90 Days or
More Past Due
and Still
Accruing
    
Nonaccrual
  
December 31, 2023
                  
Commercial real estate
  
$
—
    
$
—
    
$
—
  
Commercial - specialized
    
—
      
—
      
265
  
Commercial - general
    
69
      
33
      
63
  
Consumer:
                        
1-4 Family residential
    
—
      
—
      
—
  
Auto loans
    
69
      
—
      
—
  
Other consumer
    
—
      
—
      
—
  
Construction
    
—
      
—
      
272
  
 
  
$
138
    
$
33
    
$
600
  

The following table presents the financial effects of the loan modifications presented above to borrowers experiencing financial difficulty for the year ended December 31, 2023 (dollars in thousands):

 
  
Principal
Forgiveness
    
Weighted-
Average
Interest Rate
Reduction
    
Weighted-
Average
Term
Extension
(Months)
  
December 31, 2023                  
Commercial real estate
  
$
—
      
—
   
5
  
Commercial - specialized
    
—
      
0.86
%
    
56
  
Commercial - general
    
—
      
1.97
%
    
16
  
Consumer:
                        
1-4 Family residential
    
—
      
1.75
%
    
16
  
Auto loans
    
—
      
0.86
%
    
11
  
Other consumer
    
—
      
4.75
%
    
—
  
Construction
    
—
      
—
   
6
  
 
  
$
—
      
1.07
%
    
15
  


As of December 31, 2023, the Company had one loan relationship made to borrowers experiencing financial difficulty that was modified during the year ended December 31, 2023 that subsequently defaulted, totaling $297 thousand. Payment default is defined as movement to nonperforming status, foreclosure, or charge-off.

Upon the Company’s determination that a modified loan has subsequently been deemed to not be fully collectible, the uncollectible amount 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 amount.


Prior-period troubled debt restructuring (“TDR”) disclosures


Prior to adopting the new accounting standard on loan modifications, the Company accounted for modifications of loans to borrowers experiencing financial difficulty as TDRs, when the modification resulted in a concession and specific reserves were charged to the ACL, if necessary, for the amount of estimated credit loss. The Company had  no loans modified as a TDR during the years ended December 31, 2022 and  2021.