LOANS:

12 Months Ended

Dec. 31, 2020

Loans and Leases Receivable, Net Amount [Abstract]

LOANS

Loans are summarized as follows:

	December 31,
(Dollar amounts in thousands)	2020		2019
Commercial	$	1,521,711	$	1,584,447
Residential	604,652		682,077
Consumer	479,750		386,006
Total gross loans	2,606,113		2,652,530
Deferred costs, net	4,181		3,860
Allowance for credit losses	(47,052)		(19,943)
TOTAL	$	2,563,242	$	2,636,447

The Corporation periodically sells residential mortgage loans it originates based on the overall loan demand of the Corporation and the outstanding balances in the residential mortgage portfolio. At December 31, 2020 and 2019, loans held for sale were $7.1 million and $5.8 million, respectively, and are included in the totals above.

In the normal course of business, the Corporation’s subsidiary banks make loans to directors and executive officers and to their associates. In 2020, the aggregate dollar amount of these loans to directors and executive officers who held office amounted to $89.5 million at the beginning of the year. During 2020, advances of $22.8 million, repayments of $54.8 million, and additions

for new directors of $0.0 million were made with respect to related party loans for an aggregate dollar amount outstanding of $57.5 million at December 31, 2020.

Loans serviced for others, which are not reported as assets, total $490.4 million and $477.0 million at year-end 2020 and 2019. Custodial escrow balances maintained in connection with serviced loans were $3.0 million and $3.1 million at year-end 2020 and 2019.

Activity for capitalized mortgage servicing rights (included in other assets) was as follows:

	December 31,
(Dollar amounts in thousands)	2020		2019		2018
Servicing rights:
Beginning of year	$	1,435	$	1,431	$	1,434
Additions	956		579		513
Amortized to expense	(790)		(575)		(516)
End of year	$	1,601	$	1,435	$	1,431

Third party valuations are conducted periodically for mortgage servicing rights. Based on these valuations, fair values were approximately $2.4 million and $2.7 million at year end 2020 and 2019. There was no valuation allowance in 2020 or 2019.

Fair value for 2020 was determined using a discount rate of 12.5%, prepayment speeds ranging from 239% to 403%, depending on the stratification of the specific right. Fair value at year end 2019 was determined using a discount rate of 12.5%, prepayment speeds ranging from 118% to 263%, depending on the stratification of the specific right. Mortgage servicing rights are amortized over 8 years, the expected life of the sold loans.