Major categories of loans and leases are summarized as follows (in thousands):

¹Purchased Credit Impaired loans and leases (“PCI loans and leases”) are loans and leases with evidence of credit deterioration at purchase.

For purposes of the disclosures required pursuant to ASC 310, the loan and lease portfolio was disaggregated into segments. A portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. There are six loan and lease portfolio segments that include commercial real estate, consumer real estate, construction and land development, commercial and industrial, leases, and consumer and other.

As previously mentioned in Note 1 – Presentation of Financial Information, the CARES Act established the PPP, administered directly by the SBA. The PPP provides loans of up to $10 million to small businesses who were affected by economic conditions as a result of COVID-19 to provide cash-flow assistance to employers who maintain their payroll (including healthcare and certain related expenses), mortgage interest, rent, leases, utilities and interest on existing debt during the COVID-19 emergency. PPP loans carry an interest rate of one percent, and a maturity of two or five years. These loans are fully guaranteed by the SBA and are not included in the Company’s loan and lease loss allowance calculations. The loans may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the loan is made as long as certain conditions are met regarding employee retention and compensation levels. PPP loans deemed eligible for forgiveness by the SBA will be repaid by the SBA to the Company. The SBA pays the Company fees for processing PPP loans and the fees are accounted for as loan origination fees and recognized over the contractual loan term as a yield adjustment on the loans. At June 30, 2021, the net deferred fees outstanding for the 2020 PPP loans is $131 thousand and $6.5 million for the 2021 PPP loans, respectively. At December 31, 2020, the net deferred fees outstanding for the 2020 PPP loans is $4.2 million. PPP loans are included in the Commercial and Industrial loan segments. As of June 30, 2021, the Company had 2,015 PPP loans outstanding, with an outstanding principal balance of $178.9 million and as of December 31, 2020, the Company had 2,863 PPP loans outstanding, with an outstanding principal balance of $288.9 million.

The composition of loans and leases by loan classification for performing, impaired and PCI loan and leases status is summarized in the tables below (in thousands):


					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
June 30, 2021:
Performing loans and leases	$	1,150,261	$	433,218	$	295,439	$	495,645	$	48,824	$	11,315	$	2,434,702
Impaired loans and leases		859		2,447		—		208		—		—		3,514
		1,151,120		435,665		295,439		495,853		48,824		11,315		2,438,216
PCI loans and leases		11,371		8,975		5,265		261		4,214		16		30,102
Total loans and leases	$	1,162,491	$	444,640	$	300,704	$	496,114	$	53,038	$	11,331	$	2,468,318

December 31, 2020:
Performing loans and leases	$	992,982	$	432,356	$	272,727	$	633,992	$	—	$	12,789	$	2,344,846
Impaired loans and leases		3,871		1,316		—		146		—		—		5,333
		996,853		433,672		272,727		634,138		—		12,789		2,350,179
PCI loans and leases		16,123		10,258		5,348		308		—		27		32,064
Total loans and leases	$	1,012,976	$	443,930	$	278,075	$	634,446	$	—	$	12,816	$	2,382,243

The following tables show the allowance for loan and lease losses allocation by loan and lease classification for impaired, PCI, and performing (in thousands):


					Construction		Commercial				Consumer
	Commercial		Consumer		and Land		and				and
	Real Estate		Real Estate		Development		Industrial		Leases		Other		Total
June 30, 2021:
Performing loans and leases	$	7,965	$	3,096	$	2,061	$	4,021	$	—	$	100	$	17,243
Impaired loans and leases		417		71		—		208		—		—		696
		8,382		3,167		2,061		4,229		—		100		17,939
PCI loans and leases		—		156		—		213		—		2		371
Total loans and leases	$	8,382	$	3,323	$	2,061	$	4,442	$	—	$	102	$	18,310

December 31, 2020:
Performing loans and leases	$	7,579	$	3,267	$	2,076	$	4,768	$	—	$	110	$	17,800
Impaired loans and leases		—		116		—		121		—		—		237
		7,579		3,383		2,076		4,889		—		110		18,037
PCI loans and leases		—		88		—		218		—		3		309
Total loans and leases	$	7,579	$	3,471	$	2,076	$	5,107	$	—	$	113	$	18,346

The following tables detail the changes in the allowance for loan and lease losses by loan and lease classification (in thousands):


