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Loans
 12 Months Ended
Dec. 31, 2021
Receivables [Abstract]  
Loans
Note 4 - Loans
Loans consist of the following:
(Dollars in thousands)December 31, 2021December 31, 2020
Loans held for sale$80,387 $191,512 
LHFI:
Loans secured by real estate:
Commercial real estate$1,693,512 $1,370,928 
Construction/land/land development530,083 531,860 
Residential real estate909,739 885,120 
Total real estate3,133,334 2,787,908 
Commercial and industrial(1)
1,454,235 1,817,862 
Mortgage warehouse lines of credit627,078 1,084,001 
Consumer16,684 17,991 
Total loans accounted for at amortized cost5,231,331 5,707,762 
Loans accounted for at fair value— 17,011 
Total LHFI(2)
5,231,331 5,724,773 
Less: Allowance for loan losses64,586 86,670 
LHFI, net$5,166,745 $5,638,103 
____________________________
(1)Includes $105.8 million and $546.5 million of PPP loans at December 31, 2021 and December 31, 2020, respectively.
(2)Includes net deferred loan fees of $9.6 million and $13.7 million at December 31, 2021, and December 31, 2020, respectively.
There were no loans held for investment ("LHFI") for which the fair value option was elected at December 31, 2021, and $17.0 million of commercial real estate loans for which the fair value option was elected at December 31, 2020. The Company mitigates the interest rate component of fair value risk on loans at fair value by entering into derivative interest rate contracts. See Note 5 - Fair Value of Financial Instruments for more information on loans for which the fair value option has been elected.
The Company was a participating lender in the Paycheck Protection Program ("PPP") in 2020 and 2021. There were approximately $105.8 million and $546.5 million in PPP loans outstanding included in the Company’s commercial and industrial loan portfolio at December 31, 2021 and 2020, respectively, which included $3.0 million and $9.6 million in net deferred loan fees at December 31, 2021 and 2020, respectively. PPP loans have a maximum maturity of five years and earn interest at 1%. PPP loans are fully guaranteed by the U.S. government and can be forgiven by the Small Business Administration ("SBA") if the borrower uses the proceeds to pay specified expenses. The Company believes that the vast majority of its PPP loans will ultimately be forgiven by the SBA in accordance with the terms of the program, and as of December 31, 2021, forgiveness has been granted on $648.4 million of PPP loans.
Credit quality indicators. As part of the Company's commitment to manage the credit quality of its loan portfolio, management annually and periodically updates and evaluates certain credit quality indicators, which include but are not limited to (i) weighted-average risk rating of the loan portfolio, (ii) net charge-offs, (iii) level of non-performing loans, (iv) level of classified loans (defined as substandard, doubtful and loss), and (v) the general economic conditions in the cities and states in which the Company operates. The Company maintains an internal risk rating system where ratings are assigned to individual loans based on assessed risk. Loan risk ratings are the primary indicator of credit quality for the loan portfolio and are continually evaluated to ensure they are appropriate based on currently available information.
The following is a summary description of the Company's internal risk ratings:
• Pass (1-6)Loans within this risk rating are further categorized as follows:
Minimal risk (1)Well-collateralized by cash equivalent instruments held by the Bank.
Moderate risk (2)Borrowers with excellent asset quality and liquidity. Borrowers' capitalization and liquidity exceed industry norms. Borrowers in this category have significant levels of liquid assets and have a low level of leverage.
Better than average risk (3)Borrowers with strong financial strength and excellent liquidity that consistently demonstrate strong operating performance. Borrowers in this category generally have a sizable net worth that can be converted into liquid assets within 12 months.
Average risk (4)Borrowers with sound credit quality and financial performance, including liquidity. Borrowers are supported by sufficient cash flow coverage generated through operations across the full business cycle.
Marginally acceptable risk (5)Loans generally meet minimum requirements for an acceptable loan in accordance with lending policy, but possess one or more attributes that cause the overall risk profile to be higher than the majority of newly approved loans.
Watch (6)A passing loan with one or more factors that identify a potential weakness in the overall ability of the borrower to repay the loan. These weaknesses are generally mitigated by other factors that reduce the risk of delinquency or loss.
