The following table presents total loans outstanding, by portfolio segment, as of December 31, 2021 and 2020:

(1)	Includes PPP loans of $33.6 million at December 31, 2021 and $268.4 million at December 31, 2020.

Total loans include net deferred loan fees and costs of $231 thousand and $4.7 million at December 31, 2021 and 2020, respectively.

Management monitors the credit quality of its loan portfolio on an ongoing basis. Measurement of delinquency and past due status are based on the contractual terms of each loan. Past due loans are reviewed regularly to identify loans for nonaccrual status.

The following tables present past due aging analysis of total loans outstanding, by portfolio segment, as of December 31, 2021 and 2020, respectively:


	December 31, 2021
					90 Days
	Accruing		30 - 89 Days		or More				Total
(dollars in thousands)	Current		Past Due		Past Due		Nonaccrual		Loans
Commercial
Commercial and industrial	$	435,135	$	168	$	121	$	1,337	$	436,761
Real estate construction		40,619		—		—		—		40,619
Commercial real estate		598,264		—		—		629		598,893
Total commercial		1,074,018		168		121		1,966		1,076,273
Consumer
Residential real estate first mortgage		508,925		1,770		—		21		510,716
Residential real estate junior lien		125,412		167		—		89		125,668
Other revolving and installment		45,242		121		—		—		45,363
Total consumer		679,579		2,058		—		110		681,747
Total loans	$	1,753,597	$	2,226	$	121	$	2,076	$	1,758,020


	December 31, 2020
					90 Days
	Accruing		30 - 89 Days		or More				Total
(dollars in thousands)	Current		Past Due		Past Due		Nonaccrual		Loans
Commercial
Commercial and industrial	$	689,340	$	500	$	30	$	1,988	$	691,858
Real estate construction		44,451		—		—		—		44,451
Commercial real estate		558,127		2,449		—		2,431		563,007
Total commercial		1,291,918		2,949		30		4,419		1,299,316
Consumer
Residential real estate first mortgage		461,179		1,752		—		439		463,370
Residential real estate junior lien		143,060		191		—		165		143,416
Other revolving and installment		73,128		118		—		27		73,273
Total consumer		677,367		2,061		—		631		680,059
Total loans	$	1,969,285	$	5,010	$	30	$	5,050	$	1,979,375

Interest income foregone on nonaccrual loans approximated $0.3 million, $0.5 million, and $0.4 million for the years ended December 31, 2021, 2020, and 2019, respectively.

The Company’s consumer loan portfolio is primarily comprised of both secured and unsecured loans that are relatively small and are evaluated at origination on a centralized basis against standardized underwriting criteria. The Company generally does not risk rate consumer loans unless a default event such as bankruptcy or extended nonperformance takes place. Credit quality for the consumer loan portfolio is measured by delinquency rates, nonaccrual amounts, and actual losses incurred.

The Company assigns a risk rating to all commercial loans, except pools of homogeneous loans, and periodically performs detailed internal and external reviews of risk rated loans over a certain threshold to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by the Company’s regulators. During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate, and the estimated fair values of collateral securing the loans. These credit quality indicators are used to assign a risk rating to each individual loan.

The Company’s ratings are aligned to pass and criticized categories. The criticized category includes special mention, substandard, and doubtful risk ratings. The risk ratings are defined as follows:

Pass: A pass loan is a credit with no existing or known potential weaknesses deserving of management’s close attention.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, this potential weakness may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

Substandard: Loans classified as substandard are not adequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Well-defined weaknesses include a borrower’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time, or the failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company 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 characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss: Loans classified as loss are considered uncollectible and charged off immediately.

