Loans and Allowance For Loan Losses | 4. LOANS AND ALLOWANCE FOR LOAN LOSSES Outstanding loans as of December 31, 2020 and 2019 are summarized below. Certain loans have been pledged to secure borrowing arrangements (see Note 7). Additionally, SBA loans include loans funded under the Paycheck Protection Program under the CARES Act, which was enacted as a result of the COVID-19 pandemic (see Note 2). (Dollars in thousands) December 31, December 31, Commercial and industrial 414,548 389,746 Real estate—other 550,690 502,929 Real estate—construction and land 37,193 42,519 SBA 317,564 12,830 Other 49,075 1,628 Total loans, gross 1,369,070 949,652 Deferred loan origination costs, net 523 2,555 Allowance for loan losses (14,111 ) (11,075 ) Total loans, net 1,355,482 941,132 The following table reflects the loan portfolio allocated by management’s internal risk ratings at December 31, 2020 and 2019. (Dollars in thousands) Commercial Real Estate Real Estate SBA Other Total As of December 31, 2020 Grade: Pass $ 401,629 $ 540,153 $ 34,543 $ 315,277 $ 49,075 $ 1,340,677 Special Mention 9,013 2,911 872 859 — 13,655 Substandard 3,906 7,626 1,778 1,428 — 14,738 Total $ 414,548 $ 550,690 $ 37,193 $ 317,564 $ 49,075 $ 1,369,070 As of December 31, 2019 Grade: Pass $ 378,327 $ 494,314 $ 40,731 $ 10,736 $ 1,628 $ 925,736 Special Mention 6,894 7,928 1,788 1,655 — 18,265 Substandard 4,525 687 — 439 — 5,651 Total $ 389,746 $ 502,929 $ 42,519 $ 12,830 $ 1,628 $ 949,652 The following table reflects an aging analysis of the loan portfolio by the time past due at December 31, 2020 and 2019. (Dollars in thousands) 30 Days 60 Days 90+ Days Non-Accrual Current Total As of December 31, 2020 Commercial and industrial $ — $ — $ — $ — $ 414,548 $ 414,548 Real estate—other 1,505 — — — 549,185 550,690 Real estate—construction and land — — — — 37,193 37,193 SBA — — — 234 317,330 317,564 Other — — — — 49,075 49,075 Total loans, gross $ 1,505 $ — $ — $ 234 $ 1,367,331 $ 1,369,070 As of December 31, 2019 Commercial and industrial $ — $ 1,440 $ — $ 2,409 $ 385,897 $ 389,746 Real estate—other — — — — 502,929 502,929 Real estate—construction and land — — — — 42,519 42,519 SBA — — — 344 12,486 12,830 Other — — — — 1,628 1,628 Total loans, gross $ — $ 1,440 $ — $ 2,753 $ 945,459 $ 949,652 The following table reflects the impairment methodology applied to gross loans by portfolio segment and the related allowance for loan losses as of December 31, 2020 and 2019. (Dollars in thousands) Commercial Real Estate Real Estate SBA Other Total As of December 31, 2020 Gross loans: Loans individually evaluated for impairment $ 2,288 $ — $ — $ 689 $ — $ 2,977 Loans collectively evaluated for impairment 412,260 550,690 37,193 316,875 49,075 1,366,093 Total gross loans $ 414,548 $ 550,690 $ 37,193 $ 317,564 $ 49,075 $ 1,369,070 Allowance for loan losses: Loans individually evaluated for impairment $ 41 $ — $ — $ 259 $ — $ 300 Loans collectively evaluated for impairment 8,882 3,877 681 345 26 13,811 Total allowance for loan losses $ 8,923 $ 3,877 $ 681 $ 604 $ 26 $ 14,111 As of December 31, 2019 Gross loans: Loans individually evaluated for impairment $ 4,572 $ 687 $ — $ 344 $ — $ 5,603 Loans collectively evaluated for impairment 385,174 502,242 42,519 12,486 1,628 944,049 Total loans $ 389,746 $ 502,929 $ 42,519 $ 12,830 $ 1,628 $ 949,652 Allowance for loan losses: Loans individually evaluated for impairment $ 600 $ — $ — $ 50 $ — $ 650 Loans collectively evaluated for impairment 6,108 3,281 1,022 — 14 10,425 Total allowance for loan losses $ 6,708 $ 3,281 $ 1,022 $ 50 $ 14 $ 11,075 The following table reflects inf o (Dollars in thousands) Recorded Unpaid Related Average Interest As of December 31, 2020 With no related allowance recorded: SBA $ 234 $ 479 $ — $ 1,917 $ — With an allowance recorded: Commercial and industrial $ 2,288 $ 2,288 $ 41 $ 2,137 $ 148 SBA $ 455 $ 455 $ 259 $ 3,921 $ 57 Total: Commercial and industrial $ 2,288 $ 2,288 $ 41 $ 2,137 $ 148 SBA $ 689 $ 934 $ 259 $ 5,838 $ 57 As of December 31, 2019 With no related allowance recorded: Commercial and industrial $ 1,846 $ 1,860 $ — $ 1,282 $ 68 Real estate—other $ 687 $ 687 $ — $ 700 $ 52 SBA $ 294 $ 294 $ — $ 1,723 $ — With an allowance recorded: Commercial and industrial $ 2,726 $ 4,623 $ 600 $ 4,620 $ 56 SBA $ 50 $ 200 $ 50 $ 203 $ 15 Total: Commercial and industrial $ 4,572 $ 6,483 $ 600 $ 5,902 $ 124 Real estate—other $ 687 $ 687 $ — $ 700 $ 52 SBA $ 344 $ 494 $ 50 $ 1,926 $ 15 The recorded investment in impaired loans in the tables above excludes accrued interest receivable and net deferred origination costs due to their immateriality. The following table reflects the changes in, and allocation of, the allowance for loan losses by portfolio segment for the years ended December 31, 2020 and 2019. (Dollars in thousands) Commercial Real Real Estate SBA Other Total Year ended December 31, 2020 Beginning balance $ 6,708 $ 3,281 $ 1,022 $ 50 $ 14 $ 11,075 Provision for loan losses 3,951 596 (341 ) 662 12 4,880 Charge-offs (1,868 ) — — (108 ) — (1,976 ) Recoveries 132 — — — — 132 Ending balance $ 8,923 $ 3,877 $ 681 $ 604 $ 26 $ 14,111 Year ended December 31, 2019 Beginning balance $ 5,401 $ 3,677 $ 1,524 $ 172 $ 26 $ 10,800 Provision for loan losses 3,220 (396 ) (502 ) 15 (11 ) 2,326 Charge-offs (1,951 ) — — (137 ) (1 ) (2,089 ) Recoveries 38 — — — — 38 Ending balance $ 6,708 $ 3,281 $ 1,022 $ 50 $ 14 $ 11,075 Interest forgone on nonaccrual loans was on Trouble d At December 31, 2020, the Company had no recorded investments or allocated specific reserves related to loans with terms that had been modified in troubled debt restructurings. At December 31, 2019, the Company had a recorded investment of $722,000 and had allocated specific reserves totaling $12,000 related to loans with terms that had been modified in troubled debt restructurings. The Company had no commitments as of December 31, 2020 and 2019 to customers with outstanding loans that were classified as troubled debt restructurings. There were no new troubled debt restructurings during the years ended December 31, 2020 and 2019. The Company had no troubled debt restructurings with a subsequent payment default within twelve months following the modification during the three months and years ended December 31, 2020 and 2019. COVID-19 For additional information regarding the impact of COVID-19 |