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LOANS

9 Months Ended

Sep. 30, 2020

NOTE 3. LOANS

The Company’s loan portfolio is comprised of the following segments: commercial real estate, commercial and industrial, residential real estate, and consumer loans. Commercial real estate loans include multi-family, commercial construction and land development, and other commercial real estate classes. Commercial and industrial loans include loans to commercial and agricultural businesses and tax exempt entities. Residential real estate loans consist of mortgages for 1-to-4 family housing. Consumer loans include home equity loans, auto and other installment loans.

The Company’s lending activities are principally conducted in Maine, New Hampshire, and Vermont.

Total loans include business activity loans and acquired loans. Acquired loans are those loans previously acquired from other institutions. The following is a summary of total loans:


	September 30, 2020						December 31, 2019
	Business						Business
	Activities		Acquired				Activities		Acquired
(in thousands)	Loans		Loans		Total		Loans		Loans		Total
Commercial real estate:
Construction and land development	$	86,927	$	2,191	$	89,118	$	31,387	$	2,903	$	34,290
Other commercial real estate		765,471		191,046		956,517		666,051		230,320		896,371
Total commercial real estate		852,398		193,237		1,045,635		697,438		233,223		930,661

Commercial and industrial:
Commercial		381,512		56,858		438,370		239,692		59,072		298,764
Agricultural		17,658		156		17,814		20,018		206		20,224
Tax exempt		41,951		24,375		66,326		66,860		37,443		104,303
Total commercial and industrial		441,121		81,389		522,510		326,570		96,721		423,291

Total commercial loans		1,293,519		274,626		1,568,145		1,024,008		329,944		1,353,952

Residential real estate:
Residential mortgages		695,766		325,440		1,021,206		740,687		411,170		1,151,857
Total residential real estate		695,766		325,440		1,021,206		740,687		411,170		1,151,857

Consumer:
Home equity		58,344		50,530		108,874		59,368		63,033		122,401
Other consumer		9,217		1,249		10,466		11,167		1,715		12,882
Total consumer		67,561		51,779		119,340		70,535		64,748		135,283

Total loans	$	2,056,846	$	651,845	$	2,708,691	$	1,835,230	$	805,862	$	2,641,092

The carrying amount of the acquired loans at September 30, 2020 totaled $651.8 million. A subset of these loans was determined to have evidence of credit deterioration at acquisition date, which is accounted for in accordance with ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer. These purchased credit-impaired loans presently maintain a carrying value of $14.2 million (and total note balances of $18.1 million). These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Acquired loans considered not impaired at the acquisition date had a carrying amount of $637.6 million as of September 30, 2020.

The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer:


	Three Months Ended September 30,
(in thousands)	2020		2019
Balance at beginning of period	$	6,227	$	4,195
Net reclassifications from (to) nonaccretable difference		53		(126)
Accretion		(455)		(581)
Balance at end of period	$	5,825	$	3,488


	Nine Months Ended September 30,
(in thousands)	2020		2019
Balance at beginning of period	$	7,367	$	4,377
Net reclassifications from (to) nonaccretable difference		1,004		498
Accretion		(2,546)		(1,387)
Balance at end of period	$	5,825	$	3,488

The following is a summary of past due loans at September 30, 2020 and December 31, 2019:

Business Activities Loans


					90 Days or								Past Due >
	30-59 Days		60-89 Days		Greater		Total Past						90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
September 30, 2020
Commercial real estate:
Construction and land development	$	—	$	—	$	212	$	212	$	86,715	$	86,927	$	—
Other commercial real estate		200		1,119		725		2,044		763,427		765,471		—
Total commercial real estate		200		1,119		937		2,256		850,142		852,398		—

Commercial and industrial:
Commercial		92		310		2,193		2,595		378,917		381,512		1,932
Agricultural		122		—		109		231		17,427		17,658		—
Tax exempt		—		—		—		—		41,951		41,951		—
Total commercial and industrial		214		310		2,302		2,826		438,295		441,121		1,932

Total commercial loans		414		1,429		3,239		5,082		1,288,437		1,293,519		1,932

Residential real estate:
Residential mortgages		217		112		1,369		1,698		694,068		695,766		—
Total residential real estate		217		112		1,369		1,698		694,068		695,766		—

Consumer:
Home equity		39		36		171		246		58,098		58,344		—
Other consumer		12		—		2		14		9,203		9,217		—
Total consumer		51		36		173		260		67,301		67,561		—

Total loans	$	682	$	1,577	$	4,781	$	7,040	$	2,049,806	$	2,056,846	$	1,932

Acquired Loans


					90 Days or				Acquired				Past Due >
	30-59 Days		60-89 Days		Greater		Total Past		Credit				90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Impaired		Total Loans		Accruing
September 30, 2020
Commercial real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	221	$	2,191	$	—
Other commercial real estate		169		156		678		1,003		7,227		191,046		—
Total commercial real estate		169		156		678		1,003		7,448		193,237		—

Commercial and industrial:
Commercial		450		65		18		533		1,182		56,858		—
Agricultural		—		—		—		—		156		156		—
Tax exempt		—		—		—		—		—		24,375		—
Total commercial and industrial		450		65		18		533		1,338		81,389		—

Total commercial loans		619		221		696		1,536		8,786		274,626		—

Residential real estate:
Residential mortgages		291		441		2,006		2,738		4,657		325,440		215
Total residential real estate		291		441		2,006		2,738		4,657		325,440		215

Consumer:
Home equity		291		133		170		594		711		50,530		69
Other consumer		—		—		—		—		44		1,249		—
Total consumer		291		133		170		594		755		51,779		69

Total loans	$	1,201	$	795	$	2,872	$	4,868	$	14,198	$	651,845	$	284

Business Activities Loans


	`					90 Days or								Past Due >
		30-59 Days		60-89 Days		Greater		Total Past						90 days and
(in thousands)		Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
December 31, 2019
Commercial real estate:
Construction and land development		$	205	$	53	$	—	$	258	$	31,129	$	31,387	$	—
Other commercial real estate			40		1,534		1,810		3,384		662,667		666,051		—
Total commercial real estate			245		1,587		1,810		3,642		693,796		697,438		—

Commercial and industrial:
Commercial			452		50		894		1,396		238,296		239,692		—
Agricultural			62		34		96		192		19,826		20,018		—
Tax exempt			—		—		—		—		66,860		66,860		—
Total commercial and industrial			514		84		990		1,588		324,982		326,570		—

Total commercial loans			759		1,671		2,800		5,230		1,018,778		1,024,008		—

Residential real estate:
Residential mortgages			7,293		1,243		668		9,204		731,483		740,687		—
Total residential real estate			7,293		1,243		668		9,204		731,483		740,687		—

Consumer:
Home equity			597		43		429		1,069		58,299		59,368		50
Other consumer			36		12		—		48		11,119		11,167		—
Total consumer			633		55		429		1,117		69,418		70,535		50

Total loans		$	8,685	$	2,969	$	3,897	$	15,551	$	1,819,679	$	1,835,230	$	50

Acquired Loans


					90 Days or				Acquired				Past Due >
	30-59 Days		60-89 Days		Greater		Total Past		Credit				90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Impaired		Total Loans		Accruing
December 31, 2019
Commercial real estate:
Construction and land development	$	—	$	12	$	—	$	12	$	384	$	2,903	$	—
Other commercial real estate		2,029		245		231		2,505		8,289		230,320		—
Total commercial real estate		2,029		257		231		2,517		8,673		233,223		—

Commercial and industrial:
Commercial		440		335		140		915		2,723		59,072		—
Agricultural		—		—		—		—		173		206		—
Tax exempt		—		—		—		—		36		37,443		—
Total commercial and industrial		440		335		140		915		2,932		96,721		—

Total commercial loans		2,469		592		371		3,432		11,605		329,944		—

Residential real estate:
Residential mortgages		3,185		864		1,015		5,064		5,591		411,170		—
Total residential real estate		3,185		864		1,015		5,064		5,591		411,170		—

Consumer:
Home equity		208		548		217		973		1,291		63,033		217
Other consumer		2		9		—		11		66		1,715		—
Total consumer		210		557		217		984		1,357		64,748		217

Total loans	$	5,864	$	2,013	$	1,603	$	9,480	$	18,553	$	805,862	$	217

Non-Accrual Loans

The following is summary information pertaining to non-accrual loans at September 30, 2020 and December 31, 2019:


	September 30, 2020						December 31, 2019
	Business						Business
	Activities		Acquired				Activities		Acquired
(in thousands)	Loans		Loans		Total		Loans		Loans		Total
Commercial real estate:
Construction and land development	$	212	$	—	$	212	$	258	$	—	$	258
Other commercial real estate		1,818		2,684		4,502		2,888		343		3,231
Total commercial real estate		2,030		2,684		4,714		3,146		343		3,489

Commercial and industrial:
Commercial		918		416		1,334		932		626		1,558
Agricultural		486		—		486		278		—		278
Tax exempt		—		—		—		—		—		—
Total commercial and industrial		1,404		416		1,820		1,210		626		1,836

Total commercial loans		3,434		3,100		6,534		4,356		969		5,325

Residential real estate:
Residential mortgages		3,864		3,290		7,154		3,362		1,973		5,335
Total residential real estate		3,864		3,290		7,154		3,362		1,973		5,335

Consumer:
Home equity		450		255		705		615		254		869
Other consumer		15		—		15		21		—		21
Total consumer		465		255		720		636		254		890

Total loans	$	7,763	$	6,645	$	14,408	$	8,354	$	3,196	$	11,550

Loans evaluated for impairment as of September 30, 2020 and December 31, 2019 are, as follows:

Business Activities Loans


	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
September 30, 2020
Balance at end of period
Individually evaluated for impairment	$	2,586	$	1,274	$	2,233	$	12	$	6,105
Collectively evaluated		849,812		439,847		693,533		67,549		2,050,741
Total	$	852,398	$	441,121	$	695,766	$	67,561	$	2,056,846

Acquired Loans


	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
September 30, 2020
Balance at end of period
Individually evaluated for impairment	$	2,358	$	322	$	832	$	—	$	3,512
Purchased credit impaired		7,448		1,338		4,657		755		14,198
Collectively evaluated		183,431		79,729		319,951		51,024		634,135
Total	$	193,237	$	81,389	$	325,440	$	51,779	$	651,845

Business Activities Loans


	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
December 31, 2019
Balance at end of period
Individually evaluated for impairment	$	3,964	$	1,353	$	2,620	$	13	$	7,950
Collectively evaluated		693,474		325,217		738,067		70,522		1,827,280
Total	$	697,438	$	326,570	$	740,687	$	70,535	$	1,835,230

Acquired Loans


	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
December 31, 2019
Balance at end of period
Individually evaluated for impairment	$	258	$	385	$	1,032	$	—	$	1,675
Purchased credit impaired		8,673		2,932		5,591		1,357		18,553
Collectively evaluated		224,292		93,404		404,547		63,391		785,634
Total	$	233,223	$	96,721	$	411,170	$	64,748	$	805,862

The following is a summary of impaired loans at September 30, 2020 and December 31, 2019:

Business Activities Loans


	September 30, 2020
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		1,941		2,020		—
Commercial		678		773		—
Agricultural		155		158		—
Tax exempt loans		—		—		—
Residential real estate		1,555		1,649		—
Home equity		—		—		—
Other consumer		—		—		—

With an allowance recorded:
Construction and land development		210		210		158
Other commercial real estate		435		503		185
Commercial		216		216		18
Agricultural		225		361		225
Tax exempt loans		—		—		—
Residential real estate		678		725		45
Home equity		12		12		1
Other consumer		—		—		—

Total
Commercial real estate		2,586		2,733		343
Commercial and industrial		1,274		1,508		243
Residential real estate		2,233		2,374		45
Consumer		12		12		1
Total impaired loans	$	6,105	$	6,627	$	632

Acquired Loans


	September 30, 2020
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		1,584		1,605		—
Commercial		257		353		—
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		403		683		—
Home equity		—		—		—
Other consumer		—		—		—

With an allowance recorded:
Construction and land development		—		—		—
Other commercial real estate		774		793		297
Commercial		65		67		7
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		429		522		52
Home equity		—		—		—
Other consumer		—		—		—

Total
Commercial real estate		2,358		2,398		297
Commercial and industrial		322		420		7
Residential real estate		832		1,205		52
Consumer		—		—		—
Total impaired loans	$	3,512	$	4,023	$	356

Business Activities Loans


	December 31, 2019
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		1,911		1,957		—
Commercial		710		773		—
Agricultural		361		361		—
Tax exempt loans		—		—		—
Residential real estate		2,067		2,227		—
Home equity		—		—		—
Other consumer		—		—		—

With an allowance recorded:
Construction and land development		258		258		205
Other commercial real estate		1,795		1,940		1,026
Commercial		282		289		164
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		553		590		57
Home equity		13		13		—
Other consumer		—		—		—

Total
Commercial real estate		3,964		4,155		1,231
Commercial and industrial		1,353		1,423		164
Residential real estate		2,620		2,817		57
Consumer		13		13		—
Total impaired loans	$	7,950	$	8,408	$	1,452

Acquired Loans


	December 31, 2019
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		90		90		—
Commercial		385		481		—
Agricultural		—		—		—
Tax exempt		—		—		—
Residential mortgages		678		938		—
Home equity		—		—		—
Other consumer		—		—		—

With an allowance recorded:
Construction and land development		—		—		—
Other commercial real estate		168		168		12
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt		—		—		—
Residential mortgages		354		376		49
Home equity		—		—		—
Other consumer		—		—		—

Total
Commercial real estate		258		258		12
Commercial and industrial		385		481		—
Residential real estate		1,032		1,314		49
Consumer		—		—		—
Total impaired loans	$	1,675	$	2,053	$	61

The following is a summary of the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2020 and 2019:

Business Activities Loans


	Three Months Ended September 30, 2020				Three Months Ended September 30, 2019
	Average Recorded		Interest		Average Recorded		Interest
(in thousands)	Investment		Income Recognized		Investment		Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate		1,899		14		5,528		63
Commercial		692		1		747		4
Agricultural		157		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		1,547		12		2,041		16
Home equity		—		—		—		—
Other consumer		—		—		—		—

With an allowance recorded:
Construction and land development		205		—		1		—
Other commercial real estate		429		—		3,217		—
Commercial		212		1		654		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		665		3		551		2
Home equity		12		—		12		—
Other consumer		—		—		—		—

Total
Commercial real estate		2,533		14		8,746		52
Commercial and industrial		1,061		2		1,401		4
Residential real estate		2,212		15		2,592		18
Consumer		12		—		12		—
Total impaired loans	$	5,818	$	31	$	12,751	$	74

Business Activities Loans


	Nine Months Ended September 30, 2020				Nine Months Ended September 30, 2019
	Average Recorded		Interest		Average Recorded		Interest
(in thousands)	Investment		Income Recognized		Investment		Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate		1,427		14		5,466		56
Commercial		732		2		792		7
Agricultural		101		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		1,581		25		2,089		47
Home equity		—		—		—		—
Other consumer		—		—		—		—

