Loans | Note 3 — Loans Loans Receivable Loans consisted of the following as of the dates indicated: June 30, 2021 December 31, 2020 (in thousands) Real estate loans: Commercial property Retail $ 828,157 $ 824,606 Hospitality 795,651 859,953 Other (1) 1,766,592 1,610,377 Total commercial property loans 3,390,400 3,294,936 Construction 61,614 58,882 Residential/consumer loans 348,730 345,831 Total real estate loans 3,800,744 3,699,649 Commercial and industrial loans 587,729 757,255 Leases receivable 431,619 423,264 Loans receivable 4,820,092 4,880,168 Allowance for credit losses (83,372 ) (90,426 ) Loans receivable, net $ 4,736,720 $ 4,789,742 ( 1) Includes, among other types, mixed-use, apartment, office, industrial, gas stations, faith-based facilities and warehouse; all other property types represent less than one percent of total loans receivable. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act allows financial institutions to assist customers in dealing with financial hardship by (a) providing federal funding so that financial institutions can originate SBA loans to borrowers at a low interest rate under the Paycheck Protection Program (“PPP”) loans with eventual debt forgiveness should the borrower continue to meet certain criteria; and (b) allowing financial institutions to temporarily modify loan terms by deferring loan payments, loan fees, etc. without considering them Troubled Debt Restructurings (“TDRs”). At June 30, 2021 and December 31, 2020, there were $144.1 million and $295.7 million, respectively, of PPP loans included in commercial and industrial loans in the table above. In addition, at June 30, 2021 and December 31, 2020, there were $72.3 million and $155.6 million, respectively, of loans modified under Section 4013 of the CARES Act. Accrued interest on loans was $12.9 million and $15.2 million at June 30, 2021 and December 31, 2020, respectively. Accrued interest at June 30, 2021 and December 31, 2020 included unpaid deferred interest receivable for loans currently or previously modified under the CARES Act of $4.1 million and $7.5 million, net of a $680,000 and $1.7 million valuation allowance, respectively. At June 30, 2021 and December 31, 2020, loans of $2.23 billion and $2.17 billion, respectively, were pledged to secure advances from the FHLB. Loans Held for Sale The following is the activity for loans held for sale for the three months ended June 30, 2021 and 2020: Real Estate Commercial and Industrial Total (in thousands) June 30, 2021 Balance at beginning of period $ 10,930 $ 21,744 $ 32,674 Originations and transfers 26,185 12,938 39,123 Sales (24,022 ) (11,738 ) (35,760 ) Principal paydowns and amortization (1 ) (6 ) (7 ) Balance at end of period $ 13,092 $ 22,938 $ 36,030 June 30, 2020 Balance at beginning of period $ — $ — $ — Originations 12,661 5,281 17,942 Sales — — — Principal paydowns and amortization — — — Balance at end of period $ 12,661 $ 5,281 $ 17,942 Loans held for sale was comprised of $22.0 million and $8.6 million of the guaranteed portion of SBA 7(a) loans and $14.1 million and $0 in second draw PPP loans at June 30, 2021 and December 31, 2020, respectively. During the three months ended June 30, 2021, the Company recognized $203,000 of gains on the sale of $9.5 million second draw PPP loans. For the six months ended June 30, 2021, the Company recognized $2.7 million of gains on the sale of $118.1 million second draw PPP loans. The following is the activity for loans held for sale for the six months ended June 30, 2021 and 2020: Real Estate Commercial and Industrial Total (in thousands) June 30, 2021 Balance at beginning of period $ 8,042 $ 526 $ 8,568 Originations and