
($ in thousands)	September 30, 2021		December 31, 2020
Real estate loans:
Commercial property	$	1,054,351	$	880,736
Residential property	201,635		198,431
SBA property	127,845		126,570
Construction	6,572		15,199
Total real estate loans	1,390,403		1,220,936
Commercial and industrial loans:
Commercial term	74,390		87,250
Commercial lines of credit	101,456		96,087
SBA commercial term	18,338		21,878
SBA PPP	101,901		135,654
Total commercial and industrial loans	296,085		340,869
Other consumer loans	21,390		21,773
Loans held-for-investment	1,707,878		1,583,578
Allowance for loan losses	(23,807)		(26,510)
Net loans held-for-investment	$	1,684,071	$	1,557,068

In the ordinary course of business, the Company may grant loans to certain officers and directors, and the companies with which they are associated. As of September 30, 2021 and December 31, 2020, the Company had $398 thousand and $3.9 million, respectively, of such loans outstanding.

The following table presents the activities in allowance for loan losses by portfolio segment, which is consistent with the Company’s methodology for determining allowance for loan losses, for the three months ended September 30, 2021 and 2020:



($ in thousands)	Real Estate		Commercial and Industrial		Other Consumer		Total
Balance at July 1, 2021	$	18,672	$	5,866	$	351	$	24,889
Charge-offs	—		(84)		(43)		(127)
Recoveries on loans previously charged off	—		94		4		98
Provision (reversal) for loan losses	(733)		(336)		16		(1,053)
Balance at September 30, 2021	$	17,939	$	5,540	$	328	$	23,807

Balance at July 1, 2020	$	15,545	$	4,337	$	366	$	20,248
Charge-offs	—		—		(102)		(102)
Recoveries on loans previously charged off	—		18		56		74
Provision (reversal) for loan losses	2,556		1,686		84		4,326
Balance at September 30, 2020	$	18,101	$	6,041	$	404	$	24,546



($ in thousands)	Real Estate		Commercial and Industrial		Other Consumer		Total
Balance at January 1, 2021	$	18,894	$	7,222	$	394	$	26,510
Charge-offs	(18)		(100)		(87)		(205)
Recoveries on loans previously charged off	47		553		36		636
Provision (reversal) for loan losses	(984)		(2,135)		(15)		(3,134)
Balance at September 30, 2021	$	17,939	$	5,540	$	328	$	23,807

Balance at January 1, 2020	$	9,854	$	4,354	$	172	$	14,380
Charge-offs	(138)		(916)		(241)		(1,295)
Recoveries on loans previously charged off	56		223		105		384
Provision (reversal) for loan losses	8,329		2,380		368		11,077
Balance at September 30, 2020	$	18,101	$	6,041	$	404	$	24,546


($ in thousands)	Real Estate		Commercial and Industrial		Other Consumer		Total
September 30, 2021
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	—	$	—	$	—
Collectively evaluated for impairment	17,939		5,540		328		23,807
Total	$	17,939	$	5,540	$	328	$	23,807
Loans receivable:
Individually evaluated for impairment	$	1,344	$	325	$	—	$	1,669
Collectively evaluated for impairment	1,389,059		295,760		21,390		1,706,209
Total	$	1,390,403	$	296,085	$	21,390	$	1,707,878
December 31, 2020
Allowance for loan losses:
Individually evaluated for impairment	$	3	$	2	$	—	$	5
Collectively evaluated for impairment	18,891		7,220		394		26,505
Total	$	18,894	$	7,222	$	394	$	26,510
Loans receivable:
Individually evaluated for impairment	$	2,200	$	1,531	$	—	$	3,731
Collectively evaluated for impairment	1,218,736		339,338		21,773		1,579,847
Total	$	1,220,936	$	340,869	$	21,773	$	1,583,578

The Company classifies loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans in regards to credit risk. This analysis typically includes non-homogeneous loans, such as commercial property and commercial and industrial loans, and is performed on an ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings:

Special Mention - Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.


($ in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
September 30, 2021
Real estate loans:
Commercial property	$	1,040,685	$	11,801	$	1,865	$	—	$	1,054,351
Residential property	201,635		—		—		—		201,635
SBA property	125,672		254		1,919		—		127,845
Construction	6,572		—		—		—		6,572
Commercial and industrial loans:
Commercial term	69,694		3,550		1,146		—		74,390
Commercial lines of credit	100,007		1,449		—		—		101,456
SBA commercial term	17,695		261		382		—		18,338
SBA PPP	101,901		—		—		—		101,901
Other consumer loans	21,357		—		33		—		21,390
Total	$	1,685,218	$	17,315	$	5,345	$	—	$	1,707,878
December 31, 2020
Real estate loans:
Commercial property	$	866,508	$	10,268	$	3,960	$	—	$	880,736
Residential property	198,242		—		189		—		198,431
SBA property	123,147		251		3,172		—		126,570
Construction	15,199		—		—		—		15,199
Commercial and industrial loans:
Commercial term	81,724		4,362		1,164		—		87,250
Commercial lines of credit	93,883		1,299		905		—		96,087
SBA commercial term	20,923		281		674		—		21,878
SBA PPP	135,654		—		—		—		135,654
Other consumer loans	21,707		—		66		—		21,773
Total	$	1,556,987	$	16,461	$	10,130	$	—	$	1,583,578

The Company had no loans under modified terms related to the COVID-19 pandemic as of September 30, 2021. The following table presents the risk categories for the recorded investment in loans under modified terms related to the COVID-19 pandemic by portfolio segment as of December 31, 2020:


($ in thousands)	Pass		Special Mention		Substandard		Doubtful		Total













December 31, 2020
Real estate loans:
Commercial property	$	13,158	$	10,268	$	706	$	—	$	24,132
Residential property	425		—		—		—		425
SBA property	3,941		251		—		—		4,192

Commercial and industrial loans:
Commercial term	—		4,362		1,165		—		5,527

SBA commercial term	1,769		—		72		—		1,841

Total	$	19,293	$	14,881	$	1,943	$	—	$	36,117


	Still Accruing
($ in thousands)	30 to 59 Days Past Due		60 to 89 Days Past Due		90 or More Days Past Due		Nonaccrual		Total Past Due and Nonaccrual
September 30, 2021
Real estate loans:

Residential property	$	189	$	—	$	—	$	—	$	189
SBA property	—		—		—		766		766

Commercial and industrial loans:
Commercial term	—		—		3		—		3

SBA commercial term	—		—		—		314		314
SBA PPP	62		—		—		—		62
Other consumer loans	41		—		—		33		74
Total	$	292	$	—	$	3	$	1,113	$	1,408
December 31, 2020
Real estate loans:
Commercial property	$	—	$	—	$	—	$	524	$	524
Residential property	182		—		—		189		371
SBA property	—		—		—		885		885

Commercial and industrial loans:

Commercial lines of credit	—		—		—		904		904
SBA commercial term	—		—		—		595		595
Other consumer loans	120		36		—		66		222
Total	$	302	$	36	$	—	$	3,163	$	3,501

The following table presents loans individually evaluated for impairment by portfolio segment as of the dates indicated. The recorded investment presents customer balances net of any partial charge-offs recognized on the loans and net of any deferred fees and costs.


