Loan and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2020

Loans And Leases Receivable Disclosure [Abstract]

Loans and leases receivable disclosure [Text Block]

NOTE 4: LOANS AND ALLOWANCE FOR LOAN LOSSES

				September 30,		December 31,
(Dollars in thousands)				2020		2019
Commercial and industrial			$	98,244	$	56,782
Construction and land development				31,651		32,841
Commercial real estate:
	Owner occupied			48,955		48,860
	Hotel/motel			43,111		43,719
	Multi-family			32,608		44,839
	Other			126,318		132,900
		Total commercial real estate		250,992		270,318
Residential real estate:
	Consumer mortgage			37,577		48,923
	Investment property			47,477		43,652
		Total residential real estate		85,054		92,575
Consumer installment				7,731		8,866
		Total loans		473,672		461,382
Less: unearned income				(1,219)		(481)
		Loans, net of unearned income	$	472,453	$	460,901

Loans secured by real estate were approximately 77.6%of the Company’s total loan portfolio at September 30, 2020. At September 30, 2020, the Company’s geographic loan distribution was concentrated primarily in Lee County, Alabama, and surrounding areas.

In accordance with ASC 310, a portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for loan losses. As part of the Company’s quarterly assessment of the allowance, the loan portfolio is disaggregated into the following portfolio segments: commercial and industrial, construction and land development, commercial real estate, residential real estate, and consumer installment. Where appropriate, the Company’s loan portfolio segments are further disaggregated into classes. A class is generally determined based on the initial measurement attribute, risk characteristics of the loan, and an entity’s method for monitoring and determining credit risk.

The following describes the risk characteristics relevant to each of the portfolio segments and classes.

Commercial and industrial (“C&I”) — includes loans to finance business operations, equipment purchases, or other needs for small and medium-sized commercial customers. Also included in this category are loans to finance agricultural production. Generally, the primary source of repayment is the cash flow from business operations and activities of the borrower. We are a participating lender in the Paycheck Protection Program (“PPP”). PPP loans are forgivable in whole or in part, if the proceeds are used for payroll and other permitted purposes in accordance with the requirements of the PPP. As of September 30, 2020, the Company has 422 PPP loans with an aggregate outstanding principal balance of $36.5 million included in this category.

Construction and land development (“C&D”) — includes both loans and credit lines for the purpose of purchasing, carrying, and developing land into commercial developments or residential subdivisions. Also included are loans and credit lines for construction of residential, multi-family, and commercial buildings. Generally, the primary source of repayment is dependent upon the sale or refinance of the real estate collateral.

Commercial real estate (“CRE”) — includes loans disaggregated into three classes: (1) owner occupied, (2) multifamily and (3) other.

Owner occupied – includes loans secured by business facilities to finance business operations, equipment and owner-occupied facilities primarily for small and medium-sized commercial customers. Generally, the primary source of repayment is the cash flow from business operations and activities of the borrower, who owns the property.

Hotel/motel – includes loans for hotels and motels. Generally, the primary source of repayment is dependent upon income generated from the real estate collateral. The underwriting of these loans takes into consideration the occupancy and rental rates, as well as the financial health of the borrower.

Multi-family – primarily includes loans to finance income-producing multi-family properties. Loans in this class include loans for 5 or more unit residential property and apartments leased to residents. Generally, the primary source of repayment is dependent upon income generated from the real estate collateral. The underwriting of these loans takes into consideration the occupancy and rental rates, as well as the financial health of the borrower.

Other – primarily includes loans to finance income-producing commercial properties that are not owner occupied. Loans in this class include loans for neighborhood retail centers, medical and professional offices, single retail stores, industrial buildings, and warehouses leased to local businesses. Generally, the primary source of repayment is dependent upon income generated from the real estate collateral. The underwriting of these loans takes into consideration the occupancy and rental rates, as well as the financial health of the borrower.

Residential real estate (“RRE”) — includes loans disaggregated into two classes: (1) consumer mortgage and (2) investment property.

Consumer mortgage – primarily includes first or second lien mortgages and home equity lines of credit to consumers that are secured by a primary residence or second home. These loans are underwritten in accordance with the Bank’s general loan policies and procedures which require, among other things, proper documentation of each borrower’s financial condition, satisfactory credit history, and property value.

Investment property – primarily includes loans to finance income-producing 1-4 family residential properties. Generally, the primary source of repayment is dependent upon income generated from leasing the property securing the loan. The underwriting of these loans takes into consideration the rental rates and property value, as well as the financial health of the borrower.

Consumer installment — includes loans to individuals both secured by personal property and unsecured. Loans include personal lines of credit, automobile loans, and other retail loans. These loans are underwritten in accordance with the Bank’s general loan policies and procedures which require, among other things, proper documentation of each borrower’s financial condition, satisfactory credit history, and, if applicable, property value.

The following is a summary of current, accruing past due, and nonaccrual loans by portfolio segment and class as of September 30, 2020 and December 31, 2019.

					Accruing	Accruing	Total
					30-89 Days	Greater than	Accruing	Non-		Total
(Dollars in thousands)			Current		Past Due	90 days	Loans	Accrual		Loans
September 30, 2020:
Commercial and industrial			$	98,196	48	—	98,244	—	$	98,244
Construction and land development				31,651	—	—	31,651	—		31,651
Commercial real estate:
	Owner occupied			48,955	—	—	48,955	—		48,955
	Hotel/motel			43,111	—	—	43,111	—		43,111
	Multi-family			32,608	—	—	32,608	—		32,608
	Other			126,102	—	—	126,102	216		126,318
		Total commercial real estate		250,776	—	—	250,776	216		250,992
Residential real estate:
	Consumer mortgage			37,179	106	71	37,356	221		37,577
	Investment property			47,366	—	—	47,366	111		47,477
		Total residential real estate		84,545	106	71	84,722	332		85,054
Consumer installment				7,724	6	—	7,730	1		7,731
		Total	$	472,892	160	71	473,123	549	$	473,672

December 31, 2019:
Commercial and industrial			$	56,758	24	—	56,782	—	$	56,782
Construction and land development				32,385	456	—	32,841	—		32,841
Commercial real estate:
	Owner occupied			48,860	—	—	48,860	—		48,860
	Hotel/motel			43,719	—	—	43,719	—		43,719
	Multi-family			44,839	—	—	44,839	—		44,839
	Other			132,900	—	—	132,900	—		132,900
		Total commercial real estate		270,318	—	—	270,318	—		270,318
Residential real estate:
	Consumer mortgage			47,151	1,585	—	48,736	187		48,923
	Investment property			43,629	23	—	43,652	—		43,652
		Total residential real estate		90,780	1,608	—	92,388	187		92,575
Consumer installment				8,802	64	—	8,866	—		8,866
		Total	$	459,043	2,152	—	461,195	187	$	461,382

Allowance for Loan Losses

The Company assesses the adequacy of its allowance for loan losses prior to the end of each calendar quarter. The level of the allowance is based upon management’s evaluation of the loan portfolio, past loan loss experience, current asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect a borrower’s ability to repay (including the timing of future payment), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, industry and peer bank loan loss rates, and other pertinent factors, including regulatory recommendations. This evaluation is inherently subjective as it requires material estimates including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. Loans are charged off, in whole or in part, when management believes that the full collectability of the loan is unlikely. A loan may be partially charged-off after a “confirming event” has occurred, which serves to validate that full repayment pursuant to the terms of the loan is unlikely.

The Company deems loans impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Collection of all amounts due according to the contractual terms means that both the interest and principal payments of a loan will be collected as scheduled in the loan agreement.

An impairment allowance is recognized if the fair value of the loan is less than the recorded investment in the loan. The impairment is recognized through the allowance. Loans that are impaired are recorded at the present value of expected future cash flows discounted at the loan’s effective interest rate, or if the loan is collateral dependent, the impairment measurement is based on the fair value of the collateral, less estimated disposal costs.

The level of allowance maintained is believed by management to be adequate to absorb probable losses inherent in the portfolio at the balance sheet date. The allowance is increased by provisions charged to expense and decreased by charge-offs, net of recoveries of amounts previously charged-off.