transfers 42,468 38,834 81,302 Sales (37,417 ) (16,416 ) (53,833 ) Principal payoffs and amortization (1 ) (6 ) (7 ) Balance at end of period $ 13,092 $ 22,938 $ 36,030 June 30, 2020 Balance at beginning of period $ 2,943 $ 3,077 $ 6,020 Originations 19,155 10,984 30,139 Sales (9,432 ) (8,780 ) (18,212 ) Principal payoffs and amortization (5 ) — (5 ) Balance at end of period $ 12,661 $ 5,281 $ 17,942 Allowance for Credit Losses The following table details the information on the allowance for credit losses by portfolio segment as of and for the three months ended June 30, 2021 and 2020: Real Estate Commercial and Industrial Leases Receivable Total (in thousands) June 30, 2021 Balance at beginning of period $ 57,762 $ 16,387 $ 14,243 $ 88,392 Less loans charged off — 271 1,200 1,471 Recoveries on loans receivable previously charged off (180 ) (174 ) (209 ) (563 ) Provision for credit losses 5,087 (8,231 ) (968 ) (4,112 ) Ending balance $ 63,029 $ 8,059 $ 12,284 $ 83,372 Individually evaluated $ 270 $ 1,216 $ 3,209 $ 4,695 Collectively evaluated $ 62,759 $ 6,843 $ 9,075 $ 78,677 Loans receivable $ 3,800,744 $ 587,729 $ 431,619 $ 4,820,092 Individually evaluated $ 28,832 $ 1,639 $ 9,112 $ 39,583 Collectively evaluated $ 3,771,912 $ 586,090 $ 422,507 $ 4,780,509 June 30, 2020 Balance at beginning of period $ 39,132 $ 11,588 $ 15,780 $ 66,500 Less loans charged off 91 438 1,044 1,573 Recoveries on loans receivable previously charged off (98 ) (60 ) (114 ) (272 ) Provision for credit losses 17,279 2,178 1,674 21,131 Ending balance $ 56,418 $ 13,388 $ 16,524 $ 86,330 Individually evaluated $ 2,809 $ 123 $ 2,262 $ 5,194 Collectively evaluated $ 53,609 $ 13,265 $ 14,262 $ 81,136 Loans receivable $ 3,632,432 $ 730,399 $ 462,811 $ 4,825,642 Individually evaluated $ 49,582 $ 13,771 $ 8,456 $ 71,809 Collectively evaluated $ 3,582,850 $ 716,628 $ 454,355 $ 4,753,833 The following table details the information on the allowance for credit losses by portfolio segment as of and for the six months ended June 30, 2021 and 2020: Real Estate Commercial and Industrial Leases Receivable Total (in thousands) June 30, 2021 Balance at beginning of period $ 51,876 $ 21,410 $ 17,140 90,426 Less loans charged off 1,509 365 3,102 4,976 Recoveries on loans receivable previously charged off (453 ) (273 ) (344 ) (1,070 ) Provision for credit losses 12,209 (13,259 ) (2,098 ) (3,148 ) Ending balance $ 63,029 $ 8,059 $ 12,284 $ 83,372 Individually evaluated $ 270 $ 1,216 $ 3,209 $ 4,695 Collectively evaluated $ 62,759 $ 6,843 $ 9,075 $ 78,677 Loans receivable $ 3,800,744 $ 587,729 $ 431,619 $ 4,820,092 Individually evaluated $ 28,832 $ 1,639 $ 9,112 $ 39,583 Collectively evaluated $ 3,771,912 $ 586,090 $ 422,507 $ 4,780,509 June 30, 2020 Balance at beginning of period $ 36,435 $ 16,206 $ 8,767 $ 61,408 Adjustment related to adoption of ASU 2016-13 14,028 (2,497 ) 5,902 17,433 Adjusted balance as of January 1, 2020 50,463 13,709 14,669 78,841 Less loans charged off 14,233 12,589 2,224 29,046 Recoveries on loans receivable previously charged off (156 ) (144 ) (188 ) (488 ) Provision for credit losses 20,032 12,124 3,891 36,047 Ending balance $ 56,418 $ 13,388 $ 16,524 $ 86,330 Individually evaluated $ 2,809 $ 123 $ 2,262 $ 5,194 Collectively evaluated $ 53,609 $ 13,265 $ 14,262 $ 81,136 Loans receivable $ 3,632,432 $ 730,399 $ 462,811 $ 4,825,642 Individually evaluated $ 49,582 $ 13,771 $ 8,456 $ 71,809 Collectively evaluated $ 3,582,850 $ 716,628 $ 454,355 $ 4,753,833 The table below illustrates the allowance for credit losses by loan portfolio segment and each loan portfolio segment as a percentage of total loans. June 30, 2021 December 31, 2020 Allowance Amount