Note 5 - Loans and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

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

The Company’s loan portfolio consists of the following categories of loans as of the dates presented (dollars in thousands).

	March 31, 2021		December 31, 2020
Construction and development	$	190,816	$	206,011
1-4 Family		341,266		339,525
Multifamily		60,844		60,724
Farmland		24,145		26,547
Commercial real estate		829,880		812,395
Total mortgage loans on real estate		1,446,951		1,445,202
Commercial and industrial		380,534		394,497
Consumer		18,485		20,619
Total loans	$	1,845,970	$	1,860,318

Unamortized premiums and discounts on loans, included in the total loans balances above, were $1.6 million and $1.8 million at March 31, 2021 and  December 31, 2020, respectively, and unearned income, or deferred fees, on loans was $4.1 million and $3.2 million at March 31, 2021 and  December 31, 2020, respectively.

In the second quarter of 2020, the Bank began participating as a lender in the Small Business Administration’s (“SBA”) and U.S. Department of Treasury’s Paycheck Protection Program (“PPP”) as established by the CARES Act and enhanced by the Paycheck Protection Program and Health Care Enhancement Act and the Paycheck Protection Program Flexibility Act of 2020 (“Flexibility Act”). The PPP was established to provide unsecured low interest rate loans to small businesses that have been impacted by the COVID-19 pandemic. The PPP loans are 100% guaranteed by the SBA. The loans have a fixed interest rate of 1% with deferred payments, and if originated before June 5, 2020, mature two years from origination, or if made on or after June 5, 2020, five years from origination. PPP loans are forgiven by the SBA (which makes forgiveness payments directly to the lender) to the extent the borrower uses the proceeds of the loan for certain purposes (primarily to fund payroll costs) during a certain time period following origination and maintains certain employee and compensation levels. Lenders receive processing fees from the SBA for originating the PPP loans which are based on a percentage of the loan amount. In July 2020, the CARES Act was amended to extend the SBA’s authority to make commitments under the PPP, which had previously expired on June 30, 2020. The PPP resumed taking applications on July 6, 2020, and the new deadline to apply for a PPP loan ended on August 8, 2020. On December 27, 2020, the CAA, a $900 billion aid package, was enacted that renewed the PPP and allocated additional funding for new first time PPP loans under the original PPP and also authorized second draw PPP loans for certain eligible borrowers that had previously received a PPP loan. The SBA began accepting applications on the next round of the PPP in January 2021, and the application period was extended from  March 31, 2021 to May 31, 2021, subject to the availability of funds. Congress passed the American Rescue Plan Act of 2021, an additional $1.9 trillion stimulus package, including additional funding for the PPP, in March 2021. At March 31, 2021 and  December 31, 2020 the Company’s loan portfolio included PPP loans with balances of $106.6 million and $94.5 million, respectively, all of which are included in commercial and industrial loans.

The table below provides an analysis of the aging of loans as of the dates presented (dollars in thousands).

	March 31, 2021
	Accruing
			30-59 Days		60-89 Days		90 Days or More				Total Past Due		Acquired
	Current		Past Due		Past Due		Past Due		Nonaccrual		& Nonaccrual		Impaired Loans		Total Loans
Construction and development	$	190,249	$	50	$	—	$	—	$	517	$	567	$	—	$	190,816
1-4 Family		338,679		1,186		89		61		876		2,212		375		341,266
Multifamily		60,844		—		—		—		—		—		—		60,844
Farmland		22,141		—		—		—		303		303		1,701		24,145
Commercial real estate		826,077		79		—		40		3,150		3,269		534		829,880
Total mortgage loans on real estate		1,437,990		1,315		89		101		4,846		6,351		2,610		1,446,951
Commercial and industrial		373,092		77		20		1,604		5,741		7,442		—		380,534
Consumer		18,074		67		14		—		293		374		37		18,485
Total loans	$	1,829,156	$	1,459	$	123	$	1,705	$	10,880	$	14,167	$	2,647	$	1,845,970

