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ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY | 12 Months Ended
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Dec. 31, 2021
ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY |
ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY | ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY The Company adopted ASC 326 using the modified retrospective for all financial assets measured at amortized cost. Results for reporting periods after January 1, 2021 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The following table presents the activity in the allowance for credit losses by portfolio segment for the year ended December 31, 2021:
(dollars in thousands) | Commercial and Industrial |  | Commercial Real Estate and Multi-family Residential |  | Agri-business and Agricultural |  | Other Commercial |  | Consumer 1-4 Family Mortgage |  | Other Consumer |  | Unallocated |  | Total
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 28,333 |  |  | $ | 22,907 |  |  | $ | 3,043 |  |  | $ | 416 |  |  | $ | 2,619 |  |  | $ | 951 |  |  | $ | 3,139 |  |  | $ | 61,408 |
Impact of adopting ASC 326 | 4,312 |  |  | 4,316 |  |  | 1,060 |  |  | 941 |  |  | 953 |  |  | 349 |  |  | (2,881) |  |  | 9,050 |
Provision for credit losses | 1,966 |  |  | (632) |  |  | 611 |  |  | (211) |  |  | (777) |  |  | (72) |  |  | 192 |  |  | 1,077 |
Loans charged-off | (5,575) |  |  | (70) |  |  | 0 |  |  | 0 |  |  | (51) |  |  | (287) |  |  | 0 |  |  | (5,983) |
Recoveries | 1,559 |  |  | 14 |  |  | 320 |  |  | 0 |  |  | 122 |  |  | 206 |  |  | 0 |  |  | 2,221 |
Net loans (charged-off) recovered | (4,016) |  |  | (56) |  |  | 320 |  |  | 0 |  |  | 71 |  |  | (81) |  |  | 0 |  |  | (3,762) |
Ending balance | $ | 30,595 |  |  | $ | 26,535 |  |  | $ | 5,034 |  |  | $ | 1,146 |  |  | $ | 2,866 |  |  | $ | 1,147 |  |  | $ | 450 |  |  | $ | 67,773 |
Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $250,000. The Company uses the following definitions for risk ratings: Special Mention. Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard. Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized as the distinct possibility that the institution 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 characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans are considered to be "Pass" rated when they are reviewed as part of the previously described process and do not meet the criteria above with the exception of consumer troubled debt restructurings, which are evaluated and listed with Substandard commercial grade loans and consumer nonaccrual loans which are evaluated individually and listed with “Not Rated” loans. Loans listed as Not Rated are consumer loans or commercial loans with consumer characteristics included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status. NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) The following table summarizes the risk category of loans by loan segment and origination date as of December 31, 2021:
(dollars in thousands) | 2021 |  | 2020 |  | 2019 |  | 2018 |  | 2017 |  | Prior |  | Term Total |  | Revolving |  | Total
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Working capital lines of credit loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 3,699 |  |  | $ | 830 |  |  | $ | 3,360 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 7,889 |  |  | $ | 558,634 |  |  | $ | 566,523 |
Special Mention | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 60,441 |  |  | 60,441 |
Substandard | 0 |  |  | 0 |  |  | 35 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 35 |  |  | 25,928 |  |  | 25,963 |
Total | 3,699 |  |  | 830 |  |  | 3,395 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 7,924 |  |  | 645,003 |  |  | 652,927 |
Non-working capital loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 185,374 |  |  | 139,157 |  |  | 79,477 |  |  | 38,899 |  |  | 19,415 |  |  | 18,489 |  |  | 480,811 |  |  | 203,794 |  |  | 684,605 |
Special Mention | 17,728 |  |  | 0 |  |  | 225 |  |  | 979 |  |  | 2,350 |  |  | 1,426 |  |  | 22,708 |  |  | 0 |  |  | 22,708 |
Substandard | 2,996 |  |  | 6,948 |  |  | 1,091 |  |  | 2,534 |  |  | 5,465 |  |  | 426 |  |  | 19,460 |  |  | 3,321 |  |  | 22,781 |
Not Rated | 2,265 |  |  | 1,758 |  |  | 837 |  |  | 563 |  |  | 128 |  |  | 14 |  |  | 5,565 |  |  | 0 |  |  | 5,565 |
Total | 208,363 |  |  | 147,863 |  |  | 81,630 |  |  | 42,975 |  |  | 27,358 |  |  | 20,355 |  |  | 528,544 |  |  | 207,115 |  |  | 735,659 |
Commercial real estate and multi-family residential loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction and land development loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 35,136 |  |  | 30,224 |  |  | 1,276 |  |  | 998 |  |  | 0 |  |  | 0 |  |  | 67,634 |  |  | 310,396 |  |  | 378,030 |