Total Loans Percentage of Total Loans Allowance Amount Total Loans Percentage of Total Loans (in thousands) Real estate loans: Commercial property Retail $ 4,496 $ 828,157 17.2 % $ 4,855 $ 824,606 16.9 % Hospitality 36,166 795,651 16.5 % 28,801 859,953 17.6 % Other 13,129 1,766,592 36.7 % 13,991 1,610,377 33.0 % Total commercial property loans 53,791 3,390,400 70.4 % 47,647 3,294,936 67.5 % Construction 8,489 61,614 1.3 % 2,876 58,882 1.2 % Residential/consumer loans 749 348,730 7.2 % 1,353 345,831 7.1 % Total real estate loans 63,029 3,800,744 78.9 % 51,876 3,699,649 75.8 % Commercial and industrial loans 8,059 587,729 12.2 % 21,410 757,255 15.5 % Leases receivable 12,284 431,619 8.9 % 17,140 423,264 8.7 % Total $ 83,372 $ 4,820,092 100.0 % $ 90,426 $ 4,880,168 100.0 % The following table represents the amortized cost basis of collateral-dependent loans by class of loans as of June 30, 2021 and December 31, 2020, for which repayment is expected to be obtained through the sale of the underlying collateral. June 30, 2021 December 31, 2020 Amortized Cost Amortized Cost (in thousands) Real estate loans: Commercial property Retail $ 6,135 $ 6,330 Hospitality 8,641 20,612 Other (1) 458 8,410 Total commercial property loans 15,234 35,352 Construction 10,046 24,854 Residential/consumer loans 1,702 2,867 Total real estate loans 26,982 63,073 Commercial and industrial loans — 41 Total $ 26,982 $ 63,114 (1) Includes, among other types, mixed-use, apartment, office, industrial, gas stations, faith-based facilities and warehouse; all other property types represent less than one percent of total loans receivable. Loan Quality Indicators As part of the on-going monitoring of the quality of our loans portfolio, we utilize an internal loan grading system to identify credit risk and assign an appropriate grade (from 0 to 8) for each loan in our portfolio. A third-party loan review is performed at least on an annual basis. Additional adjustments are made when determined to be necessary. The loan grade definitions are as follows: Pass and Pass-Watch: Pass and Pass-Watch loans, grades (0-4), are in compliance with the Bank’s credit policy and regulatory requirements, and do not exhibit any potential or defined weaknesses as defined under “Special Mention,” “Substandard” or “Doubtful.” This category is the strongest level of the Bank’s loan grading system. It consists of all performing loans with no identified credit weaknesses. It includes cash and stock/security secured loans or other investment grade loans. Special Mention: A Special Mention loan, grade (5), has potential weaknesses that deserve management’s close attention. If not corrected, these potential weaknesses may result in deterioration of the repayment of the debt and result in a Substandard classification. Loans that have significant actual, not potential, weaknesses are considered more severely classified. Substandard: A Substandard loan, grade (6), has a well-defined weakness that jeopardizes the liquidation of the debt. A loan graded Substandard is not protected by the sound worth and paying capacity of the borrower, or of the value and type of collateral pledged. With a Substandard loan, there is a distinct possibility that the Bank will sustain some loss if the weaknesses or deficiencies are not corrected. Doubtful: A Doubtful loan, grade (7), is one that has critical weaknesses that would make the collection or liquidation of the full amount due improbable. However, there may be pending events which may work to strengthen the loan, and therefore the amount or timing of a possible loss cannot be determined at the current time. Loss: A loan classified as Loss, grade (8), is