Included in commercial and industrial loans as of September 30, 2022 and December 31, 2021 were loans issued under the SBA’s Paycheck Protection Program (“PPP”) of $1,897 and $38,114, respectively.

The following tables present the activity in the allowance for loan losses by portfolio segment for each of the three and nine months ended September 30, 2022 and 2021:

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2022 and December 31, 2021:

Included in the commercial and industrial loans collectively evaluated for impairment are PPP loans of $1,897 and $38,114 as of September 30, 2022 and December 31, 2021, respectively. PPP loans receivable are guaranteed by the SBA and have no allocation in the allowance for loan losses.

The following tables present loans individually evaluated for impairment recognized by class of loans as of September 30, 2022 and December 31, 2021:

The following tables present the average recorded investment and interest income of loans individually evaluated for impairment recognized by class of loans for the three and nine months ended September 30, 2022 and 2021:

(1) Cash basis interest income approximates interest income recognized.


	Nine Months Ended				Nine Months Ended
	September 30, 2022				September 30, 2021
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized⁽¹⁾		Investment		Recognized⁽¹⁾
With no related allowance recorded
Commercial and industrial	$	—	$	—	$	32	$	1
Commercial real estate		17,549		476		13,620		442
Commercial real estate construction		578		—		578		—
Residential real estate		983		18		593		23
Home equity		—		—		25		1
Consumer		—		—		—		—
Total	$	19,110	$	494	$	14,848	$	467
With an allowance recorded:
Commercial and industrial	$	9,264	$	157	$	2,892	$	118
Commercial real estate		2,292		90		10,390		405
Commercial real estate construction		—		—		—		—
Residential real estate		—		—		77		2
Home equity		—		—		—		—
Consumer		110		4		120		5
Total	$	11,666	$	251	$	13,479	$	530

(1)

Cash basis interest income approximates interest income recognized.

The following table presents the recorded investment in non-accrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2022 and December 31, 2021:


					Loans Past Due Over 90 Days
	Non-accrual				Still Accruing
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Commercial and industrial	$	4,170	$	—	$	409	$	720
Commercial real estate		3,958		3,928		—		465
Commercial real estate construction		—		—		—		—
Residential real estate		1,146		578		—		—
Home equity		53		50		—		—
Consumer		—		4		456		208
Total	$	9,327	$	4,560	$	865	$	1,393

The following tables present the aging of the recorded investment in past-due loans as of September 30, 2022 and December 31, 2021 by class of loans:


	30-59 Days		60-89 Days		Greater Than		Total		Loans
	Past Due		Past Due		90 Days		Past Due		Not Past Due
September 30, 2022
Commercial and industrial	$	461	$	492	$	1,500	$	2,453	$	248,840
Commercial real estate		281		—		684		965		1,058,856
Commercial real estate construction		—		—		—		—		132,945
Residential real estate		—		591		1,146		1,737		71,815
Home equity		—		—		—		—		12,750
Consumer		92		28		456		576		16,767
Total	$	834	$	1,111	$	3,786	$	5,731	$	1,541,973


	30-59 Days		60-89 Days		Greater Than		Total		Loans
	Past Due		Past Due		90 Days		Past Due		Not Past Due
December 31, 2021
Commercial and industrial	$	541	$	1,519	$	720	$	2,780	$	265,728
Commercial real estate		—		2,873		1,161		4,034		848,673
Commercial real estate construction		—		—		—		—		72,250
Residential real estate		26		—		578		604		64,644
Home equity		—		58		50		108		13,530
Consumer		1,134		292		212		1,638		17,439
Total	$	1,701	$	4,742	$	2,721	$	9,164	$	1,282,264

As of September 30, 2022 and December 31, 2021, loans in the process of foreclosure were $2,064 and $2,024 respectively, of which $1,125 and $578 were secured by residential real estate.

As of September 30, 2022 and December 31, 2021, the Company has a recorded investment in troubled debt restructurings (“TDRs”) of $14,168 and $14,500 respectively. The Company has allocated $173 and $687 of specific allowance for these loans at September 30, 2022 and December 31, 2021, respectively, and there were no commitments to lend additional funds to borrowers whose loans were classified as TDRs. There were no restructured loans that defaulted within the three or nine months ended September 30, 2022 and September 30, 2021.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

There were no loans whose terms were modified resulting in TDRs during the three and nine months ended September 30, 2022 and September 30, 2021.

The Company categorizes 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, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans with an outstanding balance greater than $350 thousand and non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on an annual basis. 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 deterioration of the repayment prospects for the loan or 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 so classified 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 liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

Based on the analysis performed as of September 30, 2022 and December 31, 2021, the risk category of loans by class of loans is as follows:


			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
September 30, 2022
Commercial and industrial	$	246,129	$	609	$	1,716	$	2,839	$	—	$	251,293
Commercial real estate		1,038,272		5,641		15,908		—		—		1,059,821
Commercial real estate construction		132,945		—		—		—		—		132,945
Residential real estate		71,815		—		1,737		—		—		73,552
Home equity		12,697		—		53		—		—		12,750
Consumer		17,236		—		107		—		—		17,343
Total	$	1,519,094	$	6,250	$	19,521	$	2,839	$	—	$	1,547,704


			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
December 31, 2021
Commercial and industrial	$	252,268	$	4,156	$	12,084	$	—	$	—	$	268,508
Commercial real estate		835,787		679		16,241		—		—		852,707
Commercial real estate construction		72,250		—		—		—		—		72,250
Residential real estate		64,094		—		1,154		—		—		65,248
Home equity		13,588		50		—		—		—		13,638
Consumer		18,963		—		114		—		—		19,077
Total	$	1,256,950	$	4,885	$	29,593	$	—	$	—	$	1,291,428

Loans to certain directors and principal officers of the Company, including their immediate families and companies in which they are affiliated, amounted to $11,922 and $5,076 at September 30, 2022 and December 31, 2021, respectively.