Loans, Allowance for Credit Losses, and Asset Quality Information

3 Months Ended

Mar. 31, 2023

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)	March 31, 2023				December 31, 2022
	Amount		Percentage		Amount		Percentage
All  loans:
Commercial, financial, and agricultural	$	885,032	11	%	$	641,941	9	%
Real estate – construction, land development & other land loans	1,092,026		14	%	934,176		14	%
Real estate mortgage – residential (1-4 family) first mortgages	1,386,580		18	%	1,195,785		18	%
Real estate mortgage – home equity loans / lines of credit	342,287		4	%	323,726		5	%
Real estate mortgage – commercial and other	4,026,258		52	%	3,510,261		53	%
Consumer loans	68,056		1	%	60,659		1	%
Subtotal	7,800,239		100	%	6,666,548		100	%
Unamortized net deferred loan fees	(1,276)				(1,403)
Total loans	$	7,798,963			$	6,665,145

Also included in the table above are various SBA loans, generally originated under the SBA 7A program, with additional information on these loans presented in the table below.

($ in thousands)	March 31, 2023		December 31, 2022
Guaranteed portions of SBA loans included in table above	$	36,035	31,893
Unguaranteed portions of SBA loans included in table above	115,413		116,910
Total SBA loans included in the table above	$	151,448	148,803
Sold portions of SBA loans with servicing retained - not included in tables above	$	380,634	392,370

At March 31, 2023 and December 31, 2022, there was a remaining unaccreted discount on the retained portion of sold SBA loans amounting to $4.0 million and $4.3 milion, respectively.

At March 31, 2023 and December 31, 2022, loans in the amount of $6.0 billion and $5.3 billion, respectively, were pledged as collateral for certain borrowings.

At both March 31, 2023 and December 31, 2022, total loans included loans to executive officers and directors of the Company, and their associates, totaling approximately $6.0 million. There were four new loans and advances on existing loans totaling approximately $0.1 million for the three months ended March 31, 2023 and repayments amounted to $0.2 million for that period. Available credit on related party loans totaled $1.1 million and $1.2 million, respectively, at March 31, 2023 and December 31, 2022. Management does not believe these loans involve more than the normal risk of collectability or present other unfavorable features.

As of March 31, 2023 and December 31, 2022, unamortized discounts on all acquired loans totaled $32.4 million and $11.6 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, modifications to borrowers in financial distress, loans past due 90 or more days and still accruing interest, foreclosed real estate, and prior to the adoption of ASU 2022-02 on January 1, 2023, TDRs.

Nonperforming assets are summarized as follows.

($ in thousands)	March 31, 2023		December 31, 2022
Nonaccrual loans	$	28,059	28,514
Modifications to borrowers in financial distress	2,224		—
TDRs - accruing	—		9,121
Total nonperforming loans	30,283		37,635
Foreclosed real estate	789		658
Total nonperforming assets	$	31,072	38,293

At March 31, 2023 and December 31, 2022, the Company had $1.5 million and $0.8 million, respectively, in residential mortgage loans in the process of foreclosure.

At both March 31, 2023 and December 31, 2022, there was one loan with an immaterial commitment to lend additional funds to borrowers whose loans were nonperforming.

The following table is a summary of the Company’s nonaccrual loans by major categories as of March 31, 2023:

($ in thousands)	Nonaccrual Loans with No Allowance		Nonaccrual Loans with an Allowance	Total Nonaccrual Loans
Commercial, financial, and agricultural	$	36	10,752	10,788
Real estate – construction, land development & other land loans	—		123	123
Real estate mortgage – residential (1-4 family) first mortgages	—		3,026	3,026
Real estate mortgage – home equity loans / lines of credit	—		1,781	1,781
Real estate mortgage – commercial and other	4,059		8,096	12,155
Consumer loans	—		186	186
Total	$	4,095	23,964	28,059

The following table is a summary of the Company’s nonaccrual loans by major categories as of December 31, 2022:

($ in thousands)	Nonaccrual Loans with No Allowance		Nonaccrual Loans with an Allowance	Total Nonaccrual Loans
Commercial, financial, and agricultural	$	3,855	6,374	10,229
Real estate – construction, land development & other land loans	—		1,009	1,009
Real estate mortgage – residential (1-4 family) first mortgages	157		3,132	3,289
Real estate mortgage – home equity loans / lines of credit	—		1,397	1,397
Real estate mortgage – commercial and other	5,010		7,495	12,505
Consumer loans	—		85	85
Total	$	9,022	19,492	28,514

