|12 Months Ended|
Dec. 31, 2020
NOTE 5. LOANS
Loans consisted of the following at December 31, 2020 and 2019:
(1) Acquired loans in 2020 include loans acquired in the Comanche, Beeville, Citizens, and Simmons acquisitions. Acquired loans in 2019 include loans acquired in the Comanche, Beeville, and Citizens acquisitions. All loans originated after acquisition close date are included in organic loans.
At December 31, 2020 and 2019, the Company had pledged loans as collateral for FHLB advances of $927.3 million and $668.5 million, respectively. Additionally, at December 31, 2020, the Company had pledged loans as collateral associated with the Board of Governors of the Federal Reserve System’s (“Federal Reserve”) Paycheck Protection Program Liquidity Facility (“PPPLF”) of $149.8 million. There were no loans pledged under the PPPLF at December 31, 2019. There were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of December 31, 2020 and 2019.
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. Total loans originated under the PPP were $430.8 million of which $153.0 million were forgiven by December 31, 2020. Total PPP loans at December 31, 2020 were $277.8 million and are included in the commercial and industrial segment of our loan portfolio. These loans are fully guaranteed by the SBA, carry a contractual term of two to five years and an interest rate of 1.00%. In conjunction with originating PPP loans, the Company recorded deferred origination costs of $4.9 million and deferred origination fees of $15.3 million as of December 31, 2020. During 2020, $7.1 million of origination fees net of costs have been recognized due to loan forgiveness and normal amortization. The remaining $3.3 million in fees net of costs at December 31, 2020 will be recognized over the 1.3 year remaining weighted average life of the loans or at the date of forgiveness if earlier. In conjunction with the PPP, we are also currently participating in the PPPLF which, through December 31, 2020, extended loans to banks who are loaning money to small businesses under the PPP. The amount outstanding at December 31, 2020, was $149.8 million and is non-recourse and secured by the amount of the PPP loans outstanding.
The maturity date of a borrowing under the PPPLF is equal the maturity date of the PPP loan pledged to secure the borrowing and would be accelerated (i) if the underlying PPP loan goes into default and is sold to the SBA to realize on the SBA guarantee or (ii) to the extent that any loan forgiveness reimbursement is received from the SBA. Borrowings under the PPPLF are included in long-term liabilities on the consolidated balance sheet and bear interest at a rate of 0.35%.
The Company originates and sells loans secured by the SBA. The Company retains the unguaranteed portion of the loan and servicing on the loans sold and receives a fee based upon the principal balance outstanding. During the years ended December 31, 2020, 2019 and 2018, the Company sold approximately $21.1 million, $47.8 million and $69.0 million, respectively, in loans to third parties. The loan sales resulted in realized gains of $1.8 million, $4.0 million and $5.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Loans serviced for others are not included in the accompanying balance sheets. The unpaid principal balances of loans serviced for others were $193.3 million and $205.0 million at December 31, 2020 and 2019, respectively. SBA loan servicing fees were $1.2 million, $929 thousand and $2.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.
During 2020, we began originating loans to qualified mid-sized businesses under the Main Street Lending Program administered by the Federal Reserve Bank of Boston special purpose vehicle. Under the terms of the program 95 percent of the loan balance is purchased by the Federal Reserve Bank of Boston special purpose vehicle one day following origination. During the year ended December 31, 2020, the Company sold approximately $400.3 million of loans to the Federal Reserve Bank of Boston special purpose vehicle. The loan sales resulted in realized gains of $3.6 million for the year ended December 31, 2020. At December 31, 2020 the unpaid principal balance of loans serviced for others related to the Main Street Lending Program was $400.3 million.
During the second quarter of 2018, the Company sold a loan to one of its directors for $1.5 million. No gain or loss was recognized on this transaction.
In the ordinary course of business, the Company makes loans to executive officers and directors. Loans to these related parties, including companies in which they are principal owners, are as follows:
Total unfunded commitments to related parties were $1.8 million and $861 thousand at December 31, 2020 and 2019, respectively.
The entire disclosure for financing receivable.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef