The following table presents total loans outstanding, by portfolio segment, as of September 30, 2022 and December 31, 2021:

(1)	Included Paycheck Protection Program, or PPP, loans of $2.9 million at September 30, 2022 and $33.6 million at December 31, 2021.

Total loans included net deferred loan fees and costs of $851 thousand and $231 thousand at September 30, 2022 and December 31, 2021, respectively. Deferred loan fees on PPP loans were $22 thousand at September 30, 2022 and $881 thousand at December 31, 2021. Unearned discounts associated with the acquisition of Metro Phoenix Bank totaled $8.0 million as of September 30, 2022.

Management monitors the credit quality of its loan portfolio on an ongoing basis. Measurements of delinquency and past due status are based on the contractual terms of each loan. Past due loans are reviewed regularly to identify loans for nonaccrual status. Loan modifications made in accordance with the Interagency Statement on Loan Modifications and Reporting for Financial Institutions, as issued on April 7, 2020, are included as accruing current.

The following tables present a past due aging analysis of total loans outstanding, by portfolio segment, as of September 30, 2022 and December 31, 2021:


	September 30, 2022
					90 Days
	Accruing		30 - 89 Days		or More				Total
(dollars in thousands)	Current		Past Due		Past Due		Nonaccrual		Loans
Commercial
Commercial and industrial	$	561,865	$	311	$	1,000	$	1,479	$	564,655
Real estate construction		89,215		—		—		—		89,215
Commercial real estate		818,439		—		—		629		819,068
Total commercial		1,469,519		311		1,000		2,108		1,472,938
Consumer
Residential real estate first mortgage		645,896		1,923		—		1,999		649,818
Residential real estate junior lien		143,491		2		—		188		143,681
Other revolving and installment		51,601		185		—		8		51,794
Total consumer		840,988		2,110		—		2,195		845,293
Total loans	$	2,310,507	$	2,421	$	1,000	$	4,303	$	2,318,231


	December 31, 2021
					90 Days
	Accruing		30 - 89 Days		or More				Total
(dollars in thousands)	Current		Past Due		Past Due		Nonaccrual		Loans
Commercial
Commercial and industrial	$	435,135	$	168	$	121	$	1,337	$	436,761
Real estate construction		40,619		—		—		—		40,619
Commercial real estate		598,264		—		—		629		598,893
Total commercial		1,074,018		168		121		1,966		1,076,273
Consumer
Residential real estate first mortgage		508,925		1,770		—		21		510,716
Residential real estate junior lien		125,412		167		—		89		125,668
Other revolving and installment		45,242		121		—		—		45,363
Total consumer		679,579		2,058		—		110		681,747
Total loans	$	1,753,597	$	2,226	$	121	$	2,076	$	1,758,020

The Company’s consumer loan portfolio is primarily comprised of secured loans that are evaluated at origination on a centralized basis against standardized underwriting criteria. The Company generally does not risk rate consumer loans unless a default event such as bankruptcy or extended nonperformance takes place. Credit quality for the consumer loan portfolio is measured by delinquency rates, nonaccrual amounts and actual losses incurred.

The Company assigns a risk rating to all commercial loans, except pools of homogeneous loans, and periodically performs detailed internal and external reviews of risk rated loans over a certain threshold to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by the Company’s regulators. During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate and the estimated fair values of collateral securing the loans. These credit quality indicators are used to assign a risk rating to each individual loan.

The Company’s ratings are aligned to pass and criticized categories. The criticized category includes special mention, substandard, and doubtful risk ratings. The risk ratings are defined as follows:

Pass: A pass loan is a credit with no existing or known potential weaknesses deserving of management’s close attention.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, this potential weakness may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

Substandard: Loans classified as substandard are not adequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Well-defined weaknesses include a borrower’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time, or the failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss: Loans classified as loss are considered uncollectible and charged off immediately.

