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Loans | 12 Months Ended
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Dec. 31, 2020
Loans [Abstract] |
Loans | NOTE 5 — LOANS Loans consisted of the following at December 31, 2020 and 2019:
(In thousands) |  | 2020 |  | 2019
Commercial real estate |  | $ | 438,949 |  | $ | 418,356
Commercial (1) |  |  | 565,976 |  |  | 451,791
Residential real estate |  |  | 32,785 |  |  | 45,695
Construction and land development |  |  | 28,927 |  |  | 46,763
Consumer |  |  | 5,547 |  |  | 12,737
Mortgage warehouse |  |  | 265,379 |  |  | —
|  |  | 1,337,563 |  |  | 975,342
Allowance for loan losses |  |  | (18,518) |  |  | (13,844)
Deferred loan fees, net (2) |  |  | (4,235) |  |  | (2,212)
Net loans |  | $ | 1,314,810 |  | $ | 959,286
(1) Includes $41.8 million in PPP loans at December 31, 2020. There were no PPP loans at December 31, 2019. (2) Includes $993,000 in deferred fees related to PPP loans at December 31, 2020. There were no deferred fees related to PPP loans at December 31, 2019. The following tables set forth information regarding the allowance for loans and gross impaired loans by portfolio segment as of and for the years ended December 31, 2020 and 2019:
|  |  |  |  |  |  |  |  |  | Construction |  |  |  |  |  |  |  |  |  |  |  |
| Commercial |  |  |  |  | Residential |  | and Land |  |  |  |  | Mortgage |  |  |  |  |  |
(In thousands) | Real Estate |  | Commercial |  | Real Estate |  | Development |  | Consumer |  | Warehouse |  | Unallocated |  | Total
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 6,104 |  | $ | 6,086 |  | $ | 254 |  | $ | 749 |  | $ | 650 |  | $ | — |  | $ | 1 |  | $ | 13,844
Charge-offs |  | (117) |  |  | (176) |  |  | — |  |  | (24) |  |  | (772) |  |  | — |  |  | — |  |  | (1,089)
Recoveries |  | — |  |  | 7 |  |  | 4 |  |  | — |  |  | 155 |  |  | — |  |  | — |  |  | 166
Provision (credit) |  | 108 |  |  | 4,626 |  |  | (74) |  |  | (278) |  |  | 553 |  |  | 663 |  |  | (1) |  |  | 5,597
Ending balance | $ | 6,095 |  | $ | 10,543 |  | $ | 184 |  | $ | 447 |  | $ | 586 |  | $ | 663 |  | $ | — |  | $ | 18,518
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment | $ | — |  | $ | 2,024 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 2,024
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment |  | 6,095 |  |  | 8,519 |  |  | 184 |  |  | 447 |  |  | 586 |  |  | 663 |  |  | — |  |  | 16,494
Total allowance for loan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
losses ending balance | $ | 6,095 |  | $ | 10,543 |  | $ | 184 |  | $ | 447 |  | $ | 586 |  | $ | 663 |  | $ | — |  | $ | 18,518
Loans (1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment | $ | 21,039 |  | $ | 4,458 |  | $ | 162 |  | $ | — |  | $ | — |  |  | — |  |  |  |  | $ | 25,659
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment |  | 417,910 |  |  | 561,518 |  |  | 32,623 |  |  | 28,927 |  |  | 5,547 |  |  | 265,379 |  |  |  |  |  | 1,311,904
Total loans ending balance | $ | 438,949 |  | $ | 565,976 |  | $ | 32,785 |  | $ | 28,927 |  | $ | 5,547 |  | $ | 265,379 |  |  |  |  | $ | 1,337,563
(1) Balances represent gross loans. The difference between gross loans versus recorded investment, which would consist of unpaid principal balance, net of charge-offs, interest payments received applied to principal and unamortized deferred loan origination fees and costs, is not material.
