Loans and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2021

Receivables [Abstract]

Loans and Allowance for Credit Losses

Loans and Allowance for Credit Losses

Loans Held for Sale

Loans held for sale are comprised entirely of 1-4 family residential mortgage loans as of September 30, 2021 and December 31, 2020.

Loans Held for Investment

The Company adopted ASU 2016-13 effective January 1, 2021. Upon adoption, the Company changed its loan segments for purposes of the calculation of the ACL. Prior to January 1, 2021, the Company's loan segments were based on a combination of loan purpose and loan collateral. Effective January 1, 2021 and thereafter, the Company's loan segments are primarily based on loan collateral. The following table presents the Company's loan segments as of December 31, 2020 under the legacy segmentation and the new segmentation under ASU 2016-13:

(In Thousands)	Pre-ASU 2016-13
Commercial loans	$780,058
Real estate construction one-to-four family	38,467
Real estate construction other	80,315
Real estate term owner occupied	163,597
Real estate term non-owner occupied	309,074
Real estate term other	46,620
Consumer secured by 1st deeds of trust	15,585
Consumer other	22,069
Subtotal	1,455,785
Unearned loan fees, net	(11,735)
Total portfolio loans	$1,444,050
	Post-ASU 2016-13
Commercial & industrial loans	$619,304
Commercial real estate:
Owner occupied properties	234,364
Non-owner occupied and multifamily properties	394,860
Residential real estate:
1-4 family residential properties secured by first liens	33,463
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	18,114
1-4 family residential construction loans	32,760
Other construction, land development and raw land loans	84,352
Obligations of states and political subdivisions in the US	15,274
Agricultural production, including commercial fishing	13,093
Consumer loans	5,794
Other loans	4,407
Subtotal	$1,455,785
Unearned loan fees, net	($11,735)
Total portfolio loans	$1,444,050

The following table presents amortized cost and unpaid principal balance of loans for the periods indicated:

	September 30, 2021			December 31, 2020
(In Thousands)	Amortized Cost	Unpaid Principal	Difference	Amortized Cost	Unpaid Principal	Difference
Commercial & industrial loans	$504,305	$513,482	($9,177)	$612,254	$619,304	($7,050)
Commercial real estate:
Owner occupied properties	292,021	293,346	(1,325)	233,320	234,363	(1,043)
Non-owner occupied and multifamily properties	443,258	446,688	(3,430)	392,452	394,860	(2,408)
Residential real estate:
1-4 family residential properties secured by first liens	29,548	29,627	(79)	33,415	33,510	(95)
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	18,749	18,626	123	18,236	18,114	122
1-4 family residential construction loans	36,386	36,591	(205)	32,500	32,760	(260)
Other construction, land development and raw land loans	73,313	73,832	(519)	83,463	84,351	(888)
Obligations of states and political subdivisions in the US	17,470	17,636	(166)	15,318	15,274	44
Agricultural production, including commercial fishing	27,573	27,692	(119)	12,968	13,093	(125)
Consumer loans	5,014	4,973	41	5,734	5,794	(60)
Other loans	3,020	3,035	(15)	4,390	4,407	(17)
Total	1,450,657	1,465,528	(14,871)	1,444,050	1,455,830	(11,780)
Allowance for credit losses	(13,816)			(21,136)
	$1,436,841	$1,465,528	($14,871)	$1,422,914	$1,455,830	($11,780)

The difference between the amortized cost and unpaid principal balance is primarily net deferred origination fees totaling $14.9 million and $11.7 million at September 30, 2021 and December 31, 2020, respectively, and premiums and discounts associated with acquired loans totaling $9,000 and $47,000 at September 30, 2021 and December 31, 2020, respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $6.3 million and $7.1 million at September 30, 2021 and December 31, 2020, respectively, and was included in other assets in the Consolidated Balance Sheets.

Amortized cost in the above table includes $203.4 million and $304.6 million as of September 30, 2021 and December 31, 2020, respectively, in PPP loans administered by the U.S. Small Business Administration ("SBA") within the Commercial & industrial loan segment.