The tables below present total loans outstanding, by loan portfolio segment, and risk category as of September 30, 2022 and December 31, 2021:


	September 30, 2022
			Criticized
			Special
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
Commercial
Commercial and industrial	$	559,647	$	—	$	5,008	$	—	$	564,655
Real estate construction		89,215		—		—		—		89,215
Commercial real estate		809,910		3,840		5,318		—		819,068
Total commercial		1,458,772		3,840		10,326		—		1,472,938
Consumer
Residential real estate first mortgage		647,517		64		2,237		—		649,818
Residential real estate junior lien		143,006		—		675		—		143,681
Other revolving and installment		51,786		—		8		—		51,794
Total consumer		842,309		64		2,920		—		845,293
Total loans	$	2,301,081	$	3,904	$	13,246	$	—	$	2,318,231


	December 31, 2021
			Criticized
			Special
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
Commercial
Commercial and industrial	$	430,235	$	480	$	6,046	$	—	$	436,761
Real estate construction		40,619		—		—		—		40,619
Commercial real estate		585,291		—		13,602		—		598,893
Total commercial		1,056,145		480		19,648		—		1,076,273
Consumer
Residential real estate first mortgage		510,375		—		341		—		510,716
Residential real estate junior lien		124,898		—		770		—		125,668
Other revolving and installment		45,363		—		—		—		45,363
Total consumer		680,636		—		1,111		—		681,747
Total loans	$	1,736,781	$	480	$	20,759	$	—	$	1,758,020

The adequacy of the allowance for loan losses is assessed at the end of each quarter. The allowance for loan losses includes a specific component related to loans that are individually evaluated for impairment and a general component related to loans that are segregated into homogeneous pools and collectively evaluated for impairment. The factors applied to these pools are an estimate of probable incurred losses based on management’s evaluation of historical net losses from loans with similar characteristics, which are adjusted by management to reflect current events, trends, and conditions. The adjustments include consideration of the following: changes in lending policies and procedures, economic conditions, nature and volume of the portfolio, experience of lending management, volume and severity of past due loans, quality of the loan review system, value of underlying collateral for collateral dependent loans, concentrations, and other external factors.

The following tables present, by loan portfolio segment, a summary of the changes in the allowance for loan losses for the three and nine months ended September 30, 2022 and 2021:


	Three months ended September 30, 2022
	Beginning		Provision for		Loan		Loan		Ending
(dollars in thousands)	Balance		Loan Losses		Charge-offs		Recoveries		Balance
Commercial
Commercial and industrial	$	10,333	$	(845)	$	(672)	$	105	$	8,921
Real estate construction		878		378		—		76		1,332
Commercial real estate		10,834		1,335		—		101		12,270
Total commercial		22,045		868		(672)		282		22,523
Consumer
Residential real estate first mortgage		6,175		(584)		—		—		5,591
Residential real estate junior lien		1,467		(109)		—		7		1,365
Other revolving and installment		634		(75)		(75)		53		537
Total consumer		8,276		(768)		(75)		60		7,493
Unallocated		1,052		(100)		—		—		952
Total	$	31,373	$	—	$	(747)	$	342	$	30,968


	Nine months ended September 30, 2022
	Beginning		Provision for		Loan		Loan		Ending
(dollars in thousands)	Balance		Loan Losses		Charge-offs		Recoveries		Balance
Commercial
Commercial and industrial	$	8,925	$	1,011	$	(1,336)	$	321	$	8,921
Real estate construction		783		473		—		76		1,332
Commercial real estate		12,376		(229)		—		123		12,270
Total commercial		22,084		1,255		(1,336)		520		22,523
Consumer
Residential real estate first mortgage		6,532		(941)		—		—		5,591
Residential real estate junior lien		1,295		(151)		—		221		1,365
Other revolving and installment		481		65		(130)		121		537
Total consumer		8,308		(1,027)		(130)		342		7,493
Unallocated		1,180		(228)		—		—		952
Total	$	31,572	$	—	$	(1,466)	$	862	$	30,968


