Our financing receivables consist of the following three portfolio segments: commercial mortgage loans, agricultural mortgage loans and residential mortgage loans. Our mortgage loan portfolios are summarized in the following table. There were commitments outstanding of $75.3 million at December 31, 2020.


	December 31,
	2020		2019
	(Dollars in thousands)
Commercial mortgage loans:
Principal outstanding	$	3,580,154	$	3,407,611
Deferred fees and costs, net	(1,266)		(899)
Amortized cost	3,578,888		3,406,712
Valuation allowance	(25,529)		(8,979)
Commercial mortgage loans, carrying value	3,553,359		3,397,733

Agricultural mortgage loans:
Principal outstanding	245,807		51,303
Deferred fees and costs, net	(634)		(43)
Amortized cost	245,173		51,260
Valuation allowance	(2,130)		(200)
Agricultural mortgage loans, carrying value	243,043		51,060

Residential mortgage loans:
Principal outstanding	366,320		—
Deferred fees and costs, net	925		—
Unamortized discounts and premiums, net	5,212		—
Amortized cost	372,457		—
Valuation allowance	(3,370)		—
Residential mortgage loans, carrying value	369,087		—
Mortgage loans, carrying value	$	4,165,489	$	3,448,793

Our commercial mortgage loan portfolio consists of loans collateralized by the related properties and diversified as to property type, location and loan size. Our lending policies establish limits on the amount that can be loaned to one borrower and other criteria to attempt to reduce the risk of default. The commercial mortgage loan portfolio is summarized by geographic region and property type as follows:


	December 31,
	2020				2019
	Principal		Percent		Principal		Percent
	(Dollars in thousands)
Geographic distribution
East	$	699,741	19.5	%	$	645,991	19.0	%
Middle Atlantic	281,971		7.9	%	284,597		8.4	%
Mountain	391,025		10.9	%	389,892		11.4	%
New England	24,774		0.7	%	9,152		0.3	%
Pacific	659,743		18.4	%	618,336		18.1	%
South Atlantic	832,739		23.3	%	751,199		22.0	%
West North Central	266,050		7.4	%	288,413		8.5	%
West South Central	424,111		11.9	%	420,031		12.3	%
	$	3,580,154	100.0	%	$	3,407,611	100.0	%
Property type distribution
Office	$	297,065	8.3	%	$	250,287	7.3	%
Medical Office	20,584		0.6	%	29,990		0.9	%
Retail	1,187,484		33.2	%	1,225,670		36.0	%
Industrial/Warehouse	929,325		25.9	%	896,558		26.3	%
Apartment	939,084		26.2	%	858,679		25.2	%

Mixed Use/Other	206,612		5.8	%	146,427		4.3	%
	$	3,580,154	100.0	%	$	3,407,611	100.0	%

Our agricultural mortgage loan portfolio consists of loans with an outstanding principal balance of $245.8 million. These loans are collateralized by agricultural land and are diversified as to location within the United States. Our residential mortgage loan portfolio consists of loans with an outstanding principal balance of $366.3 million that have been purchased throughout 2020. These loans are collateralized by the related properties and diversified as to location within the United States.

Mortgage loans on real estate are generally reported at cost adjusted for amortization of premiums and accrual of discounts, computed using the interest method and net of valuation allowances. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Interest income is included in Net investment income on our consolidated statements of operations. Accrued interest receivable, which was $16.6 million as of December 31, 2020, is included in Accrued investment income on our consolidated balance sheets.

We establish a valuation allowance to provide for the risk of credit losses inherent in our mortgage loan portfolios. The valuation allowance is maintained at a level believed adequate by management to absorb estimated expected credit losses. The valuation allowance is based on amortized cost, which excludes accrued interest receivable. We do not measure a credit loss allowance on accrued interest receivable as we write off any uncollectible accrued interest receivable balances to net investment income in a timely manner. We did not charge off any uncollectible accrued interest receivable on our commercial, agricultural or residential mortgage loan portfolios for the year ended December 31, 2020.

The valuation allowance for commercial mortgage loans is calculated by pooling our loans based on risk rating and property collateral type and applying an estimated loss ratio against each risk pool. Risk ratings are based on an analysis of the current state of the borrower's credit quality, which considers factors such as loan-to-value ("LTV") and debt service coverage ("DSC") ratios, loan performance and economic outlook, among others. The loss ratios are generally based upon historical loss experience for each risk pool and are adjusted for current and forecasted economic factors management believes to be relevant and supportable. Economic factors are forecasted for two years with immediate reversion to historical experience.

