XML 24 R11.htm IDEA: XBRL DOCUMENT

Note 3 - Loans and Allowance for Loan Losses

12 Months Ended

Dec. 31, 2021

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 3 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans originated for investment are stated at their principal amount outstanding adjusted for partial charge-offs, the allowance, and net deferred loan fees and costs. Interest income on loans is accrued over the term of the loans primarily using the simple interest method based on the principal balance outstanding. Interest is not accrued on loans where collectability is uncertain. Accrued interest is included in other assets in the Consolidated Balance Sheets. Loan origination fees and certain direct costs incurred to extend credit are deferred and amortized over the term of the loan or loan commitment period as an adjustment to the related loan yield.

Year-end loans disaggregated by class of loan within the loan portfolio segments were as follows:

	December 31, 2021					December 31, 2020					Percent Increase
	Balance		%			Balance		%			(Decrease)

Commercial:
Commercial and industrial (1)	$	1,137,419,000		32.9	%	$	1,145,423,000		35.9	%		(0.7	%)
Vacant land, land development, and residential construction		43,239,000		1.3			55,055,000		1.7			(21.5	)
Real estate – owner occupied		565,758,000		16.4			529,953,000		16.6			6.8
Real estate – non-owner occupied		1,027,415,000		29.7			917,436,000		28.7			12.0
Real estate – multi-family and residential rental		176,593,000		5.1			146,095,000		4.6			20.9
Total commercial		2,950,424,000		85.4			2,793,962,000		87.5			5.6

Retail:
Home equity and other		60,488,000		1.8			61,620,000		1.9			(1.8	)
1-4 family mortgages		442,547,000		12.8			337,888,000		10.6			31.0
Total retail		503,035,000		14.6			399,508,000		12.5			25.9

Total loans	$	3,453,459,000		100.0	%	$	3,193,470,000		100.0	%		8.1	%

(1) For December 31, 2021, and December 31, 2020, includes $40.1 million and $365 million in loans originated under the Paycheck Protection Program, respectively.

Concentrations within the loan portfolio were as follows at year-end:

	2021					2020
			Percentage					Percentage
	Balance		of Loan Portfolio			Balance		of Loan Portfolio
Commercial real estate loans to lessors of non-residential buildings	$	737,589,000		21.4	%	$	649,162,000		20.3	%

Year-end nonperforming loans were as follows:

	2021		2020

Loans past due 90 days or more still accruing interest	$	155,000	$	0
Nonaccrual loans		2,313,000		3,384,000
Total nonperforming loans	$	2,468,000	$	3,384,000

The recorded principal balance of nonperforming loans was as follows:

	December 31, 2021		December 31, 2020
Commercial:
Commercial and industrial	$	663,000	$	172,000
Vacant land, land development, and residential construction		0		0
Real estate – owner occupied		0		619,000
Real estate – non-owner occupied		0		22,000
Real estate – multi-family and residential rental		0		0
Total commercial		663,000		813,000

Retail:
Home equity and other		119,000		242,000
1-4 family mortgages		1,686,000		2,329,000
Total retail		1,805,000		2,571,000

Total nonperforming loans	$	2,468,000	$	3,384,000

An age analysis of past due loans is as follows as of December 31, 2021:

	30 – 59 Days Past Due		60 – 89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Current		Total Loans		Recorded Balance > 89 Days and Accruing

Commercial:
Commercial and industrial	$	14,000	$	0	$	193,000	$	207,000	$	1,137,212,000	$	1,137,419,000	$	155,000
Vacant land, land development, and residential construction		13,000		0		0		13,000		43,226,000		43,239,000		0
Real estate – owner occupied		0		0		0		0		565,758,000		565,758,000		0
Real estate – non-owner occupied		0		0		0		0		1,027,415,000		1,027,415,000		0
Real estate – multi-family and residential rental		0		0		0		0		176,593,000		176,593,000		0
Total commercial		27,000		0		193,000		220,000		2,950,204,000		2,950,424,000		155,000

