Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the ACL-Loans, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

For loans at amortized cost, interest income is accrued based on the unpaid principal balance.

The Company has made a policy election to exclude accrued interest from the amortized cost basis of loans and reports accrued interest separately from the related loan balance in the consolidated balance sheets. Accrued interest on loans totaled $42.6 million and $35.0 million at March 31, 2023 and December 31, 2022, respectively.

The Company also elected not to measure an allowance for credit losses for accrued interest receivables. The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past-due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest collected on these loans is applied to the principal balance until the loan can be returned to

an accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

For all loan portfolio segments, the Company promptly charges off loans, or portions thereof, when available information confirms that specific loans are uncollectable based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations.

When cash payments for accrued interest are received on nonaccrual loans in each loan class, the Company records a reduction in principle on the balance of the loan. For loan modifications, interest income is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms.

The Company offers warehouse loans or credit to fund mortgage loans held for sale from closing until sale to an investor. Under a warehousing arrangement the Company funds a mortgage loan as secured financing. The warehousing arrangement is secured by the underlying mortgages and a combination of deposits, personal guarantees and advance rates. The Company typically holds the collateral until it is sent under a bailee arrangement instructing the investor to send proceeds to the Company. Typical investors are large financial institutions or government agencies. Interest earned from the time of funding to the time of sale is recognized as interest income as accrued. Fees earned agreements are recognized when collected as noninterest income.

(1)

Includes $672.9 million and $497.0 million of revolving lines of credit collateralized primarily by single-family mortgage servicing rights as of March 31, 2023 and December 31, 2022, respectively.

(2)

Includes only $9.1 million of non-owner occupied commercial real estate as of March 31, 2023 and included only $12.8 million as of December 31, 2022.

Risk characteristics applicable to each segment of the loan portfolio are described as follows.

Mortgage Warehouse Lines of Credit (MTG WHLOC): Under its warehouse program, the Company provides warehouse financing arrangements to approved mortgage companies for the origination and sale of residential mortgage loans and to a lesser extent multi-family loans. Agency eligible, governmental and jumbo residential mortgage loans that

are secured by mortgages placed on existing one-to-four family dwellings may be originated or purchased and placed on each mortgage warehouse line.

As a secured repurchase agreement, collateral pledged to the Company secures each individual mortgage until the lender sells the loan in the secondary market. A traditional secured warehouse line of credit typically carries a base interest rate of the Federal Reserve’s Secured Overnight Financing Rate (“SOFR”), or mortgage note rate and a margin.

Risk is evident if there is a change in the fair value of mortgage loans originated by mortgage bankers in warehouse, the sale of which is the expected source of repayment of the borrowings under a warehouse line of credit. However, the warehouse customers are required to hedge the change in value of these loans to mitigate the risk.

Residential Real Estate Loans (RES RE): Real estate loans are secured by owner-occupied 1-4 family residences. Repayment of residential real estate loans is primarily dependent on the personal income and credit rating of the borrowers. First-lien HELOC mortgages included in this segment typically carry a base rate of 30-day LIBOR or the One-Year Constant Maturity Treasury (“CMT”), plus a margin.

Multi-Family Financing (MF FIN): The Company engages in multi-family financing, including construction loans, specializing in originating and servicing loans for multi-family rental properties. In addition, the Company originates loans secured by an assignment of federal income tax credits by partnerships invested in multi-family real estate projects. Construction and land loans are generally based upon estimates of costs and estimated value of the completed project and include independent appraisal reviews and a financial analysis of the developers and property owners. Sources of repayment of these loans are dependent on the cash flow of the property, and may include permanent loans, sales of developed property or an interim loan commitment from the Company until permanent agency-eligible financing is obtained. Credit risk in these loans may be impacted by the creditworthiness of a borrower, property values and the local economy in the Company’s market area. Repayment of these loans depends on the successful operation of a business or property and the borrower’s cash flows. Loans included in this segment typically carry a base rate of the Federal Reserve’s Secured Overnight Financing Rate (“SOFR”) that adjusts on a monthly basis and a margin.

Healthcare Financing (HC FIN): The healthcare financing portfolio includes customized loan products for independent living, assisted living, memory care and skilled nursing projects. A variety of loan products are available to accommodate rehabilitation, acquisition, and refinancing of healthcare properties. Credit risk in these loans are primarily driven by local demographics and the expertise of the operators of the facilities. Repayment of these loans may include permanent loans, sales of developed property or an interim loan commitment from the Company until permanent agency-eligible financing is obtained, as well as successful operation of a business or property and the borrower’s cash flows. Loans included in this segment typically carry a base rate of SOFR that adjusts on a monthly basis and a margin.

Commercial Lending and Commercial Real Estate Loans (CML & CRE): The commercial lending and commercial real estate portfolio includes loans to commercial customers for use in financing working capital needs, equipment purchases and expansions, as well as loans to commercial customers to finance land and improvements. It also includes loans collateralized by servicing rights and loan sale proceeds of mortgage warehouse customers. The loans in this category are repaid primarily from the cash flow of a borrower’s principal business operation. Credit risk in these loans is driven by creditworthiness of a borrower and the economic conditions that impact the cash flow stability from business operations. Small Business Administration (“SBA”) loans are included in this category. Less than 1% of total commercial and commercial real estate loans are made up of non-owner occupied commercial real estate loans. The Company strategically focuses on loan classes that are government backed or can be sold in the secondary market.

Agricultural Production and Real Estate Loans (AG & AGRE): Agricultural production loans are generally comprised of seasonal operating lines of credit to grain farmers to plant and harvest corn and soybeans and term loans to fund the purchase of equipment. The Company also offers long term financing to purchase agricultural real estate. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry-developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop and other farm assets as

considered necessary. The Company is approved to sell agricultural loans in the secondary market through the Federal Agricultural Mortgage Corporation and uses this relationship to manage interest rate risk within the portfolio. Agricultural real estate loans included in this segment are typically structured with a one-year ARM, 3-year ARM or 5-year ARM CMT and a margin. Agriculture production, livestock, and equipment loans are structured with variable rates that are indexed to prime or fixed for terms not exceeding 5 years.

Consumer and Margin Loans (CON & MAR): Consumer loans are those loans secured by household assets. Margin loans are those loans secured by marketable securities. The term and maximum amount for these loans are determined by considering the purpose of the loan, the margin (advance percentage against value) in all collateral, the primary source of repayment, and the borrower’s other related cash flow.

ACL-Loans

The Company adopted CECL on January 1, 2022. CECL replaces the previous “Allowance for Loan and Lease Losses” standard for measuring credit losses. Upon adoption of CECL, the difference in the two measurements was recorded in the ACL-Loans and retained earnings.

The ACL-Loans is the Company’s estimate of expected credit losses. Loans receivable is presented net of the allowance to reflect the principal balance expected to be collected over the contractual term of the loans. This life of loan allowance is established through a provision for credit losses charged to net interest income as loans are recorded in the financial statements. The provision for a reporting period also reflects increases or decreases in the allowance related to changes in credit loss expectations. Actual credit losses are charged against the allowance when management believes the uncollectibility of a loan balance, or a portion thereof, is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The ACL-Loans is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans considering relevant available information from internal and external sources, including historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. The allowance also incorporates reasonable and supportable forecasts. There have been no changes to the credit quality components used to assess risk during the year ended December 31, 2022. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The level of the ACL is believed to be adequate to absorb innate expected future losses in the loan portfolio as of the measurement date.

The ACL-Loans consists of individually evaluated loans and pooled loan components. The Company’s primary portfolio segmentation is by credit risk grade. Loans risk graded substandard and worse are individually evaluated for expected credit losses. For individually evaluated loans that are collateral dependent, an allowance is established when the fair value of the collateral, the loan’s obtainable market price, or the present value of expected future cash flows discounted at the loan’s effective interest rate, is lower than the carrying value of that loan. A loan is considered to be collateral dependent when repayment is expected to be provided substantially through the operation or the sale of the collateral.

To calculate the allowance for expected credit losses on loans risk graded pass through special mention, the portfolio is segmented by loans with similar risk characteristics.


Loan Portfolio Segment		ACL-Loans Methodology

Mortgage warehouse lines of credit		Remaining Life Method
Residential real estate		Discounted Cash Flow
Multi-family financing		Discounted Cash Flow
Healthcare financing		Discounted Cash Flow
Commercial and commercial real estate		Discounted Cash Flow
Agricultural production and real estate		Remaining Life Method
Consumer and margin loans		Remaining Life Method

Loan characteristics used in determining the segmentation include the underlying collateral, type or purpose of the loan, and expected credit loss patterns. The estimation of expected credit losses for each segment is primarily based on historical credit loss experience. Given the Company’s modest historical credit loss experience, peer and industry data was incorporated into the measurement. Expected life of loan credit losses are quantified using discounted cash flows and remaining life methodologies.

Model results are supplemented by qualitative adjustments for risk factors relevant in assessing the expected credit losses within the portfolio segments. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor.

The models utilized and the applicable qualitative adjustments require assumptions and management judgment that can be subjective in nature. The above measurement approach is also used to estimate the expected credit losses associated with unfunded loan commitments, which also incorporates expected utilization rates.

The following table presents, by loan portfolio segment, the activity in the ACL-Loans for the three months ended March 31, 2023 and 2022:


	For the Three Months Ended March 31, 2023
	MTG WHLOC		RES RE		MF FIN		HC FIN		CML & CRE		AG & AGRE		CON & MAR		TOTAL

	(In thousands)
ACL-Loans
Balance, beginning of period	$	1,249	$	7,029	$	16,781	$	9,882	$	8,326	$	565	$	182	$	44,014
Provision for credit losses		415		349		3,070		1,871		2,149		(22)		(15)		7,817
Loans charged to the allowance		—		—		—		—		—		—		—		—
Recoveries of loans previously charged off		—		—		—		—		7		—		—		7
Balance, end of period	$	1,664	$	7,378	$	19,851	$	11,753	$	10,482	$	543	$	167	$	51,838


	For the Three Months Ended March 31, 2022
	MTG WHLOC		RES RE		MF FIN		HC FIN		CML & CRE		AG & AGRE		CON & MAR		TOTAL

	(In thousands)
ACL-Loans
Balance, beginning of period	$	1,955	$	4,170	$	14,084	$	4,461	$	5,879	$	657	$	138	$	31,344
Impact of adopting CECL		41		275		520		139		(1,277)		(18)		21		(299)
Provision for credit losses		(55)		102		527		1,018		431		(42)		—		1,981
Loans charged to the allowance		—		—		—		—		(931)		—		—		(931)
Recoveries of loans previously charged off		—		—		—		—		—		—		7		7
Balance, end of period	$	1,941	$	4,547	$	15,131	$	5,618	$	4,102	$	597	$	166	$	32,102

The Company recorded a total provision for credit losses of $6.9 million for the three months ended March 31, 2023. The $6.9 million total provision for credit losses consisted of $7.8 million for the ACL-Loans as shown above and $(0.9) million for the ACL-OBCE’s.

The Company recorded a total provision for credit losses of $2.5 million for the three months ended March 31, 2022. The $2.5 million total provision for credit losses consisted of $2.0 million for the ACL-Loans as shown above and $0.5 million for the ACL-OBCE’s.

The following table presents the allowance for loan losses and the recorded investment in loans and impairment method as of December 31, 2022:


	December 31, 2022
	MTG WHLOC		RES RE		MF FIN		HC FIN		CML & CRE		AG & AGRE		CON & MAR		TOTAL

	(In thousands)
ACL-Loans
Balance, beginning of period	$	1,955	$	4,170	$	14,084	$	4,461	$	5,879	$	657	$	138	$	31,344
Impact of adopting CECL		41		275		520		139		(1,277)		(18)		21		(299)
Provision for credit losses		(747)		2,588		2,177		5,282		4,216		(74)		31		13,473
Loans charged to the allowance		—		(4)		—		—		(1,238)		—		(15)		(1,257)
Recoveries of loans previously charged off		—		—		—		—		746		—		7		753
Balance, end of period	$	1,249	$	7,029	$	16,781	$	9,882	$	8,326	$	565	$	182	$	44,014

