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Loans and Allowance for Loan Losses
 6 Months Ended
Jun. 30, 2021
Receivables [Abstract]  
Loans and Allowance for Loan Losses Loans and Allowance for Loan Losses
Loans in the accompanying consolidated balance sheets are classified as follows (in thousands):    
June 30, 2021December 31, 2020
Real estate loans:  
Construction$528,157 $581,941 
1-4 family residential678,402 719,952 
Commercial1,430,900 1,295,746 
Commercial loans497,513 557,122 
Municipal loans417,398 409,028 
Loans to individuals89,976 93,990 
Total loans3,642,346 3,657,779 
Less: Allowance for loan losses42,913 49,006 
Net loans$3,599,433 $3,608,773 

Paycheck Protection Program Loans
In April 2020, we began originating loans to qualified small businesses under the PPP administered by the SBA under the provisions of the CARES Act. Loans covered by the PPP may be eligible for loan forgiveness for certain costs incurred related to payroll, group health care benefit costs and qualifying mortgage, rent and utility payments. The remaining loan balance after forgiveness of any amount is still fully guaranteed by the SBA. On December 27, 2020, the Economic Aid Act was signed into law. This second coronavirus relief package granted additional funds for a new round of PPP loans. Additionally, it expanded the eligibility for loans and allowed certain businesses to request a second loan. In return for processing and booking a PPP loan, the SBA paid lenders a processing fee tiered by the size of the loan. These loans are included in commercial loans with an amortized cost basis at June 30, 2021 and December 31, 2020 of $132.1 million and $214.8 million, respectively.
Construction Real Estate Loans
Our construction loans are collateralized by property located primarily in or near the market areas we serve. A number of our construction loans will be owner occupied upon completion. Construction loans for non-owner occupied projects are financed, but these typically have cash flows from leases with tenants, secondary sources of repayment, and in some cases, additional collateral. Our construction loans have both adjustable and fixed interest rates during the construction period. Construction loans to individuals are typically priced and made with the intention of granting the permanent loan on the completed property. Speculative and commercial construction loans are subject to underwriting standards similar to that of the commercial portfolio.  Owner occupied 1-4 family residential construction loans are subject to the underwriting standards of the permanent loan.
1-4 Family Residential Real Estate Loans
Residential loan originations are generated by our loan officers, in-house origination staff, marketing efforts, present customers, walk-in customers and referrals from real estate agents and builders.  We focus our lending efforts primarily on the origination of loans secured by first mortgages on owner occupied 1-4 family residences.  Substantially all of our 1-4 family residential originations are secured by properties located in or near our market areas.  
Our 1-4 family residential loans generally have maturities ranging from five to 30 years.  These loans are typically fully amortizing with monthly payments sufficient to repay the total amount of the loan.  Our 1-4 family residential loans are made at both fixed and adjustable interest rates.
Underwriting for 1-4 family residential loans includes debt-to-income analysis, credit history analysis, appraised value and down payment considerations. Changes in the market value of real estate can affect the potential losses in the portfolio.
Commercial Real Estate Loans
Commercial real estate loans as of June 30, 2021 consisted of $1.24 billion of owner and non-owner occupied real estate, $170.4 million of loans secured by multi-family properties and $18.5 million of loans secured by farmland. Commercial real estate loans primarily include loans collateralized by retail, commercial office buildings, multi-family residential buildings, medical facilities and offices, senior living, assisted living and skilled nursing facilities, warehouse facilities, hotels and churches. In determining whether to originate commercial real estate loans, we generally consider such factors as the financial condition of the borrower and the debt service coverage of the property. Commercial real estate loans are made at both fixed and adjustable interest rates for terms generally up to 20 years.
Commercial Loans
Our commercial loans are diversified loan types including short-term working capital loans for inventory and accounts receivable and short- and medium-term loans for equipment or other business capital expansion.  In our commercial loan underwriting, we assess the creditworthiness, ability to repay and the value and liquidity of the collateral being offered.  Terms of commercial loans are generally commensurate with the useful life of the collateral offered.