The tables below present total loans outstanding, by portfolio segment and risk category, as of December 31, 2021 and 2020:


	December 31, 2021
			Criticized
			Special
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
Commercial
Commercial and industrial	$	430,235	$	480	$	6,046	$	—	$	436,761
Real estate construction		40,619		—		—		—		40,619
Commercial real estate		585,291		—		13,602		—		598,893
Total commercial		1,056,145		480		19,648		—		1,076,273
Consumer
Residential real estate first mortgage		510,375		—		341		—		510,716
Residential real estate junior lien		124,898		—		770		—		125,668
Other revolving and installment		45,363		—		—		—		45,363
Total consumer		680,636		—		1,111		—		681,747
Total loans	$	1,736,781	$	480	$	20,759	$	—	$	1,758,020


	December 31, 2020
			Criticized
			Special
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
Commercial
Commercial and industrial	$	669,602	$	5,415	$	16,841	$	—	$	691,858
Real estate construction		44,451		—		—		—		44,451
Commercial real estate		533,733		6,686		22,588		—		563,007
Total commercial		1,247,786		12,101		39,429		—		1,299,316
Consumer
Residential real estate first mortgage		461,221		1,406		743		—		463,370
Residential real estate junior lien		140,461		1,819		1,136		—		143,416
Other revolving and installment		73,236		—		37		—		73,273
Total consumer		674,918		3,225		1,916		—		680,059
Total loans	$	1,922,704	$	15,326	$	41,345	$	—	$	1,979,375

The adequacy of the allowance for loan losses is assessed at the end of each quarter. The allowance for loan losses includes a specific component related to loans that are individually evaluated for impairment and a general component related to loans that are segregated into homogeneous pool and collectively evaluated for impairment. The factors applied to these pools are an estimate of probable incurred losses based on management’s evaluation of historical

net losses from loans with similar characteristics, which are adjusted by management to reflect current events, trends, and conditions. The adjustments include consideration of the following: changes in lending policies and procedures, economic conditions, nature and volume of the portfolio, experience of lending management, volume and severity of past due loans, quality of the loan review system, value of underlying collateral for collateral dependent loans, concentrations, and other external factors.

The following tables present, by loan portfolio segment, a summary of the changes in the allowance for loan losses for the three years ending December 31, 2021, 2020, and 2019:


	Year ended December 31, 2021
	Beginning		Provision for		Loan		Loan		Ending
(dollars in thousands)	Balance		Loan Losses		Charge-offs		Recoveries		Balance
Commercial
Commercial and industrial	$	10,205	$	(1,710)	$	(1,230)	$	1,660	$	8,925
Real estate construction		658		125		—		—		783
Commercial real estate		14,105		(2,015)		(536)		822		12,376
Total commercial		24,968		(3,600)		(1,766)		2,482		22,084
Consumer
Residential real estate first mortgage		5,774		758		—		—		6,532
Residential real estate junior lien		1,373		(201)		—		123		1,295
Other revolving and installment		753		(259)		(156)		143		481
Total consumer		7,900		298		(156)		266		8,308
Unallocated		1,378		(198)		—		—		1,180
Total	$	34,246	$	(3,500)	$	(1,922)	$	2,748	$	31,572


	Year ended December 31, 2020
	Beginning		Provision for		Loan		Loan		Ending
(dollars in thousands)	Balance		Loan Losses		Charge-offs		Recoveries		Balance
Commercial
Commercial and industrial	$	12,270	$	(2,168)	$	(4,249)	$	4,352	$	10,205
Real estate construction		303		355		—		—		658
Commercial real estate		6,688		8,185		(865)		97		14,105
Total commercial		19,261		6,372		(5,114)		4,449		24,968
Consumer
Residential real estate first mortgage		1,448		4,321		—		5		5,774
Residential real estate junior lien		671		507		(12)		207		1,373
Other revolving and installment		352		514		(242)		129		753
Total consumer		2,471		5,342		(254)		341		7,900
Unallocated		2,192		(814)		—		—		1,378
Total	$	23,924	$	10,900	$	(5,368)	$	4,790	$	34,246


	Year ended December 31, 2019
	Beginning		Provision for		Loan		Loan		Ending
(dollars in thousands)	Balance		Loan Losses		Charge-offs		Recoveries		Balance
Commercial
Commercial and industrial	$	12,127	$	5,213	$	(6,540)	$	1,470	$	12,270
Real estate construction		250		51		(1)		3		303
Commercial real estate		6,279		259		—		150		6,688
Total commercial		18,656		5,523		(6,541)		1,623		19,261
Consumer
Residential real estate first mortgage		1,156		292		—		—		1,448
Residential real estate junior lien		805		99		(465)		232		671
Other revolving and installment		380		383		(572)		161		352
Total consumer		2,341		774		(1,037)		393		2,471
Unallocated		1,177		1,015		—		—		2,192
Total	$	22,174	$	7,312	$	(7,578)	$	2,016	$	23,924