The below table presents the amortized cost basis and ACL-Loans allocated for collateral dependent loans, which are individually evaluated to determine expected credit losses:


	March 31, 2023
	Real Estate		Accounts Receivable / Equipment		Other		Total		ACL-Loans Allocation

	(In thousands)
RES RE	$	231	$	—	$	9	$	240	$	38
MF FIN		36,760		—		—		36,760		184
HC FIN		21,783		—		—		21,783		132
CML & CRE		—		4,986		1,493		6,479		1,381
AG & AGRE		147		—		—		147		1
CON & MAR		—		—		5		5		—
Total collateral dependent loans	$	58,921	$	4,986	$	1,507	$	65,414	$	1,736

There have been no significant changes to the types of collateral securing the Company’s collateral dependent loans compared to March 31, 2022.

Internal Risk Categories

In adherence with policy, the Company uses the following internal risk grading categories and definitions for loans:

Pass – Loans that are considered to be of acceptable credit quality, and not classified as Special Mention, Substandard or Doubtful.

Special Mention (Watch) – This is a loan that is sound and collectable but contains potential risk. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard - Loans classified as substandard are inadequately protected by the current net 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 institution will sustain some loss if the deficiencies are not corrected.

Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following tables present the credit risk profile of the Company’s loan portfolio based on internal risk rating category as of March 31, 2023 and December 31, 2022:


	As of March 31, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Loans		TOTAL

	(In thousands)
MTG WHLOC
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	604,445	$	604,445
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	604,445	$	604,445
RES RE
Pass		3,207		13,097		8,339		24,856		3,475		12,867		1,148,709		1,214,550
Special Mention (Watch)		—		—		—		—		60		402		—		462
Substandard		—		—		—		—		—		240		—		240
Total	$	3,207	$	13,097	$	8,339	$	24,856	$	3,535	$	13,509	$	1,148,709	$	1,215,252
MF FIN
Pass		382,298		1,221,448		494,235		156,813		32,201		11,347		1,159,249		3,457,591
Special Mention (Watch)		—		32,807		16,379		8,000		—		—		14,993		72,179
Substandard		—		36,760		—		—		—		—		—		36,760
Total	$	382,298	$	1,291,015	$	510,614	$	164,813	$	32,201	$	11,347	$	1,174,242	$	3,566,530
HC FIN
Pass		93,837		1,176,484		265,032		79,805		13,682		—		207,521		1,836,361
Special Mention (Watch)		22,709		22,437		29,014		—		—		—		8,900		83,060
Substandard		—		—		21,783		—		—		—		—		21,783
Total	$	116,546	$	1,198,921	$	315,829	$	79,805	$	13,682	$	—	$	216,421	$	1,941,204
CML & CRE
Pass		23,150		130,905		85,065		22,411		22,109		19,553		881,494		1,184,687
Special Mention (Watch)		17		41		473		1,103		116		323		1,081		3,154
Substandard		—		496		2,057		586		70		632		2,638		6,479
Total	$	23,167	$	131,442	$	87,595	$	24,100	$	22,295	$	20,508	$	885,213	$	1,194,320
AG & AGRE
Pass		4,439		11,116		7,163		15,049		5,675		20,352		24,124		87,918
Special Mention (Watch)		—		14		54		462		344		551		26		1,451
Substandard		—		—		—		—		—		147		—		147
Total	$	4,439	$	11,130	$	7,217	$	15,511	$	6,019	$	21,050	$	24,150	$	89,516
CON & MAR
Pass		137		4,570		403		220		62		4,502		5,861		15,755
Special Mention (Watch)		—		—		—		19		—		2		—		21
Substandard		—		—		—		—		—		5		—		5
Total	$	137	$	4,570	$	403	$	239	$	62	$	4,509	$	5,861	$	15,781