Municipal Loans
We make loans to municipalities and school districts primarily throughout the state of Texas, with a small percentage originating outside of the state.  The majority of the loans to municipalities and school districts have tax or revenue pledges and in some cases are additionally supported by collateral.  Municipal loans made without a direct pledge of taxes or revenues are usually made based on some type of collateral that represents an essential service. Lending money directly to these municipalities allows us to earn a higher yield than we could if we purchased municipal securities for similar durations.
Loans to Individuals
Substantially all originations of our loans to individuals are made to consumers in our market areas.  The majority of loans to individuals are collateralized by titled equipment, which are primarily automobiles. Loan terms vary according to the type and value of collateral, length of contract and creditworthiness of the borrower.  The underwriting standards we employ for consumer loans include an application, a determination of the applicant’s payment history on other debts, with the greatest weight being given to payment history with us and an assessment of the borrower’s ability to meet existing obligations and payments on the proposed loan.  Although creditworthiness of the applicant is a primary consideration, the underwriting process also includes a comparison of the value of the collateral, if any, in relation to the proposed loan amount. Most of our loans to individuals are collateralized, which management believes assists in limiting our exposure.
Credit Quality Indicators
We categorize loans into risk categories on an ongoing basis 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.  We use the following definitions for risk ratings:
•Pass (Rating 1 – 4) – This rating is assigned to all satisfactory loans.  This category, by definition, consists of acceptable credit.  Credit and collateral exceptions should not be present, although their presence would not necessarily prohibit a loan from being rated Pass, if deficiencies are in the process of correction.  These loans are not included in the Watch List.
•Pass Watch (Rating 5) – These loans require some degree of special treatment, but not due to credit quality.  This category does not include loans specially mentioned or adversely classified; however, particular attention is warranted to characteristics such as:
▪A lack of, or abnormally extended payment program;
▪A heavy degree of concentration of collateral without sufficient margin;
▪A vulnerability to competition through lesser or extensive financial leverage; and
▪A dependence on a single or few customers or sources of supply and materials without suitable substitutes or alternatives.
•Special Mention (Rating 6) – A Special Mention loan has potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in our credit position at some future date.  Special Mention loans are not adversely classified and do not expose us to sufficient risk to warrant adverse classification.
•Substandard (Rating 7) – Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans 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 the Bank will sustain some loss if the deficiencies are not corrected.
•Doubtful (Rating 8) – Loans classified as Doubtful have all the weaknesses inherent in those classified Substandard 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 following tables set forth the amortized cost basis by class of financing receivable and credit quality indicator for the periods presented (in thousands):
June 30, 2021Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisTotal
20212020201920182017Prior
Construction real estate:
Pass$71,711 $121,423 $144,531 $62,296 $2,301 $7,587 $118,005 $527,854 
Pass watch— — — — — 22 — 22 
Special mention— — — — — — — — 
Substandard— — — — — 224 — 224 
Doubtful— — — 57 — — — 57 
Total construction real estate$71,711 $121,423 $144,531 $62,353 $2,301 $7,833 $118,005 $528,157 
1-4 family residential real estate:
Pass$79,835 $141,033 $94,589 $56,732 $41,836 $253,907 $2,284 $670,216 
Pass watch— — — — — 813 — 813 
Special mention— — — — — 63 — 63 
Substandard10 1,035 55 — 926 4,261 92 6,379 
