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Loans | 9 Months Ended
--- | ---
Sep. 30, 2020
Loans [Abstract] |
Loans | (6) Loans A summary of loans is as follows:
| At |  | At
| September 30, |  | December 31,
(In thousands) | 2020 |  | 2019
Commercial real estate | $ | 426,184 |  | $ | 418,356
Commercial (1) |  | 582,763 |  |  | 451,791
Residential real estate |  | 36,920 |  |  | 45,695
Construction and land development |  | 35,768 |  |  | 46,763
Consumer |  | 7,024 |  |  | 12,737
Mortgage warehouse |  | 275,763 |  |  | —
|  | 1,364,422 |  |  | 975,342
Allowance for loan losses |  | (17,788) |  |  | (13,844)
Deferred loan fees, net |  | (5,293) |  |  | (2,212)
Net loans | $ | 1,341,341 |  | $ | 959,286
(1) Includes $78.0 million in PPP loans at September 30, 2020. There were no PPP loans at December 31, 2019. The following tables set forth information regarding the activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2020 and 2019:
| For the three months ended September 30,
(In thousands) | Commercial Real Estate |  | Commercial |  | Residential ‎Real ‎Estate |  | Construction and Land Development |  | Consumer |  | Mortgage Warehouse |  | Unallocated |  | Total
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at June 30, 2020 | $ | 6,758 |  | $ | 7,925 |  | $ | 207 |  | $ | 955 |  | $ | 851 |  | $ | 462 |  | $ | — |  | $ | 17,158
Charge-offs |  | — |  |  | (78) |  |  | — |  |  | — |  |  | (96) |  |  | — |  |  | — |  |  | (174)
Recoveries |  | — |  |  | — |  |  | — |  |  | — |  |  | 44 |  |  | — |  |  | — |  |  | 44
Provision (credit) |  | 106 |  |  | 869 |  |  | (11) |  |  | (376) |  |  | (55) |  |  | 227 |  |  | — |  |  | 760
Balance at September 30, 2020 | $ | 6,864 |  | $ | 8,716 |  | $ | 196 |  | $ | 579 |  | $ | 744 |  | $ | 689 |  | $ | — |  | $ | 17,788
Balance at June 30, 2019 | $ | 4,579 |  | $ | 5,289 |  | $ | 231 |  | $ | 649 |  | $ | 928 |  | $ | — |  | $ | 114 |  | $ | 11,790
Charge-offs |  | — |  |  | — |  |  | — |  |  | — |  |  | (240) |  |  | — |  |  | — |  |  | (240)
Recoveries |  | — |  |  | 20 |  |  | 3 |  |  | — |  |  | 31 |  |  | — |  |  | — |  |  | 54
Provision (credit) |  | 366 |  |  | 339 |  |  | (6) |  |  | 15 |  |  | 63 |  |  | — |  |  | 56 |  |  | 833
Balance at September 30, 2019 | $ | 4,945 |  | $ | 5,648 |  | $ | 228 |  | $ | 664 |  | $ | 782 |  | $ | — |  | $ | 170 |  | $ | 12,437
| For the nine months ended September 30,
(In thousands) | Commercial Real Estate |  | Commercial |  | Residential ‎Real ‎Estate |  | Construction and Land Development |  | Consumer |  | Mortgage Warehouse |  | Unallocated |  | Total
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2019 | $ | 6,104 |  | $ | 6,086 |  | $ | 254 |  | $ | 749 |  | $ | 650 |  | $ | — |  | $ | 1 |  | $ | 13,844
Charge-offs |  | (118) |  |  | (175) |  |  | — |  |  | (24) |  |  | (609) |  |  | — |  |  | — |  |  | (926)
Recoveries |  | — |  |  | 7 |  |  | 4 |  |  | — |  |  | 128 |  |  | — |  |  | — |  |  | 139
Provision (credit) |  | 878 |  |  | 2,798 |  |  | (62) |  |  | (146) |  |  | 575 |  |  | 689 |  |  | (1) |  |  | 4,731
Balance at September 30, 2020 | $ | 6,864 |  | $ | 8,716 |  | $ | 196 |  | $ | 579 |  | $ | 744 |  | $ | 689 |  | $ | — |  | $ | 17,788
Balance at December 31, 2018 | $ | 4,152 |  | $ | 5,742 |  | $ | 251 |  | $ | 738 |  | $ | 710 |  | $ | — |  | $ | 87 |  | $ | 11,680
Charge-offs |  | — |  |  | (2,223) |  |  | — |  |  | — |  |  | (787) |  |  | — |  |  | — |  |  | (3,010)
Recoveries |  | — |  |  | 35 |  |  | 7 |  |  | — |  |  | 76 |  |  | — |  |  | — |  |  | 118
Provision (credit) |  | 793 |  |  | 2,094 |  |  | (30) |  |  | (74) |  |  | 783 |  |  | — |  |  | 83 |  |  | 3,649
Balance at September 30, 2019 | $ | 4,945 |  | $ | 5,648 |  | $ | 228 |  | $ | 664 |  | $ | 782 |  | $ | — |  | $ | 170 |  | $ | 12,437
The following table sets forth information regarding the allowance for loan losses and related loan balances by portfolio segment at September 30, 2020 and December 31, 2019:
(In thousands) | Commercial Real Estate |  | Commercial |  | Residential Real Estate |  | Construction and Land Development |  | Consumer |  | Mortgage Warehouse |  | Unallocated |  | Total