	December 31, 2020
	Accruing
			30-59 Days		60-89 Days		90 Days or More				Total Past Due		Acquired
	Current		Past Due		Past Due		Past Due		Nonaccrual		& Nonaccrual		Impaired Loans		Total Loans
Construction and development	$	205,002	$	488	$	—	$	—	$	521	$	1,009	$	—	$	206,011
1-4 Family		335,710		1,085		734		—		1,615		3,434		381		339,525
Multifamily		60,724		—		—		—		—		—		—		60,724
Farmland		24,333		297		—		216		—		513		1,701		26,547
Commercial real estate		807,243		1,472		118		—		1,771		3,361		1,791		812,395
Total mortgage loans on real estate		1,433,012		3,342		852		216		3,907		8,317		3,873		1,445,202
Commercial and industrial		386,607		359		273		105		6,907		7,644		246		394,497
Consumer		20,135		79		21		—		346		446		38		20,619
Total loans	$	1,839,754	$	3,780	$	1,146	$	321	$	11,160	$	16,407	$	4,157	$	1,860,318

Nonaccrual and Past Due Loans

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. In determining whether or not a borrower may be unable to meet payment obligations for each class of loans, the borrower’s debt service capacity is considered through the analysis of current financial information, if available, and/or current information with regard to the collateral position. Regulatory provisions would typically require the placement of a loan on nonaccrual status if (i) principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection or (ii) full payment of principal and interest is not expected. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income on nonaccrual loans is recognized only to the extent that cash payments are received in excess of principal due. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period (at least six months) of repayment performance by the borrower.

Certain borrowers are currently experiencing difficulties meeting their contractual payment obligations because of the adverse economic effects attributable to the COVID-19 pandemic. As a result, loan customers may apply for payment deferrals, or portions thereof, for up to 90 days. In the absence of other contributing factors, these short-term modifications made on a good faith basis are not considered TDRs, nor are loans granted payment deferrals related to COVID-19 reported as past due or placed on non-accrual status if the loans were not past due or on non-accrual status prior to the deferral. See Note 1. Summary of Significant Accounting Policies for further discussion.

Loans Acquired with Deteriorated Credit Quality

The Company accounts for certain loans acquired as acquired impaired loans under ASC 310-30 due to evidence of credit deterioration at acquisition and the probability that the Company will be unable to collect all contractually required payments. The acquired impaired loans had no accretable yield recorded for the three months ended March 31, 2021 and 2020.

Portfolio Segment Risk Factors

The following describes the risk characteristics relevant to each of the Company’s loan portfolio segments.

Construction and Development - Construction and development loans are generally made for the purpose of acquisition and development of land to be improved through the construction of commercial and residential buildings. The successful repayment of these types of loans is generally dependent upon a commitment for permanent financing from the Company, or from the sale of the constructed property. These loans carry more risk than commercial or residential real estate loans due to the dynamics of construction projects, changes in interest rates, the long-term financing market, and state and local government regulations. One such risk is that loan funds are advanced upon the security of the property under construction, which is of uncertain value prior to the completion of construction. Thus, it is more difficult to evaluate accurately the total loan funds required to complete a project and to calculate related loan-to-value ratios. The Company attempts to minimize the risks associated with construction lending by limiting loan-to-value ratios as described above. In addition, as to speculative development loans, the Company generally makes such loans only to borrowers that have a positive pre-existing relationship with us. The Company manages risk by using specific underwriting policies and procedures for these types of loans and by avoiding excessive concentrations in any one business or industry.

1-4 Family - The 1-4 family portfolio mainly consists of residential mortgage loans to consumers to finance a primary residence. The majority of these loans are secured by properties located in the Company’s market areas and carry risks associated with the creditworthiness of the borrower and changes in the value of the collateral and loan-to-value-ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, employing experienced underwriting personnel, requiring standards for appraisers, and not making subprime loans.

Multifamily - Multifamily loans are normally made to real estate investors to support permanent financing for multifamily residential income producing properties that rely on the successful operation of the property for repayment. This management mainly involves property maintenance and collection of rents due from tenants. This type of lending carries a lower level of risk, as compared to other commercial lending. In addition, underwriting requirements for multifamily properties are stricter than for other non-owner-occupied property types. The Company manages this risk by avoiding concentrations with any particular customer.