With an allowance recorded:
Construction and land development		208		—		2		—
Other commercial real estate		452		—		2,972		29
Commercial		97		2		497		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		681		9		540		7
Home equity		12		—		13		—
Other consumer		—		—		—		—

Total
Commercial real estate		2,087		14		8,440		85
Commercial and industrial		930		4		1,289		7
Residential real estate		2,262		34		2,629		54
Consumer		12		—		13		—
Total impaired loans	$	5,291	$	52	$	12,371	$	146

Acquired Loans


	Three Months Ended September 30, 2020				Three Months Ended September 30, 2019
	Average Recorded		Interest		Average Recorded		Interest
(in thousands)	Investment		Income Recognized		Investment		Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate		1,566		—		88		—
Commercial		264		—		395		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		519		—		702		—
Home equity		—		—		—		—
Other consumer		—		—		—		—

With an allowance recorded:
Construction and land development		—		—		—		—
Other commercial real estate		782		3		165		—
Commercial		67		—		—		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		420		—		352		—
Home equity		—		—		—		—
Other consumer		—		—		—		—

Total
Commercial real estate		2,348		3		253		—
Commercial and industrial		331		—		395		—
Residential real estate		939		—		1,054		—
Consumer		—		—		—		—
Total impaired loans	$	3,618	$	3	$	1,702	$	—

Acquired Loans


	Nine Months Ended September 30, 2020				Nine Months Ended September 30, 2019
	Average Recorded		Interest		Average Recorded		Interest
(in thousands)	Investment		Income Recognized		Investment		Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate		1,097		—		89		—
Commercial		318		—		429		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		541		—		593		—
Home equity		—		—		—		—
Other consumer		—		—		—		—

With an allowance recorded:
Construction and land development		—		—		—		—
Other commercial real estate		639		3		123		—
Commercial		75		—		—		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		432		—		361		—
Home equity		—		—		—		—
Other consumer		—		—		—		—

Total
Commercial real estate		1,736		3		212		—
Commercial and industrial		393		—		429		—
Residential real estate		973		—		954		—
Consumer		—		—		—		—
Total impaired loans	$	3,102	$	3	$	1,595	$	—

Troubled Debt Restructuring Loans

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring ("TDR"), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as non-performing at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. TDRs are evaluated individually for impairment and may result in a specific allowance amount allocated to an individual loan.

The following tables include the recorded investment and number of modifications identified during the three and nine months ended September 30, 2020 and 2019, respectively. The table includes the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. Modifications may include adjustments to interest rates, payment amounts, extensions of maturity, court ordered concessions or other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral.


	Three Months Ended September 30, 2020
		Pre-Modification		Post-Modification
	Number of	Outstanding Recorded		Outstanding Recorded
(in thousands, except modifications)	Modifications	Investment		Investment
Troubled Debt Restructurings
Agricultural	1	$	86	$	86
Total	1	$	86	$	86


	Three Months Ended September 30, 2019
		Pre-Modification		Post-Modification
	Number of	Outstanding Recorded		Outstanding Recorded
(in thousands, except modifications)	Modifications	Investment		Investment
Troubled Debt Restructurings
Other commercial real estate	4	$	268	$	267
Agricultural	1		141		141
Residential mortgages	2		399		342
Total	7	$	808	$	750


	Nine Months Ended September 30, 2020
		Pre-Modification		Post-Modification
	Number of	Outstanding Recorded		Outstanding Recorded
(in thousands, except modifications)	Modifications	Investment		Investment
Troubled Debt Restructurings
Other commercial real estate	1	$	54	$	247
Other commercial	3		41		162
Agricultural	1		86		86
Home equity	1		26		24
Other consumer	1		9		9
Total	7	$	216	$	528


