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.