Retail:
Home equity and other		132,000		2,000		20,000		154,000		60,334,000		60,488,000		0
1- 4 family mortgages		1,265,000		241,000		82,000		1,588,000		440,959,000		442,547,000		0
Total retail		1,397,000		243,000		102,000		1,742,000		501,293,000		503,035,000		0

Total past due loans	$	1,424,000	$	243,000	$	295,000	$	1,962,000	$	3,451,497,000	$	3,453,459,000	$	155,000

An age analysis of past due loans is as follows as of December 31, 2020:

	30 – 59 Days Past Due		60 – 89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Current		Total Loans		Recorded Balance > 89 Days and Accruing

Commercial:
Commercial and industrial	$	261,000	$	172,000	$	0	$	433,000	$	1,144,990,000	$	1,145,423,000	$	0
Vacant land, land development, and residential construction		0		0		0		0		55,055,000		55,055,000		0
Real estate – owner occupied		0		197,000		421,000		618,000		529,335,000		529,953,000		0
Real estate – non-owner occupied		0		0		23,000		23,000		917,413,000		917,436,000		0
Real estate – multi-family and residential rental		0		0		0		0		146,095,000		146,095,000		0
Total commercial		261,000		369,000		444,000		1,074,000		2,792,888,000		2,793,962,000		0

Retail:
Home equity and other		112,000		65,000		54,000		231,000		61,389,000		61,620,000		0
1- 4 family mortgages		1,147,000		247,000		342,000		1,736,000		336,152,000		337,888,000		0
Total retail		1,259,000		312,000		396,000		1,967,000		397,541,000		399,508,000		0

Total past due loans	$	1,520,000	$	681,000	$	840,000	$	3,041,000	$	3,190,429,000	$	3,193,470,000	$	0

Impaired loans with no related allowance recorded were as follows as of December 31, 2021:

	Unpaid Contractual Principal Balance		Recorded Principal Balance		Related Allowance	Year-To-Date Average Recorded Principal Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	2,893,000	$	2,818,000		$	3,632,000
Vacant land, land development and residential construction		0		0			0
Real estate – owner occupied		9,674,000		9,674,000			12,634,000
Real estate – non-owner occupied		0		0			131,000
Real estate – multi-family and residential rental		91,000		91,000			37,000
Total commercial		12,658,000		12,583,000			16,434,000
Retail:
Home equity and other		1,173,000		1,107,000			1,096,000
1-4 family mortgages		3,166,000		2,025,000			2,327,000
Total retail		4,339,000		3,132,000			3,423,000

Total with no related allowance recorded	$	16,997,000	$	15,715,000		$	19,857,000

Impaired loans with an allowance recorded and total impaired loans were as follows as of December 31, 2021:

	Unpaid Contractual Principal Balance		Recorded Principal Balance		Related Allowance		Year-To-Date Average Recorded Principal Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	2,192,000	$	2,192,000	$	266,000	$	1,732,000
Vacant land, land development and residential construction		0		0		0		0
Real estate – owner occupied		761,000		761,000		84,000		803,000
Real estate – non-owner occupied		146,000		146,000		4,000		154,000
Real estate – multi-family and residential rental		0		0		0		0
Total commercial		3,099,000		3,099,000		354,000		2,689,000
Retail:
Home equity and other		160,000		140,000		123,000		214,000
1-4 family mortgages		412,000		412,000		69,000		537,000
Total retail		572,000		552,000		192,000		751,000

Total with an allowance recorded	$	3,671,000	$	3,651,000	$	546,000	$	3,440,000

Total impaired loans:
Commercial	$	15,757,000	$	15,682,000	$	354,000	$	19,123,000
Retail		4,911,000		3,684,000		192,000		4,174,000
Total impaired loans	$	20,668,000	$	19,366,000	$	546,000	$	23,297,000

