XML 23 R13.htm IDEA: XBRL DOCUMENT v3.22.2.2
Loans
 9 Months Ended
Sep. 30, 2022
Receivables [Abstract]  
Loans LOANS (In Thousands)
Loan Categories and Past Due Loans

The following two tables present loan balances outstanding as of September 30, 2022 and an analysis of the recorded investment in loans that are past due at these dates. Generally, Arrow considers a loan past due 30 or more days when the borrower is two payments past due. Loans held-for-sale of $483, $1,154 and $2,169 as of September 30, 2022, December 31, 2021 and September 30, 2021, respectively, are included in the residential real estate balances for current loans.

Schedule of Past Due Loans by Loan Category
Commercial
CommercialReal EstateConsumerResidentialTotal
September 30, 2022
Loans Past Due 30-59 Days$86 $— $8,870 $393 $9,349 
Loans Past Due 60-89 Days80 — 4,397 1,266 5,743 
Loans Past Due 90 or more Days— 235 1,708 3,487 5,430 
Total Loans Past Due166 235 14,975 5,146 20,522 
Current Loans138,807 678,982 1,040,610 1,045,873 2,904,272 
Total Loans$138,973 $679,217 $1,055,585 $1,051,019 $2,924,794 
December 31, 2021
Loans Past Due 30-59 Days$202 $— $6,713 $107 $7,022 
Loans Past Due 60-89 Days3 — 2,709 2,557 5,269 
Loans Past Due 90 or more Days157 1,180 1,564 1,981 4,882 
Total Loans Past Due362 1,180 10,986 4,645 17,173 
Current Loans172,156 627,749 909,570 941,293 2,650,768 
Total Loans$172,518 $628,929 $920,556 $945,938 $2,667,941 
September 30, 2021
Loans Past Due 30-59 Days$729 $— $4,809 $368 $5,906 
Loans Past Due 60-89 Days63 — 2,543 1,295 3,901 
Loans Past Due 90 or more Days75 1,641 1,010 1,951 4,677 
Total Loans Past Due867 1,641 8,362 3,614 14,484 
Current Loans187,324 613,440 912,827 926,676 2,640,267 
Total Loans$188,191 $615,081 $921,189 $930,290 $2,654,751 
Schedule of Non Accrual Loans by Category
Commercial
September 30, 2022CommercialReal EstateConsumerResidentialTotal
Loans 90 or More Days Past Due
  and Still Accruing Interest		$— $— $— $514 $514 
Nonaccrual Loans9 3,401 1,708 3,694 8,812 
Nonaccrual With No Allowance for Credit Loss9 3,401 1,708 3,694 8,812 
Interest Income on Nonaccrual Loans— — — 12 12 
December 31, 2021
Loans 90 or More Days Past Due
  and Still Accruing Interest		$157 $— $— $666 $823 
Nonaccrual Loans34 7,243 1,697 1,790 10,764 
September 30, 2021
Loans 90 or More Days Past Due
  and Still Accruing Interest		$— $— $— $555 $555 
Nonaccrual Loans91 7,766 1,101 1,765 10,723 
Arrow disaggregates its loan portfolio into the following four categories:

Commercial - Arrow offers a variety of loan options to meet the specific needs of our commercial customers including term loans, time notes and lines of credit. Such loans are made available to businesses for working capital needs such as inventory and receivables, business expansion and equipment purchases. Generally, a collateral lien is placed on equipment or other assets owned by the borrower. Generally, these loans carry a higher risk than commercial real estate loans due to the nature of the underlying collateral, which can be business assets such as equipment and accounts receivable and generally have a lower liquidation value than real estate. In the event of default by the borrower, Arrow may be required to liquidate collateral at deeply discounted values. To reduce the risk, management usually obtains personal guarantees to support the borrowing, as permitted by applicable law.

