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Loans | 6 Months Ended
--- | ---
Jun. 30, 2022
Loans [Abstract] |
Loans | (5) Loans A summary of loans is as follows:
| At |  | At
| June 30, |  | December 31,
| 2022 |  | 2021
(In thousands) | Amount |  | Amount
Commercial real estate | $ | 422,162 |  | $ | 432,275
Commercial (1) |  | 796,345 |  |  | 726,241
Residential real estate |  | 9,902 |  |  | 812
Construction and land development |  | 67,525 |  |  | 42,800
Consumer |  | 720 |  |  | 1,519
Mortgage warehouse |  | 239,791 |  |  | 253,764
|  | 1,536,445 |  |  | 1,457,411
Allowance for loan losses |  | (18,972) |  |  | (19,496)
Deferred loan fees, net |  | (3,228) |  |  | (4,112)
Net loans | $ | 1,514,245 |  | $ | 1,433,803
(1)Includes $138.6 million and $120.5 million in loans to digital asset companies at June 30, 2022 and December 31, 2021, respectively. The following tables set forth information regarding the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2022 and 2021:
| For the three months ended June 30,
(In thousands) | Commercial Real Estate |  | Commercial |  | Residential ‎Real ‎Estate |  | Construction and Land Development |  | Consumer |  | Mortgage Warehouse |  | Total
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at March 31, 2022 | $ | 4,992 |  | $ | 13,267 |  | $ | 14 |  | $ | 565 |  | $ | 123 |  | $ | 335 |  | $ | 19,296
Charge-offs |  | — |  |  | (1,338) |  |  | — |  |  | — |  |  | (7) |  |  | — |  |  | (1,345)
Recoveries |  | — |  |  | 5 |  |  | — |  |  | — |  |  | 11 |  |  | — |  |  | 16
Provision (credit) |  | (102) |  |  | 1,067 |  |  | — |  |  | 173 |  |  | (38) |  |  | (95) |  |  | 1,005
Balance at June 30, 2022 | $ | 4,890 |  | $ | 13,001 |  | $ | 14 |  | $ | 738 |  | $ | 89 |  | $ | 240 |  | $ | 18,972
Balance at March 31, 2021 | $ | 6,102 |  | $ | 11,512 |  | $ | 155 |  | $ | 452 |  | $ | 445 |  | $ | 366 |  | $ | 19,032
Charge-offs |  | — |  |  | (1,366) |  |  | — |  |  | — |  |  | (35) |  |  | — |  |  | (1,401)
Recoveries |  | — |  |  | 97 |  |  | 2 |  |  | — |  |  | 13 |  |  | — |  |  | 112
Provision (credit) |  | (349) |  |  | 2,153 |  |  | (16) |  |  | (7) |  |  | (87) |  |  | (25) |  |  | 1,669
Balance at June 30, 2021 | $ | 5,753 |  | $ | 12,396 |  | $ | 141 |  | $ | 445 |  | $ | 336 |  | $ | 341 |  | $ | 19,412
| For the six months ended June 30,
(In thousands) | Commercial Real Estate |  | Commercial |  | Residential ‎Real ‎Estate |  | Construction and Land Development |  | Consumer |  | Mortgage Warehouse |  | Total
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2021 | $ | 4,935 |  | $ | 13,495 |  | $ | 38 |  | $ | 479 |  | $ | 168 |  | $ | 381 |  | $ | 19,496
Charge-offs |  | — |  |  | (1,689) |  |  | — |  |  | — |  |  | (35) |  |  | — |  |  | (1,724)
Recoveries |  | — |  |  | 93 |  |  | — |  |  | — |  |  | 19 |  |  | — |  |  | 112
Provision (credit) |  | (45) |  |  | 1,102 |  |  | (24) |  |  | 259 |  |  | (63) |  |  | (141) |  |  | 1,088
Balance at June 30, 2022 | $ | 4,890 |  | $ | 13,001 |  | $ | 14 |  | $ | 738 |  | $ | 89 |  | $ | 240 |  | $ | 18,972
Balance at December 31, 2020 | $ | 6,095 |  | $ | 10,543 |  | $ | 184 |  | $ | 447 |  | $ | 586 |  | $ | 663 |  | $ | 18,518
Charge-offs |  | (150) |  |  | (1,409) |  |  | — |  |  | — |  |  | (191) |  |  | — |  |  | (1,750)
Recoveries |  | 81 |  |  | 97 |  |  | 2 |  |  | — |  |  | 42 |  |  | — |  |  | 222
Provision (credit) |  | (273) |  |  | 3,165 |  |  | (45) |  |  | (2) |  |  | (101) |  |  | (322) |  |  | 2,422
Balance at June 30, 2021 | $ | 5,753 |  | $ | 12,396 |  | $ | 141 |  | $ | 445 |  | $ | 336 |  | $ | 341 |  | $ | 19,412
The following table sets forth information regarding the allowance for loan losses and related loan balances by portfolio segment at June 30, 2022 and December 31, 2021:
(In thousands) | Commercial Real Estate |  | Commercial |  | Residential Real Estate |  | Construction and Land Development |  | Consumer |  | Mortgage Warehouse |  | Total
June 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | —
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment |  | 4,890 |  |  | 13,001 |  |  | 14 |  |  | 738 |  |  | 89 |  |  | 240 |  |  | 18,972
Total allowance for loan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
losses ending balance | $ | 4,890 |  | $ | 13,001 |  | $ | 14 |  | $ | 738 |  | $ | 89 |  | $ | 240 |  | $ | 18,972
Loans (1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment | $ | 20,171 |  | $ | 423 |  | $ | 157 |  | $ | — |  | $ | — |  | $ | — |  | $ | 20,751
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment |  | 401,991 |  |  | 795,922 |  |  | 9,745 |  |  | 67,525 |  |  | 720 |  |  | 239,791 |  |  | 1,515,694
Total loans ending balance | $ | 422,162 |  | $ | 796,345 |  | $ | 9,902 |  | $ | 67,525 |  | $ | 720 |  | $ | 239,791 |  | $ | 1,536,445
(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.
(In thousands) | Commercial Real Estate |  | Commercial |  | Residential Real Estate |  | Construction and Land Development |  | Consumer |  | Mortgage Warehouse |  | Total
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment | $ | — |  | $ | 1,616 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 1,616
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment |  | 4,935 |  |  | 11,879 |  |  | 38 |  |  | 479 |  |  | 168 |  |  | 381 |  |  | 17,880
Total allowance for loan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
losses ending balance | $ | 4,935 |  | $ | 13,495 |  | $ | 38 |  | $ | 479 |  | $ | 168 |  | $ | 381 |  | $ | 19,496
Loans (1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment | $ | 20,188 |  | $ | 3,929 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 24,117
Ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
for impairment |  | 412,087 |  |  | 722,312 |  |  | 812 |  |  | 42,800 |  |  | 1,519 |  |  | 253,764 |  |  | 1,433,294
Total loans ending balance | $ | 432,275 |  | $ | 726,241 |  | $ | 812 |  | $ | 42,800 |  | $ | 1,519 |  | $ | 253,764 |  | $ | 1,457,411
(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. The following tables set forth information regarding non-accrual loans and loan delinquencies by portfolio segment at June 30, 2022 and December 31, 2021:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 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
June 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | 122 |  | $ | 59 |  | $ | — |  | $ | 181 |  | $ | 421,981 |  | $ | 422,162 |  | $ | — |  | $ | —
Commercial |  | — |  |  | 94 |  |  | 263 |  |  | 357 |  |  | 795,988 |  |  | 796,345 |  |  | — |  |  | 301
Residential real estate |  | — |  |  | — |  |  | 144 |  |  | 144 |  |  | 9,758 |  |  | 9,902 |  |  | — |  |  | 303
Construction and |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
land development |  | — |  |  | — |  |  | — |  |  | — |  |  | 67,525 |  |  | 67,525 |  |  | — |  |  | —
Consumer |  | 15 |  |  | 10 |  |  | 3 |  |  | 28 |  |  | 692 |  |  | 720 |  |  | — |  |  | 4
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | 239,791 |  |  | 239,791 |  |  | — |  |  | —
Total | $ | 137 |  | $ | 163 |  | $ | 410 |  | $ | 710 |  | $ | 1,535,735 |  | $ | 1,536,445 |  | $ | — |  | $ | 608
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 432,275 |  | $ | 432,275 |  | $ | — |  | $ | —
Commercial |  | 13 |  |  | 111 |  |  | 1,860 |  |  | 1,984 |  |  | 724,257 |  |  | 726,241 |  |  | — |  |  | 2,080
Residential real estate |  | — |  |  | — |  |  | 555 |  |  | 555 |  |  | 257 |  |  | 812 |  |  | — |  |  | 812
Construction and |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
land development |  | — |  |  | — |  |  | — |  |  | — |  |  | 42,800 |  |  | 42,800 |  |  | — |  |  | —
Consumer |  | 15 |  |  | 11 |  |  | — |  |  | 26 |  |  | 1,493 |  |  | 1,519 |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | 253,764 |  |  | 253,764 |  |  | — |  |  | —
Total | $ | 28 |  | $ | 122 |  | $ | 2,415 |  | $ | 2,565 |  | $ | 1,454,846 |  | $ | 1,457,411 |  | $ | — |  | $ | 2,892