There was no interest income recognized during the periods presented 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)	Three Months Ended March 31, 2023		For the Year Ended December 31, 2022	Three Months Ended March 31, 2022
Commercial, financial, and agricultural	$	123	102	8
Real estate – construction, land development & other land loans	—		16	12
Real estate mortgage – residential (1-4 family) first mortgages	8		45	10
Real estate mortgage – home equity loans / lines of credit	9		20	2
Real estate mortgage – commercial and other	16		139	100
Consumer loans	—		2	—
Total	$	156	324	132

The following table presents an analysis of the payment status of the Company’s loans as of March 31, 2023:

($ 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	$	1,329	392	—	10,788	872,523	885,032
Real estate – construction, land development & other land loans	233		52	—	123	1,091,618	1,092,026
Real estate mortgage – residential (1-4 family) first mortgages	8,806		95	—	3,026	1,374,653	1,386,580
Real estate mortgage – home equity loans / lines of credit	807		139	—	1,781	339,560	342,287
Real estate mortgage – commercial and other	1,896		725	—	12,155	4,011,482	4,026,258
Consumer loans	252		65	—	186	67,553	68,056
Total	$	13,323	1,468	—	28,059	7,757,389	7,800,239
Unamortized net deferred loan fees							(1,276)
Total loans							7,798,963

The following table presents an analysis of the payment status of the Company’s loans as of December 31, 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	$	438	565	—	10,229	630,709	641,941
Real estate – construction, land development & other land loans	238		1,687	—	1,009	931,242	934,176
Real estate mortgage – residential (1-4 family) first mortgages	3,415		25	—	3,289	1,189,056	1,195,785
Real estate mortgage – home equity loans / lines of credit	457		371	—	1,397	321,501	323,726
Real estate mortgage – commercial and other	620		97	—	12,505	3,497,039	3,510,261
Consumer loans	249		66	—	85	60,259	60,659
Total	$	5,417	2,811	—	28,514	6,629,806	6,666,548
Unamortized net deferred loan fees							(1,403)
Total loans							$	6,665,145

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 $500,000 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 $500,000 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 ACL.

The following table presents an analysis of collateral dependent loans of the Company as of March 31, 2023:

($ in thousands)	Residential Property		Business Assets	Land	Commercial Property	Total Collateral-Dependent Loans
Commercial, financial, and agricultural	$	—	3,085	—	—	3,085
Real estate mortgage – commercial and other	—		—	—	4,718	4,718
Total	$	—	3,085	—	4,718	7,803

The following table presents an analysis of collateral dependent loans of the Company as of December 31, 2022:

($ in thousands)	Residential Property		Business Assets	Land	Commercial Property	Total Collateral-Dependent Loans
Commercial, financial, and agricultural	$	—	6,394	—	—	6,394
Real estate mortgage – residential (1-4 family) first mortgages	157		—	—	—	157
Real estate mortgage – commercial and other	—		—	—	6,723	6,723
Total	$	157	6,394	—	6,723	13,274

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 2023, adjustments for acquired loan portfolios. Much of the change to the level of ACL during the three months ended March 31, 2023 is attributed to the acquisition of GrandSouth. In addition to the "Day 1" allowance recorded for PCD loans of $5.6 million, the Company recorded a "Day 2" initial provision of $12.2 million related to the non-PCD loans in the GrandSouth portfolio. The balance of the change was a result of updated economic forecast inputs to our CECL model driving lower loss rate assumptions, primarily due to slightly improved unemployment and GDP forecasts.

($ in thousands)	Commercial, financial, and agricultural		Real estate – construction, land development & other land loans	Real estate mortgage – residential (1-4 family) first mortgages	Real estate mortgage – home equity loans / lines of credit	Real estate mortgage – commercial and other	Consumer loans	Total
As of and for the three months ended March 31, 2023
Beginning balance	$	17,718	15,128	11,354	3,158	40,709	2,900	90,967
"Day 1" ACL for acquired PCD loans	5,197		49	113	8	242	1	5,610
Charge-offs	(2,177)		—	—	(2)	(235)	(207)	(2,621)
Recoveries	274		65	146	34	434	36	989
Provisions / (Reversals)	2,061		3,744	672	283	4,126	565	11,451
Ending balance	$	23,073	18,986	12,285	3,481	45,276	3,295	106,396

