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Loans and Allowance for Credit Losses on Loans HFI
 6 Months Ended
Jun. 30, 2023
Receivables [Abstract]  
Loans and Allowance for Credit Losses on Loans HFI Loans and allowance for credit losses on loans HFI:
Loans outstanding as of June 30, 2023 and December 31, 2022, by class of financing receivable are as follows:
 June 30,December 31,
 2023 2022 
Commercial and industrial$1,693,572 $1,645,783 
Construction1,636,970 1,657,488 
Residential real estate:
1-to-4 family mortgage1,548,614 1,573,121 
Residential line of credit507,652 496,660 
Multi-family mortgage518,025 479,572 
Commercial real estate:
Owner-occupied1,158,782 1,114,580 
Non-owner occupied1,881,978 1,964,010 
Consumer and other380,431 366,998 
Gross loans9,326,024 9,298,212 
Less: Allowance for credit losses on loans HFI(140,664)(134,192)
Net loans$9,185,360 $9,164,020 
As of June 30, 2023 and December 31, 2022, $1,000,551 and $909,734, respectively, of qualifying residential mortgage loans (including loans held for sale) and $1,732,824 and $1,763,730, respectively, of qualifying commercial mortgage loans were pledged to the FHLB system securing advances against the Bank’s line of credit. Additionally, as of June 30, 2023 and December 31, 2022, qualifying loans of $3,116,035 and $3,118,172, respectively, were pledged to the Federal Reserve 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 June 30, 2023 and December 31, 2022, accrued interest receivable on loans held for investment amounted to $38,057 and $38,507, respectively.
Allowance for Credit Losses on Loans HFI
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 Moody's that are applicable to each 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 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, and other considerations. The increase in the allowance for credit losses as of June 30, 2023 compared with December 31, 2022 is primarily a result of deterioration in economic forecasts between periods. 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. As of June 30, 2023, the macroeconomic forecast was determined solely using the Moody’s baseline scenario, which showed a slightly more negative outlook than the comparative baseline as of December 31, 2022. As of December 31, 2022, the macroeconomic forecast used a weighting of two economic forecasts from Moody’s in order to align with management’s best estimate over the reasonable and supportable forecast period. The Moody’s baseline scenario was weighted the heaviest and the downside scenario received a smaller weighting. Additionally, as of June 30, 2023, loss rates on residential loans and HELOC were qualitatively adjusted downward, addressing the relative strength of asset values in the Company's predominant markets.
The Company calculates its allowance for credit losses on loans HFI 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 June 30, 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: An uncertain economic outlook in Non-owner occupied CRE are driving a 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. Substantially all of its loan modifications involving borrowers experiencing financial difficulty are accounted for 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 to estimate credit losses. In cases where the expected credit loss could 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.
The following tables provide the changes in the allowance for credit losses on loans HFI by class of financing receivable for the three and six months ended June 30, 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 June 30, 2023
Beginning balance -
March 31, 2023
$11,117 $41,025 $27,213 $9,034 $6,619 $7,952 $21,868 $13,981 $138,809 
Provision for credit losses
   on loans HFI		192 (1,115)185 151 209 643 1,009 1,301 2,575 
Recoveries of loans
previously charged-off
13 10 25 — — 16 — 108 172 
Loans charged off(11)— (16)— — (144)— (721)(892)
Ending balance -
June 30, 2023
$11,311 $39,920 $27,407 $9,185 $6,828 $8,467 $22,877 $14,669 $140,664 
Six Months Ended June 30, 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
   on loans HFI		182 102 1,258 1,691 338 746 961 2,294 7,572 
Recoveries of loans
previously charged-off
80 10 40 — — 82 — 347 559 
Loans charged off(57)— (32)— — (144)— (1,426)(1,659)
Ending balance -
June 30, 2023
$11,311 $39,920 $27,407 $9,185 $6,828 $8,467 $22,877 $14,669 $140,664 
 
 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 June 30, 2022
Beginning balance -
March 31, 2022
$12,699 $31,782 $21,024 $6,545 $6,398 $8,416 $21,290 $11,895 $120,049 
Provision for credit losses
on loans HFI		(783)6,590 383 314 105 (1,102)1,246 1,428 8,181 
Recoveries of loans
previously charged-off
26 11 14 16 — 15 — 348 430 
Loans charged off(1,751)— (23)— — — — (614)(2,388)
Ending balance -
June 30, 2022
$10,191 $38,383 $21,398 $6,875 $6,503 $7,329 $22,536 $13,057 $126,272 
Six Months Ended June 30, 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
   on loans HFI		(4,789)9,796 2,291 955 (473)(5,289)(3,232)2,793 2,052 
Recoveries of loans
previously charged-off
984 11 26 17 — 25 — 565 1,628 
Loans charged off(1,755)— (23)— — — — (1,189)(2,967)
Ending balance -
 June 30, 2022		$10,191 $38,383 $21,398 $6,875 $6,503 $7,329 $22,536 $13,057 $126,272 
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 June 30, 2023 and December 31, 2022 and the gross charge-offs for the six months ended June 30, 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 six months
    ended June 30, 2023
20232022202120202019PriorRevolving Loans Amortized Cost BasisTotal
Commercial and industrial
Pass$121,939 $348,068 $174,977 $47,672 $78,078 $82,735 $787,526 $1,640,995 
Special Mention— 3,453 329 2,016 157 1,427 20,241 27,623 
Classified481 2,666 610 1,910 1,349 5,956 11,982 24,954 
Total122,420 354,187 175,916 51,598 79,584 90,118 819,749 1,693,572 
            Current-period gross
               charge-offs		— — 46 — — — 11 57 
Construction
Pass83,247 772,013 374,540 66,581 70,096 51,937 213,231 1,631,645 
Special Mention— 169 — 6 — 718 — 893 
Classified— 3,215 318 899 — — — 4,432 
Total83,247 775,397 374,858 67,486 70,096 52,655 213,231 1,636,970 
            Current-period gross
               charge-offs		— — — — — — — — 
Residential real estate:
Multi-family mortgage
Pass19,097 139,768 150,468 119,065 33,190 41,852 13,464 516,904 
Special Mention— — — — — — — — 
Classified— — — — — 1,121 — 1,121 
Total19,097 139,768 150,468 119,065 33,190 42,973 13,464 518,025 
             Current-period gross
                charge-offs		— — — — — — — — 
Commercial real estate:
Owner occupied
Pass41,038 233,473 227,506 119,039 164,411 295,161 50,408 1,131,036 
Special Mention— 1,324 1,859 — 162 5,332 — 8,677 
Classified— 6,178 672 — 3,501 4,519 4,199 19,069 
Total41,038 240,975 230,037 119,039 168,074 305,012 54,607 1,158,782 
            Current-period gross
              charge-offs		— — 144 — — — — 144 
Non-owner occupied
Pass14,235 444,487 447,841 121,359 153,675 642,442 42,683 1,866,722 
Special Mention— — — — 399 2,474 — 2,873 
Classified188 — 1,957 — — 10,238 — 12,383 
Total14,423 444,487 449,798 121,359 154,074 655,154 42,683 1,881,978 
             Current-period gross
                charge-offs		— — — — — — — — 
Total commercial loan types
Pass279,556 1,937,809 1,375,332 473,716 499,450 1,114,127 1,107,312 6,787,302 
Special Mention— 4,946 2,188 2,022 718 9,951 20,241 40,066 
Classified669 12,059 3,557 2,809 4,850 21,834 16,181 61,959 
Total$280,225 $1,954,814 $1,381,077 $478,547 $505,018 $1,145,912 $1,143,734 $6,889,327 
            Current-period gross
                charge-offs		$— $— $190 $— $— $— $11 $201 
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 June 30, 2023 and December 31, 2022 and the gross charge-offs for the six months ended June 30, 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 six months
     ended June 30, 2023
20232022202120202019PriorRevolving Loans Amortized Cost BasisTotal
Residential real estate:
1-to-4 family mortgage
Performing$100,265 $531,715 $411,194 $152,684 $86,026 $248,803 $— $1,530,687 
Nonperforming— 2,938 3,393 4,255 517 6,824 — 17,927 
Total100,265 534,653 414,587 156,939 86,543 255,627 — 1,548,614 
          Current-period gross
             charge-offs		— 16 — — — 16 — 32 
Residential line of credit
Performing— — — — — — 506,465 506,465 
Nonperforming— — — — — — 1,187 1,187 
Total— — — — — — 507,652 507,652 
          Current-period gross
             charge-offs		— — — — — — — — 
Consumer and other
Performing45,554 102,231 50,673 36,969 26,698 102,362 7,243 371,730 
Nonperforming— 570 1,630 1,916 1,072 3,513 — 8,701 
       Total45,554 102,801 52,303 38,885 27,770 105,875 7,243 380,431 
           Current-period gross
             charge-offs		632 386 72 106 21 207 2 1,426 
Total consumer type loans
Performing145,819 633,946 461,867 189,653 112,724 351,165 513,708 2,408,882 
Nonperforming— 3,508 5,023 6,171 1,589 10,337 1,187 27,815 
        Total$145,819 $637,454 $466,890 $195,824 $114,313 $361,502 $514,895 $2,436,697 
            Current-period gross
             charge-offs		$632 $402 $72 $106 $21 $223 $2 $1,458 
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 (nonaccrual 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 June 30, 2023 and December 31, 2022:
June 30, 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$822 $— $2,163 $1,690,587 $1,693,572 
Construction2,127 111 2,649 1,632,083 1,636,970 
Residential real estate:
1-to-4 family mortgage14,302 10,261 7,666 1,516,385 1,548,614 
Residential line of credit1,407 334 853 505,058 507,652 
Multi-family mortgage— — 37 517,988 518,025 
Commercial real estate:
Owner occupied1,316 — 5,803 1,151,663 1,158,782 
Non-owner occupied3,512 — 5,554 1,872,912 1,881,978 
Consumer and other10,133 1,541 7,160 361,597 380,431 
Total$33,619 $12,247 $31,885 $9,248,273 $9,326,024 
 
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 June 30, 2023 and December 31, 2022 by class of financing receivable.
June 30, 2023Nonaccrual
with no
related
allowance		Nonaccrual
with
related
allowance		Related
allowance
Commercial and industrial$1,313 $850 $12 
Construction899 1,750 198 
Residential real estate:
1-to-4 family mortgage1,483 6,183 130 
Residential line of credit729 124 2 
Multi-family mortgage— 37 1 
Commercial real estate:
Owner occupied5,683 120 6 
Non-owner occupied5,509 45 1 
Consumer and other110 7,050 362 
Total$15,726 $16,159 $712 
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 and six months ended June 30, 2023 and 2022:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Commercial and industrial$28 $83 $48 $137 
Construction46 7 52 26 
Residential real estate:
1-to-4 family mortgage70 55 149 107 
Residential line of credit27 21 51 61 
Multi-family mortgage— 2 1 2 
Commercial real estate:
Owner occupied39 63 97 88 
Non-owner occupied55 76 137 146 
Consumer and other143 54 316 69 
Total$408 $361 $851 $636 
Accrued interest receivable written off as an adjustment to interest income amounted to $163 and $344 for the three and six months ended June 30, 2023, respectively, and $123 and $307 for the three and six months ended June 30, 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 may be in the form of 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 charged off against the allowance for credit losses on loans HFI.
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.
During the three and six months ended June 30, 2023, the Company modified two residential mortgage loans in the form of term extensions for borrowers experiencing financial difficulties with balances totaling $141.
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 and six months ended June 30, 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 included $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 periods indicated:
Three Months Ended June 30, 2022Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Commercial and industrial1 $55 $55 $— 
Residential real estate:
Residential line of credit1 49 49 — 
Total2 $104 $104 $— 
Six Months Ended June 30, 2022Number of loansPre-modification outstanding recorded investment Post-modification outstanding recorded investment Charge offs and specific reserves
Commercial and industrial1 $55 $55 $— 
Residential real estate:
1-to-4 family mortgage1 80 80 — 
Residential line of credit1 49 49 — 
Consumer and other1 22 22 — 
Total4 $206 $206 $— 
Troubled debt restructurings for which there was a payment default within twelve months following the modification totaled $304 during the six months ended June 30, 2022. There were no loans modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the three months ended June 30, 2022. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.
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.
June 30, 2023
Type of Collateral
Real EstateFinancial Assets and Equipment TotalIndividually assessed allowance for credit loss
Commercial and industrial$2,027 $11,881 $13,908 $— 
Construction1,499 — 1,499 60 
Residential real estate:
1-to-4 family mortgage6,583 1,172 7,755 168 
Residential line of credit729 — 729 — 
Commercial real estate:
Owner occupied5,902 5,902 — 
Non-owner occupied5,510 — 5,510 — 
Consumer and other131 — 131 — 
Total$22,381 $13,053 $35,434 $228 
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