considered uncollectible and of such little value that their continuance as active bank assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be possible in the future. Loans classified as Loss will be charged off in a timely manner. Under regulatory guidance, loans graded special mention or worse are considered criticized loans, and loans graded substandard or worse are considered classified loans. Loans by Vintage Year and Risk Rating Term Loans Amortized Cost Basis by Origination Year (1) 2021 2020 2019 2018 2017 Prior Revolving Loans Amortized Cost Basis Total (in thousands) June 30, 2021 Real estate loans: Commercial property Risk Rating Pass / Pass-Watch $ 473,896 $ 815,959 $ 498,159 $ 448,016 $ 316,594 $ 644,736 $ 51,004 $ 3,248,364 Special Mention — 6,391 16,488 2,052 3,055 48,203 1,120 77,309 Classified — — 5,495 21,496 4,595 33,141 — 64,727 Total commercial property 473,896 822,350 520,142 471,564 324,244 726,080 52,124 3,390,400 Construction Risk Rating Pass / Pass Watch 9,476 29,345 — — — — — 38,821 Special Mention — — — — — 12,747 — 12,747 Classified — — — — — 10,046 — 10,046 Total construction 9,476 29,345 — — — 22,793 — 61,614 Residential/consumer loans Risk Rating Pass / Pass-Watch 77,142 22,757 254 28,284 104,611 101,458 7,483 341,989 Special Mention — — — 930 379 2,884 — 4,193 Classified — — — — 2,229 319 — 2,548 Total residential/consumer loans 77,142 22,757 254 29,214 107,219 104,661 7,483 348,730 Total real estate loans Risk Rating Pass / Pass-Watch 560,514 868,061 498,413 476,300 421,205 746,194 58,487 3,629,174 Special Mention — 6,391 16,488 2,982 3,434 63,834 1,120 94,249 Classified — — 5,495 21,496 6,824 43,506 — 77,321 Total real estate loans 560,514 874,452 520,396 500,778 431,463 853,534 59,607 3,800,744 Commercial and industrial loans: Risk Rating Pass / Pass-Watch 119,307 205,706 39,765 19,031 13,969 10,664 128,019 536,461 Special Mention 429 3,446 4,685 8,038 8,624 55 2,303 27,580 Classified — — 14,571 205 553 6,317 2,042 23,688 Total commercial and industrial loans 119,736 209,152 59,021 27,274 23,146 17,036 132,364 587,729 Leases receivable: Risk Rating Pass / Pass-Watch 103,420 97,760 132,502 67,887 19,069 1,869 — 422,507 Special Mention — — — — — — — — Classified — 502 5,541 2,015 636 418 — 9,112 Total leases receivable 103,420 98,262 138,043 69,902 19,705 2,287 — 431,619 Total loans receivable: Risk Rating Pass / Pass-Watch 783,241 1,171,527 670,680 563,218 454,243 758,727 186,506 4,588,142 Special Mention 429 9,837 21,173 11,020 12,058 63,889 3,423 121,829 Classified — 502 25,607 23,716 8,013 50,241 2,042 110,121 Total loans receivable $ 783,670 $ 1,181,866 $ 717,460 $ 597,954 $ 474,314 $ 872,857 $ 191,971 $ 4,820,092 Term Loans Amortized Cost Basis by Origination Year (1) 2020 2019 2018 2017 2016 Prior Revolving Loans Amortized Cost Basis Total December 31, 2020 Real estate loans: Commercial property Risk Rating Pass / Pass-Watch $ 920,876 $ 513,962 $ 479,221 $ 343,659 $ 418,361 $ 459,367 $ 31,283 $ 3,166,729 Special Mention 13,680 2,484 8,630 1,671 14,971 11,907 — 53,343 Classified — 3,528 7,303 4,712 21,351 37,840 130 74,864 Total commercial property 934,556 519,974 495,154 350,042 454,683 509,114 31,413 3,294,936 Construction Risk Rating Pass / Pass-Watch 33,415 613 — — — — — 34,028 Special Mention — — — — — — — — Classified — — — — 24,854 — — 24,854 Total construction 33,415 613 — — 24,854 — — 58,882 Residential/consumer loans Risk Rating Pass / Pass-Watch 27,997 962 37,123 127,987 82,124 54,003 7,353 337,549 Special Mention — — 930 829 537 2,782 — 5,078 Classified — — — 2,259 301 644 — 3,204 Total residential/consumer loans 27,997 962 38,053 131,075 82,962 57,429 7,353 345,831 