Loans

3 Months Ended

Mar. 31, 2022

Loan Portfolio Classifications

Major classifications of loans at the dates indicated were as follows:


(Dollars in thousands)	March 31, 2022		December 31, 2021
Commercial real estate	$	1,779,691	$	1,680,792
Commercial and industrial	408,341		412,070
Commercial construction	375,709		410,443
SBA Paycheck Protection Program ("PPP")	32,153		71,502
Total commercial loans	2,595,894		2,574,807

Residential mortgages	280,507		256,940
Home equity loans and lines	78,557		80,467
Consumer	7,763		8,470
Total retail loans	366,827		345,877




Total loans	2,962,721		2,920,684

ACL for loans	(48,424)		(47,704)
Net loans	$	2,914,297	$	2,872,980

Net deferred loan origination fees amounted to $6.2 million at March 31, 2022 and $7.5 million at December 31, 2021.

Accrued interest receivable on loans amounted to $10.2 million at both March 31, 2022 and December 31, 2021, respectively, and was included in the "Accrued interest receivable” line item on the Company’s Consolidated Balance Sheets.

Commercial loans originated by other banks in which the Company is a participating institution are carried at the pro-rata share of ownership and amounted to $44.0 million at March 31, 2022 and $62.6 million at December 31, 2021. See also "Loans serviced for others" below for information related to commercial loans participated out to various other institutions.

Paycheck Protection Program

The PPP was created by the CARES Act and instituted by the Small Business Administration ("SBA"), with SBA funding of PPP loans beginning in April 2020, until the PPP funding expired on May 31, 2021. Over the funding period, the Company originated $717.2 million in short-term PPP loans. As of March 31, 2022, the Company had received $26.2 million in PPP-related SBA processing fees over the funding period. These deferred fees are accreting into interest income over the life of the applicable loans; as the majority of PPP loans have been forgiven, their remaining unearned fee have been recognized into income at that time. For the three months ended March 31, 2022, and 2021, the Company recognized $1.4 million and $4.9 million, respectively, in PPP related fee income. The majority of the remaining $1.0 million in fees are expected to be recognized as the PPP loans are forgiven, which we expect to occur over the next several quarters.

Management believes the Company's PPP loan portfolio, which had an average loan size of approximately $147 thousand as of March 31, 2022, to be of minimal credit risk. Originations were limited to existing bank customers, and management expects the majority of outstanding PPP loans will be forgiven by the SBA or repaid, with any remaining balance fully guaranteed by the SBA. Management has segmented the PPP loan portfolio as a group of loans with similar risk characteristics in its assessment for credit losses and, as of March 31, 2022, has not recorded an ACL on these loans, but will continue to monitor the PPP loan portfolio.

Loans serviced for others

At March 31, 2022 and December 31, 2021, the Company was servicing residential mortgage loans owned by investors amounting to $10.0 million and $10.4 million, respectively. Additionally, the Company was servicing commercial loans originated by the Company and participated out to various other institutions amounting to $60.2 million and $66.7 million at March 31, 2022 and December 31, 2021, respectively.

Loans serving as collateral

Loans designated as qualified collateral and pledged to the FHLB for borrowing capacity as of the dates indicated are summarized below:


(Dollars in thousands)	March 31, 2022		December 31, 2021
Commercial real estate	$	135,528	$	143,056
Residential mortgages	220,913		235,744
Home equity	4,741		5,055
Total loans pledged to FHLB	$	361,182	$	383,855