Loans

9 Months Ended

Sep. 30, 2021

Receivables [Abstract]

Loans

Loans

Loans held for investment are categorized into the following segments:

•Construction and land development: Loans are extended to both commercial and consumer customers which are collateralized by and for the purpose of funding land development and construction projects, including 1-4 family residential construction, multi-family property and non-farm residential property where the primary source of repayment is from proceeds of the sale, refinancing or permanent financing of the property.

•Commercial real estate - owner-occupied: Loans are extended to commercial customers for the purpose of acquiring real estate to be occupied by the borrower's business. These loans are collateralized by the subject property and the repayment of these loans is largely dependent on the performance of the company occupying the property.

•Commercial real estate - non owner-occupied: Loans are extended to commercial customers for the purpose of acquiring commercial property where occupancy by the borrower is not their primary intent. These loans are viewed

primarily as cash flow loans, collateralized by the subject property, and the repayment of these loans is largely dependent on rental income from the successful operation of the property.

•Residential real estate: Loans are extended to consumer customers and collateralized primarily by 1-4 family residential properties and include fixed and variable rate mortgages, home equity mortgages, and home equity lines of credit. Loans are primarily written based on conventional loan agency guidelines, including loans that exceed agency value limitations. Sources of repayment may be from the occupant of the residential property or from cash flows on rental income from the successful operation of the property.

•Commercial and financial: Loans are extended to commercial customers. The purpose of the loans can be working capital, physical asset expansion, asset acquisition or other business purposes. Loans may be collateralized by assets owned by the borrower or the borrower's business. Commercial loans are based primarily on the historical and projected cash flow of the borrower's business and secondarily on the capacity of credit enhancements, guarantees and underlying collateral provided by the borrower.

•Consumer: Loans are extended to consumer customers. The segment includes both installment loans and lines of credit which may be collateralized or non-collateralized.

•Paycheck Protection Program ("PPP"): Loans originated under a temporary program established by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and extended by the Economic Aid Act. Under the terms of the program, balances may be forgiven if the borrower uses the funds in a manner consistent with the program guidelines, and repayment is guaranteed by the U.S. government.

The following tables present net loan balances by segment as of:

	September 30, 2021
(In thousands)	Portfolio Loans		Acquired Non-PCD Loans		PCD Loans		Total
Construction and land development	$	190,344	$	37,067	$	48	$	227,459
Commercial real estate - owner-occupied	951,119		218,128		32,089		1,201,336
Commercial real estate - non owner-occupied	1,166,220		428,095		79,272		1,673,587
Residential real estate	1,278,138		181,344		7,847		1,467,329
Commercial and financial	865,064		97,642		19,846		982,552
Consumer	157,916		5,092		11		163,019
Paycheck Protection Program	153,842		36,760		—		190,602
Totals	$	4,762,643	$	1,004,128	$	139,113	$	5,905,884

	December 31, 2020
(In thousands)	Portfolio Loans		Acquired Non-PCD Loans		PCD Loans		Total
Construction and land development	$	216,420	$	26,250	$	2,438	$	245,108
Commercial real estate - owner occupied	854,769		247,090		39,451		1,141,310
Commercial real estate - non-owner occupied	1,043,459		323,273		29,122		1,395,854
Residential real estate	1,155,914		176,105		10,609		1,342,628
Commercial and financial	743,846		94,627		16,280		854,753
Consumer	181,797		6,660		278		188,735
Paycheck Protection Program	515,532		51,429		—		566,961
Totals	$	4,711,737	$	925,434	$	98,178	$	5,735,349

The amortized cost basis of loans at September 30, 2021 included net deferred costs of $32.1 million on non-PPP portfolio loans and net deferred fees of $5.4 million on PPP loans. At December 31, 2020, the amortized cost basis included net deferred costs of $22.6 million on non-PPP portfolio loans and net deferred fees of $9.5 million on PPP loans. At September 30, 2021, the remaining fair value adjustments on acquired loans were $26.6 million, or 2.3%, of the outstanding acquired loan balances, compared to $30.2 million, or 2.9%, of the acquired loan balances at December 31, 2020. These amounts are accreted into interest income over the remaining lives of the related loans on a level yield basis.