A commercial loan is individually evaluated for impairment if it does not continue to share similar risk characteristics of a pool. A commercial mortgage loan that is individually evaluated is impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. If we determine that the value of any specific mortgage loan is impaired, the carrying amount of the mortgage loan will be reduced to its fair value, based upon the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or the fair value of the underlying collateral less estimated costs to sell.

The valuation allowances for agricultural and residential mortgage loans are estimated by deriving probability of default and recovery rate assumptions based on the characteristics of the loans in our portfolio, historical economic data and loss information, and current and forecasted economics conditions. Key loan characteristics impacting the estimate include delinquency status, time to maturity, original credit scores and loan-to-value ratios.


	Year Ended December 31, 2020
	Commercial		Agricultural		Residential		Total
	(Dollars in thousands)
Beginning allowance balance (1)	$	(17,579)	$	(200)	$	—	$	(17,779)
Charge-offs	1,485		—		—		1,485
Recoveries	712		—		—		712
Change in provision for credit losses	(10,147)		(1,930)		(3,370)		(15,447)
Ending allowance balance	$	(25,529)	$	(2,130)	$	(3,370)	$	(31,029)

(1) Upon adoption of authoritative guidance effective January 1, 2020, we updated our accounting policies and methodology for calculating the general loan loss allowance, resulting in an adjustment to our mortgage loan valuation allowance. See Note 1 - Significant Accounting Policies for further details.

Charge-offs include allowances that have been established on loans that were satisfied either by taking ownership of the collateral or by some other means such as discounted pay-off or loan sale. When ownership of the property is taken it is recorded at the lower of the loan's carrying value or the property's fair value (based on appraised values) less estimated costs to sell. The real estate owned is recorded as a component of Other investments and the loan is recorded as fully paid, with any allowance for credit loss that has been established charged off. Fair value of the real estate is determined by third party appraisal. Recoveries are situations where we have received a payment from the borrower in an amount greater than the carrying value of the loan (principal outstanding less specific allowance). We did not own any real estate during the years ended December 31, 2020 and 2019.

We evaluate the credit quality of our commercial and agricultural mortgage loans by analyzing LTV and DSC ratios and loan performance. We evaluate the credit quality of our residential mortgage loans by analyzing loan performance.

LTV and DSC ratios for our commercial mortgage loans are originally calculated at the time of loan origination and are updated annually for each loan using information such as rent rolls, assessment of lease maturity dates and property operating statements, which are reviewed in the context of current leasing and in place rents compared to market leasing and market rents. A DSC ratio of less than 1.0 indicates that a property's operations do not generate sufficient income to cover debt payments. An LTV ratio in excess of 100% indicates the unpaid loan amount exceeds the value of the underlying collateral. All of our commercial mortgage loans that have a debt service coverage ratio of less than 1.0 are performing under the original contractual loan terms at December 31, 2020.


	2020				2019				2018				2017				2016				Prior				Total
As of December 31, 2020:	Amortized Cost		Average LTV		Amortized Cost		Average LTV		Amortized Cost		Average LTV		Amortized Cost		Average LTV		Amortized Cost		Average LTV		Amortized Cost		Average LTV		Amortized Cost		Average LTV
Debt Service Coverage Ratio:	(Dollars in thousands)
Greater than or equal to 1.5	$	364,574	63	%	$	442,370	66	%	$	399,193	62	%	$	316,738	57	%	$	359,321	54	%	$	715,706	47	%	$	2,597,902	57	%
Greater than or equal to 1.2 and less than 1.5	161,779		66	%	226,166		70	%	124,267		72	%	124,564		67	%	52,513		62	%	111,690		55	%	800,979		66	%
Greater than or equal to 1.0 and less than 1.2	17,638		82	%	22,917		67	%	2,769		71	%	7,597		66	%	—		—	%	32,327		65	%	83,248		69	%
Less than 1.0	—		—	%	64,131		58	%	1,441		89	%	10,156		80	%	—		—	%	21,031		60	%	96,759		61	%
Total	$	543,991	65	%	$	755,584	67	%	$	527,670	64	%	$	459,055	60	%	$	411,834	55	%	$	880,754	49	%	$	3,578,888	59	%

LTV and DSC ratios for our agricultural mortgage loans are calculated at the time of loan origination and are evaluated annually for each loan using land value averages. A DSC ratio of less than 1.0 indicates that a property's operations do not generate sufficient income to cover debt payments. An LTV ratio in excess of 100% indicates the unpaid loan amount exceeds the value of the underlying collateral. All of our agricultural mortgage loans that have a debt service coverage ratio of less than 1.0 are performing under the original contractual loan terms at December 31, 2020.


