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LOANS
 12 Months Ended
Dec. 31, 2021
LOANS [Abstract]  
LOANS
NOTE 4 – LOANS


Our loan portfolios at December 31 follow:

 
2021
    
2020
  
   
(In thousands)
  
Real estate (1)
            
Residential first mortgages
  
$
870,169
    
$
792,762
  
Residential home equity and other junior mortgages
    
128,801
      
138,128
  
Construction and land development
    
278,992
      
232,693
  
Other (2)
    
726,224
      
669,150
  
Consumer
    
339,785
      
468,090
  
Commercial
    
555,696
      
429,011
  
Agricultural
    
5,378
      
3,844
  
Total loans
  
$
2,905,045
    
$
2,733,678
  


(1)
Includes both residential and non-residential commercial loans secured by real estate.
(2)
Includes loans secured by multi-family residential and non-farm, non-residential property.


Loans include net deferred loan costs of $22.4 million and $14.6 million at December 31, 2021 and 2020, respectively.


During 2021, we sold $9.6 million of portfolio residential fixed rate mortgage loans servicing retained into the secondary market and recognized a gain on sale of $0.45 million. During 2020, we securitized $26.3 million of portfolio residential fixed rate mortgage loans servicing retained with Freddie Mac and recognized a gain on sale of $0.72 million.  We also sold $2.4 million of portfolio residential fixed rate mortgage loans servicing retained into the secondary market and recognized a gain on sale of $0.07 million. During 2019, we sold $40.6 million of residential adjustable rate mortgage loans servicing released to another financial institution and recognized a gain on sale of $0.01 million. We also securitized $65.1 million of portfolio residential fixed rate mortgage loans servicing retained with Freddie Mac and recognized a gain on sale of $1.7 million. In addition, we sold $9.9 million of residential fixed and adjustable rate portfolio mortgage loans servicing retained to another financial institution and recognized a gain on sale of $0.07 million. These loan sale transactions were done primarily for asset/liability management purposes.


 

An analysis of the ACL by portfolio segment for the years ended December 31 follows:

 
Commercial
    
Mortgage
    
Installment
    
Subjective
Allocation
    
Total
  
   
(In thousands)
  
2021
                              
Balance at beginning of period
  
$
7,401
    
$
6,998
    
$
1,112
    
$
19,918
    
$
35,429
  
Additions (deductions)
                                        
Impact of adoption of CECL
     2,551       12,000       3,052       (6,029 )     11,574  
Provision for credit losses
    
(1,135
)
    
(266
)
    
599
      
(1,126
)
    
(1,928
)
Initial allowance on loans purchased with credit deterioration
     95       18       21       -       134  
Recoveries credited to  allowance
    
2,607
      
846
      
1,024
      
-
      
4,477
  
Loans charged against  the allowance
    
-
      
(375
)
    
(2,059
)
    
-
      
(2,434
)
Balance at end of period
  
$
11,519
    
$
19,221
    
$
3,749
    
$
12,763
    
$
47,252
  

2020
                              
Balance at beginning of period
  
$
7,922
    
$
8,216
    
$
1,283
    
$
8,727
    
$
26,148
  
Additions (deductions)
                                        
Provision for credit losses (1)
    
1,751
      
(915
)
    
436
      
11,191
      
12,463
  
Recoveries credited to  allowance
    
1,804
      
513
      
752
      
-
      
3,069
  
Loans charged against  the allowance
    
(4,076
)
    
(816
)
    
(1,359
)
    
-
      
(6,251
)
Balance at end of period
  
$
7,401
    
$
6,998
    
$
1,112
    
$
19,918
    
$
35,429
  

2019
                              
Balance at beginning of period
  
$
7,090
    
$
7,978
    
$
895
    
$
8,925
    
$
24,888
  
Additions (deductions)
                                        
Provision for credit losses (1)
    
(651
)
    
526
      
1,147
      
(198
)
    
824
  
Recoveries credited to  allowance
    
2,165
      
933
      
863
      
-
      
3,961
  
Loans charged against  the allowance
    
(682
)
    
(1,221
)
    
(1,622
)
    
-
      
(3,525
)
Balance at end of period
  
$
7,922
    
$
8,216
    
$
1,283
    
$
8,727
    
$
26,148
  

(1)
Beginning January 1, 2021, calculation is based on CECL methodology. Prior to January 1, 2021, calculation was based on the probable incurred loss methodology.


The allocation of the ACL by portfolio segment at December 31 follows:

 
  
2021
    
2020
  
    
  
Allowance
for Credit
Losses
Amount
    
Percent
of Loans
to Total
Portfolio Loans
    
Allowance
for Credit
Losses
Amount (1)
    
Percent
of Loans
to Total
Portfolio Loans
  
 
  
(Dollars in thousands)
  
Commercial
  
$
11,519
      
41.5
%
  
$
7,401
      
45.4
%
Mortgage
    
19,221
      
39.2
   
6,998
      
37.2
Installment
    
3,749
      
19.3
   
1,112
      
17.4
Subjective allocation
    
12,763
      
-
      
19,918
      
-
  
Total
  
$
47,252
      
100.0
%
  
$
35,429
      
100.0
%

(1)
Beginning January 1, 2021, calculation is based on CECL methodology. Prior to January 1, 2021, calculation was based on the probable incurred loss methodology.


ACL and recorded investment in loans by portfolio segment at December 31, 2020 follows (1):

 
Commercial
    
Mortgage
    
Installment
    
Subjective
Allocation
    
Total
  
   
(In thousands)
  
December 31, 2020
                              
ACL:
                              
Individually evaluated for impairment
  
$
1,266
    
$
4,124
    
$
191
    
$
-
    
$
5,581
  
Collectively evaluated for impairment
    
6,135
      
2,874
      
921
      
19,918
      
29,848
  
Loans acquired with deteriorated credit quality
    
-
      
-
      
-
      
-
      
-
  
Total ending ACL
  
$
7,401
    
$
6,998
    
$
1,112
    
$
19,918
    
$
35,429
  
                                         
Loans
                                        
Individually evaluated for impairment
  
$
9,431
    
$
39,245
    
$
1,996
            
$
50,672
  
Collectively evaluated for impairment
    
1,236,052
      
980,449
      
474,379
              
2,690,880
  
Loans acquired with deteriorated credit quality
    
468
      
410
      
147
              
1,025
  
Total loans recorded investment
    
1,245,951
      
1,020,104
      
476,522
              
2,742,577
  
Accrued interest included in recorded investment
    
3,536
      
4,178
      
1,185
              
8,899
  
Total loans
  
$
1,242,415
    
$
1,015,926
    
$
475,337
            
$
2,733,678
  

(1)
Beginning January 1, 2021, calculation is based on CECL methodology. Prior to January 1, 2021, calculation was based on the probable incurred loss methodology.


Loans on non-accrual status and past due more than 90 days (‘‘Non-performing Loans’’) at December 31 follow:



 
  
December 31, 2021
        
      
  
Non-
Accrual
with no
Allowance
for Credit
Loss
    
Non-
Accrual
with an
Allowance
for Credit
Loss
    
Total
Non-
Accrual
    
90+ and
Still
Accruing
    
Total Non-
Performing
Loans
    
December 31,
2020
Total Non-
Performing
Loans (1)
  
 
  
(In thousands)
        
Commercial
                                    
Commercial and industrial (2)
  
$
-
    
$
15
    
$
15
    
$
-
    
$
15
    
$
1,387
  
Commercial real estate
    
-
      
-
      
-
      
-
      
-
      
-
  
Mortgage
                                                
1-4 family owner occupied - jumbo
    
607
      
-
      
607
      
-
      
607
      
623
  
1-4 family owner occupied - non-jumbo (3)
    
137
      
1,815
      
1,952
      
-
      
1,952
      
2,281
  
1-4 family non-owner occupied
    
275
      
592
      
867
      
-
      
867
      
1,112
  
1-4 family - 2nd lien
    
182
      
681
      
863
      
-
      
863
      
1,344
  
Resort lending
    
118
      
119
      
237
      
-
      
237
      
607
  
Installment
                                                
Boat lending
    
-
      
210
      
210
      
-
      
210
      
52
  
Recreational vehicle lending
    
-
      
177
      
177
      
-
      
177
      
74
  
Other
    
-
      
182
      
182
      
-
      
182
      
393
  
Total
  
$
1,319
    
$
3,791
    
$
5,110
    
$
-
    
$
5,110
    
$
7,873
  
 
                                                
Accrued interest excluded from total
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  

(1)
Non-performing loans exclude purchase credit impaired loans.
(2)
Non-performing commercial and industrial loans exclude $0.047 million and $0.053 million of government guaranteed loans at December 31, 2021 and 2020, respectively.
(3)
Non-performing 1-4 family owner occupied – non jumbo loans exclude $0.388 million and $0.386 million of government guaranteed loans at December 31, 2021 and 2020, respectively.



If non-performing loans had continued to accrue interest in accordance with their original terms, approximately $0.2 million, $0.5 million and $0.4 million of interest income would have been recognized in each of the years ended 2021, 2020 and 2019, respectively. Interest income recorded on these loans was approximately zero during each of the years ended 2021, 2020 and 2019.



The following table provides collateral information by class of loan for collateral-dependent loans with a specific reserve. A loan is considered to be collateral dependent when the borrower is experiencing financial difficulty and the repayment is expected to be provided substantially through the operation or sale of collateral.



The amortized cost of collateral-dependent loans by class follows:

 
  
Collateral Type
    
Allowance
  
 
  
Real
          
for
  
 
  
Estate
    
Other
    
Credit Losses
  
 
  
(In thousands)
  
December 31, 2021
                  
Commercial
                  
Commercial and industrial
  
$
80
    
$
245
     $
51
  
Commercial real estate
    
84
      
-
      
19
  
Mortgage
                        
1-4 family owner occupied - jumbo
    
607
      
-
      
-
  
1-4 family owner occupied - non-jumbo
    
940
      
-
      
286
  
1-4 family non-owner occupied
    
477
      
-
      
72
  
1-4 family - 2nd lien
    
370
      
-
      
67
  
Resort lending
    
237
      
-
      
42
  
Installment
                        
Boat lending
    
-
      
80
      
29
  
Recreational vehicle lending
    
-
      
121
      
44
  
Other
    
-
      
70
      
25
  
Total
  
$
2,795
    
$
516
    
$
635
  
 
                        
Accrued interest excluded from total
  
$
-
    
$
1
          



An aging analysis of loans by class at December 31 follows:

 
Loans Past Due
    
Loans not
    
Total
  
   
30-59 days
    
60-89 days
    
90+ days
    
Total
    
Past Due
    
Loans
  
   
(In thousands)
  
2021
                                    
Commercial
                                    
Commercial and industrial
  
$
-
    
$
2
    
$
62
    
$
64
    
$
593,048
    
$
593,112
  
Commercial real estate
    
-
      
-
      
-
      
-
      
610,469
      
610,469
  
Mortgage
                                                
1-4 family owner occupied - jumbo
    
-
      
-
      
607
      
607
      
540,416
      
541,023
  
1-4 family owner occupied - non-jumbo
    
774
      
408
      
657
      
1,839
      
264,571
      
266,410
  
1-4 family non-owner occupied
    
87
      
26
      
462
      
575
      
194,277
      
194,852
  
1-4 family - 2nd lien
    
422
      
60
      
289
      
771
      
87,958
      
88,729
  
Resort lending
    
-
      
-
      
237
      
237
      
48,408
      
48,645
  
Installment
                                                
Boat lending
    
438
      
28
      
52
      
518
      
227,622
      
228,140
  
Recreational vehicle lending
    
377
      
65
      
120
      
562
      
234,183
      
234,745
  
Other
    
252
      
57
      
49
      
358
      
98,562
      
98,920
  
Total
 
$
2,350
    
$
646
    
$
2,535
    
$
5,531
    
$
2,899,514
    
$
2,905,045
  
Accrued interest excluded from total
  
$
25
    
$
9
    
$
-
    
$
34
    
$
6,802
    
$
6,836
  
                                                 
2020
                                                
Commercial
                                                
Commercial and industrial
  
$
5,003
    
$
131
    
$
70
    
$
5,204
    
$
671,115
    
$
676,319
  
Commercial real estate
    
2,600
      
-
      
-
      
2,600
      
567,032
      
569,632
  
Mortgage
                                                
1-4 family owner occupied - jumbo
    
761
      
-
      
623
      
1,384
      
438,794
      
440,178
  
1-4 family owner occupied - non-jumbo
    
1,888
      
453
      
502
      
2,843
      
264,730
      
267,573
  
1-4 family non-owner occupied
    
1,184
      
139
      
476
      
1,799
      
157,977
      
159,776
  
1-4 family - 2nd lien
    
710
      
228
      
732
      
1,670
      
92,860
      
94,530
  
Resort lending
    
32
      
195
      
358
      
585
      
57,462
      
58,047
  
Installment
                                                
Boat lending
    
95
      
101
      
-
      
196
      
207,317
      
207,513
  
Recreational vehicle lending
    
207
      
37
      
48
      
292
      
169,282
      
169,574
  
Other
    
337
      
162
      
199
      
698
      
98,737
      
99,435
  
Total recorded investment
  
$
12,817
    
$
1,446
    
$
3,008
    
$
17,271
    
$
2,725,306
    
$
2,742,577
  
Accrued interest included in recorded investment
  
$
147
    
$
22
    
$
-
    
$
169
    
$
8,730
    
$
8,899
  


Impaired loans at December 31, 2020 are as follows (1):

   
2020
  
   
(In thousands)
  
Impaired loans with no allocated ACL
      
TDR
  
$
93
  
Non - TDR
    
1,367
  
Impaired loans with an allocated ACL
        
TDR - allowance based on collateral
    
9,027
  
TDR - allowance based on present value cash flow
    
37,953
  
Non - TDR - allowance based on collateral
    
1,873
  
Total impaired loans
  
$
50,313
  
         
Amount of ACL allocated (1)
        
TDR - allowance based on collateral
  
$
1,058
  
TDR - allowance based on present value cash flow
    
3,755
  
Non - TDR - allowance based on collateral
    
768
  
Total amount of ACL allocated
  
$
5,581
  

(1)
Beginning January 1, 2021, calculation is based on CECL methodology. Prior to January 1, 2021, calculation was based on the probable incurred loss methodology.