Total real estate loans Risk Rating Pass / Pass-Watch 982,288 515,537 516,344 471,646 500,485 513,370 38,636 3,538,306 Special Mention 13,680 2,484 9,560 2,500 15,508 14,689 — 58,421 Classified — 3,528 7,303 6,971 46,506 38,484 130 102,922 Total real estate loans 995,968 521,549 533,207 481,117 562,499 566,543 38,766 3,699,649 Commercial and industrial loans: Risk Rating Pass / Pass-Watch 406,486 73,159 54,110 17,834 4,464 9,910 146,722 712,685 Special Mention 6,950 4,509 4,436 1,110 31 1,074 447 18,557 Classified — 890 5,115 9,465 4,380 1,519 4,644 26,013 Total commercial and industrial loans 413,436 78,558 63,661 28,409 8,875 12,503 151,813 757,255 Leases receivable: Risk Rating Pass / Pass-Watch 113,712 165,242 91,408 30,405 10,096 1,167 — 412,030 Special Mention — — — — — — — — Classified 452 5,728 3,137 876 804 237 — 11,234 Total leases receivable 114,164 170,970 94,545 31,281 10,900 1,404 — 423,264 Total loans receivable: Risk Rating Pass / Pass-Watch 1,502,486 753,938 661,862 519,885 515,045 524,447 185,358 4,663,021 Special Mention 20,630 6,993 13,996 3,610 15,539 15,763 447 76,978 Classified 452 10,146 15,555 17,312 51,690 40,240 4,774 140,169 Total loans receivable $ 1,523,568 $ 771,077 $ 691,413 $ 540,807 $ 582,274 $ 580,450 $ 190,579 $ 4,880,168 (1) Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision. Certain prior period amounts have been reclassified to conform to current period presentation. Loans by Vintage Year and Payment Performance Term Loans Amortized Cost Basis by Origination Year (1) 2021 2020 2019 2018 2017 Prior Revolving Loans Amortized Cost Basis Total (in thousands) June 30, 2021 Real estate loans: Commercial property Payment performance Performing $ 473,896 $ 822,350 $ 520,142 $ 471,543 $ 321,945 $ 711,316 $ 52,124 $ 3,373,316 Nonperforming — — — 21 2,299 14,764 — 17,084 Total commercial property 473,896 822,350 520,142 471,564 324,244 726,080 52,124 3,390,400 Construction Payment performance Performing 9,476 29,345 — — — 12,747 — 51,568 Nonperforming — — — — — 10,046 — 10,046 Total construction 9,476 29,345 — — — 22,793 — 61,614 Residential/consumer loans Payment performance Performing 77,142 22,757 254 29,214 105,836 104,342 7,483 347,028 Nonperforming — — — — 1,383 319 — 1,702 Total residential/consumer loans 77,142 22,757 254 29,214 107,219 104,661 7,483 348,730 Total real estate loans Payment performance Performing 560,514 874,452 520,396 500,757 427,781 828,405 59,607 3,771,912 Nonperforming — — — 21 3,682 25,129 — 28,832 Total real estate loans 560,514 874,452 520,396 500,778 431,463 853,534 59,607 3,800,744 Commercial and industrial loans: Payment performance Performing 119,736 209,152 58,200 23,371 14,078 16,753 132,364 573,654 Nonperforming — — 821 3,903 9,068 283 — 14,075 Total commercial and industrial loans 119,736 209,152 59,021 27,274 23,146 17,036 132,364 587,729 Leases receivable: Payment performance Performing 103,420 97,760 132,502 67,887 19,069 1,869 — 422,507 Nonperforming — 502 5,541 2,015 636 418 — 9,112 Total leases receivable 103,420 98,262 138,043 69,902 19,705 2,287 — 431,619 Total loans receivable: Payment performance Performing 783,670 1,181,364 711,098 592,015 460,928 847,027 191,971 4,768,073 Nonperforming — 502 6,362 5,939 13,386 25,830 — 52,019 Total loans receivable $ 783,670 $ 1,181,866 $ 717,460 $ 597,954 $ 474,314 $ 872,857 $ 191,971 $ 4,820,092 Term Loans Amortized Cost Basis by Origination Year (1) 2020 2019 2018 2017 2016 Prior Revolving Loans Amortized Cost Basis Total December 31, 2020 Real estate loans: Commercial property Payment performance Performing $ 934,556 $ 519,582 $ 495,132 $ 347,656 $ 437,230 $ 499,410 $ 31,283 $ 3,264,849 Nonperforming — 