Allowance for Credit Losses

The activity in the ACL related to loans held for investment is as follows:

Three Months Ended September 30,	Beginning Balance	Credit Loss Expense (Benefit)	Charge-offs	Recoveries	Ending Balance
	(In Thousands)
2021
Commercial & industrial loans	$4,291	($332)	$—	$23	$3,982
Commercial real estate:
Owner occupied properties	3,340	151	—	2	3,493
Non-owner occupied and multifamily properties	3,841	35	—	—	3,876
Residential real estate:
1-4 family residential properties secured by first liens	630	(154)	—	—	476
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	340	(42)	—	9	307
1-4 family residential construction loans	231	(47)	—	—	184
Other construction, land development and raw land loans	1,670	(391)	—	—	1,279
Obligations of states and political subdivisions in the US	39	(3)	—	—	36
Agricultural production, including commercial fishing	57	32	—	5	94
Consumer loans	94	(11)	—	—	83
Other loans	6	—	—	—	6
Total	$14,539	($762)	$—	$39	$13,816

Three Months Ended September 30,	Beginning Balance	Provision (benefit)	Charge-offs	Recoveries	Ending Balance
	(In Thousands)
2020
Commercial	$7,366	$285	($56)	$600	$8,195
Real estate construction 1-4 family	690	10	—	—	700
Real estate construction other	1,215	58	—	—	1,273
Real estate term owner occupied	2,533	21	(85)	—	2,469
Real estate term non-owner occupied	5,421	61	—	—	5,482
Real estate term other	702	55	—	1	758
Consumer secured by 1st deed of trust	258	(2)	—	—	256
Consumer other	447	(7)	—	3	443
Unallocated	2,021	86	—	—	2,107
Total	$20,653	$567	($141)	$604	$21,683

Nine Months Ended September 30,	Beginning Balance	Impact of adopting ASC 326	Credit Loss Expense (Benefit)	Charge-offs	Recoveries	Ending Balance
	(In Thousands)
2021
Commercial	$7,973	($7,973)	$—	$—	$—	—
Real estate construction 1-4 family	679	(679)	—	—	—	—
Real estate construction other	1,179	(1,179)	—	—	—	—
Real estate term owner occupied	2,625	(2,625)	—	—	—	—
Real estate term non-owner occupied	5,133	(5,133)	—	—	—	—
Real estate term other	779	(779)	—	—	—	—
Consumer secured by 1st deed of trust	261	(261)	—	—	—	—
Consumer other	400	(400)	—	—	—	—
Unallocated	2,107	(2,107)	—	—	—	—
Commercial & industrial loans	—	4,348	(328)	(273)	235	3,982
Commercial real estate:
Owner occupied properties	—	3,579	(92)	—	6	3,493
Non-owner occupied and multifamily properties	—	4,944	(1,068)	—	—	3,876
Residential real estate:
1-4 family residential properties secured by first liens	—	673	(197)	—	—	476
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	—	419	(141)	—	29	307
1-4 family residential construction loans	—	454	(270)	—	—	184
Other construction, land development and raw land loans	—	1,994	(715)	—	—	1,279
Obligations of states and political subdivisions in the US	—	44	(8)	—	—	36
Agricultural production, including commercial fishing	—	49	25	—	20	94
Consumer loans	—	118	(37)	—	2	83
Other loans	—	3	3	—	—	6
Total	$21,136	($4,511)	($2,828)	($273)	$292	$13,816

Nine Months Ended September 30,	Beginning Balance	Provision (benefit)	Charge-offs	Recoveries	Ending Balance
	(In Thousands)
2020
Commercial	$6,604	$1,946	($1,011)	$656	$8,195
Real estate construction 1-4 family	$643	$57	$—	$—	$700
Real estate construction other	1,017	256	—	—	1,273
Real estate term owner occupied	2,188	366	(85)	—	2,469
Real estate term non-owner occupied	5,180	302	—	—	5,482
Real estate term other	671	85	—	2	758
Consumer secured by 1st deed of trust	270	(14)	—	—	256
Consumer other	436	5	(14)	16	443
Unallocated	2,079	28	—	—	2,107
Total	$19,088	$3,031	($1,110)	$674	$21,683

