Net deferred loan origination costs included in the balances above were $4.9 million as of September 30, 2021, compared to $2.4 million as of December 31, 2020. Net accretable purchase accounting adjustments included in the balances above reduced loans by $10.1 million as of September 30, 2021, and $10.9 million as of December 31, 2020. The September 30, 2021, commercial balance includes loans originated under PPP with an amortized cost of $178.2 million, compared to $446.4 million in loans originated under PPP included in the December 31, 2020, balance.

There were no retail real estate loans purchased during the three months ended September 30, 2021 or 2020. During the nine months ended September 30, 2021, the Company purchased retail real estate loans totaling $32.2 million, compared to $43.9 million of retail real estate loan purchases in the nine months ended September 30, 2020.

The Company utilizes a loan grading scale to assign a risk grade to all of its loans. A description of the general characteristics of each grade is as follows:

All loans are graded at their inception. Commercial lending relationships that are $1.0 million or less are usually processed through an expedited underwriting process. Most commercial loans greater than $1.0 million are included in a portfolio review at least annually. Commercial loans greater than $0.35 million that have a grading of special mention or worse are typically reviewed on a quarterly basis. Interim reviews may take place if circumstances of the borrower warrant a more frequent review. GSB’s policies were similar in nature to Busey Bank’s policies and the Company is migrating the legacy GSB portfolio and grading toward the Busey Bank policies. We acquired two non-accrual loans from GSB totaling $4.4 million, which are still outstanding as of September 30, 2021.

The following table is a summary of risk grades segregated by category of portfolio loans (dollars in thousands):

Risk grades of portfolio loans, further sorted by origination year are as follows (dollars in thousands):

An analysis of the amortized cost basis of portfolio loans that are past due and still accruing, or on a non-accrual status, is as follows (dollars in thousands):

Gross interest income recorded on 90+ days past due loans, and that would have been recorded on non-accrual loans if they had been accruing interest in accordance with their original terms, was $0.3 million and $1.2 million for the three and nine months ended September 30, 2021, respectively. Gross interest income recorded on 90+ days past due loans and that would have been recorded on non-accrual loans if they had been accruing interest in accordance with their original terms was $0.5 million and $1.4 million for the three and nine months ended September 30, 2020, respectively. The amount of interest collected on those loans and recognized on a cash basis that was included in interest income was $0.4 million for the three and nine months ended September 30, 2021, and was insignificant for the three and nine months ended September 30, 2020.

The following tables summarize TDRs that occurred during the periods presented (dollars in thousands):

(1)

TDRs may include multiple concessions; those that include an interest rate concession and payment concession are shown in the rate modification columns.

There were no TDRs that were entered into during the last 12 months that subsequently had payment defaults (a default occurs when a loan is 90 days or more past due or transferred to non-accrual) during the three and nine months ended September 30, 2021 or 2020. During the nine months ended September 30, 2021, one retail real estate loan for $0.1 million that had been a performing TDR for longer than 12 months, with a rate modification, became non-performing.

Gross interest income that would have been recorded in the three and nine months ended September 30, 2021 and 2020, if TDRs had performed in accordance with their original terms compared with their modified terms, was insignificant.

Modified loans with payment deferrals that fall under the CARES Act or revised Interagency Statement that suspended requirements under GAAP related to TDR classification are not included in the Company’s TDR totals.

As of September 30, 2021, the Company had $0.2 million of residential real estate in the process of foreclosure. The Company follows Federal Housing Finance Agency guidelines on single-family foreclosures and real estate owned evictions on portfolio loans, as well as all COVID-19 related state foreclosure and eviction orders.

The following tables provide details of loans evaluated individually, segregated by category. The Company evaluates loans with disparate risk characteristics on an individual basis. The unpaid contractual principal balance represents the customer outstanding balance excluding any partial charge-offs. Amortized cost represents customer balances net of any partial charge-offs recognized on the loan. Average amortized cost is calculated using the most recent four quarters (dollars in thousands):


	As of September 30, 2021
	Unpaid		Amortized
	Contractual		Cost		Amortized		Total				Average
	Principal		with No		Cost		Amortized		Related		Amortized
	Balance		Allowance		with Allowance		Cost		Allowance		Cost
Loans evaluated on an individual basis
Commercial	$	14,233	$	2,003	$	8,203	$	10,206	$	4,450	$	8,945
Commercial real estate		7,188		6,222		—		6,222		—		6,906
Real estate construction		276		276		—		276		—		338
Retail real estate		4,020		3,637		25		3,662		25		4,630
Retail other		—		—		—		—		—		—
Total loans evaluated individually	$	25,717	$	12,138	$	8,228	$	20,366	$	4,475	$	20,819


	As of December 31, 2020
	Unpaid		Amortized
	Contractual		Cost		Amortized		Total				Average
	Principal		with No		Cost		Amortized		Related		Amortized
	Balance		Allowance		with Allowance		Cost		Allowance		Cost
Loans evaluated on an individual basis
Commercial	$	16,771	$	4,001	$	4,371	$	8,372	$	1,600	$	7,920
Commercial real estate		7,406		6,067		—		6,067		—		9,349
Real estate construction		292		292		—		292		—		581
Retail real estate		5,873		5,490		25		5,515		25		7,439
Retail other		—		—		—		—		—		10
Total loans evaluated individually	$	30,342	$	15,850	$	4,396	$	20,246	$	1,625	$	25,299

Management's evaluation as to the ultimate collectability of loans includes estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers. Collateral dependent loans are loans in which repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment. Loans are written down to the lower of cost or fair value of underlying collateral, less estimated costs to sell. As of September 30, 2021, there were $15.5 million of collateral dependent loans secured by real estate or business assets.

Management estimates the ACL balance using relevant available information from internal and external sources relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Company’s historical loss experience beginning in 2010. As of September 30, 2021, the Company expects the markets in which it operates to experience continued economic uncertainty around the levels of delinquencies over the next 12 months. Management adjusted the historical loss experience for these expectations with an immediate reversion to historical loss rate beyond this forecast period. PPP loans were excluded from the ACL calculation as they are 100% government guaranteed.

The following tables detail activity in the ACL. Allocation of a portion of the ACL to one category does not preclude its availability to absorb losses in other categories (dollars in thousands):


	As of and for the Three Months Ended September 30, 2021
			Commercial		Real Estate		Retail Real
	Commercial		Real Estate		Construction		Estate		Retail Other		Total
ACL beginning balance	$	24,356	$	39,974	$	7,599	$	20,505	$	2,976	$	95,410
Provision for credit losses		657		(25)		(1,503)		(1,155)		157		(1,869)
Charged-off		(764)		(191)		—		(155)		(98)		(1,208)
Recoveries		157		73		25		157		57		469
ACL ending balance	$	24,406	$	39,831	$	6,121	$	19,352	$	3,092	$	92,802


	As of and for the Nine Months Ended September 30, 2021
			Commercial		Real Estate		Retail
	Commercial		Real Estate		Construction		Real Estate		Retail Other		Total
ACL beginning balance	$	23,866	$	46,230	$	8,193	$	21,992	$	767	$	101,048
Day 1 PCD ⁽¹⁾		3,546		336		—		129		167		4,178
Provision for credit losses		(1,428)		(6,109)		(2,082)		(3,028)		2,282		(10,365)
Charged-off		(2,026)		(812)		(209)		(315)		(349)		(3,711)
Recoveries		448		186		219		574		225		1,652
ACL ending balance	$	24,406	$	39,831	$	6,121	$	19,352	$	3,092	$	92,802

(1)

The Day 1 PCD is attributable to the CAC acquisition.


	As of and for the Three Months Ended September 30, 2020
			Commercial		Real Estate		Retail Real
	Commercial		Real Estate		Construction		Estate		Retail Other		Total
ACL beginning balance	$	24,146	$	42,680	$	7,792	$	20,405	$	1,023	$	96,046
Provision for credit losses		2,593		3,703		(381)		(383)		17		5,549
Charged-off		(2,500)		(569)		(18)		(139)		(171)		(3,397)
Recoveries		124		103		26		301		89		643
ACL ending balance	$	24,363	$	45,917	$	7,419	$	20,184	$	958	$	98,841


	As of and for the Nine Months Ended September 30, 2020
			Commercial		Real Estate		Retail Real
	Commercial		Real Estate		Construction		Estate		Retail Other		Total
Beginning balance, prior to adoption of ASC 326-30	$	18,291	$	21,190	$	3,204	$	10,495	$	568	$	53,748
Adoption of ASC 326-30		715		9,306		2,954		3,292		566		16,833
Provision for credit losses		10,739		17,090		1,082		6,635		110		35,656
Charged-off		(5,682)		(1,833)		(18)		(1,139)		(575)		(9,247)
Recoveries		300		164		197		901		289		1,851
ACL ending balance	$	24,363	$	45,917	$	7,419	$	20,184	$	958	$	98,841

The following table presents the ACL and amortized cost of portfolio loans by category (dollars in thousands):


	As of September 30, 2021
			Commercial		Real Estate		Retail Real
	Commercial		Real Estate		Construction		Estate		Retail Other		Total
ACL
Ending balance attributed to:
Loans individually evaluated for impairment	$	4,450	$	—	$	—	$	25	$	—	$	4,475
Loans collectively evaluated for impairment		19,956		39,831		6,121		19,327		3,092		88,327
ACL ending balance	$	24,406	$	39,831	$	6,121	$	19,352	$	3,092	$	92,802

Loans
Loans individually evaluated for impairment	$	10,206	$	6,222	$	276	$	3,662	$	—	$	20,366
Loans collectively evaluated for impairment		1,921,657		3,062,400		430,581		1,509,222		206,409		7,130,269
Loans ending balance	$	1,931,863	$	3,068,622	$	430,857	$	1,512,884	$	206,409	$	7,150,635


	As of December 31, 2020
			Commercial		Real Estate		Retail Real
	Commercial		Real Estate		Construction		Estate		Retail Other		Total
ACL
Ending balance attributed to:
Loans individually evaluated for impairment	$	1,600	$	—	$	—	$	25	$	—	$	1,625
Loans collectively evaluated for impairment		22,266		46,230		8,193		21,967		767		99,423
ACL ending balance	$	23,866	$	46,230	$	8,193	$	21,992	$	767	$	101,048

Loans
Loans individually evaluated for impairment	$	8,372	$	6,067	$	292	$	5,515	$	—	$	20,246
Loans collectively evaluated for impairment		2,006,204		2,886,468		461,494		1,402,337		37,428		6,793,931
Loans ending balance	$	2,014,576	$	2,892,535	$	461,786	$	1,407,852	$	37,428	$	6,814,177