	2020				2019				2018				2017				2016				Prior				Total
As of December 31, 2020:	Amortized Cost		Average LTV		Amortized Cost		Average LTV		Amortized Cost		Average LTV		Amortized Cost		Average LTV		Amortized Cost		Average LTV		Amortized Cost		Average LTV		Amortized Cost		Average LTV
Debt Service Coverage Ratio:	(Dollars in thousands)
Greater than or equal to 1.5	$	78,631	52	%	$	13,985	47	%	$	25,000	11	%	$	—	—	%	$	—	—	%	$	—	—	%	$	117,616	43	%
Greater than or equal to 1.2 and less than 1.5	101,879		44	%	3,425		23	%	—		—	%	—		—	%	—		—	%	—		—	%	105,304		44	%
Greater than or equal to 1.0 and less than 1.2	4,213		37	%	6,573		43	%	—		—	%	—		—	%	—		—	%	—		—	%	10,786		41	%
Less than 1.0	11,467		48	%	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%	11,467		48	%
Total	$	196,190	47	%	$	23,983	42	%	$	25,000	11	%	$	—	—	%	$	—	—	%	$	—	—	%	$	245,173	43	%


	2020		2019		2018		2017		2016		Prior		Total
As of December 31, 2020:	(Dollars in thousands)
Commercial mortgage loans
Current	$	543,991	$	755,584	$	527,670	$	459,055	$	411,834	$	880,754	$	3,578,888
30 - 59 days past due	—		—		—		—		—		—		—
60 - 89 days past due	—		—		—		—		—		—		—
Over 90 days past due	—		—		—		—		—		—		—
Total commercial mortgage loans	$	543,991	$	755,584	$	527,670	$	459,055	$	411,834	$	880,754	$	3,578,888

Agricultural mortgage loans
Current	$	196,190	$	23,983	$	25,000	$	—	$	—	$	—	$	245,173
30 - 59 days past due	—		—		—		—		—		—		—
60 - 89 days past due	—		—		—		—		—		—		—
Over 90 days past due	—		—		—		—		—		—		—
Total agricultural mortgage loans	$	196,190	$	23,983	$	25,000	$	—	$	—	$	—	$	245,173

Residential mortgage loans
Current	$	321,779	$	24,951	$	—	$	—	$	—	$	—	$	346,730
30 - 59 days past due	25,150		299		—		—		—		—		25,449
60 - 89 days past due	111		—		—		—		—		—		111
Over 90 days past due	167		—		—		—		—		—		167
Total residential mortgage loans	$	347,207	$	25,250	$	—	$	—	$	—	$	—	$	372,457

Commercial, agricultural and residential mortgage loans are considered delinquent when they become 60 days or more past due. When loans become more than 90 days past due they are considered nonperforming and we place them on non-accrual status and discontinue recognizing interest income. If payments are received on a delinquent loan, interest income is recognized to the extent it would have been recognized if normal principal and interest would have been received timely. If payments are received to bring a delinquent loan back to current, we will resume accruing interest income on that loan. There was one loan in non-accrual status at December 31, 2020. We recognized no interest income on loans in non-accrual status during the year ended December 31, 2020. There were no loans in non-accrual status at December 31, 2019. We recognized no interest income on loans in non-accrual status during the years ended December 31 2019, and 2018.

Collateral dependent loans consist of loans for which we will depend on the value of the collateral real estate to satisfy the outstanding principal of the loan. There were no collateral dependent commercial, agricultural or residential loans as of December 31, 2020 or December 31, 2019.

A Troubled Debt Restructuring ("TDR") is a situation where we have granted a concession to a borrower for economic or legal reasons related to the borrower's financial difficulties that we would not otherwise consider. A mortgage loan that has been granted new terms, including workout terms as described previously, would be considered a TDR if it meets conditions that would indicate a borrower is experiencing financial difficulty and the new terms constitute a concession on our part. We analyze all loans where we have agreed to workout terms and all loans that we have refinanced to determine if they meet the definition of a TDR. We consider the following factors in determining whether or not a borrower is experiencing financial difficulty: