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Loans and Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2023
Receivables [Abstract]  
Loans and Allowance for Credit Losses Loans and allowance for credit losses:
Loans outstanding as of March 31, 2023 and December 31, 2022, by class of financing receivable are as follows:
 March 31,December 31,
 2023 2022 
Commercial and industrial$1,671,398 $1,645,783 
Construction1,697,513 1,657,488 
Residential real estate:
1-to-4 family mortgage1,562,503 1,573,121 
Residential line of credit497,391 496,660 
Multi-family mortgage489,379 479,572 
Commercial real estate:
Owner-occupied1,136,978 1,114,580 
Non-owner occupied1,939,517 1,964,010 
Consumer and other371,317 366,998 
Gross loans9,365,996 9,298,212 
Less: Allowance for credit losses(138,809)(134,192)
Net loans$9,227,187 $9,164,020 
As of March 31, 2023 and December 31, 2022, $849,349 and $909,734, respectively, of qualifying residential mortgage loans (including loans held for sale) and $1,709,763 and $1,763,730, respectively, of qualifying commercial mortgage loans were pledged to the Federal Home Loan Bank of Cincinnati securing advances against the Bank’s line of credit. Additionally, as of March 31, 2023 and December 31, 2022, qualifying loans of $3,164,317 and $3,118,172, respectively, were pledged to the Federal Reserve Bank under the Borrower-in-Custody program.
The components of amortized cost for loans on the consolidated balance sheets exclude accrued interest receivable as the Company presents accrued interest receivable separately on the balance sheet. As of March 31, 2023 and December 31, 2022, accrued interest receivable on loans held for investment amounted to $37,005 and $38,507, respectively.
Allowance for Credit Losses
The Company calculates its expected credit loss using a lifetime loss rate methodology. The Company utilizes probability-weighted forecasts, which consider multiple macroeconomic variables from a third-party vendor that are applicable to the type of loan. Each of the Company's loss rate models incorporate forward-looking macroeconomic projections throughout the reasonable and supportable forecast period and the subsequent historical reversion at the macroeconomic variable input level. In order to estimate the life of a loan, the contractual term of the loan is adjusted for estimated prepayments based on market information and the Company’s prepayment history.
The Company's loss rate models estimate the lifetime loss rate for pools of loans by combining the calculated loss rate based on each variable within the model (including the macroeconomic variables). The lifetime loss rate for the pool is then multiplied by the loan balances to determine the expected credit losses on the pool.
The quantitative models require loan data and macroeconomic variables based on the inherent credit risks in each portfolio to more accurately measure the credit risks associated with each. Each of the quantitative models pools loans with similar risk characteristics and collectively assesses the lifetime loss rate for each pool to estimate its expected credit loss.
The Company considers the need to qualitatively adjust its modeled quantitative expected credit loss estimate for information not already captured in the model loss estimation process. These qualitative factor adjustments may increase or decrease the Company’s estimate of expected credit losses. The Company reviews the qualitative adjustments so as to validate that information that has already been considered and included in the modeled quantitative loss estimation process is not also included in the qualitative adjustment. The Company considers the qualitative factors that are relevant to the institution as of the reporting date, which may include, but are not limited to: levels of and trends in delinquencies and performance of loans; levels of and trends in write-offs and recoveries collected; trends in volume and terms of loans; effects of any changes in reasonable and supportable economic forecasts; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and expertise; available relevant information sources that contradict the Company’s own forecast;
effects of changes in prepayment expectations or other factors affecting assessments of loan contractual terms; industry conditions; and effects of changes in credit concentrations.
The Company performed qualitative evaluations within the Company's established qualitative framework, assessing the impact of the current economic outlook (including uncertainty due to inflation, recent bank failures, negative economic forecasts, predicted Federal Reserve rate increases, status of federal government stimulus programs, and other considerations). The increase in estimated required reserve during the three months ended March 31, 2023 was a result of increased loan growth and a tightening monetary policy environment both of which were incorporated into the Company's reasonable and supportable forecasts. These forecasts included weighted projections that the economy may be nearing a recession, reflected through deterioration in asset quality projected over life of the loan portfolio. Loss rates on residential loans and HELOC were qualitatively adjusted downwards, addressing the relative strength of asset values in the Company's predominant markets.
The Company calculates its allowance for credit losses using a lifetime loss rate methodology and disaggregates the loan portfolio into three pools. The following presents a summary of quantitative and qualitative factors considered as of March 31, 2023, which resulted in changes in the allowance for credit losses compared to December 31, 2022 as described below.
Pool Source of repayment
Quantitative and Qualitative factors considered
Commercial and Industrial Repayment is largely dependent
upon the operation of the borrower's business.
Quantitative: Prepayment speeds are modeled in the form of a prepayment benchmarking that directly impacts the ACL output for all C&I loans and lines of credit. Loss rates incorporate a peer scaling factor.
Qualitative: An uncertain economic outlook including the effects of inflation and the interest rate environment are driving a qualitative increase in the ACL.
Retail Repayment is primarily dependent on the personal cash flow of the borrower.
Quantitative: Average FICO scores, remaining life of the portfolio, delinquency composition, prepayment speeds leveraging Equifax and Moody's data
Qualitative: High modeled loss rates and the relatively strong housing market within the bank’s footprint are driving a qualitative decrease in the ACL.
Commercial Real EstateRepayment is primarily dependent on lease income generated from the underlying collateral.
Quantitative: Prepayment speeds leverage a reverse-compounding formula. Loss rates incorporate a peer scaling factor.
Qualitative: Changes in asset quality are driving a minor qualitative increase in the ACL.
When a loan no longer shares similar risk characteristics with other loans in any given pool, the loan is individually assessed. The Company has determined the following circumstances in which a loan may require an individual evaluation: collateral dependent loans; loans for which foreclosure is probable; and loans with other unique risk characteristics. A loan is deemed collateral dependent when 1) the borrower is experiencing financial difficulty and 2) the repayment is expected to be primarily through sale or operation of the collateral. The allowance for credit losses for collateral dependent loans as well as loans where foreclosure is probable is calculated as the amount for which the loan’s amortized cost basis exceeds fair value. Fair value is determined based on appraisals performed by qualified appraisers and reviewed by qualified personnel. In cases where repayment is to be provided substantially through the sale of collateral, the Company reduces the fair value by the estimated costs to sell.
Effective January 1, 2023, the Company prospectively adopted the accounting guidance in ASU 2022-02, "Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures", which eliminates the recognition and measurement of TDRs. Upon adoption of this guidance, the Company no longer measures an allowance for credit losses for TDRs it reasonably expects will occur, and it evaluates all loan modifications according to the accounting guidance for loan refinancing and modifications to determine whether the modification should be accounted for as a new loan or a continuation of the existing loan. After adoption, the Company now derecognizes the existing loan and accounts for the modified loan as a new loan if the effective yield on the modified loan is at least equal to the effective yield for comparable loans with similar collection risks and the modifications to the original loan are more than minor. If a loan modification does not meet these conditions, it extends the existing loan’s amortized cost basis and accounts for the modified loan as a continuation of the existing loan.
Prior to January 1, 2023, loans experiencing financial difficulty for which a concession has not yet been provided may be identified as reasonably expected TDRs. Reasonably expected TDRs and TDRs used the same methodology. In cases where the expected credit loss can only be captured through a discounted cash flow analysis (such as an interest rate modification for a TDR loan), the allowance was measured by the amount which the loan’s amortized cost exceeds the discounted cash flow analysis.
As a result of the difference in methodology between periods, disclosures related to loan modifications made to borrowers experiencing financial difficulty and TDRs may not be comparative in nature.
The following tables provide the changes in the allowance for credit losses by class of financing receivable for the three months ended March 31, 2023 and 2022:
 Commercial
and industrial 		Construction1-to-4
family
residential
mortgage 		Residential
line of credit 		Multi-family
residential
mortgage 		Commercial
real estate
owner
occupied 		Commercial
real estate
non-owner
occupied 		Consumer
and other 		Total
Three Months Ended March 31, 2023
Beginning balance -
December 31, 2022
$11,106 $39,808 $26,141 $7,494 $6,490 $7,783 $21,916 $13,454 $134,192 
Provision for credit losses(10)1,217 1,073 1,540 129 103 (48)993 4,997 
Recoveries of loans
previously charged-off
67 — 15 — — 66 — 239 387 
Loans charged off(46)— (16)— — — — (705)(767)
Ending balance -
March 31, 2023
$11,117 $41,025 $27,213 $9,034 $6,619 $7,952 $21,868 $13,981 $138,809 
 
 Commercial
and industrial 		Construction1-to-4
family
residential
mortgage 		Residential
line of credit 		Multi-family
residential
mortgage 		Commercial
real estate
owner
occupied 		Commercial
real estate
non-owner
occupied 		Consumer
and other 		Total
Three Months Ended March 31, 2022 
Beginning balance -
December 31, 2021
$15,751 $28,576 $19,104 $5,903 $6,976 $12,593 $25,768 $10,888 $125,559 
Provision for credit losses(4,006)3,206 1,908 641 (578)(4,187)(4,478)1,365 (6,129)
Recoveries of loans
previously charged-off
958 — 12 1 — 10 — 217 1,198 
Loans charged off(4)— — — — — — (575)(579)
Ending balance -
  March 31, 2022		$12,699 $31,782 $21,024 $6,545 $6,398 $8,416 $21,290 $11,895 $120,049 
Credit Quality - Commercial Type Loans
The Company categorizes commercial loan types into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans that share similar risk characteristics collectively. Loans that do not share similar risk characteristics are evaluated individually.
The Company uses the following definitions for risk ratings:
Pass.
Loans rated Pass include those that are adequately collateralized performing loans which management believes do not have conditions that have occurred or may occur that would result in the loan being downgraded into an inferior category. The Pass category also includes commercial loans rated as Watch, which include those that management believes have conditions that have occurred, or may occur, which could result in the loan being downgraded to an inferior category.

Special Mention.
Loans rated Special Mention are those that have potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position at some future date. Management does not believe there will be a loss of principal or interest. These loans require intensive servicing and may possess more than normal credit risk.
Classified.
Loans included in the Classified category include loans rated as Substandard and Doubtful. Loans rated as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans 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. Also included in this category are loans classified as Doubtful, which have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weakness or weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and values, highly questionable and improbable.
Risk ratings are updated on an ongoing basis and are subject to change by continuous loan monitoring processes.
The following tables present the credit quality of the Company's commercial type loan portfolio as of March 31, 2023 and December 31, 2022 and the gross charge-offs for the three months ended March 31, 2023 by year of origination. Revolving loans are presented separately. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal constitutes a current period origination. Generally, current period renewals of credit are reunderwritten at the point of renewal and considered current period originations for the purposes of the tables below.
Effective January 1, 2023, the Company adopted the accounting guidance in ASU 2022-02 which requires the presentation of gross charge-offs by year of origination. The Company prospectively adopted ASU 2022-02; therefore, prior period activity of gross charge-offs by year of origination are not included in the below tables.