The following tables provide information with respect to the Company’s impaired loans:
| June 30, 2022 |  | December 31, 2021
|  |  |  | Unpaid |  |  |  |  |  |  |  | Unpaid |  |  |
| Recorded |  | Principal |  | Related |  | Recorded |  | Principal |  | Related
(In thousands) | Investment |  | Balance |  | Allowance |  | Investment |  | Balance |  | Allowance
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | 20,171 |  | $ | 20,217 |  | $ | — |  | $ | 20,188 |  | $ | 20,339 |  | $ | —
Commercial |  | 423 |  |  | 2,278 |  |  | — |  |  | 2,015 |  |  | 2,205 |  |  | —
Residential real estate |  | 157 |  |  | 157 |  |  | — |  |  | — |  |  | — |  |  | —
Construction and land development |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total impaired with no related allowance |  | 20,751 |  |  | 22,652 |  |  | — |  |  | 22,203 |  |  | 22,544 |  |  | —
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Commercial |  | — |  |  | — |  |  | — |  |  | 1,914 |  |  | 3,086 |  |  | 1,616
Residential real estate |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Construction and land development |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total impaired with an allowance recorded |  | — |  |  | — |  |  | — |  |  | 1,914 |  |  | 3,086 |  |  | 1,616
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | 20,171 |  |  | 20,217 |  |  | — |  |  | 20,188 |  |  | 20,339 |  |  | —
Commercial |  | 423 |  |  | 2,278 |  |  | — |  |  | 3,929 |  |  | 5,291 |  |  | 1,616
Residential real estate |  | 157 |  |  | 157 |  |  | — |  |  | — |  |  | — |  |  | —
Construction and land development |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total impaired loans | $ | 20,751 |  | $ | 22,652 |  | $ | — |  | $ | 24,117 |  | $ | 25,630 |  | $ | 1,616
| Three Months Ended June 30,
| 2022 |  | 2021
| Average |  | Interest |  | Average |  | Interest
| Recorded |  | Income |  | Recorded |  | Income
(In thousands) | Investment |  | Recognized |  | Investment |  | Recognized
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | 20,187 |  | $ | 164 |  | $ | 20,984 |  | $ | 161
Commercial |  | 581 |  |  | 3 |  |  | 2,090 |  |  | 47
Residential real estate |  | 157 |  |  | 2 |  |  | 161 |  |  | 3
Construction and land development |  | — |  |  | — |  |  | — |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | —
Total impaired with no related allowance |  | 20,925 |  |  | 169 |  |  | 23,235 |  |  | 211
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | — |  |  | — |  |  | — |  |  | —
Commercial |  | — |  |  | — |  |  | 3,342 |  |  | 1
Residential real estate |  | — |  |  | — |  |  | — |  |  | —
Construction and land development |  | — |  |  | — |  |  | — |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | —
Total impaired with an allowance recorded |  | — |  |  | — |  |  | 3,342 |  |  | 1
Total |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | 20,187 |  |  | 164 |  |  | 20,984 |  |  | 161
Commercial |  | 581 |  |  | 3 |  |  | 5,432 |  |  | 48
Residential real estate |  | 157 |  |  | 2 |  |  | 161 |  |  | 3
Construction and land development |  | — |  |  | — |  |  | — |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | —
Total impaired loans | $ | 20,925 |  | $ | 169 |  | $ | 26,577 |  | $ | 212
| Six Months Ended June 30,
| 2022 |  | 2021
| Average |  | Interest |  | Average |  | Interest
| Recorded |  | Income |  | Recorded |  | Income
(In thousands) | Investment |  | Recognized |  | Investment |  | Recognized
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | 20,187 |  | $ | 319 |  | $ | 21,040 |  | $ | 344
Commercial |  | 769 |  |  | 4 |  |  | 2,128 |  |  | 50
Residential real estate |  | 157 |  |  | 3 |  |  | 161 |  |  | 5
Construction and land development |  | — |  |  | — |  |  | — |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | —
Total impaired with no related allowance |  | 21,113 |  |  | 326 |  |  | 23,329 |  |  | 399
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | — |  |  | — |  |  | — |  |  | —
Commercial |  | — |  |  | — |  |  | 3,349 |  |  | 3
