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Loans, Allowance for Credit Losses, and Asset Quality Information
 6 Months Ended
Jun. 30, 2022
Receivables [Abstract]  
Loans, Allowance for Credit Losses, and Asset Quality Information Loans, Allowance for Credit Losses, and Asset Quality Information
The following is a summary of the major categories of total loans outstanding:
($ in thousands)June 30, 2022December 31, 2021
 AmountPercentageAmountPercentage
All  loans:
Commercial, financial, and agricultural$596,874 10 %$648,997 11 %
Real estate – construction, land development & other land loans824,723 13 %828,549 13 %
Real estate – mortgage – residential (1-4 family) first mortgages1,097,810 18 %1,021,966 17 %
Real estate – mortgage – home equity loans / lines of credit325,617 5 %331,932 5 %
Real estate – mortgage – commercial and other3,338,322 53 %3,194,737 53 %
Consumer loans60,627 1 %57,238 1 %
Subtotal6,243,973 100 %6,083,419 100 %
Unamortized net deferred loan fees(803)(1,704)
Total loans$6,243,170 $6,081,715 

Included in the line item "Commercial, financial, and agricultural" in the table above are Paycheck Protection Program ("PPP") loans totaling $3.0 million and $39.0 million at June 30, 2022 and December 31, 2021, respectively. PPP loans are fully guaranteed by the small business administration ("SBA"). Included in unamortized net deferred loan fees are approximately $0.3 million and $2.6 million at June 30, 2022 and December 31, 2021, respectively, in unamortized net deferred loan fees associated with these PPP loans. These fees are being amortized under the effective interest method over the terms of the loans. Accelerated amortization is recorded in the periods in which principal amounts are forgiven in accordance with the terms of the Program.
Included in the table above are credit card balances outstanding totaling $40.8 million and $37.9 million at June 30, 2022 and December 31, 2021, respectively. At June 30, 2022, approximately 54% of total credit card balances were business credit cards included in "commercial, financial and agricultural" above and the remaining 46% were personal credit cards included in consumer loans in the table above.

Also included in the table above are various non-PPP SBA loans, with additional information on these loans presented in the table below.
($ in thousands)June 30, 2022December 31, 2021
Guaranteed portions of non-PPP SBA loans included in table above$30,559 48,377 
Unguaranteed portions of non-PPP SBA loans included in table above120,168 122,772 
Total non-PPP SBA loans included in the table above$150,727 171,149 
Sold portions of SBA loans with servicing retained - not included in tables above$408,925 414,240 

At June 30, 2022 and December 31, 2021, there was a remaining unaccreted discount on the retained portion of sold non-PPP SBA loans amounting to $5.4 million and $6.0 million, respectively.
Loans in the amount of $5.0 billion and $4.3 billion were pledged as collateral for certain borrowings at June 30, 2022 and December 31, 2021, respectively.

The loans above also include loans to executive officers and directors serving the Company at June 30, 2022 and to their related persons, totaling approximately $6.3 million and $0.6 million at June 30, 2022 and December 31, 2021, respectively. For the six months ended June 30, 2022 there were $5.8 million in new loans due to the addition of new directors, $66,000 in advances on loans, and repayments of $192,000. The loans were made on terms and conditions applicable to similarly situated borrowers and management does not believe these loans involve more than the normal risk of collectability or present other unfavorable features.
As of June 30, 2022 and December 31, 2021, unamortized discounts on all acquired loans totaled $14.0 million and $17.2 million, respectively. Loan discounts are generally amortized as yield adjustments over the respective lives of the loans, so long as the loans perform.
Nonperforming assets are defined as nonaccrual loans, troubled debt restructured loans ("TDRs"), loans past due 90 or more days and still accruing interest, and foreclosed real estate. Nonperforming assets are summarized as follows.
($ in thousands)June 30,
2022		December 31,
2021
Nonaccrual loans$28,715 34,696 
TDRs - accruing11,771 13,866 
Accruing loans > 90 days past due— 1,004 
Total nonperforming loans40,486 49,566 
Foreclosed real estate658 3,071 
Total nonperforming assets$41,144 52,637 
At June 30, 2022 and December 31, 2021, the Company had $1.0 million and $1.5 million, respectively, in residential mortgage loans in process of foreclosure.

The following table is a summary of the Company’s nonaccrual loans by major categories as of June 30, 2022.
($ in thousands)Nonaccrual Loans with No AllowanceNonaccrual Loans with an AllowanceTotal Nonaccrual Loans
Commercial, financial, and agricultural$3,909 7,533 11,442 
Real estate – construction, land development & other land loans890 243 1,133 
Real estate – mortgage – residential (1-4 family) first mortgages159 3,120 3,279 
Real estate – mortgage – home equity loans / lines of credit— 797 797 
Real estate – mortgage – commercial and other6,333 5,587 11,920 
Consumer loans— 144 144 
Total$11,291 17,424 28,715 


The following table is a summary of the Company’s nonaccrual loans by major categories as of December 31, 2021.
($ in thousands)Nonaccrual Loans with No AllowanceNonaccrual Loans with an AllowanceTotal Nonaccrual Loans
Commercial, financial, and agricultural$3,947 8,205 12,152 
Real estate – construction, land development & other land loans495 137 632 
Real estate – mortgage – residential (1-4 family) first mortgages858 4,040 4,898 
Real estate – mortgage – home equity loans / lines of credit— 694 694 
Real estate – mortgage – commercial and other7,648 8,583 16,231 
Consumer loans— 89 89 
Total$12,948 21,748 34,696 
There was no interest income recognized during the six month period ended June 30, 2022 or the year ended December 31, 2021 on nonaccrual loans. The Company follows its nonaccrual policy of reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status.

The following table represents the accrued interest receivables written off by reversing interest income during each period indicated.
($ in thousands)Six Months Ended June 30, 2022For the Year Ended December 31, 2021Six Months Ended June 30, 2021
Commercial, financial, and agricultural$33 195 156 
Real estate – construction, land development & other land loans16 6 — 
Real estate – mortgage – residential (1-4 family) first mortgages25 31 15 
Real estate – mortgage – home equity loans / lines of credit6 14 7 
Real estate – mortgage – commercial and other102 453 390 
Consumer loans2 — — 
Total$184 699 568 


The following table presents an analysis of the payment status of the Company’s loans as of June 30, 2022.
($ in thousands)Accruing
30-59
Days Past
Due		Accruing
60-89
Days
Past
Due		Accruing
90 Days
or More
Past
Due		Nonaccrual
Loans		Accruing
Current		Total Loans
Receivable
Commercial, financial, and agricultural$817 110 — 11,442 584,505 596,874 
Real estate – construction, land development & other land loans3,678 — — 1,133 819,912 824,723 
Real estate – mortgage – residential (1-4 family) first mortgages2,202 974 — 3,279 1,091,355 1,097,810 
Real estate – mortgage – home equity loans / lines of credit879 172 — 797 323,769 325,617 
Real estate – mortgage – commercial and other688 — — 11,920 3,325,714 3,338,322 
Consumer loans136 80 — 144 60,267 60,627 
Total$8,400 1,336 — 28,715 6,205,522 6,243,973 
Unamortized net deferred loan fees(803)
Total loans6,243,170 
The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2021.
($ in thousands)Accruing
30-59
Days
Past
Due		Accruing
60-89
Days
Past
Due		Accruing
90 Days
or More
Past
Due		Nonaccrual
Loans		Accruing
Current		Total Loans
Receivable
Commercial, financial, and agricultural$377 93 — 12,152 636,375 648,997 
Real estate – construction, land development & other land loans4,046 — 286 632 823,585 828,549 
Real estate – mortgage – residential (1-4 family) first mortgages6,571 1,488 — 4,898 1,009,009 1,021,966 
Real estate – mortgage – home equity loans / lines of credit489 124 718 694 329,907 331,932 
Real estate – mortgage – commercial and other164 1,496 — 16,231 3,176,846 3,194,737 
Consumer loans116 62 — 89 56,971 57,238 
Total$11,763 3,263 1,004 34,696 6,032,693 6,083,419 
Unamortized net deferred loan fees(1,704)
Total loans$6,081,715 

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. The Company reviews individually evaluated loans on nonaccrual with a net book balance of $350,000 or greater for designation as collateral dependent loans, as well as certain other loans that may still be accruing interest and/or are less than $350,000 in size that management of the Company designates as having higher risk. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses ("ACL").


