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Loans | 3 Months Ended
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Mar. 31, 2021
Loans |
Loans | 8. Loans The loan portfolio of the Company consists of the following (in thousands):
|  | March 31, 2021 |  | December 31, 2020
Commercial: |  |  |  |  |  |
Commercial and industrial |  | $ | 143,803 |  | $ | 151,162
Paycheck Protection Program (PPP) |  |  | 67,253 |  |  | 58,344
Commercial loans secured by owner occupied real estate |  |  | 95,357 |  |  | 95,486
Commercial loans secured by non-owner occupied real estate |  |  | 407,432 |  |  | 400,751
Real estate − residential mortgage |  |  | 255,319 |  |  | 249,989
Consumer |  |  | 16,085 |  |  | 16,363
Loans, net of unearned income |  | $ | 985,249 |  | $ | 972,095
Loan balances at March 31, 2021 and December 31, 2020 are net of unearned income of $1,343,000 and $1,202,000, respectively. The unearned income balance at March 31, 2021 includes $853,000 of unrecognized fee income from the PPP loan originations compared to $755,000 at December 31, 2020. Real estate construction loans comprised 5.8% and 7.0% of total loans, net of unearned income at March 31, 2021 and December 31, 2020, respectively. The ongoing COVID-19 pandemic is a fluid situation and continues to evolve, impacting the way many businesses operate. The pandemic and its associated impacts on trade (including supply chains and export levels), travel, employee productivity, unemployment, and consumer spending has resulted in less economic activity and significant volatility and disruption. 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 March 31, 2021 and December 31, 2020 (in thousands).
|  | March 31, 2021
|  |  |  |  | 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 |  | $ | 1,371 |  | $ | — |  | $ | 103 |  | $ | 4,309 |  | $ | 5,783
Multifamily/apartments/student housing |  |  | — |  |  | — |  |  | 262 |  |  | 69,236 |  |  | 69,498
Office |  |  | 33,608 |  |  | 2,776 |  |  | 9,445 |  |  | 36,987 |  |  | 82,816
Retail |  |  | 7,824 |  |  | 608 |  |  | 22,252 |  |  | 129,982 |  |  | 160,666
Industrial/manufacturing/warehouse |  |  | 82,131 |  |  | 33,434 |  |  | 17,158 |  |  | 42,059 |  |  | 174,782
Hotels |  |  | 285 |  |  | 2,044 |  |  | — |  |  | 41,678 |  |  | 44,007
Eating and drinking places |  |  | 710 |  |  | 18,946 |  |  | 4,354 |  |  | 1,877 |  |  | 25,887
Amusement and recreation |  |  | 165 |  |  | 89 |  |  | 3,275 |  |  | 30 |  |  | 3,559
Mixed use |  |  | — |  |  | — |  |  | 2,495 |  |  | 61,363 |  |  | 63,858
Other |  |  | 17,709 |  |  | 9,356 |  |  | 36,013 |  |  | 19,911 |  |  | 82,989
Total |  | $ | 143,803 |  | $ | 67,253 |  | $ | 95,357 |  | $ | 407,432 |  | $ | 713,845
|  | December 31, 2020
|  |  |  |  | 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 |  | $ | 1,450 |  | $ | — |  | $ | 105 |  | $ | 6,139 |  | $ | 7,694
Multifamily/apartments/student housing |  |  | — |  |  | — |  |  | 469 |  |  | 66,879 |  |  | 67,348
Office |  |  | 33,525 |  |  | 6,872 |  |  | 10,095 |  |  | 37,164 |  |  | 87,656
Retail |  |  | 8,080 |  |  | 1,542 |  |  | 21,180 |  |  | 124,325 |  |  | 155,127
Industrial/manufacturing/warehouse |  |  | 87,021 |  |  | 26,222 |  |  | 18,255 |  |  | 38,814 |  |  | 170,312
Hotels |  |  | 329 |  |  | 837 |  |  | — |  |  | 41,779 |  |  | 42,945
Eating and drinking places |  |  | 769 |  |  | 13,479 |  |  | 4,390 |  |  | 1,925 |  |  | 20,563
Amusement and recreation |  |  | 190 |  |  | 46 |  |  | 3,307 |  |  | 38 |  |  | 3,581
Mixed use |  |  | — |  |  | — |  |  | 2,411 |  |  | 65,585 |  |  | 67,996
Other |  |  | 19,798 |  |  | 9,346 |  |  | 35,274 |  |  | 18,103 |  |  | 82,521
Total |  | $ | 151,162 |  | $ | 58,344 |  | $ | 95,486 |  | $ | 400,751 |  | $ | 705,743
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. In addition, PPP allows certain eligible borrowers that previously received a PPP loan to apply for a second draw loan with the same general loans terms described above. The maximum loan amount of a second draw PPP loan is 2.5 times, or 3.5 times for borrowers within the hospitality industry, the average monthly 2019 or 2020 payroll costs up to $2.0 million. Eligibility for a second draw PPP loan is based on the following criteria: (a) borrower previously received a first draw PPP loan and used the full amount for only authorized expenditures; (b) borrower has 300 or less employees; and (c) borrower can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. The loan program is set to expire on May 31, 2021. As of March 31, 2021, the Company had 389 PPP loans outstanding totaling $67.3 million and has recorded a total of $897,000 of processing fee income and interest income from PPP lending activity in the first quarter of 2021. Also, there is approximately $853,000 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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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 + Details
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