The following tables present the recorded investment in loans and related allowance for the loan losses, by portfolio segment, disaggregated on the basis of the Company’s impairment methodology, as of December 31, 2021 and 2020:


	December 31, 2021
	Recorded Investment						Allowance for Loan Losses
	Individually		Collectively				Individually		Collectively
(dollars in thousands)	Evaluated		Evaluated		Total		Evaluated		Evaluated		Total
Commercial
Commercial and industrial	$	1,831	$	434,930	$	436,761	$	278	$	8,647	$	8,925
Real estate construction		—		40,619		40,619		—		783		783
Commercial real estate		809		598,084		598,893		5		12,371		12,376
Total commercial		2,640		1,073,633		1,076,273		283		21,801		22,084
Consumer
Residential real estate first mortgage		21		510,695		510,716		—		6,532		6,532
Residential real estate junior lien		91		125,577		125,668		—		1,295		1,295
Other revolving and installment		—		45,363		45,363		—		481		481
Total consumer		112		681,635		681,747		—		8,308		8,308
Unallocated		—		—		—		—		—		1,180
Total loans	$	2,752	$	1,755,268	$	1,758,020	$	283	$	30,109	$	31,572


	December 31, 2020
	Recorded Investment						Allowance for Loan Losses
	Individually		Collectively				Individually		Collectively
(dollars in thousands)	Evaluated		Evaluated		Total		Evaluated		Evaluated		Total
Commercial
Commercial and industrial	$	2,616	$	689,242	$	691,858	$	336	$	9,869	$	10,205
Real estate construction		—		44,451		44,451		—		658		658
Commercial real estate		5,224		557,783		563,007		837		13,268		14,105
Total commercial		7,840		1,291,476		1,299,316		1,173		23,795		24,968
Consumer
Residential real estate first mortgage		439		462,931		463,370		—		5,774		5,774
Residential real estate junior lien		224		143,192		143,416		19		1,354		1,373
Other revolving and installment		27		73,246		73,273		13		740		753
Total consumer		690		679,369		680,059		32		7,868		7,900
Unallocated		—		—		—		—		—		1,378
Total loans	$	8,530	$	1,970,845	$	1,979,375	$	1,205	$	31,663	$	34,246

The tables below summarize key information on impaired loans. These impaired loans may have estimated losses which are included in the allowance for loan losses.


	December 31, 2021						December 31, 2020
	Recorded		Unpaid		Related		Recorded		Unpaid		Related
(dollars in thousands)	Investment		Principal		Allowance		Investment		Principal		Allowance
Impaired loans with a valuation allowance
Commercial and industrial	$	445	$	464	$	278	$	723	$	725	$	336
Commercial real estate		180		203		5		3,948		3,974		837
Residential real estate junior lien		—		—		—		19		20		19
Other revolving and installment		—		—		—		27		27		13
Total impaired loans with a valuation allowance		625		667		283		4,717		4,746		1,205
Impaired loans without a valuation allowance
Commercial and industrial		1,386		1,575		—		1,893		2,173		—
Commercial real estate		629		684		—		1,276		1,415		—
Residential real estate first mortgage		21		24		—		439		464		—
Residential real estate junior lien		91		120		—		205		306		—
Other revolving and installment		—		—		—		—		—		—
Total impaired loans without a valuation allowance		2,127		2,403		—		3,813		4,358		—
Total impaired loans
Commercial and industrial		1,831		2,039		278		2,616		2,898		336
Commercial real estate		809		887		5		5,224		5,389		837
Residential real estate first mortgage		21		24		—		439		464		—
Residential real estate junior lien		91		120		—		224		326		19
Other revolving and installment		—		—		—		27		27		13
Total impaired loans	$	2,752	$	3,070	$	283	$	8,530	$	9,104	$	1,205