	With No Allowance Recorded				With an Allowance Recorded
($ in thousands)	Recorded Investment		Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance		Related Allowance
September 30, 2021
Real estate loans:
Commercial property	$	328	$	327	$	—	$	—	$	—

SBA property	1,016		1,062		—		—		—

Commercial and industrial loans:
Commercial term	5		5		—		—		—

SBA commercial term	320		332		—		—		—

Total	$	1,669	$	1,726	$	—	$	—	$	—
December 31, 2020
Real estate loans:
Commercial property	$	856	$	855	$	—	$	—	$	—
Residential property	189		189		—		—		—
SBA property	1,108		1,198		47		45		3

Commercial and industrial loans:
Commercial term	18		18		—		—		—
Commercial lines of credit	905		905		—		—		—
SBA commercial term	592		632		16		18		2

Total	$	3,668	$	3,797	$	63	$	63	$	5


	Three Months Ended September 30,
	2021				2020
($ in thousands)	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
Real estate loans:
Commercial property	$	329	$	6	$	336	$	6

SBA property	1,026		3		1,203		4

Commercial and industrial loans:
Commercial term	8		—		24		—
Commercial lines of credit	—		—		1,747		—
SBA commercial term	327		—		395		—

Total	$	1,690	$	9	$	3,705	$	10


	Nine Months Ended September 30,
	2021				2020
($ in thousands)	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
Real estate loans:
Commercial property	$	330	$	17	$	337	$	17

SBA property	1,140		13		1,554		13

Commercial and industrial loans:
Commercial term	12		—		25		1
Commercial lines of credit	—		—		2,085		—
SBA commercial term	410		1		451		1

Total	$	1,892	$	31	$	4,452	$	32


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2021		2020		2021		2020
Interest income that would have been recognized had impaired loans performed in accordance with their original terms	$	23	$	53	$	78	$	198
Less: interest income recognized on impaired loans on a cash basis	(9)		(10)		(31)		(32)
Interest income foregone on impaired loans	$	14	$	43	$	47	$	166


	September 30, 2021						December 31, 2020
($ in thousands)	Accruing		Nonaccrual		Total		Accruing		Nonaccrual		Total
Real estate loans:
Commercial property	$	328	$	—	$	328	$	333	$	—	$	333

SBA property	250		26		276		270		5		275

Commercial and industrial loans:
Commercial term	5		—		5		18		—		18

SBA commercial term	6		—		6		13		—		13

Total	$	589	$	26	$	615	$	634	$	5	$	639

There were no new loans that were modified as TDRs for the three months ended September 30, 2021 or 2020. The following table presents information on new loans that were modified as TDRs for the nine months ended September 30, 2021 and 2020:


	Nine Months Ended September 30,
	2021					2020
($ in thousands)	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





Commercial and industrial loans:


SBA commercial term (1)	—	$	—	$	—	2	$	37	$	37

Total	—	$	—	$	—	2	$	37	$	37

The determination of the allowance for loan losses related to TDRs depends on the collectability of principal and interest, according to the modified repayment terms. Loans that were modified as TDRs were individually evaluated for impairment and the Company allocated no allowance for loan losses as of September 30, 2021 and December 31, 2020.

There were no loans that were modified as TDRs for which there was a payment default within twelve months following the modification for the three months ended September 30, 2021 or 2020. The following table presents information on loans that were modified as TDRs for which there was a payment default within twelve months following the modification for the nine months ended September 30, 2021 and 2020:


	Nine Months Ended September 30,
	2021			2020
($ in thousands)	Number of Loans	Recorded Investment at Date of Default		Number of Loans	Recorded Investment at Date of Default





Commercial and industrial loans:


SBA commercial term	—	$	—	1	$	26

Total	—	$	—	1	$	26


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2021		2020		2021		2020
Real estate loans:
Commercial property	$	3,452	$	—	$	5,162	$	—
Residential property	—		—		189		1,125


Commercial and industrial loans:


SBA commercial term	—		—		—		230

Total	$	3,452	$	—	$	5,351	$	1,355

Loans held-for-sale are carried at the lower of cost or fair value. When a determination is made at the time of commitment to originate as held-for-investment, it is the Company’s intent to hold these loans to maturity or for the “foreseeable future,” subject to periodic reviews under the Company’s management evaluation processes, including asset/liability management and credit risk management. When the Company subsequently changes its intent to hold certain loans, the loans are transferred to held-for-sale at the lower of cost or fair value. Certain loans are transferred to held-for-sale with write-downs to allowance for loan losses.