Total | 35,136 |  |  | 30,224 |  |  | 1,276 |  |  | 998 |  |  | 0 |  |  | 0 |  |  | 67,634 |  |  | 310,396 |  |  | 378,030 |
Owner occupied loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 135,861 |  |  | 169,404 |  |  | 124,117 |  |  | 85,070 |  |  | 78,155 |  |  | 93,925 |  |  | 686,532 |  |  | 29,611 |  |  | 716,143 |
Special Mention | 6,555 |  |  | 0 |  |  | 880 |  |  | 933 |  |  | 7,387 |  |  | 1,235 |  |  | 16,990 |  |  | 0 |  |  | 16,990 |
Substandard | 489 |  |  | 1,570 |  |  | 909 |  |  | 1,758 |  |  | 694 |  |  | 238 |  |  | 5,658 |  |  | 0 |  |  | 5,658 |
Total | 142,905 |  |  | 170,974 |  |  | 125,906 |  |  | 87,761 |  |  | 86,236 |  |  | 95,398 |  |  | 709,180 |  |  | 29,611 |  |  | 738,791 |
Nonowner occupied loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 146,342 |  |  | 154,433 |  |  | 107,262 |  |  | 19,054 |  |  | 31,023 |  |  | 59,154 |  |  | 517,268 |  |  | 44,362 |  |  | 561,630 |
Special Mention | 11,825 |  |  | 331 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 14,253 |  |  | 26,409 |  |  | 0 |  |  | 26,409 |
Total | 158,167 |  |  | 154,764 |  |  | 107,262 |  |  | 19,054 |  |  | 31,023 |  |  | 73,407 |  |  | 543,677 |  |  | 44,362 |  |  | 588,039 |
Multi-family loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 84,678 |  |  | 53,195 |  |  | 36,575 |  |  | 12,286 |  |  | 14,574 |  |  | 9,793 |  |  | 211,101 |  |  | 13,434 |  |  | 224,535 |
Special Mention | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 22,252 |  |  | 0 |  |  | 22,252 |  |  | 0 |  |  | 22,252 |
Total | 84,678 |  |  | 53,195 |  |  | 36,575 |  |  | 12,286 |  |  | 36,826 |  |  | 9,793 |  |  | 233,353 |  |  | 13,434 |  |  | 246,787 |
Agri-business and agricultural loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans secured by farmland: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 47,532 |  |  | 37,035 |  |  | 16,249 |  |  | 10,469 |  |  | 10,454 |  |  | 17,021 |  |  | 138,760 |  |  | 61,774 |  |  | 200,534 |
Special Mention | 0 |  |  | 1,985 |  |  | 2,303 |  |  | 0 |  |  | 180 |  |  | 30 |  |  | 4,498 |  |  | 918 |  |  | 5,416 |
Substandard | 207 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 145 |  |  | 352 |  |  | 0 |  |  | 352 |
Total | 47,739 |  |  | 39,020 |  |  | 18,552 |  |  | 10,469 |  |  | 10,634 |  |  | 17,196 |  |  | 143,610 |  |  | 62,692 |  |  | 206,302 |
Loans for agricultural production: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 36,238 |  |  | 25,855 |  |  | 4,224 |  |  | 11,072 |  |  | 1,331 |  |  | 4,178 |  |  | 82,898 |  |  | 138,142 |  |  | 221,040 |
Special Mention | 448 |  |  | 8,642 |  |  | 1,171 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 10,261 |  |  | 8,272 |  |  | 18,533 |
Total | 36,686 |  |  | 34,497 |  |  | 5,395 |  |  | 11,072 |  |  | 1,331 |  |  | 4,178 |  |  | 93,159 |  |  | 146,414 |  |  | 239,573 |
Other commercial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 6,556 |  |  | 21,111 |  |  | 3,243 |  |  | 1,273 |  |  | 8,592 |  |  | 7,460 |  |  | 48,235 |  |  | 21,145 |  |  | 69,380 |
Special Mention | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 3,798 |  |  | 3,798 |  |  | 0 |  |  | 3,798 |
Total | 6,556 |  |  | 21,111 |  |  | 3,243 |  |  | 1,273 |  |  | 8,592 |  |  | 11,258 |  |  | 52,033 |  |  | 21,145 |  |  | 73,178 |
Consumer 1-4 family mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Closed end first mortgage loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 14,635 |  |  | 16,173 |  |  | 5,312 |  |  | 5,903 |  |  | 3,049 |  |  | 3,221 |  |  | 48,293 |  |  | 5,005 |  |  | 53,298 |
Substandard | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 1,274 |  |  | 1,274 |  |  | 0 |  |  | 1,274 |
Not Rated | 45,089 |  |  | 27,738 |  |  | 9,248 |  |  | 5,217 |  |  | 7,628 |  |  | 26,321 |  |  | 121,241 |  |  | 482 |  |  | 121,723 |
Total | 59,724 |  |  | 43,911 |  |  | 14,560 |  |  | 11,120 |  |  | 10,677 |  |  | 30,816 |  |  | 170,808 |  |  | 5,487 |  |  | 176,295 |
Open end and junior lien loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 679 |  |  | 379 |  |  | 159 |  |  | 313 |  |  | 0 |  |  | 0 |  |  | 1,530 |  |  | 5,074 |  |  | 6,604 |
Substandard | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 98 |  |  | 98 |
Not Rated | 21,945 |  |  | 5,624 |  |  | 5,987 |  |  | 3,899 |  |  | 1,653 |  |  | 1,526 |  |  | 40,634 |  |  | 110,523 |  |  | 151,157 |
Total | 22,624 |  |  | 6,003 |  |  | 6,146 |  |  | 4,212 |  |  | 1,653 |  |  | 1,526 |  |  | 42,164 |  |  | 115,695 |  |  | 157,859 |
Residential construction loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Not Rated | 7,926 |  |  | 1,537 |  |  | 960 |  |  | 138 |  |  | 171 |  |  | 1,125 |  |  | 11,857 |  |  | 0 |  |  | 11,857 |
Total | 7,926 |  |  | 1,537 |  |  | 960 |  |  | 138 |  |  | 171 |  |  | 1,125 |  |  | 11,857 |  |  | 0 |  |  | 11,857 |