• Special Mention (7)This grade is intended to be temporary and includes borrowers whose credit quality has deteriorated and is at risk of further decline.
• Substandard (8)This grade includes "Substandard" loans under regulatory guidelines. Substandard loans exhibit a well-defined weakness that jeopardizes debt repayment in accordance with contractual agreements, even though the loan may be performing. These obligations are characterized by the distinct possibility that a loss may be incurred if these weaknesses are not corrected and repayment may be dependent upon collateral liquidation or secondary source of repayment.
• Doubtful (9)This grade includes "Doubtful" loans under regulatory guidelines. Such loans are placed on nonaccrual status and repayment may be dependent upon collateral with no readily determinable valuation or valuations that are highly subjective in nature. Repayment for these loans is considered improbable based on currently existing facts and circumstances.
• Loss (0)This grade includes "Loss" loans under regulatory guidelines. Loss loans are charged-off or written down when repayment is not expected.
In connection with the review of the loan portfolio, the Company considers risk elements attributable to particular loan types or categories in assessing the quality of individual loans. The list of loans to be reviewed for possible individual evaluation consists of nonaccrual commercial loans over $100,000 with direct exposure, unsecured loans over 90 days past due, commercial loans classified substandard or worse over $100,000 with direct exposure, TDRs, consumer loans greater than $100,000 with a FICO score under 625, loans greater than $100,000 in which the borrower has filed bankruptcy, and all loans 180 days or more past due. Loans under $50,000 will be evaluated collectively in designated pools unless a loss exposure has been identified. Some additional risk elements considered by loan type include:
•for commercial real estate loans, the debt service coverage ratio, operating results of the owner in the case of owner-occupied properties, the loan to value ratio, the age and condition of the collateral and the volatility of income, property value and future operating results typical of properties of that type;
•for construction, land and land development loans, the perceived feasibility of the project, including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer and loan to value ratio;
•for residential mortgage loans, the borrower's ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral; and
•for commercial and industrial loans, the debt service coverage ratio (income from the business in excess of operating expenses compared to loan repayment requirements), the operating results of the commercial, industrial or professional enterprise, the borrower's business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category and the value, nature and marketability of collateral.
The following table reflects recorded investments in loans by credit quality indicator and origination year at December 31, 2021, excluding loans held for sale and loans accounted for at fair value. The Company had an immaterial amount of revolving loans converted to term loans at December 31, 2021.
Term Loans
Amortized Cost Basis by Origination Year
20212020201920182017PriorRevolving Loans Amortized Cost BasisTotal
Commercial real estate:
Pass$556,218 $369,128 $278,045 $236,543 $111,308 $86,498 $22,904 $1,660,644 
Special mention— — — 8,392 15,828 — — 24,220 
Classified2,045 625 772 2,456 299 2,288 163 8,648 
Total commercial real estate loans$558,263 $369,753 $278,817 $247,391 $127,435 $88,786 $23,067 $1,693,512 
Current period gross charge-offs$— $— $— $120 $24 $26 $— $170 
Current period gross recoveries— — — 48 3 14 — 65 
Current period net charge-offs (recoveries)$— $— $— $72 $21 $12 $— $105 
Construction/land/land development:
Pass$256,212 $102,459 $85,442 $32,128 $5,422 $553 $30,729 $512,945 
Special mention— — 8,126 — 1,003 — — 9,129 
Classified443 297 272 1,677 158 — 5,162 8,009 
Total construction/land/land development loans$256,655 $102,756 $93,840 $33,805 $6,583 $553 $35,891 $530,083 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Current period gross recoveries— — — — — — — — 
Current period net charge-offs (recoveries)$— $— $— $— $— $— $— $— 
Residential real estate:
Pass$313,898 $252,115 $109,564 $52,515 $45,042 $59,690 $60,342 $893,166 
Special mention— 174 — 421 477 — — 1,072 
Classified1,398 191 2,393 2,848 1,819 6,606 246 15,501 
Total residential real estate loans$315,296 $252,480 $111,957 $55,784 $47,338 $66,296 $60,588 $909,739 
Current period gross charge-offs$— $7 $61 $— $— $10 $— $78 
Current period gross recoveries— 21 19 — 25 52 — 117 
Current period net charge-offs (recoveries)$— $(14)$42 $— $(25)$(42)$— $(39)
Term Loans
Amortized Cost Basis by Origination Year
20212020201920182017PriorRevolving Loans Amortized Cost BasisTotal
(Dollars in thousands)
Commercial and industrial:
Pass$448,377 $164,910 $93,488 $64,791 $14,742 $24,014 $599,144 $1,409,466 
Special mention259 2,170 — 1,519 — — 3,752 7,700 
Classified14,378 167 2,978 3,849 3,849 3,008 8,840 37,069 
Total commercial and industrial loans$463,014 $167,247 $96,466 $70,159 $18,591 $27,022 $611,736 $1,454,235 
Current period gross charge-offs$9 $1,172 $54 $5 $1,467 $6,354 $2,862 $11,923 
Current period gross recoveries— 18 51 3 102 204 339 717 
Current period net charge-offs (recoveries)$9 $1,154 $3 $2 $1,365 $6,150 $2,523 $11,206 
Mortgage Warehouse Lines of Credit:
Pass$— $— $— $— $— $— $627,078 $627,078 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Current period gross recoveries— — — — — — — — 
Current period net charge-offs (recoveries)$— $— $— $— $— $— $— $— 
Consumer:
Pass$6,976 $2,169 $1,467 $443 $55 $67 $5,407 $16,584 
Classified26 21 1 — — 1 51 100 
Total consumer loans$7,002 $2,190 $1,468 $443 $55 $68 $5,458 $16,684 
Current period gross charge-offs$— $5 $29 $2 $— $9 $18 $63 
Current period gross recoveries— — 20 7 1 17 4 49 
Current period net charge-offs (recoveries)$— $5 $9 $(5)$(1)$(8)$14 $14 
The following table reflects recorded investments in loans by credit quality indicator and origination year at December 31, 2020, excluding loans held for sale and loans accounted for at fair value. The Company had an immaterial amount of revolving loans converted to term loans at December 31, 2020.
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in thousands)20202019201820172016PriorRevolving Loans Amortized Cost BasisTotal
Commercial real estate:(1)
Pass$393,317 $290,394 $312,051 $154,445 $46,132 $106,994 $18,419 $1,321,752 
Special mention824 113 2,410 20,691 — 1,656 2,145 27,839 
Classified2,806 1,678 6,704 6,586 1,476 1,093 994 21,337 
Total commercial real estate loans$396,947 $292,185 $321,165 $181,722 $47,608 $109,743 $21,558 $1,370,928 
Current period gross charge-offs$— $— $— $3,622 $199 $1,103 $— $4,924 
Current period gross recoveries— — — — — 19 — 19 
Current period net charge-offs (recoveries)$— $— $— $3,622 $199 $1,084 $— $4,905 
(1) Excludes $17.0 million of commercial real estate loans at fair value at December 31, 2020, which are not included in the loss estimation methodology due to the fair value option election.