Accrued interest receivable is included within Other Assets and was $15.2 million and $25.8 million at September 30, 2021 and December 31, 2020, respectively.

The following tables present the status of net loan balances as of September 30, 2021 and December 31, 2020. Loans on short-term payment deferral at the reporting date are reported as current.

	September 30, 2021
(In thousands)	Current		Accruing 30-59 Days Past Due		Accruing 60-89 Days Past Due		Accruing Greater Than 90 Days		Nonaccrual		Total
Portfolio Loans
Construction and land development	$	190,310	$	—	$	—	$	—	$	34	$	190,344
Commercial real estate - owner-occupied	949,282		671		—		—		1,166		951,119
Commercial real estate - non owner-occupied	1,164,458		—		—		—		1,762		1,166,220
Residential real estate	1,267,081		340		35		—		10,682		1,278,138
Commercial and financial	856,579		1,179		99		1,814		5,393		865,064
Consumer	157,468		269		34		—		145		157,916
Paycheck Protection Program1	153,484		358		—		—		—		153,842
Total Portfolio Loans	$	4,738,662	$	2,817	$	168	$	1,814	$	19,182	$	4,762,643
Acquired Non-PCD Loans
Construction and land development	$	37,067	$	—	$	—	$	—	$	—	$	37,067
Commercial real estate - owner-occupied	217,436		—		692		—		—		218,128
Commercial real estate - non owner-occupied	427,170		—		—		—		925		428,095
Residential real estate	178,504		300		—		—		2,540		181,344
Commercial and financial	96,799		334		—		—		509		97,642
Consumer	4,639		15		—		—		438		5,092
Paycheck Protection Program1	36,760		—		—		—		—		36,760
Total Acquired Non-PCD Loans	$	998,375	$	649	$	692	$	—	$	4,412	$	1,004,128
PCD Loans
Construction and land development	$	42	$	—	$	—	$	—	$	6	$	48
Commercial real estate - owner-occupied	28,739		—		—		—		3,350		32,089
Commercial real estate - non owner-occupied	76,768		—		—		—		2,504		79,272
Residential real estate	6,007		24		—		—		1,816		7,847
Commercial and financial	17,678		743		83		—		1,342		19,846
Consumer	11		—				—				11
Total PCD Loans	$	129,245	$	767	$	83	$	—	$	9,018	$	139,113
Total Loans	$	5,866,282	$	4,233	$	943	$	1,814	$	32,612	$	5,905,884
1Paycheck Protection Program loans are not reflected as past due when forgiveness applications are being processed by the SBA. Repayment of principal and interest is fully guaranteed by the U.S. government.

	December 31, 2020
(In thousands)	Current		Accruing 30-59 Days Past Due		Accruing 60-89 Days Past Due		Accruing Greater Than 90 Days		Nonaccrual		Total
Portfolio Loans
Construction and land development	$	216,262	$	—	$	—	$	—	$	158	$	216,420
Commercial real estate - owner occupied	851,222		1,076		—		—		2,471		854,769
Commercial real estate - non-owner occupied	1,041,306		—		—		—		2,153		1,043,459
Residential real estate	1,142,893		3,002		1,427		61		8,531		1,155,914
Commercial and financial	737,362		135		1,967		—		4,382		743,846
Consumer	180,879		203		138		2		575		181,797
Paycheck Protection Program	515,532		—		—		—		—		515,532
Total Portfolio Loans	$	4,685,456	$	4,416	$	3,532	$	63	$	18,270	$	4,711,737
Acquired Non-PCD Loans
Construction and land development	$	26,250	$	—	$	—	$	—	$	—	$	26,250
Commercial real estate - owner occupied	244,486		—		—		—		2,604		247,090
Commercial real estate - non-owner occupied	322,264		—		—		—		1,009		323,273
Residential real estate	171,507		1,605		104		—		2,889		176,105
Commercial and financial	93,223		216		—		—		1,188		94,627
Consumer	6,640		20		—		—		—		6,660
Paycheck Protection Program	51,429		—		—		—		—		51,429
Total Acquired Non-PCD Loans	$	915,799	$	1,841	$	104	$	—	$	7,690	$	925,434
PCD Loans
Construction and land development	$	2,429	$	—	$	—	$	—	$	9	$	2,438
Commercial real estate - owner occupied	36,345		—		—		—		3,106		39,451
Commercial real estate - non-owner occupied	24,200		—		—		—		4,922		29,122
Residential real estate	9,537		—		—		—		1,072		10,609
Commercial and financial	15,121		125		—		—		1,034		16,280
Consumer	271		—		—		—		7		278
Total PCD Loans	$	87,903	$	125	$	—	$	—	$	10,150	$	98,178
Total Loans	$	5,689,158	$	6,382	$	3,636	$	63	$	36,110	$	5,735,349

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest subsequently received on such loans is accounted for under the cost-recovery method, whereby interest income is not recognized until the loan balance is reduced to zero. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, and future payments are reasonably assured. The Company recognized $0.3 million and $0.1 million in interest income on nonaccrual loans during the three months ended September 30, 2021 and 2020, respectively. The Company recognized $0.9 million and $0.5 million in interest income on nonaccrual loans during the nine months ended September 30, 2021 and 2020, respectively.

The following tables present net balances of loans on nonaccrual status and the related allowance for credit losses, if any, as of:

	September 30, 2021
(In thousands)	Nonaccrual Loans With No Related Allowance		Nonaccrual Loans With an Allowance		Total Nonaccrual Loans		Allowance for Credit Losses
Construction and land development	$	40	$	—	$	40	$	—
Commercial real estate - owner-occupied	3,490		1,026		4,516		417
Commercial real estate - non owner-occupied	3,739		1,452		5,191		95
Residential real estate	14,345		693		15,038		362
Commercial and financial	3,443		3,801		7,244		2,658
Consumer	33		550		583		550
Totals	$	25,090	$	7,522	$	32,612	$	4,082

	December 31, 2020
(In thousands)	Nonaccrual Loans With No Related Allowance		Nonaccrual Loans With an Allowance		Total Nonaccrual Loans		Allowance for Credit Losses
Construction and land development	$	148	$	19	$	167	$	8
Commercial real estate - owner-occupied	7,893		288		8,181		287
Commercial real estate - non owner-occupied	5,666		2,418		8,084		1,640
Residential real estate	9,520		2,972		12,492		1,587
Commercial and financial	3,175		3,429		6,604		2,235
Consumer	222		360		582		75
Totals	$	26,624	$	9,486	$	36,110	$	5,832

Collateral-Dependent Loans

Loans are considered collateral-dependent when the repayment, based on the Company's assessment as of the reporting date, is expected to be provided substantially through the operation or sale of the underlying collateral and there are no other available and reliable sources of repayment. The following table presents collateral-dependent loans as of:

(In thousands)	September 30, 2021		December 31, 2020
Construction and land development	$	31	$	189
Commercial real estate - owner-occupied	5,152		11,992
Commercial real estate - non owner-occupied	5,190		7,285
Residential real estate	15,039		16,652
Commercial and financial	9,302		11,198
Consumer	583		586
Totals	$	35,297	$	47,902

Loans by Risk Rating

The Company utilizes an internal asset classification system as a means of identifying problem and potential problem loans. The following classifications are used to categorize loans under the internal classification system:

•Pass: Loans that are not problem loans or potential problem loans are considered to be pass-rated.

•Special Mention: Loans that do not currently expose the Company to sufficient risk to warrant classification in the Substandard or Doubtful categories, but possess weaknesses that deserve management's close attention are deemed to be Special Mention.

•Substandard: Loans with the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

•Substandard Impaired: Loans typically placed on nonaccrual and considered to be collateral-dependent or accruing TDRs.

•Doubtful: Loans that have all the weaknesses inherent in those classified Substandard with the added characteristic that the weakness present makes collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The principal balance of loans classified as doubtful are likely to be charged off.

