The following tables present the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2020, 2019 and 2018, respectively. Also presented are the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of the years ended December 31, 2020, 2019, and 2018, respectively:

The portfolio segments used in the preceding three tables correspond to the loan classes used in all other tables in Note 3 as follows:

The weighted average interest rate on loans receivable at December 31, 2020 and 2019, was 4.29% and 4.97%, respectively.

Loans serviced for others are not included in the accompanying consolidated statements of financial condition. The unpaid principal balance of loans serviced for others at December 31, 2020, was $462.7 million, consisting of $308.4 million of commercial loan participations sold to other financial institutions and $154.3 million of residential mortgage loans sold. The unpaid principal balance of loans serviced for others at December 31, 2019, was $349.9 million, consisting of $283.0 million of commercial loan participations sold to other financial institutions and $66.9 million of residential mortgage loans sold. In addition, available lines of credit on these loans were $46.1 million and $102.1 million at December 31, 2020 and 2019, respectively.

A loan is considered impaired, in accordance with the impairment accounting guidance (FASB ASC 310-10-35-16) when, based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include not only nonperforming loans but also loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties.

The following summarizes information regarding impaired loans at and during the years ended December 31, 2020, 2019 and 2018:


							Year Ended
	December 31, 2020						December 31, 2020
							Average
			Unpaid				Investment		Interest
	Recorded		Principal		Specific		in Impaired		Income
	Balance		Balance		Allowance		Loans		Recognized

	(In Thousands)

One- to four-family residential construction	$	—	$	—	$	—	$	—	$	—
Subdivision construction		20		20		—		115		3
Land development		—		—		—		—		—
Commercial construction		—		—		—		—		—
Owner occupied one- to four-family residential		3,457		3,776		90		2,999		169
Non-owner occupied one- to four-family residential		69		106		—		309		18
Commercial real estate		3,438		3,472		445		3,736		135
Other residential		—		—		—		—		—
Commercial business		166		551		14		800		34
Industrial revenue bonds		—		—		—		—		—
Consumer auto		865		964		140		932		91
Consumer other		403		552		19		298		47
Home equity lines of credit		630		668		5		550		36

Total	$	9,048	$	10,109	$	713	$	9,739	$	533


							Year Ended
	December 31, 2019						December 31, 2019
							Average
			Unpaid				Investment		Interest
	Recorded		Principal		Specific		in Impaired		Income
	Balance		Balance		Allowance		Loans		Recognized

	(In Thousands)

One- to four-family residential construction	$	—	$	—	$	—	$	—	$	—
Subdivision construction		251		251		96		277		9
Land development		—		—		—		328		101
Commercial construction		—		—		—		—		—
Owner occupied one- to four-family residential		2,300		2,423		82		2,598		131
Non-owner occupied one- to four-family residential		409		574		20		954		43
Commercial real estate		4,020		4,049		517		4,940		264
Other residential		—		—		—		—		—
Commercial business		1,286		1,771		13		1,517		81
Industrial revenue bonds		—		—		—		—		—
Consumer auto		1,117		1,334		181		1,128		125
Consumer other		356		485		16		383		48
Home equity lines of credit		528		548		4		362		37

Total	$	10,267	$	11,435	$	929	$	12,487	$	839


							Year Ended
	December 31, 2018						December 31, 2018
							Average
			Unpaid				Investment		Interest
	Recorded		Principal		Specific		in Impaired		Income
	Balance		Balance		Allowance		Loans		Recognized

	(In Thousands)

One- to four-family residential construction	$	—	$	—	$	—	$	—	$	—
Subdivision construction		318		318		105		321		17
Land development		14		18		—		14		1
Commercial construction		—		—		—		—		—
Owner occupied one- to four-family residential		3,576		3,926		285		3,406		197
Non-owner occupied one- to four-family residential		2,222		2,519		304		2,870		158
Commercial real estate		3,501		3,665		613		6,216		337
Other residential		—		—		—		1,026		20
Commercial business		1,844		2,207		309		2,932		362
Industrial revenue bonds		—		—		—		—		—
Consumer auto		1,874		2,114		336		2,069		167
Consumer other		479		684		72		738		59
Home equity lines of credit		111		128		17		412		28

Total	$	13,939	$	15,579	$	2,041	$	20,004	$	1,346

At December 31, 2020, $4.8 million of impaired loans had specific valuation allowances totaling $713,000. At December 31, 2019, $5.2 million of impaired loans had specific valuation allowances totaling $929,000. At December 31, 2018, $8.4 million of impaired loans had specific valuation allowances totaling $2.0 million. For impaired loans which were non-accruing, interest of approximately $579,000, $761,000 and $1.0 million would have been recognized on an accrual basis during the years ended December 31, 2020, 2019 and 2018, respectively.