Impaired loans with no related allowance recorded were as follows as of December 31, 2020:

	Unpaid Contractual Principal Balance		Recorded Principal Balance		Related Allowance	Year-To-Date Average Recorded Principal Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	6,242,000	$	6,242,000		$	7,874,000
Vacant land, land development and residential construction		0		0			187,000
Real estate – owner occupied		14,782,000		14,593,000			5,361,000
Real estate – non-owner occupied		341,000		341,000			227,000
Real estate – multi-family and residential rental		0		0			3,000
Total commercial		21,365,000		21,176,000			13,652,000
Retail:
Home equity and other		1,072,000		987,000			1,216,000
1-4 family mortgages		4,455,000		2,575,000			2,447,000
Total retail		5,527,000		3,562,000			3,663,000

Total with no related allowance recorded	$	26,892,000	$	24,738,000		$	17,315,000

Impaired loans with an allowance recorded and total impaired loans were as follows as of December 31, 2020:

	Unpaid Contractual Principal Balance		Recorded Principal Balance		Related Allowance		Year-To-Date Average Recorded Principal Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	343,000	$	343,000	$	53,000	$	971,000
Vacant land, land development and residential construction		0		0		0		77,000
Real estate – owner occupied		763,000		734,000		77,000		578,000
Real estate – non-owner occupied		162,000		162,000		8,000		100,000
Real estate – multi-family and residential rental		0		0		0		0
Total commercial		1,268,000		1,239,000		138,000		1,726,000
Retail:
Home equity and other		300,000		283,000		241,000		421,000
1-4 family mortgages		698,000		698,000		172,000		595,000
Total retail		998,000		981,000		413,000		1,016,000

Total with an allowance recorded	$	2,266,000	$	2,220,000	$	551,000	$	2,742,000

Total impaired loans:
Commercial	$	22,633,000	$	22,415,000	$	138,000	$	15,378,000
Retail		6,525,000		4,543,000		413,000		4,679,000
Total impaired loans	$	29,158,000	$	26,958,000	$	551,000	$	20,057,000

Impaired loans for which no allocation of the allowance for loan losses has been made generally reflect situations whereby the loans have been charged-down to estimated fair value. Interest income recognized on accruing troubled debt restructurings totaled $1.5 million in 2021, and $1.3 million in 2020 and 2019. Interest income recognized on nonaccrual loans totaled less than $0.1 million in 2021, 2020 and 2019, reflecting the collection of interest at the time of principal pay-off. Lost interest income on nonaccrual loans totaled $0.1 million in 2021, $0.2 million in 2020, and $0.1 million in 2019.

Credit Quality Indicators. We utilize a comprehensive grading system for our commercial loans. All commercial loans are graded on a ten grade rating system. The rating system utilizes standardized grade paradigms that analyze several critical factors such as cash flow, operating performance, financial condition, collateral, industry condition and management. All commercial loans are graded at inception and reviewed and, if appropriate, re-graded at various intervals thereafter. The risk assessment for retail loans is primarily based on the type of collateral.

Loans by credit quality indicators were as follows as of December 31, 2021:

Commercial credit exposure – credit risk profiled by internal credit risk grades:

	Commercial and Industrial		Commercial Vacant Land, Land Development, and Residential Construction		Commercial Real Estate - Owner Occupied		Commercial Real Estate - Non-Owner Occupied		Commercial Real Estate - Multi-Family and Residential Rental

Internal credit risk grade groupings:
Grades 1 – 4 (1)	$	729,224,000	$	28,390,000	$	346,082,000	$	503,482,000	$	119,473,000
Grades 5 – 7		398,378,000		14,730,000		208,060,000		511,280,000		56,968,000
Grades 8 – 9		9,817,000		119,000		11,616,000		12,653,000		152,000
Total commercial	$	1,137,419,000	$	43,239,000	$	565,758,000	$	1,027,415,000	$	176,593,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail Home Equity and Other		Retail 1-4 Family Mortgages

Performing		60,369,000		440,861,000
Nonperforming		119,000		1,686,000
Total retail	$	60,488,000	$	442,547,000

(1)

Included in Commercial and Industrial Loans Grades 1 – 4 are $40.1 million of loans originated under the Paycheck Protection Program.

