Loans classified by type as of December 31, 2021 and 2020 are as follows (dollars in thousands):

The Bank has a purchased portfolio of rehabilitated student loans guaranteed by the DOE. The guarantee covers approximately 98% of principal and accrued interest. The loans are serviced by a third-party servicer that specializes in handling the special needs of the DOE student loan programs.

PPP loans, included in commercial and industrial loans in the above table, were $32,601,000 and $136,647,000 as of December 31, 2021, and December 31, 2020, respectively.

Loans pledged as collateral with the FHLB as part of their lending arrangements with the Company totaled $35,510,000 and $65,587,000 as of December 31, 2021 and 2020, respectively.

The following is a summary of loans directly or indirectly with executive officers or directors of the Company for the years ended December 31, 2021 and 2020 (in thousands):

Executive officers and directors also had unused credit lines totaling $1,364,000 and $1,507,000 at December 31, 2021 and 2020, respectively. Based on management’s evaluation all loans and credit lines to executive officers and directors were made in the ordinary course of business at the Company’s normal credit terms, including interest rate and collateralization prevailing at the time for comparable transactions with other persons.

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. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The following table provides information on nonaccrual loans segregated by type at the dates indicated (dollars in thousands):

The Company assigns risk rating classifications to its loans. These risk ratings are divided into the following groups:

The following tables provide information on the risk rating of loans at the dates indicated (in thousands):


	Risk Rated		Risk Rated		Risk Rated		Risk Rated		Total
	1‑4		5		6		7		Loans
December 31, 2021
Construction and land development
Residential	$	6,805	$	—	$	—	$	—	$	6,805
Commercial		39,707		2,637		—		—		42,344
		46,512		2,637		—		—		49,149
Commercial real estate
Owner occupied		103,370		6,181		3,557		—		113,108
Non-owner occupied		114,168		15,332		286		—		129,786
Multifamily		11,666		—		—		—		11,666
Farmland		977		—		—		—		977
		230,181		21,513		3,843		—		255,537
Consumer real estate
Home equity lines		17,054		623		300		—		17,977
Secured by 1-4 family residential
First deed of trust		57,932		3,605		740		—		62,277
Second deed of trust		11,492		429		197		—		12,118
		86,478		4,657		1,237		—		92,372
Commercial and industrial loans
(except those secured by real estate)		98,362		1,806		253		—		100,421
Guaranteed student loans		25,975		—		—		—		25,975
Consumer and other		2,972		31		—		—		3,003

Total loans	$	490,480	$	30,644	$	5,333	$	—	$	526,457


	Risk Rated		Risk Rated		Risk Rated		Risk Rated		Total
	1‑4		5		6		7		Loans
December 31, 2020
Construction and land development
Residential	$	8,103	$	—	$	—	$	—	$	8,103
Commercial		21,370		96		—		—		21,466
		29,473		96		—		—		29,569
Commercial real estate
Owner occupied		88,066		9,405		2,313		—		99,784
Non-owner occupied		116,161		4,244		779		—		121,184
Multifamily		9,889		—		—		—		9,889
Farmland		367		—		—		—		367
		214,483		13,649		3,092		—		231,224
Consumer real estate
Home equity lines		17,298		796		300		—		18,394
Secured by 1-4 family residential
First deed of trust		53,731		2,212		1,146		—		57,089
Second deed of trust		9,425		1,236		436		—		11,097
		80,454		4,244		1,882		—		86,580
Commercial and industrial loans
(except those secured by real estate)		178,217		2,602		269		—		181,088
Guaranteed student loans		29,657		—		—		—		29,657
Consumer and other		2,844		41		—		—		2,885

Total loans	$	535,128	$	20,632	$	5,243	$	—	$	561,003

The following tables present the aging of the recorded investment in past due loans as of the dates indicated (in thousands):


					Greater								Investment >
	30‑59 Days		60‑89 Days		Than		Total Past				Total		90 Days and
	Past Due		Past Due		90 Days		Due		Current		Loans		Accruing
December 31, 2021
Construction and land development
Residential	$	—	$	—	$	—	$	—	$	6,805	$	6,805	$	—
Commercial		—		—		—		—		42,344		42,344		—
		—		—		—		—		49,149		49,149		—
Commercial real estate
Owner occupied		—		—		—		—		113,108		113,108		—
Non-owner occupied		—		—		—		—		129,786		129,786		—
Multifamily		—		—		—		—		11,666		11,666		—
Farmland		—		—		—		—		977		977		—
		—		—		—		—		255,537		255,537		—
Consumer real estate
Home equity lines		—		—		—		—		17,977		17,977		—
Secured by 1‑4 family residential
First deed of trust		—		—		—		—		62,277		62,277		—
Second deed of trust		—		—		—		—		12,118		12,118		—
		—		—		—		—		92,372		92,372		—
Commercial and industrial loans
(except those secured by real estate)		1,031		—		—		1,031		99,390		100,421		—
Guaranteed student loans		956		791		1,961		3,708		22,267		25,975		1,961
Consumer and other		—		—		—		—		3,003		3,003		—