	Nine Months Ended September 30, 2019
		Pre-Modification			Post-Modification
	Number of	Outstanding Recorded		Outstanding Recorded
(in thousands, except modifications)	Modifications	Investment		Investment
Troubled Debt Restructurings
Other commercial real estate	9	$	543	$	529
Other commercial	4		168		91
Agricultural	1		141		141
Residential mortgages	11		1,133		1,034
Total	25	$	1,985	$	1,795

The following tables summarize the types of loan concessions made for the periods presented:


	Three Months Ended September 30,
	2020			2019
		Post-Modification			Post-Modification
		Outstanding			Outstanding
	Number of	Recorded		Number of	Recorded
(in thousands, except modifications)	Modifications	Investment		Modifications	Investment
Troubled Debt Restructurings
Interest only payments	—	$	—	2	$	90
Forbearance	—		—	1		141
Forbearance and interest only payments	—		—	2		176
Forbearance, amortization and maturity concession	—		—	2		343
Maturity concession	1		86	—		—
Total	1	$	86	7	$	750


	Nine Months Ended September 30,
	2020			2019
		Post-Modification			Post-Modification
		Outstanding			outstanding
	Number of	Recorded		Number of	Recorded
(in thousands, except modifications)	Modifications	Investment		Modifications	Investment
Troubled Debt Restructurings
Interest only payments	—	$	—	2	$	90
Interest only payments and maturity concession	—		—	2		73
Interest rate, forbearance and maturity concession	4		409	—		—
Amortization and maturity concession	—		—	4		273
Amortization, interest rate and maturity concession	—		—	1		77
Forbearance	—		—	3		253
Forbearance and interest only payments	1		24	5		331
Forbearance, amortization and maturity concession	—		—	7		640
Maturity concession	2		95	—		—
Other	—		—	1		58
Total	7	$	528	25	$	1,795

For the three and nine months ended September 30, 2020, there were no loans that were restructured that had subsequently defaulted during the period. The evaluation of certain loans individually for specific impairment includes loans that were previously classified as TDRs or continue to be classified as TDRs.

Modifications in response to COVID-19

The Company began offering short-term loan modifications to assist borrowers during the COVID-19 national emergency. The CARES Act along with a joint agency statement issued by banking agencies, provides that short-term modifications made in response to COVID-19 do not need to be accounted for as a TDR. Accordingly, the Company does not account for such loan modifications as TDRs. See Note 1 - Basis of Presentation for more information.

The Company modified 588 commercial loans totaling $375.0 million and 564 residential loans totaling $98.5 million. As of September 30, 2020 total outstanding deferrals were $78.7 million, which primarily consist of interest only forbearance. Outstanding deferrals consisted of 110 commercial loans totaling $74.1 million and 86 residential loans totaling $4.6 million.

Foreclosure

As of September 30, 2020 and December 31, 2019, the Company maintained bank-owned residential real estate with a fair value of $1.9 million. Additionally, residential mortgage loans collateralized by real estate that are in the process of foreclosure as of September 30, 2020 and December 31, 2019 totaled $917 thousand and $810 thousand, respectively.

Mortgage Banking

The Bank sells loans in the secondary market and retains the ability to service many of these loans. The Bank earns fees for the servicing provided. Loans serviced for others are not included in the accompanying consolidated balance sheets. The risks inherent in servicing assets relate primarily to changes in prepayments that result from shifts in interest rates.

Servicing rights activity during the three and nine months ended September 30, 2020 and 2019, included in other assets, was as follows:


	At or for the Three Months Ended September 30,				At or for the Nine Months Ended September 30,
(in thousands)	2020		2019		2020		2019
Balance at beginning of year	$	2,939	$	2,941	$	3,001	$	3,086
Acquired		—		—		—		—
Additions		515		106		796		213
Amortization		(220)		(138)		(563)		(390)
Balance at end of year	$	3,234	$	2,909	$	3,234	$	2,909

Total residential loans included held for sale loans of $23.7 million and $6.5 million at September 30, 2020 and December 31, 2019, respectively.