The following tables present the risk rating of loans by year of origination as of:

	September 30, 2021
(In thousands)	2021		2020		2019		2018		2017		Prior		Revolving		Total
Construction and Land Development
Risk Ratings:
Pass	$	62,879	$	38,326	$	38,517	$	26,344	$	4,771	$	20,952	$	35,590	$	227,379
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Substandard Impaired	—		—		—		—		—		80		—		80
Doubtful	—		—		—		—		—		—		—		—
Total	$	62,879	$	38,326	$	38,517	$	26,344	$	4,771	$	21,032	$	35,590	$	227,459
Commercial real estate - owner-occupied
Risk Ratings:
Pass	$	155,499	$	159,752	$	186,442	$	142,027	$	132,413	$	385,244	$	8,951	$	1,170,328
Special Mention	—		6,588		5,416		655		220		5,690		—		18,569
Substandard	—		—		—		77		3,903		2,770		—		6,750
Substandard Impaired	—		—		2,811		256		1,104		1,518		—		5,689
Doubtful	—		—		—		—		—		—		—		—
Total	$	155,499	$	166,340	$	194,669	$	143,015	$	137,640	$	395,222	$	8,951	$	1,201,336
Commercial real estate - non owner-occupied
Risk Ratings:
Pass	$	248,842	$	201,940	$	303,903	$	202,400	$	123,851	$	513,792	$	7,203	$	1,601,931
Special Mention	—		—		2,363		—		1,620		8,397		—		12,380
Substandard	—		4,798		3,856		24,078		1,907		19,446		—		54,085
Substandard Impaired	—		—		1,052		—		—		4,139		—		5,191
Doubtful	—		—		—		—		—		—		—		—
Total	$	248,842	$	206,738	$	311,174	$	226,478	$	127,378	$	545,774	$	7,203	$	1,673,587
Residential real estate
Risk Ratings:
Pass	$	364,563	$	119,039	$	110,560	$	136,044	$	132,151	$	243,005	$	342,581	$	1,447,943
Special Mention	—		—		—		47		—		205		285		537
Substandard	—		—		—		—		—		160		35		195
Substandard Impaired	—		488		728		40		5,358		9,335		2,705		18,654
Doubtful	—		—		—		—		—		—		—		—
Total	$	364,563	$	119,527	$	111,288	$	136,131	$	137,509	$	252,705	$	345,606	$	1,467,329

	September 30, 2021
(In thousands)	2021		2020		2019		2018		2017		Prior		Revolving		Total
Commercial and financial
Risk Ratings:
Pass	$	229,168	$	187,063	$	107,743	$	83,267	$	45,562	$	60,048	$	222,822	$	935,673
Special Mention	563		16,137		219		247		275		149		406		17,996
Substandard	—		388		4,502		3,666		1,491		3,333		25		13,405
Substandard Impaired	—		—		5,394		4,335		1,698		3,389		662		15,478
Doubtful	—		—		—		—		—		—		—		—
Total	$	229,731	$	203,588	$	117,858	$	91,515	$	49,026	$	66,919	$	223,915	$	982,552
Consumer
Risk Ratings:
Pass	$	32,239	$	34,927	$	30,164	$	19,961	$	12,050	$	18,097	$	12,838	$	160,276
Special Mention	—		38		90		57		42		50		1,477		1,754
Substandard	—		—		—		11		35		—		198		244
Substandard Impaired	—		15		59		25		79		129		438		745
Doubtful	—		—		—		—		—		—		—		—
Total	$	32,239	$	34,980	$	30,313	$	20,054	$	12,206	$	18,276	$	14,951	$	163,019
Paycheck Protection Program
Risk Ratings:
Pass	$	182,082	$	8,520	$	—	$	—	$	—	$	—	$	—	$	190,602
Total	$	182,082	$	8,520	$	—	$	—	$	—	$	—	$	—	$	190,602
Consolidated
Risk Ratings:
Pass	$	1,275,272	$	749,567	$	777,329	$	610,043	$	450,798	$	1,241,138	$	629,985	$	5,734,132
Special Mention	563		22,763		8,088		1,006		2,157		14,491		2,168		51,236
Substandard	—		5,186		8,358		27,832		7,336		25,709		258		74,679
Substandard Impaired	—		503		10,044		4,656		8,239		18,590		3,805		45,837
Doubtful	—		—		—		—		—		—		—		—
Total	$	1,275,835	$	778,019	$	803,819	$	643,537	$	468,530	$	1,299,928	$	636,216	$	5,905,884