Doubtful— 12 — — 33 886 — 931 
Total 1-4 family residential real estate$79,845 $142,080 $94,644 $56,732 $42,795 $259,930 $2,376 $678,402 
Commercial real estate:
Pass$272,014 $251,630 $269,339 $102,178 $151,519 $233,346 $6,849 $1,286,875 
Pass watch— — 4,214 23,257 36,867 5,414 — 69,752 
Special mention24,142 199 8,883 6,963 307 12,826 — 53,320 
Substandard4,526 1,869 — 1,800 40 12,587 — 20,822 
Doubtful— — — — — 131 — 131 
Total commercial real estate$300,682 $253,698 $282,436 $134,198 $188,733 $264,304 $6,849 $1,430,900 
Commercial loans:
Pass$159,561 $102,900 $33,923 $17,163 $5,633 $7,371 $164,496 $491,047 
Pass watch42 133 563 102 — — 244 1,084 
Special mention— — 418 398 — 211 281 1,308 
Substandard175 208 492 317 3 1 1,483 2,679 
Doubtful121 453 276 440 18 87 — 1,395 
Total commercial loans$159,899 $103,694 $35,672 $18,420 $5,654 $7,670 $166,504 $497,513 
Municipal loans:
Pass$36,575 $68,625 $64,734 $31,373 $58,798 $157,293 $— $417,398 
Pass watch— — — — — — — — 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total municipal loans$36,575 $68,625 $64,734 $31,373 $58,798 $157,293 $— $417,398 
Loans to individuals:
Pass$24,593 $34,063 $16,940 $6,403 $2,872 $1,454 $3,458 $89,783 
Pass watch— — — — — — — — 
Special mention— — — 44 — — 4 48 
Substandard— 3 32 17 24 4 2 82 
Doubtful— — — 3 33 27 — 63 
Total loans to individuals$24,593 $34,066 $16,972 $6,467 $2,929 $1,485 $3,464 $89,976 
Total loans$673,305 $723,586 $638,989 $309,543 $301,210 $698,515 $297,198 $3,642,346 
December 31, 2020Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisTotal
20202019201820172016Prior
Construction real estate:
Pass$155,693 $180,536 $76,090 $55,636 $3,191 $8,297 $101,793 $581,236 
Pass watch— — — — 23 — — 23 
Special mention— — — — — — — — 
Substandard— 382 62 — — 58 — 502 
Doubtful— — — — — 180 — 180 
Total construction real estate$155,693 $180,918 $76,152 $55,636 $3,214 $8,535 $101,793 $581,941 
1-4 family residential real estate:
Pass$154,003 $114,063 $70,621 $55,557 $57,680 $255,003 $2,833 $709,760 
Pass watch— — — — 267 564 — 831 
Special mention— — — — — 10 — 10 
Substandard1,473 — 135 427 1,588 5,134 96 8,853 
Doubtful— — — 36 103 359 — 498 
Total 1-4 family residential real estate$155,476 $114,063 $70,756 $56,020 $59,638 $261,070 $2,929 $719,952 
Commercial real estate:
Pass$270,087 $307,161 $143,177 $162,180 $98,828 $179,919 $6,957 $1,168,309 
Pass watch— — 3,153 40,125 1,696 2,582 — 47,556 
Special mention4,555 33,020 7,041 140 4,531 7,850 — 57,137 
Substandard7,542 — 2,097 65 704 12,282 — 22,690 
Doubtful— — — — — 54 — 54 
Total commercial real estate$282,184 $340,181 $155,468 $202,510 $105,759 $202,687 $6,957 $1,295,746 
Commercial loans:
Pass$313,688 $47,446 $20,386 $7,505 $3,392 $6,142 $140,018 $538,577 
Pass watch2,599 1,318 2,410 1,981 — — 370 8,678 
Special mention304 809 433 39 286 265 455 2,591 
Substandard405 1,081 473 7 — — 4,417 6,383 
Doubtful310 53 475 54 1 — — 893 
Total commercial loans$317,306 $50,707 $24,177 $9,586 $3,679 $6,407 $145,260 $557,122 
Municipal loans:
Pass$72,542 $68,132 $33,735 $61,170 $25,387 $148,062 $— $409,028 
Pass watch— — — — — — — — 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total municipal loans$72,542 $68,132 $33,735 $61,170 $25,387 $148,062 $— $409,028 
Loans to individuals:
Pass$46,722 $25,302 $10,132 $4,716 $1,867 $917 $3,900 $93,556 
Pass watch— — — — — — — — 
Special mention— — 51 — — — 4 55 
Substandard6 35 28 30 9 11 1 120 
Doubtful73 20 6 55 81 24 — 259 
Total loans to individuals$46,801 $25,357 $10,217 $4,801 $1,957 $952 $3,905 $93,990 
Total loans$1,030,002 $779,358 $370,505 $389,723 $199,634 $627,713 $260,844 $3,657,779 
The following tables present the aging of the amortized cost basis in past due loans by class of loans (in thousands):
 June 30, 2021
 
30-59 Days
Past Due
60-89 Days
Past Due
Greater than 90 Days Past Due
Total Past
Due
CurrentTotal
Real estate loans:     
Construction$170 $12 $— $182 $527,975 $528,157 
1-4 family residential1,563 522 752 2,837 675,565 678,402 
Commercial687 147 80 914 1,429,986 1,430,900 
Commercial loans1,246 535 454 2,235 495,278 497,513 
Municipal loans— — — — 417,398 417,398 
Loans to individuals197 62 — 259 89,717 89,976 
Total$3,863 $1,278 $1,286 $6,427 $3,635,919 $3,642,346 
