NOTE 3 – LOANS

The composition of net loans receivable at March 31, 2020 and December 31, 2019 is as follows:


(Dollars in thousands)	March 31, 2020		December 31, 2019
Commercial and industrial	$	133,654	$	124,937
Construction		114,734		125,291
Commercial real estate		1,056,745		995,220
Residential real estate		379,396		382,567
Consumer and other		1,903		2,097
Total loans receivable		1,686,432		1,630,112
Unearned net loan origination fees		(1,294)		(1,266)
Allowance for loan losses		(10,867)		(10,267)
Net loans receivable	$	1,674,271	$	1,618,579

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The total amount of loans serviced for the benefit of others was approximately $215 thousand and $218 thousand at March 31, 2020 and December 31, 2019, respectively.

Purchased Credit Impaired Loans

The carrying value of loans acquired in the Community acquisition and accounted for in accordance with ASC Subtopic 310‑30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality,” was $2.5 million at March 31, 2020, which was $1.1 million less than the balance at the time of acquisition on January 4, 2018. Under ASC Subtopic 310‑30, these loans, referred to as purchased credit impaired (“PCI”) loans, may be aggregated and accounted for as pools of loans if the loans being aggregated have common risk characteristics. The Company elected to account for the loans with evidence of credit deterioration individually rather than aggregate them into pools. The difference between the undiscounted cash flows expected at acquisition and the investment in the acquired loans, or the “accretable yield,” is recognized as interest income utilizing the level-yield method over the life of each loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “non-accretable difference,” are not recognized as a yield adjustment, as a loss accrual or as a valuation allowance.

Increases in expected cash flows subsequent to the acquisition are recognized prospectively through an adjustment of the yield on the loans over the remaining life, while decreases in expected cash flows are recognized as impairments through a loss provision and an increase in the allowance for loan and lease losses. Valuation allowances (recognized in the allowance for loan and lease losses) on these impaired loans reflect only losses incurred after the acquisition (representing all cash flows that were expected at acquisition but currently are not expected to be received).

The following table presents changes in the accretable yield for PCI loans:


	Three months ended		Three months ended
(Dollars in thousands)	March 31, 2020		March 31, 2019
Accretable yield, beginning balance	$	225	$	539
Acquisition of impaired loans		—		—
Accretable yield amortized to interest income		(34)		(79)
Reclassification from non-accretable difference		—		—
Accretable yield, ending balance	$	191	$	460