	December 31, 2020
(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving		Total
Construction and Land Development
Risk Ratings:
Pass	$	62,107	$	52,384	$	46,067	$	15,873	$	7,335	$	17,873	$	35,324	$	236,963
Special Mention	206		245		5,918		—		—		1,449		—		7,818
Substandard	—		—		—		—		—		51		—		51
Substandard Impaired	—		—		—		37		—		239		—		276
Doubtful	—		—		—		—		—		—		—		—
Total	$	62,313	$	52,629	$	51,985	$	15,910	$	7,335	$	19,612	$	35,324	$	245,108
Commercial real estate - owner-occupied
Risk Ratings:
Pass	$	155,953	$	198,559	$	156,276	$	138,341	$	148,389	$	287,772	$	14,255	$	1,099,545
Special Mention	5,773		1,858		3,305		—		4,471		4,050		2		19,459
Substandard	—		—		—		4,709		1,955		5,508		—		12,172
Substandard Impaired	—		3,151		747		1,362		—		4,874		—		10,134
Doubtful	—		—		—		—		—		—		—		—
Total	$	161,726	$	203,568	$	160,328	$	144,412	$	154,815	$	302,204	$	14,257	$	1,141,310

	December 31, 2020
(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving		Total
Commercial real estate - non owner-occupied
Risk Ratings:
Pass	$	159,299	$	313,287	$	201,112	$	123,357	$	175,623	$	356,943	$	8,596	$	1,338,217
Special Mention	—		431		9,487		7,580		10,240		114		—		27,852
Substandard	—		—		9,709		—		8,311		3,682		—		21,702
Substandard Impaired	—		2,418		—		—		125		5,540		—		8,083
Doubtful	—		—		—		—		—		—		—		—
Total	$	159,299	$	316,136	$	220,308	$	130,937	$	194,299	$	366,279	$	8,596	$	1,395,854
Residential real estate
Risk Ratings:
Pass	$	96,819	$	144,329	$	204,077	$	205,046	$	160,612	$	159,742	$	350,502	$	1,321,127
Special Mention	—		—		33		720		—		966		479		2,198
Substandard	350		—		—		896		—		1,452		100		2,798
Substandard Impaired	109		726		1,520		1,762		715		9,671		2,002		16,505
Doubtful	—		—		—		—		—		—		—		—
Total	$	97,278	$	145,055	$	205,630	$	208,424	$	161,327	$	171,831	$	353,083	$	1,342,628
Commercial and financial
Risk Ratings:
Pass	$	214,774	$	146,511	$	103,769	$	60,782	$	39,692	$	53,758	$	204,304	$	823,590
Special Mention	71		946		965		5,612		67		635		209		8,505
Substandard	154		41		3,016		1,609		553		3,239		764		9,376
Substandard Impaired	317		4,595		3,199		2,292		2,074		704		81		13,262
Doubtful1	—		—		—		—		—		—		20		20
Total	$	215,316	$	152,093	$	110,949	$	70,295	$	42,386	$	58,336	$	205,378	$	854,753
Consumer
Risk Ratings:
Pass	$	46,476	$	43,143	$	30,433	$	18,937	$	21,880	$	9,488	$	15,089	$	185,446
Special Mention	58		27		14		41		42		21		1,854		2,057
Substandard	—		—		—		42		4		151		228		425
Substandard Impaired	7		50		193		24		329		183		21		807
Doubtful	—		—		—		—		—		—		—		—
Total	$	46,541	$	43,220	$	30,640	$	19,044	$	22,255	$	9,843	$	17,192	$	188,735
Paycheck Protection Program
Risk Ratings:
Pass	$	566,961	$	—	$	—	$	—	$	—	$	—	$	—	$	566,961
Total	$	566,961	$	—	$	—	$	—	$	—	$	—	$	—	$	566,961
Consolidated
Risk Ratings:
Pass	$	1,302,389	$	898,213	$	741,734	$	562,336	$	553,531	$	885,576	$	628,070	$	5,571,849
Special Mention	6,108		3,507		19,722		13,953		14,820		7,235		2,544		67,889
Substandard	504		41		12,725		7,256		10,823		14,083		1,092		46,524
Substandard Impaired	433		10,940		5,659		5,477		3,243		21,211		2,104		49,067
Doubtful1	—		—		—		—		—		—		20		20
Total	$	1,309,434	$	912,701	$	779,840	$	589,022	$	582,417	$	928,105	$	633,830	$	5,735,349
1Loans classified as doubtful are fully reserved at December 31, 2020.