392 22 2,386 17,453 9,704 130 30,087 Total commercial property 934,556 519,974 495,154 350,042 454,683 509,114 31,413 3,294,936 Construction Payment performance Performing 33,415 613 — — — — — 34,028 Nonperforming — — — — 24,854 — — 24,854 Total construction 33,415 613 — — 24,854 — — 58,882 Residential/consumer loans Payment performance Performing 27,997 962 38,053 129,670 82,661 56,785 7,353 343,481 Nonperforming — — — 1,405 301 644 — 2,350 Total residential/consumer loans 27,997 962 38,053 131,075 82,962 57,429 7,353 345,831 Total real estate loans Payment performance Performing 995,968 521,157 533,185 477,326 519,891 556,195 38,636 3,642,358 Nonperforming — 392 22 3,791 42,608 10,348 130 57,291 Total real estate loans 995,968 521,549 533,207 481,117 562,499 566,543 38,766 3,699,649 Commercial and industrial loans: Payment performance Performing 413,436 77,668 59,726 19,002 8,875 12,227 151,813 742,747 Nonperforming — 890 3,935 9,407 — 276 — 14,508 Total commercial and industrial loans 413,436 78,558 63,661 28,409 8,875 12,503 151,813 757,255 Leases receivable: Payment performance Performing 113,712 165,242 91,408 30,405 10,096 1,167 — 412,030 Nonperforming 452 5,728 3,137 876 804 237 — 11,234 Total leases receivable 114,164 170,970 94,545 31,281 10,900 1,404 — 423,264 Total loans receivable: Payment performance Performing 1,523,116 764,067 684,319 526,733 538,862 569,589 190,449 4,797,135 Nonperforming 452 7,010 7,094 14,074 43,412 10,861 130 83,033 Total loans receivable $ 1,523,568 $ 771,077 $ 691,413 $ 540,807 $ 582,274 $ 580,450 $ 190,579 $ 4,880,168 (2) Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision. Certain prior period amounts have been reclassified to conform to current period presentation. At June 30, 2021, of the $72.3 million of loans modified in accordance with the provision of the CARES Act, $22.9 million were pass and pass-watch, $36.7 million were special mention, and $12.7 million were classified. At December 31, 2020, of the $155.6 million of loans modified in accordance with the provision of the CARES Act, $99.9 million were pass and pass-watch, $31.3 million were special mention, and $24.4 million were classified. The following is an aging analysis of loans, disaggregated by loan class, as of the dates indicated: 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total Accruing 90 Days or More Past Due (in thousands) June 30, 2021 Real estate loans: Commercial property Retail $ — $ — $ — $ — $ 828,157 $ 828,157 $ — Hospitality — — — — 795,651 795,651 — Other — — 458 458 1,766,134 1,766,592 — Total commercial property loans — — 458 458 3,389,942 3,390,400 — Construction — — — — 61,614 61,614 — Residential/consumer loans — 2,022 560 2,582 346,148 348,730 — Total real estate loans — 2,022 1,018 3,040 3,797,704 3,800,744 — Commercial and industrial loans 47 4 12,446 12,497 575,232 587,729 12,446 Leases receivable 3,664 709 2,271 6,644 424,975 431,619 — Total loans receivable $ 3,711 $ 2,735 $ 15,735 $ 22,181 $ 4,797,911 $ 4,820,092 $ 12,446 December 31, 2020 Real estate loans: Commercial property Retail $ — $ — $ — $ — $ 824,606 $ 824,606 $ — Hospitality — — 11,076 11,076 848,877 859,953 — Other — — 731 731 1,609,646 1,610,377 — Total commercial property loans — — 11,807 11,807 3,283,129 3,294,936 — Construction — 12,807 — 12,807 46,075 58,882 — Residential/consumer loans 4,693 461 564 5,718 340,113 345,831 — Total real estate loans 4,693 13,268 12,371 30,332 3,669,317 3,699,649 — Commercial and industrial loans 282 27 12,487 12,796 744,459 757,255 — Leases receivable 4,051 1,786 4,675 10,512 412,752 423,264 — Total loans receivable $ 9,026 $ 15,081 $ 29,533 $ 53,640 $ 4,826,528 $ 4,880,168 $ — L