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Loans, Allowance for Credit Losses, and Asset Quality Information
 9 Months Ended
Sep. 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)September 30, 2022December 31, 2021
 AmountPercentageAmountPercentage
All  loans:
Commercial, financial, and agricultural$617,538 9 %$648,997 11 %
Real estate – construction, land development & other land loans919,236 14 %828,549 13 %
Real estate – mortgage – residential (1-4 family) first mortgages1,132,552 17 %1,021,966 17 %
Real estate – mortgage – home equity loans / lines of credit323,218 5 %331,932 5 %
Real estate – mortgage – commercial and other3,473,225 53 %3,194,737 53 %
Consumer loans60,651 1 %57,238 1 %
Subtotal6,526,420 100 %6,083,419 100 %
Unamortized net deferred loan fees(1,134)(1,704)
Total loans$6,525,286 $6,081,715 

Included in the line item "Commercial, financial, and agricultural" in the table above are Paycheck Protection Program ("PPP") loans totaling $39.0 million at December 31, 2021. There were essentially no remaining PPP loans at September 30, 2022. PPP loans are fully guaranteed by the United State Small Business Administration ("SBA").
Included in the table above are credit card balances outstanding totaling $42.0 million and $37.9 million at September 30, 2022 and December 31, 2021, respectively. At September 30, 2022, approximately 57% of total credit card balances were business credit cards included in "commercial, financial and agricultural" above and the remaining 43% 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)September 30, 2022December 31, 2021
Guaranteed portions of non-PPP SBA loans included in table above$36,625 48,377 
Unguaranteed portions of non-PPP SBA loans included in table above119,590 122,772 
Total non-PPP SBA loans included in the table above$156,215 171,149 
Sold portions of SBA loans with servicing retained - not included in tables above$396,108 414,240 

At September 30, 2022 and December 31, 2021, there was a remaining unaccreted discount on the retained portion of sold non-PPP SBA loans amounting to $4.6 million and $6.0 milion, respectively.

Loans in the amount of $5.2 billion and $4.3 billion were pledged as collateral for certain borrowings at September 30, 2022 and December 31, 2021, respectively.
The loans above also include loans to executive officers and directors serving the Company at September 30, 2022 and to their related persons, totaling approximately $6.1 million and $0.6 million at September 30, 2022 and December 31, 2021, respectively. For the nine months ended September 30, 2022 there were $5.8 million in new loans due to the addition of new directors, $38,000 in advances on loans, and repayments of $0.4 million. 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 September 30, 2022 and December 31, 2021, unamortized discounts on all acquired loans totaled $12.5 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)September 30,
2022		December 31,
2021
Nonaccrual loans$28,669 34,696 
TDRs - accruing11,355 13,866 
Accruing loans > 90 days past due— 1,004 
Total nonperforming loans40,024 49,566 
Foreclosed real estate658 3,071 
Total nonperforming assets$40,682 52,637 
At September 30, 2022 and December 31, 2021, the Company had $1.7 million and $1.5 million, respectively, in residential mortgage loans in the process of foreclosure.

The following table is a summary of the Company’s nonaccrual loans by major categories as of September 30, 2022.
($ in thousands)Nonaccrual Loans with No AllowanceNonaccrual Loans with an AllowanceTotal Nonaccrual Loans
Commercial, financial, and agricultural$3,912 7,446 11,358 
Real estate – construction, land development & other land loans877 120 997 
Real estate – mortgage – residential (1-4 family) first mortgages157 3,203 3,360 
Real estate – mortgage – home equity loans / lines of credit— 1,340 1,340 
Real estate – mortgage – commercial and other5,517 5,992 11,509 
Consumer loans— 105 105 
Total$10,463 18,206 28,669 


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 nine month period ended September 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)Nine Months Ended September 30, 2022For the Year Ended December 31, 2021Nine Months Ended September 30, 2021
Commercial, financial, and agricultural$56 195 160 
Real estate – construction, land development & other land loans16 6 — 
Real estate – mortgage – residential (1-4 family) first mortgages32 31 20 
Real estate – mortgage – home equity loans / lines of credit17 14 11 
Real estate – mortgage – commercial and other108 453 446 
Consumer loans2 — — 
Total$231 699 637 

The following table presents an analysis of the payment status of the Company’s loans as of September 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$825 158 — 11,358 605,197 617,538 
Real estate – construction, land development & other land loans3,434 — — 997 914,805 919,236 
Real estate – mortgage – residential (1-4 family) first mortgages2,008 1,053 — 3,360 1,126,131 1,132,552 
Real estate – mortgage – home equity loans / lines of credit126 244 — 1,340 321,508 323,218 
Real estate – mortgage – commercial and other1,077 532 — 11,509 3,460,107 3,473,225 
Consumer loans229 74 — 105 60,243 60,651 
Total$7,699 2,061 — 28,669 6,487,991 6,526,420 
Unamortized net deferred loan fees(1,134)
Total loans6,525,286 
The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2021.
($ 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 September 30, 2022.
($ in thousands)Residential PropertyBusiness AssetsLandCommercial PropertyTotal Collateral-Dependent Loans
Commercial, financial, and agricultural$— 6,575 — — 6,575 
Real estate – construction, land development & other land loans— — 877 — 877 
Real estate – mortgage – residential (1-4 family) first mortgages157 — — — 157 
Real estate – mortgage – commercial and other— — — 7,257 7,257 
Total$157 6,575 877 7,257 14,866 

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 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 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 that are usually incurred when disposing of real estate collateral. 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 tables presents the activity in the ACL on loans for each of the periods indicated. Fluctuations in the ACL each period are based on loan mix and growth, changes in the levels of nonperforming loans, economic forecasts impacting loss drivers, other assumptions and inputs to the CECL model, and as occurred in 2021, adjustments for acquired loan portfolios. With regard to the increase in ACL for three and nine months ended September 30, 2022, approximately half of the increase was due to organic growth in the loan portfolio. The balance of the increase was a result of updated economic forecast inputs to our CECL model driving higher loss rate assumptions, primarily due to higher unemployment forecasts and deteriorating Commercial Real Estate Index forecasts given the developing uncertain economic environment.