	Three months ended September 30, 2021
	Beginning		Provision for		Loan		Loan		Ending
(dollars in thousands)	Balance		Loan Losses		Charge-offs		Recoveries		Balance
Commercial
Commercial and industrial	$	9,620	$	(825)	$	(747)	$	1,052	$	9,100
Real estate construction		587		92		—		—		679
Commercial real estate		12,937		(413)		—		—		12,524
Total commercial		23,144		(1,146)		(747)		1,052		22,303
Consumer
Residential real estate first mortgage		6,176		625		—		—		6,801
Residential real estate junior lien		1,401		6		—		16		1,423
Other revolving and installment		574		(32)		(46)		27		523
Total consumer		8,151		599		(46)		43		8,747
Unallocated		2,469		(1,453)		—		—		1,016
Total	$	33,764	$	(2,000)	$	(793)	$	1,095	$	32,066


	Nine months ended September 30, 2021
	Beginning		Provision for		Loan		Loan		Ending
(dollars in thousands)	Balance		Loan Losses		Charge-offs		Recoveries		Balance
Commercial
Commercial and industrial	$	10,205	$	(1,378)	$	(1,224)	$	1,497	$	9,100
Real estate construction		658		21		—		—		679
Commercial real estate		14,105		(1,049)		(536)		4		12,524
Total commercial		24,968		(2,406)		(1,760)		1,501		22,303
Consumer
Residential real estate first mortgage		5,774		1,027		—		—		6,801
Residential real estate junior lien		1,373		(63)		—		113		1,423
Other revolving and installment		753		(196)		(139)		105		523
Total consumer		7,900		768		(139)		218		8,747
Unallocated		1,378		(362)		—		—		1,016
Total	$	34,246	$	(2,000)	$	(1,899)	$	1,719	$	32,066

The following tables present the recorded investment in loans and related allowance for loan losses, by loan portfolio segment, disaggregated on the basis of the Company’s impairment methodology, as of September 30, 2022 and December 31, 2021:


	September 30, 2022
	Recorded Investment						Allowance for Loan Losses
	Individually		Collectively				Individually		Collectively
(dollars in thousands)	Evaluated		Evaluated		Total		Evaluated		Evaluated		Total
Commercial
Commercial and industrial	$	2,083	$	562,572	$	564,655	$	264	$	8,657	$	8,921
Real estate construction		—		89,215		89,215		—		1,332		1,332
Commercial real estate		800		818,268		819,068		—		12,270		12,270
Total commercial		2,883		1,470,055		1,472,938		264		22,259		22,523
Consumer
Residential real estate first mortgage		1,998		647,820		649,818		—		5,591		5,591
Residential real estate junior lien		188		143,493		143,681		—		1,365		1,365
Other revolving and installment		8		51,786		51,794		—		537		537
Total consumer		2,194		843,099		845,293		—		7,493		7,493
Unallocated		—		—		—		—		—		952
Total loans	$	5,077	$	2,313,154	$	2,318,231	$	264	$	29,752	$	30,968


	December 31, 2021
	Recorded Investment						Allowance for Loan Losses
	Individually		Collectively				Individually		Collectively
(dollars in thousands)	Evaluated		Evaluated		Total		Evaluated		Evaluated		Total
Commercial
Commercial and industrial	$	1,831	$	434,930	$	436,761	$	278	$	8,647	$	8,925
Real estate construction		—		40,619		40,619		—		783		783
Commercial real estate		809		598,084		598,893		5		12,371		12,376
Total commercial		2,640		1,073,633		1,076,273		283		21,801		22,084
Consumer
Residential real estate first mortgage		21		510,695		510,716		—		6,532		6,532
Residential real estate junior lien		91		125,577		125,668		—		1,295		1,295
Other revolving and installment		—		45,363		45,363		—		481		481
Total consumer		112		681,635		681,747		—		8,308		8,308
Unallocated		—		—		—		—		—		1,180
Total loans	$	2,752	$	1,755,268	$	1,758,020	$	283	$	30,109	$	31,572

The table below summarizes key information on impaired loans. These impaired loans may have estimated losses which are included in the allowance for loan losses:


	September 30, 2022						December 31, 2021
	Recorded		Unpaid		Related		Recorded		Unpaid		Related
(dollars in thousands)	Investment		Principal		Allowance		Investment		Principal		Allowance
Impaired loans with a valuation allowance
Commercial and industrial	$	712	$	744	$	264	$	445	$	464	$	278
Commercial real estate		—		—		—		180		203		5
Residential real estate junior lien		—		—		—		—		—		—
Other revolving and installment		—		—		—		—		—		—
Total impaired loans with a valuation allowance		712		744		264		625		667		283
Impaired loans without a valuation allowance
Commercial and industrial		1,371		1,476		—		1,386		1,575		—
Commercial real estate		800		855		—		629		684		—
Residential real estate first mortgage		1,998		2,077		—		21		24		—
Residential real estate junior lien		188		211		—		91		120		—
Other revolving and installment		8		8		—		—		—		—
Total impaired loans without a valuation allowance		4,365		4,627		—		2,127		2,403		—
Total impaired loans
Commercial and industrial		2,083		2,220		264		1,831		2,039		278
Commercial real estate		800		855		—		809		887		5
Residential real estate first mortgage		1,998		2,077		—		21		24		—
Residential real estate junior lien		188		211		—		91		120		—
Other revolving and installment		8		8		—		—		—		—
Total impaired loans	$	5,077	$	5,371	$	264	$	2,752	$	3,070	$	283

The table below presents the average recorded investment in impaired loans and interest income for the three and nine months ended September 30, 2022 and 2021:


	Three months ended September 30,
	2022				2021
	Average				Average
	Recorded		Interest		Recorded		Interest
(dollars in thousands)	Investment		Income		Investment		Income
Impaired loans with a valuation allowance
Commercial and industrial	$	722	$	3	$	719	$	3
Commercial real estate		—		—		779		2
Residential real estate first mortgage		—		—		—		—
Residential real estate junior lien		—		—		8		—
Other revolving and installment		—		—		4		—
Total impaired loans with a valuation allowance		722		3		1,510		5
Impaired loans without a valuation allowance
Commercial and industrial		1,371		7		2,016		5
Commercial real estate		801		2		3,793		—
Residential real estate first mortgage		2,032		—		121		—
Residential real estate junior lien		189		—		166		—
Other revolving and installment		8		—		—		—
Total impaired loans without a valuation allowance		4,401		9		6,096		5
Total impaired loans
Commercial and industrial		2,093		10		2,735		8
Commercial real estate		801		2		4,572		2
Residential real estate first mortgage		2,032		—		121		—
Residential real estate junior lien		189		—		174		—
Other revolving and installment		8		—		4		—
Total impaired loans	$	5,123	$	12	$	7,606	$	10


	Nine Months Ended September 30,
	2022				2021
	Average				Average
	Recorded		Interest		Recorded		Interest
(dollars in thousands)	Investment		Income		Investment		Income
Impaired loans with a valuation allowance
Commercial and industrial	$	833	$	8	$	818	$	10
Commercial real estate		—		—		782		6
Residential real estate junior lien		—		—		11		—
Other revolving and installment		—		—		3		—
Total impaired loans with a valuation allowance		833		8		1,614		16
Impaired loans without a valuation allowance
Commercial and industrial		1,291		21		2,061		15
Commercial real estate		805		5		3,980		—
Residential real estate first mortgage		2,108		—		114		—
Residential real estate junior lien		193		—		190		—
Other revolving and installment		11		—		—		—
Total impaired loans without a valuation allowance		4,408		26		6,345		15
Total impaired loans
Commercial and industrial		2,124		29		2,879		25
Commercial real estate		805		5		4,762		6
Residential real estate first mortgage		2,108		—		114		—
Residential real estate junior lien		193		—		201		—
Other revolving and installment		11		—		3		—
Total impaired loans	$	5,241	$	34	$	7,959	$	31

Loans with a carrying value of $1.4 billion as of September 30, 2022 and $1.2 billion as of December 31, 2021, were pledged to secure public deposits, and for other purposes required or permitted by law.

Under certain circumstances, the Company will provide borrowers relief through loan restructurings. A restructuring of debt constitutes a troubled debt restructuring, or TDR, if the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. TDR concessions can include a reduction of interest rates, an extension of maturity dates, forgiveness of principal or interest due, or acceptance of other assets in full or partial satisfaction of the debt.

During the third quarter of 2022 and 2021, there were no loans modified as a TDR.

The Company does not have material commitments to lend additional funds to borrowers with loans whose terms have been modified in TDRs or whose loans are on nonaccrual.