Other consumer loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 3,401 |  |  | 957 |  |  | 1,523 |  |  | 0 |  |  | 1,155 |  |  | 0 |  |  | 7,036 |  |  | 12,998 |  |  | 20,034 |
Substandard | 36 |  |  | 23 |  |  | 230 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 289 |  |  | 0 |  |  | 289 |
Not Rated | 21,652 |  |  | 14,931 |  |  | 7,474 |  |  | 5,844 |  |  | 1,890 |  |  | 1,203 |  |  | 52,994 |  |  | 9,227 |  |  | 62,221 |
Total | 25,089 |  |  | 15,911 |  |  | 9,227 |  |  | 5,844 |  |  | 3,045 |  |  | 1,203 |  |  | 60,319 |  |  | 22,225 |  |  | 82,544 |
TOTAL | $ | 839,292 |  |  | $ | 719,840 |  |  | $ | 414,127 |  |  | $ | 207,202 |  |  | $ | 217,546 |  |  | $ | 266,255 |  |  | $ | 2,664,262 |  |  | $ | 1,623,579 |  |  | $ | 4,287,841 |
NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) As of December 31, 2021, $26.2 million in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans. These loans were included in this risk rating category because they are fully guaranteed by the Small Business Administration ("SBA"). Nonaccrual and Past Due Loans: The Company does not record interest on nonaccrual loans until principal is recovered. For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in process of collection, or earlier when concern exists as to the ultimate collectability of principal or interest. Interest accrued but not received is reversed against earnings. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and the payments are reasonably assured. The following table presents the aging of the amortized cost basis in past due loans as of December 31, 2021 by class of loans and loans past due 90 days or more and still accruing by class of loan:
(dollars in thousands) |  | Loans Not Past Due |  | 30-89 Days Past Due |  | Greater than 89 Days Past Due and Accruing |  | Total Accruing |  | Total Nonaccrual |  | Nonaccrual With No Allowance For Credit Loss |  | Total
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Working capital lines of credit loans |  | $ | 652,903 |  |  | $ | 24 |  |  | $ | 0 |  |  | $ | 646,961 |  |  | $ | 5,966 |  |  | $ | 5,200 |  |  | $ | 652,927 |
Non-working capital loans |  | 735,658 |  |  | 1 |  |  | 0 |  |  | 731,063 |  |  | 4,596 |  |  | 229 |  |  | 735,659 |
Commercial real estate and multi-family residential loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction and land development loans |  | 378,030 |  |  | 0 |  |  | 0 |  |  | 378,030 |  |  | 0 |  |  | 0 |  |  | 378,030 |
Owner occupied loans |  | 738,791 |  |  | 0 |  |  | 0 |  |  | 735,157 |  |  | 3,634 |  |  | 2,129 |  |  | 738,791 |
Nonowner occupied loans |  | 588,039 |  |  | 0 |  |  | 0 |  |  | 588,039 |  |  | 0 |  |  | 0 |  |  | 588,039 |
Multi-family loans |  | 246,787 |  |  | 0 |  |  | 0 |  |  | 246,787 |  |  | 0 |  |  | 0 |  |  | 246,787 |
Agri-business and agricultural loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans secured by farmland |  | 206,302 |  |  | 0 |  |  | 0 |  |  | 205,967 |  |  | 335 |  |  | 0 |  |  | 206,302 |
Loans for agricultural production |  | 239,573 |  |  | 0 |  |  | 0 |  |  | 239,573 |  |  | 0 |  |  | 0 |  |  | 239,573 |
Other commercial loans |  | 73,178 |  |  | 0 |  |  | 0 |  |  | 73,178 |  |  | 0 |  |  | 0 |  |  | 73,178 |
Consumer 1‑4 family mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Closed end first mortgage loans |  | 175,678 |  |  | 500 |  |  | 117 |  |  | 176,240 |  |  | 55 |  |  | 55 |  |  | 176,295 |
Open end and junior lien loans |  | 157,729 |  |  | 130 |  |  | 0 |  |  | 157,761 |  |  | 98 |  |  | 98 |  |  | 157,859 |
Residential construction loans |  | 11,857 |  |  | 0 |  |  | 0 |  |  | 11,857 |  |  | 0 |  |  | 0 |  |  | 11,857 |
Other consumer loans |  | 82,472 |  |  | 72 |  |  | 0 |  |  | 82,255 |  |  | 289 |  |  | 0 |  |  | 82,544 |
Total |  | $ | 4,286,997 |  |  | $ | 727 |  |  | $ | 117 |  |  | $ | 4,272,868 |  |  | $ | 14,973 |  |  | $ | 7,711 |  |  | $ | 4,287,841 |
As of December 31, 2021, there were an insignificant number of loans 30-89 days past due or greater than 89 days past due on nonaccrual. Additionally, interest income recognized on nonaccrual loans was insignificant during the year ended December 31, 2021. ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) When management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty and the loan is expected to be repaid substantially through the operation or sale of the collateral. The class of loan represents the primary collateral type associated with the loan. Significant year over year changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value. The following table presents the amortized cost basis of collateral dependent loans by class of loan as of December 31, 2021:
(dollars in thousands) |  | Real Estate |  | General Business Assets |  | Other |  | Total
Commercial and industrial loans: |  |  |  |  |  |  |  |
Working capital lines of credit loans |  | $ | 0 |  |  | $ | 5,966 |  |  | $ | 0 |  |  | $ | 5,966 |
Non-working capital loans |  | 1,606 |  |  | 9,475 |  |  | 229 |  |  | 11,310 |
Commercial real estate and multi-family residential loans: |  |  |  |  |  |  |  |
Owner occupied loans |  | 1,435 |  |  | 1,505 |  |  | 1,161 |  |  | 4,101 |
Nonowner occupied loans |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Agri-business and agricultural loans: |  |  |  |  |  |  |  |
Loans secured by farmland |  | 190 |  |  | 145 |  |  | 0 |  |  | 335 |
Consumer 1-4 family mortgage loans: |  |  |  |  |  |  |  |
Closed end first mortgage loans |  | 3,081 |  |  | 0 |  |  | 0 |  |  | 3,081 |
Open end and junior lien loans |  | 98 |  |  | 0 |  |  | 0 |  |  | 98 |
Other consumer loans |  | 59 |  |  | 0 |  |  | 0 |  |  | 59 |
Total |  | $ | 6,469 |  |  | $ | 17,091 |  |  | $ | 1,390 |  |  | $ | 24,950 |
Troubled Debt Restructurings: Troubled debt restructured loans are included in the totals for individually analyz ed loans. The Company has allocated $5.8 million and $5.5 million of specific allocations to customers whose loan terms have been modified in troubled debt restructurings as of December 31, 2021 and December 31, 2020, respectively. The Company is not committed to lend additional funds to debtors whose loans have been modified in a troubled debt restructuring.
(dollars in thousands) |  | December 31, 2021 |  | December 31, 2020
Accruing troubled debt restructured loans |  | $ | 5,121 |  |  | $ | 5,237 |
Nonaccrual troubled debt restructured loans |  | 6,218 |  |  | 6,476 |
Total troubled debt restructured loans |  | $ | 11,339 |  |  | $ | 11,713 |
During the year ending December 31, 2021, certain loans were modified as troubled debt restructurings. The modified terms of these loans include one or a combination of the following: inadequate compensation for the terms of the restructure or renewal; a modification of the repayment terms which delays principal payment for some period; terms offered to borrowers in financial distress where no additional credit enhancements were obtained at the time of renewal. Additional concessions were granted to borrowers during 2021 with previously identified troubled debt restructured loans. There were 8 loans with recorded investments totaling $2.2 million where collateral values or cash flows were insufficient to support the loans. These troubled debt restructured loans with additional concessions decreased the allowance by $423,000 and resulted in no charge-offs for the year ending December 31, 2021. These concessions are not included in the table below. NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) The following table presents loans by class modified as new troubled debt restructurings that occurred during the year ending December 31, 2021:
|  |  |  |  |  |  |  | Modified Repayment Terms
(dollars in thousands) |  | Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Number of Loans |  | Extension Period or Range (in months)
Troubled Debt Restructurings |  |  |  |  |  |  |  |  |  |
Consumer 1-4 family loans: |  |  |  |  |  |  |  |  |  |
Closed end first mortgage loans |  | 2 |  |  | $ | 217 |  |  | $ | 217 |  |  | 2 |  |  | 172-204
Total |  | 2 |  |  | $ | 217 |  |  | $ | 217 |  |  | 2 |  |  | 172-204
For the period ending December 31, 2021, the troubled debt restructurings described above had no impact to the allowance and no charge-offs were recorded. As of December 31, 2021, one retail loan in the amount of $11,000 had a COVID-19 related deferral. In accordance with Section 4013 of the CARES Act, this deferral was not considered to be a troubled debt restructuring. This provision was effective through January 1, 2022 under the Consolidated Appropriations Act, 2021. During the year ended December 31, 2020, certain loans were modified as troubled debt restructurings. The modified terms of these loans include one or a combination of the following: inadequate compensation for the terms of the restructure or renewal; a modification of the repayment terms which delays principal repayment for some period; or renewal terms offered to borrowers in financial distress where no additional credit enhancements were obtained at the time of renewal. The following table presents loans by class modified as new troubled debt restructurings that occurred during the year ending December 31, 2020:
|  |  |  |  |  |  |  | Modified Repayment Terms
(dollars in thousands) |  | Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Number of Loans |  | Extension Period or Range (in months)
Troubled Debt Restructurings |  |  |  |  |  |  |  |  |  |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |
Working capital lines of credit loans |  | 1 |  |  | $ | 250 |  |  | $ | 315 |  |  | 1 |  |  | 0
Non-working capital lines of credit loans |  | 2 |  |  | 4,288 |  |  | 3,691 |  |  | 2 |  |  | 0