($ 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 September 30, 2022
Beginning balance$15,450 16,171 8,650 2,086 37,194 2,630 — 82,181 
Charge-offs(512)— — (2)(470)(221)— (1,205)
Recoveries166 109 1 85 112 38 — 511 
Provisions / (Reversals)2,482 (1,352)2,064 597 938 371 — 5,100 
Ending balance$17,586 14,928 10,715 2,766 37,774 2,818 — 86,587 
As of and for the nine months ended September 30, 2022
Beginning balance$16,249 16,519 8,686 4,337 30,342 2,656 — 78,789 
Charge-offs(2,030)— — (43)(1,333)(602)— (4,008)
Recoveries636 376 16 446 1,567 165 — 3,206 
Provisions / (Reversals)2,731 (1,967)2,013 (1,974)7,198 599 — 8,600 
Ending balance$17,586 14,928 10,715 2,766 37,774 2,818 — 86,587 
($ 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 September 30, 2021
Beginning balance$14,809 10,104 8,651 3,737 25,358 2,363 — 65,022 
Charge-offs(899)— (24)— (4)(178)— (1,105)
Recoveries398 98 176 311 79 49 — 1,111 
Provisions/(Reversals)(808)2,187 (1,032)(546)(1,336)135 — (1,400)
Ending balance$13,500 12,389 7,771 3,502 24,097 2,369 — 63,628 
As of and for the nine months ended September 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(2,887)(66)(138)(139)(1,838)(485)— (5,553)
Recoveries1,065 784 499 540 419 311 — 3,618 
Provisions/(Reversals)939 176 (3,222)(1,854)2,170 391 — (1,400)
Ending balance$13,500 12,389 7,771 3,502 24,097 2,369 — 63,628 
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 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 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 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. For three month and nine month periods ended September 30, 2022, the amount of revolving lines of credit that converted to term loans totaled $2.4 million and $4.6 million, respectively. Converted lines of credit were immaterial in the comparable prior year periods.
Term Loans by Year of Origination
($ in thousands)20222021202020192018PriorRevolvingTotal
As of September 30, 2022
Commercial, financial, and agricultural
Pass$126,775 136,151 89,302 56,471 59,693 22,133 110,825 601,350 
Special Mention30 175 677 1,472 906 244 85 3,589 
Classified440 2,193 902 1,251 6,864 368 581 12,599 
Total commercial, financial, and agricultural127,245 138,519 90,881 59,194 67,463 22,745 111,491 617,538 
Real estate – construction, land development & other land loans
Pass438,062 357,411 54,529 32,455 5,461 8,146 13,579 909,643 
Special Mention3,444 9 4 4,061 103 — — 7,621 
Classified592 112 35 908 66 16 243 1,972 
Total real estate – construction, land development & other land loans442,098 357,532 54,568 37,424 5,630 8,162 13,822 919,236 
Real estate – mortgage – residential (1-4 family) first mortgages
Pass197,181 300,207 192,410 101,787 66,548 250,772 7,298 1,116,203 
Special Mention852 350 274 304 106 2,382 100 4,368 
Classified403 811 225 585 971 8,084 902 11,981 
Total real estate – mortgage – residential (1-4 family) first mortgages198,436 301,368 192,909 102,676 67,625 261,238 8,300 1,132,552 
Real estate – mortgage – home equity loans / lines of credit
Pass1,042 2,046 365 256 869 1,902 308,219 314,699 
Special Mention— 179 — — — 18 977 1,174 
Classified39 158 95 82 — 290 6,681 7,345 
Total real estate – mortgage – home equity loans / lines of credit1,081 2,383 460 338 869 2,210 315,877 323,218 
Real estate – mortgage – commercial and other
Pass934,199 1,215,815 596,502 278,815 152,596 206,579 55,726 3,440,232 
Special Mention954 1,153 4,305 4,750 1,918 2,596 670 16,346 
Classified3,168 1,479 115 2,772 6,876 1,746 491 16,647 
Total real estate – mortgage – commercial and other938,321 1,218,447 600,922 286,337 161,390 210,921 56,887 3,473,225 
Consumer loans
Pass14,507 27,261 4,271 1,339 1,040 490 11,565 60,473 
Special Mention— — — — — — — — 
Classified6 99 5 1 — 12 55 178 
Total consumer loans14,513 27,360 4,276 1,340 1,040 502 11,620 60,651 
Total$1,721,694 2,045,609 944,016 487,309 304,017 505,778 517,997 6,526,420 
Unamortized net deferred loan fees(1,134)
Total loans6,525,286 
Term Loans by Year of Origination
($ 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 September 30, 2022 and September 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 September 30, 2022, there was one loan 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 September 30, 2022 and 2021.
($ in thousands)For the three months ended September 30, 2022For the three months ended September 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
Real estate – mortgage – home equity loans / lines of credit1 176 176 — — — 
TDRs – Nonaccrual
Commercial, financial, and agricultural1 327 327 — — — 
Total TDRs arising during period2 $503 $503 — $— $— 
The following table presents information related to loans modified in a TDR during the nine months ended September 30, 2022 and 2021.
($ in thousands)
For the nine months ended September 30, 2022
For the nine months ended September 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 credit3 379 379 — — — 
Real estate – mortgage – commercial and other— — — 1 160 160 
Consumer loans— — — — — — 
TDRs – Nonaccrual
Commercial, financial, and agricultural4 627 627 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 – home equity loans / lines of credit— — — — — — 
Real estate – mortgage – commercial and other2 784 784 3 1,569 1,569 
Consumer loans— — — — — — 
Total TDRs arising during period13 2,154 2,154 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 nine months ended September 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 90% 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 $12.3 million and $13.5 million at September 30, 2022 and December 31, 2021, respectively, is separately classified on the Consolidated Balance Sheets within "Other liabilities".
The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the nine months ended September 30, 2022.
($ 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(1,200)
Ending balance at September 30, 2022
$12,306 

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