Total loans	$	1,987	$	791	$	1,961	$	4,739	$	521,718	$	526,457	$	1,961


													Recorded
					Greater								Investment >
	30-59 Days		60-89 Days		Than		Total Past				Total		90 Days and
	Past Due		Past Due		90 Days		Due		Current		Loans		Accruing
December 31, 2020
Construction and land development
Residential	$	—	$	—	$	—	$	—	$	8,103	$	8,103	$	—
Commercial		—		—		—		—		21,466		21,466		—
		—		—		—		—		29,569		29,569		—
Commercial real estate
Owner occupied		86		—		—		86		99,698		99,784		—
Non-owner occupied		—		—		—		—		121,184		121,184		—
Multifamily		—		—		—		—		9,889		9,889		—
Farmland		—		—		—		—		367		367		—
		86		—		—		86		231,138		231,224		—
Consumer real estate
Home equity lines		—		—		—		—		18,394		18,394		—
Secured by 1-4 family residential
First deed of trust		133		—		—		133		56,956		57,089		—
Second deed of trust		—		57		—		57		11,040		11,097		—
		133		57		—		190		86,390		86,580		—
Commercial and industrial loans
(except those secured by real estate)		25		—		—		25		181,063		181,088		—
Guaranteed student loans		1,428		1,009		2,193		4,630		25,027		29,657		2,193
Consumer and other		1		—		—		1		2,884		2,885		—

Total loans	$	1,673	$	1,066	$	2,193	$	4,932	$	556,071	$	561,003	$	2,193

Loans greater than 90 days past due consist of student loans that are guaranteed by the DOE which covers approximately 98% of the principal and interest. Accordingly, these loans will not be placed on nonaccrual status and are not considered to be impaired.

Loans are considered impaired when, based on current information and events it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Loans evaluated individually for impairment include nonperforming loans, such as loans on nonaccrual, loans past due by 90 days or more, TDRs and other loans selected by management. The evaluations are based upon discounted expected cash flows or collateral valuations. If the evaluation shows that a loan is individually impaired, then a specific reserve is established for the amount of impairment. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably

assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible. Impaired loans are set forth in the following table as of the dates indicated (in thousands):


	December 31, 2021						December 31, 2020
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded
Commercial real estate
Owner occupied	$	4,776	$	4,791	$	—	$	2,780	$	2,795	$	—
Non-owner occupied		1,458		1,458		—		1,991		1,991		—
		6,234		6,249		—		4,771		4,786		—
Consumer real estate
Home equity lines		300		300		—		300		300		—
Secured by 1‑4 family residential
First deed of trust		1,873		1,873		—		1,937		1,940		—
Second deed of trust		238		406		—		699		992		—
		2,411		2,579		—		2,936		3,232		—
Commercial and industrial loans
(except those secured by real estate)		185		185		—		141		141		—
		8,830		9,013		—		7,848		8,159		—

With an allowance recorded
Commercial real estate
Owner occupied		267		267		4		1,125		1,125		9
		267		267		4		1,125		1,125		9
Consumer real estate
Secured by 1-4 family residential
First deed of trust		146		146		7		74		74		8
		146		146		7		74		74		8
		413		413		11		1,199		1,199		17

Total
Owner occupied		5,043		5,058		4		3,905		3,920		9
Non-owner occupied		1,458		1,458		—		1,991		1,991		—
		6,501		6,516		4		5,896		5,911		9
Consumer real estate
Home equity lines		300		300		—		300		300		—
Secured by 1-4 family residential,
First deed of trust		2,019		2,019		7		2,011		2,014		8
Second deed of trust		238		406		—		699		992		—
		2,557		2,725		7		3,010		3,306		8
Commercial and industrial loans
(except those secured by real estate)		185		185		—		141		141		—
	$	9,243	$	9,426	$	11	$	9,047	$	9,358	$	17

The following is a summary of average recorded investment in impaired loans with and without valuation allowance and interest income recognized on those loans for periods indicated (in thousands):


	December 31,
	2021				2020
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded
Construction and land development
Commercial	$	—	$	—	$	221	$	—
		—		—		221		—
Commercial real estate
Owner occupied		5,068		159		3,189		124
Non-owner occupied		1,767		86		1,980		89
		6,835		245		5,169		213
Consumer real estate
Home equity lines		300		25		300		23
Secured by 1-4 family residential
First deed of trust		1,924		93		2,069		66
Second deed of trust		574		23		802		46
		2,798		141		3,171		135
Commercial and industrial loans
(except those secured by real estate)		195		1		151		1
		9,828		387		8,712		349

With an allowance recorded
Commercial real estate
Owner occupied		67		19		913		32
		67		19		913		32
Consumer real estate
Secured by 1-4 family residential
First deed of trust		149		4		76		4
Second deed of trust		—		—		26		—
		149		4		102		4
Commercial and industrial loans
(except those secured by real estate)		—		—		129		—
Consumer and other		—		—		—		—
		216		23		1,144		36