	Three Months Ended June 30, 2021
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	7,636	$	3,309	$	1,968	$	5,347	$	—	$	110	$	18,370
Charged-off loans and leases		—		(60)		—		(4)		—		(89)		(153)
Recoveries of charge-offs		3		5		—		7		—		83		98
Provision charged to expense		743		69		93		(908)		—		(2)		(5)
Ending balance	$	8,382	$	3,323	$	2,061	$	4,442	$	—	$	102	$	18,310


	Three Months Ended June 30, 2020
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	5,963	$	3,301	$	1,484	$	2,557	$	—	$	126	$	13,431
Charged-off loans and leases		—		—		—		(9)		—		(66)		(75)
Recoveries of charge-offs		3		11		—		6		—		28		48
Provision charged to expense		629		1		311		1,889		—		20		2,850
Ending balance	$	6,595	$	3,313	$	1,795	$	4,443	$	—	$	108	$	16,254


	Six Months Ended June 30, 2021
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	7,579	$	3,471	$	2,076	$	5,107	$	—	$	113	$	18,346
Charged-off loans and leases		—		(60)		—		(4)		—		(209)		(273)
Recoveries of charge-offs		6		21		—		10		—		138		175
Provision charged to expense		797		(109)		(15)		(671)		—		60		62
Ending balance	$	8,382	$	3,323	$	2,061	$	4,442	$	—	$	102	$	18,310


	Six Months Ended June 30, 2020
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	4,508	$	2,576	$	1,127	$	1,957	$	—	$	75	$	10,243
Charged-off loans and leases		—		(2)		—		(17)		—		(142)		(161)
Recoveries of charge-offs		5		17		2		49		—		50		123
Provision charged to expense		2,082		722		666		2,454		—		125		6,049
Ending balance	$	6,595	$	3,313	$	1,795	$	4,443	$	—	$	108	$	16,254

We maintain the allowance at a level that we deem appropriate to adequately cover the probable losses inherent in the loan and lease portfolio. Our provision for loan and lease losses for the three and six months ended June 30, 2021, is ($5) thousand and $62 thousand, respectively, and $2.9 million $6.0 million, during the three and six months ended June 30, 2020, respectively. As of June 30, 2021, and December 31, 2020, our allowance for loan and lease losses was $18.3 million, which we deemed to be adequate at each of the respective dates. Our allowance for loan and lease losses as a percentage of total loans and leases was 0.74% at June 30, 2021 and 0.77% at December 31, 2020.

The following tables outline the amount of each loan and lease classification and the amount categorized into each risk rating (in thousands):


	June 30, 2021
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,109,079	$	431,122	$	295,119	$	490,144	$	48,824	$	11,241	$	2,385,529
Watch		37,077		1,637		243		5,087		—		49		44,093
Special mention		3,881		42		—		271		—		—		4,194
Substandard		1,083		2,864		77		306		—		25		4,355
Doubtful		—		—		—		45		—		—		45
Total		1,151,120		435,665		295,439		495,853		48,824		11,315		2,438,216

PCI Loans and Leases:
Pass		8,699		7,593		1,342		215		4,214		15		22,078
Watch		1,570		234		3,449		—		—		1		5,254
Special mention		17		57		—		—		—		—		74
Substandard		1,085		1,091		474		46		—		—		2,696
Doubtful		—		—		—		—		—		—		—
Total		11,371		8,975		5,265		261		4,214		16		30,102
Total loans and leases	$	1,162,491	$	444,640	$	300,704	$	496,114	$	53,038	$	11,331	$	2,468,318


	December 31, 2020
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	922,153	$	417,302	$	269,350	$	625,836	$	—	$	12,622	$	2,247,263
Watch		66,287		14,218		3,296		7,673		—		137		91,611
Special mention		4,446		46		—		320		—		—		4,812
Substandard		3,967		2,020		81		261		—		30		6,359
Doubtful		—		86		—		48		—		—		134
Total		996,853		433,672		272,727		634,138		—		12,789		2,350,179

PCI Loans and Leases:
Pass		11,072		8,382		1,008		262		—		25		20,749
Watch		3,381		224		3,820		—		—		2		7,427
Special mention		19		57		—		—		—		—		76
Substandard		1,651		1,595		520		46		—		—		3,812
Doubtful		—		—		—		—		—		—		—
Total		16,123		10,258		5,348		308		—		27		32,064
Total loans and leases	$	1,012,976	$	443,930	$	278,075	$	634,446	$	—	$	12,816	$	2,382,243

Past Due Loans and Leases:

A loan or lease is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan or lease agreement. Generally, management places a loan or lease on nonaccrual when there is a clear indicator that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan or lease is 90 days past due.

The following tables present an aging analysis of our loan and lease portfolio (in thousands):


	June 30, 2021
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		PCI		Current		Total
Commercial real estate	$	—	$	—	$	—	$	859	$	859	$	11,371	$	1,150,261	$	1,162,491
Consumer real estate		258		13		—		2,676		2,947		8,975		432,718		444,640
Construction and land development		95		—		—		—		95		5,265		295,344		300,704
Commercial and industrial		1,346		296		64		138		1,844		261		494,009		496,114
Leases		45		40		—		—		85		4,214		48,739		53,038
Consumer and other		151		2		—		21		174		16		11,141		11,331
Total	$	1,895	$	351	$	64	$	3,694	$	6,004	$	30,102	$	2,432,212	$	2,468,318


	December 31, 2020
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		PCI		Current		Total
Commercial real estate	$	134	$	—	$	67	$	3,740	$	3,941	$	16,123	$	992,912	$	1,012,976
Consumer real estate		1,916		51		82		1,823		3,872		10,258		429,800		443,930
Construction and land development		245		—		—		12		257		5,348		272,470		278,075
Commercial and industrial		12		76		—		36		124		308		634,014		634,446
Leases		—		—		—		—		—		—		—		—
Consumer and other		14		5		—		22		41		27		12,748		12,816
Total	$	2,321	$	132	$	149	$	5,633	$	8,235	$	32,064	$	2,341,944	$	2,382,243

Impaired Loans and Leases:

The following is an analysis of the impaired loan and lease portfolio, including PCI loans and leases, detailing the related allowance recorded (in thousands):


	June 30, 2021						December 31, 2020
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	—	$	—	$	—	$	3,871	$	3,872	$	—
Consumer real estate		2,186		2,187		—		888		888		—
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		2,186		2,187		—		4,759		4,760		—
Impaired loans and leases with a valuation allowance:
Commercial real estate		859		859		417		—		—		—
Consumer real estate		261		264		71		428		428		116
Construction and land development		—		—		—		—		—		—
Commercial and industrial		208		208		208		146		146		121
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		1,328		1,331		696		574		574		237
PCI loans and leases:
Commercial real estate		—		—		—		—		—		—
Consumer real estate		1,201		1,332		156		1,827		2,086		88
Construction and land development		—		—		—		—		—		—
Commercial and industrial		261		231		213		270		234		218
Leases		—		—		—		—		—		—
Consumer and other		14		12		2		21		20		3
		1,476		1,575		371		2,118		2,340		309
Total impaired loans and leases	$	4,990	$	5,093	$	1,067	$	7,451	$	7,674	$	546


	Three Months Ended June 30,
	2021				2020
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	65	$	—	$	345	$	1
Consumer real estate		2,033		8		633		10
Construction and land development		—		—		304		—
Commercial and industrial		—		—		—		—
Leases		—		—		—		—
Consumer and other		—		—		—		—
		2,098		8		1,282		11
Impaired loans and leases with a valuation allowance:
Commercial real estate		2,007		2		396		—
Consumer real estate		360		3		827		5
Construction and land development		—		—		—		—
Commercial and industrial		159		3		158		3
Leases		—		—		—		—
Consumer and other		—		—		—		—
		2,526		8		1,381		8
PCI loans and leases:
Commercial real estate		—		—		490		—
Consumer real estate		1,115		21		1,168		38
Construction and land development		—		—		116		—
Commercial and industrial		263		1		338		3
Leases		—		—		—		—
Consumer and other		16		—		22		—
		1,394		22		2,134		41
Total impaired loans and leases	$	6,018	$	38	$	4,797	$	60



