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Loans and Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2021
Receivables [Abstract]  
Loans and Allowance for Credit Losses Loans and Allowance for Credit Losses
The Bank makes loans to customers primarily in the Washington, D.C. metropolitan area and surrounding communities. A substantial portion of the Bank’s loan portfolio consists of loans to businesses secured by real estate and other business assets.
Loans, net of unamortized net deferred fees, at December 31, 2021 and 2020 are summarized by type as follows:
December 31, 2021December 31, 2020
(dollars in thousands)Amount%  Amount%
Commercial$1,354,317 19 %$1,437,433 19 %
PPP loans51,105 1 %454,771 6 %
Income producing - commercial real estate3,385,298 48 %3,687,000 47 %
Owner occupied - commercial real estate1,087,776 15 %997,694 13 %
Real estate mortgage - residential73,966 1 %76,592 1 %
Construction - commercial and residential896,319 13 %873,261 11 %
Construction - C&I (owner occupied)159,579 2 %158,905 2 %
Home equity55,811 1 %73,167 1 %
Other consumer1,427 — 1,389 — 
Total loans7,065,598 100 %7,760,212 100 %
Less: allowance for credit losses(74,965)(109,579)
Net loans$6,990,633 $7,650,633 
Unamortized net deferred fees amounted to $26.9 million and $30.8 million at December 31, 2021 and 2020, of which $15 thousand and $30 thousand at December 31, 2021 and 2020, respectively, represented net deferred costs on home equity loans.
As of December 31, 2021 and 2020, the Bank serviced $120.3 million and $124.0 million, respectively, of multifamily FHA loans, SBA loans and other loan participations, which are not reflected as loan balances on the Consolidated Balance Sheets.
Real estate loans are secured primarily by duly recorded first deeds of trust or mortgages. In some cases, the Bank may accept a recorded junior trust position. In general, borrowers will have a proven ability to build, lease, manage and/or sell a commercial or residential project and demonstrate satisfactory financial condition. Additionally, an equity contribution toward the project is customarily required.
Construction loans require that the financial condition and experience of the general contractor and major subcontractors be satisfactory to the Bank. Guaranteed, fixed price contracts are required whenever appropriate, along with payment and performance bonds or completion bonds for larger scale projects.
Loans intended for residential land acquisition, lot development and construction are made on the premise that the land: 1) is or will be developed for building sites for residential structures; and 2) will ultimately be utilized for construction or improvement of residential zoned real properties, including the creation of housing. Residential development and construction loans will finance projects such as single family subdivisions, planned unit developments, townhouses, and condominiums. Residential land acquisition, development and construction loans generally are underwritten with a maximum term of 36 months, including extensions approved at origination.
Commercial land acquisition and construction loans are secured by real property where loan funds will be used to acquire land and to construct or improve appropriately zoned real property for the creation of income producing or owner user commercial properties. Borrowers are generally required to put equity into each project at levels determined by the appropriate Loan Committee. Commercial land acquisition and construction loans generally are underwritten with a maximum term of 24 months.
Substantially all construction draw requests must be presented in writing on American Institute of Architects documents and certified either by the contractor, the borrower and/or the borrower’s architect. Each draw request shall also include the borrower’s soft cost breakdown certified by the borrower or their Chief Financial Officer. Prior to an advance, the Bank or its contractor inspects the project to determine that the work has been completed, to justify the draw requisition.
Commercial permanent loans are generally secured by improved real property which is generating income in the normal course of operation. Debt service coverage, assuming stabilized occupancy, must be satisfactory to support a permanent loan. The debt service coverage ratio is ordinarily at least 1.15 to 1.0. As part of the underwriting process, debt service coverage ratios are stress tested assuming a 200 basis point increase in interest rates from their current levels.
Commercial permanent loans generally are underwritten with a term not greater than 10 years or the remaining useful life of the property, whichever is lower. The preferred term is between five to seven years, with amortization to a maximum of 25 years.
