Loans

9 Months Ended

Sep. 30, 2022

Loans

Loans

Note 6 — Loans

The following is a summary of total loans:

	September 30,		December 31,
(Dollars in thousands)	2022		2021
Loans:
Construction and land development (1)	$	2,550,552	$	2,029,216
Commercial non-owner occupied		7,964,470		6,735,699
Commercial owner occupied real estate		5,426,216		4,970,116
Consumer owner occupied (2)		4,729,790		3,638,364
Home equity loans		1,247,330		1,168,594
Commercial and industrial		4,977,737		3,761,133
Other income producing property		676,846		696,804
Consumer		1,259,846		904,657
Other loans		3,516		23,583
Total loans		28,836,303		23,928,166
Less allowance for credit losses		(324,398)		(301,807)
Loans, net	$	28,511,905	$	23,626,359

(1) Construction and land development includes loans for both commercial construction and development, as well as loans for 1-4 family construction and lot loans.

(2) Consumer owner occupied real estate includes loans on both 1-4 family owner occupied property, as well as loans collateralized by 1-4 family owner occupied property with a business intent.

In accordance with the adoption of ASU 2016-13, the above table reflects the loan portfolio at the amortized cost basis for the periods September 30, 2022 and December 31, 2021, to include net deferred costs of $45.9 million

compared to net deferred fees of $15.9 million, respectively, and unamortized discount total related to loans acquired of $79.5 million and $68.0 million, respectively.

The Company purchased loans through its acquisition of Atlantic Capital in the first quarter, for which there was, at acquisition, evidence of more than an insignificant deterioration of credit quality since origination. The carrying amount of those loans is as follows:

(Dollars in thousands)	March 1, 2022
Book value of acquired loans at acquisition	$	137,874
Allowance for credit losses at acquisition		(13,758)
Non-credit discount at acquisition		(5,943)
Carrying value or book value of acquired loans at acquisition	$	118,173

As part of the ongoing monitoring of the credit quality of our loan portfolio, Management tracks certain credit quality indicators, including trends related to (i) the level of classified loans, (ii) net charge-offs, (iii) non-performing loans (see details below), and (iv) the general economic conditions of the markets that we serve.

We use a risk grading matrix to assign a risk grade to each commercial loan. Classified loans are assessed at a minimum every six months. A description of the general characteristics of the risk grades is as follows:

● Pass—These loans range from minimal credit risk to average, however, still acceptable credit risk.

● Special mention—A special mention loan has potential weaknesses that deserve Management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date.

● Substandard—A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

● Doubtful—A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.

Construction and land development loans in the following table are on commercial and speculative real estate. Consumer owner occupied loans are collateralized by 1-4 family owner occupied property with a business intent.

The following tables present the credit risk profile by risk grade of commercial loans by origination year as of September 30, 2022 and December 31, 2021:

		Term Loans
(Dollars in thousands)		Amortized Cost Basis by Origination Year
As of September 30, 2022	2022		2021		2020		2019		2018		Prior		Revolving		Total
Construction and land development
Risk rating:
Pass	$	584,646	$	688,921	$	177,223	$	77,949	$	15,244	$	35,460	$	71,362	$	1,650,805
Special mention		561		2,258		26		87		7,263		556		—		10,751
Substandard		349		652		13		2,345		—		4,345		—		7,704
Doubtful		—		—		—		—		—		6		—		6
Total Construction and land development	$	585,556	$	691,831	$	177,262	$	80,381	$	22,507	$	40,367	$	71,362	$	1,669,266
Commercial non-owner occupied
Risk rating:
Pass	$	1,768,208	$	1,912,649	$	771,153	$	1,002,194	$	553,378	$	1,567,763	$	128,190	$	7,703,535
Special mention		14,054		6,914		42,841		6,277		28,528		27,283		—		125,897
Substandard		8,890		24,968		620		40,807		7,966		49,054		2,653		134,958
Doubtful		—		1		—		79		—		—		—		80
Total Commercial non-owner occupied	$	1,791,152	$	1,944,532	$	814,614	$	1,049,357	$	589,872	$	1,644,100	$	130,843	$	7,964,470
Commercial Owner Occupied
Risk rating:
Pass	$	838,791	$	1,167,238	$	743,632	$	737,627	$	476,813	$	1,134,341	$	72,065	$	5,170,507
Special mention		11,866		25,820		6,032		11,305		8,907		60,034		2,281		126,245
Substandard		6,545		21,691		17,877		19,406		6,456		56,461		1,003		129,439
Doubtful		—		—		1		—		—		24		—		25
Total commercial owner occupied	$	857,202	$	1,214,749	$	767,542	$	768,338	$	492,176	$	1,250,860	$	75,349	$	5,426,216
Commercial and industrial
Risk rating:
Pass	$	1,224,618	$	941,383	$	577,778	$	304,904	$	231,177	$	373,938	$	1,186,170	$	4,839,968
Special mention		5,790		4,034		1,013		2,949		4,893		5,266		22,222		46,167
Substandard		6,154		28,588		2,127		5,746		6,965		7,460		34,288		91,328
Doubtful		—		—		—		—		155		69		50		274
Total commercial and industrial	$	1,236,562	$	974,005	$	580,918	$	313,599	$	243,190	$	386,733	$	1,242,730	$	4,977,737
Other income producing property
Risk rating:
Pass	$	111,929	$	96,377	$	62,628	$	48,310	$	52,095	$	121,664	$	47,962	$	540,965
Special mention		968		1,331		1,295		317		193		4,463		173		8,740
Substandard		648		472		1,325		301		223		12,911		1,342		17,222
Doubtful		—		—		—		—		—		5		131		136
Total other income producing property	$	113,545	$	98,180	$	65,248	$	48,928	$	52,511	$	139,043	$	49,608	$	567,063
Consumer owner occupied
Risk rating:
Pass	$	5,281	$	3,507	$	1,983	$	778	$	72	$	354	$	15,331	$	27,306
Special mention		545		21		165		287		—		—		266		1,284
Substandard		—		96		13		1,632		—		212		151		2,104
Doubtful		—		—		—		—		—		145		—		145
Total Consumer owner occupied	$	5,826	$	3,624	$	2,161	$	2,697	$	72	$	711	$	15,748	$	30,839
Other loans
Risk rating:
Pass	$	3,516	$	—	$	—	$	—	$	—	$	—	$	—	$	3,516
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total other loans	$	3,516	$	—	$	—	$	—	$	—	$	—	$	—	$	3,516
Total Commercial Loans
Risk rating:
Pass	$	4,536,989	$	4,810,075	$	2,334,397	$	2,171,762	$	1,328,779	$	3,233,520	$	1,521,080	$	19,936,602
Special mention		33,784		40,378		51,372		21,222		49,784		97,602		24,942		319,084
Substandard		22,586		76,467		21,975		70,237		21,610		130,443		39,437		382,755
Doubtful		—		1		1		79		155		249		181		666
Total Commercial Loans	$	4,593,359	$	4,926,921	$	2,407,745	$	2,263,300	$	1,400,328	$	3,461,814	$	1,585,640	$	20,639,107

		Term Loans
(Dollars in thousands)		Amortized Cost Basis by Origination Year
As of December 31, 2021	2021		2020		2019		2018		2017		Prior		Revolving		Total
Construction and land development
Risk rating:
Pass	$	570,166	$	360,488	$	206,586	$	38,866	$	24,728	$	49,321	$	76,680	$	1,326,835
Special mention		2,347		3,067		186		—		1,557		1,715		487		9,359
Substandard		960		210		2,304		326		543		2,209		—		6,552
Doubtful		1		—		—		—		—		8		—		9
Total Construction and land development	$	573,474	$	363,765	$	209,076	$	39,192	$	26,828	$	53,253	$	77,167	$	1,342,755
Commercial non-owner occupied
Risk rating:
Pass	$	1,812,512	$	798,171	$	1,061,021	$	676,803	$	494,618	$	1,371,729	$	102,763	$	6,317,617
Special mention		16,683		12,985		14,138		36,875		25,729		110,109		—		216,519
Substandard		23,035		160		64,408		23,346		31,952		56,477		2,139		201,517
Doubtful		—		—		—		—		—		46		—		46
Total Commercial non-owner occupied	$	1,852,230	$	811,316	$	1,139,567	$	737,024	$	552,299	$	1,538,361	$	104,902	$	6,735,699
Commercial Owner Occupied
Risk rating:
Pass	$	1,182,722	$	780,339	$	801,162	$	549,642	$	428,163	$	980,701	$	69,739	$	4,792,468
Special mention		9,152		4,257		7,331		10,860		22,792		49,083		115		103,590
Substandard		7,375		2,907		8,587		2,053		18,600		34,431		80		74,033
Doubtful		—		1		—		—		—		24		—		25
Total commercial owner occupied	$	1,199,249	$	787,504	$	817,080	$	562,555	$	469,555	$	1,064,239	$	69,934	$	4,970,116
Commercial and industrial
Risk rating:
Pass	$	1,198,849	$	618,676	$	360,551	$	267,772	$	178,538	$	219,339	$	860,134	$	3,703,859
Special mention		2,759		1,519		2,434		1,268		3,224		3,871		3,281		18,356
Substandard		738		5,965		8,212		2,653		3,438		5,183		12,701		38,890
Doubtful		—		—		5		3		2		16		2		28
Total commercial and industrial	$	1,202,346	$	626,160	$	371,202	$	271,696	$	185,202	$	228,409	$	876,118	$	3,761,133
Other income producing property
Risk rating:
Pass	$	105,533	$	73,583	$	67,173	$	76,971	$	56,343	$	142,183	$	56,190	$	577,976
Special mention		1,580		1,851		1,063		232		1,381		13,526		424		20,057
Substandard		1,304		482		298		166		787		12,531		46		15,614
Doubtful		—		—		—		—		—		6		—		6
Total other income producing property	$	108,417	$	75,916	$	68,534	$	77,369	$	58,511	$	168,246	$	56,660	$	613,653
Consumer owner occupied
Risk rating:
Pass	$	3,513	$	2,874	$	1,099	$	85	$	139	$	820	$	16,977	$	25,507
Special mention		1,219		180		2,430		81		—		3		—		3,913
Substandard		—		16		238		—		—		223		—		477
Doubtful		—		—		—		1		—		145		—		146
Total Consumer owner occupied	$	4,732	$	3,070	$	3,767	$	167	$	139	$	1,191	$	16,977	$	30,043
Other loans
Risk rating:
Pass	$	23,583	$	—	$	—	$	—	$	—	$	—	$	—	$	23,583
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total other loans	$	23,583	$	—	$	—	$	—	$	—	$	—	$	—	$	23,583
Total Commercial Loans
Risk rating:
Pass	$	4,896,878	$	2,634,131	$	2,497,592	$	1,610,139	$	1,182,529	$	2,764,093	$	1,182,483	$	16,767,845
Special mention		33,740		23,859		27,582		49,316		54,683		178,307		4,307		371,794
Substandard		33,412		9,740		84,047		28,544		55,320		111,054		14,966		337,083
Doubtful		1		1		5		4		2		245		2		260
Total Commercial Loans	$	4,964,031	$	2,667,731	$	2,609,226	$	1,688,003	$	1,292,534	$	3,053,699	$	1,201,758	$	17,476,982

For the consumer segment, delinquency of a loan is determined by past due status. Consumer loans are automatically placed on nonaccrual status once the loan is 90 days past due. Construction and land development loans are on 1-4 properties and lots.

The following table presents the credit risk profile by past due status of consumer loans by origination year as of September 30, 2022:

	Term Loans
(Dollars in thousands)	Amortized Cost Basis by Origination Year
As of September 30, 2022	2022		2021		2020		2019		2018		Prior		Revolving		Total
Consumer owner occupied
Days past due:
Current	$	1,351,309	$	1,335,059	$	650,548	$	327,852	$	193,413	$	824,959	$	1,227	$	4,684,367
30 days past due		178		1,247		432		786		99		2,753		—		5,495
60 days past due		—		240		462		314		194		1,105		—		2,315
90 days past due		—		433		451		913		772		4,205		—		6,774
Total Consumer owner occupied	$	1,351,487	$	1,336,979	$	651,893	$	329,865	$	194,478	$	833,022	$	1,227	$	4,698,951
Home equity loans
Days past due:
Current	$	4,837	$	5,303	$	3,803	$	2,257	$	1,881	$	20,142	$	1,203,325	$	1,241,548
30 days past due		—		—		155		170		250		36		3,009		3,620
60 days past due		—		—		—		195		—		313		347		855
90 days past due		—		60		40		54		—		942		211		1,307
Total Home equity loans	$	4,837	$	5,363	$	3,998	$	2,676	$	2,131	$	21,433	$	1,206,892	$	1,247,330
Consumer
Days past due:
Current	$	327,444	$	225,458	$	123,591	$	94,584	$	49,018	$	149,297	$	258,354	$	1,227,746
30 days past due		134		311		178		234		154		1,325		16,509		18,845
60 days past due		154		85		37		10		110		891		9,880		11,167
90 days past due		1		21		20		25		35		1,399		587		2,088
Total consumer	$	327,733	$	225,875	$	123,826	$	94,853	$	49,317	$	152,912	$	285,330	$	1,259,846
Construction and land development
Days past due:
Current	$	320,794	$	446,805	$	74,247	$	14,872	$	7,608	$	16,011	$	355	$	880,692
30 days past due		—		—		24		20		69		24		—		137
60 days past due		—		—		300		—		—		—		—		300
90 days past due		—		—		157		—		—		—		—		157
Total Construction and land development	$	320,794	$	446,805	$	74,728	$	14,892	$	7,677	$	16,035	$	355	$	881,286
Other income producing property
Days past due:
Current	$	32,433	$	21,664	$	4,989	$	2,819	$	4,580	$	42,373	$	634	$	109,492
30 days past due		—		—		—		—		—		165		—		165
60 days past due		—		—		—		—		—		—		—		—
90 days past due		—		—		—		—		—		126		—		126
Total other income producing property	$	32,433	$	21,664	$	4,989	$	2,819	$	4,580	$	42,664	$	634	$	109,783
Total Consumer Loans
Days past due:
Current	$	2,036,817	$	2,034,289	$	857,178	$	442,384	$	256,500	$	1,052,782	$	1,463,895	$	8,143,845
30 days past due		312		1,558		789		1,210		572		4,303		19,518		28,262
60 days past due		154		325		799		519		304		2,309		10,227		14,637
90 days past due		1		514		668		992		807		6,672		798		10,452
Total Consumer Loans	$	2,037,284	$	2,036,686	$	859,434	$	445,105	$	258,183	$	1,066,066	$	1,494,438	$	8,197,196

The following table presents total loans by origination year as of September 30, 2022:

	Term Loans
(Dollars in thousands)	Amortized Cost Basis by Origination Year
As of September 30, 2022	2022		2021		2020		2019		2018		Prior		Revolving		Total
Total Loans	$	6,630,643	$	6,963,607	$	3,267,179	$	2,708,405	$	1,658,511	$	4,527,880	$	3,080,078	$	28,836,303

The following table presents the credit risk profile by past due status of consumer loans by origination year as of December 31, 2021:

	Term Loans
(Dollars in thousands)	Amortized Cost Basis by Origination Year
As of December 31, 2021	2021		2020		2019		2018		2017		Prior		Revolving		Total
Consumer owner occupied
Days past due:
Current	$	1,192,449	$	710,828	$	405,138	$	246,487	$	228,876	$	810,605	$	4	$	3,594,387
30 days past due		354		666		234		472		1,068		2,230		—		5,024
60 days past due		—		330		218		254		111		928		—		1,841
90 days past due		235		574		691		549		274		4,746		—		7,069
Total Consumer owner occupied	$	1,193,038	$	712,398	$	406,281	$	247,762	$	230,329	$	818,509	$	4	$	3,608,321
Home equity loans
Days past due:
Current	$	7,128	$	5,648	$	4,745	$	2,180	$	993	$	24,716	$	1,116,621	$	1,162,031
30 days past due		6		49		68		71		24		491		2,200		2,909
60 days past due		—		—		—		—		—		603		339		942
90 days past due		75		65		172		180		22		1,548		650		2,712
Total Home equity loans	$	7,209	$	5,762	$	4,985	$	2,431	$	1,039	$	27,358	$	1,119,810	$	1,168,594
Consumer
Days past due:
Current	$	298,779	$	169,443	$	127,757	$	69,892	$	36,304	$	151,948	$	44,864	$	898,987
30 days past due		229		364		208		191		132		1,570		137		2,831
60 days past due		145		82		90		124		90		658		17		1,206
90 days past due		74		121		181		109		29		1,119		—		1,633
Total consumer	$	299,227	$	170,010	$	128,236	$	70,316	$	36,555	$	155,295	$	45,018	$	904,657
Construction and land development
Days past due:
Current	$	411,728	$	204,368	$	33,965	$	13,429	$	8,484	$	14,185	$	162	$	686,321
30 days past due		—		24		—		—		—		—		—		24
60 days past due		—		—		—		—		—		12		—		12
90 days past due		—		—		—		—		—		104		—		104
Total Construction and land development	$	411,728	$	204,392	$	33,965	$	13,429	$	8,484	$	14,301	$	162	$	686,461
Other income producing property
Days past due:
Current	$	22,131	$	5,620	$	4,906	$	4,977	$	6,303	$	37,575	$	1,379	$	82,891
30 days past due		—		—		—		—		—		90		—		90
60 days past due		—		—		—		—		—		156		—		156
90 days past due		—		—		—		—		—		14		—		14
Total other income producing property	$	22,131	$	5,620	$	4,906	$	4,977	$	6,303	$	37,835	$	1,379	$	83,151
Total Consumer Loans
Days past due:
Current	$	1,947,911	$	1,095,907	$	576,511	$	336,965	$	280,960	$	1,039,029	$	1,147,334	$	6,424,617
30 days past due		589		1,103		510		734		1,224		4,381		2,337		10,878
60 days past due		145		412		308		378		201		2,357		356		4,157
90 days past due		384		760		1,044		838		325		7,531		650		11,532
Total Consumer Loans	$	1,949,029	$	1,098,182	$	578,373	$	338,915	$	282,710	$	1,053,298	$	1,150,677	$	6,451,184

The following table presents total loans by origination year as of  December 31, 2021:

	Term Loans
(Dollars in thousands)	Amortized Cost Basis by Origination Year
As of December 31, 2021	2021		2020		2019		2018		2017		Prior		Revolving		Total
Total Loans	$	6,913,060	$	3,765,913	$	3,187,599	$	2,026,918	$	1,575,244	$	4,106,997	$	2,352,435	$	23,928,166

The following table presents an aging analysis of past due accruing loans, segregated by class:

	30 - 59 Days		60 - 89 Days		90+ Days		Total				Non-		Total
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Accruing		Loans
September 30, 2022
Construction and land development	$	843	$	464	$	21	$	1,328	$	2,548,764	$	460	$	2,550,552
Commercial non-owner occupied		10,035		586		—		10,621		7,932,535		21,314		7,964,470
Commercial owner occupied		2,901		1,318		294		4,513		5,390,789		30,914		5,426,216
Consumer owner occupied		4,740		368		—		5,108		4,707,496		17,186		4,729,790
Home equity loans		3,104		659		—		3,763		1,237,245		6,322		1,247,330
Commercial and industrial		29,527		9,036		3,211		41,774		4,922,124		13,839		4,977,737
Other income producing property		2,191		1,110		262		3,563		670,821		2,462		676,846
Consumer		18,488		10,963		—		29,451		1,226,652		3,743		1,259,846
Other loans		—		—		—		—		3,516		—		3,516
	$	71,829	$	24,504	$	3,788	$	100,121	$	28,639,942	$	96,240	$	28,836,303
December 31, 2021
Construction and land development	$	1,176	$	59	$	43	$	1,278	$	2,026,371	$	1,567	$	2,029,216
Commercial non-owner occupied		3,591		2,110		96		5,797		6,709,993		19,909		6,735,699
Commercial owner occupied		2,756		1,732		626		5,114		4,950,470		14,532		4,970,116
Consumer owner occupied		4,046		533		—		4,579		3,615,602		18,183		3,638,364
Home equity loans		2,565		913		—		3,478		1,158,861		6,255		1,168,594
Commercial and industrial		50,451		26,639		3,991		81,081		3,672,611		7,441		3,761,133
Other income producing property		879		424		106		1,409		691,320		4,075		696,804
Consumer		2,672		840		1		3,513		897,688		3,456		904,657
Other loans		—		—		—		—		23,583		—		23,583
	$	68,136	$	33,250	$	4,863	$	106,249	$	23,746,499	$	75,418	$	23,928,166

The following table is a summary of information pertaining to nonaccrual loans by class, including restructured loans:

	September 30,		Greater than		Non-accrual		December 31,
(Dollars in thousands)	2022		90 Days Accruing(1)		with no allowance(1)		2021
Construction and land development	$	460	$	21	$	145	$	1,567
Commercial non-owner occupied		21,314		—		6,574		19,909
Commercial owner occupied real estate		30,914		294		15,578		14,532
Consumer owner occupied		17,186		—		—		18,183
Home equity loans		6,322		—		1,597		6,255
Commercial and industrial		13,839		3,211		5,796		7,441
Other income producing property		2,462		262		—		4,075
Consumer		3,743		—		—		3,456
Total loans on nonaccrual status	$	96,240	$	3,788	$	29,690	$	75,418

(1) Greater than 90 days accruing and non-accrual with no allowance loans at September 30, 2022.

There is no interest income recognized during the period on nonaccrual loans. The Company follows its nonaccrual policy by reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status. Loans on nonaccrual status in which there is no allowance assigned are individually evaluated loans that do not carry a specific reserve. See Note 2 — Summary of Significant Accounting Policies for further detailed on individually evaluated loans.

The following is a summary of collateral dependent loans, by type of collateral, and the extent to which they are collateralized during the period:

	September 30,		Collateral			December 31,		Collateral
(Dollars in thousands)	2022		Coverage		%	2021		Coverage		%
Commercial owner occupied real estate
Church	$	—	$	—		$	1,953	$	2,308	118%
Other		15,578		23,135	149%		4,656		12,200	262%
Commercial non-owner occupied real estate
Hotel		—		—			1,822		4,100	225%
Other		6,574		10,900	166%		6,949		9,630	139%
Commercial and industrial
Other		5,163		5,446	105%		—		—
Home equity loans
Residential 1-4 family dwelling		1,552		1,671	108%		—		—
Total collateral dependent loans	$	28,867	$	41,152		$	15,380	$	28,238

The Bank designates individually evaluated loans (excluding TDRs) on non-accrual with a net book balance exceeding the designated threshold as collateral dependent loans. Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining ACL. Under ASC 326-20-35-6, the Bank has adopted the collateral maintenance practical expedient to measure the ACL based on the fair value of collateral. The ACL is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for selling

costs, and amortized cost. The significant changes above in collateral percentage are due to appraisal value updates or changes in the number of loans within the asset class and collateral type. Overall collateral dependent loans increased $13.5 million during the nine months ended September 30, 2022.

In the course of resolving delinquent loans, the Bank may choose to restructure the contractual terms of certain loans. Any loans that are modified are reviewed by the Bank to determine if a TDR, sometimes referred to herein as a restructured loan, has occurred. The Bank designates loan modifications as TDRs when it grants a concession to a borrower that it would not otherwise consider due to the borrower experiencing financial difficulty (FASB ASC Topic 310-40). The concessions granted on TDRs generally include terms to reduce the interest rate, extend the term of the debt obligation, or modify the payment structure on the debt obligation. See Note 2 — Summary of Significant Accounting Policies for how such modifications are factored into the determination of the ACL.

Loans on nonaccrual status at the date of modification are initially classified as nonaccrual TDRs. Loans on accruing status at the date of concession are initially classified as accruing TDRs if the note is reasonably assured of repayment and performance is expected in accordance with its modified terms. Such loans may be designated as nonaccrual loans subsequent to the concession date if reasonable doubt exists as to the collection of interest or principal under the restructuring agreement. Nonaccrual TDRs are returned to accruing status when there is economic substance to the restructuring, there is documented credit evaluation of the borrower’s financial condition, the remaining balance is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally a minimum of six months).

The Company elected the accounting policy in the CARES Act to not apply TDR accounting to loans modified for borrowers impacted by the COVID-19 pandemic if the concession met the criteria stipulated in the CARES Act. Details in regard to the Company’s implemented loan modification programs in response to the COVID-19 pandemic under the CARES Act is disclosed under the Note 2 – Summary of Significant Accounting Policies.

The following tables present loans designated as TDRs segregated by class and type of concession that were restructured during the three months ended September 30, 2022 and during the nine months ended September 30, 2022 and 2021. There were no loans restructured as TDRs during the three months ended September 30, 2021.

	Three Months Ended September 30,
	2022					2021
		Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
	Number	Amortized		Amortized		Number	Amortized		Amortized
(Dollars in thousands)	of loans	Cost		Cost		of loans	Cost		Cost
Interest rate modification
Commercial non-owner occupied	2	$	2,321	$	2,321	—	$	—	$	—
Commercial owner occupied	2		2,629		2,629	—		—		—
Commercial and industrial	1		535		535	—		—		—
Total interest rate modifications	5	$	5,485	$	5,485	—	$	—	$	—
Term modification
Commercial non-owner occupied	1	$	375	$	375	—	$	—	$	—
Commercial owner occupied	2		1,042		1,042	—		—		—
Commercial and industrial	3		3,097		3,097	—		—		—
Total term modifications	6		4,514		4,514	—		—		—
	11	$	9,999	$	9,999	—	$	—	$	—

	Nine Months Ended September 30,
	2022					2021
		Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
	Number	Amortized		Amortized		Number	Amortized		Amortized
(Dollars in thousands)	of loans	Cost		Cost		of loans	Cost		Cost
Interest rate modification
Commercial non-owner occupied	3	$	2,498	$	2,498	—	$	—	$	—
Commercial owner occupied	3		2,855		2,855	—		—		—
Consumer owner occupied	1		96		96	—		—		—
Commercial and industrial	5		905		905	—		—		—
Other income producing property	2		111		111	1		212		212
Total interest rate modifications	14	$	6,465	$	6,465	1	$	212	$	212
Term modification
Construction and land development	1	$	133	$	133	—	$	—	$	—
Commercial non-owner occupied	1		375		375	—		—		—
Commercial owner occupied	3		1,451		1,451	—		—		—
Commercial and industrial	3		3,097		3,097	1		38		38
Total term modifications	8	$	5,056	$	5,056	1	$	38	$	38
	22	$	11,521	$	11,521	2	$	250	$	250

At September 30, 2022 and 2021, the balance of accruing TDRs was $12.2 million and $14.4 million, respectively. The Company had $599,000 and $447,000 remaining availability under commitments to lend additional funds on restructured loans at September 30, 2022 and 2021. The amount of specific reserve associated with restructured loans was $12.3 million and $1.7 million at September 30, 2022 and 2021, respectively.

The following table presents the changes in status of loans restructured within the previous 12 months as of September 30, 2022 by type of concession. There were no subsequent defaults.

	Paying Under
	Restructured Terms			Converted to Nonaccrual			Foreclosures and Defaults
	Number	Amortized		Number	Amortized		Number	Amortized
(Dollars in thousands)	of Loans	Cost		of Loans	Cost		of Loans	Cost
Interest rate modification	16	$	6,747	—	$	—	—	$	—
Term modification	9		5,354	—		—	—		—
	25	$	12,101	—	$	—	—	$	—