The table below presents the average recorded investment in impaired loans and interest income for the three years ending December 31, 2021, 2020, and 2019:


	Year Ended December 31,
	2021				2020				2019
	Average				Average				Average
	Recorded		Interest		Recorded		Interest		Recorded		Interest
(dollars in thousands)	Investment		Income		Investment		Income		Investment		Income
Impaired loans with a valuation allowance
Commercial and industrial	$	517	$	13	$	765	$	14	$	839	$	16
Commercial real estate		187		7		3,972		138		5,891		—
Residential real estate junior lien		—		—		19		—		—		—
Other revolving and installment		—		—		28		—		20		—
Total impaired loans with a valuation allowance		704		20		4,784		152		6,750		16
Impaired loans without a valuation allowance
Commercial and industrial		1,988		20		4,151		25		2,434		30
Commercial real estate		672		—		1,614		—		212		8
Residential real estate first mortgage		23		—		461		—		230		—
Residential real estate junior lien		98		—		234		3		338		4
Other revolving and installment		1		—		—		—		3		—
Total impaired loans without a valuation allowance		2,782		20		6,460		28		3,217		42
Total impaired loans
Commercial and industrial		2,505		33		4,916		39		3,273		46
Commercial real estate		859		7		5,586		138		6,103		8
Residential real estate first mortgage		23		—		461		—		230		—
Residential real estate junior lien		98		—		253		3		338		4
Other revolving and installment		1		—		28		—		23		—
Total impaired loans	$	3,486	$	40	$	11,244	$	180	$	9,967	$	58

Loans with a carrying value of $1.2 billion and $1.2 billion were pledged at December 31, 2021 and 2020, respectively, to secure FHLB borrowings, public deposits, and for other purposes required or permitted by law.

Under certain circumstances, the Company will provide borrowers relief through loan restructurings. A restructuring of debt constitutes a troubled debt restructuring, or TDR, if the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. TDR concessions can include reduction of interest rates, extension of maturity dates, forgiveness of principal or interest due, or acceptance of other assets in full or partial satisfaction of the debt.

During the second quarter of 2021, there were three loans modified as a TDRs as a result of changing the terms allowing for interest rate reductions and an extension of the maturity dates. As of December 31, 2021, the carrying value of the restructured loans was $701 thousand. The loans are not currently performing in compliance with the modified terms and were placed on nonaccrual. There was no specific reserve for loan losses allocated to the loan modified as a TDR.

As of December 31, 2021, the Company had entered into modifications on 588 loans representing $154.6 million in total principal balances, since the beginning of the COVID-19 pandemic. Of those loans, 6 loans with a total outstanding principal balance of $3.3 million, have been granted second deferrals, 2 loans with a total outstanding principal balance of $72 thousand remain on the first deferral and the remaining loans have been returned to a normal payment status. These deferrals were generally no more than 90 days in duration and were not considered TDRs in accordance with the Interagency Statement on Loan Modifications and Reporting for Financial Institutions as issued on April 7, 2020.

During the fourth quarter of 2020, there was one loan modified as a TDR as a result of changing the terms allowing for interest only payments and smaller extensions. As of December 31, 2020, the carrying value of the restructured loan was $2.6 million. The loan is currently performing according to the modified terms and there was no specific reserve for loan losses allocated to the loan modified as a TDR.

As an SBA-Certified Preferred lender, we were delegated the authority as part of the CARES Act to make PPP SBA-guaranteed financing available to eligible borrowers. As of December 31, 2021, we had assisted 2,454 new and existing clients secure approximately $474.2 million of PPP financing. The SBA pays a processing fee based on the balance of the financing outstanding at the time of final disbursement. The processing fees were as follows: five percent for loans of not more than $350 thousand, three percent for loans of more than $350 thousand and less than $2 million, and one percent for loans of at least $2 million. Net processing fees in the amount of $15.7 million were being deferred and recognized as interest income on a level yield method of the life of the represented loans.

The Company does not have material commitments to lend additional funds to borrowers with loans whose terms have been modified in TDRs or whose loans are on nonaccrual.