Loans by credit quality indicators were as follows as of December 31, 2020:

Commercial credit exposure – credit risk profiled by internal credit risk grades:

	Commercial and Industrial		Commercial Vacant Land, Land Development, and Residential Construction		Commercial Real Estate - Owner Occupied		Commercial Real Estate - Non-Owner Occupied		Commercial Real Estate - Multi-Family and Residential Rental

Internal credit risk grade groupings:
Grades 1 – 4 (1)	$	828,706,000	$	22,547,000	$	315,134,000	$	396,700,000	$	91,711,000
Grades 5 – 7		306,614,000		32,398,000		185,541,000		520,395,000		54,111,000
Grades 8 – 9		10,103,000		110,000		29,278,000		341,000		273,000
Total commercial	$	1,145,423,000	$	55,055,000	$	529,953,000	$	917,436,000	$	146,095,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail Home Equity and Other		Retail 1-4 Family Mortgages

Performing		61,378,000		335,559,000
Nonperforming		242,000		2,329,000
Total retail	$	61,620,000	$	337,888,000

(1)

Included in Commercial and Industrial Loans Grades 1 – 4 are $365 million of loans originated under the Paycheck Protection Program.

All commercial loans are graded using the following criteria:

Grade 1.

“Exceptional” Loans with this rating contain very little, if any, risk.

Grade 2.

“Outstanding” Loans with this rating have excellent and stable sources of repayment and conform to bank policy and regulatory requirements.

Grade 3.

“Very Good” Loans with this rating have strong sources of repayment and conform to bank policy and regulatory requirements. These are loans for which repayment risks are acceptable.

Grade 4.

“Good” Loans with this rating have solid sources of repayment and conform to bank policy and regulatory requirements. These are loans for which repayment risks are modest.

Grade 5.

“Acceptable” Loans with this rating exhibit acceptable sources of repayment and conform with most bank policies and all regulatory requirements. These are loans for which repayment risks are satisfactory.

Grade 6.

“Monitor” Loans with this rating are considered to have emerging weaknesses which may include negative current cash flow, high leverage, or operating losses. Generally, if further deterioration is observed, these credits will be downgraded to the criticized asset report.

Grade 7.

“Special Mention” Loans with this rating have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan at some future date.

Grade 8.

“Substandard” Loans with this rating are inadequately protected by current sound net worth, paying capacity of the obligor, or of the pledged collateral, if any. A Substandard loan normally has one or more well-defined weaknesses that jeopardize the repayment of the debt. They are characterized by the distinct possibility of loss if the deficiencies are not corrected.

Grade 9.

“Doubtful” Loans with this rating exhibit all the weaknesses inherent in the Substandard classification and where collection or liquidation in full is highly questionable and improbable.

Grade 10.

“Loss” Loans with this rating are considered uncollectable, and of such little value that continuance as an active asset is not warranted.

The primary risk elements with respect to commercial loans are the financial condition of the borrower, the sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers and employ a disciplined and formalized review of the existence of collateral and its value. The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments. We have a reporting system that monitors past due loans and have adopted policies to pursue creditors’ rights in order to preserve our collateral position.