Farmland - Farmland loans are often for land improvements related to agricultural endeavors and may include construction of new specialized facilities. These loans are usually repaid through the conversion to permanent financing, or if scheduled loan amortization begins, for the long-term benefit of the borrower’s ongoing operations. Underwriting generally involves intensive analysis of the financial strength of the borrower and guarantor, liquidation value of the subject collateral, the associated unguaranteed exposure, and any available secondary sources of repayment, with the greatest emphasis given to a borrower’s capacity to meet cash flow coverage requirements as set forth by Bank policies.

Commercial Real Estate - Commercial real estate loans are extensions of credit secured by owner occupied and non-owner occupied collateral. Underwriting generally involves intensive analysis of the financial strength of the borrower and guarantor, liquidation value of the subject collateral, the associated unguaranteed exposure, and any available secondary sources of repayment, with the greatest emphasis given to a borrower’s capacity to meet cash flow coverage requirements as set forth by Bank policies. Repayment is commonly derived from the successful ongoing operations of the property. General market conditions and economic activity may impact the performance of these types of loans, including fluctuations in the value of real estate, new job creation trends, and tenant vacancy rates. The Company attempts to limit risk by analyzing a borrower’s cash flow and collateral value on an ongoing basis. The Company also typically requires personal guarantees from the principal owners of the property, supported by a review of their personal financial statements, as an additional means of mitigating our risk. The Company manages risk by avoiding concentrations in any one business or industry.

Commercial and Industrial - Commercial and industrial loans receive similar underwriting treatment as commercial real estate loans in that the repayment source is analyzed to determine its ability to meet cash flow coverage requirements as set forth by Bank policies. Repayment of these loans generally comes from the generation of cash flow as the result of the borrower’s business operations. Commercial lending generally involves different risks from those associated with commercial real estate lending or construction lending. Although commercial loans may be collateralized by equipment or other business assets (including real estate, if available as collateral), the repayment of these types of loans depends primarily on the creditworthiness and projected cash flow of the borrower (and any guarantors). Thus, the general business conditions of the local economy and the borrower’s ability to sell its products and services, thereby generating sufficient operating revenue to repay us under the agreed upon terms and conditions, are the chief considerations when assessing the risk of a commercial loan. The liquidation of collateral, if any, is considered a secondary source of repayment because equipment and other business assets may, among other things, be obsolete or of limited resale value. The Company actively monitors certain financial measures of the borrower, including advance rate, cash flow, collateral value and other appropriate credit factors.

Consumer - Consumer loans are offered by the Company in order to provide a full range of retail financial services to its customers and include auto loans, credit cards, and other consumer installment loans. Typically, the Company evaluates the borrower’s repayment ability through a review of credit scores and an evaluation of debt to income ratios. Repayment of consumer loans depends upon key consumer economic measures and upon the borrower’s financial stability, and is more likely to be adversely affected by divorce, job loss, illness and personal hardships than repayment of other loans. A shortfall in the value of any collateral also may pose a risk of loss to the Company for these types of loans.

Credit Quality Indicators

Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The following definitions are utilized for risk ratings, which are consistent with the definitions used in supervisory guidance:

Pass - Loans not meeting the criteria below are considered pass. These loans have high credit characteristics and financial strength. The borrowers at least generate profits and cash flow that are in line with peer and industry standards and have debt service coverage ratios above loan covenants and our policy guidelines. For some of these loans, a guaranty from a financially capable party mitigates characteristics of the borrower that might otherwise result in a lower grade.

Special Mention - Loans classified as special mention possess some credit deficiencies that need to be corrected to avoid a greater risk of default in the future. For example, financial ratios relating to the borrower may have deteriorated. Often, a special mention categorization is temporary while certain factors are analyzed or matters addressed before the loan is re-categorized as either pass or substandard.

Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the borrower or the liquidation value of any collateral. If deficiencies are not addressed, it is likely that this category of loan will result in the Bank incurring a loss. Where a borrower has been unable to adjust to industry or general economic conditions, the borrower’s loan is often categorized as substandard.