September 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment | $ | 1,160 |  | $ | 351 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 1,511
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment |  | 5,704 |  |  | 8,365 |  |  | 196 |  |  | 579 |  |  | 744 |  |  | 689 |  |  | — |  |  | 16,277
Total allowance for loan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
losses ending balance | $ | 6,864 |  | $ | 8,716 |  | $ | 196 |  | $ | 579 |  | $ | 744 |  | $ | 689 |  | $ | — |  | $ | 17,788
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment | $ | 21,205 |  | $ | 4,447 |  | $ | 163 |  | $ | — |  | $ | — |  | $ | — |  |  |  |  | $ | 25,815
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment |  | 404,979 |  |  | 578,316 |  |  | 36,757 |  |  | 35,768 |  |  | 7,024 |  |  | 275,763 |  |  |  |  |  | 1,338,607
Total loans ending balance | $ | 426,184 |  | $ | 582,763 |  | $ | 36,920 |  | $ | 35,768 |  | $ | 7,024 |  | $ | 275,763 |  |  |  |  | $ | 1,364,422
(In thousands) | Commercial Real Estate |  | Commercial |  | Residential Real Estate |  | Construction and Land Development |  | Consumer |  | Mortgage Warehouse |  | Unallocated |  | Total
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment | $ | 1,508 |  | $ | 174 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 1,682
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment |  | 4,596 |  |  | 5,912 |  |  | 254 |  |  | 749 |  |  | 650 |  |  | — |  |  | 1 |  |  | 12,162
Total allowance for loan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
losses ending balance | $ | 6,104 |  | $ | 6,086 |  | $ | 254 |  | $ | 749 |  | $ | 650 |  | $ | — |  | $ | 1 |  | $ | 13,844
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment | $ | 20,990 |  | $ | 3,326 |  | $ | 182 |  | $ | 165 |  | $ | — |  | $ | — |  |  |  |  | $ | 24,663
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment |  | 397,366 |  |  | 448,465 |  |  | 45,513 |  |  | 46,598 |  |  | 12,737 |  |  | — |  |  |  |  |  | 950,679
Total loans ending balance | $ | 418,356 |  | $ | 451,791 |  | $ | 45,695 |  | $ | 46,763 |  | $ | 12,737 |  | $ | — |  |  |  |  | $ | 975,342
The following tables set forth information regarding non-accrual loans and loan delinquencies by portfolio segment at September 30, 2020 and December 31, 2019:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 90 Days |  |  |
|  |  |  |  |  |  | 90 Days |  | Total |  |  |  |  |  |  |  | or More |  |  |
| 30 - 59 |  | 60 - 89 |  | or More |  | Past |  | Total |  | Total |  | Past Due |  | Non-accrual
(In thousands) | Days |  | Days |  | Past Due |  | Due |  | Current |  | Loans |  | and Accruing |  | Loans
September 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | — |  | $ | 205 |  | $ | — |  | $ | 205 |  | $ | 425,979 |  | $ | 426,184 |  | $ | — |  | $ | 19,834
Commercial |  | 172 |  |  | — |  |  | 291 |  |  | 463 |  |  | 582,300 |  |  | 582,763 |  |  | — |  |  | 4,155
Residential real estate |  | 327 |  |  | 176 |  |  | 1,033 |  |  | 1,536 |  |  | 35,384 |  |  | 36,920 |  |  | — |  |  | 1,166
Construction and |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
land development |  | — |  |  | — |  |  | — |  |  | — |  |  | 35,768 |  |  | 35,768 |  |  | — |  |  | —
Consumer |  | 77 |  |  | 44 |  |  | 51 |  |  | 172 |  |  | 6,852 |  |  | 7,024 |  |  | — |  |  | 51
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | 275,763 |  |  | 275,763 |  |  | — |  |  | —
Total | $ | 576 |  | $ | 425 |  | $ | 1,375 |  | $ | 2,376 |  | $ | 1,362,046 |  | $ | 1,364,422 |  | $ | — |  | $ | 25,206
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | 473 |  | $ | 18,256 |  | $ | 1,368 |  | $ | 20,097 |  | $ | 398,259 |  | $ | 418,356 |  | $ | — |  | $ | 1,701
Commercial |  | 529 |  |  | 85 |  |  | 484 |  |  | 1,098 |  |  | 450,693 |  |  | 451,791 |  |  | — |  |  | 2,955
Residential real estate |  | 715 |  |  | 154 |  |  | 832 |  |  | 1,701 |  |  | 43,994 |  |  | 45,695 |  |  | — |  |  | 969
Construction and |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
land development |  | — |  |  | — |  |  | 165 |  |  | 165 |  |  | 46,598 |  |  | 46,763 |  |  | — |  |  | 165
Consumer |  | 111 |  |  | 58 |  |  | 38 |  |  | 207 |  |  | 12,530 |  |  | 12,737 |  |  | — |  |  | 37
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total | $ | 1,828 |  | $ | 18,553 |  | $ | 2,887 |  | $ | 23,268 |  | $ | 952,074 |  | $ | 975,342 |  | $ | — |  | $ | 5,827
The following tables provide information with respect to the Company’s impaired loans:
| September 30, 2020 |  | December 31, 2019
|  |  |  | Unpaid |  |  |  |  |  |  |  | Unpaid |  |  |
| Recorded |  | Principal |  | Related |  | Recorded |  | Principal |  | Related
(In thousands) | Investment |  | Balance |  | Allowance |  | Investment |  | Balance |  | Allowance
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | 1,209 |  | $ | 1,209 |  | $ | — |  | $ | 2,070 |  | $ | 2,082 |  | $ | —
Commercial |  | 345 |  |  | 353 |  |  | — |  |  | 1,348 |  |  | 1,745 |  |  | —
Residential real estate |  | 163 |  |  | 163 |  |  | — |  |  | 182 |  |  | 182 |  |  | —
Construction and land development |  | — |  |  | — |  |  | — |  |  | 165 |  |  | 165 |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total impaired with no related allowance |  | 1,717 |  |  | 1,725 |  |  | — |  |  | 3,765 |  |  | 4,174 |  |  | —
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | 19,996 |  |  | 20,190 |  |  | 1,160 |  |  | 18,920 |  |  | 18,921 |  |  | 1,508
Commercial |  | 4,102 |  |  | 4,644 |  |  | 351 |  |  | 1,978 |  |  | 2,085 |  |  | 174
Residential real estate |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Construction and land development |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total impaired with an allowance recorded |  | 24,098 |  |  | 24,834 |  |  | 1,511 |  |  | 20,898 |  |  | 21,006 |  |  | 1,682
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | 21,205 |  |  | 21,399 |  |  | 1,160 |  |  | 20,990 |  |  | 21,003 |  |  | 1,508
Commercial |  | 4,447 |  |  | 4,997 |  |  | 351 |  |  | 3,326 |  |  | 3,830 |  |  | 174
Residential real estate |  | 163 |  |  | 163 |  |  | — |  |  | 182 |  |  | 182 |  |  | —
Construction and land development |  | — |  |  | — |  |  | — |  |  | 165 |  |  | 165 |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total impaired loans | $ | 25,815 |  | $ | 26,559 |  | $ | 1,511 |  | $ | 24,663 |  | $ | 25,180 |  | $ | 1,682
| Three Months Ended September 30,
| 2020 |  | 2019
| Average |  | Interest |  | Average |  | Interest
| Recorded |  | Income |  | Recorded |  | Income
(In thousands) | Investment |  | Recognized |  | Investment |  | Recognized
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | 1,383 |  | $ | 28 |  | $ | 2,420 |  | $ | 15
Commercial |  | 354 |  |  | 4 |  |  | 2,119 |  |  | 7
Residential real estate |  | 163 |  |  | 1 |  |  | 282 |  |  | 7
Construction and land development |  | — |  |  | — |  |  | 216 |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | —
Total impaired with no related allowance |  | 1,900 |  |  | 33 |  |  | 5,037 |  |  | 29
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | 20,354 |  |  | 1 |  |  | — |  |  | —
Commercial |  | 4,178 |  |  | — |  |  | 1,927 |  |  | —
Residential real estate |  | — |  |  | — |  |  | — |  |  | —
Construction and land development |  | — |  |  | — |  |  | — |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | —
Total impaired with an allowance recorded |  | 24,532 |  |  | 1 |  |  | 1,927 |  |  | —
Total |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | 21,737 |  |  | 29 |  |  | 2,420 |  |  | 15
Commercial |  | 4,532 |  |  | 4 |  |  | 4,046 |  |  | 7
Residential real estate |  | 163 |  |  | 1 |  |  | 282 |  |  | 7
Construction and land development |  | — |  |  | — |  |  | 216 |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | —
Total impaired loans | $ | 26,432 |  | $ | 34 |  | $ | 6,964 |  | $ | 29
| Nine Months Ended September 30,
| 2020 |  | 2019
| Average |  | Interest |  | Average |  | Interest
| Recorded |  | Income |  | Recorded |  | Income
(In thousands) | Investment |  | Recognized |  | Investment |  | Recognized
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | 1,455 |  | $ | 56 |  | $ | 2,442 |  | $ | 45
Commercial |  | 373 |  |  | 14 |  |  | 2,397 |  |  | 20
Residential real estate |  | 164 |  |  | 6 |  |  | 334 |  |  | 15
Construction and land development |  | 83 |  |  | — |  |  | 216 |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | —
Total impaired with no related allowance |  | 2,075 |  |  | 76 |  |  | 5,389 |  |  | 80
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | 20,695 |  |  | 253 |  |  | — |  |  | —
Commercial |  | 4,454 |  |  | 1 |  |  | 3,133 |  |  | —
Residential real estate |  | — |  |  | — |  |  | — |  |  | —
Construction and land development |  | — |  |  | — |  |  | — |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | —
Total impaired with an allowance recorded |  | 25,149 |  |  | 254 |  |  | 3,133 |  |  | —
Total |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | 22,150 |  |  | 309 |  |  | 2,442 |  |  | 45
Commercial |  | 4,827 |  |  | 15 |  |  | 5,530 |  |  | 20
Residential real estate |  | 164 |  |  | 6 |  |  | 334 |  |  | 15
Construction and land development |  | 83 |  |  | — |  |  | 216 |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | —
Total impaired loans | $ | 27,224 |  | $ | 330 |  | $ | 8,522 |  | $ | 80
Troubled debt restructurings: Loans are considered to be troubled debt restructurings (“TDRs”) when the Company has granted concessions to a borrower due to the borrower’s financial condition that it otherwise would not have considered. These concessions may include modifications of the terms of the debt such as deferral of payments, extension of maturity, reduction of principal balance, reduction of the stated interest rate other than normal market rate adjustments, or a combination of these concessions. Debt may be bifurcated with separate terms for each tranche of the restructured debt. Restructuring of a loan in lieu of aggressively enforcing the collection of the loan may benefit the Company by increasing the ultimate probability of collection. Restructured loans are classified as accruing or non-accruing based on management’s assessment of the collectability of the loan. Loans which are already on nonaccrual status at the time of the restructuring generally remain on nonaccrual status for approximately six months before management considers such loans for return to accruing status. Accruing restructured loans are placed into nonaccrual status if and when the borrower fails to comply with the restructured terms and management deems it unlikely that the borrower will return to a status of compliance in the near term. TDRs are reported as such for at least one year from the date of the restructuring. In years after the restructuring, TDRs are removed from this classification if the restructuring did not involve a below-market rate concession and the loan is not deemed to be impaired based on the terms specified in the restructuring agreement. The following tables summarize TDRs entered into during the three and nine months ended September 30, 2020 and 2019:
| Nine Months Ended September 30,
| 2020 |  | 2019
(Dollars in thousands) | Number of Contracts |  | Pre- ‎Modification ‎Outstanding ‎Recorded ‎Investment |  | Post-Modification ‎Outstanding ‎Recorded ‎Investment |  | Number of Contracts |  | Pre- ‎Modification ‎Outstanding ‎Recorded ‎Investment |  | Post-Modification ‎Outstanding ‎Recorded ‎Investment
Troubled debt restructurings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | 9 |  | $ | 18,811 |  | $ | 20,311 |  | — |  | $ | — |  | $ | —
Commercial | 1 |  |  | 81 |  |  | 81 |  | 1 |  |  | 1,963 |  |  | 1,963
| 10 |  | $ | 18,892 |  | $ | 20,392 |  | 1 |  | $ | 1,963 |  | $ | 1,963