The allowance for loan losses and recorded investments in loans for the year-ended December 31, 2021 are as follows (dollars in thousands):

	Commercial and industrial			Commercial vacant land, land development and residential construction			Commercial real estate – owner occupied			Commercial real estate – non-owner occupied			Commercial real estate – multi-family and residential rental			Home equity and other			1 – 4 family mortgages			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	9,424		$	679		$	8,246		$	13,611		$	1,819		$	889		$	3,240		$	59		$	37,967
Provision for loan losses		2,030			(618	)		(3,308	)		(310	)		(150	)		(301	)		(1,629	)		(14	)		(4,300	)
Charge-offs		(882	)		(15	)		(12	)		0			0			(43	)		(92	)		0			(1,044	)
Recoveries		210			374			1,119			0			26			81			930			0			2,740
Ending balance	$	10,782		$	420		$	6,045		$	13,301		$	1,695		$	626		$	2,449		$	45		$	35,363

Ending balance: individually evaluated for impairment	$	266		$	0		$	84		$	0		$	4		$	123		$	69		$	0		$	546

Ending balance: collectively evaluated for impairment	$	10,516		$	420		$	5,961		$	13,301		$	1,691		$	503		$	2,380		$	45		$	34,817

Total loans (*):
Ending balance	$	1,097,309		$	43,239		$	565,758		$	1,027,415		$	176,593		$	60,488		$	442,547					$	3,413,349

Ending balance: individually evaluated for impairment	$	5,010		$	0		$	10,435		$	146		$	91		$	1,247		$	2,437					$	19,366

Ending balance: collectively evaluated for impairment	$	1,092,299		$	43,239		$	555,323		$	1,027,269		$	176,502		$	59,241		$	440,110					$	3,393,983

(*) Excludes $40.1 million in loans originated under the Paycheck Protection Program.

The allowance for loan losses and recorded investments in loans for the year-ended December 31, 2020 are as follows (dollars in thousands):

	Commercial and industrial			Commercial vacant land, land development and residential construction			Commercial real estate – owner occupied			Commercial real estate – non-owner occupied		Commercial real estate – multi-family and residential rental			Home equity and other			1 – 4 family mortgages			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	6,659		$	466		$	6,291		$	6,761	$	893		$	861			1,888		$	70		$	23,889
Provision for loan losses		2,921			289			1,881			6,837		907			58			1,168			(11	)		14,050
Charge-offs		(247	)		(113	)		(235	)		0		(18	)		(96	)		(129	)		0			(838	)
Recoveries		91			37			309			13		37			66			313			0			866
Ending balance	$	9,424		$	679		$	8,246		$	13,611	$	1,819		$	889		$	3,240		$	59		$	37,967

Ending balance: individually evaluated for impairment	$	53		$	0		$	77		$	8	$	0		$	241		$	172		$	0		$	551

Ending balance: collectively evaluated for impairment	$	9,371		$	679		$	8,169		$	13,603	$	1,819		$	648		$	3,068		$	59		$	37,416

Total loans (*):
Ending balance	$	780,164		$	55,055		$	529,953		$	917,436	$	146,095		$	61,620		$	337,888					$	2,828,211

Ending balance: individually evaluated for impairment	$	6,585		$	0		$	15,327		$	503	$	0		$	1,270		$	3,273					$	26,958

Ending balance: collectively evaluated for impairment	$	773,579		$	55,055		$	514,626		$	916,933	$	146,095		$	60,350		$	334,615					$	2,801,253

(*) Excludes $365 million in loans originated under the Paycheck Protection Program.

The allowance for loan losses and recorded investments in loans for the year-ended December 31, 2019 are as follows (dollars in thousands):

	Commercial and industrial			Commercial vacant land, land development and residential construction			Commercial real estate – owner occupied			Commercial real estate – non-owner occupied			Commercial real estate – multi-family and residential rental		Home equity and other			1 – 4 family mortgages			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	6,168		$	337		$	5,866		$	6,408		$	840	$	883			1,834		$	44	$	22,380
Provision for loan losses		764			105			331			342			36		(19	)		165			26		1,750
Charge-offs		(393	)		(12	)		(48	)		(2	)		0		(66	)		(362	)		0		(883	)
Recoveries		120			36			142			13			17		63			251			0		642
Ending balance	$	6,659		$	466		$	6,291		$	6,761		$	893	$	861		$	1,888		$	70	$	23,889