Commercial Real Estate - Arrow offers commercial real estate loans to finance real estate purchases, refinancings, expansions and improvements to commercial properties. Commercial real estate loans are made to finance the purchases of real property which generally consists of real estate with completed structures. These commercial real estate loans are typically secured by first liens on the real estate, which may include apartments, commercial structures, housing businesses, healthcare facilities, and both owner- and non-owner-occupied facilities. These loans are typically less risky than commercial loans, since they are secured by real estate and buildings, and are generally originated in amounts of no more than 80% of the appraised value of the property. However, Arrow also offers commercial construction and land development loans to finance projects. Many projects will ultimately be used by the borrowers' businesses, while others are developed for resale. These real estate loans are also typically secured by first liens on the real estate, which may include apartments, commercial structures, housing businesses, healthcare facilities and both owner-occupied and non-owner-occupied facilities. There is enhanced risk during the construction period, since the loan is secured by an incomplete project.

Consumer Loans - This category is primarily comprised of automobile loans. Arrow primarily finances the purchases of automobiles indirectly through dealer relationships located throughout upstate New York and Vermont. Most automobile loans carry a fixed rate of interest with principal repayment terms typically ranging from three to seven years. Automobile loans are underwritten on a secured basis using the underlying collateral being financed. Arrow also offers a variety of consumer installment loans to finance personal expenditures. Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from one to five years, based upon the nature of the collateral and the size of the loan. In addition to installment loans, Arrow also offers personal lines of credit and overdraft protection. Several of these consumer loans are unsecured, which carry a higher risk of loss.

Residential - Residential real estate loans consist primarily of loans secured by first or second mortgages on primary residences. Arrow originates fixed-rate and adjustable-rate one-to-four-family residential real estate loans for the construction, purchase of real estate or refinancing of an existing mortgage. These loans are collateralized primarily by owner-occupied properties generally located in Arrow's market area. Loans on one-to-four-family residential real estate are generally originated in amounts of no more than 80% of the purchase price or appraised value (whichever is lower), or have private mortgage insurance. Arrow’s underwriting analysis for residential mortgage loans typically includes credit verification, independent appraisals, and a review of the borrower’s financial condition. Mortgage title insurance and hazard insurance are normally required. It is Arrow's general practice to underwrite residential real estate loans to secondary market standards. Construction loans have a unique risk, because they are secured by an incomplete dwelling. This risk is reduced through periodic site inspections, including one at each loan draw period. In addition, Arrow offers fixed home equity loans, as well as home equity lines of credit to consumers to finance home improvements, debt consolidation, education and other uses.  Arrow's policy allows for a maximum loan to value ratio of 80%, although periodically higher advances are allowed.  Arrow originates home equity lines of credit and second mortgage loans (loans secured by a second junior lien position on one-to-four-family residential real estate).  Risk is generally reduced through underwriting criteria, which include credit verification, appraisals, a review of the borrower's financial condition, and personal cash flows.  A security interest, with title insurance when necessary, is taken in the underlying real estate.

Allowance for Credit Losses

Loan segments were selected by class code and application code to ensure each segment is comprised of loans with homogenous loan characteristics and similar risk profiles. The resulting loan segments are commercial Paycheck Protection Program (PPP), commercial non-PPP, commercial real estate, consumer and residential real estate loans. The consumer segment is mainly comprised of automobile loans, and since they are relatively short-term in nature, with similar dollar amounts and collateral, the vintage analysis method was selected to determine the credit loss reserve. The vintage method utilizes Arrow loan data exclusively as the method calculates a loss rate based on the total origination balance of the loans by year and the charge-off and recovery rate of the same origination year. Arrow maintains, over the life of the loan, the loss curve by vintage year. The discounted cash flow method (DCF) is used to calculate the reserve for credit losses for the commercial, commercial real estate and residential real estate segments.
The September 30, 2022 allowance for credit losses calculation incorporated a reasonable and supportable forecast period to account for economic conditions utilized in the measurement. The quantitative model utilized an economic forecast sourced from reputable third-parties that reflects the economic conditions with a deterioration of approximately 0.45% in the national unemployment rate during the six-quarter forecast period, while forecasted gross domestic product are projected to decline approximately 1.00%. The home price index (HPI) forecast declined approximately 4.63% from the previous quarter level. The recent volatility of the national HPI forecast in projecting growth and decline is beyond any recent actual change when compared to the Albany Metropolitan Statistical Area for the last 10 years and is considered to be a unique circumstance not reflective of current economic conditions in our markets. As a result, an additional qualitative adjustment was utilized during 2022 to address risk outside of the quantitative model. Key assumptions utilized in the CECL calculation include loan segmentation, loan loss regression analysis, reasonable and supportable forecast period,
reversion period, discounted cash flow inputs including economic forecast data and prepayment and curtailment speeds and qualitative factors. Key assumptions are reviewed and approved on a quarterly basis. There was one assumption change for the third quarter calculation. Demand loans, which do not have a maturity date, now utilize a 1-year maturity as the loans are reviewed annually. The loans previously utilized a 10-year maturity. Driven by current economic forecasts, loan growth and net charge offs during the quarter, the third quarter provision for credit losses was $1.7 million. The provision is directionally consistent with both the latest economic forecasts as well as third quarter activity. Management's evaluation considers the allowance for credit losses for loans to be appropriate as of September 30, 2022.