December 31, 2020
30-59 Days Past Due60-89 Days Past DueGreater than 90 Days
Past Due
Total Past
Due
CurrentTotal
Real estate loans:
Construction$95 $14 $444 $553 $581,388 $581,941 
1-4 family residential7,872 2,469 2,830 13,171 706,781 719,952 
Commercial467 315 86 868 1,294,878 1,295,746 
Commercial loans1,423 4,516 323 6,262 550,860 557,122 
Municipal loans64 — — 64 408,964 409,028 
Loans to individuals519 123 27 669 93,321 93,990 
Total$10,440 $7,437 $3,710 $21,587 $3,636,192 $3,657,779 
The following table sets forth the amortized cost basis of nonperforming assets for the periods presented (in thousands):
 June 30, 2021December 31, 2020
Nonaccrual loans:
Real estate loans:
Construction$69 $640 
1-4 family residential2,397 3,922 
Commercial1,212 1,269 
Commercial loans1,414 1,592 
Loans to individuals62 291 
Total nonaccrual loans (1)
5,154 7,714 
Accruing loans past due more than 90 days— — 
TDR loans9,549 9,646 
OREO566 106 
Repossessed assets— 14 
Total nonperforming assets$15,269 $17,480 

(1)    Includes $810,000 and $976,000 of restructured loans as of June 30, 2021 and December 31, 2020, respectively.

We reversed $12,000 and $25,000 of interest income on nonaccrual loans during the three and six months ended June 30, 2021, respectively, and $14,000 and $143,000 for the three and six months ended June 30, 2020, respectively. We had $1.4 million and $2.2 million of loans on nonaccrual for which there was no related allowance for credit losses as of June 30, 2021 and December 31, 2020, respectively.
Collateral-dependent loans are loans that we expect the repayment to be provided substantially through the operation or sale of the collateral of the loan and we have determined that the borrower is experiencing financial difficulty. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for selling costs. As of June 30, 2021 and December 31, 2020, we had $10.1 million and $11.5 million, respectively, of collateral-dependent loans, secured mainly by real estate and equipment. There have been no significant changes to the collateral that secures the collateral-dependent assets. Foreclosed assets include OREO and repossessed assets. For 1-4 family residential real estate properties, a loan is recognized as a foreclosed property once legal title to the real estate property has been received upon completion of foreclosure or the borrower has conveyed all interest in the residential property through a deed in lieu of foreclosure. There were $34,000 and $1.2 million in loans secured by 1-4 family residential properties for which formal foreclosure proceedings were in process as of June 30, 2021 and December 31, 2020, respectively.
Troubled Debt Restructurings
The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.  Concessions may include interest rate reductions or below market interest rates, restructuring amortization schedules and other actions intended to minimize potential losses. We may provide a combination of concessions which may include an extension of the amortization period, interest rate reduction and/or converting the loan to interest-only for a limited period of time.
In response to the impact of the COVID-19 pandemic on the economy, the CARES Act was signed into law. Under the CARES Act, banks may elect to deem that loan modifications do not result in TDRs if they are: (1) related to COVID-19; (2) executed on a loan that was not more than 30 days past due as of December 31, 2019; and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the national emergency declaration or (B) December 31, 2020. The Economic Aid Act extended this relief to the earlier of 60 days after the national emergency termination date or January 1, 2022. Additionally, in accordance with the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised), other short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs under ASC Subtopic 310-40. This includes short-term (e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. Loans modified under this guidance are not considered TDRs and as such are not identified in the table below. At June 30, 2021 and December 31, 2020, we had outstanding loans with payment deferrals totaling $182,000 and $47.2 million, respectively.