The Company adopted ASU 2016-13 effective January 1, 2021. Upon adoption, the Company established an ACL of $16.6 million. As of September 30, 2021 the ACL decreased to $13.8 million. The Company primarily uses a DCF method to estimate ACL for loans. The Company utilizes and forecasts unemployment in Alaska as the primary loss driver in the DCF model. The Company also utilizes and forecasts either the one-year percentage change in the Alaska home price index or the one-year percentage change in the national commercial real estate price index as a second loss driver depending on the nature of the underlying loan pool and how well that loss driver correlates to expected future losses. Consistent forecasts of the loss drivers are used across the loan segments.

At September 30, 2021, as compared to January 1, 2021, the Company forecasted a significantly lower unemployment rate in Alaska, a slightly lower one-year percentage change in the national commercial real estate price index, and a slightly higher one-year percentage change in the Alaska home price index over the reasonable and supportable forecast period. Specifically regarding the forecasts used to calculate the September 30, 2021 ACL, management expects unemployment to remain consistent with actual levels observed in Alaska as of August 2021. This rate is above pre-pandemic levels over the forecast period, but is lower than rates previously projected by management.

Management's projections for economic indicators as of September 30, 2021 improved slightly as compared to June 30, 2021. The Company also applies qualitative factors in our CECL model, and these factors also improved in the third quarter as compared to the second quarter of 2021 due to increases in oil prices and improvement in loan portfolio quality trends. Additionally, the ACL for individually impaired loans decreased during the third quarter of 2021 due to pay downs. These factors, which decreased the ACL during the third quarter of 2021, were only partially offset by an increase in loan balances.

The following table presents loans individually and collectively evaluated for impairment and their respective allowance for credit loss allocations as of December 31, 2020, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13:

(In Thousands)	Loan Evaluation			ALLL Allocations
	Individually	Collectively	Total	Individually	Collectively	Total
Commercial	$7,786	$764,682	$772,468	$13	$7,960	$7,973
Real estate construction 1-4 family	702	$37,478	38,180	—	679	679
Real estate construction other	—	$79,403	79,403	—	1,179	1,179
Real estate term owner occupied	6,962	$155,762	162,724	—	2,625	2,625
Real estate term non-owner occupied	770	$306,477	307,247	—	5,133	5,133
Real estate term other	1,467	$44,763	46,230	—	779	779
Consumer secured by 1st deed of trust	259	$15,289	15,548	—	261	261
Consumer other	82	$22,168	22,250	—	400	400
Unallocated	—	—	—	—	2,107	2,107
Total	$18,028	$1,426,022	$1,444,050	$13	$21,123	$21,136

The following table presents information pertaining to impaired loans as of December 31, 2020, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13:

	Impaired Loans With a Valuation Allowance			Impaired Loans Without a Valuation Allowance
(In Thousands)	Recorded Investment	Unpaid Principal	Related Allowance	Recorded Investment	Unpaid Principal
Commercial	$308	$308	$13	$7,478	$8,287
Real estate construction 1-4 family	—	—	—	702	702
Real estate construction other	—	—	—	—	—
Real estate term owner occupied	—	—	—	6,962	7,047
Real estate term non-owner occupied	—	—	—	771	771
Real estate term other	—	—	—	1,467	1,467
Consumer secured by 1st deed of trust	—	—	—	258	258
Consumer other	—	—	—	82	87
Total	$308	$308	$13	$17,720	$18,619

The following table presents average impaired loans information, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13, and interest recognized on such loans, for the three and nine-month periods ended September 30, 2020:

	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
(In Thousands)	Average Impaired Loans	Interest Recognized	Average Impaired Loans	Interest Recognized
Commercial	$12,892	$65	$13,161	$95
Real estate construction 1-4 family	808	—	970	—
Real estate construction other	—	—	—	—
Real estate term owner occupied	6,707	49	6,378	78
Real estate term non-owner occupied	490	3	333	7
Real estate term other	1,562	7	1,572	14
Consumer secured by 1st deed of trust	272	5	275	9
Consumer other	86	—	88	—
Total	$22,817	$129	$22,777	$203

Credit Quality Information

As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management utilizes a loan risk grading system called the Asset Quality Rating (“AQR”) system to assign a risk classification to each of its loans. The risk classification is a dual rating system that contemplates both probability of default and risk of loss given default. Loans are graded on a scale of 1 to 10 and, loans graded 1 – 6 are considered “pass” grade loans. Loans graded 7 or higher are considered "classified" loans. A description of the general characteristics of the AQR risk classifications are as follows:

Pass grade loans – 1 through 6: The borrower demonstrates sufficient cash flow to fund debt service, including acceptable profit margins, cash flows, liquidity and other balance sheet ratios. Historic and projected performance indicates that the borrower is able to meet obligations under most economic circumstances. The Company has competent management with an acceptable track record. The category does not include loans with undue or unwarranted credit risks that constitute identifiable weaknesses.

Classified loans:

Special Mention – 7: A "special mention" credit has weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset at some future date.

Substandard – 8: A "substandard" credit is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that Northrim Bank will sustain some loss if the deficiencies are not corrected.

Doubtful – 9: An asset classified "doubtful" has all the weaknesses inherent in one that is classified "substandard-8" with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable. The loan has substandard characteristics, and available information suggests that it is unlikely that the loan will be repaid in its entirety.

Loss – 10: An asset classified "loss" is considered uncollectible and of such little value that its continuance on the books is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset, even though partial recovery may be affected in the future.

The following tables present the Company's portfolio of risk-rated loans by grade and by year of origination. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Generally, current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below.

September 30, 2021	2021	2020	2019	2018	2017	Prior	Total
	(In Thousands)
Commercial & industrial loans
Pass	$252,274	$75,997	$41,196	$38,516	$23,534	$52,902	$484,419
Classified	6,334	521	3,591	3,795	548	5,097	19,886
Total commercial & industrial loans	$258,608	$76,518	$44,787	$42,311	$24,082	$57,999	$504,305
Commercial real estate:
Owner occupied properties
Pass	$56,599	$94,373	$39,839	$15,415	$14,763	$62,377	$283,366
Classified	—	1,432	—	532	—	6,691	8,655
Total commercial real estate owner occupied properties	$56,599	$95,805	$39,839	$15,947	$14,763	$69,068	$292,021
Non-owner occupied and multifamily properties
Pass	$66,449	$79,472	$67,466	$34,569	$20,273	$164,676	$432,905
Classified	—	—	—	—	10,353	—	10,353
Total commercial real estate non-owner occupied and multifamily properties	$66,449	$79,472	$67,466	$34,569	$30,626	$164,676	$443,258
Residential real estate:
1-4 family residential properties secured by first liens
Pass	$3,744	$7,979	$3,816	$642	$1,774	$9,571	$27,526
Classified	—	1,318	486	—	—	218	2,022
Total residential real estate 1-4 family residential properties secured by first liens	$3,744	$9,297	$4,302	$642	$1,774	$9,789	$29,548
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens
Pass	$3,041	$2,609	$3,817	$4,038	$264	$4,705	$18,474
Classified	—	—	—	261	—	14	275
Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	$3,041	$2,609	$3,817	$4,299	$264	$4,719	$18,749
1-4 family residential construction loans
Pass	$19,068	$1,564	$4,329	$112	$—	$11,204	$36,277
Classified	—	—	—	—	109	—	109
Total residential real estate 1-4 family residential construction loans	$19,068	$1,564	$4,329	$112	$109	$11,204	$36,386
Other construction, land development and raw land loans
Pass	$27,179	$20,869	$10,849	$3,697	$144	$5,881	$68,619
Classified	—	—	—	3,171	—	1,523	4,694
Total other construction, land development and raw land loans	$27,179	$20,869	$10,849	$6,868	$144	$7,404	$73,313
Obligations of states and political subdivisions in the US
Pass	$52	$3,112	$3,150	$373	$2,740	$8,043	$17,470