The following table details activity in the allowance for credit losses on loans for the three and nine months ended September 30, 2022 and September 30, 2021:

Allowance for Credit Losses
CommercialCommercial Real EstateConsumerResidentialTotal
June 30, 2022$2,465 $13,936 $2,358 $9,331 $28,090 
Charge-offs(44)— (1,103)— (1,147)
Recoveries— — 574 — 574 
Provision(416)930 692 509 1,715 
September 30, 2022$2,005 $14,866 $2,521 $9,840 $29,232 
December 31, 2021$2,298 $13,136 $2,402 $9,445 $27,281 
Charge-offs$(48)$— $(2,805)$(30)$(2,883)
Recoveries$26 $— $1,419 $— $1,445 
Provision$(271)$1,730 $1,505 $425 $3,389 
September 30, 2022$2,005 $14,866 $2,521 $9,840 $29,232 
June 30, 2021$2,241 $13,606 $2,443 $8,720 $27,010 
Charge-offs(17)— (427)— $(444)
Recoveries— — 291 — $291 
Provision200 65 (19)(147)$99 
September 30, 2021$2,424 $13,671 $2,288 $8,573 $26,956 
Balance as of January 1, 2021 as adjusted for ASU 2016-13$4,257 $12,054 $2,179 $9,442 $27,932 
Charge-offs(37)— (1,480)(3)(1,520)
Recoveries— — 830 — 830 
Provision(1,796)1,617 759 (866)(286)
September 30, 2021$2,424 $13,671 $2,288 $8,573 $26,956 


Estimated Credit Losses on Off-Balance Sheet Credit Exposures Recognized as Other Liabilities

Financial instrument credit losses apply to off-balance sheet credit exposures such as unfunded loan commitments and standby letters of credit. A liability for expected credit losses for off-balance sheet exposures is recognized if the entity has a present contractual obligation to extend the credit and the obligation is not unconditionally cancellable by the entity. Changes in this allowance are reflected in other operating expenses within the non-interest expense category. As of September 30, 2022, the total unfunded commitment off-balance sheet credit exposure was $1.6 million.

Individually Evaluated Loans

All loans not included in the vintage analysis method that exceed $250,000, which are on nonaccrual status, are evaluated on an individual basis. Arrow made the policy election to apply a practical expedient for collateral dependent financial assets when the borrower is experiencing financial difficulty and the repayment is expected through the sale of the collateral. This allows Arrow to use fair value of the collateral at the reporting date adjusted for estimated cost to sell when recording the net carrying amount of the asset and determining the allowance for credit losses for a financial asset. In the event where the repayment of a collateral dependent financial asset is expected to be provided substantially through the operating of the collateral, Arrow will use fair value of the collateral at the reporting date when recording the net carrying amount of the asset and determining the allowance for credit losses. As of September 30, 2022, there were four total relationships identified to be evaluated for loss on an individual basis which had an amortized cost basis of $4.7 million and none had an allowance for credit loss.
The following tables present the amortized cost basis of collateral-dependent loans by class of loans as of September 30, 2022, December 31, 2021 and September 30, 2021:
September 30, 2022Collateral Type -Residential Real EstateCollateral Type - Commercial Real EstateTotal Loans
Commercial$— $— $— 
Commercial Real Estate— 3,166 3,166 
Consumer— — — 
Residential1,494 — 1,494 
Total$1,494 $3,166 $4,660 