Impaired loans by class as of December 31, 2020 are as follows (1):

 
2020
  
   
Recorded
Investment
    
Unpaid
Principal
Balance
    
Related
ACL (1)		  
   
(In thousands)
  
With no related ACL recorded:
      
Commercial
                  
Commercial and industrial
  
$
77
    
$
80
    
$
-
  
Commercial real estate
    
-
      
-
      
-
  
Mortgage
                        
1-4 family owner occupied - jumbo
    
623
      
629
      
-
  
1-4 family owner occupied - non-jumbo
    
-
      
-
      
-
  
1-4 family non-owner occupied
    
305
      
473
      
-
  
1-4 family - 2nd lien
    
301
      
304
      
-
  
Resort lending
    
154
      
379
      
-
  
Installment
                        
Boat lending
    
-
      
-
      
-
  
Recreational vehicle lending
    
-
      
-
      
-
  
Other
    
-
      
-
      
-
  
     
1,460
      
1,865
      
-
  

With an ACL recorded:
      
Commercial
                  
Commercial and industrial
  

2,227
      
2,370
      
756
  
Commercial real estate
    
7,127
      
7,096
      
510
  
Mortgage
                        
1-4 family owner occupied - jumbo
    
506
      
880
      
50
  
1-4 family owner occupied - non-jumbo
    
21,655
      
22,311
      
2,300
  
1-4 family non-owner occupied
    
4,335
      
4,704
      
495
  
1-4 family - 2nd lien
    
811
      
829
      
200
  
Resort lending
    
10,555
      
10,764
      
1,079
  
Installment
                        
Boat lending
    
7
      
11
      
2
  
Recreational vehicle lending
    
87
      
100
      
19
  
Other
    
1,902
      
2,040
      
170
  
     
49,212
      
51,105
      
5,581
  
Total
                        
Commercial
                        
Commercial and industrial
    
2,304
      
2,450
      
756
  
Commercial real estate
    
7,127
      
7,096
      
510
  
Mortgage
                        
1-4 family owner occupied - jumbo
    
1,129
      
1,509
      
50
  
1-4 family owner occupied - non-jumbo
    
21,655
      
22,311
      
2,300
  
1-4 family non-owner occupied
    
4,640
      
5,177
      
495
  
1-4 family - 2nd lien
    
1,112
      
1,133
      
200
  
Resort lending
    
10,709
      
11,143
      
1,079
  
Installment
                        
Boat lending
    
7
      
11
      
2
  
Recreational vehicle lending
    
87
      
100
      
19
  
Other
    
1,902
      
2,040
      
170
  
Total
  
$
50,672
    
$
52,970
    
$
5,581
  
                         
Accrued interest included in recorded investment
  
$
359
                  

(1)
Beginning January 1, 2021, calculation is based on CECL methodology. Prior to January 1, 2021, calculation was based on the probable incurred loss methodology.


Average recorded investment in and interest income earned (of which the majority of these amounts were received in cash and related primarily to performing TDR’s) on impaired loans by class for the years ended December 31, 2020 and 2019 follows (1):

 
2020
    
2019
  
   
Average
Recorded
Investment
    
Interest
Income
Recognized
    
Average
Recorded
Investment
    
Interest
Income
Recognized
  
   
(In thousands)
  
With no related ACL recorded:
      
Commercial
                        
Commercial and industrial
  
$
125
    
$
9
    
$
51
    
$
-
  
Commercial real estate
    
159
      
-
      
278
      
5
  
Mortgage
                                
1-4 family owner occupied - jumbo
    
408
      
-
      
-
      
-
  
1-4 family owner occupied - non-jumbo
    
252
      
4
      
201
      
-
  
1-4 family non-owner occupied
    
308
      
10
      
123
      
-
  
1-4 family - 2nd lien
    
380
      
-
      
136
      
7
  
Resort lending
    
92
      
-
      
-
      
-
  
Installment
                                
Boat lending
    
-
      
-
      
-
      
-
  
Recreational vehicle lending
    
-
      
-
      
-
      
-
  
Other
    
-
      
-
      
-
      
1
  
     
1,724
      
23
      
789
      
13
  
With an a ACL recorded:
                                
Commercial
                                
Commercial and industrial
    
2,230
      
242
      
2,256
      
72
  
Commercial real estate
    
10,751
      
1,043
      
5,778
      
315
  
Mortgage
                                
1-4 family owner occupied - jumbo
    
1,083
      
84
      
995
      
39
  
1-4 family owner occupied - non-jumbo
    
19,624
      
2,033
      
15,183
      
594
  
1-4 family non-owner occupied
    
4,664
      
375
      
2,874
      
291
  
1-4 family - 2nd lien
    
3,376
      
22
      
13,383
      
809
  
Resort lending
    
11,316
      
799
      
11,697
      
669
  
Installment
                                
Boat lending
    
59
      
1
      
54
      
-
  
Recreational vehicle lending
    
81
      
4
      
22
      
-
  
Other
    
2,416
      
225
      
3,186
      
189
  
     
55,600
      
4,828
      
55,428
      
2,978
  
Total
                                
Commercial
                                
Commercial and industrial
    
2,355
      
251
      
2,307
      
72
  
Commercial real estate
    
10,910
      
1,043
      
6,056
      
320
  
Mortgage
                                
1-4 family owner occupied - jumbo
    
1,491
      
84
      
995
      
39
  
1-4 family owner occupied - non-jumbo
    
19,876
      
2,037
      
15,384
      
594
  
1-4 family non-owner occupied
    
4,972
      
385
      
2,997
      
291
  
1-4 family - 2nd lien
    
3,756
      
22
      
13,519
      
816
  
Resort lending
    
11,408
      
799
      
11,697
      
669
  
Installment
                                
Boat lending
    
59
      
1
      
54
      
-
  
Recreational vehicle lending
    
81
      
4
      
22
      
-
  
Other
    
2,416
      
225
      
3,186
      
190
  
Total
  
$
57,324
    
$
4,851
    
$
56,217
    
$
2,991
  

(1)
Beginning January 1, 2021, calculation is based on CECL methodology. Prior to January 1, 2021, calculation was based on the probable incurred loss methodology.


Troubled debt restructurings at December 31 follow:

 
2021
  
   
Commercial
    
Retail (1)
    
Total
  
   
(In thousands)
  
Performing TDR’s
  
$
4,481
    
$
31,589
    
$
36,070
  
Non-performing TDR’s (2)
    
-
      
1,016
(3) 
    
1,016
  
Total
  
$
4,481
    
$
32,605
    
$
37,086
  

 
2020
  
   
Commercial
    
Retail (1)
    
Total
  
   
(In thousands)
  
Performing TDR’s
  
$
7,956
    
$
36,385
    
$
44,341
  
Non-performing TDR’s (2)
    
1,148
      
1,584
(3) 
    
2,732
  
Total
  
$
9,104
    
$
37,969
    
$
47,073
  


(1)
Retail loans include mortgage and installment loan portfolio segments.
(2)
Included in non-performing loans table above.
(3)
Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.


We have allocated $3.6 million and $4.8 million of reserves to customers whose loan terms have been modified in troubled debt restructurings as of December 31, 2021 and 2020, respectively. We have committed to lend additional amounts totaling up to $0.04 million and $0.07 million at December 31, 2021 and 2020, respectively, to customers with outstanding loans that are classified as troubled debt restructurings.


The terms of certain loans have been modified as troubled debt restructurings and generally included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at  a stated rate of interest lower than the current market rate for a new loan with similar risk; or a permanent reduction  of the recorded investment in the loan.


Modifications involving a reduction of the stated interest rate of the loan have generally been for periods ranging from 9 months to 36 months but have extended to as much as 480 months in certain circumstances. Modifications involving an extension of the maturity date have generally been for periods ranging from 1 month to 60 months but have extended to as much as 230 months in certain circumstances.




Loans that have been classified as troubled debt restructurings during the years ended December 31 follow (1):

 
Number of
Contracts
    
Pre-modification
Recorded
Balance
    
Post-modification
Recorded
Balance
  
   

 
2020
      
Commercial
                  
Commercial and industrial
    
7
    
$
1,207
    
$
1,207
  
Commercial real estate
    
4
      
7,012
      
7,012
  
Mortgage
                        
1-4 family owner occupied - jumbo
    
-
      
-
      
-
  
1-4 family owner occupied - non-jumbo
    
5
      
357
      
374
  
1-4 family non-owner occupied
    
2
      
111
      
116
  
1-4 family - 2nd lien
    
2
      
44
      
46
  
Resort lending
    
-
      
-
      
-
  
Installment
                        
Boat lending
    
-
      
-
      
-
  
Recreational vehicle lending
    
-
      
-
      
-
  
Other
    
4
      
91
      
93
  
Total
    
24
    
$
8,822
    
$
8,848
  

   
Number of
Contracts
    
Pre-modification
Recorded
Balance
    
Post-modification
Recorded
Balance
  
   
(Dollars in thousands)
  
       
2019
                  
Commercial
                  
Commercial and industrial
    
8
    
$
1,609
    
$
1,609
  
Commercial real estate
    
3
      
1,479
      
1,479
  
Mortgage
                        
1-4 family owner occupied - jumbo
    
-
      
-
      
-
  
1-4 family owner occupied - non-jumbo
    
2
      
478
      
483
  
1-4 family non-owner occupied
    
1
      
507
      
505
  
1-4 family - 2nd lien
    
3
      
75
      
75
  
Resort lending
    
-
      
-
      
-
  
Installment
                        
Boat lending
    
-
      
-
      
-
  
Recreational vehicle lending
    
-
      
-
      
-
  
Other
    
7
      
188
      
191
  
Total
    
24
    
$
4,336
    
$
4,342
  

(1)
There were no TDR modifications during the year ended December 31, 2021. The loan modifications during 2020 in the table above did not qualify for relief from TDR accounting under the CARES Act.


The troubled debt restructurings described above increased the ACL by $0.04 million and $0.50 million during the years ended December 31, 2020 and 2019, respectively and resulted in charge offs of zero during each of the years ended December 31, 2020 and 2019, respectively.


A loan is generally considered to be in payment default once it is 90 days contractually past due under the modified terms for commercial loans and installment loans and when four consecutive payments are missed for mortgage loans.
 

There were no troubled debt restructurings that subsequently defaulted within twelve months following modification during 2021 and 2020.  During 2019 we had one commercial and industrial loan with a recorded balance of $0.019 million and one 1-4 family owner occupied – non-jumbo loan with a recorded balance of $0.012 million that subsequently defaulted within twelve months following modification.  These loans did not impact the ACL during 2019 and resulted in zero charge offs during 2019.



The terms of certain other loans were modified during the years ending December 31, 2021, 2020 and 2019 that did not meet the definition of a troubled debt restructuring. The modification of these loans could have included modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant.


In order to determine whether a borrower is experiencing financial difficulty, we perform an evaluation 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 our internal underwriting policy.


Non-TDR Loan Modifications and Paycheck Protection Program (“PPP”) due to COVID-19 - On March 22, 2020, the federal banking agencies issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus”.  This guidance encourages financial institutions to work prudently with borrowers that may be unable to meet their contractual obligations because of the effects of COVID-19.  The guidance goes on to explain that in consultation with the Financial Accounting Standards Board staff that the federal banking agencies conclude that short-term modifications (e.g. six months or less) made on a good faith basis to borrowers who were current (less than 30 days past due) as of the implementation date of a relief program are not TDRs.  In addition, on March 27, 2020, the CARES Act was signed into law.  Section 4013 of the CARES Act also addressed COVID-19 related modifications and specified that COVID-19 related modifications on loans that were current (less than 30 days past due) as of December 31, 2019 are not TDRs.  We are assisting both commercial and retail (mortgage and installment) borrowers with reduced or suspended payments. Commercial loan accommodations are typically a three month interest-only period while retail loan (mortgage and installment) forbearances have primarily been payment suspensions for three months. For loans subject to these forbearance agreements each borrower is required to resume making regularly scheduled loan payments at the end of the forbearance period.  The deferred principal and interest will be repaid based upon individualized agreements.  Options for repayment include separate repayment plans, extending the term of the loan or re-amortizing the loan based upon the affordability of the payment in relationship to a reduced income.  While some borrowers may elect to make a lump sum payment, we anticipate the majority will require some type of repayment plan.  During the forbearance period, the loan will not be reported as past due in keeping with the guidance discussed previously.


A summary of COVID-19 accommodations that had been entered into under this guidance as of December 31, 2021 follows:

COVID-19 Accomodations
    
Total
    
% of Total
  
Loan Category
  
Amounts (#)
    
Amounts ($)
    
Loans
    
Loans
  
 
(Dollars in thousands)
  
Commercial
    
-
    
$
-
    
$
1,203,581
      
0.0
%
Mortgage
    
22
      
2,278
      
1,139,659
      
0.2
%
Installment
    
1
      
55
      
561,805
      
0.0
%
Total
    
23
    
$
2,333
    
$
2,905,045
      
0.1
%
Mortgage loans serviced for others(1)
    
46
    
$
5,163
    
$
3,323,521
      
0.2
%

1)
We have delegated authority from all investors to grant these deferrals on their behalf.


Information on subsequent COVID-19 accommodation extensions for portfolio loans follows (1):

Loan Category
  
Amount (#)
    
Amount ($)
  
   
(Dollars in thousands)
  
Commercial
    
-
    
$
-
  
Mortgage
    
19
      
2,194
  
Installment
    
-
      
-
  
Total
    
19
    
$
2,194
  

(1)
Subsequent accommodations are extensions of the original accommodations that were given as summarized in the paragraph above.


The CARES Act also included an initial $349 billion loan program administered through the U.S. Small Business Administration (‘‘SBA’’) referred to as the PPP. Under the PPP, small businesses and other entities and individuals could apply for loans from existing SBA lenders and other approved regulated lenders that enrolled in the program, subject to numerous limitations and eligibility criteria. We are participating as a lender in the PPP. The PPP opened on April 3, 2020 intending to provide American small businesses with eight weeks of cash-flow assistance through 100% federally guaranteed loans through the SBA. In late April 2020 the Paycheck Protection Program and Health Care Enhancement Act, added another $310 billion in funding while the Paycheck Protection Program Flexibility Act made certain changes to the program, by allowing for more time to spend the funds, and making it easier to get a loan fully forgiven. The PPP initially closed on August 8, 2020 (“Round 1”). On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (‘‘Economic Aid Act’’) was signed into law which allocated an additional $284 billion in funding for the PPP (“Round 2”). The Economic Aid Act reopened the PPP through March 31, 2021 with generally the same terms and conditions as originally enacted under the CARES Act while clarifying eligibility and ineligibility for certain entities and expanding the permitted uses of PPP funds. In addition, the Economic Aid Act simplified the loan forgiveness process for PPP loans of $150,000 or less. The Economic Aid Act also established second draw loans for entities that had already used the initial PPP funds, subject to numerous limitations and eligibility criteria. PPP Round 2 loans are eligible for forgiveness similar to Round 1 PPP loans, subject to limitations set forth in the Economic Aid Act.  Round 2 closed on May 31, 2021.



PPP loans outstanding at December 31 follows:

 
  
2021
    
2020
  
 
  
Amount (#)
    
Amount ($)
    
Amount (#)
    
Amount ($)
  
 
  
(Dollars in thousands)
  
Closed and outstanding - Round 1 loans
    
6
    
$
197
      
1,483
    
$
169,782
  
Closed and outstanding - Round 2 loans
    
180
      
26,167
      
-
      
-
  
Total closed and outstanding
    
186
    
$
26,364
      
1,483
    
$
169,782
  
Unaccreted net fees remaining at period end
          
$
806
            
$
3,216
  


PPP loans are included in the commercial and industrial class of the commercial loan portfolio segment. As these loans are 100% guaranteed through the SBA the allowance for credit losses recorded on these loans is zero.  PPP loans funded totaled $135.5 million, $261.1 million and zero during the years ended December 31, 2021, 2020 and 2019, respectively. Interest and fees on loans in our consolidated statement of operations includes $8.9 million, $5.6 million and zero during the years ended December 31, 2021, 2020 and 2019, respectively related to the accretion of net loan fees on PPP loans.

Credit Quality Indicators – As part of our on-going monitoring of the credit quality of our loan portfolios, we track certain credit quality indicators including (a) risk grade of commercial loans, (b) the level of classified commercial loans, (c) credit scores of mortgage and installment loan borrowers, and (d) delinquency history and non-performing loans.


For commercial loans, we use a loan rating system that is similar to those employed by state and federal banking regulators. Loans are graded on a scale of 1 to 12. A description of the general characteristics of the ratings follows:


Rating 1 through 6: These loans are generally referred to as our ‘‘non-watch’’ commercial credits that include very high or exceptional credit fundamentals through acceptable credit fundamentals.


Rating 7 and 8: These loans are generally referred to as our ‘‘watch’’ commercial credits. These ratings include loans to borrowers that exhibit potential credit weakness or downward trends. If not checked or cured these trends could weaken our asset or credit position. While potentially weak, no loss of principal or interest is envisioned with these ratings.


Rating 9: These loans are generally referred to as our ‘‘substandard accruing’’ commercial credits. This rating includes loans to borrowers that exhibit a well-defined weakness where payment default is probable and loss is possible if deficiencies are not corrected. Generally, loans with this rating are considered collectible as to both principal and interest primarily due to collateral coverage.


Rating 10 and 11: These loans are generally referred to as our ‘‘substandard - non-accrual’’ and ‘‘doubtful’’ commercial credits. These ratings include loans to borrowers with weaknesses that make collection of debt in full, on the basis of current facts, conditions and values at best questionable and at worst improbable. All of these loans are placed in non-accrual.


Rating 12: These loans are generally referred to as our ‘‘loss’’ commercial credits. This rating includes loans to borrowers that are deemed incapable of repayment and are charged-off.

The following table summarizes loan ratings by loan class for our commercial loan portfolio segment at December 31, 2021:



 
  
Commercial
  
 
  
Term Loans Amortized Cost Basis by Origination Year
    
Revolving
Loans
Amortized
        
 
  
2021
    
2020
    
2019
    
2018
    
2017
    
Prior
    
Cost Basis
    
Total
  
 
  
(In thousands)
  
December 31, 2021
                                                
Commercial and industrial
                                                
Non-watch (1-6)
  
$
121,917
    
$
69,856
    
$
56,984
    
$
44,827
    
$
38,307
    
$
96,261
    
$
144,579
    
$
572,731
  
Watch (7-8)
    
81
      
-
      
532
      
1,294
      
362
      
6,274
      
476
      
9,019
  
Substandard Accrual (9)
    
1,569
      
2
      
1,159
      
247
      
-
      
1,530
      
6,793
      
11,300
  
Non-Accrual (10-11)
    
-
      
-
      
-
      
-
      
-
      
62
      
-
      
62
  
Total
  
$
123,567
    
$
69,858
    
$
58,675
    
$
46,368
    
$
38,669
    
$
104,127
    
$
151,848
    
$
593,112
  
Accrued interest excluded from total
  
$
314
    
$
153
    
$
105
    
$
229
    
$
90
    
$
240
    
$
242
    
$
1,373
  
 
                              
Commercial real estate
                                                                
Non-watch (1-6)
  
$
123,330
    
$
55,479
    
$
108,056
    
$
75,828
    
$
39,123
    
$
160,199
    
$
31,551
    
$
593,566
  
Watch (7-8)
    
-
      
324
      
3,028
      
7,678
      
1,708
      
1,423
      
-
      
14,161
  
Substandard Accrual (9)
    
441
      
-
      
-
      
1,193
      
1,108
      
-
      
-
      
2,742
  
Non-Accrual (10-11)
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
  
$
123,771
    
$
55,803
    
$
111,084
    
$
84,699
    
$
41,939
    
$
161,622
    
$
31,551
    
$
610,469
  
Accrued interest excluded from total
  
$
182
    
$
81
    
$
233
    
$
203
    
$
94
    
$
325
    
$
47
    
$
1,165
  
 
                                                                
Total Commercial
                                                                
Non-watch (1-6)
  
$
245,247
    
$
125,335
    
$
165,040
    
$
120,655
    
$
77,430
    
$
256,460
    
$
176,130
    
$
1,166,297
  
Watch (7-8)
    