|  |  |  |  |  |  |  |  |  | Construction |  |  |  |  |  |  |  |  |  |  |  |
| Commercial |  |  |  |  | Residential |  | and Land |  |  |  |  | Mortgage |  |  |  |  |  |
(In thousands) | Real Estate |  | Commercial |  | Real Estate |  | Development |  | Consumer |  | Warehouse |  | Unallocated |  | Total
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 4,152 |  | $ | 5,742 |  | $ | 251 |  | $ | 738 |  | $ | 710 |  | $ | — |  | $ | 87 |  | $ | 11,680
Charge-offs |  | — |  |  | (1,950) |  |  | — |  |  | — |  |  | (1,355) |  |  | — |  |  | — |  |  | (3,305)
Recoveries |  | — |  |  | 35 |  |  | 7 |  |  | — |  |  | 101 |  |  | — |  |  | — |  |  | 143
Provision (credit) |  | 1,952 |  |  | 2,259 |  |  | (4) |  |  | 11 |  |  | 1,194 |  |  | — |  |  | (86) |  |  | 5,326
Ending balance | $ | 6,104 |  | $ | 6,086 |  | $ | 254 |  | $ | 749 |  | $ | 650 |  | $ | — |  | $ | 1 |  | $ | 13,844
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 (1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
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
(1) Balances represent gross loans. The difference between gross loans versus recorded investment, which would consist of unpaid principal balance, net of charge-offs, interest payments received applied to principal and unamortized deferred loan origination fees and costs, is not material. At December 31, 2020 and 2019, loans with an aggregate principal balance of $360.5 million and $450.6 million, respectively, were pledged to secure possible borrowings from the Federal Reserve Bank. The following tables set forth information regarding non-accrual loans and loan delinquencies by portfolio segment at December 31, 2020 and 2019:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 90 Days |  |  |
|  |  |  |  |  |  | 90 Days |  | Total |  |  |  |  |  |  |  | or More |  |  |
| 30 - 59 |  | 60 - 89 |  | or More |  | Past |  | Total |  | Total |  | Past Due |  | Nonaccrual
(In thousands) | Days |  | Days |  | Past Due |  | Due |  | Current |  | Loans |  | and Accruing |  | Loans
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 438,949 |  | $ | 438,949 |  | $ | — |  | $ | —
Commercial |  | 4,358 |  |  | — |  |  | 291 |  |  | 4,649 |  |  | 561,327 |  |  | 565,976 |  |  | — |  |  | 4,198
Residential real estate |  | 255 |  |  | 346 |  |  | 1,030 |  |  | 1,631 |  |  | 31,154 |  |  | 32,785 |  |  | — |  |  | 1,156
Construction and |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
land development |  | — |  |  | — |  |  | — |  |  | — |  |  | 28,927 |  |  | 28,927 |  |  | — |  |  | —
Consumer |  | 61 |  |  | 21 |  |  | 64 |  |  | 146 |  |  | 5,401 |  |  | 5,547 |  |  | — |  |  | 65
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | 265,379 |  |  | 265,379 |  |  | — |  |  | —
Total | $ | 4,674 |  | $ | 367 |  | $ | 1,385 |  | $ | 6,426 |  | $ | 1,331,137 |  | $ | 1,337,563 |  | $ | — |  | $ | 5,419
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
Information about the Company’s impaired loans by portfolio segment was as follows at December 31, 2020 and 2019:
|  |  |  |  | Unpaid |  |  |  |  | Average |  | Interest
|  | Recorded |  | Principal |  | Related |  | Recorded |  | Income
(In thousands) |  | Investment |  | Balance |  | Allowance |  | Investment |  | Recognized
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | $ | 21,039 |  | $ | 21,312 |  | $ | — |  | $ | 21,356 |  | $ | 350
Commercial |  |  | 434 |  |  | 441 |  |  | — |  |  | 476 |  |  | 19
Residential real estate |  |  | 162 |  |  | 162 |  |  | — |  |  | 164 |  |  | 8
Construction and land development |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Consumer |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total impaired with no related allowance |  | $ | 21,635 |  | $ | 21,915 |  | $ | — |  | $ | 21,996 |  | $ | 377
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | —
Commercial |  |  | 4,024 |  |  | 4,605 |  |  | 2,024 |  |  | 4,177 |  |  | 1
Residential real estate |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Construction and land development |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Consumer |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total impaired with an allowance recorded |  | $ | 4,024 |  | $ | 4,605 |  | $ | 2,024 |  | $ | 4,177 |  | $ | 1