Total Pass	$	507,068	$	2,557,620	$	860,237	$	299,154	$	77,204	$	68,621	$	4,031,403	$	8,401,307
Total Special Mention (Watch)	$	22,726	$	55,299	$	45,920	$	9,584	$	520	$	1,278	$	25,000	$	160,327
Total Substandard	$	—	$	37,256	$	23,840	$	586	$	70	$	1,024	$	2,638	$	65,414
Total Loans	$	529,794	$	2,650,175	$	929,997	$	309,324	$	77,794	$	70,923	$	4,059,041	$	8,627,048
Total Charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


	December 31, 2022
	2022		2021		2020		2019		2018		Prior		Revolving Loans		TOTAL

	(In thousands)
MTG WHLOC
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	464,785	$	464,785
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	464,785	$	464,785
RES RE
Pass		13,344		8,192		24,708		3,498		1,722		11,166		1,114,705		1,177,335
Special Mention (Watch)		—		—		—		61		—		668		91		820
Substandard		—		—		—		—		74		172		—		246
Total	$	13,344	$	8,192	$	24,708	$	3,559	$	1,796	$	12,006	$	1,114,796	$	1,178,401
MF FIN
Pass		1,212,008		544,823		200,829		32,349		4,416		7,229		1,042,024		3,043,678
Special Mention (Watch)		32,919		—		8,000		—		—		—		14,178		55,097
Substandard		36,760		—		—		—		—		—		—		36,760
Total	$	1,281,687	$	544,823	$	208,829	$	32,349	$	4,416	$	7,229	$	1,056,202	$	3,135,535
HC FIN
Pass		987,676		301,103		78,792		13,770		—		—		123,888		1,505,229
Special Mention (Watch)		52,022		25,307		—		—		—		—		—		77,329
Substandard		—		21,783		—		—		—		—		—		21,783
Total	$	1,039,698	$	348,193	$	78,792	$	13,770	$	—	$	—	$	123,888	$	1,604,341
CML & CRE
Pass		123,757		86,282		23,803		24,730		12,335		8,765		690,114		969,786
Special Mention (Watch)		43		164		963		119		99		228		1,376		2,992
Substandard		—		2,017		591		72		—		666		2,537		5,883
Total	$	123,800	$	88,463	$	25,357	$	24,921	$	12,434	$	9,659	$	694,027	$	978,661
AG & AGRE
Pass		12,112		7,485		15,660		5,808		3,137		20,176		29,566		93,944
Special Mention (Watch)		14		55		462		421		163		389		56		1,560
Substandard		—		—		—		—		—		147		—		147
Total	$	12,126	$	7,540	$	16,122	$	6,229	$	3,300	$	20,712	$	29,622	$	95,651
CON & MAR
Pass		4,673		463		307		101		4,589		9		3,328		13,470
Special Mention (Watch)		—		—		20		—		—		2		—		22
Substandard		—		—		—		—		—		6		—		6
Total	$	4,673	$	463	$	327	$	101	$	4,589	$	17	$	3,328	$	13,498

Total Pass	$	2,353,570	$	948,348	$	344,099	$	80,256	$	26,199	$	47,345	$	3,468,410	$	7,268,227
Total Special Mention (Watch)	$	84,998	$	25,526	$	9,445	$	601	$	262	$	1,287	$	15,701	$	137,820
Total Substandard	$	36,760	$	23,800	$	591	$	72	$	74	$	991	$	2,537	$	64,825
Total Loans	$	2,475,328	$	997,674	$	354,135	$	80,929	$	26,535	$	49,623	$	3,486,648	$	7,470,872

The Company did not have any material revolving loans converted to term loans at March 31, 2023 or December 31, 2022.

The Company evaluates the loan risk grading system definitions and ACL-Loans methodology on an ongoing basis. No significant changes were made to either during the past year.

Delinquent Loans

The following tables present the Company’s loan portfolio aging analysis of the recorded investment in loans as of March 31, 2023 and December 31, 2022.


	March 31, 2023
	30-59 Days		60-89 Days		Greater Than		Total				Total
	Past Due		Past Due		90 Days		Past Due		Current		Loans

	(In thousands)
MTG WHLOC	$	—	$	—	$	—	$	—	$	604,445	$	604,445
RES RE		2,573		2,409		918		5,900		1,209,352		1,215,252
MF FIN		—		12,975		36,760		49,735		3,516,795		3,566,530
HC FIN		—		—		21,783		21,783		1,919,421		1,941,204
CML & CRE		209		495		3,778		4,482		1,189,838		1,194,320
AG & AGRE		236		43		1,242		1,521		87,995		89,516
CON & MAR		47		1		22		70		15,711		15,781
	$	3,065	$	15,923	$	64,503	$	83,491	$	8,543,557	$	8,627,048


	December 31, 2022
	30-59 Days		60-89 Days		Greater Than		Total				Total
	Past Due		Past Due		90 Days		Past Due		Current		Loans

	(In thousands)
MTG WHLOC	$	—	$	—	$	—	$	—	$	464,785	$	464,785
RES RE		4,053		152		272		4,477		1,173,924		1,178,401
MF FIN		—		—		—		—		3,135,535		3,135,535
HC FIN		—		—		21,783		21,783		1,582,558		1,604,341
CML & CRE		4,759		—		3,778		8,537		970,124		978,661
AG & AGRE		4,903		—		—		4,903		90,748		95,651
CON & MAR		6		24		22		52		13,446		13,498
	$	13,721	$	176	$	25,855	$	39,752	$	7,431,120	$	7,470,872

Nonperforming Loans

Nonaccrual loans, including modified loans that have not met the six-month minimum performance criterion, are reported as nonperforming loans. For all loan classes, it is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being restructured remain on nonaccrual status until three months of satisfactory borrower performance, at which time management would consider its return to accrual status. A loan is generally classified as nonaccrual when the Company believes that receipt of principal and interest is doubtful under the terms of the loan agreement. Generally, this is at 90 or more days past due. The amount of interest income recognized on nonaccrual financial assets during the year ended March 31, 2023 was immaterial.

The following table presents the Company’s nonaccrual loans and loans past due 90 days or more and still accruing at March 31, 2023 and December 31, 2022.


	March 31,				December 31,
	2023				2022
			Total Loans >				Total Loans >
			90 Days &				90 Days &
	Nonaccrual		Accruing		Nonaccrual		Accruing

	(In thousands)
RES RE	$	240	$	741	$	245	$	96
MF FIN		36,760		—		—		—
HC FIN		21,783		—		21,783		—
CML & CRE		4,357		—		4,390		—
AG & AGRE		147		1,242		147		—
CON & MAR		5		17		6		16
	$	63,292	$	2,000	$	26,571	$	112

The Company did not have any nonperforming loans without an estimated ACL at March 31, 2023.

On January 1, 2023, the Company adopted FASB Accounting Standards Update (ASU) No. 2022-02, Financial Instruments – Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures. The Company adopted the prospective approach for this new guidance. During the three months ended March 31, 2023, there was one customer experiencing financial difficulty that was modified from the original contractual terms to a delayed payment schedule. No modified loans defaulted or had a financial impact during the three months ended March 31, 2023.

The following table presents the Company’s modified loans during the three months ended March 31, 2023.


	For the Three Months Ended March 31, 2023
	Principal Forgiveness		Payment Delay		Term Extension		Interest Rate Reduction		Combination Term Extension and Principal Forgiveness		Combination Term Extension Interest Rate Reduction		Total Class of Financing Receivable

	(In thousands)

Commercial and commercial real estate	$	—	$	4,357	$	—	$	—	$	—	$	—		—	%
Total	$	—	$	4,357	$	—	$	—	$	—	$	—		—	%

There were no residential loans in the process of foreclosure as of March 31, 2023 and December 31, 2022.

Loans Purchased

The Company purchased $98.8 million and $40.7 million of loans during the three months ended March 31, 2023 and 2022, respectively.