Residential real estate |  | — |  |  | — |  |  | — |  |  | —
Construction and land development |  | — |  |  | — |  |  | — |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | —
Total impaired with an allowance recorded |  | — |  |  | — |  |  | 3,349 |  |  | 3
Total |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | 20,187 |  |  | 319 |  |  | 21,040 |  |  | 344
Commercial |  | 769 |  |  | 4 |  |  | 5,477 |  |  | 53
Residential real estate |  | 157 |  |  | 3 |  |  | 161 |  |  | 5
Construction and land development |  | — |  |  | — |  |  | — |  |  | —
Consumer |  | — |  |  | — |  |  | — |  |  | —
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | —
Total impaired loans | $ | 21,113 |  | $ | 326 |  | $ | 26,678 |  | $ | 402
Troubled debt restructurings: Loans are considered to be 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. There were no new TDRs entered into during the three months ended June 30, 2022 and 2021. The following table summarize TDRs entered into during the six months ended June 30, 2022 and 2021:
| Six Months Ended June 30,
| 2022 |  | 2021
(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 | — |  | $ | — |  | $ | — |  | 3 |  | $ | 1,868 |  | $ | 1,868
| — |  | $ | — |  | $ | — |  | 3 |  | $ | 1,868 |  | $ | 1,868
There were no new TDRs approved during the six months ended June 30, 2022. During the six months ended June 30, 2021, the Company approved three TDRs all related to one commercial relationship totaling $1.9 million. A troubled debt restructuring was completed to provide the borrower with a three-month principal and interest deferral through April 2021; upon review in the second quarter of 2021 an additional three-month principal and interest deferral was granted through August 2021. During the third quarter of 2021, $1.6 million relating to this commercial relationship was charged-off with an additional $351,000 written off in the first quarter of 2022. As of June 30, 2022 the balance remaining is equal to the estimated net value of the collateral and the relationship remains on non-accrual status. The total recorded investment in TDRs was $20.6 million and $22.7 million at June 30, 2022 and December 31, 2021, respectively. As of June 30, 2022, there were no material 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 June 30, 2022 and December 31, 2021:
(In thousands) | Commercial Real Estate |  | Commercial |  | Residential Real Estate |  |  | Construction ‎and Land ‎Development |  | Consumer |  | Mortgage Warehouse |  | Total
June 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 374,227 |  | $ | 750,660 |  | $ | — |  | $ | 66,487 |  | $ | — |  | $ | 239,791 |  | $ | 1,431,165
Special mention |  | 28,125 |  |  | 39,220 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 67,345
Substandard |  | 19,810 |  |  | 6,202 |  |  | 303 |  |  | 1,038 |  |  | — |  |  | — |  |  | 27,353
Doubtful |  | — |  |  | 263 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 263
Not formally rated |  | — |  |  | — |  |  | 9,599 |  |  | — |  |  | 720 |  |  | — |  |  | 10,319
Total | $ | 422,162 |  | $ | 796,345 |  | $ | 9,902 |  | $ | 67,525 |  | $ | 720 |  | $ | 239,791 |  | $ | 1,536,445
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 383,460 |  | $ | 676,081 |  | $ | — |  | $ | 41,762 |  | $ | — |  | $ | 253,764 |  | $ | 1,355,067
Special mention |  | 29,004 |  |  | 41,921 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 70,925
Substandard |  | 19,811 |  |  | 7,677 |  |  | 812 |  |  | 1,038 |  |  | — |  |  | — |  |  | 29,338
Doubtful |  | — |  |  | 562 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 562
Not formally rated |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,519 |  |  | — |  |  | 1,519
Total | $ | 432,275 |  | $ | 726,241 |  | $ | 812 |  | $ | 42,800 |  | $ | 1,519 |  | $ | 253,764 |  | $ | 1,457,411
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. 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.

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