81
      
324
      
3,560
      
8,972
      
2,070
      
7,697
      
476
      
23,180
  
Substandard Accrual (9)
    
2,010
      
2
      
1,159
      
1,440
      
1,108
      
1,530
      
6,793
      
14,042
  
Non-Accrual (10-11)
    
-
      
-
      
-
      
-
      
-
      
62
      
-
      
62
  
Total
  
$
247,338
    
$
125,661
    
$
169,759
    
$
131,067
    
$
80,608
    
$
265,749
    
$
183,399
    
$
1,203,581
  
Accrued interest excluded from total
  
$
496
    
$
234
    
$
338
    
$
432
    
$
184
    
$
565
    
$
289
    
$
2,538
  



The following table summarizes loan ratings by loan class for our commercial portfolio loan segment at December 31, 2020:

 
Commercial
  
   
Non-watch
1-6
    
Watch
7-8
    
Substandard
Accrual
9
    
Non-
Accrual
10-11
    
Total
  
               
(In thousands)
              
December 31, 2020
                              
Commercial and industrial
  
$
637,826
    
$
32,765
    
$
4,341
    
$
1,387
    
$
676,319
  
Commercial real estate
    
561,382
      
5,978
      
2,272
      
-
      
569,632
  
Total
  
$
1,199,208
    
$
38,743
    
$
6,613
    
$
1,387
    
$
1,245,951
  
Accrued interest included in total
  
$
3,408
    
$
105
    
$
23
    
$
-
    
$
3,536
  


For each of our mortgage and installment portfolio segment classes we generally monitor credit quality based on the credit scores of the borrowers. These credit scores are generally updated semi-annually. The following tables summarize credit scores by loan class for our mortgage and installment loan portfolio segments at December 31, 2021:

     
Mortgage (1)
  
     
Term Loans Amortized Cost Basis by Origination Year
    
Revolving
Loans
Amortized
        
     
2021
    
2020
    
2019
    
2018
    
2017
    
Prior
    
Cost Basis
    
Total
  
     
(In thousands)
  
December 31, 2021
                                                  
1-4 family owner occupied - jumbo
                                                  
800 and above
    
$
31,137
    
$
17,652
    
$
8,491
    
$
2,565
    
$
7,516
    
$
527
    
$
-
    
$
67,888
  
750-799
      
135,292
      
92,590
      
30,072
      
7,118
      
9,469
      
5,043
      
2,371
      
281,955
  
700-749
      
67,255
      
34,665
      
13,765
      
4,421
      
7,748
      
4,856
      
-
      
132,710
  
650-699
      
19,367
      
10,313
      
5,447
      
5,285
      
6,080
      
690
      
-
      
47,182
  
600-649
      
2,050
      
2,638
      
506
      
1,013
      
837
      
976
      
-
      
8,020
  
550-599
      
-
      
469
      
-
      
-
      
781
      
-
      
-
      
1,250
  
500-549
      
-
      
1,411
      
-
      
-
      
-
      
-
      
-
      
1,411
  
Under 500
      
-
      
-
      
-
      
-
      
607
      
-
      
-
      
607
  
Unknown
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
    
$
255,101
    
$
159,738
    
$
58,281
    
$
20,402
    
$
33,038
    
$
12,092
    
$
2,371
    
$
541,023
  
Accrued interest excluded from total
    
$
557
    
$
370
    
$
163
    
$
77
    
$
87
    
$
33
    
$
3
    
$
1,290
  
                                                                   
1-4 family owner occupied - non-jumbo
                                                                  
800 and above
    
$
6,185
    
$
5,534
    
$
3,756
    
$
2,514
    
$
3,566
    
$
4,569
    
$
4,026
    
$
30,150
  
750-799
      
33,227
      
20,300
      
9,688
      
5,664
      
8,887
      
12,498
      
8,341
      
98,605
  
700-749
      
19,317
      
10,572
      
4,813
      
4,035
      
5,008
      
21,806
      
5,637
      
71,188
  
650-699
      
6,593
      
4,233
      
3,217
      
2,010
      
3,135
      
12,423
      
2,812
      
34,423
  
600-649
      
2,119
      
1,082
      
1,051
      
1,549
      
1,660
      
8,663
      
89
      
16,213
  
550-599
      
-
      
295
      
1,076
      
758
      
1,023
      
5,802
      
147
      
9,101
  
500-549
      
-
      
57
      
421
      
327
      
510
      
3,169
      
18
      
4,502
  
Under 500
      
-
      
616
      
284
      
394
      
250
      
684
      
-
      
2,228
  
Unknown
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
    
$
67,441
    
$
42,689
    
$
24,306
    
$
17,251
    
$
24,039
    
$
69,614
    
$
21,070
    
$
266,410
  
Accrued interest excluded from total
    
$
208
    
$
97
    
$
84
    
$
58
    
$
68
    
$
226
    
$
57
    
$
798
  
                                                                   
1-4 family non-owner occupied
                                                                  
800 and above
    
$
15,406
    
$
1,786
    
$
2,857
    
$
1,459
    
$
2,627
    
$
5,058
    
$
1,639
    
$
30,832
  
750-799
      
44,201
      
21,885
      
10,517
      
3,667
      
6,956
      
10,004
      
5,117
      
102,347
  
700-749
      
16,486
      
7,807
      
2,764
      
1,878
      
966
      
6,095
      
2,756
      
38,752
  
650-699
      
6,617
      
3,095
      
257
      
299
      
248
      
6,019
      
955
      
17,490
  
600-649
      
125
      
57
      
108
      
282
      
174
      
2,051
      
381
      
3,178
  
550-599
      
-
      
25
      
-
      
192
      
-
      
1,121
      
-
      
1,338
  
500-549
      
-
      
-
      
-
      
55
      
-
      
638
      
50
      
743
  
Under 500
      
-
      
-
      
-
      
-
      
-
      
172
      
-
      
172
  
Unknown
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
    
$
82,835
    
$
34,655
    
$
16,503
    
$
7,832
    
$
10,971
    
$
31,158
    
$
10,898
    
$
194,852
  
Accrued interest excluded from total
    
$
171
    
$
95
    
$
46
    
$
23
    
$
33
    
$
107
    
$
38
    
$
513
  
                                                                   
1-4 family - 2nd lien
                                                                  
800 and above
    
$
415
    
$
964
    
$
426
    
$
95
    
$
266
    
$
353
    
$
8,465
    
$
10,984
  
750-799
      
2,161
      
2,413
      
714
      
1,332
      
1,859
      
2,415
      
30,106
      
41,000
  
700-749
      
1,307
      
1,049
      
771
      
561
      
1,374
      
2,365
      
16,316
      
23,743
  
650-699
      
122
      
309
      
460
      
405
      
140
      
1,639
      
5,286
      
8,361
  
600-649
      
-
      
177
      
72
      
106
      
92
      
1,143
      
1,370
      
2,960
  
550-599
      
-
      
-
      
61
      
-
      
-
      
476
      
228
      
765
  
500-549
      
-
      
-
      
99
      
-
      
89
      
190
      
155
      
533
  
Under 500
      
-
      
-
      
54
      
3
      
60
      
16
      
250
      
383
  
Unknown
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
    
$
4,005
    
$
4,912
    
$
2,657
    
$
2,502
    
$
3,880
    
$
8,597
    
$
62,176
    
$
88,729
  
Accrued interest excluded from total
    
$
7
    
$
9
    
$
9
    
$
5
    
$
8
    
$
34
    
$
211
    
$
283
  

     
Mortgage - continued (1)
  