Included in certain loan categories in the impaired loans are troubled debt restructurings that were classified as impaired. Troubled debt restructurings are loans that are modified by granting concessions to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. The types of concessions made are factored into the estimation of the allowance for loan losses for troubled debt restructurings primarily using a discounted cash flows or collateral adequacy approach.

The following table presents newly restructured loans during the years ended December 31, 2020, 2019 and 2018 by type of modification:


	2020
							Total
	Interest Only		Term		Combination		Modification
	(In Thousands)

Residential one-to-four family	$	—	$	—	$	1,030	$	1,030
Commercial real estate		—		—		559		559
Commercial business		—		—		22		22
Consumer		—		16		1,951		1,967

	$	—	$	16	$	3,562	$	3,578


	2019
							Total
	Interest Only		Term		Combination		Modification
	(In Thousands)

Consumer	$	—	$	136	$	—	$	136

	$	—	$	136	$	—	$	136


	2018
							Total
	Interest Only		Term		Combination		Modification
	(In Thousands)

Residential one-to-four family	$	1,348	$	—	$	—	$	1,348
Construction and land development		—		31		—		31
Commercial construction		—		—		106		106
Consumer		—		535		—		535

	$	1,348	$	566	$	106	$	2,020

At December 31, 2020, the Company had $3.3 million of loans that were modified in troubled debt restructurings and impaired, as follows: $20,000 of construction and land development loans, $1.9 million of single family residential mortgage loans, $646,000 of commercial real estate loans, $127,000 of commercial business loans and $629,000 of consumer loans. Of the total troubled debt restructurings at December 31, 2020, $2.4 million were accruing interest and $1.6 million were classified as substandard using the Company's internal grading system which is described below. The Company had no troubled debt restructurings which were modified in the previous 12 months and subsequently defaulted during the year ended December 31, 2020. When loans modified as troubled debt restructuring have subsequent payment defaults, the defaults are factored into the determination of the allowance for loan losses to ensure specific valuation allowances reflect amounts considered uncollectible. At December 31, 2019, the Company had $1.9 million of loans that were modified in troubled debt restructurings and impaired, as follows: $251,000 of construction and land development loans, $768,000 of single family residential mortgage loans, $412,000 of commercial real estate loans, $156,000 of commercial business loans and $343,000 of consumer loans. Of the total troubled debt restructurings at December 31, 2019, $1.4 million were accruing interest and $562,000 were classified as substandard using the Company’s internal grading system. During the year ended December 31, 2020, borrowers with loans designated as troubled debt restructurings totaling $372,000, all of which consisted of residential one-to-four family loans, met the criteria for placement back on accrual status. This criteria generally includes a minimum of six months of consistent and timely payment performance under original or modified terms.

At December 31, 2020, the Company had remaining 65 modified commercial loans with an aggregate principal balance outstanding of $233 million and 581 modified consumer and mortgage loans with an aggregate principal balance outstanding of $18 million. The loan modifications are within the guidance provided by the CARES Act (and its amending legislation), the federal banking regulatory agencies, the Securities and Exchange Commission and the Financial Accounting Standards Board; therefore, they are not considered troubled debt restructurings.

The Company reviews the credit quality of its loan portfolio using an internal grading system that classifies loans as “Satisfactory,” “Watch,” “Special Mention,” “Substandard” and “Doubtful.” Loans classified as watch are being monitored because of indications of potential weaknesses or deficiencies that may require future classification as special mention or substandard. Special mention loans possess potential weaknesses that deserve management’s close attention but do not expose the Bank to a degree of risk that warrants substandard classification. Substandard loans are characterized by the distinct possibility that the Bank will sustain some loss if certain deficiencies are not corrected. Doubtful loans are those having all the weaknesses inherent to those classified 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 not meeting any of the criteria previously described are considered satisfactory. The FDIC-assisted acquired loans are evaluated using this internal grading system. These loans are accounted for in pools. Minimal adverse classification in these acquired loan pools was identified as of December 31, 2020 and 2019 respectively. See Note 4 for further discussion of the acquired loan pools and termination of the loss sharing agreements.

The Company evaluates the loan risk internal grading system definitions and allowance for loan loss methodology on an ongoing basis. The general component of the allowance for loan losses is affected by several factors, including, but not limited to, average historical losses, average life of the loans, current composition of the loan portfolio, current and expected economic conditions, collateral values and internal risk ratings. Management considers all these factors in determining the adequacy of the Company’s allowance for loan losses. No significant changes were made to the loan risk grading system definitions and allowance for loan loss methodology during the past year.

The loan grading system is presented by loan class below:


	December 31, 2020
					Special
	Satisfactory		Watch		Mention		Substandard		Doubtful		Total
	(In Thousands)

One- to four-family residential construction	$	41,428	$	1,365	$	—	$	—	$	—	$	42,793
Subdivision construction		30,874		—		—		20		—		30,894
Land development		54,010		—		—		—		—		54,010
Commercial construction		1,212,837		—		—		—		—		1,212,837
Owner occupied one- to-four-family residential		467,855		216		—		2,365		—		470,436
Non-owner occupied one-to-four-family residential		114,176		324		—		69		—		114,569
Commercial real estate		1,498,031		52,208		—		3,438		—		1,553,677
Other residential		1,017,648		3,497		—		—		—		1,021,145
Commercial business		363,681		7,102		—		115		—		370,898
Industrial revenue bonds		14,003		—		—		—		—		14,003
Consumer auto		85,657		5		—		511		—		86,173
Consumer other		40,514		2		—		246		—		40,762
Home equity lines of credit		114,049		39		—		601		—		114,689
Loans acquired and accounted for under ASC 310-30, net of discounts		98,633		—		—		10		—		98,643

Total	$	5,153,396	$	64,758	$	—	$	7,375	$	—	$	5,225,529


	December 31, 2019
					Special
	Satisfactory		Watch		Mention		Substandard		Doubtful		Total
	(In Thousands)


One- to four-family residential construction	$	33,963	$	—	$	—	$	—	$	—	$	33,963
Subdivision construction		16,061		27		—		—		—		16,088
Land development		40,431		—		—		—		—		40,431
Commercial construction		1,322,861		—		—		—		—		1,322,861
Owner occupied one- to-four-family residential		385,001		26		—		1,989		—		387,016
Non-owner occupied one-to-four-family residential		119,743		419		—		181		—		120,343
Commercial real estate		1,458,400		32,063		—		3,709		—		1,494,172
Other residential		866,006		—		—		—		—		866,006
Commercial business		307,322		4,651		—		1,236		—		313,209
Industrial revenue bonds		13,189		—		—		—		—		13,189
Consumer auto		150,874		47		—		933		—		151,854
Consumer other		46,294		92		—		334		—		46,720
Home equity lines of credit		118,428		43		—		517		—		118,988
Loans acquired and accounted for under ASC 310-30, net of discounts		127,192		—		—		14		—		127,206

Total	$	5,005,765	$	37,368	$	—	$	8,913	$	—	$	5,052,046

Certain of the Bank’s real estate loans are pledged as collateral for borrowings as set forth in Notes 9 and 11.

Certain directors and executive officers of the Company and the Bank, and their related interests, are customers of and had transactions with the Bank in the ordinary course of business. Except for the interest rates on loans secured by personal residences, in the opinion of management, all loans included in such transactions were made on substantially the same terms as those prevailing at the time for comparable transactions with unrelated parties. Generally, residential first mortgage loans and home equity lines of credit

to all employees and directors have been granted at interest rates equal to the Bank’s cost of funds, subject to annual adjustments in the case of residential first mortgage loans and monthly adjustments in the case of home equity lines of credit. At December 31, 2020 and 2019, loans outstanding to these directors and executive officers, and their related interests, are summarized as follows:


	2020		2019
	(In Thousands)

Balance, beginning of year	$	15,240	$	29,017
New loans		901		15,062
Payments		(2,673)		(28,839)

Balance, end of year	$	13,468	$	15,240