December 31, 2021Collateral Type -Residential Real EstateCollateral Type - Commercial Real EstateTotal Loans
Commercial$— $— $— 
Commercial Real Estate— 6,732 6,732 
Consumer— — — 
Residential673 — 673 
Total$673 $6,732 $7,405 

September 30, 2021Collateral Type -Residential Real EstateCollateral Type - Commercial Real EstateTotal Loans
Commercial$— $— $— 
Commercial Real Estate— 7,254 7,254 
Consumer— — — 
Residential676 — 676 
Total$676 $7,254 $7,930 



Allowance for Credit Losses - Collectively and Individually Evaluated
CommercialCommercial Real EstateConsumerResidentialTotal
September 30, 2022
Ending Loan Balance - Collectively Evaluated$138,973 $676,051 $1,055,585 $1,049,525 $2,920,134 
Allowance for Credit Losses - Loans Collectively Evaluated2,005 14,866 2,521 9,840 29,232 
Ending Loan Balance - Individually Evaluated— 3,166 — 1,494 4,660 
Allowance for Credit Losses - Loans Individually Evaluated— — — — — 
December 31, 2021
Ending Loan Balance - Collectively Evaluated$172,518 $622,197 $920,556 $945,265 $2,660,536 
Allowance for Credit Losses - Loans Collectively Evaluated2,298 12,537 2,402 9,445 $26,682 
Ending Loan Balance - Individually Evaluated— 6,732 — 673 7,405 
Allowance for Credit Losses - Loans Individually Evaluated— 599 — — 599 
September 30, 2021
Ending Loan Balance - Collectively Evaluated$188,191 $607,827 $921,189 $929,614 $2,646,821 
Allowance for Credit Losses - Loans Collectively Evaluated2,424 13,055 2,288 8,573 26,340 
Ending Loan Balance - Individually Evaluated— 7,254 — 676 7,930 
Allowance for Credit Losses - Loans Individually Evaluated— 616 — — 616 

Through the provision for credit losses, an allowance for credit losses is maintained that reflects the best estimate of the calculated expected credit losses in Arrow's loan portfolio as of the balance sheet date. Additions are made to the allowance for credit losses through a periodic provision for credit losses. Actual credit losses are charged against the allowance for credit losses when loans are deemed uncollectible and recoveries of amounts previously charged off are recorded as credits to the allowance for credit losses.
Arrow's loan officers and risk managers meet at least quarterly to discuss and review the conditions and risks associated with certain criticized and classified commercial-related relationships. In addition, the independent internal loan review department performs periodic reviews of the credit quality indicators on individual loans in the commercial loan portfolio.
Arrow considers the need to qualitatively adjust expected credit loss estimates for information not already captured in the loss estimation process. These qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses. Adjustments are not made for information that has already been considered and included in the loss estimation process.
Arrow considers the qualitative factors that are relevant as of the reporting date, which may include, but are not limited to the following factors:
•The nature and volume of Arrow's financial assets;
•The existence, growth, and effect of any concentrations of credit;
•The volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans;
•The value of the underlying collateral for loans that are not collateral-dependent;
•Arrow's lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries;
•The quality of Arrow's loan review function;
•The experience, ability, and depth of Arrow's lending, investment, collection, and other relevant management/staff;
•The effect of other external factors such as the regulatory, legal and technological environments; competition; and events such as natural disasters;
•Actual and expected changes in international, national, regional, and local economic and business conditions and developments in which the institution operates that affect the collectability of financial assets; and,
•Other qualitative factors not reflected in quantitative loss rate calculations.
Loan Credit Quality Indicators

The following tables present credit quality indicators by total loans amortized cost basis by origination year as of September 30, 2022, December 31, 2021 and September 30, 2021:

Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisRevolving Loan Converted to TermTotal
September 30, 202220222021202020192018Prior
Commercial:
Risk rating
Satisfactory$34,589 $31,762 $26,654 $7,554 $9,605 $11,194 $8,008 $— $129,366 
Special mention— — — — — 35 35 — 70 
Substandard— 3,318 479 445 — 37 5,258 — 9,537 
Doubtful— — — — — — — — — 
Total Commercial Loans$34,589 $35,080 $27,133 $7,999 $9,605 $11,266 $13,301 $— $138,973 
Commercial Real Estate:
Risk rating
Satisfactory$106,549 $136,306 $247,780 $40,959 $30,667 $64,934 $3,052 $— $630,247 
Special mention9,801 — 2,973 — 4,315 1,425 — — 18,514 
Substandard9,531 4,723 11,352 1,133 93 3,403 221 — 30,456 
Doubtful— — — — — — — — — 
Total Commercial Real Estate Loans$125,881 $141,029 $262,105 $42,092 $35,075 $69,762 $3,273 $— $679,217 
Consumer:
Risk rating
Performing$406,206 $309,006 $172,974 $101,458 $47,874 $15,933 $483 $— $1,053,934 
Nonperforming268 583 351 304 58 87 — — 1,651 
Total Consumer Loans$406,474 $309,589 $173,325 $101,762 $47,932 $16,020 $483 $— $1,055,585 
Residential:
Risk rating
Performing$163,702 $209,408 $173,435 $84,370 $61,907 $232,021 $122,191 $— $1,047,034 
Nonperforming— 257 939 28 318 2,268 175 — 3,985 
Total Residential Loans$163,702 $209,665 $174,374 $84,398 $62,225 $234,289 $122,366 $— $1,051,019 
Total Loans$730,646 $695,363 $636,937 $236,251 $154,837 $331,337 $139,423 $— $2,924,794 
Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisRevolving Loan Converted to TermTotal
December 31, 202120212020201920182017Prior
Commercial:
Risk rating
Satisfactory$75,615 $35,522 $11,591 $11,661 $7,792 $3,442 $12,783 $— $158,406 
Special mention— — 3 — — 5,899 — — 5,902 
Substandard3,541 3,791 589 — 25 12 252 — 8,210 
Doubtful— — — — — — — — — 
Total Commercial Loans$79,156 $39,313 $12,183 $11,661 $7,817 $9,353 $13,035 $— $172,518 
Commercial Real Estate:
Risk rating
Satisfactory$140,636 $276,461 $42,369 $37,997 $22,155 $59,698 $1,923 $— $581,239 
Special mention— 7,893 1,204 — 137 1,906 — — 11,140 
Substandard7,248 16,405 3,910 96 — 8,867 24 — 36,550 
Doubtful— — — — — — — — — 
Total Commercial Real Estate Loans$147,884 $300,759 $47,483 $38,093 $22,292 $70,471 $1,947 $— $628,929 
Consumer:
Risk rating
Performing$402,558 $239,492 $154,517 $82,673 $29,587 $9,578 $455 $— $918,860 
Nonperforming388 399 502 151 160 96 — — 1,696 
Total Consumer Loans$402,946 $239,891 $155,019 $82,824 $29,747 $9,674 $455 $— $920,556 
Residential:
Risk rating
Performing$187,708 $146,113 $93,547 $88,505 $93,524 $215,679 $118,595 $— $943,671 
Nonperforming— 133 — 27 162 1,907 38 — 2,267 
Total Residential Loans$187,708 $146,246 $93,547 $88,532 $93,686 $217,586 $118,633 $— $945,938 
Total Loans$817,694 $726,209 $308,232 $221,110 $153,542 $307,084 $134,070 $— $2,667,941 
Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisRevolving Loan Converted to TermTotal
September 30, 202120212020201920182017Prior
Commercial:
Risk rating
Satisfactory$81,914 $38,970 $13,966 $12,860 $8,511 $3,917 $12,796 $— $172,934 
Special mention— 652 51 — — 5,499 — — 6,202 
Substandard3,575 4,496 636 — 31 295 22 — 9,055 
Doubtful— — — — — — — — — 
Total Commercial Loans$85,489 $44,118 $14,653 $12,860 $8,542 $9,711 $12,818 $— $188,191 
Commercial Real Estate:
Risk rating
Satisfactory$96,419 $290,785 $47,605 $41,215 $22,661 $62,203 $2,935 $— $563,823 
Special mention— 16,829 1,227 — 139 1,976 — — 20,171 
Substandard7,248 10,359 3,950 146 — 9,384 — — 31,087 
Doubtful— — — — — — — — — 
Total Commercial Real Estate Loans$103,667 $317,973 $52,782 $41,361 $22,800 $73,563 $2,935 $— $615,081 
Consumer:
Risk rating
Performing$330,952 $264,963 $175,448 $97,563 $37,112 $13,572 $477 $— $920,087 
Nonperforming203 319 332 160 30 58 — — 1,102 
Total Consumer Loans$331,155 $265,282 $175,780 $97,723 $37,142 $13,630 $477 $— $921,189 
Residential:
Risk rating
Performing$124,536 $154,071 $101,678 $94,621 $97,457 $231,375 $124,231 $— $927,969 
Nonperforming— 336 — 155 213 1,586 31 — 2,321 
Total Residential Loans$124,536 $154,407 $101,678 $94,776 $97,670 $232,961 $124,262 $— $930,290 
Total Loans$644,847 $781,780 $344,893 $246,720 $166,154 $329,865 $140,492 $— $2,654,751 