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in thousands)20202019201820172016PriorRevolving Loans Amortized Cost BasisTotal
Construction/land/land development:
Pass$189,311 $150,281 $138,000 $12,907 $1,812 $1,157 $18,892 $512,360 
Special mention323 10,421 135 1,003 — — — 11,882 
Classified— 1,811 726 1,507 143 168 3,263 7,618 
Total construction/land/land development loans$189,634 $162,513 $138,861 $15,417 $1,955 $1,325 $22,155 $531,860 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Current period gross recoveries— — — — — 1 — 1 
Current period net charge-offs (recoveries)$— $— $— $— $— $(1)$— $(1)
Residential real estate:
Pass$367,652 $143,368 $103,450 $102,272 $41,522 $50,094 $53,854 $862,212 
Special mention188 — 29 1,875 9,287 803 — 12,182 
Classified1,857 2,403 2,982 511 1,344 1,533 96 10,726 
Total residential real estate loans$369,697 $145,771 $106,461 $104,658 $52,153 $52,430 $53,950 $885,120 
Current period gross charge-offs$94 $271 $— $283 $— $44 $— $692 
Current period gross recoveries— — — — — 202 — 202 
Current period net charge-offs (recoveries)$94 $271 $— $283 $— $(158)$— $490 
Commercial and industrial:
Pass$851,780 $153,722 $110,092 $29,413 $9,927 $26,964 $511,220 $1,693,118 
Special mention4,860 2,059 26,438 423 — 14,843 8,077 56,700 
Classified5,436 12,250 5,859 5,450 5,950 6,707 26,392 68,044 
Total commercial and industrial loans$862,076 $168,031 $142,389 $35,286 $15,877 $48,514 $545,689 $1,817,862 
Current period gross charge-offs$189 $204 $87 $121 $3,228 $469 $2,404 $6,702 
Current period gross recoveries— 42 20 81 185 112 582 1,022 
Current period net charge-offs (recoveries)$189 $162 $67 $40 $3,043 $357 $1,822 $5,680 
Mortgage Warehouse Lines of Credit:
Pass$— $— $— $— $— $— $1,084,001 $1,084,001 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Current period gross recoveries— — — — — — — — 
Current period net charge-offs (recoveries)$— $— $— $— $— $— $— $— 
Consumer:
Pass$6,702 $3,318 $1,578 $203 $116 $83 $5,935 $17,935 
Classified28 8 — — 6 1 13 56 
Total consumer loans$6,730 $3,326 $1,578 $203 $122 $84 $5,948 $17,991 
Current period gross charge-offs$— $39 $23 $8 $— $4 $2 $76 
Current period gross recoveries— — 1 7 5 7 4 24 
Current period net charge-offs (recoveries)$— $39 $22 $1 $(5)$(3)$(2)$52 
The following tables present the Company's loan portfolio aging analysis at the dates indicated:
December 31, 2021
(Dollars in thousands)30-59 Days Past Due60-89 Days Past DueLoans Past Due 90 Days or MoreTotal Past DueCurrent LoansTotal Loans ReceivableAccruing Loans 90 or More Days Past Due
Loans secured by real estate:
Commercial real estate
$22 $— $197 $219 $1,693,293 $1,693,512 $— 
Construction/land/land development
— 129 52 181 529,902 530,083 — 
Residential real estate2,245 352 10,331 12,928 896,811 909,739 — 
Total real estate2,267 481 10,580 13,328 3,120,006 3,133,334 — 
Commercial and industrial77 1,172 10,927 12,176 1,442,059 1,454,235 — 
Mortgage warehouse lines of credit
— — — — 627,078 627,078 — 
Consumer90 — 21 111 16,573 16,684 — 
Total LHFI$2,434 $1,653 $21,528 $25,615 $5,205,716 $5,231,331 $— 
December 31, 2020
(Dollars in thousands)30-59 Days Past Due60-89 Days Past DueLoans Past Due 90 Days or MoreTotal Past DueCurrent LoansTotal Loans ReceivableAccruing Loans 90 or More Days Past Due
Loans secured by real estate:
Commercial real estate (1)
$1,072 $— $3,172 $4,244 $1,383,695 $1,387,939 $— 
Construction/land/land development
369 1 2,328 2,698 529,162 531,860 — 
Residential real estate3,774 134 364 4,272 880,848 885,120 — 
Total real estate5,215 135 5,864 11,214 2,793,705 2,804,919 — 
Commercial and industrial703 1,097 12,625 14,425 1,803,437 1,817,862 — 
Mortgage warehouse lines of credit
— — — — 1,084,001 1,084,001 — 
Consumer113 9 2 124 17,867 17,991 — 
Total LHFI$6,031 $1,241 $18,491 $25,763 $5,699,010 $5,724,773 $— 
____________________________
(1)Includes $17.0 million of commercial real estate loans at fair value.