The Company’s loan portfolio includes ADC real estate loans including both investment and owner occupied projects. ADC loans amounted to $1.5 billion at December 31, 2021. A portion of the ADC portfolio, both speculative and non-speculative, includes loan funded interest reserves at origination. ADC loans that provide for the use of interest reserves represent approximately 64% of the outstanding ADC loan portfolio at December 31, 2021. The decision to establish a loan-funded interest reserve is made upon origination of the ADC loan and is based upon a number of factors considered during underwriting of the credit including: (1) the feasibility of the project; (2) the experience of the sponsor; (3) the creditworthiness of the borrower and guarantors; (4) borrower equity contribution; and (5) the level of collateral protection. When appropriate, an interest reserve provides an effective means of addressing the cash flow characteristics of a properly underwritten ADC loan. The Company does not significantly utilize interest reserves in other loan products. The Company recognizes that one of the risks inherent in the use of interest reserves is the potential masking of underlying problems with the project and/or the borrower’s ability to repay the loan. In order to mitigate this inherent risk, the Company employs a series of reporting and monitoring mechanisms on all ADC loans, whether or not an interest reserve is provided, including: (1) construction and development timelines which are monitored on an ongoing basis which track the progress of a given project to the timeline projected at origination; (2) a construction loan administration department independent of the lending function; (3) third party independent construction loan inspection reports; (4) monthly interest reserve monitoring reports detailing the balance of the interest reserves approved at origination and the days of interest carry represented by the reserve balances as compared to the then current anticipated time to completion and/or sale of speculative projects; and (5) quarterly commercial real estate construction meetings among senior Company management, which includes monitoring of current and projected real estate market conditions. If a project has not performed as expected, it is not the customary practice of the Company to increase loan funded interest reserves.
The following tables detail activity in the ACL by portfolio segment for the years ended December 31, 2021 and 2020. PPP loans are excluded from these tables since they do not carry an allowance for credit loss, as these loans are fully guaranteed as to principal and interest by the SBA, whose guarantee is backed by the full faith and credit of the U.S. Government. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
(dollars in thousands)CommercialIncome Producing -
Commercial
Real Estate		Owner Occupied -
Commercial
Real Estate		Real Estate
Mortgage -
Residential		Construction -
Commercial and
Residential		Home
Equity		Other
Consumer		Total
Year Ended December 31, 2021
Allowance for credit losses:                
Balance at beginning of period$26,569 $55,385 $14,000 $1,020 $11,529 $1,039 $37 $109,579 
Loans charged-off(8,788)— (5,444)— (206)— (1)(14,439)
Recoveries of loans previously charged-off486 — 97 — 499 — 18 1,100 
Net loans charged-off(8,302)— (5,347)— 293 — 17 (13,339)
Provision for credit losses(3,792)(17,098)3,493 (571)(2,723)(565)(19)(21,275)
Ending balance$14,475 $38,287 $12,146 $449 $9,099 $474 $35 $74,965 
Year Ended December 31, 2020
Allowance for credit losses:
Balance at beginning of period prior to adoption of ASC 326$18,832 $29,265 $5,838 $1,557 $17,485 $656 $25 $73,658 
Impact of adopting ASC 326892 11,230 4,674 (301)(6,143)245 17 $10,614 
Loans charged-off(12,082)(4,300)(20)(815)(2,947)(92)(3)(20,259)
Recoveries of loans previously charged-off130 — — — 4 — 28 162 
Net loans (charged-off) recoveries(11,952)(4,300)(20)(815)(2,943)(92)25 (20,097)
Provision for credit losses18,797 19,190 3,508 579 3,130 230 (30)45,404 
Ending balance$26,569 $55,385 $14,000 $1,020 $11,529 $1,039 $37 $109,579 
The following table presents the ending allowance balance attributable to loans individually and collectively evaluated for impairment, as well as associated loan balances, as of December 31, 2021 and 2020:
(dollars in thousands)CommercialIncome  Producing -