	Six Months Ended June 30,
	2021				2020
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	1,334	$	1	$	315	$	4
Consumer real estate		1,651		20		606		14
Construction and land development		—		—		385		—
Commercial and industrial		—		—		—		—
Leases		—		—		—		—
Consumer and other		—		—		—		—
		2,985		21		1,306		18
Impaired loans and leases with a valuation allowance:
Commercial real estate		1,338		104		264		2
Consumer real estate		383		8		882		14
Construction and land development		—		—		—		—
Commercial and industrial		154		5		158		5
Leases		—		—		—		—
Consumer and other		—		—		—		—
		1,875		117		1,304		21
PCI loans and leases:
Commercial real estate		—		—		333		1
Consumer real estate		1,165		43		1,174		39
Construction and land development		—		—		77		—
Commercial and industrial		266		2		361		3
Leases		—		—		—		—
Consumer and other		18		—		31		—
		1,449		45		1,976		43
Total impaired loans and leases	$	6,309	$	183	$	4,586	$	82

Troubled Debt Restructurings:

For the periods presented, impaired loans included loans that were classified as TDRs. The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.

In assessing whether or not a borrower is experiencing financial difficulties, the Company considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (i) the debtor is currently in payment default on any of its debt; (ii) a payment default is probable in the foreseeable future without the modification; (iii) the debtor has declared or is in the process of declaring bankruptcy; and (iv) the debtor’s projected cash flow is sufficient to satisfy contractual payments due under the original terms of the loan without a modification.

The Company considers all aspects of the modification to loan terms to determine whether or not a concession has been granted to the borrower. Key factors considered by the Company include the debtor’s ability to access funds at a market rate for debt with similar risk characteristics, the significance of the modification relative to unpaid principal balance or collateral value of the debt, and the significance of a delay in the timing of payments relative to the original contractual terms of the loan.

The most common concessions granted by the Company generally include one or more modifications to the terms of the debt, such as (i) a reduction in the interest rate for the remaining life of the debt; (ii) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk; (iii) a temporary period of interest-only payments; and (iv) a reduction in the contractual payment amount for either a short period or remaining term of the loan.

As of June 30, 2021 and December 31, 2020, management had approximately $219 thousand and $257 thousand, respectively, in loans that met the criteria for TDR, none of which were on nonaccrual. A loan is placed back on accrual status when both principal and interest are current, and it is probable that the Company will be able to collect all amounts due (both principal and interest) according to the terms of the loan agreement.

There were no loans that were modified as a TDR during the six months ended June 30, 2021, and one loan that was modified during the six months ended June 30, 2020. There were no loans that were modified as TDRs during the past six months and for which there was a subsequent payment default.

The Company began offering short-term loan modifications to assist borrowers during the COVID-19 national emergency. The Coronavirus Aid Relief and Economic Security (“CARES”) Act along with a joint agency statement issued by banking agencies, provides that short-term modifications made in response to COVID-19 does not need to be accounted for as a TDR. Accordingly, the Company does not account for such loan modifications as TDRs. See Note 1 Presentation of Financial Information for more information. At June 30, 2021, the Company had no loans remaining under COVID-19 modifications.

Foreclosure Proceedings and Balances:

As of June 30, 2021, there was one residential property secured by real estate included in other real estate owned and there were two residential real estate loans totaling $103 thousand in the process of foreclosure.

Purchased Credit Impaired Loans and Leases:

The Company has acquired loans and leases where there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans and leases are as follows (in thousands):


	June 30,		December 31,
	2021		2020
Commercial real estate	$	18,456	$	23,787
Consumer real estate		11,342		12,692
Construction and land development		858		1,812
Commercial and industrial		6,313		6,521
Leases		4,603		—
Consumer and other		94		161
Total loans and leases		41,666		44,973
Less: Remaining purchase discount		(11,564)		(12,909)
Total loans and leases, net of purchase discount		30,102		32,064
Less: Allowance for loan and leases losses		(371)		(309)
Carrying amount, net of allowance	$	29,731	$	31,755

Activity related to the accretable yield on loans and leases acquired with deteriorated credit quality is as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Accretable yield, beginning of period	$	14,705	$	10,979	$	16,889	$	8,454
Additions		649		—		649		2,515
Accretion income		(1,098)		(1,057)		(3,029)		(3,134)
Reclassification		1,340		247		1,677		2,163
Other changes, net		(1,074)		1,608		(1,664)		1,779
Accretable yield, end of period	$	14,522	$	11,777	$	14,522	$	11,777