($ in thousands)	Commercial, financial, and agricultural		Real estate – construction, land development & other land loans	Real estate mortgage – residential (1-4 family) first mortgages	Real estate mortgage – home equity loans / lines of credit	Real estate mortgage – commercial and other	Consumer loans	Total
As of and for the year ended December 31, 2022
Beginning balance	$	16,249	16,519	8,686	4,337	30,342	2,656	78,789
Charge-offs	(2,519)		—	—	(43)	(1,063)	(840)	(4,465)
Recoveries	756		480	17	600	1,983	207	4,043
Provisions/(Reversals)	3,232		(1,871)	2,651	(1,736)	9,447	877	12,600
Ending balance	$	17,718	15,128	11,354	3,158	40,709	2,900	90,967

($ in thousands)	Commercial, financial, and agricultural		Real estate – construction, land development & other land loans	Real estate mortgage – residential (1-4 family) first mortgages	Real estate mortgage – home equity loans / lines of credit	Real estate mortgage – commercial and other	Consumer loans	Total
As of and for the three months ended March 31, 2022
Beginning balance	$	16,249	16,519	8,686	4,337	30,342	2,656	78,789
Charge-offs	(790)		—	—	(41)	(45)	(167)	(1,043)
Recoveries	247		137	4	233	155	47	823
Provisions/(Reversals)	307		(599)	(531)	(2,455)	6,875	(97)	3,500
Ending balance	$	16,013	16,057	8,159	2,074	37,327	2,439	82,069

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 Grade	Description
Pass:
	1	Loans with virtually no risk, including cash secured loans.
	2	Loans 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.
	3	Loans 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.
	4	Loans 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.
	5	Loans 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:
	6	Existing loans with defined weaknesses in primary source of repayment that, if not corrected, could cause a loss to the Bank.
Classified:
	7	An 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.
	8	Loans 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.
	9	Loans 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.

	Term Loans by Year of Origination
($ in thousands)	2023		2022	2021	2020	2019	Prior	Revolving	Total
As of March 31, 2023
Commercial, financial, and agricultural
Pass	$	30,973	191,669	133,914	90,094	54,372	72,590	295,435	869,047
Special Mention	362		233	367	529	1,164	914	109	3,678
Classified	—		1,020	1,990	1,651	1,618	5,346	682	12,307
Total commercial, financial, and agricultural	31,335		192,922	136,271	92,274	57,154	78,850	296,226	885,032
Gross charge-offs, YTD	—		129	691	21	299	651	386	2,177
Real estate – construction, land development & other land loans
Pass	170,337		570,389	221,325	46,235	15,108	10,720	51,065	1,085,179
Special Mention	389		5,220	—	1	—	102	12	5,724
Classified	530		272	86	32	19	160	24	1,123
Total real estate – construction, land development & other land loans	171,256		575,881	221,411	46,268	15,127	10,982	51,101	1,092,026
Gross charge-offs, YTD	—		—	—	—	—	—	—	—
Real estate mortgage – residential (1-4 family) first mortgages
Pass	70,953		376,734	317,648	205,073	102,510	297,101	1,770	1,371,789
Special Mention	—		748	203	106	647	2,110	19	3,833
Classified	—		538	130	397	403	8,801	689	10,958
Total real estate mortgage – residential (1-4 family) first mortgages	70,953		378,020	317,981	205,576	103,560	308,012	2,478	1,386,580
Gross charge-offs, YTD	—		—	—	—	—	—	—	—
Real estate mortgage – home equity loans / lines of credit
Pass	624		5,439	1,732	1,338	219	1,883	322,004	333,239
Special Mention	—		173	119	—	—	17	123	432
Classified	13		91	153	93	92	276	7,898	8,616
Total real estate mortgage – home equity loans / lines of credit	637		5,703	2,004	1,431	311	2,176	330,025	342,287
Gross charge-offs, YTD	—		—	—	—	—	—	2	2
Real estate mortgage – commercial and other
Pass	156,862		1,245,323	1,311,892	617,132	280,085	306,906	59,260	3,977,460
Special Mention	243		1,617	1,016	8,473	7,327	11,948	652	31,276
Classified	189		3,983	541	255	3,896	8,297	361	17,522
Total real estate mortgage – commercial and other	157,294		1,250,923	1,313,449	625,860	291,308	327,151	60,273	4,026,258
Gross charge-offs, YTD	—		—	235	—	—	—	—	235
Consumer loans
Pass	4,750		18,431	8,093	3,646	1,036	1,026	30,541	67,523
Special Mention	—		—	—	—	—	—	—	—
Classified	235		173	35	—	6	15	69	533
Total consumer loans	4,985		18,604	8,128	3,646	1,042	1,041	30,610	68,056
Gross charge-offs, YTD	—		—	11	3	—	—	193	207
Total loans	$	436,460	2,422,053	1,999,244	975,055	468,502	728,212	770,713	7,800,239
Unamortized net deferred loan fees									(1,276)
Total loans, net of deferred loan fees									7,798,963
Total gross charge-offs, year to date	$	—	129	937	24	299	651	581	2,621