The following table presents an analysis of collateral-dependent loans of the Company as of June 30, 2022.
($ in thousands)Residential PropertyBusiness AssetsLandCommercial PropertyTotal Collateral-Dependent Loans
Commercial, financial, and agricultural$— 8,516 — — 8,516 
Real estate – construction, land development & other land loans— — 890 — 890 
Real estate – mortgage – residential (1-4 family) first mortgages159 — — — 159 
Real estate – mortgage – commercial and other— — — 8,182 8,182 
Total$159 8,516 890 8,182 17,747 

The following table presents an analysis of collateral-dependent loans of the Company as of December 31, 2021.
($ in thousands)Residential PropertyBusiness AssetsLandCommercial PropertyTotal Collateral-Dependent Loans
Commercial, financial, and agricultural$— 7,886 — — 7,886 
Real estate – construction, land development & other land loans— — 533 — 533 
Real estate – mortgage – residential (1-4 family) first mortgages871 — — — 871 
Real estate – mortgage – commercial and other— — — 10,743 10,743 
Total$871 7,886 533 10,743 20,033 

Under CECL, for collateral dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an
individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

The Company's policy is to obtain third-party appraisals on any significant pieces of collateral. For loans secured by real estate, the Company's policy is to write nonaccrual loans down to 90% of the appraised value, which considers estimated selling costs. For real estate collateral that is in industries which may be undergoing heightened stress due to economic or other external factors, the Company may reduce the collateral values by an additional 10-25% of appraised value to recognize additional discounts that are estimated to be incurred in a near-term sale. For non real-estate collateral secured loans, the Company generally writes nonaccrual loans down to 75% of the appraised value, which provides for selling costs and liquidity discounts that are usually incurred when disposing of non real-estate collateral. For reviewed loans that are not on nonaccrual basis, the Company assigns a specific allowance based on the parameters noted above.

The Company does not believe that there is significant excess collateral for any of the loan types noted above.
The following table presents the activity in the ACL on loans for each of the periods indicated.
($ in thousands)Commercial,
Financial,
and
Agricultural		Real Estate
–
Construction,
Land
Development
& Other Land
Loans		Real Estate
–
Residential
(1-4 Family)
First
Mortgages		Real Estate
– Mortgage
– Home
Equity
Lines of
Credit		Real Estate
– Mortgage
–
Commercial
and Other		Consumer LoansUnallocatedTotal
As of and for the three months ended June 30, 2022
Beginning balance$16,013 16,057 8,159 2,074 37,327 2,439 — 82,069 
Charge-offs(728)— — — (818)(214)— (1,760)
Recoveries223 130 11 128 1,300 80 — 1,872 
Provisions / (Reversals)(58)(16)480 (116)(615)325 — — 
Ending balance$15,450 16,171 8,650 2,086 37,194 2,630 — 82,181 
As of and for the six months ended June 30, 2022
Beginning balance$16,249 16,519 8,686 4,337 30,342 2,656 — 78,789 
Charge-offs(1,518)— — (41)(863)(381)— (2,803)
Recoveries470 267 15 361 1,455 127 — 2,695 
Provisions / (Reversals)249 (615)(51)(2,571)6,260 228 — 3,500 
Ending balance$15,450 16,171 8,650 2,086 37,194 2,630 — 82,181 

($ in thousands)Commercial,
Financial,
and
Agricultural		Real Estate
–
Construction,
Land
Development
& Other Land
Loans		Real Estate
–
Residential
(1-4 Family)
First
Mortgages		Real Estate
– Mortgage
– Home
Equity
Lines of
Credit		Real Estate
– Mortgage
–
Commercial
and Other		Consumer LoansUnallocatedTotal
As of and for the year ended December 31, 2021
Beginning balance$11,316 5,355 8,048 2,375 23,603 1,478 213 52,388 
Adjustment for implementation of CECL3,067 6,140 2,584 2,580 (257)674 (213)14,575 
Allowance for acquired PCD loans2,917 165 222 92 1,489 10 — 4,895 
Charge-offs(3,722)(245)(273)(400)(2,295)(667)— (7,602)
Recoveries1,744 948 761 578 533 358 — 4,922 
Provisions/(Reversals)927 4,156 (2,656)(888)7,269 803 — 9,611 
Ending balance$16,249 16,519 8,686 4,337 30,342 2,656 — 78,789 
($ in thousands)Commercial,
Financial,
and
Agricultural		Real Estate
–
Construction,
Land
Development
& Other Land
Loans		Real Estate
–
Residential
(1-4 Family)
First
Mortgages		Real Estate
– Mortgage
– Home
Equity
Lines of
Credit		Real Estate
– Mortgage
–
Commercial
and Other		Consumer LoansUnallocatedTotal
As of and for the three months ended June 30, 2021
Beginning balance$13,606 10,134 8,996 4,309 26,507 2,297 — 65,849 
Charge-offs(550)— (76)(8)(1,324)(173)— (2,131)
Recoveries153 392 236 218 78 227 — 1,304 
Provisions/(Reversals)1,600 (422)(505)(782)97 12 — — 
Ending balance$14,809 10,104 8,651 3,737 25,358 2,363 — 65,022 
As of and for the six months ended June 30, 2021
Beginning balance$11,316 5,355 8,048 2,375 23,603 1,478 213 52,388 
Adjustment for implementation of CECL3,067 6,140 2,584 2,580 (257)674 (213)14,575 
Charge-offs(1,988)(66)(114)(139)(1,834)(307)— (4,448)
Recoveries667 686 323 229 340 262 — 2,507 
Provisions/(Reversals)1,747 (2,011)(2,190)(1,308)3,506 256 — — 
Ending balance$14,809 10,104 8,651 3,737 25,358 2,363 — 65,022 
Credit Quality Indicators
The Company tracks credit quality based on its internal risk ratings. Upon origination, a loan is assigned an initial risk grade, which is generally based on several factors such as the borrower’s credit score, the loan-to-value ratio, the debt-to-income ratio, etc. Loans that are risk-graded as substandard during the origination process are declined. After loans are initially graded, they are monitored regularly for credit quality based on many factors, such as payment history, the borrower’s financial status, and changes in collateral value. Loans can be downgraded or upgraded depending on management’s evaluation of these factors. Internal risk-grading policies are consistent throughout each loan type.
The following describes the Company’s internal risk grades in ascending order of likelihood of loss:
Risk GradeDescription
Pass:
1Loans with virtually no risk, including cash secured loans.
2Loans with documented significant overall financial strength.  These loans have minimum chance of loss due to the presence of multiple sources of repayment – each clearly sufficient to satisfy the obligation.
3Loans with documented satisfactory overall financial strength.  These loans have a low loss potential due to presence of at least two clearly identified sources of repayment – each of which is sufficient to satisfy the obligation under the present circumstances.
4Loans to borrowers with acceptable financial condition.  These loans could have signs of minor operational weaknesses, lack of adequate financial information, or loans supported by collateral with questionable value or marketability.  
5Loans that represent above average risk due to minor weaknesses and warrant closer scrutiny by management.  Collateral is generally required and felt to provide reasonable coverage with realizable liquidation values in normal circumstances.  Repayment performance is satisfactory.
P
(Pass)		Consumer loans (<$500,000) that are of satisfactory credit quality with borrowers who exhibit good personal credit history, average personal financial strength and moderate debt levels.  These loans generally conform to Bank policy, but may include approved mitigated exceptions to the guidelines.  
Special Mention:
6Existing loans with defined weaknesses in primary source of repayment that, if not corrected, could cause a loss to the Bank.
Classified:
7An existing loan inadequately protected by the current sound net worth and paying capacity of the obligor or the collateral pledged, if any.  These loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.
8Loans that have a well-defined weakness that make the collection or liquidation in full highly questionable and improbable.  Loss appears imminent, but the exact amount and timing is uncertain.
9Loans that are considered uncollectible and are in the process of being charged-off.  This grade is a temporary grade assigned for administrative purposes until the charge-off is completed.
F
(Fail)		Consumer loans (<$500,000) with a well-defined weakness, such as exceptions of any kind with no mitigating factors, history of paying outside the terms of the note, insufficient income to support the current level of debt, etc.

In the tables that follow, substantially all of the "Classified Loans" have grades of 7 or Fail, with those categories having similar levels of risk. The amount of revolving lines of credit that converted to term loans during the period was immaterial.

The tables below present the Company’s recorded investment in loans by credit quality indicators by year of origination or renewal as of the periods indicated. Acquired loans are presented in the year originated, not in the year of acquisition.
Term Loans by Year of Origination
($ in thousands)20222021202020192018PriorRevolvingTotal
As of June 30, 2022
Commercial, financial, and agricultural
Pass$82,022 145,908 96,143 60,488 59,675 25,201 108,819 578,256 
Special Mention— 188 608 1,441 2,872 296 94 5,499 
Classified429 2,067 906 1,413 6,941 620 743 13,119 
Total commercial, financial, and agricultural82,451 148,163 97,657 63,342 69,488 26,117 109,656 596,874 
Real estate – construction, land development & other land loans
Pass273,339 420,336 62,604 34,122 5,946 10,861 9,839 817,047 
Special Mention109 36 618 4,084 104 — — 4,951 
Classified1,013 422 40 927 67 113 143 2,725 
Total real estate – construction, land development & other land loans274,461 420,794 63,262 39,133 6,117 10,974 9,982 824,723 
Real estate – mortgage – residential (1-4 family) first mortgages
Pass121,779 308,026 199,903 106,905 69,983 267,244 7,421 1,081,261 
Special Mention— 333 378 317 110 3,196 100 4,434 
Classified375 669 251 487 888 8,504 941 12,115 
Total real estate – mortgage – residential (1-4 family) first mortgages122,154 309,028 200,532 107,709 70,981 278,944 8,462 1,097,810 
Real estate – mortgage – home equity loans / lines of credit
Pass814 2,256 389 274 883 1,995 311,230 317,841 
Special Mention47 183 — — — 18 1,116 1,364 
Classified16 160 95 78 — 319 5,744 6,412 
Total real estate – mortgage – home equity loans / lines of credit877 2,599 484 352 883 2,332 318,090 325,617 
Real estate – mortgage – commercial and other
Pass603,662 1,249,549 644,611 312,994 162,805 266,653 62,875 3,303,149 
Special Mention2,069 1,195 4,418 4,753 4,042 2,468 1,046 19,991 
Classified235 4,191 119 2,701 4,837 2,894 205 15,182 
Total real estate – mortgage – commercial and other605,966 1,254,935 649,148 320,448 171,684 272,015 64,126 3,338,322 
Consumer loans
Pass10,109 29,684 5,087 1,814 1,207 701 11,822 60,424 
Special Mention— — — — — — — — 
Classified6 129 2 1 — 15 50 203 
Total consumer loans10,115 29,813 5,089 1,815 1,207 716 11,872 60,627 
Total$1,096,024 2,165,332 1,016,172 532,799 320,360 591,098 522,188 6,243,973 
Unamortized net deferred loan fees(803)
Total loans6,243,170 
Term Loans by Year of Origination
($ in thousands)20212020201920182017PriorRevolvingTotal
As of December 31, 2021
Commercial, financial, and agricultural
Pass$204,945 138,540 71,369 66,645 16,009 17,492 112,933 627,933 
Special Mention225 1,255 1,313 2,729 225 9 2,348 8,104 
Classified1,609 793 1,703 7,096 511 96 1,152 12,960 
Total commercial, financial, and agricultural206,779 140,588 74,385 76,470 16,745 17,597 116,433 648,997 
Real estate – construction, land development & other land loans
Pass573,613 133,888 69,066 12,455 9,764 8,190 13,737 820,713 
Special Mention41 737 5,095 110 104 2 9 6,098 
Classified1,541 49 47 83 14 4 — 1,738 
Total real estate – construction, land development & other land loans575,195 134,674 74,208 12,648 9,882 8,196 13,746 828,549 
Real estate – mortgage – residential (1-4 family) first mortgages
Pass241,619 224,617 120,097 82,531 86,074 234,950 11,051 1,000,939 
Special Mention888 615 516 229 323 3,237 94 5,902 
Classified419 156 535 1,185 653 11,246 931 15,125 
Total real estate – mortgage – residential (1-4 family) first mortgages242,926 225,388 121,148 83,945 87,050 249,433 12,076 1,021,966 
Real estate – mortgage – home equity loans / lines of credit
Pass3,111 498 439 1,304 245 1,649 317,319 324,565 
Special Mention194 — 15 — — 19 1,341 1,569 
Classified75 97 71 — — 607 4,948 5,798 
Total real estate – mortgage – home equity loans / lines of credit3,380 595 525 1,304 245 2,275 323,608 331,932 
Real estate – mortgage – commercial and other
Pass1,328,156 796,992 355,885 211,118 197,165 197,659 66,104 3,153,079 
Special Mention1,759 4,849 5,801 3,741 2,072 1,801 1,440 21,463 
Classified7,147 413 2,110 6,025 3,897 603 — 20,195 
Total real estate – mortgage – commercial and other1,337,062 802,254 363,796 220,884 203,134 200,063 67,544 3,194,737 
Consumer loans
Pass14,960 25,431 2,965 1,722 673 525 10,810 57,086 
Special Mention— 4 — — — — — 4 
Classified— 73 — 8 — 25 42 148 
Total consumer loans14,960 25,508 2,965 1,730 673 550 10,852 57,238 
Total$2,380,302 1,329,007 637,027 396,981 317,729 478,114 544,259 6,083,419 
Unamortized net deferred loan fees(1,704)
Total loans6,081,715 
Troubled Debt Restructurings

The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extension of terms and other actions intended to minimize potential losses.

The vast majority of the Company’s TDRs modified during the periods ended June 30, 2022 and June 30, 2021 related to interest rate reductions combined with extension of terms. The Company does not generally grant principal forgiveness.

The Company’s TDRs can be classified as either nonaccrual or accruing based on the loan’s payment status. The TDRs that are nonaccrual are reported within the nonaccrual loan totals presented previously.

At June 30, 2022, there were three loans with immaterial commitments to lend additional funds to debtors whose loans were modified as a TDR. At December 31, 2021, there were no commitments to lend additional funds to debtors whose loans were modified as a TDR.

The following table presents information related to loans modified in a TDR during the three months ended June 30, 2022 and 2021.
($ in thousands)For the three months ended June 30, 2022For the three months ended June 30, 2021
Number of
Contracts		Pre-
Modification
Restructured
Balances		Post-
Modification
Restructured
Balances		Number of
Contracts		Pre-
Modification
Restructured
Balances		Post-
Modification
Restructured
Balances
TDRs – Accruing
Commercial, financial, and agricultural1 $161 $161 — $— $— 
Real estate – construction, land development & other land loans1 131 131 — — — 
Real estate – mortgage – residential (1-4 family) first mortgages— — — 1 33 33 
Real estate – mortgage – home equity loans / lines of credit2 203 203 — — — 
TDRs – Nonaccrual
Commercial, financial, and agricultural2 259 259 2 715 715 
Real estate – construction, land development & other land loans— — — 1 75 75 
Real estate – mortgage – residential (1-4 family) first mortgages— — — 1 263 263 
Real estate – mortgage – commercial and other1 244 244 3 1,569 1,569 
Total TDRs arising during period7 $998 $998 8 $2,655 $2,655 

The following table presents information related to loans modified in a TDR during the six months ended June 30, 2022 and 2021.
($ in thousands)
For the six months ended June 30, 2022
For the six months ended June 30, 2021
Number of
Contracts		Pre-
Modification
Restructured
Balances		Post-
Modification
Restructured
Balances		Number of
Contracts		Pre-
Modification
Restructured
Balances		Post-
Modification
Restructured
Balances
TDRs – Accruing
Commercial, financial, and agricultural1 $161 $161 — $— $— 
Real estate – construction, land development & other land loans1 131 131 — — — 
Real estate – mortgage – residential (1-4 family) first mortgages1 36 36 1 33 33 
Real estate – mortgage – home equity loans / lines of credit2 203 203 — — — 
Real estate – mortgage – commercial and other— — — 1 160 160 
TDRs – Nonaccrual
Commercial, financial, and agricultural3 300 300 3 826 823 
Real estate – construction, land development & other land loans— — — 1 75 75 
Real estate – mortgage – residential (1-4 family) first mortgages1 36 36 1 263 263 
Real estate – mortgage – commercial and other2 784 784 3 1,569 1,569 
Total TDRs arising during period11 $1,651 $1,651 10 $2,926 $2,923 

The Company considers a TDR loan to have defaulted when it becomes 90 or more days delinquent under the modified terms, has been transferred to nonaccrual status, or has been transferred to foreclosed real estate. There were no accruing TDRs that were modified in the previous twelve months and that defaulted during the three or six months ended June 30, 2022 or 2021.
Concentration of Credit Risk
Most of the Company's business activity is with customers located within the markets where it has banking operations. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy within its markets. Approximately 89% of the Company's loan portfolio is secured by real estate and is therefore susceptible to changes in real estate valuations.
Allowance for Credit Losses - Unfunded Loan Commitments
In addition to the ACL on loans, the Company maintains an ACL for lending-related commitments such as unfunded loan commitments and letters of credit. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for lending-related commitments on off-balance sheet credit exposures is adjusted as a provision for unfunded commitments expense. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the ACL on loans. The ACL for unfunded loan commitments of $12.0 million and $13.5 million at June 30, 2022 and December 31, 2021, respectively, is separately classified on the Consolidated Balance Sheets within "Other liabilities".
The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the six months ended June 30, 2022.
($ in thousands)Total Allowance for Credit Losses - Unfunded Loan Commitments
Beginning balance at December 31, 2021$13,506 
Charge-offs— 
Recoveries— 
Reversal of provision for unfunded commitments(1,500)
Ending balance at June 30, 2022
$12,006 

Allowance for Credit Losses - Securities Held to Maturity
The ACL for securities held to maturity was immaterial at June 30, 2022 and December 31, 2021.