Ending balance: individually evaluated for impairment	$	202		$	0		$	982		$	0		$	0	$	356		$	83		$	0	$	1,623

Ending balance: collectively evaluated for impairment	$	6,457		$	466		$	5,309		$	6,761		$	893	$	505		$	1,805		$	70	$	22,266

Total loans:
Ending balance	$	846,551		$	56,119		$	579,003		$	835,346		$	124,525	$	75,374		$	339,749				$	2,856,667

Ending balance: individually evaluated for impairment	$	8,587		$	85		$	1,745		$	178		$	9	$	1,694		$	2,324				$	14,622

Ending balance: collectively evaluated for impairment	$	837,964		$	56,034		$	577,258		$	835,168		$	124,516	$	73,680		$	337,425				$	2,842,045

Loans modified as troubled debt restructurings during the year-ended December 31, 2021 were as follows:

			Pre-		Post-
			Modification		Modification
			Recorded		Recorded
	Number of		Principal		Principal
	Contracts		Balance		Balance

Commercial:
Commercial and industrial		10	$	3,017,000	$	3,016,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		1		692,000		692,000
Real estate – non-owner occupied		0		0		0
Real estate – multi-family and residential rental		1		93,000		93,000
Total commercial		12		3,802,000		3,801,000

Retail:
Home equity and other		4		485,000		482,000
1-4 family mortgages		2		46,000		46,000
Total retail		6		531,000		528,000

Total		18	$	4,333,000	$	4,329,000

Loans modified as troubled debt restructurings during the year-ended December 31, 2020 were as follows:

			Pre-		Post-
			Modification		Modification
			Recorded		Recorded
	Number of		Principal		Principal
	Contracts		Balance		Balance

Commercial:
Commercial and industrial		13	$	6,914,000	$	7,717,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		8		14,663,000		14,663,000
Real estate – non-owner occupied		2		319,000		318,000
Real estate – multi-family and residential rental		0		0		0
Total commercial		23		21,896,000		22,698,000

Retail:
Home equity and other		16		451,000		452,000
1-4 family mortgages		6		151,000		148,000
Total retail		22		602,000		600,000

Total		45	$	22,498,000	$	23,298,000

The following loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due during the year-ended December 31, 2021 (amounts as of period end):

	Number of Contracts		Recorded Principal Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		0		0
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0

Total		0	$	0

The following loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due during the year-ended December 31, 2020 (amounts as of period end):

	Number of Contracts		Recorded Principal Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		0		0

Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0

Total		0	$	0

Activity for loans categorized as troubled debt restructurings during the year-ended December 31, 2021 is as follows:

	Commercial and			Commercial Vacant Land, Land Development, and Residential		Commercial Real Estate - Owner			Commercial Real Estate - Non-Owner			Commercial Real Estate - Multi-Family and Residential
	Industrial			Construction		Occupied			Occupied			Rental

Commercial Loan Portfolio:
Beginning Balance	$	6,414,000		$	0	$	14,797,000		$	480,000		$	0
Charge-Offs		(17,000	)		0		0			0			0
Payments		(4,278,000	)		0		(5,048,000	)		(334,000	)		(1,000	)
Transfers to ORE		0			0		0			0			0
Net Additions/Deletions		2,854,000			0		686,000			0			92,000
Ending Balance	$	4,973,000		$	0	$	10,435,000		$	146,000		$	91,000

	Retail Home Equity and Other			Retail 1-4 Family Mortgages

Retail Loan Portfolio:
Beginning Balance	$	1,146,000		$	806,000
Charge-Offs		0			0
Payments		(426,000	)		(224,000	)
Transfers to ORE		0			0
Net Additions/Deletions		482,000			45,000
Ending Balance	$	1,202,000		$	627,000