As of and for the three months
    ended March 31, 2023
20232022202120202019PriorRevolving Loans Amortized Cost BasisTotal
Commercial and industrial
Pass$40,396 $383,606 $193,605 $53,715 $83,158 $92,586 $785,130 $1,632,196 
Special Mention— 2,625 4 — 159 891 7,040 10,719 
Classified457 2,692 647 1,939 1,476 6,818 14,454 28,483 
Total40,853 388,923 194,256 55,654 84,793 100,295 806,624 1,671,398 
            Current-period gross
               charge-offs		— 46 — — — — — 46 
Construction
Pass41,824 769,011 430,782 110,280 77,147 56,628 207,940 1,693,612 
Special Mention— 2,797 — 6 — 698 — 3,501 
Classified— 78 322 — — — — 400 
Total41,824 771,886 431,104 110,286 77,147 57,326 207,940 1,697,513 
            Current-period gross
               charge-offs		— — — — — — — — 
Residential real estate:
Multi-family mortgage
Pass10,827 144,897 147,358 95,536 33,362 42,701 13,557 488,238 
Special Mention— — — — — — — — 
Classified— — — — — 1,141 — 1,141 
Total10,827 144,897 147,358 95,536 33,362 43,842 13,557 489,379 
             Current-period gross
                charge-offs		— — — — — — — — 
Commercial real estate:
Owner occupied
Pass24,353 227,787 229,910 114,965 158,969 310,138 43,682 1,109,804 
Special Mention— 6,295 677 — 165 3,397 5,100 15,634 
Classified— — 1,293 — 3,501 6,646 100 11,540 
Total24,353 234,082 231,880 114,965 162,635 320,181 48,882 1,136,978 
            Current-period gross
              charge-offs		— — — — — — — — 
Non-owner occupied
Pass7,627 464,026 460,997 125,499 161,560 652,952 44,748 1,917,409 
Special Mention— — 1,032 — — 2,507 — 3,539 
Classified— — 1,960 — 143 16,466 — 18,569 
Total7,627 464,026 463,989 125,499 161,703 671,925 44,748 1,939,517 
             Current-period gross
                charge-offs		— — — — — — — — 
Total commercial loan types
Pass125,027 1,989,327 1,462,652 499,995 514,196 1,155,005 1,095,057 6,841,259 
Special Mention— 11,717 1,713 6 324 7,493 12,140 33,393 
Classified457 2,770 4,222 1,939 5,120 31,071 14,554 60,133 
Total$125,484 $2,003,814 $1,468,587 $501,940 $519,640 $1,193,569 $1,121,751 $6,934,785 
            Current-period gross
                charge-offs		$— $46 $— $— $— $— $— $46 
As of December 31, 2022
20222021202020192018PriorRevolving Loans Amortized Cost BasisTotal
Commercial and industrial
Pass$396,643 $204,000 $67,231 $90,894 $39,780 $62,816 $762,717 $1,624,081 
Special Mention125 7 — 160 143 771 2,520 3,726 
Classified65 823 1,916 1,651 273 6,913 6,335 17,976 
Total396,833 204,830 69,147 92,705 40,196 70,500 771,572 1,645,783 
Construction
Pass682,885 495,723 142,233 84,599 17,360 44,326 188,906 1,656,032 
Special Mention— — 15 — — 707 — 722 
Classified80 309 — — — 345 — 734 
Total682,965 496,032 142,248 84,599 17,360 45,378 188,906 1,657,488 
Residential real estate:
Multi-family mortgage
Pass142,912 147,168 96,819 33,547 6,971 37,385 13,604 478,406 
Special Mention— — — — — — — — 
Classified— — — — — 1,166 — 1,166 
Total142,912 147,168 96,819 33,547 6,971 38,551 13,604 479,572 
Commercial real estate:
Owner occupied
Pass237,862 223,883 110,748 148,405 66,101 246,414 57,220 1,090,633 
Special Mention101 683 — 168 2,225 1,258 5,000 9,435 
Classified— 1,293 224 4,589 1,276 7,018 112 14,512 
Total237,963 225,859 110,972 153,162 69,602 254,690 62,332 1,114,580 
Non-owner occupied
Pass467,360 440,319 131,497 159,205 210,752 473,60760,908 1,943,648 
Special Mention— — — — 82 2,459— 2,541 
Classified— 2,258 — 146 3,270 12,147— 17,821 
Total467,360 442,577 131,497 159,351 214,104 488,213 60,908 1,964,010 
Total commercial loan types
Pass1,927,662 1,511,093 548,528 516,650 340,964 864,548 1,083,355 6,792,800 
Special Mention226 690 15 328 2,450 5,195 7,520 16,424 
Classified145 4,683 2,140 6,386 4,819 27,589 6,447 52,209 
Total$1,928,033 $1,516,466 $550,683 $523,364 $348,233 $897,332 $1,097,322 $6,861,433 
Credit Quality - Consumer Type Loans
For consumer and residential loan classes, the company primarily evaluates credit quality based on delinquency and accrual status of the loan, credit documentation and by payment activity. The performing or nonperforming status is updated on an on-going basis dependent upon improvement and deterioration in credit quality.
The following tables present the credit quality by classification (performing or nonperforming) of the Company's consumer type loan portfolio as of March 31, 2023 and December 31, 2022 and the gross charge-offs for the three months ended March 31, 2023 by year of origination. Revolving loans are presented separately. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal constitutes a current period origination. Generally, current period renewals of credit are reunderwritten at the point of renewal and considered current period originations for the purposes of the tables below.
Effective January 1, 2023, the Company adopted the accounting guidance in ASU 2022-02 which requires the presentation of gross charge-offs by year of origination. The Company prospectively adopted ASU 2022-02; therefore, prior period balances for gross charge-offs by year of origination are not included below.
As of and for the three months
     ended March 31, 2023
20232022202120202019PriorRevolving Loans Amortized Cost BasisTotal
Residential real estate:
1-to-4 family mortgage
Performing$36,402 $550,052 $439,949 $157,470 $88,489 $269,548 $— $1,541,910 
Nonperforming— 1,945 4,671 4,834 1,115 8,028 — 20,593 
Total36,402 551,997 444,620 162,304 89,604 277,576 — 1,562,503 
          Current-period gross
             charge-offs		— — — — — 16 — 16 
Residential line of credit
Performing— — — — — — 496,309 496,309 
Nonperforming— — — — — — 1,082 1,082 
Total— — — — — — 497,391 497,391 
          Current-period gross
             charge-offs		— — — — — — — — 
Consumer and other
Performing24,159 108,985 53,452 39,098 27,758 105,751 4,198 363,401 
Nonperforming— 233 1,536 1,481 966 3,700 — 7,916 
       Total24,159 109,218 54,988 40,579 28,724 109,451 4,198 371,317 
           Current-period gross
             charge-offs		171 339 38 81 9 65 2 705 
Total consumer type loans
Performing60,561 659,037 493,401 196,568 116,247 375,299 500,507 2,401,620 
Nonperforming— 2,178 6,207 6,315 2,081 11,728 1,082 29,591 
        Total$60,561 $661,215 $499,608 $202,883 $118,328 $387,027 $501,589 $2,431,211 
            Current-period gross
             charge-offs		$171 $339 $38 $81 $9 $81 $2 $721 
As of December 31, 2022
20222021202020192018PriorRevolving Loans Amortized Cost BasisTotal
Residential real estate:
1-to-4 family mortgage
Performing$568,210 $448,401 $160,715 $93,548 $68,113 $211,019 $— $1,550,006 
Nonperforming1,227 5,163 5,472 1,778 2,044 7,431 — 23,115 
Total569,437 453,564 166,187 95,326 70,157 218,450 — 1,573,121 
Residential line of credit
Performing— — — — — — 495,129 495,129 
Nonperforming— — — — — — 1,531 1,531 
Total— — — — — — 496,660 496,660 
Consumer and other
Performing118,637 56,779 41,008 29,139 26,982 82,318 4,175 359,038 
Nonperforming166 1,396 1,460 906 1,507 2,525 — 7,960 
       Total118,803 58,175 42,468 30,045 28,489 84,843 4,175 366,998 
Total consumer type loans
Performing686,847 505,180 201,723 122,687 95,095 293,337 499,304 2,404,173 
Nonperforming1,393 6,559 6,932 2,684 3,551 9,956 1,531 32,606 
       Total$688,240 $511,739 $208,655 $125,371 $98,646 $303,293 $500,835 $2,436,779 
Nonaccrual and Past Due Loans
Nonperforming loans include loans that are no longer accruing interest (non-accrual loans) and loans past due ninety or more days and still accruing interest.
The following tables represent an analysis of the aging by class of financing receivable as of March 31, 2023 and December 31, 2022:
March 31, 202330-89 days
past due and accruing
interest		90 days or 
more and accruing
interest 		Nonaccrual
loans		Loans current
on payments
and accruing
interest 		Total
Commercial and industrial$574 $42 $2,413 $1,668,369 $1,671,398 
Construction2,708 — 382 1,694,423 1,697,513 
Residential real estate:
1-to-4 family mortgage13,348 11,505 9,088 1,528,562 1,562,503 
Residential line of credit678 158 924 495,631 497,391 
Multi-family mortgage— — 39 489,340 489,379 
Commercial real estate:
Owner occupied851 — 7,211 1,128,916 1,136,978 
Non-owner occupied— — 5,802 1,933,715 1,939,517 
Consumer and other6,918 875 7,041 356,483 371,317 
Total$25,077 $12,580 $32,900 $9,295,439 $9,365,996 
 
December 31, 202230-89 days
past due and accruing
interest		90 days or 
more and accruing
interest 		Nonaccrual
loans		Loans current on payments and accruing interest Total
Commercial and industrial$1,650 $136 $1,307 $1,642,690 $1,645,783 
Construction1,246 — 389 1,655,853 1,657,488 
Residential real estate:
1-to-4 family mortgage15,470 16,639 6,476 1,534,536 1,573,121 
Residential line of credit772 131 1,400 494,357 496,660 
Multi-family mortgage— — 42 479,530 479,572 
Commercial real estate:
Owner occupied1,948 — 5,410 1,107,222 1,114,580 
Non-owner occupied102 — 5,956 1,957,952 1,964,010 
Consumer and other10,108 1,509 6,451 348,930 366,998 
Total$31,296 $18,415 $27,431 $9,221,070 $9,298,212 
The following tables provide the amortized cost basis of loans on non-accrual status, as well as any related allowance as of March 31, 2023 and December 31, 2022 by class of financing receivable.
March 31, 2023Nonaccrual
with no
related
allowance		Nonaccrual
with
related
allowance		Related
allowance
Commercial and industrial$1,804 $609 $11 
Construction— 382 7 
Residential real estate:
1-to-4 family mortgage1,955 7,133 143 
Residential line of credit842 82 1 
Multi-family mortgage— 39 1 
Commercial real estate:
Owner occupied7,008 203 12 
Non-owner occupied5,610 192 4 
Consumer and other110 6,931 354 
Total$17,329 $15,571 $533 
December 31, 2022
Nonaccrual
with no
related
allowance		Nonaccrual
with
related
allowance		Related
allowance
Commercial and industrial$790 $517 $10 
Construction— 389 7 
Residential real estate:
1-to-4 family mortgage2,834 3,642 78 
Residential line of credit1,134 266 4 
Multi-family mortgage1 41 1 
Commercial real estate:
Owner occupied5,200 210 1 
Non-owner occupied5,755 201 5 
Consumer and other— 6,451 327 
Total$15,714 $11,717 $433 
The following presents interest income recognized on nonaccrual loans for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31,
20232022
Commercial and industrial$20 $54 
Construction6 19 
Residential real estate:
1-to-4 family mortgage79 52 
Residential line of credit24 40 
Multi-family mortgage1 — 
Commercial real estate:
Owner occupied58 25 
Non-owner occupied82 70 
Consumer and other173 15 
Total$443 $275 
Accrued interest receivable written off as an adjustment to interest income amounted to $181 and $184 for the three months ended March 31, 2023 and 2022, respectively.