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 liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss - Loans classified as loss are considered uncollectible and of such little value that their continuance as recorded assets is not warranted. This classification does not mean that the assets have absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off these assets.

The table below presents the Company’s loan portfolio by category and credit quality indicator as of the dates presented (dollars in thousands).

	March 31, 2021
			Special
	Pass		Mention		Substandard		Doubtful		Total
Construction and development	$	189,087	$	1,212	$	517	$	—	$	190,816
1-4 Family		339,250		—		2,016		—		341,266
Multifamily		60,203		—		641		—		60,844
Farmland		22,141		—		2,004		—		24,145
Commercial real estate		814,704		4,978		10,198		—		829,880
Total mortgage loans on real estate		1,425,385		6,190		15,376		—		1,446,951
Commercial and industrial		355,582		2,259		22,046		647		380,534
Consumer		18,155		—		330		—		18,485
Total loans	$	1,799,122	$	8,449	$	37,752	$	647	$	1,845,970

	December 31, 2020
			Special
	Pass		Mention		Substandard		Doubtful		Total
Construction and development	$	198,139	$	7,352	$	520	$	—	$	206,011
1-4 Family		337,829		—		1,696		—		339,525
Multifamily		60,724		—		—		—		60,724
Farmland		24,846		—		1,701		—		26,547
Commercial real estate		801,244		4,729		6,422		—		812,395
Total mortgage loans on real estate		1,422,782		12,081		10,339		—		1,445,202
Commercial and industrial		379,451		4,794		9,343		909		394,497
Consumer		20,235		—		384		—		20,619
Total loans	$	1,822,468	$	16,875	$	20,066	$	909	$	1,860,318

The Company had no loans that were classified as loss at March 31, 2021 or December 31, 2020.

Loan Participations and Sold Loans

Loan participations and whole loans sold to and serviced for others are not included in the accompanying consolidated balance sheets. The balance of loans serviced for others was $50.3 million and $53.5 million at March 31, 2021 and  December 31, 2020, respectively. The unpaid principal balance of these loans was approximately$137.8 million and $154.0 million at March 31, 2021 and  December 31, 2020, respectively.

Loans to Related Parties

In the ordinary course of business, the Company makes loans to related parties including its executive officers, principal stockholders, directors and their immediate family members, as well as companies in which these individuals are principal owners. Loans outstanding to such related party borrowers amounted to approximately $94.7 million and $96.4 million as of March 31, 2021 and  December 31, 2020, respectively.

The table below shows the aggregate principal balance of loans to such related parties as of the dates presented (dollars in thousands).

	March 31, 2021			December 31, 2020
Balance, beginning of period	$	96,390		$	98,093
New loans		3,545			12,443
Repayments and changes in relationship		(5,211	)		(14,146	)
Balance, end of period	$	94,724		$	96,390

Allowance for Loan Losses

The table below shows a summary of the activity in the allowance for loan losses for the three months ended March 31, 2021 and 2020 (dollars in thousands).

	Three months ended March 31,
	2021			2020
Balance, beginning of period	$	20,363		$	10,700
Provision for loan losses		400			3,760
Loans charged off		(405	)		(262	)
Recoveries		65			35
Balance, end of period	$	20,423		$	14,233

The following tables outline the activity in the allowance for loan losses by collateral type for the three months ended March 31, 2021 and 2020, and show both the allowance and portfolio balances for loans individually and collectively evaluated for impairment as of  March 31, 2021 and 2020 (dollars in thousands).

	Three months ended March 31, 2021
	Construction &											Commercial		Commercial &
	Development			Farmland			1-4 Family			Multifamily		Real Estate		Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	2,375		$	435		$	3,370		$	589	$	8,496	$	4,558		$	540		$	20,363
Provision		(140	)		(40	)		127			107		547		(122	)		(79	)		400
Charge-offs		—			—			(134	)		—		—		(215	)		(56	)		(405	)
Recoveries		10			—			6			—		2		5			42			65
Ending balance	$	2,245		$	395		$	3,369		$	696	$	9,045	$	4,226		$	447		$	20,423
Ending allowance balance for loans individually evaluated for impairment		—			—			—			—		175		81			103			359
Ending allowance balance for loans acquired with deteriorated credit quality		—			210			—			—		—		—			—			210
Ending allowance balance for loans collectively evaluated for impairment		2,245			185			3,369			696		8,870		4,145			344			19,854
Loans receivable:
Balance of loans individually evaluated for impairment		774			302			1,532			—		6,654		8,159			298			17,719
Balance of loans acquired with deteriorated credit quality		—			1,701			375			—		534		—			37			2,647
Balance of loans collectively evaluated for impairment		190,042			22,142			339,359			60,844		822,692		372,375			18,150			1,825,604
Total period-end balance	$	190,816		$	24,145		$	341,266		$	60,844	$	829,880	$	380,534		$	18,485		$	1,845,970

	Three months ended March 31, 2020
	Construction &										Commercial		Commercial &
	Development		Farmland		1-4 Family			Multifamily			Real Estate		Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,201	$	101	$	1,490		$	387		$	4,424	$	2,609		$	488		$	10,700
Provision		340		62		1,003			(36	)		1,439		683			269			3,760
Charge-offs		—		—		(160	)		—			—		(7	)		(95	)		(262	)
Recoveries		13		—		4			—			—		2			16			35
Ending balance	$	1,554	$	163	$	2,337		$	351		$	5,863	$	3,287		$	678		$	14,233
Ending allowance balance for loans individually evaluated for impairment		—		—		—			—			—		13			175			188
Ending allowance balance for loans acquired with deteriorated credit quality		—		—		—			—			—		—			—			—
Ending allowance balance for loans collectively evaluated for impairment		1,554		163		2,337			351			5,863		3,274			503			14,045
Loans receivable:
Balance of loans individually evaluated for impairment		1,097		—		1,763			—			47		155			512			3,574
Balance of loans acquired with deteriorated credit quality		—		2,264		405			—			1,564		1,042			38			5,313
Balance of loans collectively evaluated for impairment		190,500		27,109		326,562			61,709			774,743		312,653			27,631			1,720,907
Total period-end balance	$	191,597	$	29,373	$	328,730		$	61,709		$	776,354	$	313,850		$	28,181		$	1,729,794

Impaired Loans

The Company considers a loan to be impaired when, based on current information and events, the Company determines that it will not be able to collect all amounts due according to the loan agreement, including scheduled interest payments. Determination of impairment is treated the same across all classes of loans. When the Company identifies a loan as impaired, it measures the impairment based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the sole (remaining) source of repayment for the loans is the operation or liquidation of the collateral. In these cases when foreclosure is probable, the Company uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If the Company determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs, and unamortized premium or discount), the Company recognizes impairment through an allowance estimate or a charge-off to the allowance.

When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on nonaccrual, all payments are applied to principal, under the cost recovery method. When the ultimate collectability of the total principal of an impaired loan is not in doubt and the loan is on nonaccrual, contractual interest is credited to interest income when received, under the cash basis method.

The following tables contain information on the Company’s impaired loans, which include TDRs, discussed in more detail below, and nonaccrual loans individually evaluated for impairment for purposes of determining the allowance for loan losses. The average balances are calculated based on the month-end balances of the loans during the period reported (dollars in thousands).

	March 31, 2021
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Construction and development	$	774	$	782	$	—
1-4 Family		1,532		1,588		—
Farmland		302		302		—
Commercial real estate		5,341		5,410		—
Total mortgage loans on real estate		7,949		8,082		—
Commercial and industrial		8,074		9,325		—
Consumer		127		145		—
Total		16,150		17,552		—
With related allowance recorded:
Commercial real estate		1,313		1,344		175
Total mortgage loans on real estate		1,313		1,344		175
Commercial and industrial		85		85		81
Consumer		171		212		103
Total		1,569		1,641		359
Total loans:
Construction and development		774		782		—
1-4 Family		1,532		1,588		—
Farmland		302		302		—
Commercial real estate		6,654		6,754		175
Total mortgage loans on real estate		9,262		9,426		175
Commercial and industrial		8,159		9,410		81
Consumer		298		357		103
Total	$	17,719	$	19,193	$	359

	December 31, 2020
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Construction and development	$	782	$	800	$	—
1-4 Family		2,280		2,353		—
Commercial real estate		6,666		6,721		—
Total mortgage loans on real estate		9,728		9,874		—
Commercial and industrial		8,841		9,953		—
Consumer		126		143		—
Total		18,695		19,970		—
With related allowance recorded:
Commercial and industrial		261		260		80
Consumer		221		265		130
Total		482		525		210
Total loans:
Construction and development		782		800		—
1-4 Family		2,280		2,353		—
Commercial real estate		6,666		6,721		—
Total mortgage loans on real estate		9,728		9,874		—
Commercial and industrial		9,102		10,213		80
Consumer		347		408		130
Total	$	19,177	$	20,495	$	210

Presented in the tables below is the average recorded investment of the impaired loans and the related amount of interest income recognized during the time within the period that the loans were impaired. The average balances are calculated based on the month-end balances of the loans during the periods reported (dollars in thousands).

	Three months ended March 31,
	2021				2020
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction and development	$	777	$	5	$	528	$	2
1-4 Family		1,541		9		1,754		2
Farmland		244		—		—		—
Commercial real estate		5,370		46		47		—
Total mortgage loans on real estate		7,932		60		2,329		4
Commercial and industrial		8,067		42		109		1
Consumer		120		—		185		1
Total		16,119		102		2,623		6
With related allowance recorded:
Commercial real estate		1,326		—		—		—
Total mortgage loans on real estate		1,326		—		—		—
Commercial and industrial		202		—		13		—
Consumer		177		—		312		1
Total		1,705		—		325		1
Total loans:
Construction and development		777		5		528		2
1-4 Family		1,541		9		1,754		2
Farmland		244		—		—		—
Commercial real estate		6,696		46		47		—
Total mortgage loans on real estate		9,258		60		2,329		4
Commercial and industrial		8,269		42		122		1
Consumer		297		—		497		2
Total	$	17,824	$	102	$	2,948	$	7

Troubled Debt Restructurings

In situations where, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession for other than an insignificant period of time to the borrower that the Company would not otherwise consider, the related loan is classified as a TDR. The Company strives to identify borrowers in financial difficulty early and work with them to modify their loans to more affordable terms before such loans reach nonaccrual status. These modified terms may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. In cases in which the Company grants the borrower new terms that provide for a reduction of either interest or principal, or otherwise include a concession, the Company identifies the loan as a TDR and measures any impairment on the restructuring as previously noted for impaired loans.

Loans classified as TDRs, consisting of 33 credits, totaled $13.8 million at  March 31, 2021, compared to 34 credits totaling $14.7 million at  December 31, 2020. At  March 31, 2021, twelve of the restructured loans were considered TDRs due to modification of terms through adjustments to maturity, nine restructured loans were considered TDRs due to principal payment forbearance paying interest only for a specified period of time, seven of the restructured loans were considered TDRs due to a reduction in the interest rate to a rate lower than the current market rate, four of the restructured loans were considered TDRs due to principal and interest payment forbearance, and one restructured loan was considered a TDR due to a reduction in principal payments on a modified payment schedule.

As of March 31, 2021, one $1.3 million commercial real estate TDR was in default of its modified terms and is included in nonaccrual loans. At December 31, 2020, none of the TDRs were in default of their modified terms and included in nonaccrual loans. The Company individually evaluates each TDR for allowance purposes, primarily based on collateral value, and excludes these loans from the loan population that is collectively evaluated for impairment.

There was one loan modified under TDR during the previous twelve month period that subsequently defaulted during the three months ended March 31, 2021. No TDRs defaulted on their modified terms during the three months ended March 31, 2020.

At March 31, 2021 and  December 31, 2020, there were no available balances on loans classified as TDRs that the Company was committed to lend.