In assessing the adequacy of the allowance, the Company also considers the results of its ongoing internal and independent loan review processes. The Company’s loan review process assists in determining whether there are loans in the portfolio whose credit quality has weakened over time and evaluating the risk characteristics of the entire loan portfolio. The Company’s loan review process includes the judgment of management, the input from our independent loan reviewers, and reviews conducted by bank regulatory agencies as part of their examination process. The Company incorporates loan review results in the determination of whether or not it is probable that it will be able to collect all amounts due according to the contractual terms of a loan.

As part of the Company’s quarterly assessment of the allowance, management divides the loan portfolio into five segments: commercial and industrial, construction and land development, commercial real estate, residential real estate, and consumer installment. The Company analyzes each segment and estimates an allowance allocation for each loan segment.

The allocation of the allowance for loan losses begins with a process of estimating the probable losses inherent for each loan segment. The estimates for these loans are established by category and based on the Company’s internal system of credit risk ratings and historical loss data. The estimated loan loss allocation rate for the Company’s internal system of credit risk grades is based on its experience with similarly graded loans. For loan segments where the Company believes it does not have sufficient historical loss data, the Company may make adjustments based, in part, on loss rates of peer bank groups. At September 30, 2020 and December 31, 2019, and for the periods then ended, the Company adjusted its historical loss rates for the commercial real estate portfolio segment based, in part, on loss rates of peer bank groups.

The estimated loan loss allocation for all five loan portfolio segments is then adjusted for management’s estimate of probable losses for several “qualitative and environmental” factors. The allocation for qualitative and environmental factors is particularly subjective and does not lend itself to exact mathematical calculation. This amount represents estimated probable inherent credit losses which exist, but have not yet been identified, as of the balance sheet date, and are based upon quarterly trend assessments in delinquent and nonaccrual loans, credit concentration changes, prevailing economic conditions, changes in lending personnel experience, changes in lending policies or procedures, and other factors. These qualitative and environmental factors are considered for each of the five loan segments and the allowance allocation, as determined by the processes noted above, is increased or decreased based on the incremental assessment of these factors.

The Company regularly re-evaluates its practices in determining the allowance for loan losses. Since the fourth quarter of 2016, the Company has increased its look-back period each quarter to incorporate the effects of at least one economic downturn in its loss history. The Company believes the extension of its look-back period is appropriate due to the risks inherent in the loan portfolio. Absent this extension, the early cycle periods in which the Company experienced significant losses would be excluded from the determination of the allowance for loan losses and its balance would decrease. For the quarter ended September 30, 2020, the Company increased its look-back period to 46 quarters to continue to include losses incurred by the Company beginning with the first quarter of 2009. The Company will likely continue to increase its look-back period to incorporate the effects of at least one economic downturn in its loss history. During the first nine months of 2020, the Company adjusted certain qualitative and economic factors related to changes in economic conditions driven by the impact of the novel strain of coronavirus (“COVID-19 pandemic”) and resulting adverse economic conditions, including higher unemployment in our primary market area.

The following table details the changes in the allowance for loan losses by portfolio segment for the respective periods.

			September 30, 2020
(Dollars in thousands)		Commercial and industrial		Construction and land development	Commercial real estate	Residential real estate	Consumer installment		Total
Quarter ended:
Beginning balance		$	679	613	2,915	954	147	$	5,308
Charge-offs			—	—	—	—	(4)		(4)
Recoveries			8	—	—	8	5		21
	Net recoveries		8	—	—	8	1		17
Provision for loan losses			111	(31)	205	(8)	(27)		250
Ending balance		$	798	582	3,120	954	121	$	5,575

Nine months ended:
Beginning balance		$	577	569	2,289	813	138	$	4,386
Charge-offs			(4)	—	—	—	(36)		(40)
Recoveries			63	—	—	53	13		129
	Net recoveries (charge-offs)		59	—	—	53	(23)		89
Provision for loan losses			162	13	831	88	6		1,100
Ending balance		$	798	582	3,120	954	121	$	5,575