Loans Modified in Connection with COVID-19 Pandemic

The CARES Act, which was signed into law on March 27, 2020, and amended by the Consolidated Appropriations Act on December 27, 2020, encourages financial institutions to practice prudent efforts to work with borrowers financially impacted by the COVID-19 pandemic by providing an option to exclude from TDR consideration certain loan modifications that might otherwise be categorized as TDRs under ASC 310-40. This option is available for modifications that are deemed to be COVID-related, where the borrower was not more than 30 days past due on December 31, 2019, and the modification is executed between March 1, 2020 and the earlier of (i) January 1, 2022 or (ii) 60 days after the end of the COVID-19 national emergency.

Federal banking regulators issued similar guidance that also allows lenders to conclude that short-term modifications for borrowers affected by the pandemic should not be considered TDRs if the borrower was current at the time of modification. Seacoast has provided financially impacted borrowers with loan accommodations, primarily consisting of payment deferrals of up to six months. At its peak on June 30, 2020, loans on deferral represented $1.1 billion, or 21%, of total non-PPP loans. In the second half of 2020, the large majority of these borrowers successfully resumed making contractual payments, and the level of loans with accommodations has decreased to $2.2 million, or 0.04%, of total non-PPP loans as of September 30, 2021. Types of accommodations have included a combination of one or more of the following: full payment deferral, partial payment deferral, reduction of interest rate, extension of the original maturity date, or re-amortization of the facility.

The following table presents the balance of loans with active payment accommodations at the specified dates, excluding PPP loans:

(In thousands)	September 30, 2021		December 31, 2020
Construction and land development	$	—	$	1,032
Commercial real estate - owner-occupied	582		14,248
Commercial real estate - non owner-occupied	—		32,549
Residential real estate	610		12,839
Commercial and financial	624		11,915
Consumer	338		1,479
Totals	$	2,154	$	74,062

Troubled Debt Restructured Loans

The Company’s TDR concessions granted to certain borrowers generally do not include forgiveness of principal balances, but may include interest rate reductions, an extension of the amortization period and/or converting the loan to interest only for a limited period of time. Loan modifications are not reported in calendar years after modification if the loans were modified at an interest rate equal to the yields of new loan originations with comparable risk and the loans are performing based on the terms of the restructuring agreements.

The following table presents loans that were modified in a troubled debt restructuring during the three and nine months ended:

	Three Months Ended September 30,
	2021					2020
(In thousands)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Construction and land development	—	$	—	$	—	—	$	—	$	—
Commercial real estate - owner-occupied	—	—		—		—	—		—
Commercial real estate - non owner-occupied	—	—		—		—	—		—
Residential real estate	1	152		152		—	—		—
Commercial and financial	—	—		—		—	—		—
Consumer	—	—		—		1	41		41
Totals	1	$	152	$	152	1	$	41	$	41

	Nine Months Ended September 30,
	2021					2020
(In thousands)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Construction and land development	—	$	—	$	—	—	$	—	$	—
Commercial real estate - owner-occupied	—	—		—		—	—		—
Commercial real estate - non owner-occupied	—	—		—		—	—		—
Residential real estate	4	231		231		1	45		45
Commercial and financial	1	142		142		4	437		437
Consumer	—	—		—		3	88		88
Totals	5	$	373	$	373	8	$	570	$	570

The TDRs described above resulted in a specific allowance for credit losses of $0.2 million as of September 30, 2021 and September 30, 2020. During the nine months ended September 30, 2021, there were two defaults totaling $0.1 million of loans that had been modified in TDRs within the preceding twelve months. During the nine months ended September 30, 2020, there were four defaults totaling $1.4 million of loans that had been modified to a TDR within the preceding twelve months. The Company considers a loan to have defaulted when it becomes 90 days or more delinquent under the modified terms, has been transferred to nonaccrual status, is charged off or has been transferred to other real estate owned. For loans measured based on the present value of expected future cash flows, $9,000 and $19,000 for the three months ended September 30, 2021, and 2020, respectively, and $20,000 and $65,000 for the nine months ended September 30, 2021, and 2020, respectively, was included in interest income and represents the change in present value attributable to the passage of time.