Total
Construction and land development
Commercial		—		—		221		—
		—		—		221		—
Commercial real estate
Owner occupied		5,135		178		4,102		156
Non-owner occupied		1,767		86		1,980		89
		6,902		264		6,082		245
Consumer real estate
Home equity lines		300		25		300		23
Secured by 1-4 family residential,
First deed of trust		2,073		97		2,145		70
Second deed of trust		574		23		828		46
		2,947		145		3,273		139
Commercial and industrial loans
(except those secured by real estate)		195		1		280		1
Consumer and other		—		—		—		—
	$	10,044	$	410	$	9,856	$	385

As of December 31, 2021 and 2020, the Company had impaired loans of $1,359,000 and $1,577,000, respectively, which were on nonaccrual status. These loans had no valuation allowances as of December 31, 2021 and December 31, 2020. Cumulative interest income that would have been recorded had nonaccrual loans been performing would have been $88,000 and $84,000 for 2021 and 2020, respectively.

Included in impaired loans are loans classified as TDRs. A modification of a loan’s terms constitutes a TDR if the creditor grants a concession to the borrower for economic or legal reasons related to the borrowers financial difficulties that it would not otherwise consider. For loans classified as impaired TDRs, the Company further evaluates the loans as performing or nonaccrual. To restore a nonaccrual loan that has been formally restructured in a TDR to accrual status, we perform a current, well documented credit analysis supporting a return to accrual status based on the borrower’s financial condition and prospects for repayment under the revised terms. Otherwise, the TDR must remain in nonaccrual status. The analysis considers the borrower’s sustained historical repayment performance for a reasonable period to the return-to-accrual date, but may take into account payments made for a reasonable period prior to the restructuring if the payments are consistent with the modified terms. A sustained period of repayment performance generally would be a minimum of six months and would involve payments in the form of cash or cash equivalents.

An accruing loan that is modified in a TDR can remain in accrual status if, based on a current well-documented credit analysis, collection of principal and interest in accordance with the modified terms is reasonably assured, and the borrower has demonstrated sustained historical repayment performance for a reasonable period before modification. The following is a summary of performing and nonaccrual TDRs and the related specific valuation allowance by portfolio segment as of December 31, 2021 and 2020 (dollars in thousands).


							Specific
							Valuation
	Total		Performing		Nonaccrual		Allowance
December 31, 2021
Commercial real estate
Owner occupied	$	3,243	$	3,243	$	—	$	4
Non-owner occupied		1,458		1,172		286		—
		4,701		4,415		286		4
Consumer real estate
Secured by 1-4 family residential
First deeds of trust		1,666		1,279		387		7
Second deeds of trust		99		40		59		—
		1,765		1,319		446		7
Commercial and industrial loans
(except those secured by real estate)		19		—		19		—
	$	6,485	$	5,734	$	751	$	11

Number of loans		28		23		5		3


							Specific
							Valuation
	Total		Performing		Nonaccrual		Allowance
December 31, 2020

Commercial real estate
Owner occupied	$	3,396	$	3,396	$	—	$	9
Non-owner occupied		1,991		1,688		303		—
		5,387		5,084		303		9
Consumer real estate
Secured by 1-4 family residential
First deeds of trust		1,460		910		550		8
Second deeds of trust		617		556		61		—
		2,077		1,466		611		8
Commercial and industrial loans
(except those secured by real estate)		27		—		27		—
	$	7,491	$	6,550	$	941	$	17

Number of loans		34		27		7		2

The following table provides information about TDRs identified during the indicated periods (dollars in thousands).


	Year Ended					Year Ended
	December 31, 2021					December 31, 2020
		Pre-		Post-			Pre-		Post-
		Modification		Modification			Modification		Modification
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Loans	Balance		Balance		Loans	Balance		Balance

Commercial real estate Non-owner occupied	—	$	—	$	—	1	$	311	$	311

Secured by 1-4 family residential
First deed of trust	1		267		267	—		—		—
	1	$	267	$	267	1	$	311	$	311

A TDR payment default occurs when, within 12 months of the original TDR modification, either a full or partial charge-off occurs or a TDR becomes 90 days or more past due. The specific reserve associated with a TDR is reevaluated when a TDR payment default occurs. There were no defaults on TDRs that were modified as TDRs during the twelve-month periods ended December 31, 2021 and 2020.

The CARES Act, as amended by the Appropriations Act, permits financial institutions to suspend requirements under GAAP for loan modifications to borrowers affected by COVID-19 that would otherwise be characterized as TDRs and suspend any determination related thereto if (i) the loan modification is made between March 1, 2020 and the earlier of January 1, 2022 or 60 days after the end of the COVID-19 emergency declaration and (ii) the applicable loan was not more than 30 days past due as of December 31, 2019. In addition, federal bank regulatory authorities have issued guidance to encourage financial institutions to make loan modifications for borrowers affected by COVID-19 and have assured financial institutions that they will neither receive supervisory criticism for such prudent loan modifications, nor be required by examiners to automatically categorize COVID-19-related loan modifications as TDRs. As of December 31, 2021, all previously modified loans had returned to contractual payment terms. As of December 31, 2020, the Company had approximately $38.0 million in loans still under their modified terms. The Company’s modification program primarily included payment deferrals and interest only modifications.