Activity for loans categorized as troubled debt restructurings during the year-ended December 31, 2020 is as follows:

	Commercial and			Commercial Vacant Land, Land Development, and Residential			Commercial Real Estate - Owner			Commercial Real Estate - Non-Owner			Commercial Real Estate - Multi-Family and Residential
	Industrial			Construction			Occupied			Occupied			Rental

Commercial Loan Portfolio:
Beginning Balance	$	8,587,000		$	85,000		$	1,145,000		$	178,000		$	7,000
Charge-Offs		0			0			0			0			0
Payments		(11,260,000	)		(85,000	)		(3,765,000	)		(585,000	)		(7,000	)
Transfers to ORE		0			0			0			0			0
Net Additions/Deletions		9,087,000			0			17,417,000			887,000			0
Ending Balance	$	6,414,000		$	0		$	14,797,000		$	480,000		$	0

	Retail Home Equity and Other			Retail 1-4 Family Mortgages

Retail Loan Portfolio:
Beginning Balance	$	1,415,000		$	724,000
Charge-Offs		0			0
Payments		(881,000	)		(68,000	)
Transfers to ORE		0			0
Net Additions/Deletions		612,000			150,000
Ending Balance	$	1,146,000		$	806,000

Activity for loans categorized as troubled debt restructurings during the year-ended December 31, 2019 is as follows:

	Commercial and Industrial			Commercial Vacant Land, Land Development, and Residential Construction			Commercial Real Estate - Owner Occupied			Commercial Real Estate - Non-Owner Occupied			Commercial Real Estate - Multi-Family and Residential Rental

Commercial Loan Portfolio:
Beginning Balance	$	14,138,000		$	0		$	3,100,000		$	210,000		$	24,000
Charge-Offs		0			0			0			0			0
Payments		(20,364,000	)		(2,000	)		(3,820,000	)		(32,000	)		(17,000	)
Transfers to ORE		0			0			(97,000	)		0			0
Net Additions/Deletions		14,813,000			87,000			1,962,000			0			0
Ending Balance	$	8,587,000		$	85,000		$	1,145,000		$	178,000		$	7,000

	Retail Home Equity and Other			Retail 1-4 Family Mortgages

Retail Loan Portfolio:
Beginning Balance	$	1,402,000		$	578,000
Charge-Offs		(18,000	)		0
Payments		(272,000	)		(162,000	)
Transfers to ORE		0			0
Net Additions/Deletions		303,000			308,000
Ending Balance	$	1,415,000		$	724,000

The allowance related to loans categorized as troubled debt restructurings was as follows:

	December 31, 2021		December 31, 2020
Commercial:
Commercial and industrial	$	266,000	$	53,000
Vacant land, land development, and residential construction		0		0
Real estate – owner occupied		84,000		59,000
Real estate – non-owner occupied		5,000		8,000
Real estate – multi-family and residential rental		0		0
Total commercial		355,000		120,000

Retail:
Home equity and other		95,000		202,000
1-4 family mortgages		69,000		145,000
Total retail		164,000		347,000

Total related allowance	$	519,000	$	467,000

In general, our policy dictates that a renewal or modification of an 8- or 9-rated commercial loan meets the criteria of a troubled debt restructuring, although we review and consider all renewed and modified loans as part of our troubled debt restructuring assessment procedures. Loan relationships rated 8 contain significant financial weaknesses, resulting in a distinct possibility of loss, while relationships rated 9 reflect vital financial weaknesses, resulting in a highly questionable ability on our part to collect principal. We believe borrowers warranting such ratings would have difficulty obtaining financing from other market participants. Thus, due to the lack of comparable market rates for loans with similar risk characteristics, we believe 8- or 9-rated loans renewed or modified were done so at below market rates. Loans that are identified as troubled debt restructurings are considered impaired and are individually evaluated for impairment when assessing these credits in our allowance for loan losses calculation.