oans 90 days or more past due and still accruing were $12.4 million as of June 30, 2021 and represented two film tax-credit loans previously included in nonaccrual loans. At June 30, 2021, these loans were well secured and in the process of collection. Subsequent to the end of the second quarter, the Company collected payments of $4.6 million, including accrued interest, representing the full payoff of one of these loans, and $5.4 million, representing the partial paydown of the other. The Company expects to collect the remaining amounts due on the second loan prior to the end of the third quarter. No loans were 90 days or more past due and accruing interest as of December 31, 2020. In addition, $36.0 million and $53.4 million of loans past due less than 90 days were classified as nonaccrual at June 30, 2021 and December 31, 2020, respectively. At June 30, 2021 and December 31, 2020, currently modified loans under the CARES Act were $72.3 million and $155.6 million, respectively. Of the currently modified loans, $260,000 were 30-59 days past due, no loans were 60-89 days past due, and $28,000 were 90 days or more past due at June 30, 2021, and all loans were current at December 31, 2020. For loans previously modified under the CARES Act, $887,000 were 30-59 days past due, $388,000 were 60-89 days past due, and $1.8 million were 90 days or more past due at June 30, 2021 and $4.9 million were 30-59 days past due, $1.7 million were 60-89 days past due, and $13.9 million were 90 days or more past due at December 31, 2020. Individually Evaluated Loans The Company reviews all loans on an individual basis when they do not share similar risk characteristics with loan pools. The following is a summary of interest foregone on nonaccrual loans for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 (in thousands) Interest income that would have been recognized had individually evaluated loans performed in accordance with their original terms $ 1,091 $ 1,386 $ 2,848 $ 2,998 Less: Interest income recognized on individually evaluated loans (136 ) (508 ) (287 ) (1,085 ) Interest foregone on individually evaluated loans $ 955 $ 878 $ 2,561 $ 1,913 There were no commitments to lend additional funds to borrowers whose loans are included above. Nonaccrual Loans and Nonperforming Assets The following table represents the amortized cost basis of loans on nonaccrual status and loans past due 90 days and still accruing as of June 30, 2021 and December 31, 2020. June 30, 2021 Nonaccrual Loans With No Allowance for Credit Losses Nonaccrual Loans With Allowance for Credit Losses Loans Past Due 90 Days Still Accruing Total Nonperforming Loans (in thousands) Real estate loans: Commercial property Retail $ 6,135 $ — $ — $ 6,135 Hospitality 8,641 — — 8,641 Other 1,581 727 — 2,308 Total commercial property loans 16,357 727 — 17,084 Construction 10,046 — — 10,046 Residential/consumer loans 1,702 — — 1,702 Total real estate loans 28,105 727 — 28,832 Commercial and industrial loans 133 1,496 12,446 14,075 Leases receivable 1,235 7,877 — 9,112 Total $ 29,473 $ 10,100 $ 12,446 $ 52,019 December 31, 2020 Nonaccrual Loans With No Allowance for Credit Losses Nonaccrual Loans With Allowance for Credit Losses Loans Past Due 90 Days Still Accruing Total Nonperforming Loans (in thousands) Real estate loans: Commercial property Retail $ 6,331 $ — $ — $ 6,331 Hospitality 20,611 — — 20,611 Other 2,236 909 — 3,145 Total commercial property loans 29,178 909 — 30,087 Construction 24,854 — — 24,854 Residential/consumer loans 2,350 — — 2,350 Total real estate loans 56,382 909 — 57,291 Commercial and industrial loans 58 14,450 — 14,508 Leases receivable 2,318 8,916 — 11,234 Total $ 58,758 $ 24,275 $ — $ 83,033 The following table details nonperforming assets as of the dates indicated: June 30, 2021 December 31, 2020 (in thousands) Nonaccrual loans $ 39,573 $ 83,033 Loans receivable 90 days or more past due and still accruing 12,446 — Total nonperforming loans receivable 52,019 83,033 Other real estate owned ("OREO") 712 2,360 Total nonperforming assets $ 52,731 $ 85,393 OREO is included in prepaid expenses and other assets in the accompanying Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020. Troubled Debt Restructurings As of June 30, 2021 and December 31, 2020, total TDRs were $14.7 million and $25.0 million, respectively. A debt restructuring is considered a TDR if we grant a concession that we would not have otherwise been considered, to the borrower for economic or legal reasons related to the borrower’s financial difficulties. In addition, the concession granted must result in a reduction in the borrower’s payment for a period of three months or more in order to be classified as a TDR. The following table details TDRs as of June 30, 2021 and December 31, 2020: Nonaccrual TDRs Accrual TDRs Deferral of Principal Deferral of Principal and Interest Reduction of Principal and Interest Extension of Maturity Total Deferral of Principal Deferral of Principal and Interest Reduction of Principal and Interest Extension of Maturity Total (in thousands) June 30, 2021 Real estate loans $ 419 $ 3,070 $ 10,455 $ — $ 13,944 $ 574 $ — $ — $ — $ 574 Commercial and industrial loans — 133 — — 133 — — 1 26 27 Total $ 419 $ 3,203 $ 10,455 $ — $ 14,077 $ 574 $ — $ 1 $ 26 $ 601 December 31, 2020 Real estate loans $ 1,095 $ 3,334 $ 12,492 $ — $ 16,921 $ 513 $ — $ 67 $ 7,290 $ 7,870 Commercial and industrial loans — 144 — — 144 — — 4 56 60 Total $ 1,095 $ 3,478 $ 12,492 $ — $ 17,065 $ 513 $ — $ 71 $ 7,346 $ 7,930 The following table presents the number of loans by class modified as troubled debt restructurings that occurred during the periods indicated, with their pre- and post-modification recorded amounts. Three Months ended Twelve Months ended June 30, 2021 December 31, 2020 Number of Loans Pre- Modification Outstanding Recorded Investment Post- Modification Outstanding Recorded Investment Number of Loans Pre- Modification Outstanding Recorded Investment Post- Modification Outstanding Recorded Investment (in thousands except for number of loans) Real estate loans — $ — $ — 5 $ 4,479 $ 3,676 Commercial and industrial loans — — — — — — Total — $ — $ — 5 $ 4,479 $ 3,676 Six Months ended Twelve Months ended June 30, 2021 December 31, 2020 Number of Loans Pre- Modification Outstanding Recorded Investment Post- Modification Outstanding Recorded Investment Number of Loans Pre- Modification Outstanding Recorded Investment Post- Modification Outstanding Recorded Investment (in thousands except for number of loans) Real estate loans — $ — $ — 5 $ 4,479 $ 3,676 Commercial and industrial loans — — — — — — Total — $ — $ — 5 $ 4,479 $ 3,676 All TDRs are individually analyzed using one of three criteria: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price; or (3) the fair value of the collateral if the loan is collateral dependent. At June 30, 2021 and December 31, 2020, the allowance resulting from the individual evaluation of TDRs was inconsequential. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. No loans defaulted during the three and six months ended June 30, 2021 following modification. During the year ended December 31, 2020, one loan for $398,000 defaulted within the twelve-month period following modification. The allowance for credit losses resulting from this defaulted loan was inconsequential. |