	Term Loans by Year of Origination
($ in thousands)	2022		2021	2020	2019	2018	Prior	Revolving	Total
As of December 31, 2022
Commercial, financial, and agricultural
Pass	$	185,167	107,747	85,110	51,274	590	76,588	120,590	627,066
Special Mention	342		166	648	1,312	—	990	332	3,790
Classified	734		1,909	808	1,384	—	5,762	488	11,085
Total commercial, financial, and agricultural	186,243		109,822	86,566	53,970	590	83,340	121,410	641,941
Real estate – construction, land development & other land loans
Pass	550,752		267,096	42,421	30,973	—	12,722	19,519	923,483
Special Mention	5,128		5	3,679	—	—	100	13	8,925
Classified	656		107	38	899	—	44	24	1,768
Total real estate – construction, land development & other land loans	556,536		267,208	46,138	31,872	—	12,866	19,556	934,176
Real estate mortgage – residential (1-4 family) first mortgages
Pass	317,282		274,756	186,102	98,559	185	301,885	1,379	1,180,148
Special Mention	1,189		127	110	470	—	2,416	—	4,312
Classified	763		251	221	359	—	9,072	659	11,325
Total real estate – mortgage – residential (1-4 family) first mortgages	319,234		275,134	186,433	99,388	185	313,373	2,038	1,195,785
Real estate mortgage – home equity loans / lines of credit
Pass	869		1,091	349	237	—	2,020	309,786	314,352
Special Mention	175		—	—	—	—	18	1,072	1,265
Classified	106		156	94	87	—	213	7,453	8,109
Total real estate – mortgage – home equity loans / lines of credit	1,150		1,247	443	324	—	2,251	318,311	323,726
Real estate mortgage – commercial and other
Pass	1,096,643		1,186,678	569,624	247,448	179	324,361	48,882	3,473,815
Special Mention	1,715		1,114	4,436	8,289	—	4,457	665	20,676
Classified	3,480		1,265	84	2,456	—	8,118	367	15,770
Total real estate mortgage – commercial and other	1,101,838		1,189,057	574,144	258,193	179	336,936	49,914	3,510,261
Consumer loans
Pass	35,406		7,946	3,610	1,056	3	1,250	10,953	60,224
Special Mention	—		—	—	—	—	—	—	—
Classified	320		31	3	1	—	25	55	435
Total consumer loans	35,726		7,977	3,613	1,057	3	1,275	11,008	60,659
Total loans	$	2,200,727	1,850,445	897,337	444,804	957	750,041	522,237	6,666,548
Unamortized net deferred loan fees									(1,403)
Total loans, net of deferred loan fees									6,665,145

Loan Modifications to Borrowers Experiencing Financial Difficulty

Effective January 1, 2023, we adopted ASU 2022-02 which eliminated the accounting guidance for TDRs and requires disclosures for certain loan modifications when a borrower is experiencing financial difficulty.

Occasionally, the Company modifies loans to borrowers in financial distress as a part of our loss mitigation activities. Various types of modification may be offered including principal forgiveness, term extension, payment delays, or interest rate reductions. In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession may be granted. For loans included in the “combination” columns below, multiple types of modifications have been made on the same loan within the current reporting period.

The followings tables present the amortized cost basis at March 31, 2023 of the loans modified for borrowers experiencing financial difficulty, by loan category and type of concession granted. Percentages labeled as "NM" are not measurable to the class of financing receivable, as they are less than 0.1% of the total class.