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | $ | 21,039 |  | $ | 21,312 |  | $ | — |  | $ | 21,356 |  | $ | 350
Commercial |  |  | 4,458 |  |  | 5,046 |  |  | 2,024 |  |  | 4,653 |  |  | 20
Residential real estate |  |  | 162 |  |  | 162 |  |  | — |  |  | 164 |  |  | 8
Construction and land development |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Consumer |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total impaired loans |  | $ | 25,659 |  | $ | 26,520 |  | $ | 2,024 |  | $ | 26,173 |  | $ | 378
|  |  |  |  | Unpaid |  |  |  |  | Average |  | Interest
|  | Recorded |  | Principal |  | Related |  | Recorded |  | Income
(In thousands) |  | Investment |  | Balance |  | Allowance |  | Investment |  | Recognized
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | $ | 2,070 |  | $ | 2,082 |  | $ | — |  | $ | 2,144 |  | $ | 59
Commercial |  |  | 1,348 |  |  | 1,745 |  |  | — |  |  | 2,323 |  |  | 26
Residential real estate |  |  | 182 |  |  | 182 |  |  | — |  |  | 303 |  |  | 16
Construction and land development |  |  | 165 |  |  | 165 |  |  | — |  |  | 273 |  |  | —
Consumer |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total impaired with no related allowance |  | $ | 3,765 |  | $ | 4,174 |  | $ | — |  | $ | 5,043 |  | $ | 101
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | $ | 18,920 |  | $ | 18,921 |  | $ | 1,508 |  | $ | 18,921 |  | $ | —
Commercial |  |  | 1,978 |  |  | 2,085 |  |  | 174 |  |  | 2,972 |  |  | —
Residential real estate |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Construction and land development |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Consumer |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total impaired with an allowance recorded |  | $ | 20,898 |  | $ | 21,006 |  | $ | 1,682 |  | $ | 21,893 |  | $ | —
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | $ | 20,990 |  | $ | 21,003 |  | $ | 1,508 |  | $ | 21,065 |  | $ | 59
Commercial |  |  | 3,326 |  |  | 3,830 |  |  | 174 |  |  | 5,295 |  |  | 26
Residential real estate |  |  | 182 |  |  | 182 |  |  | — |  |  | 303 |  |  | 16
Construction and land development |  |  | 165 |  |  | 165 |  |  | — |  |  | 273 |  |  | —
Consumer |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total impaired loans |  | $ | 24,663 |  | $ | 25,180 |  | $ | 1,682 |  | $ | 26,936 |  | $ | 101
The following summarizes TDRs entered into during the years ended December 31, 2020 and 2019:
|  | Year Ended December 31,
|  | 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 |  | 2 |  |  | 2,640 |  |  | 2,640
|  | 10 |  | $ | 18,892 |  | $ | 20,392 |  | 2 |  | $ | 2,640 |  | $ | 2,640
In 2020, the Bank 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 years 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 years at a reduced rate. Upon completion of the restructuring in the first quarter, the commercial relationship was placed on non-accrual status and after demonstrating the ability to pay the loan under the restructured terms, it was taken off non-accrual status in the fourth quarter of 2020. 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 years. The Bank also approved one TDR for a commercial loan totaling $81,000. This commercial loan was placed on an extended 6-month interest-only period with a new term and re-amortization to follow. As of December 31, 2020, these loans were paying in accordance with the restructured terms. In 2019, the Bank approved two troubled debt restructures totaling $2.6 million. Both commercial loans were placed on an extended 12-month interest-only period with re-amortization to follow. As of December 31, 2020, one of the two loans was paid off. The remaining loan is paying as agreed upon in the modified terms. As of December 31, 2020, an impairment analysis was performed and specific reserves of $157,000 were allocated to the relationships approved as TDRs in 2019 and 2020. The total recorded investment in TDRs was $23.3 million and $4.2 million at December 31, 2020 and 2019, respectively. At December 31, 2020, there were no commitments to lend additional funds to borrowers whose loans were modified in troubled debt restructurings. Additionally, the Company is working with borrowers impacted by COVID-19 and providing modifications to allow for deferral of interest or principal and interest payments on an as-needed and case-by-case basis. These modifications are excluded from troubled debt restructuring classification under Section 4013 of the CARES Act or under applicable interagency guidance of the federal banking regulators. As previously noted, loan modifications and payment deferrals as a result of COVID-19 that meet the criteria established under Section 4013 of the CARES Act or under applicable interagency guidance of the federal banking regulators are excluded from evaluation of TDR classification and will continue to be reported as current during the payment deferral period. The Company’s policy is to continue to accrue interest during the deferral period. Loans not meeting the CARES Act or regulatory guidance are evaluated for TDR and non-accrual treatment under the Company’s existing policies and procedures. Loan modifications made pursuant to the CARES Act or interagency guidance that were in payment deferral at December 31, 2020 totaled approximately $44.0 million. There were eight commercial real estate loans that amounted to $12.4 million, 28 commercial and industrial loans that amounted to $22.4 million, and one residential mortgage loan that amounted to $177,000. There were no consumer loans that were in payment deferral at December 31, 2020 based on modifications made pursuant to the CARES Act or interagency guidance. Credit Quality Information The Company utilizes a seven grade internal loan rating system for commercial real estate, construction and land development, commercial loans and mortgage warehouse 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. On an annual basis, or more often if needed, the Company completes a credit recertification on all mortgage warehouse originators. For residential real estate 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. Consumer loans are not formally rated. The following tables present the Company’s loans by risk rating and portfolio segment at December 31, 2020 and 2019:
|  |  |  |  |  |  |  |  |  | Construction |  |  |  |  |  |  |  |  |
| Commercial |  |  |  |  | Residential |  | and Land |  |  |  |  | Mortgage |  |  |
(In thousands) | Real Estate |  | Commercial |  | Real Estate |  | Development |  | Consumer |  | Warehouse |  | Total
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 401,541 |  | $ | 538,449 |  | $ | — |  | $ | 28,927 |  | $ | — |  | $ | 265,379 |  | $ | 1,234,296
Special mention |  | 17,702 |  |  | 13,625 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 31,327
Substandard |  | 19,706 |  |  | 13,902 |  |  | 1,560 |  |  | — |  |  | — |  |  | — |  |  | 35,168
Not formally rated |  | — |  |  | — |  |  | 31,225 |  |  | — |  |  | 5,547 |  |  | — |  |  | 36,772
Total | $ | 438,949 |  | $ | 565,976 |  | $ | 32,785 |  | $ | 28,927 |  | $ | 5,547 |  | $ | 265,379 |  | $ | 1,337,563
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
Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of mortgage and other loans serviced for others were $14.0 million and $16.0 million at December 31, 2020 and 2019, respectively. Certain directors and executive officers of the Company and companies in which they have significant ownership interests were customers of the Bank during 2020. The following is a summary of the loans to such persons and their companies at December 31, 2020 and 2019:
(In thousands) |  |  |
Beginning balance, January 1, 2019 |  | $ | 11,957
Advances |  |  | 5,303
Principal payments |  |  | (13,555)
Ending balance, December 31, 2019 |  | $ | 3,705
Beginning balance, January 1, 2020 |  | $ | 3,705
Advances |  |  | 12,329
Principal payments |  |  | (656)
Ending balance, December 31, 2020 |  | $ | 15,378

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