     
Term Loans Amortized Cost Basis by Origination Year
    
Revolving
Loans
Amortized
        
     
2021
    
2020
    
2019
    
2018
    
2017
    
Prior
    
Cost Basis
    
Total
  
     
(In thousands)
  
December 31, 2021
                                                  
Resort lending
                                                  
800 and above
    
$
-
    
$
-
    
$
-
    
$
274
    
$
-
    
$
7,347
    
$
-
    
$
7,621
  
750-799
      
600
      
1,246
      
250
      
511
      
63
      
19,630
      
-
      
22,300
  
700-749
      
-
      
174
      
-
      
301
      
67
      
9,052
      
-
      
9,594
  
650-699
      
951
      
-
      
-
      
-
      
-
      
6,057
      
-
      
7,008
  
600-649
      
-
      
-
      
-
      
-
      
-
      
1,841
      
-
      
1,841
  
550-599
      
-
      
-
      
-
      
-
      
-
      
80
      
-
      
80
  
500-549
      
-
      
-
      
-
      
-
      
-
      
201
      
-
      
201
  
Under 500
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Unknown
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
    
$
1,551
    
$
1,420
    
$
250
    
$
1,086
    
$
130
    
$
44,208
    
$
-
    
$
48,645
  
Accrued interest excluded from total
    
$
2
    
$
3
    
$
-
    
$
3
    
$
-
    
$
106
    
$
-
    
$
114
  
                                                                   
Total Mortgage
                                                                  
800 and above
    
$
53,143
    
$
25,936
    
$
15,530
    
$
6,907
    
$
13,975
    
$
17,854
    
$
14,130
    
$
147,475
  
750-799
      
215,481
      
138,434
      
51,241
      
18,292
      
27,234
      
49,590
      
45,935
      
546,207
  
700-749
      
104,365
      
54,267
      
22,113
      
11,196
      
15,163
      
44,174
      
24,709
      
275,987
  
650-699
      
33,650
      
17,950
      
9,381
      
7,999
      
9,603
      
26,828
      
9,053
      
114,464
  
600-649
      
4,294
      
3,954
      
1,737
      
2,950
      
2,763
      
14,674
      
1,840
      
32,212
  
550-599
      
-
      
789
      
1,137
      
950
      
1,804
      
7,479
      
375
      
12,534
  
500-549
      
-
      
1,468
      
520
      
382
      
599
      
4,198
      
223
      
7,390
  
Under 500
      
-
      
616
      
338
      
397
      
917
      
872
      
250
      
3,390
  
Unknown
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
    
$
410,933
    
$
243,414
    
$
101,997
    
$
49,073
    
$
72,058
    
$
165,669
    
$
96,515
    
$
1,139,659
  
Accrued interest excluded from total
    
$
945
    
$
574
    
$
302
    
$
166
    
$
196
    
$
506
    
$
309
    
$
2,998
  

(1)
Credit scores have been updated within the last twelve months.
 
     
Installment (1)
  
     
Term Loans Amortized Cost Basis by Origination Year
  
     
2021
    
2020
    
2019
    
2018
    
2017
    
Prior
    
Total
  
     
(In thousands)
  