Commercial
Real Estate		Owner  Occupied -
Commercial
Real Estate		Real Estate
Mortgage -
Residential		Construction -
Commercial  and
Residential		Home
Equity		Other
Consumer		Total
Year Ended December 31, 2021
Allowance for credit losses:                
Ending Allowance Balance Attributable to loans:
Individually evaluated for impairment$1,799 $5,156 $— $— $— $— $— $6,955 
Collectively evaluated for impairment12,676 33,131 12,146 449 9,099 474 35 68,010 
Acquired with deteriorated credit quality———— — — — — 
Total Allowance Ending Balance$14,475 $38,287 $12,146 $449 $9,099 $474 $35 $74,965 
Loans:
Loans Individually evaluated for impairment$11,284 $22,570 $42 $1,779 $3,093 $366 $— $39,134 
Loans Collectively evaluated for impairment1,394,138 3,362,728 1,087,734 72,187 1,052,805 55,445 1,427 7,026,464 
Loans Acquired with deteriorated credit quality———— — — — — 
Total Ending Loans Balance$1,405,422 $3,385,298 $1,087,776 $73,966 $1,055,898 $55,811 $1,427 $7,065,598 
Year Ended December 31, 2020
Allowance for credit losses:
Ending Allowance Balance Attributable to loans:
Individually evaluated for impairment$7,343 $6,425 $1,241 $330 $103 $— $— $15,442 
Collectively evaluated for impairment19,226 48,960 12,759 690 11,426 1,039 37 94,137 
Acquired with deteriorated credit quality———— — — — — 
Total Allowance Ending Balance$26,569 $55,385 $14,000 $1,020 $11,529 $1,039 $37 $109,579 
Loans:
Loans Individually evaluated for impairment$16,627 $28,063 $22,398 $2,683 $206 $416 $— $70,393 
Loans Collectively evaluated for impairment1,875,577 3,658,937 975,296 73,909 1,031,960 72,751 1,389 7,689,819 
Loans Acquired with deteriorated credit quality———— — — — — 
Total Ending Loans Balance$1,892,204 $3,687,000 $997,694 $76,592 $1,032,166 $73,167 $1,389 $7,760,212 

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2021:
December 31, 2021December 31, 2020
(dollars in thousands)Business/Other AssetsReal EstateBusiness/Other AssetsReal Estate
Commercial$3,098 $6,821 $11,326 $4,026 
PPP loans1,365 — — — 
Income-producing-commercial real estate3,193 19,378 3,193 15,686 
Owner occupied - commercial real estate— 42 — 23,159 
Real estate mortgage- residential— 1,779 — 2,932 
Construction - commercial and residential— 3,093 — 206 
Home Equity— 366 — 415 
Other consumer— — — — 
Total$7,656 $31,479 $14,519 $46,424 

Credit Quality Indicators
The Company uses several credit quality indicators to manage credit risk in an ongoing manner. The Company’s primary credit quality indicator is an internal credit risk rating system that categorizes loans into pass, watch, special mention, or classified categories. Credit risk ratings are applied individually to those classes of loans that have significant or unique credit characteristics that benefit from a case-by-case evaluation. These are typically loans to businesses or individuals in the classes which comprise the commercial portfolio segment. Groups of loans that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk rated and monitored collectively. These are typically loans to individuals in the classes which comprise the consumer portfolio segment.
The following are the definitions of the Company’s credit quality indicators:
Pass:Loans in all classes that comprise the commercial and consumer portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan agreement. Management believes that there is a low likelihood of loss related to those loans that are considered pass.
Watch:Loan is paying as agreed with generally acceptable asset quality; however the obligor’s performance has not met expectations. Balance sheet and/or income statement has shown deterioration to the point that the obligor could not sustain any further setbacks. Credit is expected to be strengthened through improved obligor performance and/or additional collateral within a reasonable period of time.
Special Mention:Loans in the classes that comprise the commercial portfolio segment that have potential weaknesses that deserve management’s close attention. If not addressed, these potential weaknesses may result in deterioration of the repayment prospects for the loan. The special mention credit quality indicator is not used for classes of loans that comprise the consumer portfolio segment. Management believes that there is a moderate likelihood of some loss related to those loans that are considered special mention.