Commercial real estate and multi-family residential loans: |  |  |  |  |  |  |  |  |  |
Owner occupied loans |  | 1 |  |  | 1,528 |  |  | 1,527 |  |  | 1 |  |  | 0
Total |  | 4 |  |  | $ | 6,066 |  |  | $ | 5,533 |  |  | 4 |  |  | 0
For the period ending December 31, 2020, the troubled debt restructurings described above had no impact to the allowance and no charge-offs were recorded. As of December 31, 2020, total deferrals attributed to COVID-19 were $100.7 million representing 49 borrowers. This represented 2.2% of the total loan portfolio. Of that 22 were commercial loan borrowers representing $98.2 million in loans, or 2.3% of commercial loans, and 27 were retail loan borrowers representing $2.5 million, or 0.7% of total retail loans. The majority of all loan deferrals were for a period of 90 days. Of the total commercial deferrals attributed to COVID-19, $11.9 million represented a first deferral action, $22.8 million represented a second deferral action, $41.9 million represented a third deferral action and $24.1 million represented a fourth deferral action. Two borrowers represented 90% of the fourth deferral population and were commercial real estate nonowner occupied loans supported by adequate collateral and personal guarantors and consist of loans to the hotel and accommodation industry. All COVID-19 related loan deferrals remain on accrual status, as each deferral is individually analyzed, and management has determined that all contractual cashflows are collectable at this NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) time. In accordance with Section 4013 of the CARES Act, these were not considered to be troubled debt restructurings and were excluded from the table above. During the year ending December 31, 2019, certain loans were modified as troubled debt restructurings. The modified terms of these loans include one or a combination of the following: inadequate compensation for the terms of the restructure or renewal; a modification of the repayment terms which delays principal repayment for some period; or renewal terms offered to borrowers in financial distress where no additional credit enhancements were obtained at the time of renewal. Additional concessions were granted to borrowers during 2019 with previously identified troubled debt restructured loans. There were three commercial real estate loans with recorded investments totaling $1.9 million and five commercial and industrial loans with recorded investments totaling $2.4 million where the collateral values or cash flows were insufficient to support the loans. These troubled debt restructured loans with additional concessions decreased the allowance by $484,000 and resulted in no charge-offs for year ending December 31, 2019. These concessions are not included in the table below. The following table presents loans by class modified as new troubled debt restructurings that occurred during the year ending December 31, 2019:
|  |  |  |  |  |  |  | Modified Repayment Terms
(dollars in thousands) |  | Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Number of Loans |  | Extension Period or Range (in months)
Troubled Debt Restructurings |  |  |  |  |  |  |  |  |  |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |
Working capital lines of credit loans |  | 1 |  |  | $ | 35 |  |  | $ | 35 |  |  | 1 |  |  | 1
Total |  | 1 |  |  | $ | 35 |  |  | $ | 35 |  |  | 1 |  |  | 1
For the period ending December 31, 2019, the working capital line of credit troubled debt restructuring described above had no impact to the allowance and no charge-offs were recorded. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. The following table presents loans modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the period ending December 31, 2021, 2020 and 2019.
| 2021 |  | 2020 |  | 2019
(dollars in thousands) | Number of Loans |  | Recorded Investment |  | Number of Loans |  | Recorded Investment |  | Number of Loans |  | Recorded Investment
Troubled Debt Restructurings that Subsequently Defaulted Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |
Non-working capital loans | 0 |  |  | $ | 0 |  |  | 0 |  |  | $ | 0 |  |  | 1 |  |  | $ | 601 |
Total | 0 |  |  | $ | 0 |  |  | 0 |  |  | $ | 0 |  |  | 1 |  |  | $ | 601 |
NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) Allowance for Loan Losses (Prior to January 1, 2021) Prior to the adoption of ASC 326 on January 1, 2021 the Company calculated the allowance for loan losses using the incurred losses methodology. The following tables are disclosures related to the allowance for loan losses in prior periods. The following tables present the activity and balance in the allowance for loan losses by portfolio segment for the year ended December 31, 2020 and 2019. PPP loans are fully guaranteed by the SBA and have not been allocated for within the allowance for loan losses.