	Payment Delay
($ in thousands)	Amortized Cost Basis at 3/31/2023		Percent of Total Class of Financing Receivable
Commercial, financial, and agricultural	$	156	NM
	$	156

	Term Extension
($ in thousands)	Amortized Cost Basis at 3/31/2023		Percent of Total Class of Financing Receivable
Commercial, financial, and agricultural	$	1,442	0.2	%
Real estate – construction, land development & other land loans	130		NM
Real estate mortgage – residential (1-4 family) first mortgages	48		NM
Real estate mortgage – home equity loans / lines of credit	103		NM
Real estate mortgage – commercial and other	104		NM
Consumer loans	228		0.3	%
	$	2,055

	Combination - Interest Rate Reduction and Term Extension
($ in thousands)	Amortized Cost Basis at 3/31/2023		Percent of Total Class of Financing Receivable
Real estate – construction, land development & other land loans	$	14	NM
	$	14

For the three months ended March 31, 2023, there were no modifications for borrowers experiencing financial difficulty with principal forgiveness concessions.

The following tables describes the financial effect for the three months ended March 31, 2023 of the modifications made for borrowers experiencing financial difficulty:

Payment Delay
Loan Type	Financial Effect
Commercial, financial, and agricultural	Delayed payment for 4 months.

Term Extension
Loan Type	Financial Effect
Commercial, financial, and agricultural	Added a weighted average 6 months to the life of loans, which reduced monthly payment amounts to borrowers.
Real estate – construction, land development & other land loans	Added a weighted average 11 months to the life of loans, which reduced monthly payment amounts to borrowers.
Real estate mortgage – residential (1-4 family) first mortgages	Added a weighted average 14 months to the life of loans, which reduced monthly payment amounts to borrowers.
Real estate mortgage – home equity loans / lines of credit	Added a weighted average 46 months to the life of loans, which reduced monthly payment amounts to borrowers.
Real estate mortgage – commercial and other	Added a weighted average 12 months to the life of loans, which reduced monthly payment amounts to borrowers.
Consumer loans	Added a weighted average 3 months to the life of loans, which reduced monthly payment amounts to borrowers.

Interest Rate Reduction
Loan Type	Financial Effect
Real estate – construction, land development & other land loans	Reduced weighted average contractual interest rate from 7.0% to 5.5%

The Company closely monitors the performance of the loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that have been modified in the last 12 months (numbers in thousands):

	Payment Status (Amortized Cost Basis)
($ in thousands)	Current		30-59 Days Past Due	60-89 Days Past Due	90+ Days Past Due
Commercial, financial, and agricultural	$	1,363	156	79	—
Real estate – construction, land development & other land loans	144		—	—	—
Real estate mortgage – residential (1-4 family) first mortgages	48		—	—	—
Real estate mortgage – home equity loans / lines of credit	103		—	—	—
Real estate mortgage – commercial and other	104		—	—	—
Consumer loans	228		—	—	—
	$	1,990	156	79	—

None of the modifications made for borrowers experiencing financial difficulty during the three months ended March 31, 2023 are considered to have had a payment default.

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.

TDR Disclosures Prior to the Adoption of ASU 2022-02

The restructuring of a loan was considered a TDR if both (i) the borrower was experiencing financial difficulties and (ii) the creditor had granted a concession. Concessions may have included 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 period ended March 31, 2022 related to interest rate reductions combined with extension of terms. The Company does not generally grant principal forgiveness.

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

The following table presents information related to loans modified in a TDR during the three months ended March 31, 2022.

	For the three months ended March 31, 2022
($ in thousands)	Number of Contracts	Pre-Modification Restructured Balances		Post-Modification Restructured Balances
TDRs - Accruing
Real estate mortgage – residential (1-4 family) first mortgages	1	$	36	36
TDRs - Nonaccrual
Commercial, financial, and agricultural	1	41		41
Real estate mortgage – residential (1-4 family) first mortgages	1	36		36
Real estate mortgage – commercial and other	1	540		540
Total TDRs arising during period	4	$	653	653

The Company considered a TDR loan to have defaulted when it became 90 or more days delinquent under the modified terms, had been transferred to nonaccrual status, or had 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 months ended March 31, 2022.

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 $14.4 million and $13.3 million at March 31, 2023 and December 31, 2022, 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 three months ended March 31, 2023 and 2022 and for the twelve months ended December 31, 2022:

($ in thousands)	March 31, 2023		December 31, 2022	March 31, 2022
Beginning balance	$	13,306	13,506	13,506
"Day 2" provision for credit losses on unfunded commitments acquired from GrandSouth	1,921		—	—
Charge-offs	—		—	—
Recoveries	—		—	—
Reversal of provision for unfunded commitments	(870)		(200)	(1,500)
Ending balance	$	14,357	13,306	12,006

Allowance for Credit Losses - Securities Held to Maturity

The ACL for securities held to maturity was insignificant at March 31, 2023 and December 31, 2022.