December 31, 2021
                                            
Boat lending
                                            
800 and above
    
$
7,513
    
$
5,786
    
$
6,015
    
$
4,906
    
$
2,968
    
$
4,433
    
$
31,621
  
750-799
      
47,434
      
24,968
      
21,052
      
15,681
      
9,797
      
10,971
      
129,903
  
700-749
      
19,180
      
9,724
      
8,263
      
6,467
      
3,109
      
4,953
      
51,696
  
650-699
      
3,845
      
1,679
      
2,301
      
1,223
      
1,166
      
1,378
      
11,592
  
600-649
      
373
      
419
      
209
      
327
      
185
      
604
      
2,117
  
550-599
      
237
      
81
      
91
      
113
      
115
      
191
      
828
  
500-549
      
-
      
49
      
-
      
85
      
-
      
67
      
201
  
Under 500
      
-
      
-
      
-
      
10
      
168
      
4
      
182
  
Unknown
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
    
$
78,582
    
$
42,706
    
$
37,931
    
$
28,812
    
$
17,508
    
$
22,601
    
$
228,140
  
Accrued interest excluded from total
    
$
169
    
$
102
    
$
106
    
$
69
    
$
44
    
$
47
    
$
537
  
                                                           
Recreational vehicle lending
                                                          
800 and above
    
$
8,475
    
$
5,121
    
$
5,837
    
$
4,627
    
$
2,456
    
$
3,594
    
$
30,110
  
750-799
      
66,834
      
22,707
      
17,173
      
11,973
      
5,281
      
6,794
      
130,762
  
700-749
      
32,702
      
9,500
      
6,169
      
3,768
      
1,657
      
2,343
      
56,139
  
650-699
      
7,390
      
2,423
      
1,842
      
948
      
649
      
905
      
14,157
  
600-649
      
990
      
408
      
291
      
333
      
152
      
111
      
2,285
  
550-599
      
271
      
100
      
163
      
318
      
6
      
72
      
930
  
500-549
      
39
      
21
      
105
      
62
      
26
      
91
      
344
  
Under 500
      
-
      
-
      
11
      
-
      
-
      
7
      
18
  
Unknown
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total
    
$
116,701
    
$
40,280
    
$
31,591
    
$
22,029
    
$
10,227
    
$
13,917
    
$
234,745
  
Accrued interest excluded from total
    
$
265
    
$
93
    
$
78
    
$
56
    
$
26
    
$
28
    
$
546
  
                                                           
Other
                                                          
800 and above
    
$
2,328
    
$
1,424
    
$
1,493
    
$
882
    
$
357
    
$
695
    
$
7,179
  
750-799
      
13,923
      
9,093
      
6,074
      
3,175
      
2,183
      
2,731
      
37,179
  
700-749
      
10,791
      
5,426
      
3,301
      
1,899
      
906
      
2,194
      
24,517
  
650-699
      
20,167
      
1,715
      
1,249
      
657
      
561
      
1,332
      
25,681
  
600-649
      
761
      
368
      
272
      
190
      
284
      
357
      
2,232
  
550-599
      
159
      
42
      
127
      
167
      
46
      
154
      
695
  
500-549
      
8
      
53
      
56
      
55
      
38
      
98
      
308
  
Under 500
      
6
      
62
      
42
      
14
      
12
      
18
      
154
  
Unknown
      
975
      
-
      
-
      
-
      
-
      
-
      
975
  
Total
    
$
49,118
    
$
18,183
    
$
12,614
    
$
7,039
    
$
4,387
    
$
7,579
    
$
98,920
  
Accrued interest excluded from total
    
$
73
    
$
40
    
$
36
    
$
19
    
$
11
    
$
38
    
$
217
  
                                                           
Total installment
                                                          
800 and above
    
$
18,316
    
$
12,331
    
$
13,345
    
$
10,415
    
$
5,781
    
$
8,722
    
$
68,910
  
750-799
      
128,191
      
56,768
      
44,299
      
30,829
      
17,261
      
20,496
      
297,844
  
700-749
      
62,673
      
24,650
      
17,733
      
12,134
      
5,672
      
9,490
      
132,352
  
650-699
      
31,402
      
5,817
      
5,392
      
2,828
      
2,376
      
3,615
      
51,430
  
600-649
      
2,124
      
1,195
      
772
      
850
      
621
      
1,072
      
6,634
  
550-599
      
667
      
223
      
381
      
598
      
167
      
417
      
2,453
  
500-549
      
47
      
123
      
161
      
202
      
64
      
256
      
853
  
Under 500
      
6
      
62
      
53
      
24
      
180
      
29
      
354
  
Unknown
      
975
      
-
      
-
      
-
      
-
      
-
      
975
  
Total
    
$
244,401
    
$
101,169
    
$
82,136
    
$
57,880
    
$
32,122
    
$
44,097
    
$
561,805
  
Accrued interest excluded from total
    
$
507
    
$
235
    
$
220
    
$
144
    
$
81
    
$
113
    
$
1,300
  

(1)
Credit scores have been updated within the last twelve months.


The following tables summarize credit scores by loan class for our mortgage and installment loan portfolio segments at December 31, 2020:

 
Mortgage
  
   
1-4 Family
Owner
Occupied -
Jumbo
    
1-4 Family
Owner
Occupied -
Non-jumbo
    
1-4 Family
Non-owner
Occupied
    
1-4 Family
2nd Lien
    
Resort
Lending
    
Total
  
   
(In thousands)
  
December 31, 2020
                                    
800 and above
  
$
61,077
    
$
40,187
    
$
25,468
    
$
12,490
    
$
9,546
    
$
148,768
  
_750-799
    
223,177
      
70,642
      
82,124
      
42,138
      
27,530
      
445,611
  
_700-749
    
101,086
      
75,489
      
30,326
      
22,962
      
11,726
      
241,589
  
_650-699
    
40,296
      
44,344
      
13,182
      
11,269
      
6,393
      
115,484
  
_600-649
    
11,146
      
18,519
      
4,303
      
2,703
      
1,670
      
38,341
  
_550-599
    
-
      
11,021
      
2,388
      
1,608
      
917
      
15,934
  
_500-549
    
3,396
      
5,129
      
1,580
      
1,012
      
192
      
11,309
  
Under 500
    
-
      
2,242
      
405
      
348
      
73
      
3,068
  
Total
  
$
440,178
    
$
267,573
    
$
159,776
    
$
94,530
    
$
58,047
    
$
1,020,104
  
Accrued interest included in total
  
$
1,301
    
$
1,641
    
$
587
    
$
373
    
$
276
    
$
4,178
  

 
Installment
  
   
Boat Lending
    
Recreational
Vehicle
Lending
    
Other
    
Total
  
   
(In thousands)
  
December 31, 2020
                        
800 and above
  
$
32,231
    
$
29,223
    
$
9,154
    
$
70,608
  
_750-799
    
123,689
      
95,890
      
37,512
      
257,091
  
_700-749
    
38,223
      
33,476
      
25,262
      
96,961
  
_650-699
    
10,189
      
8,794
      
21,138
      
40,121
  
_600-649
    
2,083
      
1,305
      
3,730
      
7,118
  
_550-599
    
661
      
551
      
1,299
      
2,511
  
_500-549
    
342
      
283
      
767
      
1,392
  
Under 500
    
95
      
52
      
63
      
210
  
Unknown
    
-
      
-
      
510
      
510
  
Total
  
$
207,513
    
$
169,574
    
$
99,435
    
$
476,522
  
Accrued interest included in total
  
$
572
    
$
457
    
$
156
    
$
1,185
  



Mortgage loans serviced for others are not reported as assets on the Consolidated Statements of Financial Condition. The principal balances of these loans at December 31 follow:

 
2021
    
2020
  
   
(In thousands)
  
Mortgage loans serviced for :
            
Fannie Mae
  
$
1,753,255
    
$
1,656,060
  
Freddie Mac
    
1,344,675
      
1,095,877
  
Ginnie Mae
    
170,983
      
181,615
  
FHLB
    
49,581
      
39,294
  
Other
    
5,027
      
11,242
  
Total
  
$
3,323,521
    
$
2,984,088
  


Custodial deposit accounts maintained in connection with mortgage loans serviced for others totaled $39.4 million and $40.5 million, at December 31, 2021 and 2020, respectively.


If we do not remain well capitalized for regulatory purposes (see note #20), meet certain minimum capital levels or certain profitability requirements or if we incur a rapid decline in net worth, we could lose our ability to sell and/or service loans to these investors. This could impact our ability to generate net gains on mortgage loans and generate servicing income. A forced liquidation of our servicing portfolio could also impact the value that could be recovered on this asset. Fannie Mae has the most stringent eligibility requirements covering capital levels, profitability and decline in net worth. Fannie Mae requires seller/servicers to be well capitalized for regulatory purposes. For the profitability requirement, we cannot record four or more consecutive quarterly losses and experience a 30% decline in net worth over the same period. Our net worth cannot decline by more than 25% in one quarter or more than 40% over two consecutive quarters. The highest level of capital we are required to maintain is at least $2.5 million plus 0.25% of all loans serviced for others.


An analysis of capitalized mortgage loan servicing rights for the years ended December 31 follows:

 
2021
    
2020
    
2019
  
   
(In thousands)
  
Balance at beginning of period
  
$
16,904
    
$
19,171
    
$
21,400
  
Originated servicing rights capitalized
    
11,436
      
13,957
      
7,303
  
Change in fair value due to price
    
3,380
      
(10,833
)
    
(6,408
)
Change in fair value due to pay downs
    
(5,488
)
    
(5,391
)
    
(3,124
)
Balance at end of year
  
$
26,232
    
$
16,904
    
$
19,171
  
Loans sold and serviced that have had servicing rights capitalized
  
$
3,323,521
    
$
2,982,833
    
$
2,580,705
  


Fair value of capitalized mortgage loan servicing rights was determined using an average coupon rate of 3.46%, average servicing fee of 0.256%, average discount rate of 10.07% and an average Public Securities Association (‘‘PSA’’) prepayment rate of 232 for December 31, 2021; and average coupon rate of 3.77%, average servicing fee of 0.257%, average discount rate of 10.09% and an average PSA prepayment rate of 348 for December 31, 2020.