The following tables set forth the recorded balance of loans considered to be TDRs that were restructured and the type of concession by class of loans during the periods presented (dollars in thousands):
Three Months Ended June 30, 2021
 
Extend Amortization
 Period
Interest Rate ReductionsCombination Total ModificationsNumber of Loans
Commercial loans$— $— $106 $106 2 
Total$— $— $106 $106 2 
 Six Months Ended June 30, 2021
 
Extend Amortization
 Period
Interest Rate ReductionsCombinationTotal ModificationsNumber of Loans
Real estate loans:
1-4 family residential$— $— $128 $128 2 
Commercial loans— — 122 122 3 
Total$— $— $250 $250 5 
Three Months Ended June 30, 2020
 
Extend Amortization
 Period
Interest Rate ReductionsCombination Total ModificationsNumber of Loans
Commercial loans$— $— $148 $148 2 
Total$— $— $148 $148 2 
 Six Months Ended June 30, 2020
 
Extend Amortization
 Period
Interest Rate ReductionsCombinationTotal ModificationsNumber of Loans
Real estate loans:  
Commercial$— $— $59 $59 1 
Commercial loans— — 150 150 3 
Total$— $— $209 $209 4 
Interest continues to be charged on principal balances outstanding during the extended term. Therefore, the financial effects of the recorded investment of loans restructured as TDRs during the six months ended June 30, 2021 and 2020 were not significant. Generally, the loans identified as TDRs were previously reported as impaired loans prior to restructuring, and therefore, the modification did not impact our determination of the allowance for loans losses.
On an ongoing basis, the performance of the TDRs is monitored for subsequent payment default. Payment default for TDRs is recognized when the borrower is 90 days or more past due. For the three and six months ended June 30, 2021, TDRs in default totaled $230,000. For the three and six months ended June 30, 2020 the amount of TDRs in default was not significant. Payment defaults for TDRs did not significantly impact the determination of the allowance for loan losses in the periods presented.
At June 30, 2021 and 2020, there were no commitments to lend additional funds to borrowers whose terms had been modified in TDRs.
Allowance for Loan Losses
In accordance with ASC 326, the allowance for credit losses on loans is estimated and recognized upon origination of the loan based on expected credit losses. The CECL model uses historical experience and current conditions for homogeneous pools of loans, and reasonable and supportable forecasts about future events. The impact of varying economic conditions and portfolio stress factors are a component of the credit loss models applied to each portfolio. Reserve factors are specific to the loan segments that share similar risk characteristics based on the probability of default assumptions and loss given default assumptions, over the contractual term. The forecasted periods gradually mean-revert the economic inputs to their long-run historical trends. Management evaluates the economic data points used in the Moody’s forecasting scenarios on a quarterly basis to determine the most appropriate impact to the various portfolio characteristics based on management’s view and applies weighting to various forecasting scenarios as deemed appropriate based on known and expected economic activities. Management also considers and may apply relevant qualitative factors, not previously considered, to determine the appropriate allowance level. The use of the CECL model includes significant judgment by management and may differ from those of our peers due to different historical loss patterns, economic forecasts, and the length of time of the reasonable and supportable forecast period and reversion period.
We utilize Moody’s Analytics economic forecast scenarios and assign probability weighting to those scenarios which best reflect management’s views on the economic forecast. The probability weighting and scenarios utilized for the estimate of the allowance were generally reflective of an improved economic forecast based on known and knowable information as of June 30, 2021.