The following tables detail activity in the allowance for loan credit losses by portfolio segment. Accrued interest of $15.9 million and $20.3 million was not included in the book value for the purposes of calculating the allowance at December 31, 2021, and December 31, 2020, respectively. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
Year Ended December 31, 2021
(Dollars in thousands)Beginning BalanceCharge-offsRecoveries
Provision(1)
Ending BalanceAverage BalanceNet Charge-offs to Loan Average Balance
Loans secured by real estate:
Commercial real estate$15,430 $170 $65 $(1,900)$13,425 $1,501,890 0.01 %
Construction/land/land development
8,191 — — (4,180)4,011 528,618 — 
Residential real estate
9,418 78 117 (3,341)6,116 916,039 — 
Commercial and industrial
51,857 11,923 717 (505)40,146 1,627,077 0.69 
Mortgage warehouse lines of credit
856 — — (516)340 753,588 — 
Consumer918 63 49 (356)548 16,764 0.08 
Total$86,670 $12,234 $948 $(10,798)$64,586 $5,343,976 0.21 
                                                       
     
(1)The $10.8 million provision for credit losses net benefit on the consolidated statements of income includes a $10.8 million provision for loan losses net benefit, a $68,000 provision for off-balance sheet commitments net benefit and a $101,000 provision for held to maturity securities credit losses for the year ended December 31, 2021.
Year Ended December 31, 2020
(Dollars in thousands)Beginning BalanceImpact of Adopting ASC 326Charge-offsRecoveries
Provision(1)
Ending BalanceAverage BalanceNet Charge-offs to Loan Average Balance
Loans secured by real estate:
Commercial real estate$10,013 $(5,052)$4,924 $19 $15,374 $15,430 $1,322,477 0.37 %
Construction/land/land development
3,711 1,141 — 1 3,338 8,191 554,038 — 
Residential real estate
6,332 (2,526)692 202 6,102 9,418 769,838 0.06 
Commercial and industrial
16,960 7,296 6,702 1,022 33,281 51,857 1,710,648 0.33 
Mortgage warehouse lines of credit
262 29 — — 565 856 574,837 — 
Consumer242 360 76 24 368 918 18,707 0.28 
Total$37,520 $1,248 $12,394 $1,268 $59,028 $86,670 $4,950,545 0.22 
                                                       
(1)The $59.9 million provision for credit losses on the consolidated statements of income includes a $59.0 million net loan loss provision, a $902,000 provision for off-balance sheet commitments and a $30,000 provision benefit for held to maturity securities credit losses for the year ended December 31, 2020.
Year Ended December 31, 2019
(Dollars in thousands)Beginning BalanceCharge-offsRecoveries
Provision(1)
Ending BalanceAverage BalanceNet Charge-offs to Loan Average Balance
Loans secured by real estate:
Commercial real estate$8,999 $1,420 $341 $2,093 $10,013 $1,247,941 0.09 %
Construction/land/land development
3,331 38 40 378 3,711 505,795 — 
Residential real estate
5,705 265 185 707 6,332 661,581 0.01 
Commercial and industrial
15,616 8,231 3,627 5,948 16,960 1,324,002 0.35 
Mortgage warehouse lines of credit
316 29 — (25)262 212,733 0.01 
Consumer236 148 48 106 242 20,809 0.48 
Total$34,203 $10,131 $4,241 $9,207 $37,520 $3,972,861 0.15 
                                                       
(1)The $9.6 million provision for credit losses on the consolidated statements of income includes a $9.2 million net loan loss provision, a $361,000 provision for off-balance sheet commitments for the year ended December 31, 2019.
The decrease in provision expense compared to the year ended December 31, 2020, was primarily due to improvement in forecasted economic conditions during the year ended December 31, 2021, as compared to continuing uncertainty related to ongoing economic impact and duration of the COVID-19 pandemic during the year ended December 31, 2020. The Company's credit quality profile in relation to the allowance for loan credit losses drove a decline of $25.1 million in the collectively evaluated portion of the reserve during the year ended December 31, 2021, of which a $19.6 million decrease was related to qualitative factor changes across the Company's risk pools for the year ended December 31, 2021. These declines were partially offset by an increase in certain specific loan reserves, at December 31, 2021.