Classified	—	—	—	—	—	—	—
Total obligations of states and political subdivisions in the US	$52	$3,112	$3,150	$373	$2,740	$8,043	$17,470
Agricultural production, including commercial fishing
Pass	$16,235	$6,598	$1,130	$1,150	$781	$1,679	$27,573
Classified	—	—	—	—	—	—	—
Total agricultural production, including commercial fishing	$16,235	$6,598	$1,130	$1,150	$781	$1,679	$27,573
Consumer loans
Pass	$854	$936	$693	$427	$318	$1,786	$5,014
Classified	—	—	—	—	—	—	—
Total consumer loans	$854	$936	$693	$427	$318	$1,786	$5,014
Other loans
Pass	$495	$1,692	$439	$165	$—	$229	$3,020
Classified	—	—	—	—	—	—	—
Total other loans	$495	$1,692	$439	$165	$—	$229	$3,020
Total loans
Pass	$445,990	$295,201	$176,724	$99,104	$64,591	$323,053	$1,404,663
Classified	6,334	3,271	4,077	7,759	11,010	13,543	45,994
Total loans	$452,324	$298,472	$180,801	$106,863	$75,601	$336,596	$1,450,657
Total pass loans	$445,990	$295,201	$176,724	$99,104	$64,591	$323,053	$1,404,663
Government guarantees	(203,664)	(22,169)	(16,800)	(5,212)	(409)	(1,537)	(249,791)
Total pass loans, net of government guarantees	$242,326	$273,032	$159,924	$93,892	$64,182	$321,516	$1,154,872
Total classified loans	$6,334	$3,271	$4,077	$7,759	$11,010	$13,543	$45,994
Government guarantees	(1,501)	(1,289)	—	—	(9,570)	(1,123)	(13,483)
Total classified loans, net government guarantees	$4,833	$1,982	$4,077	$7,759	$1,440	$12,420	$32,511

The following table presents the Company's portfolio of risk-rated loans by grade as of December 31, 2020:

	Pass	Classified	Total
	(In Thousands)
December 31, 2020
Commercial	$758,362	$14,106	$772,468
Real estate construction 1-4 family	37,093	1,087	38,180
Real estate construction other	79,403	—	79,403
Real estate term owner occupied	152,734	9,990	162,724
Real estate term non-owner occupied	289,555	17,692	307,247
Real estate term other	42,900	3,330	46,230
Consumer secured by 1st deed of trust	15,404	144	15,548
Consumer other	22,144	106	22,250
Portfolio loans	1,397,595	46,455	1,444,050
Government guarantees	(334,639)	(14,587)	(349,226)
Portfolio loans, net of government guarantees	$1,062,956	$31,868	$1,094,824

Past Due Loans: The following tables present an aging of contractually past due loans:

(In Thousands)	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days Past Due	Total Past Due	Current	Total	Greater Than 90 Days Past Due Still Accruing
September 30, 2021
Commercial & industrial loans	$266	$19	$4,227	$4,512	$499,793	$504,305	$—
Commercial real estate:
Owner occupied properties	—	—	1,219	1,219	290,802	292,021	—
Non-owner occupied and multifamily properties	—	—	—	—	443,258	443,258	—
Residential real estate:
1-4 family residential properties secured by first liens	—	168	—	168	29,380	29,548	—
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	44	—	139	183	18,566	18,749	—
1-4 family residential construction loans	—	—	109	109	36,277	36,386	—
Other construction, land development and raw land loans	—	—	1,545	1,545	71,768	73,313	—
Obligations of states and political subdivisions in the US	—	—	—	—	17,470	17,470	—
Agricultural production, including commercial fishing	—	—	—	—	27,573	27,573	—
Consumer loans	—	—	—	—	5,014	5,014	—
Other loans	—	—	—	—	3,020	3,020	—
Total	$310	$187	$7,239	$7,736	$1,442,921	$1,450,657	$—
December 31, 2020
Commercial & industrial loans	$242	$229	$2,675	$3,146	$609,108	$612,254	$—
Commercial real estate:
Owner occupied properties	2,203	—	2,459	4,662	228,658	233,320	449
Non-owner occupied and multifamily properties	—	—	—	—	392,452	392,452	—
Residential real estate:
1-4 family residential properties secured by first liens	446	—	—	446	32,969	33,415	—
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	38	—	139	177	18,059	18,236	—
1-4 family residential construction loans	—	—	702	702	31,798	32,500	—
Other construction, land development and raw land loans	—	—	1,545	1,545	81,918	83,463	—
Obligations of states and political subdivisions in the US	—	—	—	—	15,318	15,318	—
Agricultural production, including commercial fishing	—	—	—	—	12,968	12,968	—
Consumer loans	—	—	272	272	5,462	5,734	—
Other loans	—	—	—	—	4,390	4,390	—
Total	$2,929	$229	$7,792	$10,950	$1,433,100	$1,444,050	$449

Nonaccrual loans: Nonaccrual loans net of government guarantees totaled $11.5 million and $9.6 million at September 30, 2021 and December 31, 2020, respectively. The following table presents loans on nonaccrual status and loans on nonaccrual status for which there was no related allowance for credit losses:

	September 30, 2021		December 31, 2020
(In  Thousands)	Nonaccrual	Nonaccrual With No ACL	Nonaccrual	Nonaccrual With No ACL
Commercial & industrial loans	$4,974	$1,179	$3,848	$3,513
Commercial real estate:
Owner occupied properties	3,640	3,640	4,620	4,582
Residential real estate:
1-4 family residential properties secured by first liens	1,950	1,464	160	160
1-4 family residential properties secured by junior liens       and revolving secured by 1-4 family first liens	275	275	242	221
1-4 family residential construction loans	109	109	702	702
Other construction, land development and raw land loans	1,545	1,545	1,545	1,545
Consumer loans	—	—	3	—
Total nonaccrual loans	12,493	8,212	11,120	10,723
Government guarantees on nonaccrual loans	(1,017)	(1,017)	(1,483)	(1,483)
Net nonaccrual loans	$11,476	$7,195	$9,637	$9,240

There was no interest on nonaccrual loans reversed through interest income during three and nine-month periods ending September 30, 2021. There was no interest on nonaccrual loans reversed through interest income during the three-month period ending September 30, 2020 and $12,000 in interest on nonaccrual loans reversed through interest income during the nine-month period ending September 30, 2020, respectively.

There was no interest earned on nonaccrual loans with a principal balance during the three and nine-month periods ending September 30, 2021 and September 30, 2020, respectively. However, the Company recognized interest income of $198,000 and $780,000 in the three-month periods ending September 30, 2021 and 2020 and $565,000 and $986,000 in the nine-month periods ending September 30, 2021 and 2020, respectively, related to interest collected on nonaccrual loans whose principal had been paid down to zero.

Troubled Debt Restructurings: Loans classified as TDRs totaled $7.0 million and $7.9 million at September 30, 2021 and December 31, 2020, respectively.  A TDR is a loan to a borrower that is experiencing financial difficulty that has been modified from its original terms and conditions in such a way that the Company is granting the borrower a concession that it would not grant otherwise. 

The provisions of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act included an election to not apply the guidance on accounting for TDRs to loan modifications, such as extensions or deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i) January 1, 2022 or (ii) 60 days after the end of the COVID-19 national emergency. The relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019. The Company has elected to adopt these provisions of the CARES Act. The Company has made the following types of loan modifications related to COVID-19, which are not classified as TDRs with principal balance outstanding of:

Loan Modifications due to COVID-19 as of September 30, 2021
(Dollars in thousands)	Interest Only	Full Payment Deferral	Total
Portfolio loans	$49,888	$7,533	$57,421
Number of modifications	21	3	24

Loan Modifications due to COVID-19 as of December 31, 2020
(Dollars in thousands)	Interest Only	Full Payment Deferral	Total
Portfolio loans	$43,379	$22,165	$65,544
Number of modifications	23	11	34

The Company has granted a variety of concessions to borrowers in the form of loan modifications.  The modifications granted can generally be described in the following categories:

Rate Modification:  A modification in which the interest rate is changed.

Term Modification:  A modification in which the maturity date, timing of payments, or frequency of payments is changed.

Payment Modification:  A modification in which the dollar amount of the payment is changed, or in which a loan is converted to interest only payments for a period of time is included in this category.

Combination Modification:  Any other type of modification, including the use of multiple categories above. 

AQR pass graded loans included above in the impaired loan data are loans classified as TDRs. By definition, TDRs are considered impaired loans. All of the Company's TDRs are included in impaired loans.

The following table presents the breakout between newly restructured loans that occurred during the nine months ended September 30, 2021 and restructured loans that occurred prior to 2021 that are still included in portfolio loans. As discussed above, the CARES Act provided banks an option to elect to not account for certain loan modifications related to COVID-19 as TDRs as long as the borrowers were not more than 30 days past due as of December 31, 2020. The disclosed restructurings were not related to COVID-19 modifications.

	Accrual Status	Nonaccrual Status	Total Modifications
(In Thousands)
New Troubled Debt Restructurings
Commercial & industrial loans	$—	$249	$249
Commercial real estate:
Owner occupied properties	—	360	360
Other construction, land development and raw land loans	—	578	578
Subtotal	$—	$1,187	$1,187
Existing Troubled Debt Restructurings	$2,382	$3,467	$5,849
Total	$2,382	$4,654	$7,036

The following tables present newly restructured loans that occurred during the nine months ended September 30, 2021 and 2020, by concession (terms modified):

		September 30, 2021
	Number of Contracts	Rate Modification	Term Modification	Payment Modification	Combination Modification	Total Modifications
(In Thousands)
Pre-Modification Outstanding Recorded Investment:
Commercial & industrial loans	1	$—	$254	$—	$—	$254
Commercial real estate:
Owner occupied properties	1	—	360	—	—	360
Other construction, land development and raw land loans	1	—	577	—	—	360
Total	3	$—	$1,191	$—	$—	$974
Post-Modification Outstanding Recorded Investment:
Commercial & industrial loans	1	$—	$249	$—	$—	$249
Commercial real estate:
Owner occupied properties	1	—	360	—	—	360
Other construction, land development and raw land loans	1	—	577	—	—	577
Total	3	$—	$1,186	$—	$—	$1,186

		September 30, 2020
	Number of Contracts	Rate Modification	Term Modification	Payment Modification	Combination Modification	Total Modifications
(In Thousands)
Pre-Modification Outstanding Recorded Investment:
Commercial & industrial loans	2	$—	$3,249	$164	$—	$3,413
Total	2	$—	$3,249	$164	$—	$3,413
Post-Modification Outstanding Recorded Investment:
Commercial & industrial loans	2	$—	$1,565	$163	$—	$1,728
Total	2	$—	$1,565	$163	$—	$1,728

The Company had no commitments to extend additional credit to borrowers whose terms have been modified in TDRs. There were no in charge-offs in the nine months ended September 30, 2021 on loans that were newly classified as TDRs during the same period.

As of December 31, 2020, all TDRs are also classified as impaired loans and are included in the loans individually evaluated for impairment. There were no TDRs with specific impairment at December 31, 2020.

The Company had no TDRs that defaulted within twelve months of restructure and defaulted during the nine months ended September 30, 2021 and 2020, respectively.