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Loans | 9 Months Ended
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Sep. 30, 2020
Loans |
Loans | 8. Loans The loan portfolio of the Company consists of the following (in thousands):
|  | September 30, 2020 |  | December 31, 2019
Commercial: |  |  |  |  |  |
Commercial and industrial |  | $ | 152,636 |  | $ | 173,922
Paycheck Protection Program (PPP) |  |  | 68,460 |  |  | —
Commercial loans secured by owner occupied real estate |  |  | 90,819 |  |  | 91,655
Commercial loans secured by non-owner occupied real estate |  |  | 378,858 |  |  | 363,635
Real estate − residential mortgage |  |  | 233,811 |  |  | 235,239
Consumer |  |  | 17,196 |  |  | 18,255
Loans, net of unearned income |  | $ | 941,780 |  | $ | 882,706
Loan balances at September 30, 2020 and December 31, 2019 are net of unearned income of $1,466,000 and $384,000, respectively. The unearned income balance at September 30, 2020 includes $1,057,000 of unrecognized fee income from the PPP loan originations. Real estate construction loans comprised 6.4% and 4.9% of total loans, net of unearned income at September 30, 2020 and December 31, 2019, respectively. The third quarter of 2020 represented the second full quarter’s impact of the COVID-19 pandemic. Certain loans within our commercial and commercial real estate portfolios have been disproportionately adversely affected by the pandemic. Due to mandatory lockdowns and travel restrictions, certain industries, such as hospitality, travel, food service and restaurants and bars, have suffered as a result of COVID-19. The following table provides information regarding our potential COVID-19 risk concentrations for commercial and commercial real estate loans by industry type at September 30, 2020 (in thousands).
|  |  |  |  | Paycheck |  | Commercial loans |  | Commercial loans |  |  |
|  | Commercial |  | Protection |  | secured by owner |  | secured by non-owner |  |  |
|  | and industrial |  | Program |  | occupied real estate |  | occupied real estate |  | Total
1-4 unit residential |  | $ | 1,488 |  | $ | — |  | $ | 107 |  | $ | 5,920 |  | $ | 7,515
Multifamily/apartments/student housing |  |  | — |  |  | — |  |  | 418 |  |  | 54,963 |  |  | 55,381
Office |  |  | 32,793 |  |  | 9,924 |  |  | 10,075 |  |  | 34,452 |  |  | 87,244
Retail |  |  | 7,997 |  |  | 1,786 |  |  | 21,213 |  |  | 116,830 |  |  | 147,826
Industrial/manufacturing/warehouse |  |  | 89,382 |  |  | 29,463 |  |  | 17,751 |  |  | 43,093 |  |  | 179,689
Hotels |  |  | 372 |  |  | 1,287 |  |  | — |  |  | 41,830 |  |  | 43,489
Eating and drinking places |  |  | 855 |  |  | 13,630 |  |  | 4,424 |  |  | 538 |  |  | 19,447
Amusement and recreation |  |  | 245 |  |  | 106 |  |  | 3,345 |  |  | 46 |  |  | 3,742
Mixed use |  |  | — |  |  | — |  |  | 2,802 |  |  | 66,435 |  |  | 69,237
Other |  |  | 19,504 |  |  | 12,264 |  |  | 30,684 |  |  | 14,751 |  |  | 77,203
Total |  | $ | 152,636 |  | $ | 68,460 |  | $ | 90,819 |  | $ | 378,858 |  | $ | 690,773
Paycheck Protection Program The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020, and provides emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the Small Business Administration (SBA) to temporarily guarantee loans under a new 7(a) program called the Paycheck Protection Program (PPP). As a qualified SBA lender, the Company was automatically authorized to originate PPP loans. An eligible business could apply for a PPP loan up to the lesser of: (1) 2.5 times its average monthly “payroll costs;” or (2) $10.0 million. PPP loans have: (a) an interest rate of 1.0%, (b) a two-year (if originated prior to June 5, 2020) or five-year (if originated after June 5, 2020) loan term to maturity; and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA will guarantee 100% of the PPP loans made to eligible borrowers pursuant to standards as defined by the SBA. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be reduced by the loan forgiveness amount under the PPP so long as employee and compensation levels of the business are maintained and at least 60% of the loan proceeds are used for payroll expenses, with the remaining loan proceeds being used for other qualifying expenses such as interest on mortgages, rent, and utilities. As of September 30, 2020, the Company had 469 PPP loans outstanding totaling $68.5 million and has recorded a total of $1.4 million of processing fee income and interest income from PPP lending activity. Also, there is approximately $1.1 million of PPP processing fees that will be amortized into income over the time period that the loans remain on our balance sheet or until the PPP loan is forgiven at which time the remaining fee will be recognized immediately as income.

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