When determining the appropriate allowance for credit losses on our loan portfolio, our commercial construction and real estate loans, commercial loans and municipal loans utilize the probability of default/loss given default discounted cash flow approach. Reserves on these loans are based upon risk factors including the loan type and structure, collateral type, leverage ratio, refinancing risk and origination quality, among others. Our consumer construction real estate loans, 1-4 family residential loans and our loans to individuals use a loss rate based upon risk factors including loan types, origination year and credit scores. Loans covered by the PPP may be eligible for loan forgiveness. The remaining loan balance after forgiveness of any amount is still fully guaranteed by the SBA and therefore does not have an associated allowance.
Loans evaluated collectively in a pool are monitored to ensure they continue to exhibit similar risk characteristics with other loans in the pool. If a loan does not share similar risk characteristics with other loans, expected credit losses for that loan are evaluated individually.
The following tables detail activity in the allowance for loan losses by portfolio segment for the periods presented (in thousands):
 Three Months Ended June 30, 2021
 Real Estate    
 Construction
1-4 Family
Residential
Commercial
Commercial
Loans
Municipal
Loans
Loans to
Individuals
Total
Balance at beginning of period$8,201 $2,508 $27,236 $3,108 $46 $355 $41,454 
Loans charged-off— (28)— (116)— (383)(527)
Recoveries of loans charged-off— 12 1 179 — 274 466 
Net loans (charged-off) recovered— (16)1 63 — (109)(61)
Provision for (reversal of) loan losses(183)28 1,693 (74)1 55 1,520 
Balance at end of period$8,018 $2,520 $28,930 $3,097 $47 $301 $42,913 
 Six Months Ended June 30, 2021
 Real Estate    
 Construction
1-4 Family
Residential
Commercial
Commercial
Loans
Municipal
Loans
Loans to
Individuals
Total
Balance at beginning of period$6,490 $2,270 $35,709 $4,107 $46 $384 $49,006 
Loans charged-off— (101)— (435)— (786)(1,322)
Recoveries of loans charged-off1 67 1 461 — 558 1,088 
Net loans (charged-off) recovered1 (34)1 26 — (228)(234)
Provision for (reversal of) loan losses1,527 284 (6,780)(1,036)1 145 (5,859)
Balance at end of period$8,018 $2,520 $28,930 $3,097 $47 $301 $42,913 
 Three Months Ended June 30, 2020
 Real Estate    
 Construction
1-4 Family
Residential
Commercial
Commercial
Loans
Municipal
Loans
Loans to
Individuals
Total
Balance at beginning of period$9,654 $2,640 $36,120 $4,519 $47 $658 $53,638 
Loans charged-off— (2)— (225)— (319)(546)
Recoveries of loans charged-off— 16 12 56 — 352 436 
Net loans (charged-off) recovered— 14 12 (169)— 33 (110)
Provision for (reversal of) loan losses(1)
(1,154)48 7,653 (129)— (78)6,340 
Balance at end of period$8,500 $2,702 $43,785 $4,221 $47 $613 $59,868 
Six Months Ended June 30, 2020
Real Estate
Construction
1-4 Family
Residential
Commercial
Commercial
Loans
Municipal
Loans
Loans to
Individuals
Total
Balance at beginning of period$3,539 $3,833 $9,572 $6,351 $570 $932 $24,797 
Impact of CECL adoption - cumulative effect adjustment2,968 (1,447)7,730 (3,532)(522)(125)5,072 
Impact of CECL adoption - purchased loans with credit deterioration(15)(6)333 (22)— (59)231 
Loans charged-off(33)(56)(21)(521)— (910)(1,541)
Recoveries of loans charged-off11 20 81 130 — 645 887 
Net loans (charged-off) recovered(22)(36)60 (391)— (265)(654)
Provision for (reversal of) loan losses(1)
2,030 358 26,090 1,815 (1)130 30,422 
Balance at end of period$8,500 $2,702 $43,785 $4,221 $47 $613 $59,868 

(1)    The increase in the provision for credit losses during 2020 was primarily due to the economic impact of COVID-19 on macroeconomic factors used in the CECL model.

The accrued interest receivable on our loan receivables is excluded from the allowance for credit loss estimate and is included in interest receivable on our consolidated balance sheets. As of June 30, 2021 and December 31, 2020, the accrued interest on our loan portfolio was $13.4 million and $16.4 million, respectively.