(dollars in thousands) | Commercial and Industrial |  | Commercial Real Estate and Multi-family Residential |  | Agri-business and Agricultural |  | Other Commercial |  | Consumer 1-4 Family Mortgage |  | Other Consumer |  | Unallocated |  | Total
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 25,789 |  |  | $ | 15,796 |  |  | $ | 3,869 |  |  | $ | 447 |  |  | $ | 2,086 |  |  | $ | 345 |  |  | $ | 2,320 |  |  | $ | 50,652 |
Provision for loan losses | 6,640 |  |  | 6,868 |  |  | (826) |  |  | (31) |  |  | 341 |  |  | 959 |  |  | 819 |  |  | 14,770 |
Loans charged-off | (4,524) |  |  | (72) |  |  | 0 |  |  | 0 |  |  | (141) |  |  | (516) |  |  | 0 |  |  | (5,253) |
Recoveries | 428 |  |  | 315 |  |  | 0 |  |  | 0 |  |  | 333 |  |  | 163 |  |  | 0 |  |  | 1,239 |
Net loans (charged-off) recovered | (4,096) |  |  | 243 |  |  | 0 |  |  | 0 |  |  | 192 |  |  | (353) |  |  | 0 |  |  | (4,014) |
Ending balance | $ | 28,333 |  |  | $ | 22,907 |  |  | $ | 3,043 |  |  | $ | 416 |  |  | $ | 2,619 |  |  | $ | 951 |  |  | $ | 3,139 |  |  | $ | 61,408 |
(dollars in thousands) | Commercial and Industrial |  | Commercial Real Estate and Multi-family Residential |  | Agri-business and Agricultural |  | Other Commercial |  | Consumer 1-4 Family Mortgage |  | Other Consumer |  | Unallocated |  | Total
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 22,518 |  |  | $ | 15,393 |  |  | $ | 4,305 |  |  | $ | 368 |  |  | $ | 2,292 |  |  | $ | 283 |  |  | $ | 3,294 |  |  | $ | 48,453 |
Provision for loan losses | 4,259 |  |  | 259 |  |  | (444) |  |  | 79 |  |  | (219) |  |  | 275 |  |  | (974) |  |  | 3,235 |
Loans charged-off | (1,447) |  |  | (17) |  |  | 0 |  |  | 0 |  |  | (110) |  |  | (336) |  |  | 0 |  |  | (1,910) |
Recoveries | 459 |  |  | 161 |  |  | 8 |  |  | 0 |  |  | 123 |  |  | 123 |  |  | 0 |  |  | 874 |
Net loans (charged-off) recovered | (988) |  |  | 144 |  |  | 8 |  |  | 0 |  |  | 13 |  |  | (213) |  |  | 0 |  |  | (1,036) |
Ending balance | $ | 25,789 |  |  | $ | 15,796 |  |  | $ | 3,869 |  |  | $ | 447 |  |  | $ | 2,086 |  |  | $ | 345 |  |  | $ | 2,320 |  |  | $ | 50,652 |
NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) The following tables present balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2020:
(dollars in thousands) | Commercial and Industrial |  | Commercial Real Estate and Multi-family Residential |  | Agri-business and Agricultural |  | Other Commercial |  | Consumer 1-4 Family Mortgage |  | Other Consumer |  | Unallocated |  | Total
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 6,310 |  |  | $ | 1,377 |  |  | $ | 84 |  |  | $ | 0 |  |  | $ | 270 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 8,041 |
Collectively evaluated for impairment | 22,023 |  |  | 21,530 |  |  | 2,959 |  |  | 416 |  |  | 2,349 |  |  | 951 |  |  | 3,139 |  |  | 53,367 |
Total ending allowance balance | $ | 28,333 |  |  | $ | 22,907 |  |  | $ | 3,043 |  |  | $ | 416 |  |  | $ | 2,619 |  |  | $ | 951 |  |  | $ | 3,139 |  |  | $ | 61,408 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment | $ | 12,533 |  |  | $ | 5,518 |  |  | $ | 428 |  |  | $ | 0 |  |  | $ | 1,700 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 20,179 |
Loans collectively evaluated for impairment | 1,772,393 |  |  | 1,887,054 |  |  | 429,234 |  |  | 93,912 |  |  | 342,999 |  |  | 103,385 |  |  | 0 |  |  | 4,628,977 |
Total ending loans balance | $ | 1,784,926 |  |  | $ | 1,892,572 |  |  | $ | 429,662 |  |  | $ | 93,912 |  |  | $ | 344,699 |  |  | $ | 103,385 |  |  | $ | 0 |  |  | $ | 4,649,156 |
NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2020:
(dollars in thousands) | Unpaid Principal Balance |  | Recorded Investment |  | Allowance for Loan Losses Allocated
With no related allowance recorded: |  |  |  |  |
Commercial and industrial loans: |  |  |  |  |
Working capital lines of credit loans | $ | 346 |  |  | $ | 173 |  |  | $ | 0 |
Non-working capital loans | 2,399 |  |  | 968 |  |  | 0 |
Commercial real estate and multi-family residential loans: |  |  |  |  |
Owner occupied loans | 3,002 |  |  | 2,930 |  |  | 0 |
Agri-business and agricultural loans: |  |  |  |  |
Loans secured by farmland | 603 |  |  | 283 |  |  | 0 |
Consumer 1‑4 family loans: |  |  |  |  |
Closed end first mortgage loans | 316 |  |  | 236 |  |  | 0 |
Open end and junior lien loans | 5 |  |  | 5 |  |  | 0 |
With an allowance recorded: |  |  |  |  |
Commercial and industrial loans: |  |  |  |  |
Working capital lines of credit loans | 433 |  |  | 433 |  |  | 255 |
Non-working capital loans | 11,644 |  |  | 10,959 |  |  | 6,055 |
Commercial real estate and multi-family residential loans: |  |  |  |  |
Owner occupied loans | 2,589 |  |  | 2,588 |  |  | 1,377 |
Agri-business and agricultural loans: |  |  |  |  |
Loans secured by farmland | 145 |  |  | 145 |  |  | 84 |
Consumer 1‑4 family mortgage loans: |  |  |  |  |
Closed end first mortgage loans | 1,457 |  |  | 1,459 |  |  | 270 |
Total | $ | 22,939 |  |  | $ | 20,179 |  |  | $ | 8,041 |
NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) The following table presents loans individually evaluated for impairment by class of loans for the year ended December 31, 2020:
(dollars in thousands) | Average Recorded Investment |  | Interest Income Recognized |  | Cash Basis Interest Income Recognized
With no related allowance recorded: |  |  |  |  |
Commercial and industrial loans: |  |  |  |  |
Working capital lines of credit loans | $ | 375 |  |  | $ | 0 |  |  | $ | 0 |
Non-working capital loans | 816 |  |  | 21 |  |  | 21 |
Commercial real estate and multi-family residential loans: |  |  |  |  |
Owner occupied loans | 2,156 |  |  | 13 |  |  | 12 |
Agri-business and agricultural loans: |  |  |  |  |
Loans secured by farmland | 283 |  |  | 0 |  |  | 0 |
Loans for agricultural production | 4 |  |  | 0 |  |  | 0 |
Consumer 1-4 family loans: |  |  |  |  |
Closed end first mortgage loans | 291 |  |  | 3 |  |  | 2 |
Open end and junior lien loans | 49 |  |  | 0 |  |  | 0 |
With an allowance recorded: |  |  |  |  |
Commercial and industrial loans: |  |  |  |  |
Working capital lines of credit loans | 2,433 |  |  | 0 |  |  | 0 |
Non-working capital loans | 11,579 |  |  | 287 |  |  | 287 |
Commercial real estate and multi-family residential loans: |  |  |  |  |
Construction and land development loans |  |  |  |  |
Owner occupied loans | 3,156 |  |  | 30 |  |  | 30 |
Agri-business and agricultural loans: |  |  |  |  |
Loans secured by farmland | 147 |  |  | 0 |  |  | 0 |
Consumer 1-4 family mortgage loans: |  |  |  |  |
Closed end first mortgage loans | 1,557 |  |  | 36 |  |  | 33 |
Open end and junior lien loans | 481 |  |  | 0 |  |  | 0 |
Residential construction loans | 35 |  |  | 0 |  |  | 0 |
Other consumer loans | 0 |  |  | 0 |  |  | 0 |
Total | $ | 23,362 |  |  | $ | 390 |  |  | $ | 385 |
NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) The following table presents loans individually evaluated for impairment by class of loans for the year ended December 31, 2019:
(dollars in thousands) | Average Recorded Investment |  | Interest Income Recognized |  | Cash Basis Interest Income Recognized
With no related allowance recorded: |  |  |  |  |
Commercial and industrial loans: |  |  |  |  |
Working capital lines of credit loans | $ | 176 |  |  | $ | 9 |  |  | $ | 9 |
Non-working capital loans | 1,170 |  |  | 40 |  |  | 30 |
Commercial real estate and multi-family residential loans: |  |  |  |  |
Owner occupied loans | 2,354 |  |  | 34 |  |  | 34 |
Loans for ag production | 4 |  |  | 0 |  |  | 0 |
Agri-business and agricultural loans: |  |  |  |  |
Loans secured by farmland | 283 |  |  | 0 |  |  | 0 |
Consumer 1‑4 family loans: |  |  |  |  |
Closed end first mortgage loans | 272 |  |  | 3 |  |  | 3 |
Open end and junior lien loans | 133 |  |  | 0 |  |  | 0 |
With an allowance recorded: |  |  |  |  |
Commercial and industrial loans: |  |  |  |  |
Working capital lines of credit loans | 6,335 |  |  | 143 |  |  | 81 |
Non-working capital loans | 11,800 |  |  | 448 |  |  | 410 |
Commercial real estate and multi-family residential loans: |  |  |  |  |
Construction and land development loans |  |  |  |  |
Owner occupied loans | 1,849 |  |  | 43 |  |  | 39 |
Agri-business and agricultural loans: |  |  |  |  |
Loans secured by farmland | 147 |  |  | 3 |  |  | 1 |
Consumer 1‑4 family mortgage loans: |  |  |  |  |
Closed end first mortgage loans | 1,643 |  |  | 45 |  |  | 43 |
Open end and junior lien loans | 268 |  |  | 0 |  |  | 0 |
Residential constructions loans | 9 |  |  | 0 |  |  | 0 |
Other consumer loans | 21 |  |  | 2 |  |  | 1 |
Total | $ | 26,464 |  |  | $ | 770 |  |  | $ | 651 |
Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) The following table presents the aging of the recorded investment in past due loans as of December 31, 2020 by class of loans:
(dollars in thousands) | Loans Not Past Due |  | 30-89 Days Past Due |  | Greater than 90 Days Past Due and Still Accruing |  | Nonaccrual |  | Total Past Due and Nonaccrual |  | Total
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |
Working capital lines of credit loans | $ | 625,493 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 606 |  |  | $ | 606 |  |  | $ | 626,099 |
Non-working capital loans | 1,153,540 |  |  | 0 |  |  | 0 |  |  | 5,287 |  |  | 5,287 |  |  | 1,158,827 |
Commercial real estate and multi-family residential loans: |  |  |  |  |  |  |  |  |  |  |
Construction and land development loans | 361,664 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 361,664 |
Owner occupied loans | 642,527 |  |  | 0 |  |  | 0 |  |  | 5,047 |  |  | 5,047 |  |  | 647,574 |
Nonowner occupied loans | 579,050 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 579,050 |
Multi-family loans | 304,284 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 304,284 |
Agri-business and agricultural loans: |  |  |  |  |  |  |  |  |  |  |
Loans secured by farmland | 194,935 |  |  | 0 |  |  | 0 |  |  | 428 |  |  | 428 |  |  | 195,363 |
Loans for agricultural production | 234,191 |  |  | 108 |  |  | 0 |  |  | 0 |  |  | 108 |  |  | 234,299 |
Other commercial loans | 93,912 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 93,912 |
Consumer 1‑4 family mortgage loans: |  |  |  |  |  |  |  |  |  |  |
Closed end first mortgage loans | 165,895 |  |  | 877 |  |  | 116 |  |  | 613 |  |  | 1,606 |  |  | 167,501 |
Open end and junior lien loans | 165,094 |  |  | 137 |  |  | 0 |  |  | 5 |  |  | 142 |  |  | 165,236 |
Residential construction loans | 11,962 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 11,962 |
Other consumer loans | 103,240 |  |  | 145 |  |  | 0 |  |  | 0 |  |  | 145 |  |  | 103,385 |
Total | $ | 4,635,787 |  |  | $ | 1,267 |  |  | $ | 116 |  |  | $ | 11,986 |  |  | $ | 13,369 |  |  | $ | 4,649,156 |
NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) As of December 31, 2020, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:
(dollars in thousands) |  | Pass |  | Special Mention |  | Substandard |  | Doubtful |  | Not Rated |  | Total
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |
Working capital lines of credit loans |  | $ | 535,071 |  |  | $ | 81,095 |  |  | $ | 9,718 |  |  | $ | 0 |  |  | $ | 215 |  |  | $ | 626,099 |
Non-working capital loans |  | 1,111,989 |  |  | 26,523 |  |  | 14,820 |  |  | 0 |  |  | 5,495 |  |  | 1,158,827 |
Commercial real estate and multi-family residential loans: |  |  |  |  |  |  |  |  |  |  |  |
Construction and land development loans |  | 361,664 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 361,664 |
Owner occupied loans |  | 608,845 |  |  | 31,355 |  |  | 7,374 |  |  | 0 |  |  | 0 |  |  | 647,574 |
Nonowner occupied loans |  | 547,790 |  |  | 31,260 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 579,050 |
Multi-family loans |  | 282,031 |  |  | 22,253 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 304,284 |
Agri-business and agricultural loans: |  |  |  |  |  |  |  |  |  |  |  |
Loans secured by farmland |  | 183,983 |  |  | 10,728 |  |  | 652 |  |  | 0 |  |  | 0 |  |  | 195,363 |
Loans for agricultural production |  | 185,875 |  |  | 48,424 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 234,299 |
Other commercial loans |  | 93,912 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 93,912 |
Consumer 1‑4 family mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |
Closed end first mortgage loans |  | 40,682 |  |  | 0 |  |  | 1,695 |  |  | 0 |  |  | 125,124 |  |  | 167,501 |
Open end and junior lien loans |  | 8,424 |  |  | 0 |  |  | 5 |  |  | 0 |  |  | 156,807 |  |  | 165,236 |
Residential construction loans |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 11,962 |  |  | 11,962 |
Other consumer loans |  | 36,979 |  |  | 253 |  |  | 0 |  |  | 0 |  |  | 66,153 |  |  | 103,385 |
Total |  | $ | 3,997,245 |  |  | $ | 251,891 |  |  | $ | 34,264 |  |  | $ | 0 |  |  | $ | 365,756 |  |  | $ | 4,649,156 |

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