Loan Modifications to Borrowers Experiencing Financial Difficulty
Occasionally, the Company may make certain modifications of loans to borrowers experiencing financial difficulty. These modifications typically include an interest rate reduction, a term extension or a combination thereof.
Upon the Company's determination that a modified loan has subsequently been deemed uncollectible, the portion of the loan deemed uncollectible 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.
The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.
There were no modifications of loans to borrowers experiencing financial difficulty during the three months ended March 31, 2023.
Troubled debt restructurings
The following disclosure is presented in accordance with GAAP in effect prior to the adoption of ASU 2022-02. The Company has included this disclosure as of December 31, 2022 or for the three months ended March 31, 2022.
Prior to the Company's adoption of ASU 2022-02, the Company accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR. ASU 2022-02 eliminated TDR accounting prospectively for all restructurings occurring on or after January 1, 2023. Loans that were restructured in a TDR prior to the adoption of ASU 2022-02 will continue to be accounted for under the historical TDR accounting until the loan is paid off, liquidated or subsequently modified. See Note 1, "Basis of presentation" for more information on the Company's adoption of ASU 2022-02.
As of December 31, 2022, the Company had a recorded investment in TDRs of $13,854. The modifications included extensions of the maturity date and/or a stated rate of interest to one lower than the current market rate to borrowers experiencing financial difficulty. Of these loans, $7,321 were classified as nonaccrual loans as of December 31, 2022. The Company has calculated $253 in allowances for credit losses on TDRs as of December 31, 2022. As of December 31, 2022, unfunded loan commitments to extend additional funds on troubled debt restructurings were not meaningful.
The following table presents the financial effect of TDRs recorded during the three months ended March 31, 2022:
Number of loansPre-modification outstanding recorded investment Post-modification outstanding recorded investment Charge offs and specific reserves
Residential real estate:
1-to-4 family mortgage1 80 80 — 
Consumer and other1 22 22 — 
Total2 $102 $102 $— 
Troubled debt restructurings for which there was a payment default within twelve months following the modification totaled $304 during the three months ended March 31, 2022. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.
In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. The terms of certain other loans were modified during the three months ended March 31, 2022 that did not meet the definition of a TDR. The modification of these loans usually involves either a modification of the terms of a loan to borrowers who are not experiencing financial difficulties or an insignificant delay in payments.
Collateral-Dependent Loans
For loans for which the repayment (based on the Company's assessment) is expected to be provided substantially through the operation or sale of collateral and the borrower is experiencing financial difficulty, the following tables present the loans and the corresponding individually assessed allowance for credit losses by class of financing receivable. Significant changes in individually assessed reserves are due to changes in the valuation of the underlying collateral in addition to changes in accrual and past due status.
March 31, 2023
Type of Collateral
Real EstateFinancial Assets and Equipment TotalIndividually assessed allowance for credit loss
Commercial and industrial$2,597 $800 $3,397 $— 
Residential real estate:
1-to-4 family mortgage5,332 — 5,332 169 
Residential line of credit1,109 — 1,109 5 
Commercial real estate:
Owner occupied7,651 — 7,651 4 
Non-owner occupied5,610 — 5,610 — 
Consumer and other132 — 132 — 
Total$22,431 $800 $23,231 $178 
December 31, 2022
Type of Collateral
Real EstateFinancial Assets and Equipment TotalIndividually assessed allowance for credit loss
Commercial and industrial$2,596 $— $2,596 $— 
Residential real estate:
1-to-4 family mortgage4,467 — 4,467 194 
Residential line of credit1,135 — 1,135 — 
Commercial real estate:
Owner occupied5,424 — 5,424 — 
Non-owner occupied5,755 — 5,755 — 
Consumer and other134 — 134 — 
Total$19,511 $— $19,511 $194