The provision for loan credit losses for the year ended December 31, 2020, was driven by the continuing uncertainty related to the ongoing economic impact and duration of the COVID-19 pandemic. Based upon the requirements of CECL, economic forecasts are essential for estimating the life of loan losses. The increased risk, as reflected in current and forecast adjustments, resulted in approximately $39.8 million in provision expense in total collective reserves, of which $27.5 million was related to qualitative factor changes, across the Company’s risk pools for the year ended December 31, 2020. An additional $8.1 million in provision expense was due to the current and forecast effects of individually evaluated loans. There were four significant loan charge-offs during year ended December 31, 2020, totaling $6.6 million, reflecting two loan relationships.
The following tables show the recorded investment in loans by loss estimation methodology, excluding loans for which the fair value option was elected at December 31, 2020. There were no LHFI for which the fair value option was elected at December 31, 2021.
December 31, 2021
Collectively EvaluatedIndividually Evaluated
(Dollars in thousands)Probability of DefaultFair Value of CollateralDiscounted Cash FlowTotal
Loans secured by real estate:
Commercial real estate$1,691,269 $166 $2,077 $1,693,512 
Construction/land/land development529,789 — 294 530,083 
Residential real estate
898,456 8,150 3,133 909,739 
Commercial and industrial
1,441,204 8,547 4,484 1,454,235 
Mortgage warehouse lines of credit627,078 — — 627,078 
Consumer16,682 2 — 16,684 
Total$5,204,478 $16,865 $9,988 $5,231,331 
December 31, 2020
Collectively EvaluatedIndividually Evaluated
(Dollars in thousands)Probability of DefaultFair Value of CollateralDiscounted Cash FlowTotal
Loans secured by real estate:
Commercial real estate(1)
$1,365,284 $3,173 $2,471 $1,370,928 
Construction/land/land development528,894 2,621 345 531,860 
Residential real estate
879,015 2,009 4,096 885,120 
Commercial and industrial
1,804,049 3,152 10,661 1,817,862 
Mortgage warehouse lines of credit1,084,001 — — 1,084,001 
Consumer17,991 — — 17,991 
Total$5,679,234 $10,955 $17,573 $5,707,762 
____________________________
(1)Excludes $17.0 million of commercial real estate loans at fair value, which are not included in the loss estimation methodology due to the fair value option election.
The following tables show the allowance for loan credit losses by loss estimation methodology at December 31, 2021, and December 31, 2020.
December 31, 2021
Collectively EvaluatedIndividually Evaluated
(Dollars in thousands)Probability of DefaultFair Value of CollateralDiscounted Cash FlowTotal
Loans secured by real estate:
Commercial real estate$13,416 $— $9 $13,425 
Construction/land/land development3,997 — 14 4,011 
Residential real estate
5,017 19 1,080 6,116 
Commercial and industrial
29,995 6,680 3,471 40,146 
Mortgage warehouse lines of credit340 — — 340 
Consumer546 2 — 548 
Total$53,311 $6,701 $4,574 $64,586 
December 31, 2020
Collectively EvaluatedIndividually Evaluated
(Dollars in thousands)Probability of DefaultFair Value of CollateralDiscounted Cash FlowTotal
Loans secured by real estate:
Commercial real estate$14,896 $525 $9 $15,430 
Construction/land/land development8,062 128 1 8,191 
Residential real estate
8,983 — 435 9,418 
Commercial and industrial
44,714 1,707 5,436 51,857 
Mortgage warehouse lines of credit856 — — 856 
Consumer918 — — 918 
Total$78,429 $2,360 $5,881 $86,670 
Note that the Company is not using the collateral maintenance agreement practical expedient. The fair value of equipment collateral that secures commercial and industrial loans is estimated by third-party valuation experts.
Collateral-dependent loans consist primarily of commercial real estate and commercial and industrial loans. These loans are individually evaluated when foreclosure is probable or when the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral. Loan balances are charged down to the underlying collateral value when they are deemed uncollectible.
Nonaccrual LHFI were as follows:
Nonaccrual With No
Allowance for Credit Loss		Nonaccrual
(Dollars in thousands)
Loans secured by real estate:
December 31, 2021December 31, 2020December 31, 2021December 31, 2020
Commercial real estate$453 $1,053 $512 $3,704 
Construction/land/land development
52 1,319 338 2,962 
Residential real estate7,684 2,436 11,647 6,530 
Total real estate8,189 4,808 12,497 13,196 
Commercial and industrial
58 82 12,306 12,897 
Consumer— — 100 56 
Total nonaccrual loans$8,247 $4,890 $24,903 $26,149 
All interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. Subsequent receipts on nonaccrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. At December 31, 2021, the Company had no funding commitments for which the terms have been modified in TDRs.
For the years ended December 31, 2021, 2020 and 2019, gross interest income that would have been recorded had the nonaccruing loans been current in accordance with their original terms was $1.9 million, $1.5 million and $1.5 million, respectively. No interest income was recorded on these loans while they were considered nonaccrual during the years ended December 31, 2021, 2020 and 2019.
The Company elects the fair value option for recording residential mortgage loans held for sale, as well as for certain commercial real estate loans at December 31, 2020, in accordance with U.S. GAAP. The Company had $1.8 million of nonaccrual mortgage loans held for sale that were recorded using the fair value option election at December 31, 2021, compared to $681,000 at December 31, 2020. There were no LHFI that were recorded using the fair value option election at December 31, 2021.
Loans classified as TDRs, excluding the impact of forbearances granted due to COVID-19, were as follows:
(Dollars in thousands)December 31, 2021December 31, 2020
TDRs
Nonaccrual TDRs$4,064 $5,671 
Performing TDRs2,763 3,314 
Total$6,827 $8,985 
The tables below summarize loans classified as TDRs by loan and concession type during the dates indicated.
Year Ended December 31, 2021
(Dollars in thousands)Number of Loans RestructuredPre-Modification Recorded BalanceTerm ConcessionsInterest Rate ConcessionsCombination of Term and Rate ConcessionsTotal Modifications
Residential real estate1 $31 $26 $— $— $26 
Commercial and industrial1 100 100 — — 100 
Total2 $131 $126 $— $— $126 
Year Ended December 31, 2020
(Dollars in thousands)Number of Loans RestructuredPre-Modification Recorded BalanceTerm ConcessionsInterest Rate ConcessionsCombination of Term and Rate ConcessionsTotal Modifications
Loans secured by real estate:
Commercial real estate2 $1,696 $1,694 $— $— $1,694 
Residential real estate5 1,212 — 177 877 1,054 
Total real estate7 2,908 1,694 177 877 2,748 
Commercial and industrial5 217 193 — — 193 
Consumer1 2 — — 2 2 
Total13 $3,127 $1,887 $177 $879 $2,943 
Year Ended December 31, 2019
(Dollars in thousands)Number of Loans RestructuredPre-Modification Recorded BalanceTerm ConcessionsInterest Rate ConcessionsCombination of Term and Rate ConcessionsTotal Modifications
Loans secured by real estate:
Construction/land/land development1 $361 $— $— $343 $343 
Residential real estate2 2,516 — — 2,410 2,410 
Total real estate3 2,877 — — 2,753 2,753 
Commercial and industrial5 1,314 852 — — 852 
Consumer1 11 9 — — 9 
Total9 $4,202 $861 $— $2,753 $3,614 
During the year ended December 31, 2021, one loan with an outstanding principal balance of $9,000 defaulted after having been modified as a TDR within the previous 12 months. During the year ended December 31, 2020, no loans defaulted after having been modified as a TDR within the previous 12 months. During the year ended December 31, 2019, two loans with an outstanding principal balance of $117,000 defaulted after having been modified as a TDR within the previous 12 months. A payment default is defined as a loan that was 90 or more days past due. The modifications made during the year ended December 31, 2021, did not significantly impact the Company's determination of the allowance for loan credit losses. The Company monitors the performance of the modified loans to their restructured terms on an ongoing basis. In the event of a subsequent default, the allowance for loan credit losses continues to be reassessed on the basis of an individual evaluation of each loan.