Loans, net and allowance for loan losses | 4. Loans, net and allowance for loan losses: The major classifications of loans outstanding, net of deferred loan origination fees and costs at December 31, 2020 and 2019 are summarized as follows. Net deferred December 31 2020 2019 Commercial $ 359,080 $ 118,658 Real estate: Construction 73,402 61,831 Commercial 502,495 455,901 Residential 197,596 207,354 Consumer 6,666 8,365 Total $ 1,139,239 $ 852,109 The Company participated in the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), Paycheck Protection Program (“PPP”), a multi-billion dollar specialized low-interest of PPP loans, net of unearned fees of $5,075, included in commercial loans at December 31, 2020. The Company is utilizing the Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) to meet the funding needs of its borrowers of PPP loans. Additionally, the Company is working with borrowers impacted by COVID-19 and providing modifications to include interest only deferral or principal and interest deferral up to 180 days. The majority of deferrals approved by the Company were 90 days or less. The modifications are excluded from troubled debt restructuring classification under the CARES Act. The Company modified 325 commercial and 176 consumer loans with outstanding balances of $256,422 at time of deferral, during the year ended December 31, 2020. As of December 31, 2020, 19 modified loans remained on deferral with an outstanding balance of $21,854. Loans outstanding to directors, executive officers, principal stockholders or to their affiliates totaled $17,800 and $9,518 at December 31, 2020 and 2019, respectively. Advances and repayments during 2020, totaled $15,880 and $7,598, respectively. There were no related party loans that were classified as nonaccrual, past due, or restructured or considered a potential credit risk at December 31, 2020 and 2019. At December 31, 2020, the majority of the Company’s loans were at least partially secured by real estate located in Central and Southwestern Pennsylvania. Therefore, a primary concentration of credit risk is directly related to the real estate market in these areas. Changes in the general economy, local economy or in the real estate market could affect the ultimate collectability of this portion of the loan portfolio. Management does not believe there are any other significant concentrations of credit risk that could affect the loan portfolio. The changes in the allowance for loan losses account by major classification of loan for the years ended December 31, 2020 and 2019 are summarized as follows: Real Estate December 31, 2020 Commercial Construction Commercial Residential Consumer Unallocated Total Allowance for loan losses: Beginning Balance January 1, 2020 $ 1,953 $ 473 $ 3,115 $ 1,820 $ 155 $ $ 7,516 Charge-offs (909 ) (595 ) (2 ) (333 ) (1,839 ) Recoveries 11 61 1 168 241 Provisions 650 644 3,913 608 152 315 6,282 Ending balance $ 1,705 $ 1,117 $ 6,494 $ 2,427 $ 142 $ 315 $ 12,200 Real Estate December 31, 2019 Commercial Construction Commercial Residential Consumer Unallocated Total Allowance for loan losses: Beginning Balance January 1, 2019 $ 1,162 $ 404 $ 3,298 $ 1,286 $ 50 $ 148 $ 6,348 Charge-offs (1,128 ) (254 ) (26 ) (476 ) (1,884 ) Recoveries 484 6 7 149 646 Provisions 1,435 69 65 553 432 (148 ) 2,406 Ending balance $ 1,953 $ 473 $ 3,115 $ 1,820 $ 155 $ $ 7,516 The allocation of the allowance for loan losses and the related loans by major classifications of loans at December 31, 2020 and December 31, 2019 is summarized as follows: Real Estate December 31, 2020 Commercial Construction Commercial Residential Consumer Unallocated Total Allowance for loan losses: Ending balance $ 1,705 $ 1,117 $ 6,494 $ 2,427 $ 142 $ 315 $ 12,200 Ending balance: individually evaluated for impairment Ending balance: collectively evaluated for impairment 1,705 1,117 6,494 2,427 142 315 12,200 Ending balance: purchased credit impaired loans $ $ $ $ $ $ $ Loans receivable: Ending balance $ 359,080 $ 73,402 $ 502,495 $ 197,596 $ 6,666 $ $ 1,139,239 Ending balance: individually evaluated for impairment 1,565 6,444 2,494 10,503 Ending balance: collectively evaluated for impairment 357,515 73,402 495,674 194,939 6,666 1,128,196 Ending balance: purchased credit impaired loans $ $ $ 377 $ 163 $ $ $ 540 Real Estate December 31, 2020 Commercial Construction Commercial Residential Consumer Unallocated Total Allowance for loan losses: Ending balance $ 1,953 $ 473 $ 3,115 $ 1,820 $ 155 $ $ 7,516 Ending balance: individually evaluated for impairment 712 218 930 Ending balance: collectively evaluated for impairment 1,241 473 2,897 1,820 155 6,586 Ending balance: purchased credit impaired loans $ $ $ $ $ $ $ Loans receivable: Ending balance $ 118,658 $ 61,831 $ 455,901 $ 207,354 $ 8,365 $ $ 852,109 Ending balance: individually evaluated for impairment 2,260 1,224 2,085 5,569 Ending balance: collectively evaluated for impairment 116,390 61,831 453,156 205,026 8,365 844,768 Ending balance: purchased credit impaired loans $ 8 $ $ 1,521 $ 243 $ $ $ 1,772 The following tables present the major classification of loans summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company’s internal risk rating system at December 31, 2020 and 2019: December 31, 2020: Pass Special Mention Substandard Doubtful Total Commercial $ 353,758 $ 3,147 $ 2,175 $ $ 359,080 Real estate: Construction 63,838 1,817 7,747 73,402 Commercial 451,190 29,180 22,125 502,495 Residential 191,775 2,670 3,151 197,596 Consumer 6,666 6,666 Total $ 1,067,227 $ 36,814 $ 35,198 $ $ 1,139,239 December 31, 2019: Pass Special Mention Substandard Doubtful Total Commercial $ 109,190 $ 5,992 $ 3,476 $ $ 118,658 Real estate: Construction 61,678 153 61,831 Commercial 430,771 9,271 15,859 455,901 Residential 203,381 1,437 2,536 207,354 Consumer 8,365 8,365 Total $ 813,385 $ 16,853 $ 21,871 $ $ 852,109 The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of December 31, 2020 and 2019. Purchased credit impaired loans are excluded from the aging and nonaccrual loan schedules. Accrual Loans December 31, 2020 30-59 Days Past Due 60-89 Days Past Due 90 or More Days Past Due Total Past Due Current Nonaccrual Loans Total Loans Commercial $ 64 $ 1 $ $ 65 $ 358,496 $ 519 $ 359,080 Real estate: Construction 73,402 73,402 Commercial 1,238 4,063 5,301 496,785 32 502,118 Residential 2,125 2,993 146 5,264 191,299 870 197,433 Consumer 22 20 10 52 6,614 6,666 Total $ 3,449 $ 7,077 $ 156 $ 10,682 $ 1,126,596 $ 1,421 $ 1,138,699 Purchased credit impaired loans 540 Total Loans $ 1,139,239 Accrual Loans December 31, 2019 30-59 Days Past Due 60-89 Days Past Due 90 or More Days Past Due Total Past Due Current Nonaccrual Loans Total Loans Commercial $ 137 $ $ $ 137 $ 117,354 $ 1,159 $ 118,650 Real estate: Construction 9 9 61,822 61,831 Commercial 147 147 453,774 459 454,380 Residential 3,402 820 18 4,240 202,202 669 207,111 Consumer 84 14 27 125 8,240 8,365 Total $ 3,779 $ 834 $ 45 $ 4,658 $ 843,392 $ 2,287 $ 850,337 Purchased credit impaired loans 1,772 Total Loans $ 852,109 The following tables summarize information concerning impaired loans including purchase credit impaired loans as of and for the years ended December 31, 2020 and 2019, by major loan classification: For the Year Ended December 31, 2020 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized With no related allowance: Commercial $ 1,565 $ 1,675 $ 1,356 $ 416 Real estate: Construction Commercial 6,821 6,821 4,392 311 Residential 2,657 2,787 2,493 146 Consumer Total 11,043 11,283 8,241 873 With an allowance recorded: Commercial 561 Real estate: Construction Commercial 391 65 Residential Consumer Total 952 65 Commercial 1,565 1,675 1,917 416 Real estate: Construction Commercial 6,821 6,821 4,783 376 Residential 2,657 2,787 2,493 146 Consumer Total $ 11,043 $ 11,283 $ 9,193 $ 938 For the Year Ended December 31, 2019 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized With no related allowance: Commercial $ 1,147 $ 1,257 $ 648 $ 660 Real estate: Construction Commercial 1,963 1,963 3,124 1,456 Residential 2,329 2,467 2,397 173 Consumer Total 5,439 5,687 6,169 2,289 With an allowance recorded: Commercial 1,121 1,121 $ 712 685 Real estate: Construction Commercial 782 936 218 658 17 Residential 91 Consumer Total 1,903 2,057 930 1,434 17 Commercial 2,268 2,378 712 1,333 660 Real estate: Construction Commercial 2,745 2,899 218 3,782 1,473 Residential 2,329 2,467 2,488 173 Consumer Total $ 7,342 $ 7,744 $ 930 $ 7,603 $ 2,306 For the years ended December 31, interest income, r ela At and for the year ended December 31, 2020, there were nine loans modified as troubled debt restructuring and 20 restructured loans totaling $9,985. At and for the year ended December 31, 2019, there was one loan modified as troubled debt restructuring and 14 restructured loans totaling $2,701. The following tables present the number of loans and recorded investment in loans restructured and identified as troubled debt restructurings for the years ended December 31, 2020 and 2019. Defaulted loans are those which are 30 days or more past due for payment under the modified terms. December 31, 2020 Number of Pre-Modification Post-Modification Recorded Commercial 5 $ 1,042 $ 1,042 $ 954 Commercial real estate 3 6,063 6,063 6,243 Residential real estate 1 512 512 502 December 31, 2019 Number of Pre-Modification Post-Modification Recorded Residential real estate 1 $ 23 $ 23 $ 28 During 2020, there was default on loans restructured, totaling $ . |