There were no new TDRs approved during the three months ended September 30, 2020. During the nine months ended September 30, 2020, the Company approved 10 TDRs. Of the 10 TDRs, seven were for one commercial real estate loan relationship totaling $20.1 million. The Bank analyzed the relationship and modified the relationship as follows: $16.5 million was placed on interest-only payments for three year s at a reduced rate; $2.1 million was restructured to amortize and pay out over a 10-year term at a reduced rate; and $1.5 million was advanced for necessary capital expenditures. The advance was placed on interest-only payments for three year s at a reduced rate. This commercial relationship is currently on non-accrual until satisfactory demonstration of payments. The Bank approved two TDRs for another commercial real estate relationship totaling $165,000. These loans have a reduced rate for a period of two year s. An impairment analysis was performed and a specific reserve of $4,000 was allocated to this relationship. The Bank also approved one TDR for a commercial loan totaling $81,000. This commercial loan was placed on an extended six-month interest-only period with a new term and re-amortization to follow. There were no TDRs approved during the three months ended September 30, 2019. In the nine months ended September 30, 2019, the Company approved one TDR totaling $1.9 million. This commercial loan was placed on an extended 12-month interest-only period with re-amortization to follow. As of September 30, 2020, these loan relationships are paying as agreed upon in the modified terms. An impairment analysis was performed and a specific reserves of $1.3 million were allocated to these relationships. The total recorded investment in TDRs was $23.6 million and $4.2 million at September 30, 2020 and December 31, 2019, respectively. As of September 30, 2020, there were no significant commitments to lend additional funds to borrowers whose loans had been restructured. The following tables present the Company’s loans by risk rating and portfolio segment at September 30, 2020 and December 31, 2019:
(In thousands) | Commercial Real Estate |  | Commercial |  | Residential Real Estate |  |  | Construction ‎and Land ‎Development |  | Consumer |  | Mortgage Warehouse |  | Total
September 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 393,589 |  | $ | 555,693 |  | $ | — |  | $ | 35,768 |  | $ | — |  | $ | 275,763 |  | $ | 1,260,813
Special mention |  | 12,761 |  |  | 19,064 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 31,825
Substandard |  | 19,834 |  |  | 8,006 |  |  | 1,462 |  |  | — |  |  | — |  |  | — |  |  | 29,302
Not formally rated |  | — |  |  | — |  |  | 35,458 |  |  | — |  |  | 7,024 |  |  | — |  |  | 42,482
Total | $ | 426,184 |  | $ | 582,763 |  | $ | 36,920 |  | $ | 35,768 |  | $ | 7,024 |  | $ | 275,763 |  | $ | 1,364,422
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 396,217 |  | $ | 433,076 |  | $ | — |  | $ | 46,598 |  | $ | — |  | $ | — |  | $ | 875,891
Special mention |  | 1,936 |  |  | 14,044 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,980
Substandard |  | 20,203 |  |  | 4,671 |  |  | 1,379 |  |  | 165 |  |  | — |  |  | — |  |  | 26,418
Not formally rated |  | — |  |  | — |  |  | 44,316 |  |  | — |  |  | 12,737 |  |  | — |  |  | 57,053
Total | $ | 418,356 |  | $ | 451,791 |  | $ | 45,695 |  | $ | 46,763 |  | $ | 12,737 |  | $ | — |  | $ | 975,342
Credit Quality Information The Company utilizes a seven grade internal loan risk rating system for commercial real estate, construction and land development, and commercial loans as follows: Loans rated 1-3: Loans in these categories are considered “pass” rated loans with low to average risk. Loans rated 4: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management. Loans rated 5: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected. Loans rated 6: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. Loans rated 7: Loans in this category are considered uncollectible “loss” and of such little value that their continuance as loans is not warranted. On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, construction and land development, and commercial loans. For residential real estate and consumer loans, the Company initially assesses credit quality based upon the borrower’s ability to pay and rates such loans as pass. Ongoing monitoring is based upon the borrower’s payment activity.

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