			September 30, 2019
(Dollars in thousands)		Commercial and industrial		Construction and land development	Commercial real estate	Residential real estate	Consumer installment		Total
Quarter ended:
Beginning balance		$	726	781	2,287	904	153	$	4,851
Charge-offs			(128)	—	—	(1)	(2)		(131)
Recoveries			59	—	—	12	16		87
	Net (charge-offs) recoveries		(69)	—	—	11	14		(44)
Provision for loan losses			28	(51)	67	(25)	(19)		—
Ending balance		$	685	730	2,354	890	148	$	4,807

Nine months ended:
Beginning balance		$	778	700	2,218	946	148	$	4,790
Charge-offs			(128 )	—	—	(1 )	(18)		(147)
Recoveries			83	—	1	59	21		164
	Net (charge-offs) recoveries		(45)	—	1	58	3		17
Provision for loan losses			(48)	30	135	(114)	(3)		—
Ending balance		$	685	730	2,354	890	148	$	4,807

The following table presents an analysis of the allowance for loan losses and recorded investment in loans by portfolio segment and impairment methodology as of September 30, 2020 and 2019.

			Collectively evaluated (1)		Individually evaluated (2)		Total
			Allowance	Recorded	Allowance	Recorded	Allowance	Recorded
			for loan	investment	for loan	investment	for loan	investment
(Dollars in thousands)			losses	in loans	losses	in loans	losses	in loans
September 30, 2020:
Commercial and industrial (3)		$	798	98,244	—	—	798	98,244
Construction and land development			582	31,651	—	—	582	31,651
Commercial real estate			3,120	250,776	—	216	3,120	250,992
Residential real estate			954	84,943	—	111	954	85,054
Consumer installment			121	7,731	—	—	121	7,731
	Total	$	5,575	473,345	—	327	5,575	473,672

September 30, 2019:
Commercial and industrial		$	685	52,288	—	—	685	52,288
Construction and land development			730	41,599	—	—	730	41,599
Commercial real estate			2,354	267,346	—	—	2,354	267,346
Residential real estate			890	95,215	—	—	890	95,215
Consumer installment			148	9,148	—	—	148	9,148
	Total	$	4,807	465,596	—	—	4,807	465,596
(1)	Represents loans collectively evaluated for impairment in accordance with ASC 450-20, Loss Contingencies, and
	pursuant to amendments by ASU 2010-20 regarding allowance for non-impaired loans.
(2)	Represents loans individually evaluated for impairment in accordance with ASC 310-30, Receivables, and
	pursuant to amendments by ASU 2010-20 regarding allowance for impaired loans.
(3)	Includes $36.5 million of PPP loans for which no loan loss reserve was allocated due to 100% SBA guarantee

Credit Quality Indicators

The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the standard asset classification system used by the federal banking agencies. The following table presents credit quality indicators for the loan portfolio segments and classes. These categories are utilized to develop the associated allowance for loan losses using historical losses adjusted for qualitative and environmental factors and are defined as follows:

 Pass – loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral.

 Special Mention – loans with potential weakness that may, if not reversed or corrected, weaken the credit or inadequately protect the Company’s position at some future date. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification.

 Substandard Accruing – loans that exhibit a well-defined weakness which presently jeopardizes debt repayment, even though they are currently performing. These loans are characterized by the distinct possibility that the Company may incur a loss in the future if these weaknesses are not corrected.

 Nonaccrual – includes loans where management has determined that full payment of principal and interest is not expected.

(Dollars in thousands)				Pass	Special Mention	Substandard Accruing	Nonaccrual		Total loans
September 30, 2020:
Commercial and industrial			$	95,824	2,190	230	—	$	98,244
Construction and land development				31,088	—	563	—		31,651
Commercial real estate:
	Owner occupied			45,089	3,723	143	—		48,955
	Hotel/motel			43,111	—	—	—		43,111
	Multi-family			29,078	3,530	—	—		32,608
	Other			125,574	483	45	216		126,318
		Total commercial real estate		242,852	7,736	188	216		250,992
Residential real estate:
	Consumer mortgage			34,682	398	2,276	221		37,577
	Investment property			46,654	502	210	111		47,477
		Total residential real estate		81,336	900	2,486	332		85,054
Consumer installment				7,673	15	42	1		7,731
		Total	$	458,773	10,841	3,509	549	$	473,672