Classified:
Classified (a) Substandard – Loans inadequately protected by the current sound 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 by the distinct possibility that the company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual loans classified substandard.
Classified (b) Doubtful – Loans that have all the weaknesses inherent in a loan classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the assets, its classification as an estimated loss is deferred until its more exact status may be determined.
The Company’s credit quality indicators are updated on an ongoing basis along with our credits rated watch or below reviews. The following table presents by class and by credit quality indicator, the recorded investment in the Company’s loans and leases as of December 31, 2021 and 2020. The data is further defined by year of loan origination.

December 31, 2021 (dollars in thousands)Prior20172018201920202021Total
Commercial
Pass$344,887 $232,399 $212,461 $125,698 $109,685 $248,191 $1,287,658 
Watch23,986 7,758 15,039 996 4,268 3,137 40,847 
Special Mention901 9,515 363 — — — 10,779 
Substandard11,694 778 2,124 437 — — 15,033 
Total381,468 250,450 229,987 127,131 113,953 251,328 1,354,317 
PPP loans— — — — — — — 
Pass— — — — 16,840 32,900 49,740 
Substandard1,365 1,365 
Total— — — — 18,205 32,900 51,105 
Income producing - commercial real estate— — — — — 
Pass650,960 334,935 467,617 503,546 349,120 598,806 2,904,984 
Watch58,334 73,760 — 43,561 35,094 — 210,749 
Special Mention101,580 — 41,936 51,957 — — 195,473 
Substandard60,059 — 8,491 5,542 — — 74,092 
Total870,933 408,695 518,044 604,606 384,214 598,806 3,385,298 
Owner occupied - commercial real estate— — — — — 
Pass369,402 127,687 210,348 82,427 43,143 184,527 1,017,534 
Watch22,710 4,643 11,783 7,026 — — 46,162 
Special Mention— — — 2,122 — — 2,122 
Substandard21,958 — — — — — 21,958 
Total414,070 132,330 222,131 91,575 43,143 184,527 1,087,776 
Real estate mortgage - residential— — — — — 
Pass14,645 5,854 12,956 15,546 3,436 16,495 68,932 
Watch3,255 — — — — — 3,255 
Substandard1,698 — — 81 — — 1,779 
Total19,598 5,854 12,956 15,627 3,436 16,495 73,966 
Construction - commercial and residential— — — — — 
Pass56,631 140,529 184,749 147,582 225,312 93,999 848,802 
Watch506 43,918 — — — — 44,424 
Special Mention— — — — — — — 
Substandard— — — 3,093 — — 3,093 
Total57,137 184,447 184,749 150,675 225,312 93,999 896,319 
Construction - C&I (owner occupied)— — — — — 
Pass19,710 1,754 25,163 46,451 61,408 768 155,254 
Watch680 390 3,255 — — — 4,325 
Total20,390 2,144 28,418 46,451 61,408 768 159,579 
Home Equity— — — — — — — 
Pass23,371 5,237 1,766 2,484 9,966 12,383 55,207 
Watch193 — — — — — 193 
Substandard366 — — 45 — — 411 
Total23,930 5,237 1,766 2,529 9,966 12,383 55,811 
Other Consumer— — — — — — — 
Pass1,192 26 44 — 19 91 1,372 
Substandard55 — — — — — 55 
Total1,247 26 44 — 19 91 1,427 
Total Recorded Investment$1,788,773 $989,183 $1,198,095 $1,038,594 $859,656 $1,191,297 $7,065,598 
December 31, 2020 (dollars in thousands)Prior20162017201820192020Total
Commercial
Pass$323,660 $111,886 $249,541 $211,551 $164,166 $227,095 $1,287,899 
Watch31,903 5,315 19,145 21,013 7,740 7,979 93,095 
Special Mention4,969 1,692 8,969 3,385 5,599 2,169 26,783 
Substandard17,679 5,803 1,820 3,525 829 — 29,656 
Total378,211 124,696 279,475 239,474 178,334 237,243 1,437,433 
PPP loans— 
Pass— — — — — 454,771 454,771 
Total— — — — — 454,771 454,771 
Income producing - commercial real estate— 
Pass560,915 347,946 397,953 622,276 643,388 512,387 3,084,865 
Watch152,367 62,912 91,636 89,852 44,555 34,195 475,517 
Special Mention213 — — — 51,969 — 52,182 
Substandard58,555 800 4,656 4,883 5,542 — 74,436 
Total772,050 411,658 494,245 717,011 745,454 546,582 3,687,000 
Owner occupied - commercial real estate— 
Pass343,371 100,272 111,996 136,644 59,681 49,584 801,548 
Watch16,014 5,011 2,640 10,338 15,501 — 49,504 
Special Mention418 — — 83,110 19,091 — 102,619 
Substandard28,228 784 1,908 2,048 10,151 904 44,023 
Total388,031 106,067 116,544 232,140 104,424 50,488 997,694 
Real estate mortgage - residential— 
Pass16,310 2,693 10,199 12,746 18,209 10,116 70,273 
Watch1,996 699 — 728 — — 3,423 
Substandard1,198 1,698 — — — — 2,896 
Total19,504 5,090 10,199 13,474 18,209 10,116 76,592 
Construction - commercial and residential— 
Pass21,290 60,486 266,788 297,480 105,679 71,297 823,020 
Watch929 — 42,751 3,448 — — 47,128 
Special Mention12 — — 2,895 — — 2,907 
Substandard— — 206 — — — 206 
Total22,231 60,486 309,745 303,823 105,679 71,297 873,261 
Construction - C&I (owner occupied)— 
Pass8,278 10,476 6,637 30,340 22,209 40,101 118,041 
Watch3,573 — 2,118 4,935 — — 10,626 
Special Mention124 — — — 14,436 15,678 30,238 
Total11,975 10,476 8,755 35,275 36,645 55,779 158,905 
Home Equity— 
Pass33,226 4,493 8,227 7,827 4,224 12,924 70,921 
Watch1,596 — — — — — 1,596 
Substandard603 — — — 47 — 650 
Total35,425 4,493 8,227 7,827 4,271 12,924 73,167 
Other Consumer— 
Pass929 190 64 74 94 31 1,382 
Substandard7 — — — — — 7 
Total936 190 64 74 94 31 1,389 
Total Recorded Investment$1,628,363 $723,156 $1,227,254 $1,549,098 $1,193,110 $1,439,231 $7,760,212 
Nonaccrual and Past Due Loans
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
The following table presents, by class of loan, information related to nonaccrual loans as of December 31, 2021 and 2020.
December 31, 2021
(dollars in thousands)Nonaccrual with No Allowance for Credit LossNonaccrual with an Allowance for Credit LossesTotal Nonaccrual Loans
Commercial$5,806 $3,070 $8,876 
PPP1,365 $— 1,365 
Income producing - commercial real estate3,920 9,536 13,456 
Owner occupied - commercial real estate42 — 42 
Real estate mortgage - residential1,779 231 2,010 
Construction - commercial and residential3,093 — 3,093 
Home equity366 — 366 
Total nonaccrual loans (1)(2) (3)
$16,371 $12,837 $29,208 
December 31, 2020
(dollars in thousands)Nonaccrual with No Allowance for Credit LossNonaccrual with an Allowance for Credit LossesTotal Nonaccrual Loans
Commercial$3,263 $12,089 $15,352 
Income producing - commercial real estate6,500 12,380 18,880 
Owner occupied - commercial real estate18,941 4,217 23,158 
Real estate mortgage - residential1,234 1,697 2,931 
Construction - commercial and residential— 206 206 
Home equity416 — 416 
Total nonaccrual loans (1)(2)
$30,354 $30,589 $60,943 

(1)Excludes TDRs that were performing under their restructured terms totaling $10.2 million at December 31, 2021, and $10.5 million at December 31, 2020.
(2)Gross interest income of $1.7 million $3.7 million and $3.0 million would have been recorded for 2021, 2020 and 2019, respectively, if nonaccrual loans shown above had been current and in accordance with their original terms, while interest actually recorded on such loans were $101 thousand, $679 thousand and $630 thousand at December 31, 2021 2020 and 2019, respectively. See Note 1 to the Consolidated Financial Statements for a description of the Company’s policy for placing loans on nonaccrual status.
(3)The CARES Act created the PPP, a program designed to aid small- and medium-sized businesses through federally guaranteed loans distributed through banks. These loans are intended to guarantee payroll and other costs to help those businesses remain viable and allow their workers to pay their bills.
The following table presents, by class of loan, an aging analysis and the recorded investments in loans past due as of December 31, 2021 and 2020.
(dollars in thousands)Loans
30-59 Days
Past Due		Loans
60-89 Days
Past Due		Loans
90 Days or
More Past Due		Total Past
Due Loans		Current
Loans		Nonaccrual LoansTotal Recorded
Investment in
Loans
December 31, 2021
Commercial$1,462 $672 $— $2,134 $1,343,307 $8,876 $1,354,317 
PPP loans1,765 825 — $2,590 47,150 1,365 $51,105 
Income producing - commercial real estate— — — — 3,371,842 13,456 3,385,298 
Owner occupied - commercial real estate419 19,108 — 19,527 1,068,207 42 1,087,776 
Real estate mortgage – residential1,372 — — 1,372 70,584 2,010 73,966 
Construction - commercial and residential— — — — 893,226 3,093 896,319 
Construction - C&I (owner occupied)— — — $— 159,579 — $159,579 
Home equity33 187 — 220 55,225 366 55,811 
Other consumer— — — — 1,427 — 1,427 
Total$5,051 $20,792 $— $25,843 $7,010,547 $29,208 $7,065,598 
December 31, 2020
Commercial$6,411 $21,426 $— $27,837 $1,394,244 $15,352 $1,437,433 
PPP loans— — — 454,771 — 454,771 
Income producing - commercial real estate— 51,913 — $51,913 3,616,207 18,880 3,687,000 
Owner occupied - commercial real estate10,630 3,542 — $14,172 960,364 23,158 997,694 
Real estate mortgage – residential1,430 — — $1,430 72,231 2,931 76,592 
Construction - commercial and residential2,992 340 — $3,332 869,723 206 873,261 
Construction - C&I (owner occupied)— — — 158,905 — 158,905 
Home equity467 4,552 — $5,019 67,732 416 73,167 
Other consumer21 1 — $22 1,367 — 1,389 
Total$21,951 $81,774 $— $103,725 $7,595,544 $60,943 $7,760,212 

Loan Modifications
A modification of a loan constitutes a troubled debt restructuring ("TDR") when a borrower is experiencing financial difficulty and the modification constitutes a concession. The Company offers various types of concessions when modifying a loan. Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor is often requested.
Commercial mortgage and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Construction loans modified in a TDR may also involve extending the interest-only payment period. As of December 31, 2021, all performing TDRs were categorized as interest-only modifications.
Loans modified in a TDR for the Company may have the financial effect of increasing the specific allowance associated with the loan. An allowance for consumer and commercial loans that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates.
In response to the COVID-19 pandemic and its economic impact to our customers, we implemented a short-term modification program that complies with the CARES Act and ASC 310-40 to provide temporary payment relief to those borrowers directly impacted by COVID-19 who were not more than 30 days past due as of December 31, 2019. This program allowed for a deferral of payments for 90 days, which we extended for an additional 90 days for certain loans, for a maximum of 180 days on a cumulative and successive basis. The deferred payments along with interest accrued during the deferral period are due and payable on the maturity date. Additionally, none of the deferrals are reflected in the Company's asset quality measures (i.e. non-performing loans) due to the provision of the CARES Act that permits U.S. financial institutions to temporarily suspend the GAAP requirements to treat such short-term loan modifications as TDR. Similar provisions have also been confirmed by interagency guidance issued by the federal banking agencies and confirmed with staff members of the Financial Accounting Standards Board.

The following tables presents, by class, the recorded investment of loans modified in TDRs held by the Company during the years ended December 31, 2021 and 2020.
As of December 31, 2021
(dollars in thousands)Number
of
Contracts		CommercialIncome
Producing -
Commercial
Real Estate		Owner
Occupied -
Commercial
Real Estate		Construction -
Commercial
Real Estate		Total
Troubled debt restructurings
Restructured accruing5 $1,043 $9,116 $— $— $10,159 
Restructured nonaccruing2 — 6,342 — — 6,342 
Total7 $1,043 $15,458 $— $— $16,501 
Specific allowance$140 $3,216 $— $— $3,356 
Restructured and subsequently defaulted$— $6,342 $— $— $6,342 
 As of December 31, 2020
(dollars in thousands)Number
of
Contracts		CommercialIncome
Producing -
Commercial
Real Estate		Owner
Occupied -
Commercial
Real Estate		Construction -
Commercial
Real Estate		Total
Troubled debt restructurings            
Restructured accruing7 $1,276 $9,183 $13 $— $10,472 
Restructured nonaccruing3 — 6,342 2,370 — 8,712 
Total10 $1,276 $15,525 $2,383 $— $19,184 
Specific allowance$733 $2,989 $— $— $3,722 
Restructured and subsequently defaulted$— $6,342 $2,370 $— $8,712 
The Company had seven TDRs at December 31, 2021, totaling $16.5 million, as compared to ten TDRs totaling $19.2 million at December 31, 2020. 
At December 31, 2021, five of these TDR loans, totaling $10.2 million, were performing under their modified terms, as compared to December 31, 2020, when there were seven performing TDR loans totaling approximately $10.5 million. 
During 2021, there was one performing TDRs totaling $101 thousand that defaulted on their modified terms that were reclassified to nonperforming loans, as compared to two performing TDR loans during 2020 totaling approximately $6.3 million that defaulted on their modified terms and either charged-off or were reclassified to nonperforming loans. A default is considered to have occurred once the TDR is past due 90 days or more, or has been placed on nonaccrual.
During 2021, one previously nonperforming restructured loan had its collateral sold and all principal collected along with partial collection of delinquent interest; one restructured loan purchased as part of the 2014 acquisition of Virginia Heritage Bank had its full carrying value collected, while additional payments are expected to recover previously written off principal and interest;
and, the aforementioned performing TDR totaling $101 thousand that defaulted in 2021 was subsequently charged off later in the year. During 2020, there were two restructured loans totaling approximately $870 thousand that had their collateral property sold and were paid in full, and one TDR loan totaling $138 thousand that had previously defaulted was charged off.

Commercial and consumer loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, the Company evaluates the loan for possible further loss. The allowance may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.

During 2021, there were no loans modified in a TDR, as compared to two loans during 2020 totaling approximately $572 thousand modified in a TDR.
Related Party Loans
Certain directors and executive officers of the Company and the Bank and certain affiliated entities of such directors and executive officers have had loan transactions with the Company. All of such loans are either fully repaid or performing and none of such loans are nonaccrual, past due, restructured or, rated substandard or worse (not on nonaccrual).
The following table summarizes changes in amounts of loans outstanding, both direct and indirect, to those persons during 2021 and 2020.
Amounts in the “Additions due to Changes in Related Parties” reflect existing outstanding loans that transitioned to being related party loans between January 1, 2021 and December 31, 2021 as a result of changes in related party status with respect to certain of the Company’s directors who are affiliated with the related borrowers.

(dollars in thousands)20212020
Balance at January 1,$72,956$52,368
Additions30130,920
Repayments(4,750)(10,332)
Additions due to Changes in Related Parties82,315—
Deletions due to Changes in Related Parties——
Balance at December 31,$150,822$72,956