For the purposes of the table above, nonperforming consumer and residential loans were those loans on nonaccrual status or were 90 days or more past due and still accruing interest.
The recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process is $2.2 million.
For the allowance calculation, an internally developed system of five credit quality indicators is used to rate the credit worthiness of each commercial loan defined as follows:
1) Satisfactory - "Satisfactory" borrowers have acceptable financial condition with satisfactory record of earnings and sufficient historical and projected cash flow to service the debt.  Borrowers have satisfactory repayment histories and primary and secondary sources of repayment can be clearly identified;
2) Special Mention - Loans in this category have potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date.  "Special mention" assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.  Loans which might be assigned this credit quality indicator include loans to borrowers with deteriorating financial strength and/or earnings record and loans with potential for problems due to weakening economic or market conditions;
3) Substandard - Loans classified as “substandard” are inadequately protected by the current sound net worth or paying capacity of the borrower or the collateral pledged, if any.  Loans in this category have well defined weaknesses that jeopardize the repayment. They are characterized by the distinct possibility that Arrow will sustain some loss if the deficiencies are not corrected. “Substandard” loans may include loans which are likely to require liquidation of collateral to effect repayment, and other loans where character or ability to repay has become suspect. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard;
4) Doubtful - Loans classified as “doubtful” have all of 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 current existing facts, conditions, and values, highly questionable and improbable.  Although possibility of loss is extremely high, classification of these loans as “loss” has been deferred due to specific pending factors or events which may strengthen the value (e.g. possibility of additional collateral, injection of
capital, collateral liquidation, debt restructure, economic recovery, etc).  Loans classified as “doubtful” need to be placed on non-accrual; and,
5) Loss - Loans classified as “loss” are considered uncollectible with collateral of such little value that their continuance as bankable assets is not warranted.  As of the date of the balance sheet, all loans in this category have been charged-off to the allowance for loan losses.  
Commercial loans are generally evaluated on an annual basis depending on the size and complexity of the loan relationship, unless the credit related quality indicator falls to a level of "special mention" or below, when the loan is evaluated quarterly.  The credit quality indicator is one of the factors used in assessing the level of incurred risk of loss in our commercial related loan portfolios.

Loans Modified in Trouble Debt Restructurings

The following table presents information on loans modified in trouble debt restructurings during the periods indicated:
Loans Modified in Trouble Debt Restructurings During the Period
Commercial
CommercialReal EstateConsumerResidentialTotal
For the Quarter Ended:
September 30, 2022
Number of Loans— — — — — 
Pre-Modification Outstanding Recorded Investment$— $— $— $— $— 
Post-Modification Outstanding Recorded Investment— — — — — 
Subsequent Default, Number of Contracts— — — — — 
Subsequent Default, Recorded Investment— — — — — 
September 30, 2021
Number of Loans— — — — — 
Pre-Modification Outstanding Recorded Investment$— $— $— $— $— 
Post-Modification Outstanding Recorded Investment— — — — — 
Subsequent Default, Number of Contracts— — — — — 
Subsequent Default, Recorded Investment— — — — — 
In general, prior to the COVID-19 pandemic, loans requiring modification were restructured to accommodate the projected cash-flows of the borrower. Such modifications may involve a reduction of the interest rate, a significant deferral of payments or forgiveness of a portion of the outstanding principal balance. As indicated in the table above, no loans modified during the preceding twelve months subsequently defaulted as of September 30, 2022.