December 31, 2019:
Commercial and industrial			$	54,340	2,176	266	—	$	56,782
Construction and land development				31,798	—	1,043	—		32,841
Commercial real estate:
	Owner occupied			47,865	917	78	—		48,860
	Hotel/motel			43,719	—	—	—		43,719
	Multi-family			44,839	—	—	—		44,839
	Other			132,030	849	21	—		132,900
		Total commercial real estate		268,453	1,766	99	—		270,318
Residential real estate:
	Consumer mortgage			45,247	962	2,527	187		48,923
	Investment property			42,331	949	372	—		43,652
		Total residential real estate		87,578	1,911	2,899	187		92,575
Consumer installment				8,742	60	64	—		8,866
		Total	$	450,911	5,913	4,371	187	$	461,382

Impaired loans

The following tables present details related to the Company’s impaired loans. Loans that have been fully charged-off are not included in the following tables. The related allowance generally represents the following components that correspond to impaired loans:

 Individually evaluated impaired loans equal to or greater than $500,000 secured by real estate (nonaccrual construction and land development, commercial real estate, and residential real estate loans).

 Individually evaluated impaired loans equal to or greater than $250,000 not secured by real estate (nonaccrual commercial and industrial and consumer installment loans).

The following tables set forth certain information regarding the Company’s impaired loans that were individually evaluated for impairment at September 30, 2020 and December 31, 2019.

				September 30, 2020
(Dollars in thousands)				Unpaid principal balance (1)	Charge-offs and payments applied (2)	Recorded investment (3)		Related allowance
With no allowance recorded:
Commercial real estate:
	Other		$	218	(2)	216	$	—
		Total commercial real estate		218	(2)	216		—
Residential real estate:
	Investment property			111	—	111		—
		Total residential real estate		111	—	111		—
		Total impaired loans	$	329	(2)	327	$	—
(1) Unpaid principal balance represents the contractual obligation due from the customer.
(2) Charge-offs and payments applied represents cumulative charge-offs taken, as well as interest payments that have been
	applied against the outstanding principal balance subsequent to the loans being placed on nonaccrual status.
(3) Recorded investment represents the unpaid principal balance less charge-offs and payments applied; it is shown before
	any related allowance for loan losses.

				December 31, 2019
(Dollars in thousands)				Unpaid principal balance (1)	Charge-offs and payments applied (2)	Recorded investment (3)		Related allowance
With no allowance recorded:
Commercial and industrial			$	335	(236)	99	$	—
		Total impaired loans	$	335	(236)	99	$	—
(1) Unpaid principal balance represents the contractual obligation due from the customer.
(2) Charge-offs and payments applied represents cumulative charge-offs taken, as well as interest payments that have been
	applied against the outstanding principal balance subsequent to the loans being placed on nonaccrual status.
(3) Recorded investment represents the unpaid principal balance less charge-offs and payments applied; it is shown before
	any related allowance for loan losses.

The following table provides the average recorded investment in impaired loans, if any, by portfolio segment, and the amount of interest income recognized on impaired loans after impairment by portfolio segment and class during the respective periods.

				Quarter ended September 30, 2020		Nine months ended September 30, 2020
				Average	Total interest	Average	Total interest
				recorded	income	recorded	income
(Dollars in thousands)				investment	recognized	investment	recognized
Impaired loans:
Commercial real estate:
	Other		$	217	—	87	—
		Total commercial real estate		217	—	87	—
Residential real estate:
	Investment property			111	—	44	—
		Total residential real estate		111	—	44	—
		Total	$	328	—	131	—

				Quarter ended September 30, 2019		Nine months ended September 30, 2019
				Average	Total interest	Average	Total interest
				recorded	income	recorded	income
(Dollars in thousands)				investment	recognized	investment	recognized
Impaired loans:
Commercial real estate:
	Owner occupied		$	—	—	31	9
		Total commercial real estate		—	—	31	9
		Total	$	—	—	31	9

Troubled Debt Restructurings

Impaired loans also include troubled debt restructurings (“TDRs”). On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” provides banks the option to temporarily suspend certain requirements under ASC 340-10 TDR classifications for a limited period of time to account for the effects of COVID-19. On April 7, 2020, the Federal Reserve and the other banking agencies and regulators issued a statement, “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working With Customers Affected by the Coronavirus (Revised)” (the “Interagency Statement on COVID-19 Loan Modifications”), to encourage banks to work prudently with borrowers and to describe the agencies’ interpretation of how accounting rules under ASC 310-40, “Troubled Debt Restructurings by Creditors,” apply to certain COVID-19-related modifications. The Interagency Statement on COVID-19 Loan Modifications was supplemented on June 23, 2020 by the Interagency Examiner Guidance for Assessing Safety and Soundness Considering the Effect of the COVID-19 Pandemic on Institutions. If a loan modification is eligible, a bank may elect to account for the loan under section 4013 of the CARES Act. If a loan modification is not eligible under section 4013, or if the bank elects not to account for the loan modification under section 4013, the Revised Statement includes criteria when a bank may presume a loan modification is not a TDR in accordance with ASC 310-40.

The Company evaluates loan extensions or modifications not qualified under Section 4013 of the CARES Act or under the Interagency Statement on COVID-19 Loan Modifications in accordance with FASB ASC 340-10 with respect to the classification of the loan as a TDR. In the normal course of business, management may grant concessions to borrowers that are experiencing financial difficulty. A concession may include, but is not limited to, delays in required payments of principal and interest for a specified period, reduction of the stated interest rate of the loan, reduction of accrued interest, extension of the maturity date, or reduction of the face amount or maturity amount of the debt. A concession has been granted when, as a result of the restructuring, the Bank does not expect to collect, when due, all amounts owed, including interest at the original stated rate. A concession may have also been granted if the debtor is not able to access funds elsewhere at a market rate for debt with similar risk characteristics as the restructured debt. In making the determination of whether a loan modification is a TDR, the Company considers the individual facts and circumstances surrounding each modification. As part of the credit approval process, the restructured loans are evaluated for adequate collateral protection in determining the appropriate accrual status at the time of restructure.

Similar to other impaired loans, TDRs are measured for impairment based on the present value of expected payments using the loan’s original effective interest rate as the discount rate, or the fair value of the collateral, less selling costs if the loan is collateral dependent. If the recorded investment in the loan exceeds the measure of fair value, impairment is recognized by establishing a valuation allowance as part of the allowance for loan losses or a charge-off to the allowance for loan losses. In periods subsequent to the modification, all TDRs are individually evaluated for possible impairment.

The following is a summary of accruing and nonaccrual TDRs, which are included in the impaired loan totals, and the related allowance for loan losses, by portfolio segment and class as of September 30, 2020. The company had no TDRs as of December 31, 2019.

				TDRs
								Related
(Dollars in thousands)				Accruing	Nonaccrual	Total		Allowance
September 30, 2020
Commercial real estate:
	Other		$	—	216	216	$	—
		Total commercial real estate		—	216	216		—
Residential real estate:
	Investment property			—	111	111		—
		Total residential real estate		—	111	111		—
		Total	$	—	327	327	$	—

At September 30, 2020, there were no significant outstanding commitments to advance additional funds to customers whose loans had been restructured.

The following table summarizes loans modified in a TDR during the respective periods both before and after their modification.

			Quarter ended September 30,				Nine months ended September 30,
					Pre-	Post -			Pre-	Post -
					modification	modification			modification	modification
			Number		outstanding	outstanding	Number		outstanding	outstanding
			of		recorded	recorded	of		recorded	recorded
(Dollars in thousands)			contracts		investment	investment	contracts		investment	investment
2020:
Commercial real estate:
	Other		—	$	—	—	1	$	216	216
		Total commercial real estate	—		—	—	1		216	216
Residential real estate:
	Investment property		—		—	—	3		111	111
		Total residential real estate	—		—	—	3		111	111
		Total	—	$	—	—	4	$	327	327

Four loans were modified in a TDR during the nine months ended September 30, 2020. The only concession granted by the Company was related to a delay in the required payment of principal and interest. There were no loans modified in a TDR during the quarter and nine months ended September 30, 2019.

During the quarter and nine months ended September 30, 2020 and 2019, respectively, there were no loans modified in a TDR within the previous 12 months for which there was a payment default (defined as 90 days or more past due).