(1)	Real estate construction loans constituted 5.6% and 7.0% of the Company’s total loans, net of unearned income as of December 31, 2021 and 2020, respectively.

Loan balances at December 31, 2021 and 2020 are net of unearned income of $826,000 and $1,202,000, respectively. The unearned income balance at December 31, 2021 includes $386,000 of unrecognized fee income from PPP loan originations compared to $755,000 at December 31, 2020. Real estate construction loans comprised 5.6% and 7.0% of total loans net of unearned income at December 31, 2021 and 2020, respectively. The Company has no exposure to subprime mortgage loans in either the loan or investment portfolios. The Company has no direct loan exposure to foreign countries. Additionally, the Company has no significant industry lending concentrations. As of December 31, 2021 and 2020, loans to customers engaged in similar activities and having similar economic characteristics, as defined by standard industrial classifications, did not exceed 10% of total loans. Additionally, the majority of the Company’s lending occurs within a 250-mile radius of the Johnstown market.

In the ordinary course of business, the subsidiaries have transactions, including loans, with their officers, directors, and their affiliated companies. In management’s opinion, these transactions were on substantially the same terms as those prevailing at the time for comparable transactions with unaffiliated parties and do not involve more than the normal credit risk. These loans totaled $601,000 and $615,000 at December 31, 2021 and 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 December 31, 2021 and 2020 (in thousands).

DECEMBER 31, 2021

Paycheck

Commercial loans

Commercial

Protection

secured by owner

secured by non-owner

and industrial

Program

occupied real estate

Total

1-4 unit residential

1,246

—

8,565

9,907

Multifamily/apartments/student housing

—

245

73,912

74,157

Office

37,386

203

8,644

28,500

74,733

Retail

7,253

444

20,439

148,668

176,804

Industrial/manufacturing/warehouse

74,508

5,940

21,468

44,316

146,232

Hotels

154

1,764

—

42,425

44,343

Eating and drinking places

484

6,591

4,537

1,752

13,364

Personal care

1,197

173

—

4,315

5,685

Amusement and recreation

5,402

5,559

Mixed use

—

4,031

62,088

66,119

Other

11,862

2,143

34,782

16,272

65,059

Total

134,182

17,311

99,644

430,825

681,962


	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
Personal care		4,118		621		—		9,356		14,095
Amusement and recreation		190		46		3,307		38		3,581
Mixed use		—		—		2,411		65,585		67,996
Other		15,680		8,725		35,274		8,747		68,426
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 and subsequent legislation 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 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 PPP loan program expired on May 31, 2021 for originating new loans.

As of December 31, 2021, the Company had 114 PPP loans outstanding totaling $17.3 million and has recorded a total of $2.3 million of processing fee income and interest income from PPP lending activity. Also, there is approximately $386,000 of PPP processing fees that will be amortized into income over the time period that the loans remain on our balancec sheet or until the PPP loan is forgiven at which time the remaining fee will be recognized immediately as income. As of December 31, 2020, the Company had 364 PPP loans outstanding totaling $58.3 million and has recorded a total of $1.9 million of processing fee income and interest income from PPP lending activity.